FR Doc E8-26212

[Federal Register: November 18, 2008 (Volume 73, Number 223)]
[Rules and Regulations]
[Page 68501-69380]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18no08-20]

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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, 416, and 419

Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2009 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2009 Payment Rates; Hospital
Conditions of Participation: Requirements for Approval and Re-Approval
of Transplant Centers To Perform Organ Transplants--Clarification of
Provider and Supplier Termination Policy Medicare and Medicaid
Programs: Changes to the Ambulatory Surgical Center Conditions for
Coverage; Final Rule

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 416, and 419

[CMS-1404-FC; CMS-3887-F; CMS-3835-F-1]
RIN 0938-AP17; RIN 0938-AL80; RIN 0938-AH17

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

ACTION: Final rule with comment period; final rules.

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SUMMARY: This final rule with comment period revises 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 a number of changes made
by the Medicare Improvement for Patients and Providers Act of 2008. In
this final rule with comment period, we describe the 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 are applicable to services furnished on or after January
1, 2009.
In addition, this final rule with comment period updates the
revised Medicare ambulatory surgical center (ASC) payment system to
implement applicable statutory requirements and changes arising from
our continuing experience with this system. In this final rule with
comment period, we set forth the applicable relative payment weights
and amounts for services furnished in ASCs, specific HCPCS codes to
which these changes apply, and other pertinent ratesetting information
for the CY 2009 ASC payment system. These changes are applicable to
services furnished on or after January 1, 2009.
In this document, we are responding to public comments on a
proposed rule and finalizing updates to the ASC Conditions for Coverage
to reflect current ASC practices and new requirements in the conditions
to promote and protect patient health and safety.
Further, this final rule also clarifies policy statements included
in responses to public comments set forth in the preamble of the March
30, 2007 final rule regarding the Secretary's ability to terminate
Medicare providers and suppliers (that is, transplant centers) during
an appeal of a determination that affects participation in the Medicare
program.

DATES: Effective Dates: The provisions of this rule are effective
January 1, 2009, except for amendments to 42 CFR 416.2, 416.41 through
416.43, and 416.49 through 416.52 are effective on May 18, 2009. The
policy clarification set forth in section XVIII of the preamble of this
rule is effective December 18, 2008.
Comment Period: We will consider comments on the payment
classifications assigned to HCPCS codes identified in Addenda B, AA,
and BB to this final rule with comment period with the ``NI'' comment
indicator, and on other areas specified throughout this rule, received
at one of the addresses provided in the ADDRESSES section, no later
than 5 p.m. EST on December 29, 2008.
Application Deadline--New Class of New Technology Intraocular
Lenses: Request for review of applications for a new class of new
technology intraocular lenses must be received by 5 p.m. EST on March
2, 2009.

ADDRESSES: In commenting, please refer to file code CMS-1404-FC.
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 this
regulation to http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the file code to find the document
accepting comments.
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-1404-FC, P.O. Box 8013, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1404-FC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-9994 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
Applications for a new class of new technology intraocular lenses:
Requests for review of applications for a new class of new technology
intraocular lenses must be sent by regular mail to: ASC/NTIOL, Division
of Outpatient Care, Mailstop C4-05-17, Centers for Medicare & Medicaid
Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

FOR FURTHER INFORMATION CONTACT: Alberta Dwivedi, (410) 786-0378,
Hospital outpatient prospective payment issues.
Dana Burley, (410) 786-0378, Ambulatory surgical center issues.
Suzanne Asplen, (410) 786-4558, Partial hospitalization and
community mental health center issues.
Sheila Blackstock, (410) 786-3502, Reporting of quality data
issues.
Jacqueline Morgan, (410) 786-4282, Joan A. Moliki, (410) 786-5526,
Steve Miller, (410) 786-6656, and Jeannie Miller, (410) 786-3164,
Ambulatory

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surgical center Conditions for Coverage issues.
Marcia Newton, (410) 786-5265, and Karen Tritz, (410) 786-8021,
Clarification of provider and supplier termination policy issues.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://
www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection 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. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.

Electronic Access

This Federal Register document is also available from the Federal
Register online database through 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 This Final Rule With Comment
Period

AAAASF American Association for Accreditation of Ambulatory Surgical
Facilities
AAAHC Accreditation Association for Ambulatory Health Care
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
APC Ambulatory payment classification
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CfC Condition for Coverage
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition,
2007, 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, Public Law 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, Public Law 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME Graduate medical education
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,
Public Law 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPE Initial preventive physical examination
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
MIEA-TRHCA Medicare Improvements and Extension Act under Division B,
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia vaccine
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
[Program]
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, Public Law
97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
WAC Wholesale acquisition cost

In this document, we address two payment systems under the Medicare
program: The hospital outpatient prospective payment system (OPPS) and
the revised ambulatory surgical center (ASC) payment system. The
provisions relating to the OPPS are included in sections I. through
XIV., XVI., XVII., and XIX. through XXIII. of this final rule with
comment period and in Addenda A, B, C (Addendum C is available on the
Internet only; we refer readers to section XIX. of this final rule with
comment period), D1, D2, E, L, and M to this final rule with comment
period. The provisions related to the revised ASC payment system are
included in sections XV. and XIX. through XXIII. of this final rule
with comment period and in Addenda AA, BB, DD1, DD2, and EE

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to this final rule with comment period. (Addendum EE is available on
the Internet only; we refer readers to section XIX. of this final rule
with comment period.)
In this document, we also address changes to the ASC Conditions for
Coverage (CfCs). The provisions relating to the ASC CfCs are included
in sections XV., XIX., XX.B., and XXIII. of this document. In addition,
in this document, we clarify policy regarding the Secretary's ability
to terminate Medicare providers and suppliers (in this case, transplant
centers) during an appeal of a determination that affects participation
in the Medicare Program. This clarification is included in section
XVIII. of this document.

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, Medicaid, and SCHIP Extension Act
of 2007
1. Increase in Physician Payment Update
2. Extended Expiration Date for Cost-Based OPPS Payment for
Brachytherapy Sources and Therapeutic Radiopharmaceuticals
3. Alternative Volume Weighting in Computation of Average Sales
Price (ASP) for Medicare Part B Drugs
4. Extended Expiration Date for Certain IPPS Wage Index
Geographic Reclassification and Special Exceptions
F. Provisions of the Medicare Improvements for Patients and
Providers Act of 2008
1. Improvements to Coverage of Preventive Services
2. Extended Expiration Date for Certain IPPS Wage Index
Geographic Reclassifications and Special Exceptions
3. Increase in Physician Payment Update
4. Extension of Expiration Date for Cost-Based OPPS Payment for
Brachytherapy and Therapeutic Radiopharmaceuticals
5. Extension and Expansion of the Medicare Hold Harmless
Provision Under the OPPS for Certain Hospitals
G. Summary of the Major Contents of the CY 2009 OPPS/ASC
Proposed Rule
1. Updates Affecting OPPS Payments
2. OPPS Ambulatory Payment Classification (APC) Group Policies
3. OPPS Payment for Devices
4. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
5. Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. OPPS Payment for Brachytherapy Sources
7. OPPS Payment for Drug Administration Services
8. OPPS Payment for Hospital Outpatient Visits
9. Payment for Partial Hospitalization Services
10. Procedures That Will Be Paid Only as Inpatient Services
11. OPPS Nonrecurring Technical and Policy Clarifications
12. OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Update of the Revised Ambulatory Surgical Center (ASC)
Payment System
15. Reporting Quality Data for Annual Payment Rate Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
H. Public Comments Received in Response to the CY 2009 OPPS/ASC
Proposed Rule
I. Public Comments Received in Response to the November 27, 2007
OPPS/ASC Final Rule With Comment Period
J. Proposed Rule on ASC Conditions for Coverage
K. Medicare Hospital Conditions of Participation: Requirements
for Approval and Re-Approval of Transplant Programs To Perform
Transplants--Clarification of Provider and Supplier Termination
Policy
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure Claims
c. Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Calculation of Median Costs
a. Claims Preparations
b. Splitting Claims and Creation of ``Pseudo'' Single Claims
(1) Splitting Claims
(2) Creation of ``Pseudo'' Single Claims
c. Completion of Claim Records and Median Cost Calculations
d. Calculation of Single Procedure APC Criteria-Based Median
Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests
(4) Echocardiography Services
(5) Nuclear Medicine Services
(6) Hyperbaric Oxygen Therapy
(7) Payment for Ancillary Outpatient Services When Patient
Expires (-CA Modifier)
e. Calculation of Composite APC Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002
and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite
APC (APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Calculation of OPPS Scaled Payment Weights
4. Changes to Packaged Services
a. Background
b. Service-Specific Packaging Issues
(1) Package Services Addressed by APC Panel Recommendations
(2) Intravenous Immune Globulin (IVIG) Preadministration-Related
Services
(3) Other Service-Specific Packaging Issues
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. OPPS Payments to Certain Rural and Other Hospitals
1. Hold Harmless Transitional Payment Changes Made by Public Law
110-275 (MIPPA)
2. Adjustment for Rural SCHs Implemented in CY 2006 Related to
Public Law 108-173 (MMA)
F. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Outlier Reconciliation
G. Calculation of an Adjusted Medicare Payment from the National
Unadjusted Medicare Payment
H. Beneficiary Copayments
1. Background
2. Copayment Policy
3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New HCPCS and CPT Codes
1. Treatment of New HCPCS Codes Included in the April and July
Quarterly OPPS Updates for CY 2008
2. Treatment of New Category I and III CPT Codes and Level II
HCPCS Codes
B. OPPS 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. Background
2. Movement of Procedures from New Technology APCs to Clinical
APCs
D. OPPS APC-Specific Policies
1. Apheresis and Stem Cell Processing Services
a. Low Density Lipoprotein (LDL) Apheresis (APC 0112)
b. Bone Marrow and Stem Cell Processing Services (APC 0393)
2. Genitourinary Procedures
a. Implant Injection for Vesicoureteral Reflex (APC 0163)
b. Laparoscopic Ablation of Renal Mass (APC 0132)
c. Percutaneous Renal Cryoablation (APC 0423)
d. Magnetic Resonance Guided Focused Ultrasound (MRgFus)
Ablation of Uterine Fibroids (APC 0067)
e. Prostatic Thermotherapy (APC 0429)
3. Nervous System Procedures
a. Magnetoencephalography (MEG) (APC 0067)
b. Chemodenervation (APC 0204)
4. Ocular Procedures
a. Suprachoroidal Delivery of Pharmacologic Agent (APC 0237)
b. Scanning Opthalmic Imaging (APC 0230)
5. Orthopedic Procedures
a. Closed Treatment Fracture of Finger/Toe/Trunk (APCs 0129,
0138, and 0139)

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b. Arthroscopic and Other Orthopedic Procedures (APCs 0041 and
0042)
c. Surgical Wrist Procedures (APCs 0053 and 0054)
d. Intercarpal or Carpometacarpal Arthroplasty (APC 0047)
e. Insertion of Posterior Spinous Process Distraction Device
(APC 0052)
6. Radiation Therapy Services
a. Proton Beam Therapy (APCs 0664 and 0667)
b. Implantation of Interstitial Devices (APC 0310)
c. Stereotactic Radiosurgery (SRS) Treatment Delivery Services
(APCs 0065, 0066, and 0067)
7. Other Procedures and Services
a. Negative Pressure Wound Therapy (APC 0013)
b. Endovenous Ablation (APCs 0091 and 0092)
c. Unlisted Antigen Skin Testing (APC 0341)
d. Home International Normalized Ratio (INR) Monitoring (APC
0607)
e. Mental Health Services (APCs 0322, 0323, 0324, and 0325)
f. Trauma Response Associated With Hospital Critical Care
Services (APC 0618)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. Final Policy
2. Provisions for Reducing Transitional Pass-Through Payments To
Offset Costs Packaged Into APC Groups
a. Background
b. Final Policy
B. Adjustment to OPPS Payments for No Cost/Full Credit and
Partial Credit Devices
1. Background
2. APCs and Devices Subject to the Adjustment Policy
V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals With Expiring Pass-Through Status in CY
2008
3. Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2009
4. Reduction of Transitional Pass-Through Payments for
Diagnostic Radiopharmaceuticals To Offset Costs Packaged Into APC
Groups
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Status
1. Background
2. Criteria for Packaging Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals
c. Payment for Diagnostic Radiopharmaceuticals and Contrast
Agents
3. Payment for Drugs and Biologicals Without Pass-Through Status
That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs
b. Payment Policy
c. Payment for Blood Clotting Factors
4. Payment for Therapeutic Radiopharmaceuticals
a. Background
b. Payment Policy
5. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, but Without OPPS Hospital
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Brachytherapy Sources
A. Background
B. OPPS Payment Policy
VIII. OPPS Payment for Drug Administration Services
A. Background
B. Coding and Payment for Drug Administration Services
IX. OPPS Payment for Hospital Outpatient Visits
A. Background
B. Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update
C. Policy Changes
1. Policy to Deny Payment for Low Intensity Days
2. Policy to Strengthen PHP Patient Eligibility
3. Partial Hospitalization Coding Update
D. Separate Threshold for Outlier Payments to CMHCs
XI. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Changes and
Clarifications
A. Physician Supervision of HOPD Services
B. Reporting of Pathology Services for Prostrate Saturation
Biopsy
C. Changes to the Initial Preventive Physical Examination (IPPE)
D. Reporting of Wound Care Services
E. Standardized Cognitive Performance Testing
XIII. OPPS Payment Status and Comment Indicators
A. OPPS Payment Status Indicator Definitions
1. Payment Status Indicators To Designate Services That Are Paid
Under the OPPS
2. Payment Status Indicators To Designate Services That Are Paid
Under a Payment System Other Than the OPPS
3. Payment Status Indicators To Designate Services That Are Not
Recognized Under the OPPS but That May Be Recognized by Other
Institutional Providers
4. Payment Status Indicators To Designate Services That Are Not
Payable by Medicare on Outpatient Claims
B. Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. Medicare Payment Advisory Commission (MedPAC) Recommendations
1. March 2008 Report
2. June 2007 Report
B. APC Panel Recommendations
C. OIG Recommendations
XV. Ambulatory Surgical Centers: Updates and Revisions to the
Ambulatory Surgical Center Conditions for Coverage and Updates to
the Revised Ambulatory Surgical Center Payment System
A. Legislative and Regulatory Authority for the ASC Conditions
for Coverage
B. Updates and Revisions to the ASC Conditions for Coverage
1. Background
2. Provisions of the Proposed and Final Regulations
a. Definitions (Sec. 416.2)
b. Specific Conditions for Coverage
(1) Condition for Coverage: Governing Body and Management (Sec.
416.41)
(2) Condition for Coverage: Quality Assessment and Performance
Improvement (QAPI) (Sec. 416.43)
(3) Condition for Coverage: Laboratory and Radiologic Services
(Sec. 416.49)
(4) Condition for Coverage: Patients Rights (Sec. 416.50)
(5) Condition for Coverage: Infection Control (Sec. 416.51)
(6) Condition for Coverage: Patient Admission, Assessment and
Discharge (Sec. 416.52)
c. Comments Outside the Scope of the Proposed Rule
C. Updates of the Revised ASC Payment System
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
D. Treatment of New Codes
1. Treatment of New Category I and III CPT Codes and Level II
HCPCS Codes
2. Treatment of New Level II HCPCS Codes Implemented in April
and July 2008
E. Update to the List of ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered Surgical Procedures
b. Covered Surgical Procedures Designated as Office-Based
(1) Background
(2) Changes to Covered Surgical Procedures Designated as Office-
Based for CY 2009
c. Covered Surgical Procedures Designated as Device-Intensive
(1) Background
(2) Changes to List of Covered Surgical Procedures Designated as
Device-Intensive for CY 2009
d. Surgical Procedures Removed from the OPPS Inpatient List for
CY 2009

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2. Covered Ancillary Services
F. ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. Payment for Covered Surgical Procedures
a. Background
b. Update to ASC Covered Surgical Procedure Payment Rates for CY
2009
c. Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
2. Payment for Covered Ancillary Services
a. Background
b. Payment for Covered Ancillary Services for CY 2009
G. New Technology Intraocular Lenses (NTIOLs)
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Request for Payment
Adjustment
a. Background
b. Requests To Establish New NTIOL Class for CY 2009
4. Payment Adjustment
5. ASC Payment for Insertion of IOLs
6. Announcement of CY 2009 Deadline for Submitting Requests for
CMS Review of Appropriateness of ASC Payment for Insertion of an
NTIOL Following Cataract Surgery
H. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
I. Calculation of the ASC Conversion Factor and ASC Payment
Rates
1. Background
2. Policy Regarding Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2009 and
Future Years
b. Updating the ASC Conversion Factor
3. Display of ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient Quality Data for Annual Payment
Update
2. Reporting ASC Quality Data for Annual Payment Update
3. Reporting Hospital Inpatient Quality Data for Annual Payment
Update
B. Hospital Outpatient Measures for CY 2009
C. Quality Measures for CY 2010 and Subsequent Calendar Years
and the Process To Update Measures
1. Quality Measures for CY 2010 Payment Determinations
2. Process for Updating Measures
3. Possible New Quality Measures for CY 2011 and Subsequent
Calendar Years
D. Payment Reduction for Hospitals That Fail To Meet the HOP
QDRP Requirements for the CY 2009 Payment Update
1. Background
2. Reduction of OPPS Payments for Hospitals That Fail To Meet
the HOP QDRP CY 2009 Payment Update Requirements
a. Calculation of Reduced National Unadjusted Payment Rates
b. Calculation of Reduced Minimum Unadjusted and National
Unadjusted Beneficiary Copayments
c. Treatment of Other Payment Adjustments
E. Requirements for HOPD Quality Data Reporting for CY 2010 and
Subsequent Calendar Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
3. HOP QDRP Validation Requirements
a. Data Validation Requirements for CY 2010
b. Alternative Data Validation Approaches for CY 2011
F. Publication of HOP QDRP Data
G. HOP QDRP Reconsideration and Appeals Procedures
H. Reporting of ASC Quality Data
I. FY 2010 IPPS Quality Measures under the RHQDAPU Program
XVII. Healthcare-Associated Conditions
A. Background
B. Expanding the Principles of the IPPS Hospital-Acquired
Conditions Payment Provision to the OPPS
1. Criteria for Possible Candidate OPPS Conditions
2. Collaboration Process
3. Potential OPPS Healthcare-Associated Conditions
4. OPPS Infrastructure and Payment for Encounters Resulting in
Healthcare-Associated Conditions
XVIII. Medicare Hospital Conditions of Participation: Requirements
for Approval and Re-Approval of Transplant Programs To Perform
Transplants; Clarification of Provider and Supplier Termination
Policy
XIX. Files Available to the Public Via the Internet
A. Information in Addenda Related to the CY 2009 Hospital OPPS
B. Information in Addenda Related to the CY 2009 ASC Payment
System
XX. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
B. ASC Conditions for Coverage Collections
1. Condition for Coverage--Governing Body and Management (Sec.
416.41)
2. Condition for Coverage--Quality Assessment and Performance
Improvement (Sec. 416.43)
3. Condition for Coverage--Patient Rights (Sec. 416.50)
4. Condition for Coverage--Patient Admission, Assessment and
Discharge (Sec. 416.52)
5. Revisions to the CfCs on Infection Control in This Final Rule
(Sec. 416.51)
C. Associated Information Collections Not Specified in
Regulatory Text
XXI. Waiver of Proposed Rulemaking
XXII. Response to Comments
XXIII. 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 OPPS Changes in This Final Rule With Comment
Period
1. Alternatives Considered
a. Alternatives Considered for Payment of Multiple Imaging
Procedures
b. Alternatives Considered for the HOP QDRP Requirements for the
CY 2009 Payment Update
c. Alternatives Considered Regarding OPPS Cost Estimation for
Relative Payment Weights
2. Limitation of Our Analysis
3. Estimated Effects of This Final Rule With Comment Period on
Hospitals
4. Estimated Effects of This Final Rule With Comment Period on
CMHCs
5. Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Final Rule With
Comment Period
1. Alternatives Considered
a. Office-Based Procedures
b. Covered Surgical Procedures
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule With Comment Period on
ASCs
4. Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Final Requirements for Reporting of Quality Data
for Annual Hospital Payment Update
E. Effects of ASC Conditions for Coverage Changes in This Final
Rule
1. Effects on ASCs
a. Effects of the Governing Body and Management Provision
b. Effects of the QAPI Provision
c. Effects of the Laboratory and Radiologic Services Provision
d. Effects of the Patient Rights Provision
e. Effects of the Infection Control Provision
f. Effects of the Patient Admission, Assessment and Discharge
Provision
2. Alternatives Considered
a. Alternatives to the Governing Body and Management Provision
b. Alternatives to the QAPI Provision
c. Alternatives to the Patient Rights Provision
d. Alternatives to the Discharge Provision
3. Conclusion
F. Executive Order 12866
Regulation Text
Addenda
Addendum A--OPPS APCs for CY 2009
Addendum AA--ASC Covered Surgical Procedures for CY 2009
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--OPPS Payment by HCPCS Code for CY 2009
Addendum BB--ASC Covered Ancillary Services Integral to Covered
Surgical Procedures for CY 2009 (Including Ancillary Services for
Which Payment Is Packaged)
Addendum D1--OPPS Payment Status Indicators
Addendum DD1--ASC Payment Indicators
Addendum D2--OPPS Comment Indicators
Addendum DD2--ASC Comment Indicators
Addendum E--HCPCS Codes That Would Be Paid Only as Inpatient
Procedures for CY 2009

[[Page 68507]]

Addendum EE--Surgical Procedures Excluded from Payment in ASCs
Addendum L--Out-Migration Adjustment
Addendum M--HCPCS Codes for Assignment to Composite APCs for CY
2009

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.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital
outpatient prospective payment system (OPPS). The Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub.
L. 106-554) made further changes in the OPPS. The Medicare Prescription
Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-
173) also amended Section 1833(t) of the Act. The Deficit Reduction Act
(DRA) of 2005 (Pub. L. 109-171), enacted on February 8, 2006, also made
additional changes in the OPPS. In addition, the Medicare Improvements
and Extension Act under Division B of Title I of the Tax Relief and
Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432), enacted on
December 20, 2006, made further changes in the OPPS. Further, the
Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 (Pub. L.
110-173), enacted on December 29, 2007, made additional changes in the
OPPS. We also note that the Medicare Improvements for Patients and
Providers Act (MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15,
2008, made further changes to the OPPS. A discussion of these changes
related to the MMSEA are included in sections I.E., II.C., V., and VII.
of this final rule with comment period and those related to the MIPPA
are included in sections I.F., II.C., II.E.1., V., VII., and XII.C.
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 basis that varies according to the ambulatory payment
classification (APC) group to which the service is assigned. We use the
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 final rule with comment period.
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 Public Law 108-173 added provisions for Medicare coverage for 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 hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, 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 generally use the median cost of the item or service assigned to an
APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
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 Public Law 108-173 amended section 1833(t)(1)(B)(iv) of
the Act to exclude payment for screening and diagnostic mammography
services from the OPPS. The Secretary exercised the authority granted
under the statute to also 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 (CLFS); 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

[[Page 68508]]

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 that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. We published in the Federal Register on November 27, 2007
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580). 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
2008 OPPS on the basis of claims data from January 1, 2006, through
December 31, 2006, and to implement certain provisions of Public Law
108-173 and Public Law 109-171. In addition, we responded to public
comments received on the provisions of the November 26, 2006 final rule
with comment period (71 FR 67960) pertaining to the APC assignment of
HCPCS codes identified in Addendum B to that rule with the new interim
(NI) comment indicator; and public comments received on the August 2,
2007 OPPS/ASC proposed rule for CY 2008 (72 FR 42628).
Subsequent to publication of the CY 2008 OPPS/ASC final rule with
comment period, we published in the Federal Register on February 22,
2008, a correction notice (73 FR 9860) to correct certain technical
errors in the CY 2008 OPPS/ASC final rule with comment period.
On July 18, 2008, we issued in the Federal Register (73 FR 41416) a
proposed rule for the CY 2009 OPPS/ASC payment system to implement
statutory requirements and changes arising from our continuing
experience with both systems. Subsequent to issuance of the CY 2009
OPPS/ASC proposed rule, we published in the Federal Register on August
11, 2008 a correction notice (73 FR 46575) to replace Table 30 included
the CY 2009 OPPS/ASC proposed rule.

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, and redesignated by section 202(a)(2) 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 Classification (APC) Groups
(the APC Panel), discussed under section I.D.2. of this final rule with
comment period, fulfills these requirements. The APC Panel is not
restricted to using data compiled by CMS, and it 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 (currently employed full-time,
not as consultants, in their respective areas of expertise) subject to
the OPPS, reviews clinical data and advises CMS about the clinical
integrity of the APC groups and their payment weights. The APC Panel is
technical in nature, and it is governed by the provisions of the
Federal Advisory Committee Act (FACA). Since its initial chartering,
the Secretary has renewed the APC Panel's charter three times: On
November 1, 2002; on November 1, 2004; and on November 21, 2006. The
current charter specifies, 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 designated
by the Secretary.
The current APC Panel membership and other information pertaining
to the APC Panel, including its charter, Federal Register notices,
membership, meeting dates, agenda topics, and meeting reports can be
viewed on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1,
2001. Since the initial meeting, the APC Panel has held 15 subsequent
meetings, with the last meeting taking place on August 27 and 28, 2008.
Prior to each meeting, we publish a notice in the Federal Register to
announce the meeting and, when necessary, to solicit nominations for
APC Panel membership and to announce new members.
The APC Panel has established an operational structure that, in
part, includes the use of three subcommittees to facilitate its
required APC review process. At its March 2008 meeting, the APC Panel
recommended that the Observation and Visit Subcommittee's name be
changed to the ``Visits and Observation Subcommittee.'' As stated in
the CY 2009 OPPS/ASC proposed rule (73 FR 41421), we are accepting this
recommendation and are referring to the subcommittee by its new name,
as appropriate, throughout this final rule with comment period. Thus,
the three current subcommittees are the Data Subcommittee, the Visits
and 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
Visits and Observation Subcommittee reviews and makes recommendations
to the APC Panel on all technical issues pertaining to observation
services and hospital outpatient visits paid under the OPPS (for
example, APC configurations and APC payment weights). The Packaging
Subcommittee studies and makes recommendations on issues pertaining to
services that are not separately payable under the OPPS, but whose
payments are bundled or packaged into APC payments. Each of these
subcommittees was established by a majority vote from the full APC
Panel during a scheduled APC Panel meeting, and their continuation as
subcommittees was last approved at the August 2008 APC Panel meeting.
At that meeting, the Panel recommended that the work of these three
subcommittees continue, and we are accepting that recommendation. All
subcommittee recommendations are discussed and voted upon by the full
APC Panel.
Discussions of the recommendations resulting from the APC Panel's
March and August 2008 meetings are included in the sections of this
final rule that are specific to each recommendation. For

[[Page 68509]]

discussions of earlier APC Panel meetings and recommendations, we refer
readers to previously published hospital OPPS final rules, the Web site
mentioned earlier in this section, or the FACA database at http://
fido.gov/facadatabase/public.asp.
During the comment period for the CY 2009 OPPS/ASC proposed rule,
we received several public comments regarding representation on the APC
Panel.
Comment: Several commenters requested that CMS include a designated
ASC representative on the APC Panel. The commenters believed that,
because the ASC payment system is based on the same APC groups and
relative payment weights as the OPPS, ASC representation on the APC
Panel would ensure input from representatives of all the care settings
providing surgical services whose payment groups and payment weights
are affected by the OPPS.
Response: We acknowledge that the revised ASC payment system
provides Medicare payment to ASCs for surgical procedures that is
based, in most cases, on the relative payment weights of the OPPS.
However, CMS is statutorily required to have an appropriate selection
of representatives of ``providers'' as members of the APC Panel.
Specifically, the current APC Panel charter requires that ``Each
Panel member must be employed full-time by a hospital, hospital system,
or other Medicare provider subject to payment under the OPPS,'' which
does not include ASCs because ASCs are not providers. We refer readers
to section 1833(t)(9)(A) of the Act and Sec. 400.202 of our
regulations for specific requirements and definitions. The charter must
comply with the statute, which does not include representatives of
suppliers on the APC Panel. However, we understand the concerns of
commenters regarding their interest in ASC input on the APC Panel now
that the ASC payment system is based on the OPPS relative payment
weights.

E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of
2007

The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007
(Pub. L. 110-173), enacted on December 29, 2007, includes the following
provisions that affect the OPPS and the revised ASC payment system:
1. Increase in Physician Payment Update
Section 101 of the MMSEA provided a 0.5 percent increase in the
physician payment update from January 1, 2008 through June 30, 2008;
revised the Physician Assistance and Quality Initiative Fund, and
extended through 2009 the physician quality reporting system. We refer
readers to section XV. of this final rule with comment period for
discussion of the effect of this provision on services paid under the
revised ASC payment system.
2. Extended Expiration Date for Cost-Based OPPS Payment for
Brachytherapy Sources and Therapeutic Radiopharmaceuticals
Section 106 of the MMSEA amended section 1833(t)(16)(C) of the Act,
as amended by section 107 of the MIEA-TRCHA, to extend for an
additional 6 months, through June 30, 2008, payment for brachytherapy
devices at hospitals' charges adjusted to costs and to mandate that the
same cost-based payment methodology apply to therapeutic
radiopharmaceuticals for the same extended payment period. We refer
readers to sections V.B.4. and VII. of this final rule with comment
period for discussion of this provision. We also note that section 142
of Public Law 110-275 further extended this provision, as discussed in
section I.F.4. of this final rule with comment period.
3. Alternative Volume Weighting in Computation of Average Sales Price
(ASP) for Medicare Part B Drugs
Section 112 of the MMSEA amended section 1847A(b) of the Act to
provide for application of alternative volume weighting in computing
the ASP for payment of Medicare Part B multiple source and single
source drugs furnished after April 1, 2008, and for a special rule,
beginning April 1, 2008, for payment of single source drugs or
biologicals treated as a multiple source drug. This provision is
discussed in section V. of this final rule with comment period.
4. Extended Expiration Date for Certain IPPS Wage Index Geographic
Reclassifications and Special Exceptions
Section 117 of the MMSEA extended through September 30, 2008, both
the reclassifications that were extended by section 106 of MIEA-TRCHA
as well as certain special exception wage indices referenced in the FY
2005 IPPS final rule (69 FR 49105 and 49107). We refer readers to
section II.C. of this final rule with comment for discussion of this
provision. We also note that section 124 of Public Law 110-275 further
extended this provision through September 30, 2009, as discussed under
section I.F.2. of this final rule with comment period.

F. Provisions of the Medicare Improvements for Patients and Providers
Act of 2008

The Medicare, Improvements for Patients and Providers Act (MIPPA)
of 2008 (Pub. L. 110-275), enacted on July 15, 2008, includes the
following provisions that affect the OPPS and the revised ASC payment
system:
1. Improvements to Coverage of Preventive Services
Section 101(b) of the MIPPA amended section 1861 of the Act, as
amended by section 114 of the MMSEA, to make several changes to the
Initial Preventive Physical Examination (IPPE) benefit, including
waiving the deductible and extending the period of eligibility for an
IPPE from 6 months to 12 months after the date of the beneficiary's
initial enrollment in Medicare Part B. Section 101(b) of the MIPPA also
removed the screening electrocardiagram (EKG) as a mandatory
requirement that is part of the IPPE and required that there be
education, counseling, and referral for an EKG, as appropriate, for a
once-in-a-lifetime screening EKG performed as a result of a referral
from an IPPE. The facility service for the screening EKG (tracing only)
is payable under the OPPS when it is the result of a referral from an
IPPE. The amendments apply to services furnished on or after January 1,
2009. We refer readers to section XII.C. of this final rule for
discussion of the HCPCS codes to be used for the IPPE and screening EKG
and the OPPS payment rates for services under this provision for CY
2009.
2. Extended Expiration Date for Certain IPPS Wage Index Geographic
Reclassifications and Special Exceptions
Section 124 of the MIPPA extended through September 30, 2009 the
hospital wage index reclassifications for hospitals reclassified under
section 508 of the MMA. MIPPA also extended through the last date of
the extension of the reclassifications under section 106(a) of the
MIEA-TRHCA certain special exception wage indices referenced in the FY
2005 IPPS final rule (69 FR 49105 and 49107) and that were extended by
section 117(a)(2) of the MMSEA. We refer readers to section II.C. of
this final rule with comment period for discussion of this provision.
3. Increase in Physician Payment Update
Section 131 of MIPPA increased the conversion factor by 1.1 percent
for CY 2009 and required that CY 2008 and CY 2009 payment updates have
no effect on payment rates for CY 2010 and subsequent years under the
MPFS. We

[[Page 68510]]

refer readers to section XV.F. of this final rule with comment period
for discussion of the effect of this provision on payment for covered
office-based surgical procedures and covered ancillary services paid
under the ASC payment system.
4. Extension of Expiration Date for Cost-Based OPPS Payment for
Brachytherapy and Therapeutic Radiopharmaceuticals
Section 142 of the MIPPA amended section 1833(t)(16)(C) of the Act,
as amended by section 106(a) of the MMSEA, and further extended the
payment period for brachytherapy devices sources and therapeutic
radiopharmaceuticals based on hospital's charges adjusted to cost
through December 31, 2009. We refer readers to sections V.B.4. and VII.
of this final rule with comment period for discussions of this
provision. We also refer readers to section XV.F. of this final rule
with comment period for discussion of the effect of this provision on
covered ancillary services paid under the ASC payment system.
5. Extension and Expansion of the Medicare Hold Harmless Provision
Under the OPPS for Certain Hospitals
Section 147 of the MIPPA amended section 1833(t)(7)(D)(i) of the
Act by extending the hold harmless payments (85 percent of the
difference between the prospective payment system amount under the OPPS
and the pre-BBA amount) for covered OPD services furnished by rural
hospitals with 100 beds or less through December 31, 2009. It also
expanded the same hold harmless payments to SCHs with 100 beds or fewer
for covered OPD services furnished on or after January 1, 2009, and
before January 1, 2010. We refer readers to section II.E. of this final
rule with comment period for discussion of this provision.

G. Summary of the Major Contents of the CY 2009 OPPS/ASC Proposed Rule

A proposed rule appeared in the July 18, 2008 Federal Register (73
FR 41416) that set forth proposed changes to the Medicare hospital OPPS
for CY 2009 to implement statutory requirements and changes arising
from our continuing experience with the system and to implement certain
new statutory provisions. In addition, we proposed changes to the
revised Medicare ASC payment system for CY 2009, including updated
payment weights and covered ancillary services based on the proposed
OPPS update. Finally, we set forth proposed quality measures for the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP) for
reporting quality data for annual payment rate updates for CY 2010 and
subsequent calendar years, the requirements for data collection and
submission for the annual payment update, and a proposed reduction in
the OPPS payment for hospitals that fail to meet the HOP QDRP
requirements for CY 2009, in accordance with the statutory requirement.
The following is a summary of the major changes included in the CY 2009
OPPS/ASC proposed rule:
1. Updates Affecting OPPS Payments
In section II. of the proposed rule, we set forth--
The methodology used to recalibrate the proposed APC
relative payment weights.
The proposed changes to packaged services.
The proposed update to the conversion factor used to
determine payment rates under the OPPS. In this section we set forth
changes in the amounts and factors for calculating the full annual
update increase to the conversion factor.
The proposed retention of our current policy to use the
IPPS wage indices to adjust, for geographic wage differences, the
portion of the OPPS payment rate and the copayment standardized amount
attributable to labor-related cost.
The proposed update of statewide average default CCRs.
The proposed application of hold harmless transitional
outpatient payments (TOPs) for certain small rural hospitals.
The proposed payment adjustment for rural SCHs.
The proposed calculation of the hospital outpatient
outlier payment.
The calculation of the proposed national unadjusted
Medicare OPPS payment.
The proposed beneficiary copayments for OPPS services.
2. OPPS Ambulatory Payment Classification (APC) Group Policies
In section III. of the proposed rule, we discussed the proposed
additions of new procedure codes to the APCs; our proposal to establish
a number of new APCs; and our analyses of Medicare claims data and
certain recommendations of the APC Panel. We also discussed the
application of the 2 times rule and proposed exceptions to it; proposed
changes to specific APCs; and proposed movement of procedures from New
Technology APCs to clinical APCs.
3. OPPS Payment for Devices
In section IV. of the proposed rule, we discussed proposed pass-
through payment for specific categories of devices and the proposed
adjustment for devices furnished at no cost or with partial or full
credit.
4. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
In section V. of the proposed rule, we discussed proposed CY 2009
OPPS payment for drugs, biologicals, and radiopharmaceuticals,
including the proposed payment for drugs, biologicals, and
radiopharmaceuticals with and without pass-through status.
5. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
In section VI. of the proposed rule, we discussed the estimate of
CY 2009 OPPS transitional pass-through spending for drugs, biologicals,
and devices.
6. OPPS Payment for Brachytherapy Sources
In section VII. of the proposed rule, we discussed our proposal
concerning coding and payment for brachytherapy sources.
7. OPPS Payment for Drug Administration Services
In section VIII. of the proposed rule, we set forth our proposed
policy concerning payment and coding for drug administration services.
8. OPPS Payment for Hospital Outpatient Visits
In section IX. of the proposed rule, we set forth our proposed
policies for the payment of clinic and emergency department visits and
critical care services based on claims paid under the OPPS.
9. Payment for Partial Hospitalization Services
In section X. of the proposed rule, we set forth our proposed
payment for partial hospitalization services, including the proposed
separate threshold for outlier payments for CMHCs.
10. Procedures That Will Be Paid Only as Inpatient Procedures
In section XI. of the proposed rule, we discussed the procedures
that we proposed to remove from the inpatient list and assign to APCs.

[[Page 68511]]

11. OPPS Nonrecurring Technical and Policy Clarifications
In section XII. of the proposed rule, we set forth our nonrecurring
technical issues and policy clarifications.
12. OPPS Payment Status and Comment Indicators
In section XIII. of the proposed rule, we discussed our proposed
changes to the definitions of status indicators assigned to APCs and
presented our proposed comment indicators for the final rule with
comment period.
13. OPPS Policy and Payment Recommendations
In section XIV. of the proposed rule, we addressed recommendations
made by the Medicare Payment Advisory Commission (MedPAC) in its June
2007 and March 2008 reports to Congress, by the APC Panel regarding the
OPPS for CY 2009, and by the Office of the Inspector General (OIG) in
its June 2007 report.
14. Update of the Revised Ambulatory Surgical Center Payment System
In section XV. of the proposed rule, we discussed the proposed
update of the revised ASC payment system payment rates for CY 2009.
15. Reporting of Hospital Outpatient Quality Data for Annual Hospital
Payment Rate Updates and CY 2009 Payment Reduction
In section XVI. of the proposed rule, we discussed the proposed
quality measures for reporting hospital outpatient quality data for the
annual payment update factor for CY 2010 and subsequent calendar years,
set forth the requirements for data collection and submission for the
annual payment update, and proposed a reduction in the OPPS payment for
hospitals that fail to meet the HOP QDRP requirements for CY 2009.
16. Healthcare-Associated Conditions
In section XVII. of the proposed rule, we discussed considerations
related to potentially extending the principle of Medicare not paying
more for the preventable healthcare-associated conditions acquired
during inpatient stays paid under the IPPS to other Medicare payment
systems for healthcare-associated conditions that occur or result from
care in other settings.
17. Regulatory Impact Analysis
In section XXI. of the proposed rule, we set forth an analysis of
the impact the proposed changes would have on affected entities and
beneficiaries.

H. Public Comments Received in Response to the CY 2009 OPPS/ASC
Proposed Rule

We received approximately 2,390 timely pieces of correspondence
containing multiple comments on the CY 2009 OPPS/ASC proposed rule. We
note that we received some comments that were outside the scope of the
CY 2009 OPPS/ASC proposed rule, including public comments on new CY
2009 HCPCS codes that were not presented in the CY 2009 OPPS/ASC
proposed rule. These comments are not addressed in this CY 2009 OPPS/
ASC final rule with comment period. New CY 2009 HCPCS codes are
designated with comment indicator ``NI'' in Addenda B, AA, and BB to
this final rule with comment period, to signify that their CY 2009
interim OPPS and/or ASC treatment is open to public comment on this
final rule with comment period. Summaries of the public comments that
are within the scope of the proposals and our responses to those
comments are set forth in the various sections of this final rule with
comment period under the appropriate headings.

I. Public Comments Received on the November 27, 2007 OPPS/ASC Final
Rule With Comment Period

We received approximately 507 timely items of correspondence on the
CY 2008 OPPS/ASC final rule with comment period, some of which
contained multiple comments on the interim APC assignments and/or
status indicators of HCPCS codes identified with comment indicator
``NI'' in Addendum B to that final rule with comment period. Summaries
of those public comments on topics open to comment in the CY 2008 OPPS/
ASC final rule with comment period and our responses to them are set
forth in the various sections of this final rule with comment period
under the appropriate headings.

J. Proposed Rule on ASC Conditions for Coverage

On August 31, 2007, we published in the Federal Register (72 FR
50470) a proposed rule to update the ASC Conditions for Coverage (CfCs)
by revising some of the definitions and revising the CfCs on governing
body and management and laboratory and radiologic services to reflect
current ASC practices; and to add several new CfCs on quality
assessment and performance improvement, patient rights, and patient
admission, assessment, and discharge to promote and protect patient
health and safety.
We received 30 timely items of correspondence on this proposed
rule. We present a summary of the provisions of the proposed rule, a
summary of the public comments received and our responses, and the
final policy provisions in section XV.B. of the preamble of this
document. (Hereinafter, we refer to this proposed rule as the 2007 ASC
CfCs proposed rule.)

K. Medicare Hospital Conditions of Participation: Requirements for
Approval and Re-Approval of Transplant Programs To Perform
Transplants--Clarification of Provider and Supplier Termination Policy

In section XVIII. of this document, we are clarifying policy set
forth in responses to public comments on a March 30, 2007 final rule
(72 FR 15198) regarding the Secretary's ability to terminate Medicare
providers and suppliers (in this case, transplant centers) during an
appeal of a determination that affects participation in the Medicare
program.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Weights

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. As discussed in
the November 13, 2000 interim final rule (65 FR 67824 through 67827),
except for some reweighting due to a small number of APC changes, these
relative payment weights continued to be in effect for CY 2001.
For CY 2009, we proposed to use the same basic methodology that we
described in the April 7, 2000 OPPS final rule with comment period to
recalibrate the APC relative payment weights for services furnished on
or after January 1, 2009, and before January 1, 2010 (CY 2009). That
is, we proposed to recalibrate the relative payment weights for each
APC based on claims and cost report data for outpatient services. We
proposed to use the most recent available data to construct the
database for calculating APC group weights. Therefore, for the purpose
of recalibrating the final APC relative payment weights for CY 2009, we
used approximately 140 million final action

[[Page 68512]]

claims for hospital outpatient department (HOPD) services furnished on
or after January 1, 2007, and before January 1, 2008. (For exact counts
of claims used, we refer readers to the claims accounting narrative
under supporting documentation for this final rule with comment period
on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/
HORD/.)
Of the 140 million final action claims for services provided in
hospital outpatient settings used to calculate the CY 2009 OPPS payment
rates for this final rule with comment period, approximately 107
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 107 million claims,
approximately 49 million were not for services paid under the OPPS or
were excluded as not appropriate for use (for example, erroneous cost-
to-charge ratios (CCRs) or no HCPCS codes reported on the claim). From
the remaining 58 million claims, we created approximately 99 million
single records, of which approximately 67 million were ``pseudo''
single claims (created from 26 million multiple procedure claims using
the process we discuss later in this section). Approximately 617,000
claims trimmed out on cost or units in excess of + /-3 standard
deviations from the geometric mean, yielding approximately 99 million
single bills for median setting. This number of ``pseudo'' and
``natural'' single bills is comparable to the 97 million single bills
that we used in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66589). In prior rules, we have reported the percentage of claims
that we were able to use to estimate APC median costs. However, our
refinement to the bypass process to accommodate the multiple imaging
composite methodology described in section II.A.2.e.(5) of this final
rule with comment period currently prevents us from providing an
accurate percentage. Because our refinement increased the number of
``pseudo'' single bills, we are confident that we are using a high
percentage of claims to estimate the final CY 2009 APC median costs. We
provide greater detail on this refinement in our claims accounting
narrative for this final rule with comment period that is posted on the
CMS Web site.
As proposed, the APC relative weights and payments for CY 2009 in
Addenda A and B to this final rule with comment period were calculated
using claims from CY 2007 that were processed on or before June 30,
2008, and continue to be based on the median hospital costs for
services in the APC groups. 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 continue
to believe that it is appropriate to use the most current full calendar
year claims data and the most recently submitted cost reports to
calculate the median costs which we proposed to convert to relative
payment weights for purposes of calculating the CY 2009 payment rates.
We did not receive any public comments on our proposal to base the
CY 2009 APC relative weights on the most currently available cost
reports and on claims for services furnished in CY 2007. Therefore, for
this reason and the reasons noted above in this section, we are
finalizing our data source for the recalibration of the CY 2009 APC
relative payment weights as proposed, without modification, as
described in this section of this final rule with comment period.
b. Use of Single and Multiple Procedure Claims
For CY 2009, in general, we proposed to continue to use single
procedure claims to set the medians on which the APC relative payment
weights would be based, with some exceptions as discussed below (73 FR
41423). We generally use single procedure claims to set the median
costs for APCs because we believe that the OPPS relative weights on
which payment rates are based should be appropriate when one and only
one procedure is furnished and 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. 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 claims for multiple procedures. As we have for several years, we
continued to use date of service stratification and a list of codes to
be bypassed to convert multiple procedure claims to ``pseudo'' single
procedure claims. Through 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 numerous separately paid procedures reported on the same date
on one claim. We refer to these newly created single procedure claims
as ``pseudo'' single claims because they were submitted by providers as
multiple procedure claims. The history of our use of a bypass list to
generate ``pseudo'' single claims is well documented, most recently in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66590
through 66597). In addition, for CY 2008, we increased packaging and
created the first composite APCs, which also increased the number of
bills we were able to use for median calculation by enabling us to use
claims that contained multiple major procedures that previously would
not have been usable. We refer readers to section II.A.2.e. of this
final rule with comment period for discussion of the use of claims to
establish median costs for composite APCs.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41423), we proposed to
continue to apply these processes to enable us to use as much claims
data as possible for ratesetting for the CY 2009 OPPS. This process
enabled us to create, for this final rule with comment period,
approximately 67 million ``pseudo'' single claims, including multiple
imaging composite ``single session'' bills (we refer readers to section
II.A.2.e.(5) of this final rule with comment period for further
discussion), and approximately 32 million ``natural'' single bills. For
this final rule with comment period, ``pseudo'' single procedure bills
represent 68 percent of all single bills used to calculate median
costs.
In the CY 2009 OPPS/ASC proposed rule (73FR 41424 through 41429),
we proposed to bypass 452 HCPCS codes for CY 2009 that were identified
in Table 1 of the proposed rule. We proposed to continue the use of the
codes on the CY 2008 OPPS bypass list. Since the inception of the
bypass list, we have calculated the percent of ``natural'' single bills
that contained packaging for each HCPCS code and the amount of
packaging in each ``natural'' single bill for each code. We have
generally retained the codes on the previous year's bypass list and
used the update year's data (for CY 2009, data available for the first
CY 2008 APC Panel meeting for services furnished on and after January
1, 2007 through and including September 30, 2007) to determine whether
it would be appropriate to add additional codes to the previous year's
bypass list. The entire list (including the codes that remained on the
bypass list from prior years) was open to public comment. We removed
two HCPCS codes from the CY 2008 bypass list for the CY 2009 proposal
because the codes were deleted on December 31, 2005, specifically C8951
(Intravenous infusion for therapy/diagnosis; each additional hour (List
separately in addition to C8950)) and C8955 (Chemotherapy

[[Page 68513]]

administration, intravenous; infusion technique, each additional hour
(List separately in addition to C8954)). We updated HCPCS codes on the
CY 2008 bypass list that were mapped to new HCPCS codes for CY 2009
ratesetting. We proposed to add to the bypass list all HCPCS codes not
on the CY 2008 bypass list that, using the APC Panel data, met the same
previously established empirical criteria for the bypass list that are
summarized below. We assumed that the representation of packaging in
the single claims for any given code was comparable to packaging for
that code in the multiple claims. The proposed criteria for the bypass
list were:
There are 100 or more single claims for the code. This
number of single claims ensures that observed outcomes are sufficiently
representative of packaging that might occur in the multiple claims.
Five percent or fewer of the single claims for the code
have packaged costs on that single claim for the code. This criterion
results in limiting the amount of packaging being redistributed to the
separately 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.
The median cost of packaging observed in the single claims
is 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 proposed to continue to include on the bypass list
HCPCS codes that CMS medical advisors believe have minimal associated
packaging based on their clinical assessment of the complete CY 2009
OPPS proposal. Some of these codes were identified by CMS medical
advisors and some were identified in prior years by commenters with
specialized knowledge of the services they requested be added to the
bypass list. To ensure clinical consistency in our treatment of related
services, we also proposed to add the other CPT add-on codes for drug
administration services to the CY 2009 bypass list, in addition to the
CPT codes for additional hours of infusion that were previously
included on the CY 2008 bypass list, because adding them enabled us to
use many correctly coded claims for initial drug administration
services that would otherwise not be available for ratesetting. The
result of this proposal was that the packaged costs associated with
add-on drug administration services were packaged into payment for the
initial administration service, as has been our payment policy for the
past 2 years for the CPT codes for additional hours of infusion.
We also proposed to add HCPCS code G0390 (Trauma response team
activation associated with hospital critical care service) because we
thought it was appropriate to attribute all of the packaged costs that
appear on a claim with HCPCS code G0390 and CPT code 99291 (Critical
care, evaluation and management of the critically ill or critically
injured patient; first 30-74 minutes) to CPT code 99291. If we had not
added HCPCS code G0390 to the bypass list, we would have had many fewer
claims to use to set the median costs for APCs 0617 (Critical Care) and
0618 (Trauma Response with Critical Care). By definition, we could not
have had any properly coded ``natural'' single bills for HCPCS code
G0390. Including HCPCS code G0390 on the bypass list allowed us to
create more ``pseudo'' single bills for CPT code 99291 and HCPCS code
G0390, and, therefore, to improve the accuracy of the median costs of
APCs 0617 and 0618 to which the two codes were assigned, respectively.
The Integrated Outpatient Code Editor (I/OCE) logic rejects a line for
HCPCS code G0390 if CPT code 99291 is not also reported on the claim.
Therefore, we could not assess whether HCPCS code G0390 would meet the
empirical criteria for inclusion on the bypass list because we had no
``natural'' single claims for HCPCS code G0390.
As a result of the multiple imaging composite APCs that we proposed
to establish for CY 2009 as discussed in section II.A.2.e.(5) of this
final rule with comment period, we noted that the ``pseudo'' single
converter logic for bypassed codes that are also members of multiple
imaging composite APCs would change. When creating the set of
``pseudo'' single claims, claims that contain ``overlap bypass codes,''
that is, those HCPCS codes that are both on the bypass list and are
members of the multiple imaging composite APCs, were identified first.
These HCPCS codes were then processed to create multiple imaging
composite ``single'' bills, that is, claims containing HCPCS codes from
only one imaging family, thus suppressing the initial use of these
codes as bypass codes. However, these ``overlap bypass codes'' were
retained on the bypass list because single unit occurrences of these
codes are identified as single bills at the end of the ``pseudo''
single processing logic. For this final rule with comment period, we
then reassessed the claims without suppression of the ``overlap bypass
codes'' under our longstanding ``pseudo'' single process to determine
whether we could convert additional claims to ``pseudo'' single claims.
(We refer readers to section II.A.2.c. of this final rule with comment
period for further discussion of the treatment of ``overlap bypass
codes.'') This process also created multiple imaging composite ``single
session'' bills that could be used for calculating composite APC median
costs. ``Overlap bypass codes'' that would be members of the proposed
multiple imaging composite APCs were identified by asterisks (*) in
Table 1 of the CY 2009 OPPS/ASC proposed rule.
Table 1 published in the CY 2009 OPPS/ASC proposed rule included
the proposed list of bypass codes for CY 2009. As noted in that
proposed rule (73 FR 41424 through 41429), that list contained bypass
codes that were appropriate to claims for services in CY 2007 and,
therefore, included codes that were deleted for CY 2008. Moreover,
there were codes on the proposed bypass list that were new for CY 2008
and which we indicated were appropriate additions to the bypass list in
preparation for use of the CY 2008 claims for creation of the CY 2010
OPPS. We specifically requested public comment on the proposed CY 2009
bypass list.
Comment: Several commenters indicated that review of the CY 2007
claims data on which the CY 2009 proposed OPPS was based revealed that
fewer than 10 percent of the billed lines for radiation oncology
guidance codes were used in setting the proposed CY 2009 OPPS payment
rates. They also asserted that more than a third of the billed lines
for Image Guided Radiation Therapy (IGRT) services were being packaged
into the single bills for services that are totally unrelated to
radiation oncology services, such as clinic visits. They believed that
this misassignment may have occurred in part as a result of the
inclusion of radiation oncology services on the bypass list.
Response: We examined the combinations of codes that occurred on
claims that contained guidance codes for radiation oncology services,
specifically CPT codes 76950 (Ultrasonic guidance for placement of
radiation therapy fields); 76965 (Ultrasonic guidance for interstitial
radioelement application); 77014 (Computed tomography guidance for
placement of radiation therapy fields); 77417 (Therapeutic radiology
port film(s)); and 77421 (Stereoscopic X-ray guidance for localization
of target volume for the delivery of radiation therapy), in our
proposed rule data. We found that, on some claims, the costs of

[[Page 68514]]

image guidance for radiation therapy services were being packaged into
the costs of other services such as visits, or were not available to be
correctly packaged. Therefore, those costs were not being appropriately
packaged into the radiation oncology services to which they were
incidental and supportive.
Our analysis indicated that the inclusion of radiation oncology
codes that failed to meet the empirical criteria for inclusion of the
codes on the bypass list was the most likely source of the problem. We
were unable to ensure that the radiation oncology codes that failed the
empirical criteria could be retained on the bypass list with confidence
that they would not result in incorrect or missing packaging for
guidance services. We therefore removed from the proposed CY 2009
bypass list all codes in the radiation oncology series of CPT,
specifically ranging from CPT code 77261 (Therapeutic radiology
treatment planning; simple) through and including CPT code 77799
(Unlisted procedure, clinical brachytherapy), that did not meet the
empirical criteria for inclusion on the bypass list based on CY 2009
proposed rule data. We had added many of these codes to the bypass list
after reviewing and accepting the recommendations of several commenters
to past OPPS proposed rules who believed that the codes were
appropriate for inclusion on the bypass list (71 FR 67970 and 72 FR
66591), although they failed to meet the empirical criteria for
inclusion on the bypass list.
Removing these codes from the bypass list for the CY 2009 OPPS
resulted in a reduction of approximately 1 million ``pseudo'' single
procedure claims but we believe that it resulted in more appropriate
assignment of packaged costs. In some cases, the removal of these codes
from the bypass list increased the median costs of APCs to which
radiation oncology services are assigned (for example, APC 0412 (IMRT
Treatment Delivery) and APC 0304 (Level I Therapeutic Radiation
Treatment Preparation)) and in other cases it reduced the ``pseudo''
single bills that were available to be used to set median costs and led
to decreases in medians that were calculated using the smaller set of
single procedure claims (for example, APC 8001 (LDR Prostate
Brachytherapy Composite)).
On balance, we believe that removing these codes from the bypass
list is the most appropriate approach for this final rule with comment
period to ensure that packaged costs are correctly captured in
ratesetting. Although we have removed all codes in the radiation
oncology series that do not meet the empirical criteria for inclusion
on the bypass list for this CY 2009 final rule with public comment
period, we will continue to examine the claims data for these codes,
and particularly for the APCs for which the number of usable claims
declined. We hope to determine if there are specific codes in the
radiation oncology series that do not meet the empirical bypass list
criteria but which could be safely added back to the bypass list
without resulting in inappropriate packaging, in order to enable the
use of more claims data for radiation oncology services.
Comment: One commenter expressed support for the ratesetting
methodology using single and ``pseudo'' single claims and recommended
that CMS continue to use methodologies that improve the overall
accuracy of the cost estimate calculations.
Response: We appreciate the commenter's support. We will continue
to use our established methodologies and continue to evaluate
additional refinements and improvements to our methodologies, with the
goal of achieving appropriate and accurate estimates of the costs of
services in the HOPD.
Comment: One commenter supported inclusion of HCPCS code G0340
(Image-guided robotic linear accelerator-based stereotactic
radiosurgery, delivery including collimator changes and custom
plugging, fractionated treatment, all lesion, per session, second
through fifth session, maximum) on the bypass list.
Response: We appreciate the commenter's support and have continued
to include HCPCS code G0340 on the CY 2009 bypass list.
Comment: One commenter requested clarification regarding the
standards by which codes are added to the bypass list, believing that
CMS' proposal to include HCPCS code G0390 on the bypass list would
affect the billing of the code.
Response: The purpose of the bypass list is to isolate resource
costs associated with an individual service through identifying the
costs of HCPCS codes with little or no packaging and using that cost
data to create ``pseudo'' single claims. The remaining costs of other
services on the claim are then evaluated to determine if the claim
qualifies as a single bill that can be used for ratesetting. The use of
empirical criteria and clinical assessment ensure that there is minimal
and infrequent packaging associated with services on the bypass list,
making additional ``pseudo'' single claims for the bypass services
available for ratesetting and potentially making the claims with the
bypass code's costs removed appropriate for ratesetting for other
services on the same claim. In the case of HCPCS code G0390 and CPT
code 99291, as described above, inclusion of HCPCS code G0390 on the
bypass list allows us to develop more accurate estimates of the median
costs of CPT code 99291 and HCPCS code G0390 than otherwise would be
possible. However, the bypass list is only used for data purposes and
has no effect on how hospitals report services on claims. We fully
expect hospitals to continue reporting HCPCS code G0390 when a critical
care visit qualifies for trauma activation, in accordance with our
instructions in the Medicare Claims Processing Manual, Pub. 100-04,
Chapter 4, Section 160.1.
Comment: One commenter recommended that CPT code 90768 (Intravenous
infusion, for therapy, prophylaxis, or diagnosis (specify substance or
drug): Concurrent infusion (List separately in addition to code for
primary procedure)) be included on the bypass list in order to ensure
consistency with the treatment of other drug administration codes.
Response: We have not added CPT code 90768 to the bypass list
because our CY 2009 policy unconditionally packages payment for this
service and, therefore, it is not a candidate for the bypass list. The
purpose of the bypass list is to develop ``pseudo'' single claims so
that there are more data available to determine the median costs of
separately payable services for ratesetting purposes. Including
packaged codes would be contrary to the purpose of the bypass list. For
further discussion of packaged payment in CY 2009 for CPT code 90768,
we refer readers to section VIII.B. of this final rule with comment
period.
Comment: One commenter suggested that CMS claims data for CY 2007
showed a number of guidance and radiological supervision and
interpretation ``dependent'' HCPCS codes are not on claims with paid
procedures in many cases, due in part to the interaction with the
bypass list, and therefore, their costs are not used in ratesetting.
They urged CMS to ensure that the packaging and composite methodologies
are meeting the goals of capturing accurate multiple claims data.
Response: The empirical criteria through which most codes are added
to the bypass list are set to limit bypass codes to those codes which
seldom have packaging, and when packaging exists, ensure limited
packaging associated with the code. This is to ensure that any
remaining packaging left after removal of the bypass codes would be
minimal

[[Page 68515]]

and uncommon. As discussed above in response to the comment on image
guidance for radiation oncology services, we have made some changes to
the final CY 2009 bypass list to remove certain radiation oncology
codes from the bypass list that do not meet the empirical criteria.
Those bypass list changes ensure that the packaged costs of image
guidance services for radiation therapy are not lost or misdirected to
payment for other unrelated services. Furthermore, we have reviewed the
other guidance HCPCS codes that are unconditionally packaged under the
CY 2009 OPPS, and we do not believe that there are other HCPCS codes
included on the bypass list that fail to meet the empirical criteria
and to which the packaged costs of these other guidance services would
be appropriately assigned. Thus, we do not believe that other changes
to the bypass list to appropriately capture and assign the costs of
other guidance services are necessary.
With regard to the radiological supervision and interpretation
HCPCS codes, these codes are conditionally packaged codes assigned
status indicator ``Q2'' (``T-packaged'') to reflect that their payment
would be packaged when one or more surgical procedures (status
indicator ``T'') are provided on the same day, but otherwise they would
be separately paid. The determination of packaged versus separately
payable status is made for radiological supervision and interpretation
codes prior to application of the bypass list to develop ``pseudo''
single claims. Of note, there are only 22 ``T'' status codes on the
bypass list, out of a total of 424 final bypass codes, and many of the
``T'' status codes on the bypass list are minor skin treatment
procedures. Most of these ``T'' status procedures currently meet the
empirical criteria for inclusion on the bypass list, so we do not
believe that radiological supervision and interpretation services
generally appear on claims with only those ``T'' status procedures or
would be appropriately packaged with those procedures. Therefore, we
continue to believe that the costs of packaged radiological supervision
and interpretation services are being appropriately captured for
purposes of ratesetting, and those costs are not being lost or
misassigned due to an interaction with the bypass list.
After consideration of the public comments received, we are
adopting, as final, the proposed ``pseudo'' single claims process and
the final CY 2009 bypass list of 424 HCPCS codes, as displayed in Table
1 below. This list has been modified from the CY 2009 proposed list,
with the removal of certain HCPCS codes as discussed above in this
section.

Table 1--Final CY 2009 Bypass Codes for Creating ``Pseudo'' Single
Claims for Calculating Median Costs
------------------------------------------------------------------------
``Overlap
HCPCS code Short descriptor bypass
codes''
------------------------------------------------------------------------
0144T CT heart w/o dye; qual calc.... ...........
11056 Trim skin lesions, 2 to 4...... ...........
11057 Trim skin lesions, over 4...... ...........
11300 Shave skin lesion.............. ...........
11301 Shave skin lesion.............. ...........
11719 Trim nail(s)................... ...........
11720 Debride nail, 1-5.............. ...........
11721 Debride nail, 6 or more........ ...........
11954 Therapy for contour defects.... ...........
17000 Destruct premalg lesion........ ...........
17003 Destruct premalg les, 2-14..... ...........
29220 Strapping of low back.......... ...........
31231 Nasal endoscopy, dx............ ...........
31579 Diagnostic laryngoscopy........ ...........
51798 Us urine capacity measure...... ...........
53661 Dilation of urethra............ ...........
54240 Penis study.................... ...........
56820 Exam of vulva w/scope.......... ...........
57150 Treat vagina infection......... ...........
67820 Revise eyelashes............... ...........
69210 Remove impacted ear wax........ ...........
69220 Clean out mastoid cavity....... ...........
70030 X-ray eye for foreign body..... ...........
70100 X-ray exam of jaw.............. ...........
70110 X-ray exam of jaw.............. ...........
70120 X-ray exam of mastoids......... ...........
70130 X-ray exam of mastoids......... ...........
70140 X-ray exam of facial bones..... ...........
70150 X-ray exam of facial bones..... ...........
70160 X-ray exam of nasal bones...... ...........
70200 X-ray exam of eye sockets...... ...........
70210 X-ray exam of sinuses.......... ...........
70220 X-ray exam of sinuses.......... ...........
70250 X-ray exam of skull............ ...........
70260 X-ray exam of skull............ ...........
70328 X-ray exam of jaw joint........ ...........
70330 X-ray exam of jaw joints....... ...........
70336 Magnetic image, jaw joint...... *
70355 Panoramic x-ray of jaws........ ...........
70360 X-ray exam of neck............. ...........
70370 Throat x-ray & fluoroscopy..... ...........
70371 Speech evaluation, complex..... ...........
70450 Ct head/brain w/o dye.......... *
70480 Ct orbit/ear/fossa w/o dye..... *
70486 Ct maxillofacial w/o dye....... *
70490 Ct soft tissue neck w/o dye.... *
70544 Mr angiography head w/o dye.... *
70551 Mri brain w/o dye.............. *
71010 Chest x-ray.................... ...........
71015 Chest x-ray.................... ...........
71020 Chest x-ray.................... ...........
71021 Chest x-ray.................... ...........
71022 Chest x-ray.................... ...........
71023 Chest x-ray and fluoroscopy.... ...........
71030 Chest x-ray.................... ...........
71034 Chest x-ray and fluoroscopy.... ...........
71035 Chest x-ray.................... ...........
71100 X-ray exam of ribs............. ...........
71101 X-ray exam of ribs/chest....... ...........
71110 X-ray exam of ribs............. ...........
71111 X-ray exam of ribs/chest....... ...........
71120 X-ray exam of breastbone....... ...........
71130 X-ray exam of breastbone....... ...........
71250 Ct thorax w/o dye.............. *
72010 X-ray exam of spine............ ...........
72020 X-ray exam of spine............ ...........
72040 X-ray exam of neck spine....... ...........
72050 X-ray exam of neck spine....... ...........
72052 X-ray exam of neck spine....... ...........
72069 X-ray exam of trunk spine...... ...........
72070 X-ray exam of thoracic spine... ...........
72072 X-ray exam of thoracic spine... ...........
72074 X-ray exam of thoracic spine... ...........
72080 X-ray exam of trunk spine...... ...........
72090 X-ray exam of trunk spine...... ...........
72100 X-ray exam of lower spine...... ...........
72110 X-ray exam of lower spine...... ...........
72114 X-ray exam of lower spine...... ...........

[[Page 68516]]

72120 X-ray exam of lower spine...... ...........
72125 Ct neck spine w/o dye.......... *
72128 Ct chest spine w/o dye......... *
72131 Ct lumbar spine w/o dye........ *
72141 Mri neck spine w/o dye......... *
72146 Mri chest spine w/o dye........ *
72148 Mri lumbar spine w/o dye....... *
72170 X-ray exam of pelvis........... ...........
72190 X-ray exam of pelvis........... ...........
72192 Ct pelvis w/o dye.............. *
72202 X-ray exam sacroiliac joints... ...........
72220 X-ray exam of tailbone......... ...........
73000 X-ray exam of collar bone...... ...........
73010 X-ray exam of shoulder blade... ...........
73020 X-ray exam of shoulder......... ...........
73030 X-ray exam of shoulder......... ...........
73050 X-ray exam of shoulders........ ...........
73060 X-ray exam of humerus.......... ...........
73070 X-ray exam of elbow............ ...........
73080 X-ray exam of elbow............ ...........
73090 X-ray exam of forearm.......... ...........
73100 X-ray exam of wrist............ ...........
73110 X-ray exam of wrist............ ...........
73120 X-ray exam of hand............. ...........
73130 X-ray exam of hand............. ...........
73140 X-ray exam of finger(s)........ ...........
73200 Ct upper extremity w/o dye..... *
73218 Mri upper extremity w/o dye.... *
73221 Mri joint upr extrem w/o dye... *
73510 X-ray exam of hip.............. ...........
73520 X-ray exam of hips............. ...........
73540 X-ray exam of pelvis & hips.... ...........
73550 X-ray exam of thigh............ ...........
73560 X-ray exam of knee, 1 or 2..... ...........
73562 X-ray exam of knee, 3.......... ...........
73564 X-ray exam, knee, 4 or more.... ...........
73565 X-ray exam of knees............ ...........
73590 X-ray exam of lower leg........ ...........
73600 X-ray exam of ankle............ ...........
73610 X-ray exam of ankle............ ...........
73620 X-ray exam of foot............. ...........
73630 X-ray exam of foot............. ...........
73650 X-ray exam of heel............. ...........
73660 X-ray exam of toe(s)........... ...........
73700 Ct lower extremity w/o dye..... *
73718 Mri lower extremity w/o dye.... *
73721 Mri jnt of lwr extre w/o dye... *
74000 X-ray exam of abdomen.......... ...........
74010 X-ray exam of abdomen.......... ...........
74020 X-ray exam of abdomen.......... ...........
74022 X-ray exam series, abdomen..... ...........
74150 Ct abdomen w/o dye............. *
74210 Contrst x-ray exam of throat... ...........
74220 Contrast x-ray, esophagus...... ...........
74230 Cine/vid x-ray, throat/esoph... ...........
74246 Contrst x-ray uppr gi tract.... ...........
74247 Contrst x-ray uppr gi tract.... ...........
74249 Contrst x-ray uppr gi tract.... ...........
76100 X-ray exam of body section..... ...........
76510 Ophth us, b & quant a.......... ...........
76511 Ophth us, quant a only......... ...........
76512 Ophth us, b w/non-quant a...... ...........
76513 Echo exam of eye, water bath... ...........
76514 Echo exam of eye, thickness.... ...........
76516 Echo exam of eye............... ...........
76519 Echo exam of eye............... ...........
76536 Us exam of head and neck....... ...........
76645 Us exam, breast(s)............. ...........
76700 Us exam, abdom, complete....... *
76705 Echo exam of abdomen........... *
76770 Us exam abdo back wall, comp... *
76775 Us exam abdo back wall, lim.... *
76776 Us exam k transpl w/doppler.... *
76801 Ob us <14 wks, single fetus.... ...........
76805 Ob us >/= 14 wks, sngl fetus... ...........
76811 Ob us, detailed, sngl fetus.... ...........
76816 Ob us, follow-up, per fetus.... ...........
76817 Transvaginal us, obstetric..... ...........
76830 Transvaginal us, non-ob........ ...........
76856 Us exam, pelvic, complete...... *
76857 Us exam, pelvic, limited....... *
76870 Us exam, scrotum............... *
76880 Us exam, extremity............. ...........
76970 Ultrasound exam follow-up...... ...........
76977 Us bone density measure........ ...........
76999 Echo examination procedure..... ...........
77072 X-rays for bone age............ ...........
77073 X-rays, bone length studies.... ...........
77074 X-rays, bone survey, limited... ...........
77075 X-rays, bone survey complete... ...........
77076 X-rays, bone survey, infant.... ...........
77077 Joint survey, single view...... ...........
77078 Ct bone density, axial......... ...........
77079 Ct bone density, peripheral.... ...........
77080 Dxa bone density, axial........ ...........
77081 Dxa bone density/peripheral.... ...........
77082 Dxa bone density, vert fx...... ...........
77083 Radiographic absorptiometry.... ...........
77084 Magnetic image, bone marrow.... ...........
77301 Radiotherapy dose plan, imrt... ...........
77315 Teletx isodose plan complex.... ...........
77336 Radiation physics consult...... ...........
77401 Radiation treatment delivery... ...........
80500 Lab pathology consultation..... ...........
80502 Lab pathology consultation..... ...........
85097 Bone marrow interpretation..... ...........
86510 Histoplasmosis skin test....... ...........
86850 RBC antibody screen............ ...........
86870 RBC antibody identification.... ...........
86880 Coombs test, direct............ ...........
86885 Coombs test, indirect, qual.... ...........
86886 Coombs test, indirect, titer... ...........
86890 Autologous blood process....... ...........

[[Page 68517]]

86900 Blood typing, ABO.............. ...........
86901 Blood typing, Rh (D)........... ...........
86903 Blood typing, antigen screen... ...........
86904 Blood typing, patient serum.... ...........
86905 Blood typing, RBC antigens..... ...........
86906 Blood typing, Rh phenotype..... ...........
86930 Frozen blood prep.............. ...........
86970 RBC pretreatment............... ...........
86977 RBC pretreatment, serum........ ...........
88104 Cytopath fl nongyn, smears..... ...........
88106 Cytopath fl nongyn, filter..... ...........
88107 Cytopath fl nongyn, sm/fltr.... ...........
88108 Cytopath, concentrate tech..... ...........
88112 Cytopath, cell enhance tech.... ...........
88160 Cytopath smear, other source... ...........
88161 Cytopath smear, other source... ...........
88162 Cytopath smear, other source... ...........
88172 Cytopathology eval of fna...... ...........
88173 Cytopath eval, fna, report..... ...........
88182 Cell marker study.............. ...........
88184 Flowcytometry/tc, 1 marker..... ...........
88185 Flowcytometry/tc, add-on....... ...........
88300 Surgical path, gross........... ...........
88302 Tissue exam by pathologist..... ...........
88304 Tissue exam by pathologist..... ...........
88305 Tissue exam by pathologist..... ...........
88307 Tissue exam by pathologist..... ...........
88311 Decalcify tissue............... ...........
88312 Special stains................. ...........
88313 Special stains................. ...........
88321 Microslide consultation........ ...........
88323 Microslide consultation........ ...........
88325 Comprehensive review of data... ...........
88331 Path consult intraop, 1 bloc... ...........
88342 Immunohistochemistry........... ...........
88346 Immunofluorescent study........ ...........
88347 Immunofluorescent study........ ...........
88348 Electron microscopy............ ...........
88358 Analysis, tumor................ ...........
88360 Tumor immunohistochem/manual... ...........
88361 Tumor immunohistochem/comput... ...........
88365 Insitu hybridization (fish).... ...........
88368 Insitu hybridization, manual... ...........
88399 Surgical pathology procedure... ...........
89049 Chct for mal hyperthermia...... ...........
89230 Collect sweat for test......... ...........
89240 Pathology lab procedure........ ...........
90472 Immunization admin, each add... ...........
90474 Immune admin oral/nasal addl... ...........
90761 Hydrate iv infusion, add-on.... ...........
90766 Ther/proph/dg iv inf, add-on... ...........
90767 Tx/proph/dg addl seq iv inf.... ...........
90770 Sc ther infusion, addl hr...... ...........
90771 Sc ther infusion, reset pump... ...........
90775 Tx/pro/dx inj new drug add-on.. ...........
90801 Psy dx interview............... ...........
90802 Intac psy dx interview......... ...........
90804 Psytx, office, 20-30 min....... ...........
90805 Psytx, off, 20-30 min w/e&m.... ...........
90806 Psytx, off, 45-50 min.......... ...........
90807 Psytx, off, 45-50 min w/e&m.... ...........
90808 Psytx, office, 75-80 min....... ...........
90809 Psytx, off, 75-80, w/e&m....... ...........
90810 Intac psytx, off, 20-30 min.... ...........
90811 Intac psytx, 20-30, w/e&m...... ...........
90812 Intac psytx, off, 45-50 min.... ...........
90816 Psytx, hosp, 20-30 min......... ...........
90818 Psytx, hosp, 45-50 min......... ...........
90826 Intac psytx, hosp, 45-50 min... ...........
90845 Psychoanalysis................. ...........
90846 Family psytx w/o patient....... ...........
90847 Family psytx w/patient......... ...........
90853 Group psychotherapy............ ...........
90857 Intac group psytx.............. ...........
90862 Medication management.......... ...........
90899 Psychiatric service/therapy.... ...........
92002 Eye exam, new patient.......... ...........
92004 Eye exam, new patient.......... ...........
92012 Eye exam established pat....... ...........
92014 Eye exam & treatment........... ...........
92020 Special eye evaluation......... ...........
92025 Corneal topography............. ...........
92081 Visual field examination(s).... ...........
92082 Visual field examination(s).... ...........
92083 Visual field examination(s).... ...........
92135 Ophth dx imaging post seg...... ...........
92136 Ophthalmic biometry............ ...........
92225 Special eye exam, initial...... ...........
92226 Special eye exam, subsequent... ...........
92230 Eye exam with photos........... ...........
92240 Icg angiography................ ...........
92250 Eye exam with photos........... ...........
92275 Electroretinography............ ...........
92285 Eye photography................ ...........
92286 Internal eye photography....... ...........
92520 Laryngeal function studies..... ...........
92541 Spontaneous nystagmus test..... ...........
92546 Sinusoidal rotational test..... ...........
92548 Posturography.................. ...........
92552 Pure tone audiometry, air...... ...........
92553 Audiometry, air & bone......... ...........
92555 Speech threshold audiometry.... ...........
92556 Speech audiometry, complete.... ...........
92557 Comprehensive hearing test..... ...........
92567 Tympanometry................... ...........
92582 Conditioning play audiometry... ...........
92585 Auditor evoke potent, compre... ...........
92603 Cochlear implt f/up exam 7 >... ...........
92604 Reprogram cochlear implt 7 >... ...........
92626 Eval aud rehab status.......... ...........
93005 Electrocardiogram, tracing..... ...........

[[Page 68518]]

93017 Cardiovascular stress test..... ...........
93225 ECG monitor/record, 24 hrs..... ...........
93226 ECG monitor/report, 24 hrs..... ...........
93231 ECG monitor/record, 24 hrs..... ...........
93232 ECG monitor/report, 24 hrs..... ...........
93236 ECG monitor/report, 24 hrs..... ...........
93270 ECG recording.................. ...........
93271 ECG/monitoring and analysis.... ...........
93278 ECG/signal-averaged............ ...........
93727 Analyze ilr system............. ...........
93731 Analyze pacemaker system....... ...........
93732 Analyze pacemaker system....... ...........
93733 Telephone analy, pacemaker..... ...........
93734 Analyze pacemaker system....... ...........
93735 Analyze pacemaker system....... ...........
93736 Telephonic analy, pacemaker.... ...........
93741 Analyze ht pace device sngl.... ...........
93742 Analyze ht pace device sngl.... ...........
93743 Analyze ht pace device dual.... ...........
93744 Analyze ht pace device dual.... ...........
93786 Ambulatory BP recording........ ...........
93788 Ambulatory BP analysis......... ...........
93797 Cardiac rehab.................. ...........
93798 Cardiac rehab/monitor.......... ...........
93875 Extracranial study............. ...........
93880 Extracranial study............. ...........
93882 Extracranial study............. ...........
93886 Intracranial study............. ...........
93888 Intracranial study............. ...........
93922 Extremity study................ ...........
93923 Extremity study................ ...........
93924 Extremity study................ ...........
93925 Lower extremity study.......... ...........
93926 Lower extremity study.......... ...........
93930 Upper extremity study.......... ...........
93931 Upper extremity study.......... ...........
93965 Extremity study................ ...........
93970 Extremity study................ ...........
93971 Extremity study................ ...........
93975 Vascular study................. ...........
93976 Vascular study................. ...........
93978 Vascular study................. ...........
93979 Vascular study................. ...........
93990 Doppler flow testing........... ...........
94015 Patient recorded spirometry.... ...........
94690 Exhaled air analysis........... ...........
95115 Immunotherapy, one injection... ...........
95117 Immunotherapy injections....... ...........
95165 Antigen therapy services....... ...........
95250 Glucose monitoring, cont....... ...........
95805 Multiple sleep latency test.... ...........
95806 Sleep study, unattended........ ...........
95807 Sleep study, attended.......... ...........
95808 Polysomnography, 1-3........... ...........
95812 EEG, 41-60 minutes............. ...........
95813 EEG, over 1 hour............... ...........
95816 EEG, awake and drowsy.......... ...........
95819 EEG, awake and asleep.......... ...........
95822 EEG, coma or sleep only........ ...........
95869 Muscle test, thor paraspinal... ...........
95872 Muscle test, one fiber......... ...........
95900 Motor nerve conduction test.... ...........
95921 Autonomic nerv function test... ...........
95925 Somatosensory testing.......... ...........
95926 Somatosensory testing.......... ...........
95930 Visual evoked potential test... ...........
95950 Ambulatory eeg monitoring...... ...........
95953 EEG monitoring/computer........ ...........
95970 Analyze neurostim, no prog..... ...........
95972 Analyze neurostim, complex..... ...........
95974 Cranial neurostim, complex..... ...........
95978 Analyze neurostim brain/1h..... ...........
96000 Motion analysis, video/3d...... ...........
96101 Psycho testing by psych/phys... ...........
96111 Developmental test, extend..... ...........
96116 Neurobehavioral status exam.... ...........
96118 Neuropsych tst by psych/phys... ...........
96119 Neuropsych testing by tec...... ...........
96150 Assess hlth/behave, init....... ...........
96151 Assess hlth/behave, subseq..... ...........
96152 Intervene hlth/behave, indiv... ...........
96153 Intervene hlth/behave, group... ...........
96402 Chemo hormon antineopl sq/im... ...........
96411 Chemo, iv push, addl drug...... ...........
96415 Chemo, iv infusion, addl hr.... ...........
96417 Chemo iv infus each addl seq... ...........
96423 Chemo ia infuse each addl hr... ...........
96900 Ultraviolet light therapy...... ...........
96910 Photochemotherapy with UV-B.... ...........
96912 Photochemotherapy with UV-A.... ...........
96913 Photochemotherapy, UV-A or B... ...........
96920 Laser tx, skin < 250 sq cm..... ...........
98925 Osteopathic manipulation....... ...........
98926 Osteopathic manipulation....... ...........
98927 Osteopathic manipulation....... ...........
98940 Chiropractic manipulation...... ...........
98941 Chiropractic manipulation...... ...........
98942 Chiropractic manipulation...... ...........
99204 Office/outpatient visit, new... ...........
99212 Office/outpatient visit, est... ...........
99213 Office/outpatient visit, est... ...........
99214 Office/outpatient visit, est... ...........
99241 Office consultation............ ...........
99242 Office consultation............ ...........
99243 Office consultation............ ...........
99244 Office consultation............ ...........
99245 Office consultation............ ...........
G0008 Admin influenza virus vac...... ...........
G0101 CA screen; pelvic/breast exam.. ...........
G0127 Trim nail(s)................... ...........
G0130 Single energy x-ray study...... ...........
G0166 Extrnl counterpulse, per tx.... ...........
G0175 OPPS Service, sched team conf.. ...........
G0340 Robt lin-radsurg fractx 2-5.... ...........
G0344 Initial preventive exam........ ...........
G0365 Vessel mapping hemo access..... ...........
G0367 EKG tracing for initial prev... ...........

[[Page 68519]]

G0376 Smoke/tobacco counseling >10... ...........
G0389 Ultrasound exam AAA screen..... ...........
G0390 Trauma Respons w/hosp criti.... ...........
M0064 Visit for drug monitoring...... ...........
Q0091 Obtaining screen pap smear..... ...........
------------------------------------------------------------------------

c. Calculation of CCRs
(1) Development of the CCRs
We calculated hospital-specific overall CCRs and hospital-specific
departmental CCRs for each hospital for which we had CY 2007 claims
data. For CY 2009 OPPS ratesetting, we used the set of claims processed
during CY 2007. We applied the hospital-specific CCR to the hospital's
charges at the most detailed level possible, based on a revenue code-
to-cost center crosswalk that contains a hierarchy of CCRs used to
estimate costs from charges for each revenue code. That crosswalk is
available for review and continuous comment on the CMS Web site at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/03_
crosswalk.asp#TopOfPage. We calculated CCRs for the standard and
nonstandard cost centers accepted by the electronic cost report
database. In general, the most detailed level at which we calculated
CCRs was the hospital-specific departmental level.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41429), we proposed to
make a change to the revenue code-to-cost center crosswalk for the CY
2009 OPPS. Specifically, for revenue code 0904 (Activity Therapy), we
proposed to make cost center 3550 (Psychiatric/Psychological Services)
the primary cost center and to make cost center 6000 (Clinic services)
the secondary cost center. For CY 2008, for revenue code 0904, the
primary cost center is 3580 (Recreational Therapy), cost center 3550 is
secondary; and cost center 6000 is tertiary. We proposed this change to
conform the OPPS methodology for hospital claims to the crosswalk that
is being used to calculate partial hospitalization costs for CMHCs.
We would like to affirm that the longstanding Medicare principles
of cost apportionment at Sec. 413.53 convey that, under the
departmental method of apportionment, the cost of each ancillary
department is to be apportioned separately rather than being combined
with another department. However, CMS does not specify a revenue code-
to-cost center crosswalk that hospitals must adopt to prepare the cost
report, but instead, requires hospitals to submit their individual
crosswalk to the Medicare contractor when the cost report is filed. The
proposed CY 2009 OPPS revenue code-to-cost center crosswalk contains
several potential cost center locations for a revenue code because it
is an attempt to best represent the association of revenue codes with
cost centers across all hospitals for modeling purposes. Assignment to
cost centers is mutually exclusive and only defaults to the next level
when the cost center with higher priority is unavailable. The changes
to the crosswalk for revenue code 0904 mentioned above are used by CMS
for modeling purposes only, and we fully expect hospitals to comply
with the Medicare reimbursement policies when reporting their costs and
charges in the cost report.
At the August 2008 APC Panel meeting, we reviewed with the APC
Panel's Data Subcommittee the current revenue code-to-cost center
crosswalk, as well as other data in preparation for the CY 2009
rulemaking cycle. At this meeting, the APC Panel recommended that the
Data Subcommittee continue its work and we are accepting that
recommendation. We will continue to work with the APC Panels' Data
Subcommittee to prepare and review data and analyses relevant to the
APC configurations and OPPS payment policies for hospital outpatient
items and services.
We received no public comments on this proposal and, therefore, we
are finalizing our proposal for CY 2009, without modification, to
calculate hospital-specific overall and departmental CCRs as described
above in this section.
(2) Charge Compression
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher-cost services and a higher charge markup to
lower-cost services. As a result, the cost-based weights incorporate
aggregation bias, undervaluing high cost items and overvaluing low cost
items when an estimate of average markup, embodied in a single CCR, is
applied to items of widely varying costs in the same cost center.
Commenters expressed increased concern about the impact of charge
compression when CMS began setting the relative weights for payment
under the IPPS based on the costs of inpatient hospital services,
rather than the charges for the services.
To explore this issue, in August 2006 we awarded a contract to RTI
International (RTI) to study the effects of charge compression in
calculating the IPPS relative weights, particularly with regard to the
impact on inpatient diagnosis-related group (DRG) payments, and to
consider methods to capture better the variation in cost and charges
for individual services when calculating costs for the IPPS relative
weights across services in the same cost center. Of specific note was
RTI's analysis of a regression-based methodology estimating an average
adjustment for CCR by type of revenue code from an observed
relationship between provider cost center CCRs and proportional billing
of high and low cost services in the revenue codes associated with the
cost center in the claims data. RTI issued a report in March 2007 with
its findings on charge compression. The report is available on the CMS
Web site at: http://www.cms.hhs.gov/reports/downloads/Dalton.pdf.
Although this report was focused largely on charge compression in the
context of the IPPS cost-based relative weights, several of the
findings were relevant to the OPPS. Therefore, we discussed the
findings and our responses to that interim draft report in the CY 2008
OPPS/ASC proposed rule (72 FR 42641 through 42643) and reiterated them
in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66599
through 66602).
We did not propose any changes to address charge compression for CY
2008. RTI noted in its 2007 report that its research was limited to
IPPS DRG cost-based weights and that it did not examine potential areas
of charge compression specific to hospital outpatient services. We were
concerned that the analysis was too limited in scope because typically
hospital cost report CCRs encompass both inpatient and outpatient
services for each cost center. Further, because both the IPPS and OPPS
rely on cost-based weights, we preferred to introduce any
methodological adjustments to both payment systems at the same time. We
believe that because charge compression affects the cost estimates for
services paid under both IPPS and OPPS in the same way, it is
appropriate that we would use the same or, at least, similar approaches
to address the issue. Finally, we noted that we wished to assess the

[[Page 68520]]

educational activities being undertaken by the hospital community to
improve cost reporting accuracy in response to RTI's findings, either
as an adjunct to or in lieu of regression-based adjustments to CCRs.
We have since expanded RTI's analysis of charge compression to
incorporate outpatient services. In August 2007, we again contracted
with RTI. Under this contract, we asked RTI to evaluate the cost
estimation process for the OPPS relative weights. This research
included a reassessment of the regression-based CCR models using
hospital outpatient and inpatient charge data, as well as a detailed
review of the OPPS revenue code-to-cost center crosswalk and the OPPS'
hospital-specific CCR methodology. In evaluating cost-based estimation,
in general, the results of RTI's analyses impact both the OPPS APC
relative weights and the IPPS MS-DRG (Medicare-Severity) relative
weights. With the release of the IPPS FY 2009 proposed rule in April
2008, CMS posted an interim report discussing RTI's research findings
for the IPPS MS-DRG relative weights to be available during the public
comment period on the FY 2009 IPPS proposed rule. This report can be
found on RTI's Web site at: http://www.rti.org/reports/cms/HHSM-500-
2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200804.pdf. The
IPPS-specific chapters, which were separately displayed in the April
2008 interim report, as well as the more recent OPPS chapters, are
included in the July 2008 RTI final report entitled, ``Refining Cost to
Charge Ratios for Calculating APC and DRG Relative Payment Weights,''
which became available at the time of the publication of the CY 2009
OPPS/ASC proposed rule. The RTI final report can be found on RTI's Web
site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios_200807_Final.pdf.
RTI's final report distinguished between two types of research
findings and recommendations, those pertaining to the accounting or
cost report data itself and those related to statistical regression
analysis. Because the OPPS uses a hospital-specific CCR methodology,
employs detailed cost report data, and estimates costs at the claim
level, CMS asked RTI to closely evaluate the accounting component of
the cost-based weight methodology, specifically the revenue code-to-
cost center crosswalk. In reviewing the cost report data for
nonstandard cost centers used in the crosswalk, RTI discovered some
problems concerning the classification of nonstandard cost centers and
reclassified nonstandard cost centers by reading providers' cost center
labels. Standard cost centers are preprinted in the CMS-approved cost
report software and constitute the minimum set of cost centers that
must be reported on the Medicare hospital cost report if a hospital
includes that cost center in its own internal accounts. Nonstandard
cost centers are additional common cost centers available to hospitals
for reporting when preparing their Medicare hospital cost report. To
the extent hospitals provide services captured by nonstandard cost
centers, they should report the relevant nonstandard cost centers as
well, if the service is captured in a separate account and qualifies as
a cost center in accordance with the Provider Reimbursement Manual
(PRM)-I, Section 2302.8. RTI also evaluated the revenue code-to-cost
center crosswalk after examining hospitals' cost report and revenue
code billing patterns in order to reduce aggregation bias inherent in
defaulting to the overall ancillary CCR and generally to improve the
empirical accuracy of the crosswalk.
With regard to the statistical adjustments, RTI confirmed the
findings of its March 2007 report that regression models are a valid
approach for diagnosing potential aggregation bias within selected
services for the IPPS and found that regression models are equally
valid for setting payments under the OPPS. RTI also suggested that
regression-based CCRs could provide a short-term correction for charge
compression until accounting data could be refined to support more
accurate CCR estimates under both the IPPS and the OPPS. RTI again
found aggregation bias in devices, drugs, and radiology and, using
combined outpatient and inpatient claims, expanded the number of
recommended regression-adjusted CCRs.
In almost all cases, RTI observed that potential distortions in the
APC relative weights were proportionally much greater than for MS-DRGs
for both accounting-based and statistical adjustments because APC
groups are small and generally price a single service. However, just as
the overall impacts on MS-DRGs were more moderate because MS-DRGs
experienced offsetting effects of changes in cost estimation, a given
hospital outpatient visit might include more than one service, leading
to offsetting effects in cost estimation for services provided in the
outpatient episode as a whole. In general, APC relative weights are
more volatile than MS-DRG relative weights from year to year yet OPPS
provider impacts are typically quite modest and, in light of this
experience, we expect that overall provider impacts could be much more
moderate than those suggested by individual APC impacts from the RTI
analysis.
Notwithstanding likely offsetting effects at the provider level,
RTI asserted that, while some averaging is appropriate for a
prospective payment system, extreme distortions in APC payments for
individual services bias perceptions of service profitability and may
lead hospitals to inappropriately set their charge structure. RTI noted
that this may not be true for ``core'' hospital services, such as
oncology, but these distortions may have a greater impact in evolving
areas with greater potential for provider-induced demand, such as
specialized imaging services. RTI also noted that cost-based weights
are only one component of a final prospective payment rate. There are
other rate adjustments (wage index, indirect medical education (IME),
and disproportionate share hospital (DSH)) to payment derived from the
revised cost-based weights and the cumulative effect of these
components may not improve the ability of final payment to reflect
resource cost. With regard to APCs and MS-DRGs that contain substantial
device costs, RTI cautioned that other prospective payment system
adjustments (wage index, IME, and DSH) largely offset the effects of
charge compression among hospitals that receive these adjustments.
Although RTI endorsed short-term regression-based adjustments, RTI also
concluded that more refined and accurate accounting data are the
preferred long-term solution to mitigate charge compression and related
bias in hospital cost-based weights.
As a result of this research, RTI made 11 recommendations, 2 of
which are specific to IPPS MS-DRGs and were not discussed in the CY
2009 OPPS/ASC proposed rule, nor are they discussed in this final rule
with comment. The first set of non-IPPS-specific recommendations
concentrates on short-term accounting changes to current cost report
data; the second set addresses short-term regression-based and other
statistical adjustments. RTI concluded its recommendations with longer-
term accounting changes to the cost report. (RTI report, ``Refining
Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment
Weights,'' July 2008.) Given the magnitude and scope of impacts on APC
relative weights that would result from adopting both accounting and
statistical changes, as specifically observed in Chapter 6 of RTI's
July 2008 final report and Attachments 4a, 4b, and 5 (RTI report,
``Refining Cost to Charge Ratios for

[[Page 68521]]

Calculating APC and MS-DRG Relative Payment Weights,'' July 2008), we
did not propose to adopt any short-term adjustments to OPPS payment
rate calculations for CY 2009 (73 FR 41430 through 41431). Furthermore,
the numerous and substantial changes that RTI recommended have
significantly complex interactions with one another and we believe that
we should proceed cautiously. In a budget neutral payment system,
increases in payment for some services must be countered by reductions
to payment for other services.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41431), we did not
propose to adopt, but specifically requested general public comments
on, several of RTI's recommended accounting-based changes pertaining to
the cost report as discussed below because we plan to consider the
public comments in our current revision of the Medicare hospital cost
report and for CY 2010 OPPS ratesetting. We believe that improved and
more precise cost reporting is the best way to improve the accuracy of
all cost-based payment weights, including relative weights for the IPPS
MS-DRGs. Because both the IPPS and the OPPS rely on cost-based weights
derived, in part, from data on the Medicare hospital cost report form,
we indicated in the CY 2009 OPPS/ASC proposed rule (73 FR 41431) that
the requested public comments on recommended changes to the cost report
should address any impact on both the inpatient and outpatient payment
systems.
We noted in the FY 2009 IPPS final rule (73 FR 48467 through
48468), that we are updating the cost report form to eliminate outdated
requirements in conjunction with the Paperwork Reduction Act (PRA), and
that we plan to propose actual changes to the cost reporting form, the
attending cost reporting software, and the cost report instructions in
Chapter 36 of the PRM-II. We indicated that we now believe the revised
cost report may not be available until cost reporting periods starting
after the Spring of 2009. Because there is generally a 3-year lag
between the availability of cost report data for IPPS and OPPS
ratesetting purposes in a given calendar year, we may be able to use
data from the revised cost report form for CY 2012 or CY 2013 OPPS
relative weights.
In the FY 2009 IPPS final rule, we finalized our proposal for both
OPPS and IPPS to add one cost center to the cost report so that, in
general, the costs and charges for relatively inexpensive medical
supplies would be reported separately from the costs and charges for
more expensive implantable devices (such as pacemakers and other
implantable devices). Specifically we will create one cost center for
``Medical Supplies Charged to Patients'' and one cost center for
``Implantable Devices Charged to Patients.'' This change ultimately
will split the current CCR for Medical Supplies and Equipment into one
CCR for medical supplies and another CCR for implantable devices. In
response to support from a majority of commenters on the FY 2009 IPPS
proposed rule, we finalized a definition of the Implantable Devices
Charged to Patients cost center as capturing the costs and charges
billed with the following UB-04 revenue codes: 0275 (Pacemaker), 0276
(Intraocular lens), 0278 (Other implants), and 0624 (FDA
investigational devices). Identifying most implantable devices based on
the existing revenue code definitions is the most straightforward and
easiest means of capturing device costs, although some charge
compression will remain in the resulting device and supply CCRs.
Hospitals are already familiar with National Uniform Billing Committee
(NUBC) billing instructions, and we believe this definition will
minimize the disruption to hospitals' accounting and billing systems.
For a complete discussion of the proposal, public comments, and our
responses, we refer readers to section II.E.4. of the FY 2009 IPPS
final rule (73 FR 48458 through 45467).
RTI's first set of recommendations for accounting changes addressed
improved use of existing cost report and claims data. RTI recommended:
(1) Immediately using text searches of providers' line descriptions to
identify provider-specific cost centers and ultimately to more
appropriately classify nonstandard cost centers in current hospital
cost report data; (2) changing cost report preparation software to
impose fixed descriptions on nonstandard cost centers; (3) slightly
revising CMS' cost center aggregation table to eliminate duplicative or
misplaced nonstandard cost centers and to add nonstandard cost centers
for common services without one; and (4) adopting RTI's recommended
changes to the revenue code-to-cost center crosswalk.
Given the magnitude and scope of impacts resulting from RTI's
recommended revisions, we did not propose to adopt any of the short-
term accounting changes, including text searches of providers' line
descriptions to more appropriately classify nonstandard cost centers
and changes to the revenue code-to-cost center crosswalk. As indicated
in the CY 2009 OPPS/ASC proposed rule (73 FR 41431), we stated that we
would modify the cost report preparation software. This revision will
print a brief fixed description next to each nonstandard cost center
number, while continuing to allow the hospital to enter a description,
and will be incorporated in the 2009 Medicare hospital cost report
preparation software.
With regard to revisions to the cost center aggregation table, we
specifically invited public comment on whether several identified cost
centers are duplicative (RTI report, ``Refining Cost to Charge Ratios
for Calculating APC and MS-DRG Relative Payment Weights,'' July 2008).
We also specifically requested public comment on creation of new
nonstandard cost centers for services that are well represented in line
descriptions reported with ``other ancillary services'' and other
outpatient nonstandard cost centers, but for which no specific
nonstandard cost center currently exists and for which UB-04 revenue
codes do exist, including cardiac rehabilitation, hyperbaric oxygen
therapy, and patient education (RTI report, ``Refining Cost to Charge
Ratios for Calculating APC and MS-DRG Relative Payment Weights,'' July
2008) (73 FR 41431).
Comment: Many commenters expressed support for refining the
Healthcare Cost Report Information System (HCRIS) database that CMS
uses for ratesetting by using text string searches to reassign cost
center lines based on the description entered by the hospital, in order
to mitigate hospital error in assigning a nonstandard HCRIS cost center
code. Commenters viewed this change as a way to improve the accuracy of
the CCRs derived from the cost report for cost estimation, without
imposing additional burden on hospitals. Many commenters also supported
CMS' modification to add fixed descriptions to nonstandard cost center
lines in the cost reporting software, with the caveat that hospitals
continue to be allowed to enter their own nonstandard cost center
descriptions. The commenters believed that this change would improve
the quality and consistency of hospital reporting. One commenter
indicated that CMS should clarify instructions about the specific cost
centers that should be reported on nonstandard lines. Another commenter
noted that a cost center for patient education could be difficult to
report because patient education can take place across multiple
departments and reclassifying costs could be challenging. Many
commenters supported RTI's recommendation to modify the cost
aggregation table to

[[Page 68522]]

eliminate duplicative or misplaced nonstandard cost centers but
emphasized that hospitals should not be required to report the revised
cost centers. A number of commenters supported the addition of
nonstandard cost centers that also have a UB-04 revenue code, including
Cardiac Rehabilitation, Patient Education, Hyperbaric Oxygen Therapy,
and Lithotripsy.
Response: With regard to modifying the cost reporting preparation
software to impose fixed descriptions for nonstandard cost centers, we
stated in the CY 2009 OPPS/ASC proposed rule (73 FR 41431) that we
would make this change in the cost reporting preparation software
accompanying the revised Medicare hospital cost report form. Should
release of the revised form be delayed, we will make this change for
the next release of the cost report preparation software. Hospitals
will continue to be able to enter their own description of the
nonstandard cost center. This modification will act as a quality check
for hospitals to review their choice of nonstandard cost center code
and encourage hospitals to more accurately report their nonstandard
cost centers without significantly increasing provider burden.
We appreciate the commenters' argument that text string searches
could refine submitted cost report data without imposing hospital
burden. However, we will not implement RTI's recommended text string
search algorithm for CY 2009 because it would introduce significant
changes in APC median costs in concentrated areas with significant
Medicare charges and utilization and because it would represent a major
shift in the current way we use cost report data. Our preference in the
median cost development process has been to accept the information
submitted by hospitals as it is received, only trimming egregiously
erroneous data through conservative statistical methods in order to
maintain the integrity of the original data set. Modifying the data
from its submitted form based on assumptions about the data typically
would be contrary to our principle of using the data as submitted by
hospitals. Further, implementing an algorithm that reassigns
nonstandard cost center lines based on their HCRIS descriptions would
entail assumptions about what that hospital's written description means
and what the data represent. For example, RTI reassigned cost center
lines with combined descriptions, such as ``Radiation and Oncology,''
to the cost center with the highest dollar volume, in this case
Radiation Therapy. However, we are not confident that the assumptions
underlying these reassignments are correct. We will continue to examine
the quality of the data submitted by hospitals and may consider
implementing the text string searches in the future.
While many commenters expressed general support for RTI's
recommendation to eliminate duplicative nonstandard cost centers with
low volume from the cost aggregation table, we continue to consider
whether we should retain these cost centers. We note that RTI's
analysis only included an examination of the nonstandard cost centers
from more recent cost reports. Observing data from older cost reports
may have led RTI to conclude that the same nonstandard cost centers
would nonetheless be necessary. For continuity with historical cost
report data, at this time we do not plan to eliminate any duplicative
nonstandard cost centers from the cost center aggregation table.
As part of its recommendation for modifications to the cost
aggregation table, RTI suggested adding new nonstandard cost centers
for hospital departments that were well represented in the cost report
data and had an associated UB-04 revenue code but lacked their own
nonstandard cost center, specifically Cardiac Rehabilitation, Patient
Education, Hyperbaric Oxygen Therapy, and Lithotripsy. Many commenters
were supportive of these changes, believing that these cost centers
would result in more accurate cost estimates for the services in
question, but they were concerned about additional burden associated
with reporting new cost centers. One commenter indicated that reporting
patient education could be difficult.
We do not expect additional burden for reporting these new
nonstandard cost centers to be significant because hospitals that
provide these services and maintain a separate account for each of
these services in their internal accounting records to capture the
costs and charges are currently required, in accordance with Sec.
413.53(a)(1), to report these cost centers in the cost report, even if
CMS does not identify a nonstandard cost center code for the
department(s). Specifically, under those regulations defining the
departmental method of cost apportionment, the hospital must separately
apportion the costs of each ancillary department. CMS defines a cost
center in PRM-I, Section 2302.8, as an organizational unit, generally a
department or its subunit, having a common functional purpose for which
direct and indirect costs are accumulated, allocated, and apportioned.
Hospitals that do not maintain distinct departments or accounts in
their internal accounting systems for Cardiac Rehabilitation,
Hyperbaric Oxygen Therapy, or Lithotripsy would not be required to
report these nonstandard cost centers. We plan to include nonstandard
cost center codes for Cardiac Rehabilitation, Hyperbaric Oxygen
Therapy, and Lithotripsy on the revised Medicare hospital cost report
form that we provide to the public for comment through the PRA process,
because we believe these changes will facilitate more accurate cost
reporting for these services.
With regard to ``patient education,'' we agree with the commenter
that ``education'' may not be sufficiently definitive to serve as a
useful cost center. We will review RTI's findings on the presence of
patient education in the HCRIS data to see if we should narrow the
scope of this label to improve its usefulness as a nonstandard cost
center. Based on this review, we may include a nonstandard cost center
like Patient Education on the revised Medicare hospital cost report
form that we provide for public comment through the PRA process.
In summary, CMS continues to examine ways in which it can improve
the cost reporting process. We have already implemented the minor
change in the cost reporting software by imposing fixed descriptions on
nonstandard cost centers. We also plan to add the new nonstandard cost
centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and
Lithotripsy, as well as potentially a nonstandard cost center like
Patient Education, to the nonstandard list when we revise the Medicare
hospital cost report form. We will consider the appropriateness of the
text string searches for future ratesetting.
Comment: One commenter requested that CMS issue a detailed written
explanation of CMS's processes for collecting, reviewing, and
aggregating data, and reviewing and adjusting cost data to arrive at
median cost amounts, specifically in the context of hyperbaric oxygen
therapy services.
Response: This final rule with comment period contains a
comprehensive discussion of the process through which we use cost
report and claims data to arrive at median costs in sections II.A.1.
and II.A.2. The claims accounting narrative mentioned earlier,
available on the CMS Web site, offers a detailed breakdown of the
processing logic CMS uses to refine the claims data set, as well as
exact

[[Page 68523]]

counts of claims involved in each stage of that process.
CMS also requested comment in the CY 2009 OPPS/ASC proposed rule
(73 FR 41431) on RTI's recommended changes to the OPPS revenue code-to-
cost center crosswalk. We indicated that we may propose to adopt
crosswalk changes for CY 2010 based on RTI's analyses and related
public comments received on this issue. Although available on the CMS
Web site for continuous public comment, we have received relatively few
public comments over the last several years on the OPPS revenue code-
to-cost center crosswalk, which has undergone only minimal change since
the inception of the OPPS. RTI's revised crosswalk in Attachment 2b of
its final report reflected all accounting changes, including
reclassification of nonstandard cost centers from text searches,
removal of duplicative cost centers, and addition of new nonstandard
cost centers for common services (RTI report, ``Refining Cost to Charge
Ratios for Calculating APC and MS-DRG Relative Payment Weights,'' July
2008). Throughout the July 2008 final report, RTI used a subscripting
nomenclature developed from CMS's aggregation table to identify cost
centers. To disentangle the combined impact of these changes and
clearly communicate RTI's recommended changes in current HCRIS cost
center numbers, we made available on the CMS Web site a revised (RTI-
recommended) crosswalk using current standard and nonstandard cost
centers codes in the same format as the crosswalk proposed for the CY
2009 OPPS. This revised (RTI-recommended) crosswalk may be found on the
CMS Web site under supporting documentation for this final rule with
comment period at: http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/
list.asp#TopOfPage. We did not include RTI's recommended new
nonstandard cost centers in this revised crosswalk as they are not yet
active.
We specifically requested public comment on the numerous changes
included in this crosswalk (73 FR 41431). We were interested in public
opinion about the addition of ``default'' CCRs for clinic, cardiology,
and therapy services before defaulting to the overall ancillary CCR, as
is our current policy. The overall ancillary CCR, which is the
traditional default CCR, is charge-weighted and heavily influenced by
the relationship between costs and charges for surgical and imaging
services. RTI also introduced cost center 4300 (Radioisotope) as a
primary cost converter for the nuclear medicine revenue codes (034X).
Further, RTI added secondary and tertiary crosswalk maps for services
that frequently appear together, such as CCRs for Computed Tomography
(CT) Scan as a secondary cost converter for the Magnetic Resonance
Imaging (MRI) revenue codes (061X) (RTI report, ``Refining Cost to
Charge Ratios for Calculating APC and MS-DRG Relative Payment
Weights,'' July 2008).
Comment: Some commenters supported full adoption of the RTI-
recommended revenue code-to-cost center crosswalk, which included
expanded and revised crosswalks. Others believed that they could not
comment on the proposal, including the addition of default CCRs for
cardiology, therapy, and clinic services, until CMS provides additional
information comparing the cost-based weights under the current and RTI-
recommended crosswalks that would illustrate the impact of these
changes. Other commenters wondered whether the crosswalk would be
applied under both the IPPS for estimating DRG relative weights and the
OPPS for estimating APC relative weights.
One commenter requested that CMS update the revenue code-to-cost
center crosswalk to reflect the cost report change finalized in the FY
2009 IPPS final rule to create a new implantable device cost center.
Some commenters expressed support for using cost center 4300
(Radioisotope) as a primary cost converter for the nuclear medicine
revenue code series 0340 to 0349, which includes revenue codes for
nuclear medicine and radiopharmaceuticals. One commenter believed that
cost center 2500 (Adults and Pediatrics (General Routine Care)) offered
the appropriate CCR for estimating costs from charges on revenue code
0762 (Observation Room), instead of cost center 6200 (Observation
Beds). Another commenter recommended removing cost center 3540
(Prosthetic Devices) as the primary CCR for revenue code 0275
(Pacemaker) and only keeping cost center 5500 (Medical Supplies Charged
to Patients) in the crosswalk. The same commenter pointed out that
hospitals frequently bill certain imaging services under revenue code
0361 (Operating Room Services: Minor Surgery) because of billing
requirements by Medicare Administrative Contractors (MACs) and non-
Medicare payers. This practice ensures that a radiology CCR would not
be used to estimate costs for these radiology services under the OPPS
cost methodology.
Response: The RTI-recommended revenue code-to-cost center crosswalk
included significant changes from the current OPPS crosswalk that would
impact the APC relative payment weights considerably. While several of
RTI's recommendations to improve CMS' processes for estimating costs
from charges would apply to both the IPPS and the OPPS, the revenue
code-to-cost center crosswalk is specific to the OPPS. We agree with
the commenters that observing the actual median costs associated with
the revised crosswalk would help to inform public comment. We note that
the majority of the changes detailed under the (RTI--1) column in
Attachment 4a of RTI's final report are attributable to the revised
crosswalk (RTI report, ``Refining Cost to Charge Ratios for Calculating
APC and MS-DRG Relative Payment Weights,'' July 2008). Like many
commenters, we also believe that RTI's recommended changes are
improvements. For example, we expect that default CCRs for clinic
services, cardiology, and therapy that are specific to those types of
services would be appropriate for more accurately estimating cost when
the hospital has not reported a clinic, cardiology, or therapy cost
center. However, we understand that commenters may not have been able
to fully absorb the changes discussed in RTI's report and would benefit
from a streamlined comparison of median costs that isolates changes
attributable to the revenue code-to-cost center crosswalk.
We did not receive many detailed comments about specific revenue
code and cost center relationships in the crosswalk, and we will
therefore not adopt significant changes to the crosswalk until we
provide such a comparison. Informed analysis and public comment
regarding the RTI-recommended changes to the revenue code-to-cost
center crosswalk would help to ensure that any final changes would be
appropriate and likely to result in more accurate data. We will update
the revenue code-to-cost center crosswalk when the new device cost
centers and new nonstandard cost centers are included in the Medicare
hospital cost report form and corresponding HCRIS database.
We appreciate the small number of commenters who provided
thoughtful input on specific adjustments to the revenue code-to-cost
center crosswalk. We will consider these and any further public
comments regarding RTI's recommended revisions to the revenue code-to-
cost center crosswalk as we consider crosswalk revisions for future
OPPS updates. We are not adopting RTI's revised revenue code-to-cost
center crosswalk for the CY 2009 OPPS. Furthermore, we intend to
explore

[[Page 68524]]

differences between revenue code billing requirements set by
contractors and NUBC revenue code definitions.
RTI's second set of recommendations concentrated on short-term
statistical regression-based adjustments to address aggregation bias.
RTI recommended: (1) Adopting regression-adjusted OPPS CCRs for
Devices, Other Supplies Sold, Additional Detail Coded Drugs, and
Intravenous (IV) Solutions and Other Drugs Sold; and (2) adopting a set
of CCRs that blend corrected cost report and regression-adjusted CCRs
for CT scanning, MRI, therapeutic radiology, nuclear medicine, and
other diagnostic radiology services for hospitals that did not report
these standard and nonstandard cost centers. We agree that improved
data for cost estimation in these areas is a desirable goal. However,
we historically have received mixed support for regression-adjusted
CCRS through both the IPPS and OPPS regulatory process. For this
reason, we have chosen to concentrate our efforts on concrete steps to
improve the quality of cost report accounting data that ultimately
would be used to calculate both hospital inpatient and outpatient
prospective payment system relative weights. We specifically did not
propose to adopt regression-adjusted CCRs for the CY 2009 OPPS. In the
FY 2009 IPPS final rule (73 FR 48457), we emphasized our fundamental
goal of improving cost report accounting data through revisions to the
cost report and our support of education initiatives, rather than
introducing short-term statistical adjustments.
Comment: Many commenters expressed general support for all of RTI's
recommended regression-adjusted CCRs to improve the overall accuracy of
the OPPS relative weights. One commenter specifically noted that CMS
should not delay applying regression-based adjustments to CCRs for APC
payment calculations because the agency chose not to implement
regression-adjusted CCRs for FY 2009 IPPS payments. Some commenters
supported the CMS' decision not to implement the short-term statistical
adjustments recommended by RTI. A number of commenters believed that
actual hospital data should be used for ratesetting to ensure accuracy
in payment rates. Other commenters did not support the adoption of
regression-adjusted CCRs until CMS could provide enough information to
show the payment impact and redistribution of costs. A few commenters
noted that CMS should actually propose specific refinements and discuss
the methodology behind such a proposal. Many commenters requested that
CMS proceed with caution with regard to making any changes that could
significantly affect the payment system.
Numerous commenters expressed support for the use of regression-
adjusted CCRs for devices in order to improve short-term accuracy in
the OPPS relative payment weights by addressing charge compression
arising from use of a single CCR for supplies and devices. These
commenters viewed regression-adjusted CCRs as a suitable temporary
adjustment for charge compression until CCRs for the new Implantable
Devices Charged to Patients cost center, finalized in the FY 2009 IPPS
final rule (73 FR 48458 through 48469), become available in CY 2012 or
CY 2013. Many commenters saw regression-adjusted CCRs for devices as a
necessary solution that would be immediately available and appropriate,
especially because they believed that other options, such as provider
education, could not address the issue of highly variable markup rates
compressed by a single CCR during cost estimation. Those commenters
offered varied suggestions for implementing regression-adjusted CCRs
for devices, including phasing in adoption of regression-adjusted
device CCRs over several years, using the regression-adjusted CCRs to
check the validity of early cost report data for the new cost center,
and using the device regression-adjusted CCR to soften CCR changes due
to new implantable devices cost report data.
Several commenters supported the use of regression-adjusted CCRs
for drugs, but most commenters focused their comments about charge
compression in drug payment on CMS' proposal to create two new cost
centers for drugs with high and low pharmacy overhead costs,
respectively, which is discussed in more detail in section V.B.3. of
this final rule with comment period. Many commenters specifically
opposed the concept of regression-adjusted CCRs for radiology services,
noting that RTI's results for the CT Scanning and MRI cost centers were
inaccurate due to error in capital cost allocation for specialized
imaging services which resulted in inappropriately low relative
weights.
Response: As noted above in the preceding three paragraphs, we once
again received numerous mixed comments on the use of regression-
adjusted CCRs, comparable to the type of comments received on the FY
2009 IPPS proposed rule. While we appreciate commenters' continued
thoughtful comments on this issue, we did not propose to adopt
regression-adjusted CCRs for the CY 2009 OPPS, as we have received
mixed support for this approach in the past. As such, we are not
implementing regression-adjusted CCRs for CY 2009. We continue to
emphasize our preference for long-term cost reporting changes and broad
education initiatives to address the accuracy of the data, rather than
short-term statistical adjustments. With regard to devices, CMS
finalized a proposal in the FY 2009 IPPS final rule to disaggregate the
medical supplies CCR into one cost center for medical supplies and one
for implantable devices (73 FR 48458 through 48467). This change to the
cost report will influence both the IPPS and OPPS relative weights. We
believe that, ultimately, improved and more precise cost reporting is
the best way to minimize charge compression and improve the accuracy of
the cost weights. With regard to radiology, we agree with the
commenters that the hospital community could benefit from education on
Medicare hospital cost report requirements for allocation of fixed
capital and moveable equipment indirect costs to improve the accuracy
of cost reporting for specialized imaging services.
RTI's third and final set of recommendations focused on long-term
accounting revisions to the cost report and educational efforts to
improve the overall accuracy of accounting data. RTI recommended: (1)
Clarifying cost report instructions and requiring hospitals to use all
standard lines in the cost report if their facility offers the
described services; (2) creating new standard lines in the cost report
for CT Scanning, MRI, Cardiac Catheterization, Devices, and Drugs
Requiring Additional Coding; and (3) educating hospitals through
industry-led educational initiatives directed at methods for capital
cost finding, specifically encouraging providers to use direct
assignment of equipment depreciation and lease costs wherever possible,
or at least to allocate moveable equipment depreciation based on dollar
value of assigned depreciation costs.
As noted above in this section, we will assess further steps we can
take to educate hospitals about the principle of departmental
apportionment of costs at Sec. 413.53, which states that hospitals
should apportion separately the costs and charges of each ancillary
department for which charges are customarily made separately, rather
than combining those costs and charges with another ancillary
department. Standard cost centers are preprinted in the CMS-approved
cost report software and constitute the minimum set of cost centers
that must be reported on the Medicare hospital cost report as

[[Page 68525]]

required in Section 2302.8 of the PRM-I if the hospital creates a
separate account for the service in its accounting system. RTI noted
that many hospitals combine costs and charges for standard costs
centers, especially therapeutic radiology and nuclear medicine
services, under the diagnostic radiology cost center (RTI report,
``Refining Cost to Charge Ratios for Calculating APC and MS-DRG
Relative Payment Weights,'' July 2008). In the CY 2009 OPPS/ASC
proposed rule (73 FR 41431 through 41432), we specifically asked for
public comment on the reasons for this aggregation and other relatively
common deviations from cost reporting instructions, such as a failure
to report the standard cost center 4700 (Blood Storing, Processing &
Transportation) when the hospital bills Medicare for blood products
that have storage and processing costs and charges.
With regard to creating new standard lines in the cost report, in
addition to our proposal to add a standard cost center for Implantable
Devices Charged to Patients in the FY 2009 IPPS proposed rule, we
proposed to add two standard cost centers, one for Drugs with High
Overhead Cost Charged to Patients and one for Drugs with Low Overhead
Cost Charge to Patients, in the CY 2009 OPPS/ASC proposed rule. We
discuss our decision not to finalize this proposal to create two new
cost centers for drugs in our discussion of payment for the acquisition
and pharmacy overhead costs associated with separately payable drugs
and biologicals in section V.B.3. of this final rule with comment
period.
As we indicated in the CY 2009 OPPS/ASC proposed rule (73 FR
41432), we believe that standard cost centers for CT Scanning, MRI, and
Cardiac Catheterization also may be appropriate as we revise the
Medicare hospital cost report form. CMS already has established
nonstandard cost centers for these services and many hospitals
currently report costs and charges for these cost centers. RTI
identified almost 1,000 cost center lines for CT scanning, MRI, and
cardiac catheterization each in the one year of HCRIS data used for
RTI's study. Many more hospitals than this bill distinct charges for
these services, and we are confident that many hospitals maintain a
separate account for these services in their accounting system. While
we currently use available nonstandard cost center CCRs for cost
estimation under the OPPS, creating standard lines for common advanced
imaging services, such as CT Scanning and MRI, and a common cardiac
diagnostic service, Cardiac Catheterization, would encourage more
providers to report cost and charge information separately for these
services. Although we did not propose to create these cost centers, in
the CY 2009 OPPS/ASC proposed rule (73 FR 41432), we specifically
invited public comment on the appropriateness of creating standard cost
centers for CT Scanning, MRI, and Cardiac Catheterization to consider
in our revision of the Medicare hospital cost report form. We recognize
that improved allocation of moveable equipment costs based on dollar
value, the recommended allocation statistic, would be important to
ensure improved accuracy in ratesetting if we were to make these cost
centers standard.
The accuracy of capital cost allocation under Medicare allocation
methods remains an issue when discussing the accuracy of CCRs for
radiology and other capital-intensive services. We are supportive of
industry-led educational initiatives to improve the quality of
reporting capital costs in the cost report within the context of the
Medicare policies in PRM-I, Section 2307, and PRM-II, Chapter 36, and,
as we explained in the FY 2008 IPPS final rule with comment period (72
FR 47196), we are willing to work with the hospital industry to further
such initiatives.
We received numerous comments about potential revisions to the cost
report and recommendations to improve the cost report form and cost
report process. A summary of the comments and our responses follow.
Comment: Many commenters urged CMS to use caution when making
incremental changes to the cost report, but also suggested that a more
comprehensive effort be made to improve the cost reporting process.
Several commenters noted that changes to the cost report to improve the
accuracy of prospective payment system weights impose hospital burden
without adding additional revenue to the system and may counteract
their purpose by requesting a level of precision that hospitals cannot
provide. Some commenters requested that CMS make cost report changes
consistent across the inpatient and outpatient payment systems. One
commenter requested that CMS coordinate cost report requirements with
those required by State Medicaid programs. Other commenters suggested
that CMS undertake educational efforts providing greater detail on how
to comply with regulations and manual instructions, how to file a cost
report, how to evaluate a completed cost report for accuracy, and the
consequences of noncompliance. Many commenters noted that hospitals do
not know what CMS wants them to do when completing the cost report and
urged CMS to provide explicit cost report guidance on direct expense
assignment, capital expense assignment, allocation of overhead, and
matching gross revenue, in order to reduce hospital reporting burden
and to ensure that hospitals have both the direction and knowledge to
comply. One commenter suggested that even if hospitals recognized
problems in their internal cost reporting process, they would continue
their erroneous reporting practice in order to achieve base year
consistency. A number of commenters also requested that CMS instruct
Medicare contractors to audit cost reports more closely.
Several commenters specifically addressed the new Implantable
Devices Charged to Patients cost center finalized in the FY 2009 IPPS
final rule. These commenters requested that CMS carefully choose an
appropriate overhead allocation statistic to ensure that overhead
allocation would not undermine the potential accuracy in CCR data
behind CMS' proposal to create a new cost center. They requested that
CMS undertake an educational campaign to describe appropriate practices
for distinguishing between devices and supplies. Some commenters also
requested that CMS develop mechanisms to validate the accuracy of data
from the new cost center.
In response to CMS' inquiry regarding the failure of hospitals to
report costs and charges for cost center 4700 (Blood Storing,
Processing, and Transfusion), several commenters indicated that even
though hospitals are required to bill costs and charges under revenue
code 0391 (Administration, Processing and Storage for Blood and Blood
Components; Administration (eg, Transfusion)) and capture those costs
in cost center 4700 in the cost report, as indicated in the FY 2009
IPPS final rule (73 FR 48466), hospitals do not report costs and
charges for cost center 4700 because there are no specific cost report
instructions. The commenters suggested that CMS define a formula-driven
expense reclassification method.
Response: We appreciate the thoughtful public input on clarifying
cost report instructions and the cost reporting process. We recognize
that there are areas of concern with the cost report, and we are taking
steps to address some of them. These include finalizing a new cost
center for implantable devices, adding fixed descriptions to HCRIS cost
center codes in the cost report preparation software, and engaging in
provider educational efforts to help educate providers

[[Page 68526]]

regarding the proper accounting of costs in the cost report. While
these efforts are being made to help address charge compression and
improve the accuracy of cost report data, more fundamentally, they will
improve the cost reporting process itself.
We are currently in the process of making revisions to the Medicare
cost report form, and we will consider the commenters' many concerns
and recommendations summarized above in our revisions. Changes to the
Medicare hospital cost report will be incorporated into both the IPPS
and OPPS relative weights. Under the effort to update the cost report
and eliminate outdated requirements in conjunction with the PRA,
changes to the cost report form and cost report instructions will be
made available to the public for comment. The commenters will have an
opportunity to suggest more comprehensive reforms and to request more
detailed instructions, and similarly will be able to make suggestions
for ensuring that these reforms are made in a manner that is not
disruptive to hospitals' billing and accounting systems and are within
the guidelines of Medicare principles of reimbursement and generally
accepted accounting principles (GAAP). We welcome further comment on
changes to the revised Medicare hospital cost report through the PRA
process.
Many State Medicaid programs use the Medicare cost report to
determine Medicaid payments, including Medicaid Disproportionate Share
Hospital (DSH) payments. Therefore, it is important for hospitals to
complete the Medicare cost report in accordance with the Medicare
reimbursement and cost reporting policies. With regard to reporting
costs and charges for cost center 4700, we note that CMS provides
instructions in PRM-II, Section 3610, Line 47 for this cost center.
While we always are open to incorporating refinements in our cost
report instructions as requested by numerous commenters, we note that
CMS cannot provide as much specificity in instructions as some
commenters have requested, as discussed below. While CMS is responsible
for issuing cost reporting instructions that are clear, hospitals are
required to complete the cost report in a manner that is appropriate
for their internal accounting system structure (42 CFR 413.20) and that
is within the framework of Medicare reimbursement principles and cost
report instructions. With regard to the overhead allocation basis for
the new implantable devices cost center, CMS will recommend an
allocation basis as it does with all overhead allocation. However,
hospitals may use a different statistic if approved by the hospital's
Medicare contractor, in accordance with PRM-I, Section 2313.
Comment: Many commenters did not support requiring hospitals to
report all standard cost centers that describe services the hospitals
provide.
Response: In accordance with the principle of departmental
apportionment of costs at Sec. 413.53, hospitals are required to
report separately the costs and charges for each ancillary department
for which charges are customarily billed. Section 2302.8 of the PRM-I
defines a cost center as an organizational unit, generally a department
or its subunit, having a common functional purpose for which direct and
indirect costs are accumulated, allocated and apportioned. Language in
the PRM-II, Chapter 36, incorporated these policies when establishing
the standard ancillary cost centers in the cost report. Therefore, the
standard cost centers constitute the most minimum set of common cost
centers hospitals are required to report, assuming they maintain a
separate account for those services in the internal accounting systems.
We recognize that not all cost centers, whether standard or
nonstandard, apply to all providers. For example, where a provider
furnishes all radiological services in a single department and their
records are maintained in that manner, the provider would currently
enter a single entry identifying all radiological services on the
Radiology-Diagnostic line of Worksheet A and make no entries on the
Radiology-Therapeutic line and Radioisotopes line of the cost report.
However, currently, if these radiological services were furnished in
three separate departments (cost centers), then the corresponding
department data should also be accumulated as such in the provider's
accounting system and recorded similarly in the cost report.
Comment: While some commenters expressed agreement in theory with
establishing standard cost centers for CT Scanning, MRI, and Cardiac
Catheterization, many expressed significant concern with their actual
implementation. The commenters believed that allocating costs for these
services to specific cost centers could prove difficult, especially for
cardiac catheterization, and would in most cases be an estimate. Some
commenters warned that smaller hospitals might not have accounting
systems that allow matching costs to revenue in departments for these
diagnostic services. One commenter suggested that hospitals frequently
are slow to adopt new cost centers and that CMS should consider
requiring all providers to use the new cost centers. Some commenters
wanted to ensure that these services met CMS' definition for reporting
as a separate and distinct cost center. A number of commenters
requested that CMS delay implementation of these changes to the cost
report to allow industry-led initiatives to improve cost reporting,
especially capital cost finding, to take effect. Other commenters
believed that the agency should fully understand hospital costs for CT
and MRI before adding the standard cost centers. One commenter
suggested that failure to establish cost centers for CT Scanning and
MRI would amount to a violation of the Administrative Procedures Act
(APA) because the final regulation must have some rational connection
with the facts.
Response: RTI recommended these standard cost centers in order to
separately capture cost and charge data for high volume services
contributing to aggregation bias in the OPPS relative weights. Although
we did not propose to adopt these cost centers as standard cost
centers, we believe that doing so would help provide more accurate cost
estimates for CT scans, MRI, and Cardiac Catheterization, coupled with
improved hospital allocation of moveable equipment costs based on
dollar value or direct assignment, if the criteria in PRM-I, Section
2307 are met. All of these departments already are nonstandard cost
centers, and, therefore, we believe that they meet CMS' definition of
separate and distinct cost centers, if a hospital maintains separate
departments for these services and establishes separate accounts for
them in its internal accounting system.
We will review these comments again, should we consider proposing
additional standard cost centers in the cost report in future years.
We do not understand the comments concerning the APA. We did not
propose to adopt these three cost centers; we only requested comment on
RTI's recommendation. Further, RTI and commenters acknowledge that
hospitals do not appear to be appropriately allocating capital costs to
these specialized imaging cost centers, potentially using ``square
feet'' as the allocation basis rather than the recommended allocation
basis of ``dollar value.'' Finally, commenters will have an opportunity
to provide further input on revisions to the Medicare hospital cost
report form through a notice and comment process as we pursue changes
to the cost report through the PRA process.

[[Page 68527]]

Comment: Many commenters asked CMS to consider whether separate
cost centers for a variety of services should be created, such as Type
B emergency departments, in order to develop more accurate CCRs,
particularly in the context of potentially significant changes to the
cost report form. Other commenters recommended that CMS limit cost
report changes to cost center lines that have significant accuracy
problems in their current CCRs, so as not to place undue burden on
hospitals.
Response: The commenters will have an opportunity to provide
further input on revisions to the Medicare hospital cost report form
through the PRA notice and comment process anticipated later this year.
We note that RTI could not consider Type B emergency department visits
specifically in its analysis because Type B visits do not have a unique
UB-04 revenue code. Still, most commenters believed that the issue of
medical devices and supplies represented the most significant area of
charge compression and further changes to the cost report and
associated hospital reporting burden would not be warranted by
potential improvements in payment accuracy. We understand the
hospital's increased administrative burden that may result from changes
to the cost report because we have been told that changes to the cost
report involve significant accounting and billing modifications.
However, we note that most of the cost centers discussed in this
section are for departments or accounts that cost report data indicate
are already established within many hospitals' internal accounting
systems. As to the potential new billing requirements, we do not
believe most cost report changes would require significant billing
modifications if the hospital uses the most detailed UB-04 revenue
codes available. In summary, we will keep these comments in mind as we
consider other revisions to the Medicare hospital cost report.
Comment: Some commenters were very concerned with the results of
RTI's analysis, which observed very low CCRs for CT scanning and MRI.
They attributed this finding to a common hospital practice of
allocating fixed capital and moveable equipment costs using a per
square footage allocation statistic, rather than one that more
appropriately associates the high capital and equipment costs with the
CT and MRI cost centers. Some commenters believed that RTI's
conclusions were unjustified because RTI assumed that the full cost of
these specialized imaging services was fully captured by the CT and MRI
nonstandard cost centers. Many commenters requested more guidance
regarding how to properly allocate moveable equipment capital costs,
including the practice of direct assignment of equipment depreciation
and lease costs, and generally supported an educational initiative
about capital cost finding. Most commenters supported allocating
overhead based on direct assignment or dollar value of depreciation and
lease costs.
Response: We agree that cost allocation of the capital costs (for
example, depreciation or rental) of expensive moveable equipment using
``square feet'' as the allocation basis may lead to inaccuracies in
cost estimates, as the allocation basis bears no direct relationship to
the cost being allocated. Because the CMS-recommended allocation basis
for moveable equipment capital costs is ``dollar value,'' we suggest
that hospitals use that basis rather than ``square feet'' to allocate
the moveable equipment capital costs. (We refer readers to Section 3617
of PRM-II and column header on Worksheet B-1.) We note that ``dollar
value'' in the context of PRM-II, Section 3617 means the ``cost of the
equipment'' rather than ``depreciation expense and lease costs'' as the
commenters mentioned. We fully support industry-led hospital
educational initiatives related to capital cost finding, including
direct assignment. As to the cost finding, the policies in PRM-I,
Section 2313 permit a hospital to request that its Medicare contractor
approve a different allocation basis than the CMS-recommended basis if
the use of the basis results in more appropriate and more accurate
allocations. Hospitals may also directly assign the capital-related
cost if such assignment meets all the criteria of PRM-I, Section 2307.
However, we specify in PRM-I, Section 2307.A that, ``Direct assignment
of cost is the process of assigning directly allocable costs of a
general service cost center (we refer readers to Section 2302.9 of PRM-
I) to all cost centers receiving service from that cost center based
upon actual auditable usage'' and that, ``The direct assignment of
costs must be made as part of the provider's accounting system with
costs recorded in the ongoing normal accounting process.'' Therefore,
these policies prohibit a hospital from directly assigning moveable
equipment capital or building and fixture costs to, for example, only a
CT Scanning, MRI, or Radiology-Diagnostic cost center(s), and
allocating those moveable equipment capital or building and fixture
costs applicable to all the other cost centers through the stepdown
process. We note that these policies for allocating moveable equipment
and building and fixture costs not only impact the accuracy of the OPPS
cost estimates, but also impact the calculation of reimbursement for
hospitals paid under cost reimbursement (such as cancer hospitals or
CAHs).
2. Calculation of Median Costs
In this section of this final rule with comment period, we discuss
the use of claims to calculate the final OPPS payment rates for CY
2009. The hospital OPPS page on the CMS Web site on which this final
rule with comment period is posted provides an accounting of claims
used in the development of the final rates at: http://www.cms.hhs.gov/
HospitalOutpatientPPS. The accounting of claims used in the development
of this final rule with comment period is included on the Web site
under supplemental materials for the CY 2009 final rule with comment
period. 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.'' These files are
available for the claims that were used to calculate the final payment
rates for the CY 2009 OPPS.
As proposed, we used the following methodology to establish the
relative weights used in calculating the proposed OPPS payment rates
for CY 2009 shown in Addenda A and B to this final rule with comment
period.
a. Claims Preparation
We used the CY 2007 hospital outpatient claims processed on and
before June 30, 2008, to set the final relative weights for CY 2009. To
begin the calculation of the relative weights for CY 2009, we pulled
all claims for outpatient services furnished in CY 2007 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 would be made. For example,

[[Page 68528]]

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, the
U.S. Virgin Islands, American Samoa, and the Northern Mariana 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 107 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X (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. In
prior years, we also used claims of bill type 14X to set payment rates
under the OPPS. However, bill type 14X ceased to be used to report any
services for which payment is made under the OPPS effective April 1,
2006. Therefore, we did not use these claims in development of the
final CY 2009 OPPS rates.
2. Claims that were bill types 12X or 13X (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 2007 using the
revised CCR calculation which excluded the costs of paramedical
education programs and weighted the outpatient charges by the volume of
outpatient services furnished by the hospital. We refer readers to the
CY 2007 OPPS/ASC final rule with comment period for more information
(71 FR 67983 through 67985). We first limited the population of cost
reports to only those for hospitals that filed outpatient claims in CY
2007 before determining whether the CCRs for such hospitals were valid.
We then calculated the CCRs for each cost center and the overall
CCR for each hospital for which we had claims data. We did this using
hospital-specific data from the HCRIS. We used the most recent
available cost report data, in most cases, cost reports beginning in CY
2006. As proposed, for this final rule with comment period, we used the
most recently submitted cost reports to calculate the CCRs to be used
to calculate median costs for the proposed CY 2009 OPPS rates. 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 calculated both an overall CCR and cost center-specific
CCRs for each hospital. We used the overall CCR calculation discussed
in section II.A.1.c. of this final rule with comment period for all
purposes that require use of an overall CCR.
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
overall 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 (that is, departmental) level by
removing the CCRs for each cost center as outliers if they exceeded +/-
3 standard deviations from the geometric mean. We used a four-tiered
hierarchy of cost center CCRs, the revenue code-to-cost center
crosswalk, to match a cost center to every possible revenue code
appearing in the outpatient claims that is relevant to OPPS services,
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 cost center 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, if a visit was 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 revenue code-to-
cost center crosswalk is available for inspection and comment on the
CMS Web site: http://www.cms.hhs.gov/HospitalOutpatientPPS. Revenue
codes not used to set medians or to model impacts are identified with
an ``N'' in the revenue code-to-cost center crosswalk. We note that as
discussed in section II.A.1.c.(1) of this final rule with comment
period, we removed cost center 3580 (Recreational Therapy) from the
hierarchy of CCRs for revenue code 0904 (Activity Therapy).
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 of the CY 2009 OPPS/ASC proposed
rule contained a list of the revenue codes we proposed to package.
Revenue codes not included in Table 2 were those not allowed under the
OPPS because their services could not be paid under the OPPS (for
example, inpatient room and board charges), and thus charges with those
revenue codes were not packaged during development of the OPPS median
costs. One exception to this general methodology for converting charges
to costs on each claim is the calculation of median blood costs, as
discussed in section II.A.2.d.(2) of this final rule with comment
period.
Thus, we applied CCRs as described above to claims with bill type
12X or 13X, excluding all claims from CAHs and hospitals in Maryland,
Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana
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 moved to another
file claims that contained nothing but influenza and pneumococcal
pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at
reasonable cost and, therefore, these claims are not used to set OPPS
rates. We note that the separate file containing partial
hospitalization claims is included in the files that are available for
purchase as discussed above.
We next copied line-item costs for drugs, blood, and brachytherapy
sources (the lines stay on the claim, but are copied 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 cost and a per day mean and median cost for drugs,
radiopharmaceutical agents, blood and blood products, and brachytherapy
sources, as well as other information used to set payment rates, such
as a unit-to-day ratio for drugs.
We did not receive any public comments on our CY 2009 proposal to
prepare the claims to be split into usable groups and, therefore, we
are finalizing our proposal without modification.

[[Page 68529]]

b. Splitting Claims and Creation of ``Pseudo'' Single Claims
(1) Splitting Claims
We then split the remaining claims into five groups: single majors,
multiple majors, single minors, multiple minors, and other claims.
(Specific definitions of these groups follow below.) In the CY 2009
OPPS/ASC proposed rule (73 FR 41434), we proposed to continue our
current policy of defining major procedures as any procedure having a
status indicator of ``S,'' ``T,'' ``V,'' or ``X;'' defining minor
procedures as any code having a status indicator of ``F,'' ``G,''
``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and classifying ``other''
procedures as any code having a status indicator other than one that we
have classified as major or minor. For CY 2009, we proposed that status
indicator ``R'' would be assigned to blood and blood products; status
indicator ``U'' would be assigned to brachytherapy sources; status
indicator ``Q1'' would be assigned to all ``STVX-packaged codes;''
status indicator ``Q2'' would be assigned to all ``T-packaged codes;''
and status indicator ``Q3'' would be assigned to all codes that may be
paid through a composite APC based on composite-specific criteria or
paid separately through single code APCs when the criteria are not met.
The codes with proposed status indicators ``Q1,'' ``Q2,'' and ``Q3''
were previously assigned status indicator ``Q'' for the CY 2008 OPPS.
As we discuss in section XIII.A.1. of this final rule with comment
period, we proposed to assign these new status indicators to facilitate
identification of the different categories of codes. We proposed to
treat these codes in the same manner for data purposes for CY 2009 as
we treated them for CY 2008. Specifically, we proposed to continue to
evaluate whether the criteria for separate payment of codes with status
indicator ``Q1'' or ``Q2'' are met in determining whether they are
treated as major or minor codes. Codes with status indicator ``Q1'' or
``Q2'' are carried through the data either with status indicator ``N''
as packaged or, if they meet the criteria for separate payment, they
are given the status indicator of the APC to which they are assigned
and are considered as ``pseudo'' single major codes. Codes assigned
status indicator ``Q3'' are paid under individual APCs unless they
occur in the combinations that qualify for payment as composite APCs
and, therefore, they carry the status indicator of the individual APC
to which they are assigned through the data process and are treated as
major codes during both the split and ``pseudo'' single creation
process. The calculation of the median costs for composite APCs from
multiple major claims is discussed in section II.A.2.e. of this final
rule with comment period.
Specifically, we 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,''
which includes codes with status indicator ``Q3''); claims with one
unit of a status indicator ``Q1'' code (``STVX-packaged'') where there
was no code with status indicator ``S,'' ``T,'' ``V,'' or ``X'' on the
same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.
2. Multiple Major Claims: Claims with more than one separately
payable procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or
``X,'' which includes codes with status indicator ``Q3''), or multiple
units of one payable procedure. These claims include those codes with a
status indicator ``Q2'' code (``T-packaged'') where there was no
procedure with a status indicator ``T'' on the same claim on the same
date of service but where there was another separately paid procedure
on the same claim with the same date of service (that is, another code
with status indicator ``S,'' ``V,'' or ``X''). We also include in this
set claims that contained one unit of one code when the bilateral
modifier was appended to the code and the code was conditionally or
independently bilateral. In these cases, the claims represented more
than one unit of the service described by the code, notwithstanding
that only one unit was billed.
3. Single Minor Claims: Claims with a single HCPCS code that was
assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,''
``U,'' or ``N'' and not status indicator ``Q1'' (``STVX-packaged'') or
status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Minor Claims: Claims with multiple HCPCS codes that are
assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,''
``U,'' or ``N;'' claims that contain more than one code with status
indicator ``Q1'' (``STVX-packaged'') or more than one unit of a code
with status indicator ``Q1'' but no codes with status indicator ``S,''
``T,'' ``V,'' or ``X'' on the same date of service; or claims that
contain more than one code with status indicator ``Q2'' (``T-
packaged''), or ``Q2'' and ``Q1,'' or more than one unit of a code with
status indicator ``Q2'' but no code with status indicator ``T'' on the
same date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were 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 tests, and do not contain either a code for a separately
paid OPPS service or a code for a packaged service. Non-OPPS claims
include claims for therapy services paid sometimes under the OPPS but
billed, in these non-OPPS cases, with revenue codes indicating that the
therapy services would be paid under the Medicare Physician Fee
Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data files that can be purchased as described above. Claims that
contain codes to which we have assigned status indicators ``Q1''
(``STVX-packaged'') and ``Q2'' (``T-packaged'') appear in the data for
the single major file, the multiple major file, and the multiple minor
file used in this final rule with comment period. Claims that contain
codes to which we have assigned status indicator ``Q3'' (composite APC
members) appear in both the data of the single and multiple major files
used in this final rule with comment period, depending on the specific
composite calculation.
Comment: One commenter asked that CMS make the preliminary
packaging and composite data available to the public for review as soon
as possible. In addition, several commenters requested that CMS make
packaging data available to the public, including utilization rates and
median costs for packaged services, and general payment calculations,
to allow more transparency in the OPPS ratesetting process.
Response: We make available a considerable amount of data for
public analysis each year and, while we are not developing and
providing to the public the extensively detailed information that
commenters requested, we provide the public use files of claims and a
detailed narrative description of our data process that the public can
use to perform any desired analyses. In addition, we believe that the
commenters must examine the data themselves to develop the specific
arguments to support their requests for changes to payments under the
OPPS. In fact, several commenters submitted detailed analyses of how
often certain packaged services were provided with specific independent
services, and the amount by which packaged costs contribute to the
payment rate for the

[[Page 68530]]

independent service. We understand that the OPPS is a complex payment
system and that it is impossible to easily determine the quantitative
amount of packaged costs present in the median cost for every
independent service. However, based on the complex and detailed
comments that we received, commenters are clearly able to perform
meaningful analyses based on the public claims data available at this
time.
After consideration of the public comments received on our proposed
process of organizing claims by type, we are finalizing our CY 2009
proposal, without modification.
(2) Creation of ``Pseudo'' Single Claims
As proposed, to develop ``pseudo'' single claims for this final
rule with comment period, we examined both the multiple major claims
and the multiple minor claims. We first examined the multiple major
claims for dates of service to determine if we could break them into
``pseudo'' single procedure claims using the dates of service for all
lines on the claim. If we could create claims with single major
procedures by using dates 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 also used the bypass codes listed earlier in Table 1 and
discussed in section II.A.1.b. of this final rule with comment period
to remove separately payable procedures that we determined contained
limited or no packaged costs or that 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 list, we split the claim into two ``pseudo'' single
procedure claim 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 code 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 enabled us to use
claims that would otherwise be multiple procedure claims and could not
be used.
Where only one unit of one of an ``overlap bypass code'' appeared
on a claim with only one unit of another separately paid code, for the
CY 2009 OPPS/ASC proposed rule we used the line-item cost of the
``overlap bypass code'' to create a ``pseudo'' single procedure claim
for the ``overlap bypass code'' but did not use the remaining costs on
the claim for the other separately paid procedure.
Comment: Several commenters urged CMS to use as much claims data as
possible to set the CY 2009 OPPS median costs.
Response: We agree that it is preferable to use as much claims data
as possible to maximize the extent to which the median costs for any
given service or APC accurately reflect the relative costs of the
services. Although as discussed in section II.A.1.b. of this final rule
with comment period, the removal of radiation oncology codes that did
not pass the empirical criteria from the bypass list for this final
rule with comment period resulted in a smaller number of ``pseudo''
single claims, we were able to revise our treatment of the ``overlap
bypass codes'' to enable us to use the claims data that remained on the
claim after removal of the line-item cost for the bypass code when only
one unit of one separately paid code remained on the claim. We refer
readers to section II.A.1.b. of this final rule with comment period for
further discussion of this change.
For this final rule with comment period, we created ``pseudo''
single claims from the remaining information on these claims. We
assessed the claim to determine if, after removal of all lines for
bypass codes, including the ``overlap bypass codes,'' a single unit of
a single separately paid code remained on the claim. If so, we
attributed the packaged costs on the claim to the single unit of the
single remaining separately paid code other than the bypass code to
create a ``pseudo'' single claim. This allowed us to use more claims
data for ratesetting purposes for this final rule with comment period.
We also examined the multiple minor claims to determine whether we
could create ``pseudo'' single procedure claims. Specifically, where
the claim contained multiple codes with status indicator ``Q1''
(``STVX-packaged'') on the same date of service or contained multiple
units of a single code with status indicator ``Q1,'' we selected the
status indicator ``Q1'' HCPCS code that had the highest CY 2008
relative weight, moved the units to one on that HCPCS code, and
packaged all costs for other codes with status indicator ``Q1,'' as
well as all other packaged HCPCS code and packaged revenue code costs,
into a total single cost for the claim to create a ``pseudo'' single
claim for the selected code. We changed the status indicator for
selected codes from the data status indicator of ``N'' to the status
indicator of the APC to which the selected procedure was assigned for
further data processing and considered this claim as a major procedure
claim. We used this claim in the calculation of the APC median cost for
the status indicator ``Q1'' HCPCS code.
Similarly, where a multiple minor claim contained multiple codes
with status indicator ``Q2'' (``T-packaged'') or multiple units of a
single code with status indicator ``Q2,'' we selected the status
indicator ``Q2'' HCPCS code that had the highest CY 2008 relative
weight, moved the units to one on that HCPCS code, and packaged all
costs for other codes with status indicator ``Q2,'' as well as all
other packaged HCPCS code and packaged revenue code costs into a total
single cost for the claim to create a ``pseudo'' single claim for the
selected code. We changed the status indicator for the selected code
from a data status indicator of ``N'' to the status indicator of the
APC to which the selected code was assigned, and we considered this
claim as a major procedure claim.
Lastly, where a multiple minor claim contained multiple codes with
status indicator ``Q2'' (``T-packaged'') and status indicator ``Q1''
(``STVX-packaged''), we selected the status indicator ``Q2'' HCPCS code
(``T-packaged'') that had the highest relative weight for CY 2008,
moved the units to one on that HCPCS code, and packaged all costs for
other codes with status indicator ``Q2,'' costs of all codes with
status indicator ``Q1'' (``STVX-packaged''), and other packaged HCPCS
code and packaged revenue code costs into a total single cost for the
claim to create a ``pseudo'' single claim for the selected (``T-
packaged'') code. We favor status indicator ``Q2'' over ``Q1'' HCPCS
codes because ``Q2'' HCPCS codes have higher CY 2008 relative weights.
If a status indicator ``Q1'' HCPCS code had a higher CY 2008 relative
weight, it would become the primary code for the simulated single bill
process. We changed the status indicator for the selected status
indicator ``Q2'' (``T-packaged'') code from a data status indicator of
``N'' to the status indicator of the APC to which the selected code was
assigned and we considered this claim as a major procedure claim.
After we assessed the conditional packaging of HCPCS codes with
proposed status indicators ``Q1'' and

[[Page 68531]]

``Q2,'' we then assessed the claims to determine if the criteria for
the multiple imaging composite APCs, discussed in section II.A.2.e.(5)
of this final rule with comment period, were met. Where the criteria
for the imaging composite APCs were met, we created a ``single
session'' claim for the applicable imaging composite service and
determined whether we could use the claim in ratesetting. For HCPCS
codes that are both conditionally packaged and are members of a
multiple imaging composite APC, we first assessed whether the code
would be packaged and if so, the code ceased to be available for
further assessment as part of the composite APC. Because the packaged
code would not be a separately payable procedure, we considered it to
be unavailable for use in setting the composite APC median cost.
We excluded those claims that we were not able to convert to single
claims even after applying all of the techniques for creation of
``pseudo'' singles to multiple majors and to multiple minors. As has
been our practice in recent years, we also excluded claims that
contained codes that were viewed as independently or conditionally
bilateral and that contained the bilateral modifier (Modifier 50
(Bilateral procedure)) because the line-item cost for the code
represented the cost of two units of the procedure, notwithstanding
that the code appeared with a unit of one.
Comment: One commenter suggested that the handling of status
indicator ``Q1'' (``STVX-packaged'') and ``Q2'' (``T-packaged'')
conditionally packaged codes at the beginning of the ratesetting
process rather than in later stages packaged more lines than were
necessary or appropriate. The commenter suggested that applying the
packaging determination of the conditionally packaged code in later
stages would allow lines that would otherwise be packaged to be used
for ratesetting.
Response: The purposes of the various methods through which we
develop ``pseudo'' single claims is to isolate the resource cost of a
service in situations where that otherwise might not be possible. In
the case of the status indicator ``Q1'' and ``Q2'' conditionally
packaged codes, we only used lines that would actually be paid
separately under the final CY 2009 payment policies in estimating
median costs in order to accurately estimate the costs of these
services when they would be separately payable. The commenter's
suggested methodology would result in our incorporation of lines that
would be packaged when processed through the I/OCE, which we believe to
be inappropriate in the ``pseudo'' single claim development process
that we use to estimate the costs of services that would be separately
payable.
After consideration of the public comment received, we are
finalizing our CY 2009 proposal, without modification, for the process
by which we develop ``pseudo'' single claims, for this final rule with
comment period.
c. Completion of Claim Records and Median Cost Calculations
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this final rule with
comment period, the costs of those lines for codes with status
indicator ``Q1'' or ``Q2'' when they are not separately paid), and the
costs of packaged revenue codes into the cost of the single major
procedure remaining on the claim.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that requires CMS to review the final list of packaged revenue codes
for consistency with OPPS policy and ensure that future versions of the
I/OCE edit accordingly. We compared the packaged revenue codes in the
I/OCE to the final list of packaged revenue codes for the CY 2008 OPPS
(72 FR 66608 through 66609) and that we used for packaging costs in
median calculation. As a result of that analysis, we used the packaged
revenue codes for CY 2009 that are displayed in Table 2 below. We
received no public comments on the revenue codes that we proposed to
package for CY 2009 and, therefore, we are finalizing the list of
packaged revenue codes as proposed, without modification, as shown in
Table 2 below.
In this final rule with comment period, we replaced the NUBC
standard abbreviations for the revenue codes listed in Table 2 of the
CY 2009 OPPS/ASC proposed rule with the most current NUBC description
of the revenue code categories and subcategories to better articulate
the meanings of the revenue codes. However, while the labeling for the
packaged revenue codes changed, the list of revenue codes shown in
Table 2 has not changed from the revenue codes that we proposed to
package for CY 2009 as displayed in Table 2 of the CY 2009 OPPS/ASC
proposed rule (73 FR 41436 through 41437) and which we are finalizing
for the CY 2009 OPPS. In the course of making the changes in labeling
for the revenue codes in Table 2, we noticed some changes to revenue
categories and subcategories that we believe warrant further review for
future OPPS updates. Although we are finalizing the list of packaged
revenue codes in Table 2 for CY 2009, we intend to assess the NUBC
revenue codes to determine whether any changes to the list of packaged
revenue codes should be proposed for the CY 2010 OPPS. We welcome
public input and discussion during the comment period of this final
rule with comment period on the packaged revenue codes listed in Table
2, for purposes of assisting us in this assessment of revenue codes.
When submitting comments, commenters should remember that the OPPS pays
not only for services furnished to hospital outpatients but also pays
for a limited set of services furnished to inpatients who do not have
Part A coverage of hospital services furnished on the date on which the
service is furnished. Payment under the OPPS for these services, which
are reported on 12X bill types, may lead to the appropriate packaging
of some costs reported on inpatient revenue codes for purposes of the
OPPS ratesetting.

Table 2--CY 2009 Packaged Revenue Codes
------------------------------------------------------------------------
Revenue code Description
------------------------------------------------------------------------
0250........................ Pharmacy; General Classification.
0251........................ Pharmacy; Generic Drugs.
0252........................ Pharmacy; Non-Generic Drugs.
0254........................ Pharmacy; Drugs Incident to Other
Diagnostic Services.
0255........................ Pharmacy; Drugs Incident to Radiology.
0257........................ Pharmacy; Non-Prescription.
0258........................ Pharmacy; IV Solutions.
0259........................ Pharmacy; Other Pharmacy.

[[Page 68532]]

0260........................ IV Therapy; General Classification.
0262........................ IV Therapy; IV Therapy/Pharmacy Svcs.
0263........................ IV Therapy; IV Therapy/Drug/Supply
Delivery.
0264........................ IV Therapy; IV Therapy/Supplies.
0269........................ IV Therapy; Other IV Therapy.
0270........................ Medical/Surgical Supplies and Devices;
General Classification.
0271........................ Medical/Surgical Supplies and Devices; Non-
sterile Supply.
0272........................ Medical/Surgical Supplies and Devices;
Sterile Supply.
0273........................ Medical/Surgical Supplies and Devices;
Take Home Supplies.
0275........................ Medical/Surgical Supplies and Devices;
Pacemaker.
0276........................ Medical/Surgical Supplies and Devices;
Intraocular Lens.
0278........................ Medical/Surgical Supplies and Devices;
Other Implants.
0279........................ Medical/Surgical Supplies and Devices;
Other Supplies/Devices.
0280........................ Oncology; General Classification.
0289........................ Oncology; Other Oncology.
0343........................ Nuclear Medicine; Diagnostic
Radiopharmaceuticals.
0344........................ Nuclear Medicine; Therapeutic
Radiopharmaceuticals.
0370........................ Anesthesia; General Classification.
0371........................ Anesthesia; Anesthesia Incident to
Radiology.
0372........................ Anesthesia; Anesthesia Incident to Other
DX Services.
0379........................ Anesthesia; Other Anesthesia.
0390........................ Administration, Processing and Storage for
Blood and Blood Components; General
Classification.
0399........................ Administration, Processing and Storage for
Blood and Blood Components; Other Blood
Handling.
0560........................ Home Health (HH)--Medical Social Services;
General Classification.
0569........................ Home Health (HH)--Medical Social Services;
Other Med. Social Service.
0621........................ Medical Surgical Supplies--Extension of
027X; Supplies Incident to Radiology.
0622........................ Medical Surgical Supplies--Extension of
027X; Supplies Incident to Other DX
Services.
0624........................ Medical Surgical Supplies--Extension of
027X; FDA Investigational Devices.
0630........................ Pharmacy--Extension of 025X; Reserved.
0631........................ Pharmacy--Extension of 025X; Single Source
Drug.
0632........................ Pharmacy--Extension of 025X; Multiple
Source Drug.
0633........................ Pharmacy--Extension of 025X; Restrictive
Prescription.
0681........................ Trauma Response; Level I Trauma.
0682........................ Trauma Response; Level II Trauma.
0683........................ Trauma Response; Level III Trauma.
0684........................ Trauma Response; Level IV Trauma.
0689........................ Trauma Response; Other.
0700........................ Cast Room; General Classification.
0709........................ Cast Room; Reserved.
0710........................ Recovery Room; General Classification.
0719........................ Recovery Room; Reserved.
0720........................ Labor Room/Delivery; General
Classification.
0721........................ Labor Room/Delivery; Labor.
0732........................ EKG/ECG (Electrocardiogram); Telemetry.
0762........................ Specialty Room--Treatment/Observation
Room; Observation Room.
0801........................ Inpatient Renal Dialysis; Inpatient
Hemodialysis.
0802........................ Inpatient Renal Dialysis; Inpatient
Peritoneal Dialysis (Non-CAPD).
0803........................ Inpatient Renal Dialysis; Inpatient
Continuous Ambulatory Peritoneal Dialysis
(CAPD).
0804........................ Inpatient Renal Dialysis; Inpatient
Continuous Cycling Peritoneal Dialysis
(CCPD).
0809........................ Inpatient Renal Dialysis; Other Inpatient
Dialysis.
0810........................ Acquisition of Body Components; General
Classification.
0819........................ Inpatient Renal Dialysis; Other Donor.
0821........................ Hemodialysis-Outpatient or Home;
Hemodialysis Composite or Other Rate.
0824........................ Hemodialysis-Outpatient or Home;
Maintenance--100%.
0825........................ Hemodialysis-Outpatient or Home; Support
Services.
0829........................ Hemodialysis-Outpatient or Home; Other OP
Hemodialysis.
0942........................ Other Therapeutic Services (also see 095X,
an extension of 094x); Education/
Training.
------------------------------------------------------------------------

In addition, we excluded (1) claims that had zero costs after
summing all costs on the claim and (2) claims containing packaging flag
number 3. Effective for services furnished on or after July 1, 2004,
the I/OCE assigned packaging 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 the OPPS) for which the
fiscal intermediary or MAC was required to allocate the sum of charges
for services with a status indicator equaling ``S'' or ``T'' based on
the weight of the APC to which each code was assigned. We do not
believe that these charges, which were token charges as submitted by
the hospital, are valid reflections of hospital resources. Therefore,
we deleted these claims. We also deleted claims for which the charges
equaled the revenue center payment (that is, the Medicare payment) on
the assumption that where the charge equaled 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

[[Page 68533]]

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 proposed 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, therefore, would result in the most accurate
unadjusted 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).
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, approximately 58 million
claims were left for this final rule with comment period. Using these
58 million claims, we created approximately 99 million single and
``pseudo'' single claims, of which we used 99 million single bills
(after trimming out approximately 617,000 claims as discussed above in
this section) in the final CY 2009 median development and ratesetting.
We used the remaining claims to calculate the final CY 2009 median
costs for each separately payable HCPCS code and each APC. The
comparison of HCPCS code-specific and APC medians determines the
applicability of the 2 times rule. 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 median costs
and public comments received on the CY 2009 OPPS/ASC proposed rule and
reassigned HCPCS codes to different APCs where we believed that it was
appropriate. Section III. of this final rule with comment period
includes a discussion of certain HCPCS code assignment changes that
resulted from examination of the median costs, review of the public
comments, and for other reasons. The APC medians were recalculated
after we reassigned the affected HCPCS codes. Both the HCPCS code-
specific 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.
Comment: Several commenters objected to the volatility of the OPPS
rates from year to year. These commenters asserted that the absence of
stability in the OPPS rates creates budgeting, planning, and operating
problems for hospitals, and that as more care is provided on an
outpatient, rather than inpatient basis, the need for stable payment
rates from one year to the next becomes more important to hospitals.
Some commenters suggested that we limit reductions in APC payments to a
set amount. One commenter suggested that we reexamine the billing
system.
Response: There are a number of factors pertinent to the OPPS that
may cause median costs to change from one year to the next. Some of
these are a reflection of hospital behavior, and some of them are a
reflection of fundamental characteristics of the OPPS as defined in
statute. For example, the OPPS payment rates are based on hospital cost
report and claims data. However, hospital costs and charges change each
year and this results in both changes to the CCRs taken from the most
currently available cost reports and also differences in the charges on
the claims that are the basis of the calculation of the median costs on
which OPPS rates are based. Similarly, hospitals adjust their mix of
services from year to year by offering new services and ceasing to
furnish services or changing the proportion of the various services
they furnish, which has an impact on the CCRs that we derive from their
cost reports. CMS cannot stabilize these hospital-driven fundamental
inputs to the calculation of OPPS payment rates.
Moreover, there are other essential elements of the OPPS which
contribute to the changes in relative weights each year. These include,
but are not limited to, reassignments of HCPCS codes to APCs to rectify
2 times violations as required by the law, to address the costs of new
services, to address differences in hospitals' costs that may result
from changes in medical practice, and to respond to public comments.
Our efforts to improve payment accuracy may also contribute to payment
volatility in the short run, as may be the case when we are eventually
able to use more specific CCRs to estimate the costs of implantable
devices, based on the final policy that we adopted to disaggregate the
single cost center for medical supplies into two more specific cost
centers, as described in the FY 2009 IPPS final rule (73 FR 48458
through 48467). Moreover, for some services, we cannot avoid using
small numbers of claims, either because the volume of services is
naturally low or because the claims data do not facilitate the
calculation of a median cost for a single service. Where there are
small numbers of claims that are used in median calculation, there is
more volatility in the median cost from one year to the next. Lastly,
changes to OPPS payment policy (for example, changes to packaging) also
contribute to some extent to the fluctuations in the OPPS payment rates
for the same services from year to year.
We cannot avoid the naturally occurring volatility in the cost
report and claims data that hospitals submit and on which the payment
rates are based. Moreover (with limited exceptions), we are required by
law to reassign HCPCS codes to APCs where it is necessary to avoid 2
times violations. However, we have made other changes to resolve some
of the other potential reasons for instability from year to year.
Specifically, we continue to seek ways to use more claims data so that
we have fewer APCs for which there are small numbers of single bills
used to set the APC median costs. Moreover, we have tried to eliminate
APCs with very small numbers of single bills where we could do so. We
recognize that changes to payment policies, such as the packaging of
payment for ancillary and supportive services and the implementation of
composite APCs, may contribute to volatility in payment rates in the
short term, but we believe that larger payment packages and bundles
should help to stabilize payments in future years by enabling us to use
more claims data and by establishing payments for larger groups of
services.
Comment: Some commenters asked that CMS provide an adjustment for
medical education costs under the OPPS because many of the costs of
teaching services are now incurred in the HOPD as services previously
furnished only in the inpatient setting are now being furnished in the
HOPD. These commenters stated that CMS indicated that it would study
the costs and payment differential among different classes of providers
in the April 7, 2000 OPPS final rule but has not done so. They
recommended that CMS study whether the hospital outpatient costs of
teaching hospitals are higher than the costs of other hospitals for
purposes of determining whether there should be a teaching hospital
adjustment. The

[[Page 68534]]

commenters explained that their internal analysis of 2006 Medicare cost
reports showed that the average outpatient margins were -27.3 for major
teaching hospitals, -13.0 for other teaching hospitals, and -15.2 for
nonteaching hospitals. They believed that these findings demonstrated
that the hospital outpatient costs of major teaching hospitals are
significantly greater than the costs of other hospitals. The commenters
requested that CMS conduct its own analysis and that if that analysis
showed a difference due to the unique missions of teaching hospitals,
CMS should add a teaching adjustment to the OPPS.
Response: Unlike payment under the IPPS, the law does not provide
for payment for indirect medical education costs to be made under the
OPPS. Section 1833(t)(2)(E) of the Act, as added by section 4523 of the
BBA, states that the Secretary shall establish, in a budget neutral
manner ``* * * other adjustments as determined to be necessary to
ensure equitable payments, such as adjustments for certain classes of
hospitals.'' We have not found such an adjustment to be necessary to
ensure equitable payments to teaching hospitals and, therefore, have
not developed such an adjustment. We do not believe an indirect medical
education add-on payment is appropriate in a budget neutral payment
system where such changes would result in reduced payments to all other
hospitals. Furthermore, in this final rule with comment period, we have
developed payment weights that we believe provide appropriate and
adequate payment for the complex medical services, such as visits
requiring prolonged observation, new technology services, and device-
dependent procedures, which we understand are disproportionately
furnished by teaching hospitals. We note that teaching hospitals
benefit from the CY 2009 recalibration of the APCs in this final rule
with comment period. The final CY 2009 impacts by class of hospital are
displayed in Table 51 in section XXIII.B. of this final rule with
comment period.
After consideration of the public comments received, we are
finalizing our proposed CY 2009 methodology for calculating the median
costs upon which the CY 2009 OPPS payment rates are based.
In some cases, APC median costs are calculated using variations of
the process outlined above. Section II.A.2.d. of this final rule with
comment period that follows addresses the calculation of single APC
criteria-based median costs. Section II.A.2.e. of this final rule with
comment period discusses the calculation of composite APC criteria-
based median costs. Section X.B. of this final rule with comment period
addresses the methodology for calculating the median cost for partial
hospitalization services.
d. Calculation of Single Procedure APC Criteria-Based Median Costs
(1) Device-Dependent APCs
Device-dependent APCs are populated by CPT codes that usually, but
not always, require that a device be implanted or used to perform the
procedure. For a full history of how we have calculated payment rates
for device-dependent APCs in previous years and a detailed discussion
of how we developed the standard device-dependent APC ratesetting
methodology, we refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66739 through 66742). Overviews of the procedure-
to-device edits and device-to-procedure edits used in ratesetting for
device-dependent APCs are available in the CY 2005 OPPS final rule with
comment period (69 FR 65761 through 65763) and the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68070 through 68071).
In the CY 2009 OPPS/ASC proposed rule (73 FR 41437), we proposed
for CY 2009 to continue using our standard methodology for calculating
median costs for device-dependent APCs, which utilizes claims data that
generally represent the full cost of the required device. Specifically,
we proposed to calculate the medians for device-dependent APCs for CY
2009 using only the subset of single procedure claims from CY 2007
claims data that pass the procedure-to-device and device-to-procedure
edits; do not contain token charges (less than $1.01) for devices; and
do not contain the ``FB'' modifier signifying that the device was
furnished without cost to the provider, supplier, or practitioner, or
where a full credit was received. We believe that this methodology gave
us the most appropriate proposed rule median costs for device-dependent
APCs in which the hospital incurs the full cost of the device.
While the median costs for the majority of device-dependent APCs
showed increases from CY 2008 based on the CY 2009 proposed rule claims
data, the median costs for three APCs involving electrode/lead
implantation decreased significantly compared to the CY 2008 final rule
with comment period median costs. Specifically, APC 0106 (Insertion/
Replacement of Pacemaker Leads and/or Electrodes), APC 0225
(Implantation of Neurostimulator Electrodes, Cranial Nerve), and APC
0418 (Insertion of Left Ventricular Pacing Electrode) demonstrated
median decreases of 26 percent, 52 percent, and 47 percent,
respectively. As indicated in the CY 2009 OPPS/ASC proposed rule (73 FR
41437), we believe these decreases reflect hospitals' correction of
inaccurate and incomplete billing practices for these services due to
the implementation of device-to-procedure edits beginning in CY 2007.
As discussed in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68070 through 68071), in the course of examining claims data for
calculation of the CY 2007 OPPS payment rates, we identified
circumstances in which hospitals billed a device code but failed to
bill any procedure code with which the device could be used correctly.
For APCs 0106, 0225, and 0418 in particular, we found that hospitals
frequently billed a procedure code for lead/electrode implantation with
device HCPCS codes for a lead/electrode and the more expensive pulse
generator but failed to report a procedure code for generator
implantation. These errors in billing led to the costs of the pulse
generator being packaged incorrectly into the procedure codes for lead/
electrode implantation. Hospitals that coded and billed in this manner
received no payment for the procedure to implant the pulse generator,
but these erroneous claims caused the OPPS payment rate for the lead/
electrode implantation APCs to be inappropriately high. To address this
problem, we implemented edits to correct the coding for CY 2007, and
the proposed decreases to the median costs of APCs 0106, 0225, and 0418
for CY 2009 were consistent with what we expected, based on what we
understood to be the nature of the services and the costs of correctly
coded devices. In the CY 2009 OPPS/ASC proposed rule (73 FR 41438), we
also noted an anticipated decrease in our frequency of single procedure
claims for the services assigned to APCs 0106, 0225, and 0418, most
likely because the device-to-procedure edits led hospitals to include
the pulse generator implantation HCPCS codes on the same claims,
resulting in fewer single procedure claims for the lead/electrode
implantation procedures.
At the August 2008 meeting of the APC Panel, one presenter stated
that the proposed decrease in payment for CY 2009 for APC 0225, which
includes a procedure to implant a neurostimulator electrode for vagus
nerve stimulation (VNS), would make VNS too costly for

[[Page 68535]]

providers and beneficiaries relative to its OPPS payment. The presenter
requested that CMS reassign CPT code 64553 (Percutaneous implantation
of neurostimulator electrodes, cranial nerve) to APC 0040 (Percutaneous
Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve),
leaving CPT code 64573 (Incision for implantation of neurostimulator
electrodes, cranial nerve) as the only code in APC 0225 (CPT code 64573
describes the lead implantation for VNS). The presenter argued that the
procedure described by CPT code 64553 is more similar clinically and in
terms of resource utilization to the procedures assigned to APC 0040
than to the other procedure assigned to APC 0225. The presenter also
requested that, after reassigning CPT code 64553 to APC 0040, CMS
calculate the payment rate for APC 0225 using only claims for patients
with epilepsy. According to the presenter, in May 2007, CMS issued a
National Coverage Determination (NCD) denying Medicare coverage of VNS
for the treatment of depression, while maintaining coverage for certain
epilepsy indications. The presenter stated that it was possible the
Medicare noncoverage of VNS for depression may have confused hospital
providers, leading to incorrect hospital coding and submission of
epilepsy claims. In response to this two-part request, the APC Panel
recommended that CMS reassign CPT code 64553 to APC 0040, and that CMS
recalculate the median cost of APC 0225 based solely on claims for CPT
code 64573. The APC Panel did not make a recommendation related to the
requester's second request, to include only claims with epilepsy
indications in ratesetting for APC 0225. We discuss our response to
these two APC Panel recommendations below under the comments and
responses section of this section of this final rule with comment
period.
We also indicated in the CY 2009 OPPS/ASC proposed rule (73 FR
41438), that APC 0625 (Level IV Vascular Access Procedures) as
configured for CY 2008 and calculated based on CY 2007 claims data also
demonstrated a significant decrease in median cost (approximately 59
percent) relative to CY 2008 (based on CY 2006 claims data). We believe
this decrease is attributable to the implementation of procedure-to-
device edits on January 1, 2007, for the only CPT code assigned to this
APC, specifically CPT code 36566 (Insertion of tunneled centrally
inserted central venous access device, requiring two catheters via two
separate venous access sites; with subcutaneous port(s)). Because the
procedure described by CPT code 36566 involves the insertion of a
dialysis access system, our edits require that the HCPCS code for that
device be present on the claim any time a hospital bills CPT code
36566. Prior to January 1, 2007, we believe that hospitals often
reported CPT code 36566 without also reporting the device HCPCS code
for the dialysis access system, or incorrectly billed CPT code 36566
for procedures that do not require the use of the device. Therefore,
with the implementation of procedure-to-device edits, the volume of
total CY 2007 claims for CPT code 36566 decreased as hospitals
corrected their claims to report this service only under the
appropriate circumstances, while the correctly coded claims reporting
the required device (and available for CY 2009 ratesetting) increased
significantly from CY 2006 to CY 2007. We believe that the CY 2009
proposed rule median cost of approximately $2,092 calculated for CPT
code 36566 from those claims was accurate and appropriately reflected
correct hospital reporting of the procedure and the associated device.
Furthermore, because of the decrease in the median cost for CPT code
36566, we proposed to reassign the code to APC 0623 (Level III Vascular
Access Procedures), which had a proposed median cost of approximately
$1,939. We also proposed to delete APC 0625 because no other procedures
would map to this APC if CPT code 36566 was reassigned.
In addition, we noted a decrease of approximately 19 percent for
APC 0681 (Knee Arthroplasty) relative to CY 2008, which we believe is
attributable to a low volume of services being performed by a small
number of providers (73 FR 41438) and to a single provider furnishing
the majority of the services. As we have stated in the past, some
fluctuation in relative costs from year to year is to be expected in a
prospective payment system, particularly for low volume device-
dependent APCs such as APC 0681, for which the proposed median cost
increased approximately 37 percent from CY 2007 to CY 2008.
Comment: Many commenters supported the CMS proposal to set the
median costs for device-dependent APCs using the standard device-
dependent APC ratesetting methodology in CY 2009, and expressed
appreciation of CMS' efforts to use only those claims that reflect the
full costs of devices in ratesetting for device-dependent APCs. One
commenter remarked that the methodology of using only those claims that
include the appropriate device HCPCS codes to calculate payment rates
for procedures that require a device to be implanted or used results in
payment rates that more appropriately reflect the costs associated with
device-dependent APCs. The commenter supported the proposed payment
increases for APC 0385 (Level I Prosthetic Urological Procedures) and
APC 0386 (Level II Prosthetic Urological Procedures) in particular.
Some commenters supported the mandatory reporting of all HCPCS device
C-codes, and urged CMS to continue educating hospitals on the
importance of accurate coding for devices, supplies, and other
technologies. Those commenters recommended that CMS focus on educating
providers on the accurate use of supply codes, particularly HCPCS code
A4306 (Disposable drug delivery system, flow rate of less than 50 ml
per hour), which the commenters believed was reported inappropriately
by many hospitals.
Several commenters also requested that CMS exclude claims from
ratesetting in CY 2010 and beyond that contain the ``FC'' modifier,
indicating the procedure was performed using a device for which the
hospital received partial credit. According to the commenters,
exclusion of these claims is necessary to ensure that only claims that
contain the full costs of devices are included in ratesetting.
Response: We appreciate the commenters' support of the standard
device-dependent APC ratesetting methodology. We agree that accurate
reporting of device, supply, and technology charges will help to ensure
that these items are appropriately accounted for in future years' OPPS
payment rates. We encourage stakeholders to carefully review HCPCS code
descriptors, as well as any guidance CMS may have provided for specific
HCPCS codes. In addition, we have provided further instructions on the
billing of medical and surgical supplies in the October 2008 OPPS
update (Transmittal 1599, Change Request 6196, dated September 19,
2008). For HCPCS codes that are paid under the OPPS, providers may also
submit inquiries to the AHA Central Office on HCPCS, which serves as a
clearinghouse on the proper use of Level I HCPCS codes for hospital
providers and certain Level II HCPCS codes for hospitals, physicians,
and other health professionals. Inquiries must be submitted using the
approved form, which may be downloaded from the AHA Web site (http://
www.ahacentraloffice.org) and either faxed to 312-422-4583 or mailed
directly to the AHA Central Office: Central Office on HCPCS, American

[[Page 68536]]

Hospital Association, One North Franklin, Chicago, IL 60606.
The ``FC'' modifier became effective January 1, 2008, and will be
present for the first time on claims used in OPPS ratesetting for CY
2010. Any refinements to our standard device-dependent APC ratesetting
methodology for years beyond CY 2009 would be addressed in future
rulemaking.
Comment: Several commenters remarked that the CY 2009 OPPS/ASC
proposed rule included several reductions to the payments for device-
dependent APCs that they believe may threaten medical technology
innovation and patient access. The commenters made the general
recommendation that CMS study further the claims for any APC for which
the calculated payment reduction would be greater than 10 percent and
take action to correct issues that may reduce these payments
artificially. The commenters further recommended that CMS limit the
reduction in payment that any device-dependent APC may experience in 1
year to 10 percent. Other commenters expressed concerns specifically
about the proposed payment reductions for APCs 0106 and 0418, arguing
that the proposed payment rates would not cover outpatient hospital
costs associated with providing the procedures assigned to these APCs,
and that CMS should take steps to stabilize payment for these APCs to
protect beneficiary access.
Several commenters also requested that CMS reassign CPT code 64553
from APC 0225 to APC 0040 as a means to address what they perceived to
be inadequate payment for the only other procedure assigned to APC
0225, which is described by CPT code 64573, consistent with the
recommendation made by the APC Panel at its August 2008 meeting. These
commenters argued that the procedure described by CPT code 64553 is
more similar clinically and/or in terms of resource utilization to
procedures that are assigned to APC 0040, because these procedures have
median costs that more closely approximate the median cost of CPT code
64553 and involve the percutaneous implantation of neurostimulator
electrodes through an introducer needle. They asserted that CPT code
64573, in contrast, describes electrode placement by using a scalpel to
incise skin. In addition to requesting the reassignment of CPT code
64553 to APC 0040, some commenters asked CMS to calculate the median
cost for CPT code 64573 using only single procedure claims with an
epilepsy diagnosis code that is consistent with CMS' NCD for VNS,
effective May 4, 2007.
Response: We do not agree that it is necessary to implement a
payment reduction limit of 10 percent or take other steps to stabilize
payment for device-dependent APCs in CY 2009. We reviewed the data for
all device-dependent APCs with significant changes in median costs from
CY 2008 to CY 2009, as is our usual practice, to ensure there are no
data errors that would inappropriately or artificially impact the
median costs. We found no reason to believe that the claims used to
calculate the median costs for all device-dependent APCs, including
those with median costs that declined for CY 2009 relative to CY 2008,
did not appropriately reflect hospitals' relative costs for providing
those services as reported to us in the claims and cost report data.
Because we believe the device-dependent APC median costs appropriately
reflect hospital costs, implementing a payment reduction limit would
artificially and inaccurately inflate payment rates. As described
previously in this section and in the CY 2009 OPPS/ASC proposed rule
(73 FR 41437 through 41438), the decreases in median costs for three
APCs involving electrode/lead implantation, APCs 0106, 0225, and 0418,
are expected and appropriate based on what we understand to be the
nature of the services included in these APCs and the costs of
correctly coded devices. We believe that the median costs calculated
for these APCs were inappropriately high in years prior to CY 2009 due
to widespread errors in how hospitals billed for the implantation of
leads/electrodes and the pulse generators connected to the leads/
electrodes. Prior to CY 2007, hospitals frequently billed a procedure
code for lead/electrode implantation with device HCPCS codes for a
lead/electrode and the more costly pulse generator, but failed to
report a procedure code for the implantation of the pulse generator. As
a result, hospitals received only one APC payment for implanting both
the electrode/lead and the pulse generator when they should have
received separate APC payments for both the electrode/lead implantation
and the pulse generator implantation. These hospital billing errors
also resulted in the inappropriate attribution of the pulse generator
costs to the median costs for the APCs for the less expensive
electrode/lead implantation procedures.
The implementation of device-to-procedure edits in CY 2007
corrected these incorrect and incomplete billing practices by requiring
hospitals to include a procedure code for pulse generator implantation
when they report a device HCPCS code for a pulse generator or to remove
the device HCPCS code for the pulse generator from the claim if it was
not furnished. As described above in this section, prior to CY 2007,
some hospitals billed a procedure code for lead/electrode implantation
with device HCPCS codes for both a lead/electrode and the more costly
pulse generator, but did not bill a procedure code for implantation of
the pulse generator. This practice resulted in an erroneous single
procedure claim that was used for ratesetting in years prior to CY
2009. However, beginning in CY 2007, hospitals reported such services
with a procedure code for lead/electrode implantation, a device HCPCS
code for the lead/electrode, a procedure code for pulse generator
implantation, and a device HCPCS code for the pulse generator
(resulting in a multiple procedure claim that would not be used for
ratesetting). Thus, for the first time in CY 2009, we no longer have
single procedure claims available for ratesetting that would result in
the inappropriate attribution of pulse generator costs to lead/
electrode implantation APCs. Where the edits result in hospitals
billing both the CPT code for the insertion of the leads and the CPT
code for the implantation of the device, hospitals are being correctly
paid considerably more than they were being paid when they were billing
incorrectly. Therefore, we believe that the device-to-procedure edits
result both in more accurate claims payment and more appropriate
relative weights for these services.
We agree with the commenters and the APC Panel that the procedure
described by CPT code 64553 is more similar clinically and in terms of
resource utilization to procedures that are assigned to APC 0040 than
to the other procedure assigned to APC 0225. Therefore, for CY 2009, we
are accepting the APC Panel's recommendation and reassigning the
procedure described by CPT code 64553 to APC 0040, and changing the
title of APC 0040 to ``Percutaneous Implantation of Neurostimulator
Electrode.'' As a result of our decision to reassign CPT code 64553
from APC 0225 to APC 0040, CPT code 64573 is the only CPT code assigned
to APC 0225. Consistent with the APC Panel's second recommendation, we
are recalculating the median cost of APC 0225 based solely on claims
for CPT code 64573.
We do not agree with the commenters that we should calculate the
median cost for CPT code 64573 using only single procedure claims with
an epilepsy diagnosis code based on CMS'

[[Page 68537]]

NCD for VNS therapy, effective May 4, 2007. OPPS payment rates
typically apply regardless of the medical condition for which a device
is used; thus, APC median costs are developed based on claims for all
patient diagnoses. Furthermore, we note that the NCD for VNS made
effective on May 4, 2007, establishes noncoverage of VNS specifically
for indications of depression. We examined the diagnosis codes present
on the single procedure claims for CPT code 64573 that we would use in
ratesetting, and found that, while diagnosis codes for epilepsy most
commonly appeared on the claims, most nonepilepsy diagnoses present on
the claims were for conditions other than depression. As such, the
recommendation by some commenters to utilize only those claims with an
epilepsy diagnosis for ratesetting would result predominantly in the
exclusion of claims with diagnoses other than depression, to which the
VNS national noncoverage decision does not apply. Therefore, we find no
basis to deviate from our standard device-dependent APC ratesetting
methodology, which does not take into consideration patient diagnoses,
and we will not exclude claims for VNS therapy with diagnoses other
than epilepsy from ratesetting.
Comment: One commenter stated that, while the standard device-
dependent APC ratesetting methodology of using single procedure claims
for calculating median costs is appropriate for many device-dependent
APCs, this approach distorts and undervalues payment for those services
where multiple device-dependent procedures are conducted within the
same session. The commenter pointed out, as an example, that the lead/
electrode implantation procedures assigned to APC 0225 are frequently
performed with pulse generator implantation procedures assigned to APC
0039 (Level I Implantation of Neurostimulator). The commenter also
noted that, according to an analysis of CY 2007 claims data available
for the CY 2009 OPPS/ASC proposed rule, claims for device-dependent
APCs more commonly include multiple procedures than claims for other
types of APCs. The commenter encouraged CMS to develop a methodology to
ensure that packaged costs can be allocated across multiple procedures
performed on the same date of service. Until such a methodology can be
implemented, the commenter asked that CMS institute a payment reduction
limit of no more than 10 percent annually for device-dependent APCs
such as APC 0225 with a large proportion of multiple procedure claims.
Other commenters shared similar concerns about the use of single
procedure claims in ratesetting for device-dependent APCs and suggested
that CMS implement a composite payment methodology for certain
procedures assigned to device-dependent APCs for which relatively few
correctly coded single procedure claims are available for ratesetting,
specifically those procedures involving the implantation of a cardiac
resynchronization therapy defibrillator (CRT-D) or cardiac
resynchronization therapy pacemaker (CRT-P).
Response: We do not agree that it is necessary, as one commenter
suggested, to establish a payment reduction limit for APC 0225, or any
other device-dependent APC, until we have developed a methodology for
device-dependent ratesetting that can incorporate data from multiple
procedure claims. For all OPPS services, we continue our efforts to use
the data from as many multiple procedure claims as possible, through
approaches such as use of the bypass list and date splitting of claims
as described further in section II.A. of this final rule with comment
period, and through methodologies such as increased packaging and
composite APCs. We believe that the standard device-dependent APC
ratesetting methodology currently provides the most appropriate median
costs for device-dependent APCs in which the hospital incurs the full
cost of the device. As we discuss above in this section, we believe
that decreases in the median costs for APC 0225 and other device-
dependent APCs involving lead/electrode implantation are appropriate
and attributable to the correction of inaccurate and incomplete
hospital billing practices. However, we recognize the importance of
maximizing our utilization of claims data, especially of claims that
reflect common clinical scenarios, and that the number of single
procedure claims available for ratesetting for many device-dependent
APCs comprise a very low proportion of total bills for procedures that
map to those APCs. We will continue to examine ways to utilize more
claims data to set payment rates under the OPPS, including payment
rates for device-dependent APCs, and appreciate the commenters'
thoughtful suggestions. We refer readers to section II.A.2.e. of this
final rule with comment period for a detailed summary of the public
comments related to the establishment of a composite payment
methodology for procedures involving CRT-D and CRT-P devices and our
responses.
Comment: Several commenters requested that CMS alter the standard
device-dependent APC ratesetting methodology in order to utilize data
from multiple procedure claims for APC 0222 (Level II Implantation of
Neurostimulator). They noted that, for CY 2008, CMS reconfigured the
APC assignments for implantable neurostimulators to accommodate the
inclusion of procedures involving both nonrechargeable and rechargeable
neurostimulators (the pass-through status for which expired in CY 2007)
and improve resource homogeneity among the neurostimulator APCs. The
commenters further noted that the revised configuration provides
payment for procedures involving mostly nonrechargeable neurostimulator
technology (that is, cranial, sacral, gastric, or other peripheral
neurostimulators) through two APCs--APC 0039 (Level I Implantation of
Neurostimulator) and APC 0315 (Level III Implantation of
Neurostimulator)--while establishing a single APC, APC 0222, for spinal
neurostimulator implantation, which commonly utilizes either
rechargeable or nonrechargeable technologies. The commenters summarized
CMS' assessment in the CY 2008 OPPS/ASC final rule with comment period
that, to the extent rechargeable spinal neurostimulators become the
dominant device implanted in procedures described by the only CPT code
assigned to APC 0222, CPT code 63685 (Insertion or replacement of
spinal neurostimulator pulse generator or receiver, direct or inductive
coupling), the median cost for APC 0222 may increase to reflect
contemporary utilization patterns.
The commenters raised concerns that analyses of the CY 2007 claims
data demonstrate that the evolution to rechargeable spinal
neurostimulators, while occurring in clinical practice and seen in the
total billed claims, is not well represented in single procedure claims
used for ratesetting for APC 0222. As a result, the commenters stated,
the use of single procedure claims in the calculation of the median
costs for APC 0222 systematically underestimates the use and cost of
rechargeable neurostimulators. According to the data provided by the
commenters, rechargeable neurostimulators are present on only 40 to 43
percent of single procedure claims, as opposed to 57 to 60 percent of
all claims (both single and multiple procedure) for APC 0222. If CMS
were to replace the device cost estimated for single procedure claims
with the device cost estimated for total claims, the commenters stated,
the median cost for APC 0222 would increase by 7 percent.

[[Page 68538]]

One commenter also contended that the median line-item device cost for
neurostimulator generators was 17 percent lower in ``pure single
claims'' when compared to all claims assigned to APC 0222. Another
commenter noted that neurostimulator implantation procedures are
reported with two separately payable CPT codes and consequently almost
always appear on multiple procedure claims. The commenter argued that
the single procedure claims used in ratesetting are either replacement
procedures or incorrectly coded claims and do not reflect clinical
practice in terms of either procedural frequency or cost.
Several commenters recommended that CMS calculate the payment rate
for APC 0222 using the median device cost for rechargeable and
nonrechargeable neurostimulators from all claims and the median
procedure cost for CPT code 63685 from single procedure claims, arguing
that larger claim samples lead to more accurate payment rates. The
commenters stated that this would be an extension of CMS' process of
using ``pseudo'' single procedure claims to calculate median costs, and
would be consistent with CMS' focus on converting multiple procedure
claims to ``pseudo'' single procedure claims in order to maximize the
use of claims data in calculating median costs for OPPS ratesetting.
According to the commenters, this approach would result in a 7 percent
increase in the median cost for APC 0222 compared to the median cost
calculated for the CY 2009 OPPS/ASC proposed rule.
Another commenter expressed the same concern that rechargeable
neurostimulator costs were underrepresented in the claims data used to
establish the median cost for APC 0222 and urged CMS to split APC 0222
into separate APCs based on whether a rechargeable or nonrechargeable
spinal neurostimulator generator is utilized. Alternatively, the
commenter asked CMS to consider a ratesetting methodology that, similar
to the method offered by other commenters, would incorporate data from
single and multiple procedure claims and result in a 9-percent increase
in the median cost for APC 0222.
Response: We do not believe it is necessary or appropriate to alter
our ratesetting methodology for device-dependent APC 0222. We believe
that the revised neurostimulator APC configuration adopted in CY 2008,
and our standard device-dependent APC ratesetting methodology, allow us
to calculate appropriate OPPS payment rates for procedures involving
spinal neurostimulators. The foundation of a system of relative weights
is the relativity of the costs of all services to one another, as
derived from a standardized system that uses standardized inputs and a
consistent methodology. Adoption of a ratesetting methodology for APC
0222 that is different from our standard device-dependent APC
ratesetting would undermine this relativity. A policy to provide
different payments for the same procedures according to the types of
devices implanted also would not be consistent with our overall
strategy under the OPPS to encourage hospitals to use resources more
efficiently by increasing the size of the payment bundles, as we
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66715 through 66716).
According to information provided by certain manufacturers of
rechargeable neurostimulators in response to the CY 2008 OPPS/ASC final
rule with comment period, rechargeable neurostimulators are clinically
indicated in only a subset of patients for whom spinal neurostimulation
is a treatment option. These manufacturers estimated that approximately
35 percent of these patients are candidates for rechargeable spinal
neurostimulators, although this proportion may be higher (72 FR 66715).
We note that, according to the data analysis submitted by the
commenters, rechargeable neurostimulators were used in 40 to 43 percent
of spinal neurostimulator implantation procedures included on single
procedure claims for APC 0222 in CY 2007, and in 57 to 60 percent of
spinal neurostimulator implantation procedures included on all claims
(both single and multiple procedure) for APC 0222 in CY 2007.
Therefore, the rate of implantation of rechargeable neurostimulators in
Medicare beneficiaries in CY 2007 in the hospital outpatient setting
appears to have met or exceeded the expectations of certain
manufacturers that were expressed in their comments to the CY 2008
OPPS/ASC final rule with comment period. Based on these reported
analyses, rechargeable neurostimulator technology appears to have been
widely adopted into medical practice, and we expect that our CY 2009
OPPS payment rates will provide continued access to this technology for
those patients for whom rechargeable neurostimulators are clinically
indicated.
Comment: Several commenters stated that the proposed national
unadjusted CY 2009 OPPS payment rate for cochlear implantation is
significantly less than the average cost for the hospital to acquire
the cochlear device and the associated costs to provide the
implantation procedure and may impede patient access to this
technology. The cochlear device implantation procedure is described by
CPT code 69930 (Cochlear device implantation, with or without
mastoidectomy), the only CPT code assigned to APC 0259 (Level VII ENT
Procedures). The commenters remarked that, although the proposed CY
2009 OPPS payment rate is higher than the CY 2008 OPPS payment rate, it
is also less than the OPPS national unadjusted CY 2007 OPPS payment
rate, and occurs at a time when device costs and related hospital costs
continue to rise. Some commenters stated that the true cost of the
cochlear implant procedure, including the device and related surgical
costs, is between $35,000 and $40,000, depending on the specific
devices and services required for a given patient, while other
commenters indicated that the cost to hospitals is approximately
$32,000. Several commenters recommended that CMS adjust the median cost
upon which the OPPS payment rate for APC 0259 is based by substituting
a weighted average selling price of $24,500 for the median device cost
from the CY 2007 OPPS claims of $18,420, where this selling price was
calculated based on hospital invoice data supplied separately by the
two leading cochlear implant manufacturers. The commenters indicated
that this methodology would result in a median cost for APC 0259 of
$30,037. Other commenters referenced a 2006 analysis, which found the
average cost of cochlear implant procedures to be approximately
$33,364, and asked that CMS reconsider establishing payment based on
this figure.
The commenters also expressed concern about the proposed assignment
and payment rate of procedures involving auditory osseointegrated
devices, the pass-through status for which will expire on December 31,
2008. The commenters noted that CMS proposed in the CY 2009 OPPS/ASC
proposed rule to package payment for these devices, described by HCPCS
code L8690 (Auditory osseointegrated device, includes all internal and
external components), into payment for their associated implantation
procedures, described by CPT codes 69714 (Implantation, osseointegrated
implant, temporal bone, with percutaneous attachment to external speech
processor/cochlear stimulator; without mastoidectomy); 69715
(Implantation, osseointegrated implant, temporal bone, with
percutaneous attachment to external speech processor/cochlear

[[Page 68539]]

stimulator; with mastoidectomy); 69717 (Replacement (including removal
of existing device), osseointegrated implant, temporal bone, with
percutaneous attachment to external speech processor/cochlear
stimulator; without mastoidectomy); and 69718 (Replacement (including
removal of existing device), osseointegrated implant, temporal bone,
with percutaneous attachment to external speech processor/cochlear
stimulator; with mastoidectomy). Citing the CMS proposal to assign
these implantation procedures to APC 0425 (Level II Arthroplasty or
Implantation with Prosthesis) for CY 2009, the commenters stated that
the proposed payment rate for APC 0425 would be insufficient to
guarantee continued patient access to auditory osseointegrated devices
and argued that the appropriate payment for procedures involving these
devices should at least approximate the sum of the CY 2008 OPPS payment
rate for APC 0256 (Level VI ENT Procedures), the APC to which the
auditory osseointegrated device implantation procedures were assigned
in CY 2007, and the average sales price for auditory osseointegrated
devices, which they report totals $8,826 ($2,539 for APC 0256 plus
$6,287 for device costs). The commenters also remarked that auditory
osseointegrated device implantation procedures are clinically
dissimilar to the other procedures assigned to APC 0425 and recommended
that CMS establish a new APC for procedures involving osseointegrated
devices. According to the commenters, APC 0425 is an inappropriate APC
assignment for osseointegrated device implantation procedures because
it is comprised of less device-intensive orthopedic procedures for the
restoration of joint functioning. The commenters also stated that a
training and audit process for the billing offices of hospitals
performing osseointegrated device implantation procedures revealed
widespread billing and coding errors, and indicated that these billing
errors may contribute to a median cost calculation for osseointegrated
device implantation procedures that is too low.
Response: We disagree with the commenters that it would be
appropriate to use external pricing information in place of the costs
derived from the claims and Medicare cost report data for APC 0259 or
APC 0425 because we believe that to do so would distort the relativity
that is so fundamental to the integrity of the OPPS. We have not
systematically used external data to validate the median costs derived
from claims data because external data lack relativity to the estimated
costs derived from the claims and cost report data and generally are
not appropriate for determining relative weights that result in payment
rates. As described earlier in this section and in previous final rules
such as the CY 2008 OPPS/ASC final rule with comment period (72 FR
66742), the foundation of a system of relative weights is the
relativity of the costs of all services to one another, as derived from
a standardized system that uses standardized inputs and a consistent
methodology.
We also do not agree that auditory osseointegrated device
implantation procedures are so clinically dissimilar to the other
procedures assigned to APC 0425 that their assignment to that APC is
not warranted. All procedures assigned to APC 0425 involve the
implantation of a prosthestic device into bone. In regard to the
commenters' concerns that billing and coding errors may have
contributed to an inaccurate median cost calculation for APC 0425, we
note that, because APC 0425 is a device-dependent APC, we calculated
the median cost for osseointegrated device implantation procedures
using only correctly coded claims that included the HCPCS device code
for the osseointegrated device, L8690, along with an appropriate
procedure code. Effective January 1, 2009, we also will implement
procedure-to-device edits that require all hospitals paid under the
OPPS to report HCPCS code L8690 whenever they report an osseointegrated
device implantation procedure described by CPT codes 69714, 69715,
69717, and 69718. We also will implement the appropriate device-to-
procedure edits to ensure that when HCPCS code L8690 is reported, an
appropriate implantation procedure code is also included on the claim.
Comment: One commenter accepted CMS' consistent reliance on claims
data to establish the CY 2009 OPPS/ASC proposed rule median cost for
CPT code 36566 of $2,092, but disagreed with the proposed reassignment
of CPT code 36566 to APC 0623 and urged CMS to maintain APC 0625. While
the median cost for CPT code 36566 is very similar to the median costs
of other procedures assigned to APC 0623, the commenter stated that the
amounts will likely diverge in the future.
Response: We do not believe it would be appropriate to maintain an
APC that is not necessary to classify services into groups that are
similar clinically and in terms of resource utilization based on
purported anticipated future costs. We continue to believe that CPT
code 36566 is most appropriately assigned to APC 0623 for CY 2009, as
we proposed, based on consideration of the procedure's clinical and
resource characteristics. We reassess the composition of APCs,
including reviewing the median costs of individual HCPCS codes,
annually when we have new claims and Medicare cost report data and
propose those changes through our annual rulemaking cycle that we
believe are necessary to maintain the clinical and resource homogeneity
of APCs based on that updated data. To the extent that the median cost
of CPT code 36566 changes significantly in the future, we may propose
future changes to the CPT code's assignment if we determine that a
different APC would be more appropriate.
After consideration of the public comments received, we are
finalizing our proposed CY 2009 payment policies for device-dependent
APCs, with modification to reassign CPT code 64553 from APC 0225 to APC
0040. The CY 2009 OPPS payment rates for device-dependent APCs are
based on their median costs calculated from CY 2007 claims and the most
recent cost report data, using only claims that pass the device edits,
do not contain token charges for devices, and do not have a modifier
signifying that the device was furnished without cost or with full
credit. We continue to believe that the median costs calculated from
the single bills that meet these three criteria represent the most
valid estimated relative costs of these services to hospitals when they
incur the full cost of the devices required to perform the procedures.
The CY 2009 device-dependent APCs are listed in Table 3 below.

Table 3--CY 2009 Device-Dependent APCs
----------------------------------------------------------------------------------------------------------------
Final CY 2009 APC Final CY 2009 status indicator CY 2009 APC title
----------------------------------------------------------------------------------------------------------------
0039.................................. S............................. Level I Implantation of Neurostimulator.
0040.................................. S............................. Percutaneous Implantation of
Neurostimulator Electrodes.

[[Page 68540]]

0061.................................. S............................. Laminectomy, Laparoscopy, or Incision
for Implantation of Neurostimulator
Electrodes.
0082.................................. T............................. Coronary or Non Coronary Atherectomy.
0083.................................. T............................. Coronary or Non Coronary Angioplasty and
Percutaneous Valvuloplasty.
0084.................................. S............................. Level I Electrophysiologic Procedures.
0085.................................. T............................. Level II Electrophysiologic Procedures.
0086.................................. T............................. Level III Electrophysiologic Procedures.
0089.................................. T............................. Insertion/Replacement of Permanent
Pacemaker and Electrodes.
0090.................................. T............................. Insertion/Replacement of Pacemaker Pulse
Generator.
0104.................................. T............................. Transcatheter Placement of Intracoronary
Stents.
0106.................................. T............................. Insertion/Replacement of Pacemaker Leads
and/or Electrodes.
0107.................................. T............................. Insertion of Cardioverter-Defibrillator.
0108.................................. T............................. Insertion/Replacement/Repair of
Cardioverter-Defibrillator Leads.
0115.................................. T............................. Cannula/Access Device Procedures.
0202.................................. T............................. Level VII Female Reproductive
Procedures.
0222.................................. S............................. Level II Implantation of
Neurostimulator.
0225.................................. S............................. Implantation of Neurostimulator
Electrodes, Cranial Nerve.
0227.................................. T............................. Implantation of Drug Infusion Device.
0229.................................. T............................. Transcatheter Placement of Intravascular
Shunts.
0259.................................. T............................. Level VII ENT Procedures.
0293.................................. T............................. Level V Anterior Segment Eye Procedures.
0315.................................. S............................. Level III Implantation of
Neurostimulator.
0384.................................. T............................. GI Procedures with Stents.
0385.................................. S............................. Level I Prosthetic Urological
Procedures.
0386.................................. S............................. Level II Prosthetic Urological
Procedures.
0418.................................. T............................. Insertion of Left Ventricular Pacing
Elect.
0425.................................. T............................. Level II Arthroplasty or Implantation
with Prosthesis.
0427.................................. T............................. Level II Tube or Catheter Changes or
Repositioning.
0622.................................. T............................. Level II Vascular Access Procedures.
0623.................................. T............................. Level III Vascular Access Procedures.
0648.................................. T............................. Level IV Breast Surgery.
0652.................................. T............................. Insertion of Intraperitoneal and Pleural
Catheters.
0653.................................. T............................. Vascular Reconstruction/Fistula Repair
with Device.
0654.................................. T............................. Insertion/Replacement of a permanent
dual chamber pacemaker.
0655.................................. T............................. Insertion/Replacement/Conversion of a
permanent dual chamber pacemaker.
0656.................................. T............................. Transcatheter Placement of Intracoronary
Drug-Eluting Stents.
0674.................................. T............................. Prostate Cryoablation.
0680.................................. S............................. Insertion of Patient Activated Event
Recorders.
0681.................................. T............................. Knee Arthroplasty.
----------------------------------------------------------------------------------------------------------------

(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, separate
payments have been made for blood and blood products through APCs
rather than packaging them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41439), we proposed to
continue to establish payment rates for blood and blood products for CY
2009 using our blood-specific CCR methodology, which utilizes actual or
simulated CCRs from the most recently available hospital cost reports
to convert hospital charges for blood and blood products to costs. This
methodology has been our standard ratesetting methodology for blood and
blood products since CY 2005. It was developed in response to data
analysis indicating that there was a significant difference in CCRs for
those hospitals with and without blood-specific cost centers, and past
comments indicating that the former OPPS policy of defaulting to the
overall hospital CCR for hospitals not reporting a blood-specific cost
center often resulted in an underestimation of the true hospital costs
for blood and blood products. Specifically, in order to address the
difference in CCRs and to better reflect hospitals' costs, we proposed
to continue to simulate blood CCRs for each hospital that does not
report a blood cost center by calculating the ratio of the blood-
specific CCRs to hospitals' overall CCRs for those hospitals that do
report costs and charges for blood cost centers. We would then apply
this mean ratio to the overall CCRs of hospitals not reporting costs
and charges for blood cost centers on their cost reports in order to
simulate blood-specific CCRs for those hospitals. We calculated the
median costs upon which the proposed CY 2009 payment rates for blood
and blood products were based using the actual blood-specific CCR for
hospitals that reported costs and charges for a blood cost center and a
hospital-specific simulated blood-specific CCR for hospitals that did
not report costs and charges for a blood cost center. For more detailed
discussion of the blood-specific CCR methodology, we refer readers to
the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full
history of OPPS payment for blood and blood products, we refer readers
to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807
through 66810).
As we indicated in the CY 2009 OPPS/ASC proposed rule (73 FR
41439), we believe that the blood-specific CCR methodology better
responds to the absence of a blood-specific CCR for a hospital than
alternative methodologies, such as defaulting to the overall hospital
CCR or applying an average blood-specific CCR across hospitals. Because
this methodology takes into account the unique charging and cost
accounting

[[Page 68541]]

structure of each provider, we believe that it yields more accurate
estimated costs for these products. We believe that continuing with
this methodology in CY 2009 will result in median costs for blood and
blood products that appropriately reflect the relative estimated costs
of these products for hospitals without blood cost centers, and,
therefore, for these products in general.
As discussed in section XIII.A.1. of this final rule with comment
period, we also proposed to create status indicator ``R'' (Blood and
Blood Products) to denote blood and blood products for publication and
payment purposes in CY 2009. We believe that it is necessary to create
a status indicator that is specific to blood and blood products to
facilitate development of blood product median costs under the blood-
specific CCR methodology and to facilitate implementation of the
reduced payments that will be made to hospitals that fail to report the
hospital outpatient quality data, as discussed in section XVI.D.2. of
this final rule with comment period.
Comment: One commenter remarked that the proposed blood-specific
CCR methodology accurately reflects the relative estimated costs of
blood and blood products for hospitals without blood cost centers and
for these products in general. The commenter encouraged CMS to continue
the historical practice of providing separate payments for blood and
blood products through APCs, rather than packaging their payment into
payments for the procedures with which they are administered. Another
commenter stated that the proposed payment rates for many blood and
blood products are less than the actual acquisition costs, particularly
for high volume blood products. The commenter noted that the proposed
payment rate for the most commonly transfused blood product, leukocyte-
reduced red blood cells described by HCPCS code P9016 (Red blood cells,
leukocytes reduced, each unit), is less than hospitals' average
acquisition cost for the product (not including overhead, storage,
handling, and wastage) according to a nationwide survey of 2006 blood
costs. The survey was conducted by the American Association of Blood
Banks under a contract with HHS and includes data from approximately
1,700 hospitals. The commenter noted that since 2006, the year for
which cost data were collected, the costs of acquiring blood products
have continued to increase due to new safety advances and increasingly
expensive donor recruitment and retention efforts. The commenter
recommended that CMS continue to increase payments for blood products,
particularly leukocyte-reduced red blood cells, to bridge the perceived
gap between Medicare payments and the actual costs incurred by
hospitals.
Response: We continue to believe that using blood-specific CCRs
applied to hospital claims data results in payments that appropriately
reflect hospitals' relative costs of providing blood and blood products
as reported to us by hospitals. We do not believe it is necessary or
appropriate to incorporate external survey data into our ratesetting
process for blood and blood products because, in a relative weight
system, it is the relativity of the costs to one another, rather than
absolute cost, that is most important for setting payment rates.
External data lack relativity to the estimated costs derived from the
claims and cost report data and generally are not appropriate for
determining relative weights that result in payment rates. We note that
median costs per unit (calculated using the blood-specific CCR
methodology) for this final rule with comment period increase from CY
2008 for 16 of the top 20 highest volume blood products.
Comment: One commenter asked that CMS reconsider the proposed
payment rate of approximately $30 for HCPCS code P9011 (Blood, split
unit), indicating that this payment rate was much lower than the CY
2008 payment rate of approximately $149 and would fail to cover the
costs of split units of blood. The commenter also was concerned that
the proposed payment decrease would result in insufficient Medicaid
payment for transfusions involving split blood products.
Response: We do not agree that it would be appropriate to deviate
from our standard methodology of using blood-specific CCRs to calculate
the median cost upon which payment is based for HCPCS code P9011,
despite the significant decrease in median cost from the CY 2006 claims
data used for ratesetting in CY 2008 relative to the CY 2007 claims
data used for ratesetting in CY 2009. We believe that some variation in
relative costs from year to year is to be expected in a prospective
payment system, particularly for low volume items such as HCPCS code
P9011. We also note that, because HCPCS code P9011 is defined only as a
split unit of blood and no particular designation is made within the
code's descriptor as to the type or volume of blood product that makes
up the split unit reported, the median cost for this HCPCS code also
may vary based upon the types and volumes of split products hospitals
report using HCPCS code P9011.
Public comments on Medicaid payment for blood and blood products
are not within the scope of this CY 2009 OPPS/ASC final rule with
comment period, as it is only within our purview to establish payment
rates for HOPDs that receive payment under the OPPS for services
furnished to Medicare beneficiaries.
We also note that it is our common practice to review significant
changes in median costs from year to year and from the proposed rule to
the final rule for a given calendar year. Although a handful of HCPCS
codes experienced decreases in median cost for CY 2009 from the
proposed rule to this final rule with comment period, most notably
HCPCS codes P9011 and P9043 (Infusion, plasma protein fraction (human),
5%, 50ml), we determined that the decreases in median cost were due to
contributions of additional claims and revised cost report data. For
all APCs whose payment rates are based upon relative payment weights,
we note that the quality and accuracy of reported units and charges
significantly influence the final median costs that are the basis for
our payment rates, especially for low volume items and services. Beyond
our standard OPPS trimming methodology (described in section II.A.2. of
this final rule with comment period) that we apply to those claims that
have passed various types of claims processing edits, it is not our
policy to judge the accuracy of hospital coding and charging for
purposes of ratesetting.
After consideration of the public comments received, we are
finalizing, without modification, our CY 2009 proposal to calculate the
median costs upon which the CY 2009 payment rates for blood and blood
products are based using the blood-specific CCR methodology that we
have utilized since CY 2005. We continue to believe this methodology is
the best mechanism to deal with the absence of a blood-specific CCR for
hospitals that do not use the blood cost center. We believe that
continuing with this methodology, which takes into account the unique
charging and cost accounting structure of each provider, results in
median costs for blood and blood products that appropriately reflect
the relative estimated costs of these products. As discussed in section
XIII.A.1. of this final rule with comment period, we also are
finalizing our proposal to create status indicator ``R'' to denote
blood and blood products in Addendum B to this final rule with comment
period for publication and payment purposes.

[[Page 68542]]

(3) Single Allergy Tests
In the CY 2009 OPPS/ASC proposed rule (73 FR 41439 through 41440),
we proposed to continue with our methodology of differentiating single
allergy tests (``per test'') from multiple allergy tests (``per
visit'') by assigning these services to two different APCs to provide
accurate payments for these tests in CY 2009. Multiple allergy tests
are currently assigned to APC 0370 (Allergy Tests), with a median cost
calculated based on the standard OPPS methodology. We provided billing
guidance in CY 2006 in Transmittal 804 (issued on January 3, 2006)
specifically clarifying that hospitals should report charges for the
CPT codes that describe single allergy tests to reflect charges ``per
test'' rather than ``per visit'' and should bill the appropriate number
of units of these CPT codes to describe all of the tests provided.
However, as noted in the CY 2009 OPPS/ASC proposed rule (73 FR 41439),
our CY 2007 claims data available for that rule for APC 0381 did not
reflect improved and more consistent hospital billing practices of
``per test'' for single allergy tests. The median cost of APC 0381,
calculated for the proposed rule according to the standard single
claims OPPS methodology, was approximately $51, significantly higher
than the CY 2008 median cost of APC 0381 of approximately $17
calculated according to the ``per unit'' methodology, and greater than
we would expect for these procedures that are to be reported ``per
test'' with the appropriate number of units. Some claims for single
allergy tests still appear to provide charges that represent a ``per
visit'' charge, rather than a ``per test'' charge. Therefore,
consistent with our payment policy for CYs 2006, 2007, and 2008, we
calculated a proposed ``per unit'' median cost for APC 0381 of $25,
based upon 520 claims containing multiple units or multiple occurrences
of a single CPT code. For a full discussion of this methodology, we
refer readers to the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66737).
We did not receive any public comments on our CY 2009 proposal for
payment of single allergy tests. Therefore, we are finalizing our CY
2009 proposal, without modification, to calculate a ``per unit'' median
cost for APC 0381 as described above in this section. The final CY 2009
median cost of APC 0381 is approximately $23.
(4) Echocardiography Services
In the CY 2009 OPPS/ASC proposed rule (73 FR 41440), we proposed to
continue the packaging of payment for all contrast agents into the
payment for the associated imaging procedure for CY 2009, as we did in
CY 2008. For echocardiography services, we proposed to estimate median
costs using the same methodology that we used to set medians for these
services for CY 2008. In CY 2008, we finalized a policy to package
payment for all contrast agents into the payment for the associated
imaging procedure, regardless of whether the contrast agent met the
OPPS drug packaging threshold. Section 1833(t)(2)(G) of the Act
requires us to create additional APC groups of services for procedures
that use contrast agents that classify them separately from those
procedures that do not utilize contrast agents. To reconcile this
statutory provision with our final policy of packaging all contrast
agents, for CY 2008, we calculated HCPCS code-specific median costs for
all separately payable echocardiography procedures that may be
performed with contrast agents by isolating single and ``pseudo''
single claims with the following CPT codes where a contrast agent was
also billed on the claim: 93303 (Transthoracic echocardiography for
congenital cardiac anomalies; complete); 93304 (Transthoracic
echocardiography for congenital cardiac anomalies; follow-up or limited
study); 93307 (Echocardiography, transthoracic, real-time with image
documentation (2D) with or without M-mode recording; complete); 93308
(Echocardiography, transthoracic, real-time with image documentation
(2D) with or without M-mode recording; follow-up or limited study);
93312 ( Echocardiography, transesophageal, real time with image
documentation (2D) (with or without M-mode recording); including probe
placement, image acquisition, interpretation and report); 93315
(Transesophageal echocardiography for congenital cardiac anomalies;
including probe placement, image acquisition, interpretation and
report); 93318 (Echocardiography, transesophageal (TEE) for monitoring
purposes, including probe placement, real time 2-dimensional image
acquisition and interpretation leading to ongoing (continuous)
assessment of (dynamically changing) cardiac pumping function and to
therapeutic measures on an immediate time basis); and 93350
(Echocardiography, transthoracic, real-time with image documentation
(2D), with or without M-mode recording, during rest and cardiovascular
stress test using treadmill, bicycle exercise and/or pharmacologically
induced stress, with interpretation and report). As noted in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66644), our
analysis indicated that all echocardiography procedures that may be
performed with contrast agents are reasonably similar both clinically
and in terms of resource use, as evidenced by similar HCPCS code-
specific median costs.
As provided for under the statute, for CY 2008, we created APC 0128
(Echocardiogram With Contrast) to provide payment for echocardiography
procedures that are performed with a contrast agent. In addition, as
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66644 through 66646), in order for hospitals to identify separately and
receive appropriate payment for echocardiography procedures performed
with contrast beginning in CY 2008, we created eight new HCPCS codes
(C8921 through C8928) that corresponded to the related CPT
echocardiography codes and assigned them to the newly created APC 0128.
We instructed hospitals performing echocardiography procedures without
contrast to continue to report the CPT codes and to report the new
HCPCS C-codes when performing echocardiography procedures with contrast
or without contrast followed by with contrast.
As noted in the CY 2009 OPPS/ASC proposed rule (73 FR 41440),
claims data from CY 2008 are not yet available for ratesetting, so we
do not yet have claims data specific to HCPCS codes C8921 through C8928
in order to determine the CY 2009 payment rate for APC 0128. Therefore,
for CY 2009, we proposed to again use the methodology that we used to
set the CY 2008 payment rate for APC 0128 (72 FR 66645). That is, we
isolated single and ``pseudo'' single claims in our database that
included those CPT codes in the range of 93303 through 93350 as
described above in this section that correspond to the contrast studies
described by HCPCS codes C8921 through C8928. For claims where one of
these echocardiography procedures was billed with a contrast agent, we
packaged the cost of the contrast agent into the cost of the
echocardiography procedure and then calculated a median cost for APC
0128 using this subset of claims. As in CY 2008, the HCPCS code-
specific median costs for echocardiography procedures performed with
contrast are all similar, and we continue to believe these services
share sufficient similarity to be assigned to the same APC.
For CY 2009, we also recalculated the median cost for APCs 0269
(Level II Echocardiogram Without Contrast

[[Page 68543]]

Except Transesophageal); 0270 (Transesophageal Echocardiogram Without
Contrast); and 0697 (Level I Echocardiogram Without Contrast Except
Transesophageal), as we did in CY 2008 (72 FR 66645). We used claims
for CPT codes 93303 through 93350 after removing claims from the
ratesetting process that included contrast agents because these claims
were used to set the median cost for APC 0128.
Comment: One commenter noted that a new CPT code will be available
in CY 2009 that combines spectral and color Doppler with transthoracic
echocardiography. The commenter stated that hospitals using this code
in CY 2009 will be able to assign costs to this new code, but expressed
concern as to how CMS plans to provide payment for the years before
claims data are available.
Response: Typically, our process for providing payment for CPT
codes that are newly recognized under the OPPS for payment in the
upcoming calendar year is to provide interim APC assignments in the
final rule with comment period for that upcoming year. The APC
assignment of these codes is then open to comment on that final rule.
We note that there are circumstances regarding the new CPT code
referenced by the commenter, CPT 93306 (Echocardiography,
transthoracic, real-time with image documentation (2D), includes M-mode
recording, when performed, complete, with spectral Doppler
echocardiography, and with color flow Doppler echocardiography), that
contributed to our CY 2009 interim APC assignment for that code. There
were also several factors that contributed to our decision regarding
the final APC assignment for CPT code 93307 for CY 2009.
First, as discussed above in this section, in CY 2008, we
implemented HCPCS C-codes for hospitals to identify echocardiography
procedures provided with contrast, or without contrast followed by with
contrast. As these data are not yet available for ratesetting for CY
2009, we used the same process for CY 2009 as we did for CY 2008 to
separately identify echocardiography services provided with contrast
and those provided without contrast.
Second, the American Medical Association (AMA) revised several CPT
codes in the 93000 series to more specifically describe particular
services provided during echocardiography procedures. The CY 2009
descriptor for CPT code 93306 essentially includes the services
described in CY 2008 by CPT codes 93307 (Echocardiography,
transthoracic, real-time with image documentation (2D) with or without
M-mode recording; complete); 93320 (Doppler echocardiography, pulsed
wave and/or continuous wave with spectral display; complete) and 93325
(Doppler echocardiography color flow velocity mapping). Therefore, in
CY 2008, the service described in CY 2009 by new CPT code 93306 is
reported with three CPT codes, specifically CPT codes 93307, 93320, and
93325, and the hospital receives separate payment for CPT code 93307
through APC 0269, into which payment for the other two services is
packaged. The revised CY 2009 descriptor of CPT code 93307
(Echocardiography, transthoracic, real-time with image documentation
(2D), includes M-mode recording, when performed, complete, without
spectral or color Doppler echocardiography) explicitly excludes
services described by CPT codes 93320 and 93325.
To determine the hospital costs of CPT codes 93306 and 93307 under
CY 2009 definitions for purposes of CY 2009 ratesetting, we redefined
our CY 2007 single and ``pseudo'' single claims. We began by redefining
the single claims for CPT code 93307 billed with packaged CPT codes
93320 and 93325 as single claims for CPT code 93306. We identified
almost 600,000 CY 2007 single and ``pseudo'' single claims for CPT code
93306. We then limited the single claims for CPT code 93307 to reflect
the newly revised descriptor for CY 2009, that is, those claims where
CPT code 93307 was not billed with either packaged CPT code 93320 or
CPT code 93325. We identified roughly 13,000 single and ``pseudo''
single claims for revised CPT code 93307.
Having created claims that reflected CY 2009 definitions, we then
followed our proposed CY 2009 methodology for calculating HCPCS code-
specific median costs for these echocardiography procedures with and
without contrast by dividing the new set of single and ``pseudo''
single claims for CPT codes 93306 and 93307 into those billed without
and with contrast agents. We first calculated a HCPCS code-specific
median cost for new CPT code 93306 when it was billed without contrast.
We had over 500,000 claims that fit this criterion, and the median cost
for this service was approximately $425. We then calculated a HCPCS
code-specific median cost for CPT code 93307 under the newly revised
descriptor for CY 2009 without contrast. We had approximately 13,000
claims that fit this criterion. The median cost for this service was
approximately $256.
In addition, as discussed above in this section, in CY 2008, we
began providing separate payment for echocardiography services that are
performed with contrast through APC 0128. In accordance with this
policy and the revised and new CPT codes, we calculated a HCPCS code-
specific median cost for new CPT code 93306 using the set of redefined
single claims billed with contrast. Over 9,000 claims met this
criterion, and the median cost for CPT code 93306 with contrast was
approximately $569. Consistent with our CY 2008 policy of providing
HCPCS C-codes for billing the ``with contrast'' form of the
echocardiography CPT code, we identified this set of claims to
represent new HCPCS code C8929 (Transthoracic echocardiography with
contrast, or without contrast followed by with contrast, real-time with
image documentation (2D), includes M-mode recording, when performed,
complete, with spectral Doppler echocardiography, and with color flow
Doppler echocardiography).
Finally, we calculated a HCPCS code-specific median cost for CPT
code 93307 using single claims for CPT code 93307 under the newly
revised descriptor for CY 2009 when billed with contrast. We had 168
claims that fit this criterion, and the median cost for this service
was approximately $376. We identified this set of claims to represent
revised HCPCS code C8923 (Transthoracic echocardiography with contrast,
or without contrast followed by with contrast, real-time with image
documentation (2D), includes M-mode recording, when performed,
complete, without spectral or color Doppler echocardiography). Based on
their HCPCS code-specific median costs, we have assigned new CPT code
93306 (with a median cost of approximately $425 based on the
methodology described above in this section) without contrast to APC
0269 for CY 2009 on an interim basis. In addition, we have reassigned
CPT code 93307 without contrast, using the updated CPT descriptor and
the criteria described above in this section to develop a median cost
of approximately $256, to APC 0697 for CY 2009. We have assigned new
HCPCS code C8929 on an interim basis and revised HCPCS code C8923 on a
final basis to APC 0128. All codes with interim assignments are
designated with comment indicator ``NI'' in Addendum B to this final
rule with comment period, and their OPPS treatment is open to comment
in this final rule with comment period.
Comment: One commenter disagreed with the proposed payment for
fetal echocardiography services in general, while several other
commenters suggested that the proposed assignment of CPT code 76825
(Echocardiography,

[[Page 68544]]

fetal, cardiovascular system, real time with image documentation (2D),
with or without M-mode recording) to APC 0266 (Level II Diagnostic and
Screening Ultrasound) and CPT code 76826 (Echocardiography, fetal,
cardiovascular system, real time with image documentation (2D), with or
without M-mode recording; follow-up or repeat study) to APC 0265 (Level
I Diagnostic and Screening Ultrasound) did not provide an accurate
representation of the resources required by these two CPT codes. These
commenters noted that the resources required to perform these
procedures differ substantially from the other services included in
APCs 0265 and 0266 and that resource use exceeds that for comparable
studies on adults. In addition, the commenters suggested that CMS
reassign CPT code 76825 to APC 0269 and CPT code 76826 to APC 0697.
Response: We agree with the commenters that the services described
by CPT codes 76825 and 76826 are most appropriately grouped with the
services assigned to APCs 0269 and 0697, respectively. The resource use
and clinical characteristics of these fetal echocardiography services
resemble those of nonfetal echocardiography services also assigned to
APCs 0269 and 0697 for CY 2009. Therefore, we are reassigning CPT code
76825 to APC 0269, and CPT code 76826 to APC 0697 for CY 2009. In
reference to the general comment regarding fetal echocardiography
services, we note that CPT codes 76827 (Doppler echocardiography,
fetal, pulsed wave and/or continuous wave with spectral display;
complete) and 76828 (Doppler echocardiography, fetal, pulsed wave and/
or continuous wave with spectral display; follow-up or repeat study)
are also included in this general service type. We have reviewed the
proposed APC assignments of these two CPT codes, and we have concluded
that the clinical characteristics of these services and their HCPCS
code-specific median costs from hospital claims data (approximately $92
and $77, respectively) are similar to those of other services also
assigned to APC 0265, which has a final CY 2009 APC median cost of
approximately $61. Therefore, in the absence of specific
recommendations to move these codes to another APC or other detailed
information from commenters in support of their reassignment, we
believe that CPT codes 76827 and 76828 are most appropriately assigned
to APC 0265 for CY 2009, as we proposed.
Comment: One commenter agreed with our procedure regarding
identifying those echocardiography procedures with and without contrast
until the specific HCPCS C-code data are available for ratesetting
purposes. However, the commenter expressed concern that because of low
utilization of contrast for echocardiography procedures, the median
cost for APC 0128 may not accurately reflect all of the resources
required to provide contrast echocardiography services. The commenter
suggested that CMS review those echocardiography procedures that are
performed with contrast and consider creating more than one APC that
includes echocardiography services performed with contrast.
Response: We have reviewed the HCPCS code-specific median costs for
echocardiography services performed with contrast in our CY 2007 claims
data, and we continue to believe that the median cost of APC 0128
accurately reflects the hospital costs of performing echocardiography
procedures with contrast. We see no need, based on clinical
characteristics or median costs as reflected in the hospital claims
data, to develop another APC for certain echocardiography procedures
with contrast. Only two services assigned to APC 0128 for CY 2009 are
significant procedures, specifically with contrast studies described by
CPT code 93306 (based on the subset of claims that met our criteria
described above in this section) and CPT code 93350, with median costs
of approximately $569 and $537, respectively. Other echocardiography
services are rarely provided with contrast to Medicare beneficiaries.
Furthermore, we believe that the final OPPS coding and payment
methodology for echocardiography services allows us to both adhere to
the statutory requirement to create additional groups of services for
procedures that use contrast agents and to continue packaged payment
for contrast agents.
After consideration of the public comments received, we are
finalizing our CY 2009 payment proposals for echocardiography services,
with modification to reassign CPT code 93307 to APC 0697 and to assign
new CPT code 93306 to APC 0269 based on their revised and new CY 2009
CPT code descriptors, respectively. In addition, we are reassigning CPT
code 76825 and CPT code 76826 for fetal echocardiography services to
APC 0269 and APC 0697, respectively. The final echocardiography APCs
and their CY 2009 median costs are listed in Table 4 below.

Table 4--CY 2009 Echocardiography APCs
------------------------------------------------------------------------
Final CY 2009
approximate
Final CY 2009 APC CY 2009 APC title APC median
cost
------------------------------------------------------------------------
0128..................... Echocardiogram with Contrast. $553
0269..................... Level II Echocardiogram 422
Without Contrast Except
Transesophageal.
0270..................... Transesophageal 539
Echocardiogram Without
Contrast.
0697..................... Level I Echocardiogram 249
Without Contrast Except
Transesophageal.
------------------------------------------------------------------------

(5) Nuclear Medicine Services
In CY 2008, we began packaging payment for diagnostic
radiopharmaceuticals into the payment for the associated nuclear
medicine procedure. (For a discussion regarding the distinction between
diagnostic and therapeutic radiopharmaceuticals, we refer readers to
the CY 2008 OPPS/ASC final rule at 72 FR 66636.) Prior to the
implementation of this policy, diagnostic radiopharmaceuticals were
subject to the standard OPPS drug packaging methodology whereby
payments are packaged when the estimated mean per day product costs
fall at or below the annual packaging threshold for drugs, biologicals,
and radiopharmaceuticals.
Packaging costs into a single aggregate payment for a service,
encounter, or episode-of-care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of supportive items and services into the
payment for the independent procedure or service with which they are
associated encourages hospital efficiencies and also enables hospitals
to manage their resources with maximum flexibility. All nuclear
medicine

[[Page 68545]]

procedures require the use of at least one radiopharmaceutical or other
radiolabeled product, and there are only a small number of
radiopharmaceuticals that may be appropriately billed with each
diagnostic nuclear medicine procedure. For the OPPS, we distinguish
diagnostic radiopharmaceuticals from therapeutic radiopharmaceuticals
for payment purposes, and this distinction is recognized in the Level
II HCPCS codes for diagnostic radiopharmaceuticals that include the
term ``diagnostic'' along with a radiopharmaceutical in their HCPCS
code descriptors. As we stated in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66635), we believe that our policy to package
payment for diagnostic radiopharmaceuticals (other than those already
packaged when their per day costs are below the packaging threshold for
OPPS drugs, biologicals, and radiopharmaceuticals) is consistent with
OPPS packaging principles, provides greater administrative simplicity
for hospitals, and encourages hospitals to use the most clinically
appropriate and cost efficient diagnostic radiopharmaceutical for each
study. For more background on this policy, we refer readers to
discussions in the CY 2008 OPPS/ASC proposed rule (72 FR 42667 through
42672) and the CY 2008 OPPS/ASC final rule with comment period (72 FR
66635 through 66641).
For CY 2008 ratesetting, we used only claims for nuclear medicine
procedures that contained a diagnostic radiopharmaceutical in
calculating the median costs for APCs including nuclear medicine
procedures (72 FR 66639). This is similar to the established
methodology used for device-dependent APCs before claims reflecting the
procedure-to-device edits were included in our claims data. For CY
2008, we also implemented claims processing edits (called procedure-to-
radiolabeled product edits) requiring the presence of a
radiopharmaceutical (or other radiolabeled product) HCPCS code when a
separately payable nuclear medicine procedure is present on a claim.
Similar to our practice regarding the procedure-to-device edits that
have been in place for some time, we continually review comments and
requests for changes related to these edits and, based on our review,
may update the edit list during our quarterly update process if
necessary. The radiopharmaceutical (and other radiolabeled product) and
procedure HCPCS codes that are included in these edits can be viewed on
the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/ 01_
overview.asp.
The CY 2008 OPPS claims that are subject to the procedure-to-
radiolabeled product edits will not be available for setting payment
rates until CY 2010 and, therefore, are not yet available to set
payment rates for CY 2009. Therefore, in the CY 2009 OPPS/ASC proposed
rule (73 FR 41440), we proposed to continue our established CY 2008
methodology for setting the payment rates for APCs that include nuclear
medicine procedures for CY 2009. We used an updated list of
radiolabeled products, including but not limited to diagnostic
radiopharmaceuticals, from the procedure-to-radiolabeled product edit
file to identify single and ``pseudo'' single claims for nuclear
medicine procedures that also included at least one eligible
radiolabeled product. Using this subset of claims, we followed our
standard OPPS ratesetting methodology, discussed in section II.A. of
this final rule with comment period, to calculate median costs for
nuclear medicine procedures and their associated APCs.
We identified those APCs containing nuclear medicine procedures
that would be subject to this methodology under our CY 2009 proposal in
Table 4 of the CY 2009 OPPS/ASC proposed rule, and shown below in Table
5. As in CY 2008, when we set APC median costs based on single and
``pseudo'' single claims that also included at least one radiolabeled
product on our edit file, we observed an equivalent or higher median
cost than that calculated from all single and ``pseudo'' single bills.
We believe that this methodology appropriately ensures that the costs
of diagnostic radiopharmaceuticals are included in the ratesetting
process for these APCs.
During its March 2008 meeting, the APC Panel recommended that CMS
continue to package payment for diagnostic radiopharmaceuticals for CY
2009. In addition, the APC Panel recommended that CMS present data at
the first CY 2009 APC Panel meeting on usage and frequency, geographic
distribution, and size and type of hospitals performing nuclear
medicine studies using radioisotopes in order to ensure that access to
diagnostic radiopharmaceuticals is preserved for Medicare
beneficiaries. We discuss, below, our response to these APC Panel
recommendations along with our response to public comments.
Comment: A number of the commenters opposed CMS' proposed policy to
package payment for all diagnostic radiopharmaceuticals into their
associated nuclear medicine procedure. They noted that the majority of
diagnostic radiopharmaceuticals are not interchangeable, and for that
reason, the CMS policy of packaging all diagnostic radiopharmaceuticals
into their associated nuclear medicine procedure does not foster
hospital efficiencies. Some of these commenters expressed concern that
packaging diagnostic radiopharmaceuticals into the payment for
associated nuclear medicine procedures results in overpayment of many
procedures, especially those using existing lower-cost
radiopharmaceuticals, while the bundled payment would be insufficient
for newer, and likely more expensive, radiopharmaceuticals.
In addition, the commenters requested that if CMS continues to
package payment for diagnostic radiopharmaceuticals into payment for
their associated nuclear medicine procedures, CMS should revise the
nuclear medicine APCs to provide differential payments for nuclear
medicine procedures when used with different radiopharmaceuticals.
Several commenters identified the series of tumor/infection imaging
APCs, including APCs 0406 (Level I Tumor/Infection Imaging), 0408
(Level III Tumor/Infection Imaging), and 0414 (Level II Tumor/Infection
Imaging), for CMS' attention to ensure appropriate payment for low
volume, high cost radiopharmaceuticals. One commenter specifically
suggested a composite APC for specific combinations of a tumor imaging
scan and certain diagnostic radiopharmaceuticals. Several commenters
noted that there is wide variation in the costs of diagnostic
radiopharmaceuticals, and that composite APCs for specific combinations
of procedures and diagnostic radiopharmaceuticals would be necessary to
ensure adequate payment to hospitals using expensive diagnostic
radiopharmaceuticals. Other commenters suggested that the significant
clinical and resource diversity of radiopharmaceuticals packaged into
nuclear imaging procedures amounted to a violation of the 2 times rule.
The commenters explained that just as diagnostic radiopharmaceuticals
are not interchangeable, certain radiopharmaceuticals are indicated for
particular types of diseases, such as cancer, and are not clinically
similar to other radiopharmaceuticals used for other purposes, such as
tumor imaging.
Response: We understand that the selection of a diagnostic
radiopharmaceutical for a particular nuclear medicine procedure is a
complex decision based on many factors, including patient-specific

[[Page 68546]]

factors, and that not every diagnostic radiopharmaceutical is fully
interchangeable with others. However, as stated in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66617), we believe that
nonspecific packaging (as opposed to selected code packaging) based on
combinations of items and services observed on hospital claims is fully
appropriate because of the myriad combinations of items and services
that can be appropriately provided together. Under the OPPS, we package
payment for ancillary, supportive, and interrelated items and services
into payment for the independent services they accompany. As we discuss
in section II.A.4. of this final rule with comment period, packaging
promotes hospital efficiencies through numerous means, not only just
through the choice of which radiopharmaceutical to use for a specific
nuclear medicine scan. While all diagnostic radiopharmaceuticals may
not be interchangeable, we believe that packaging the costs of
diagnostic radiopharmaceuticals, however differential those costs may
be, into the payment for nuclear medicine services that use these
products is appropriate, whether there is one product or multiple
products that could be used to furnish the particular service provided
to an individual patient. The OPPS has a history of packaging items
that are not necessarily interchangeable. It is our longstanding
practice to package payment for nonpass-through implantable medical
devices into payment for the procedure in which they are used,
notwithstanding that there may be different devices or combinations of
devices that could be used to furnish a service. (For a more complete
discussion of the history of packaging items, we refer readers to the
CY 2008 OPPS/ASC final rule with comment period at 72 FR 66639.)
Therefore, in combination with our understanding that a diagnostic
radiopharmaceutical is never provided without an accompanying nuclear
medicine scan, we believe that it is appropriate to package the payment
for all diagnostic radiopharmaceuticals into the payment for the
associated nuclear medicine procedure.
With regard to suggested composites or other revisions designed to
isolate specific nuclear medicine scans with a subset of diagnostic
radiopharmaceuticals, we do not believe that the inability to
substitute one diagnostic radiopharmaceutical for another is a
compelling reason for creating composite APCs, as explained below. We
developed composite APCs to provide a single payment for two or more
services that are typically performed together during a single clinical
encounter and that result in the provision of a complete service.
Composite APCs differ from packaging. Composite APCs provide a single
payment for specific combinations of independent services that would
otherwise be separately payable if they were not provided together,
while packaging entails associating the cost of ancillary, supportive,
and interrelated services and supplies with a distinct service or
composite service. Composite APCs are intended to expand the OPPS
payment bundles to encourage hospital efficiencies. Providing a single
payment for a specific combination of a diagnostic radiopharmaceutical
with a particular nuclear medicine procedure would not constitute a
composite APC and would provide no incentives for hospital efficiency.
From the perspective of value-based purchasing, we see no benefit to
paying for many individual diagnostic radiopharmaceutical and nuclear
medicine procedure combinations over paying separately for both the
item and service, beyond an appearance of bundling. Such an approach
would add complexity to ratesetting and would create challenges and
cost instability because payments would be based on data from small
numbers of claims for certain HCPCS code pairs. As noted above, there
are many items and services that we package under the OPPS that are
similarly not interchangeable with other related items and services.
We understand that by packaging payment for a range of products
such as diagnostic radiopharmaceuticals, payment for the associated
nuclear medicine procedure may be more or less than the hospital's cost
for these services in a given case. As stated in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66639), we note that the most
fundamental characteristic of a prospective payment system is that
payment is to be set at an average for the service, which, by
definition, means that some services are paid more or less than
average. As explained above in this section, in order to more
accurately account for these packaged services, for CY 2009
ratesetting, we used only correctly coded claims for nuclear medicine
procedures that contained a radiolabeled product in calculating the CY
2009 median costs for APCs including nuclear medicine procedures.
We discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66640) the issue of variability in radiopharmaceutical costs or
other packaged costs creating potential 2 times violations. We note
that 2 times violations are specific to the total cost of the primary
service, nuclear medicine scans in this case, including packaged costs.
We have performed our standard review of the APCs using updated CY 2007
claims data for this final rule with comment period and, as a result,
have not identified any 2 times violations in the APCs containing
nuclear medicine procedures, when calculated as described above. (For
more information on the 2 times rule, we refer readers to sections
III.B.2. and 3. of this final rule with comment period.)
After consideration of the public comments received, we are
finalizing our CY 2009 proposal, without modification, to set the
payment rates for APCs containing nuclear medicine procedures based on
those claims that also contain a radiolabeled product to ensure that
the costs of diagnostic radiopharmaceuticals are appropriately packaged
into the costs of nuclear medicine procedures. The CY 2009 APCs to
which nuclear medicine procedures are assigned and for which we
required radiolabeled products on the nuclear medicine procedure claims
used for ratesetting are displayed in Table 5 below.
Comment: Several commenters cited concerns regarding the proposed
APC assignments and proposed payment rates for a number of the nuclear
medicine procedures. These commenters noted that the APC assignments of
certain nuclear medicine procedures led to clinically diverse
procedures being grouped together for payment purposes. Furthermore,
they added that, in some cases, nuclear medicine procedures with very
different resource requirements, such as positron emission tomography
(PET) and PET/computed tomography (CT) scans, were grouped together.
Specifically, one commenter requested that (1) CPT code 78645
(Cerebrospinal fluid flow, imaging (not including introduction of
material); shunt evaluation) be reassigned from APC 0403 (Level I
Nervous System Imaging) to APC 0402 (Level II Nervous System Imaging);
(2) CPT code 78608 (Brain imaging, positron emission tomography (PET);
metabolic evaluation) be reassigned from APC 0308 (Non-Myocardial
Positron Emission Tomography (PET) Imaging) to a more appropriate APC;
and (3) CPT codes 78000 (Thyroid uptake; single determination) and
78001 (Thyroid uptake; multiple determinations) be reassigned from APC
0389 (Level I Non-imaging Nuclear Medicine) to APC 0392

[[Page 68547]]

(Level II Non-imaging Nuclear Medicine).
Response: We have performed our annual review of all the procedures
and APC groupings for this final rule with comment period based on
updated CY 2007 claims data. The HCPCS code-specific median cost of CPT
code 78645 is approximately $208 based on 425 single claims, which is
reasonably close to the median cost of APC 0403 of approximately $182,
where we proposed to assign the service. The commenter recommended
assignment of CPT code 78645 to APC 0402, in the same nervous system
imaging series, with an APC median cost of approximately $536. Based on
this review of costs, we continue to believe CPT code 78645 is most
appropriately assigned to APC 0403 as we proposed, as the HCPCS code-
specific median cost of CPT code 78645 is more comparable to the level
of hospital resources that are reflected in the median cost of APC 0403
than the level of resources reflected in the median cost of APC 0402.
There is a single APC for nonmyocardial PET scans, APC 0308, with a
median cost of approximately $1,014. The median costs of all CPT codes
assigned to that APC, including CPT codes for PET scans and PET/CT
scans and CPT code 78608 for a metabolic evaluation of the brain using
PET, range from approximately $891 to $1,164, demonstrating very
significant resource similarity. Therefore, we do not agree with
commenters that the proposed configuration of APC 0308 should be
modified because all of these nonmyocardial services that use PET
technology demonstrate very similar costs and share clinical similarity
as well.
With regard to the thyroid scans described by CPT codes 78000 and
78001, these procedures have HCPCS code-specific median costs of
approximately $109 and $117, respectively, very close to the median
cost of APC 0389 of approximately $115, where we proposed to assign
them. There is only one other service, with one single claim, assigned
to APC 0389, other than an unlisted code whose data do not contribute
to ratesetting for the APC. Therefore, these two CPT codes determine
the median cost of APC 0389. In contrast, the median cost of APC 0392,
their recommended placement according to the commenter, is
approximately $161, substantially greater than the median costs of the
two thyroid studies. Therefore, we do not believe any changes to the
proposed APC assignments of CPT codes 78000 or 78001 are justified.
Comment: Several commenters disagreed with the proposed payment
rate for myocardial PET scan services because they believed that the
payment rate is based on inadequate hospital data consisting of fewer
than 2,800 claims. They stated that the CY 2009 proposed payment rate
of approximately $1,143 for myocardial PET scan services decreased 18
percent compared to the CY 2008 payment rate of approximately $1,400
for these services. The commenters believed that the proposed payment
rate for APC 0307 (Myocardial Positron Emission Tomography (PET)
Imaging) is substantially less than the cost of providing the services
involved, including the use of a relatively costly diagnostic
radiopharmaceutical. They urged CMS to accept external data in light of
the limited hospital claims data in order to set the payment rate for
myocardial PET scans. If external data are not used for CY 2009
ratesetting, the commenters alternatively recommended that CMS freeze
the payment rate for myocardial PET scans at the CY 2008 payment rate
of approximately $1,400 for CY 2009 to ensure greater stability in
payment. Some commenters asserted that the payment rates for myocardial
PET studies have shown significant volatility over the past 4 years,
and requested that CMS refrain from implementing the proposed payment
reduction and work towards stabilizing the payment rate. One commenter
suggested placing all three myocardial PET scan CPT codes, that is
78459, 78491, and 78492, in New Technology APC 1516 (New Technology--
Level XVI ($1400--$1500)), with a proposed CY 2009 payment rate of
$1,450, for at least 2 years, to stabilize the payment for these
services. Another commenter urged CMS to carefully review the claims
data in setting the final payment rate for APC 0307.
Response: Analysis of the CY 2007 hospital outpatient claims data
revealed that the HCPCS code-specific median costs for all three
myocardial PET scan procedures that we proposed to retain in APC 0307
are about the same. Specifically, the HCPCS code-specific median costs
of the three myocardial PET scan procedures are as follows: (1) For CPT
code 78459, the median cost is approximately $924 based on 118 single
claims; (2) For CPT code 78491, the median cost is approximately $1,410
based on 28 single claims; and (3) For CPT code 78492, the median cost
is approximately $1,142 based on 1,809 single claims. In setting the CY
2009 payment rates for the myocardial PET scan services, according to
our standard ratesetting methodology for clinical APCs to which nuclear
medicine procedures are assigned, we used only those claims with a
radiolabeled product reported, to ensure correctly coded claims. We
packaged the cost of the diagnostic radiopharmaceuticals used in the
studies into payment for the scans, as discussed in detail in section
V.B.2.c. of this final rule with comment period. We believe that all of
the myocardial PET scan procedures are appropriately assigned to APC
0307 based on consideration of their clinical characteristics and
resource costs.
While we utilized external data in the early years of the OPPS for
ratesetting for a few services, we now rely on the cost data from
claims as the system has matured and we have gained additional
experience in ratesetting for HOPD services. The foundation of a system
of relative weights like the OPPS is the relativity of the costs of all
services to one another, as derived from a standardized system that
uses standardized inputs and a consistent methodology. Adoption of a
ratesetting methodology for APC 0307 that is different from ratesetting
for other APCs containing nuclear medicine procedures would undermine
this relativity. We believe that we have sufficient claims data for the
myocardial PET scan services upon which to base the CY 2009 final
payment rates. In fact, the total number of claims for these services
has increased steadily over the past several years. There were 2,576
claims for CY 2004; 2,874 claims for CY 2005; 3,094 claims for CY 2006;
and 3,537 claims for CY 2007, the most recent year of claims available
for CY 2009 ratesetting. The historical variability in OPPS payment for
myocardial PET scan services does not appear to have affected the
access of Medicare beneficiaries to these services. Given that these
services have been assigned to APC 0307 since CY 2007, with payment
based on the most current hospital claims and Medicare cost report
data, we believe we are providing a stable and consistent payment
methodology that appropriately reflects the hospital resources required
for myocardial PET scans. Therefore, we see no reason to ``freeze'' the
payment for myocardial PET scans at the CY 2008 rate when we have
updated hospital claims information available for ratesetting.
Further, we do not agree with the recommendation to assign
myocardial PET scan services to New Technology APC 1516, because these
services are established OPPS services of moderate volume, with
historical claims data available for a number of past years, and they
do not fit the general criteria for services considered to be new

[[Page 68548]]

technology services under the OPPS. We continue to believe that
assignment of CPT codes 78459, 78491, and 78492 to APC 0307 ensures
appropriate payment for the services. Assignment to New Technology APC
1516, which has a CY 2009 payment rate of $1,450, would result in
overpayment for myocardial PET scan services according to our most
recent hospital cost data.
Comment: One commenter expressed concern with the proposed
assignment of the multiple myocardial PET scan procedure, specifically
CPT code 78492, to the same APC as the single myocardial PET scan
procedure, specifically CPT code 78491, and believed this approach
would significantly underpay providers for multiple scanning
procedures. The commenter stated that multiple scans require greater
hospital resources, as well as increased scan times, than single scans,
and argued that the proposal would result in underpayment to the
facilities providing multiple scan services. The commenter further
asserted that the proposed significant reduction in payment from CY
2008 to CY 2009 would impact patient access to these services. The
commenter urged CMS to reevaluate the claims data for APC 0307 to
distinguish between the resources necessary to provide single versus
multiple imaging studies before finalizing the proposed CY 2009 payment
rate for myocardial PET scan services.
Response: Based on our CY 2007 claims data used for this final rule
with comment period, the HCPCS code-specific median costs for all three
myocardial PET scan services that we proposed to assign to APC 0307 are
similar. Approximately 93 percent of the CY 2007 claims for myocardial
PET scans are for CPT code 78492 for multiple scans, while only
approximately 1 percent are for CPT code 78491, the single scan CPT
code referenced by the commenter. The median cost for CPT code 78492 of
approximately $1,142 is actually less than the median cost of CPT code
78491 of approximately $1,410, a counterintuitive finding that is
likely the result of very few claims for CPT code 78491 from a small
number of hospitals. Nevertheless, the assignment of single myocardial
PET scan procedures to the same APC as multiple scan procedures has
very little effect on the payment rate for APC 0307, which is largely
driven by the majority of claims for multiple scan procedures. As we
explained previously in the CY 2007 OPPS/ASC final rule with comment
period (71 FR 68040 through 68041) and the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66718), based on the CY 2007 claims data
used for this final rule with comment period, we believe that the
assignment of CPT codes 78459, 78491, and 78492 to a single clinical
APC for CY 2009 is appropriate because the CY 2007 claims data used for
CY 2009 ratesetting do not support a payment differential between
single and multiple myocardial PET scan services.
After consideration of the public comments received, we are
finalizing our CY 2009 proposal, without modification, to continue to
assign CPT codes 78459, 78491, and 78492 for myocardial PET scan
services to APC 0307, with a final APC median cost of approximately
$1,131 for CY 2009.
After consideration of the public comments received, we are
finalizing our CY 2009 proposals, without modification, for the
configurations of APCs containing nuclear medicine procedures. The
final APC assignments of all CPT codes for nuclear medicine procedures
are displayed in Addendum B to this final rule with comment period.
Comment: With regard to the procedure-to-radiolabeled product
claims processing edits, some commenters suggested that CMS create a
modifier or a HCPCS code for hospitals to use when the hospital
performs the nuclear medicine scan but does not supply the radiolabeled
product. The commenters noted that this would be an appropriate
situation for a reduction to payment for the nuclear medicine procedure
in order to offset the packaged diagnostic radiopharmaceutical costs
not incurred by the hospital when the hospital does not provide the
radiopharmaceutical.
Response: It continues to be our expectation that, in accordance
with the hospital bundling requirements, hospitals will provide both
the diagnostic radiopharmaceutical and the nuclear medicine procedure
because administration of the diagnostic radiopharmaceutical is an
essential part of the nuclear medicine study. As we stated in the April
7, 2000 OPPS final rule (65 FR 18440), ``All diagnostic tests that are
furnished by a hospital, directly or under arrangements, to a
registered hospital outpatient during an encounter at a hospital are
subject to the bundling requirements.'' We further explained that the
hospital is not responsible for billing the diagnostic test if a
hospital patient leaves the hospital and goes elsewhere to obtain the
diagnostic test. However, when reporting a nuclear medicine procedure
provided in the HOPD, the administration of the radiopharmaceutical is
not separately reported because the administration is considered to be
integral to the performance of the nuclear medicine procedure.
Therefore, we would expect that the radiopharmaceutical and the
accompanying nuclear medicine procedure that make up the complete
service ``furnished to hospital patients, must be provided directly or
under arrangements by the hospital and only the hospital may bill the
program,'' as we also stated in the August 2, 2000 OPPS final rule (65
FR 18440).
We have provided a specific accommodation for one rare circumstance
where the HOPD does not furnish a diagnostic radiopharmaceutical (or
other radiolabeled product) prior to performing a nuclear medicine
procedure. In the particular case where a Medicare beneficiary receives
a radiolabeled product as a hospital inpatient and then requires a
nuclear medicine procedure as a hospital outpatient but does not
require administration of a diagnostic radiopharmaceutical, as of
October 2008, we have instructed hospitals to report HCPCS code C9898
(Radiolabeled product provided during a hospital inpatient stay) with a
token charge of less than $1.01 so that the claims for the nuclear
medicine procedure may process to payment. In this situation, which we
have been told is rare, the patient would not receive a radiolabeled
product in the HOPD. We believe the hospital should receive payment for
the nuclear medicine procedure provided in the HOPD and the hospital
bundling rules would not present a problem because the radiolabeled
product furnished to an inpatient was not provided for purposes of the
nuclear medicine study. HCPCS code C9898 is recognized as a
radiolabeled product code for purposes of the procedure-to-radiolabeled
product edits incorporated in the I/OCE. However, we do not believe
that the development of a modifier, additional HCPCS codes, or an
offset methodology for other circumstances, such as the patient
receiving a radiopharmaceutical in the physician's office when the
nuclear medicine procedure is provided in the HOPD, would be
appropriate because of the hospital bundling requirements. Moreover, in
those situations where an exception is made, such as when a beneficiary
is administered a therapeutic radiopharmaceutical as part of a hospital
inpatient stay and then returns to the HOPD for a nuclear medicine scan
without needing a diagnostic radiopharmaceutical to be administered for
the study, we do use

[[Page 68549]]

these claims for ratesetting purposes. We believe that just as these
situations are representative of the use of a nuclear medicine scan, it
is also appropriate to include them for ratesetting purposes.
After consideration of the public comments received, we are
finalizing our CY 2009 proposal, without modification, to provide
payment for nuclear medicine procedures on OPPS claims that pass the
procedure-to-radiolabeled product edits incorporated in the I/OCE,
without additional provisions for bypassing those edits or offsetting
the packaged diagnostic radiopharmaceutical costs included in the
procedure payment if the radiopharmaceutical is administered outside
the HOPD.
In summary, because we are continuing to package payment for
diagnostic radiopharmaceuticals in CY 2009 as discussed further in
section V.B.2.c. of this final rule with comment period, we are
finalizing our CY 2009 proposal, without modification, to set the
nuclear medicine procedure payment rates based on those correctly coded
claims that pass the claims processing edits that ensure that a
radiolabeled product is included on the nuclear medicine procedure
claim. We also are finalizing the proposed APC configurations for those
APCs to which nuclear medicine procedures are assigned. In doing so, we
are accepting the APC Panel's March 2008 recommendation to continue to
package payment for diagnostic radiopharmaceuticals for CY 2009. In
addition, we are accepting another APC Panel recommendation from March
2008 to present data at the first CY 2009 APC Panel meeting on usage
and frequency, geographic distribution, and size and type of hospitals
performing nuclear medicine studies using radioisotopes in order to
ensure that access to diagnostic radiopharmaceuticals is preserved for
Medicare beneficiaries.

Table 5--APCs Where Nuclear Medicine Procedures Are Assigned With Median Costs Calculated From Claims With an Associated Radiolabeled Product
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final CY 2009 APC CY 2009 APC Title
--------------------------------------------------------------------------------------------------------------------------------------------------------
0307............................. Myocardial Positron Emission Tomography (PET) imaging.
0308............................. Non-Myocardial Positron Emission Tomography (PET) imaging.
0377............................. Level II Cardiac Imaging.
0378............................. Level II Pulmonary Imaging.
0389............................. Level I Non-Imaging Nuclear Medicine.
0390............................. Level I Endocrine Imaging.
0391............................. Level II Endocrine Imaging.
0392............................. Level II Non-imaging Nuclear Medicine.
0393............................. Hematologic Processing & Studies.
0394............................. Hepatobiliary Imaging.
0395............................. GI Tract Imaging.
0396............................. Bone Imaging.
0397............................. Vascular Imaging.
0398............................. Level I Cardiac Imaging.
0400............................. Hematopoietic Imaging.
0401............................. Level I Pulmonary Imaging.
0402............................. Level II Nervous System Imaging.
0403............................. Level I Nervous System Imaging.
0404............................. Renal and Genitourinary Studies.
0406............................. Level I Tumor/Infection Imaging.
0408............................. Level III Tumor/Infection Imaging.
0414............................. Level II Tumor/Infection Imaging.
--------------------------------------------------------------------------------------------------------------------------------------------------------

(6) Hyperbaric Oxygen Therapy
Since the implementation of the OPPS in August 2000, the OPPS has
recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full
body chamber, per 30 minute interval) for hyperbaric oxygen therapy
(HBOT) provided in the hospital outpatient setting. In the CY 2005 OPPS
final rule with comment period (69 FR 65758 through 65759), we
finalized a ``per unit'' median cost calculation for APC 0659
(Hyperbaric Oxygen) using only claims with multiple units or multiple
occurrences of HCPCS code C1300 because delivery of a typical HBOT
service requires more than 30 minutes. We observed that claims with
only a single occurrence of the code were anomalies, either because
they reflected terminated sessions or because they were incorrectly
coded with a single unit. In the same rule, we also established that
HBOT would not generally be furnished with additional services that
might be packaged under the standard OPPS APC median cost methodology.
This enabled us to use claims with multiple units or multiple
occurrences. Finally, we also used each hospital's overall CCR to
estimate costs for HCPCS code C1300 from billed charges rather than the
CCR for the respiratory therapy or other departmental cost centers. The
comments on the CY 2005 OPPS proposed rule effectively demonstrated
that hospitals report the costs and charges for HBOT in a wide variety
of cost centers. Since CY 2005, we have used this methodology to
estimate the median cost for HBOT. The median costs of HBOT using this
methodology have been relatively stable for the last 4 years. In the CY
2009 OPPS/ASC proposed rule (73 FR 41442), we proposed to continue
using the same methodology to estimate a ``per unit'' median cost for
HCPCS code C1300 for CY 2009 of approximately $103, using 71,866 claims
with multiple units or multiple occurrences.
Comment: One commenter suggested that the payment rate per unit for
HBOT was too low relative to the commenter's incurred costs for the
hyperbaric oxygen and equipment. The commenter further encouraged CMS
to instruct providers to be sure their charges are appropriate and
offer providers specific billing guidance and instruction by providing
examples of charging by the ``unit'' for multiple 30 minute sessions.
The commenter noted that per unit billing can be confusing.
Response: In response to the comment on the adequacy of the
proposed payment rate, the proposed methodology represents our best

[[Page 68550]]

approach to estimating a valid median cost upon which to base a payment
rate for HBOT services for CY 2009, in the context of the per 30 minute
time period specified in the HCPCS code descriptor for HCPCS code
C1300. All OPPS payment rates are based on the middle or median
estimated cost of providing a service or group of services. For any
given service or group of services, we expect that some hospitals will
incur costs higher than the payment rate and some less.
We agree with the commenter on the importance of having accurate
claims data as part of our median cost calculation and that unit
billing can be challenging. For all services, we do expect hospitals
participating in the OPPS to be familiar with CPT and HCPCS code
descriptors and to bill accordingly. We provide general direction on
billing units for HCPCS codes under the OPPS in the Medicare Claims
Processing Manual, Pub. 100-04, Chapter 4, Section 20.4. We note that
HCPCS code C1300 has been in use for some time. Our analysis of claims
for HCPCS code C1300 for the CY 2005 OPPS proposed rule indicated that
many hospitals understand unit billing for HCPCS code C1300. We
observed that most hospitals billed 3 or 4 units for an HBOT session,
and these multiple unit claims are the claims we used for rateseting
for CY 2009.
After consideration of the public comment received, we are
finalizing our CY 2009 proposal, without modification, to continue to
use our established ratesetting methodology for calculating the median
cost of APC 0659 for payment of HBOT, with a final CY 2009 APC median
cost of approximately $101.
(7) Payment for Ancillary Outpatient Services When Patient Expires (-CA
Modifier)
In the November 1, 2002 final rule with comment period (67 FR
66798), we discussed the creation of the new HCPCS-CA modifier to
address situations where a procedure on the OPPS inpatient list must be
performed to resuscitate or stabilize a patient (whose status is that
of an outpatient) with an emergent, life-threatening condition, and the
patient dies before being admitted as an inpatient. In Transmittal A-
02-129, issued on January 3, 2003, we instructed hospitals on the use
of this modifier. For a complete description of the history of the
policy and development of the payment methodology for these services,
we refer readers to the CY 2007 OPPS/ASC final rule with comment period
(71 FR 68157 through 68158).
In the CY 2009 OPPS/ASC proposed rule (73 FR 41442), we proposed to
continue to use for CY 2009 our established ratesetting methodology for
calculating the median cost of APC 0375 (Ancillary Outpatient Services
When Patient Expires), and we proposed to continue to make one payment
under APC 0375 for the services that meet the specific conditions for
using modifier -CA. We proposed to calculate the relative payment
weight for APC 0375 by using all claims reporting a status indicator
``C'' procedure appended with the -CA modifier, using estimated costs
from claims data for line-items with a HCPCS code assigned status
indicator ``G,'' ``H,'' ``K,'' ``N,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,''
``S,'' ``T,'' ``U,'' ``V,'' and ``X'' and charges for packaged revenue
codes without a HCPCS code. We continue to believe that this
methodology results in the most appropriate aggregate median cost for
the ancillary services provided in these unusual clinical situations.
As discussed in the CY 2009 OPPS/ASC proposed rule (73 FR 41442),
we believe that hospitals are reporting the -CA modifier according to
the policy initially established in CY 2003. We noted that the claims
frequency for APC 0375 has been relatively stable over the past few
years. Although the proposed median cost for APC 0375 was slightly
lower for CY 2009 than the final median cost for CY 2008, generally it
has increased significantly in recent years. Variation in the median
cost for APC 0375 is expected because of the small number of claims and
because the specific cases are grouped by the presence of the -CA
modifier appended to an inpatient procedure and not according to the
standard APC criteria of clinical and resource homogeneity. Cost
variation for APC 0375 from year to year is anticipated and acceptable
as long as hospitals continue judicious reporting of the -CA modifier.
Table 5 of the CY 2009 OPPS/ASC proposed rule showed the number of
claims and the median cost for APC 0375 from CY 2006 to CY 2008. For CY
2009, the final median cost for APC 0375 of approximately $5,545 is
slightly higher than the CY 2008 and proposed CY 2009 median costs.
We did not receive any public comments regarding this proposal.
Therefore, we are finalizing our CY 2009 proposal, without
modification, to continue to use our established ratesetting
methodology for calculating the median cost of APC 0375, which has a
final CY 2009 APC median cost of approximately $5,545.
Table 6 below shows the number of claims and the final median cost
for APC 0375 from CY 2006 to CY 2009.

Table 6--Claims for Ancillary Outpatient Services When Patient Expires (-
CA Modifier) for CYs 2006 Through 2009
------------------------------------------------------------------------
Final approximate
Prospective payment year Number of claims APC median cost
------------------------------------------------------------------------
CY 2006........................... 370 $2,717
CY 2007........................... 260 3,549
CY 2008........................... 183 4,945
CY 2009........................... 168 5,545
------------------------------------------------------------------------

e. Calculation of Composite APC Criteria-Based Median Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide only necessary, high quality care
and to provide that care as efficiently as possible. For CY 2008, we
developed composite APCs to provide a single payment for groups of
services that are typically performed together during a single clinical
encounter and that result in the provision of a complete service.
Bundling payment for multiple independent services into a single OPPS
payment in this way enables hospitals to manage their resources with
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than

[[Continued on page 68551]]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]

[[pp. 68551-68600]] Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2009 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2009 Payment Rates; Hospital
Conditions of Participation: Requirements for Approval and Re[[Page 68551]]

[[Continued from page 68550]]

[[Page 68551]]

relying upon single procedure claims which typically are low in volume
and/or incorrectly coded. We refer readers to section II.A.4. of the CY
2008 OPPS/ASC final rule with comment period for a full discussion of
the development of the composite APC methodology (72 FR 66611 through
66614 and 66650 through 66652).
We continue to consider the development and implementation of
larger payment bundles, such as composite APCs, a long-term policy
objective for the OPPS and continue to explore other areas where this
payment model may be utilized. In developing the CY 2009 OPPS/ASC
proposed rule, we followed the same methodology for identifying
possible composite APCs as we did for CY 2008. Specifically, we
examined the multiple procedure claims that we could not convert to
single procedure claims to identify common combinations of services for
which we have relatively few single procedure claims. We then performed
a clinical assessment of the combinations that we identified to
determine whether our findings were consistent with our understanding
of the services furnished. In addition, consistent with our stated
intention to involve the APC Panel in our future exploration of how we
can develop encounter-based and episode-based payment groups (72 FR
66614), we also specifically explored a possible composite APC for
radioimmunotherapy in response to a recommendation of the APC Panel
from its September 2007 meeting.
After performing claims analysis and clinical assessments as
described earlier, and taking into consideration the recommendation of
the APC Panel from its March 2008 meeting that we continue pursuing a
radioimmunotherapy composite APC, we did not propose a composite APC
payment for radioimmunotherapy for CY 2009, as discussed further in
section V.B.4. of this final rule with comment period. However, in the
CY 2009 OPPS/ASC proposed rule (73 FR 41450), we proposed to expand the
composite APC model to one new clinical area for CY 2009, multiple
imaging services, as described in detail in section II.A.2.e.(5) of
this final rule with comment period. We also proposed to continue for
CY 2009 our established composite APC policies for extended assessment
and management, low dose rate (LDR) prostate brachytherapy, cardiac
electrophysiologic evaluation and ablation, and mental health services,
as discussed in sections II.A.2.e.(1), II.A.2.e.(2), II.A.2.e.(3), and
II.A.2.e.(4), respectively, of this final rule with comment period (73
FR 41443).
Comment: Many commenters supported the development and
implementation of composite APCs as a mechanism to encourage efficient
and effective care and to use multiple procedure claims that otherwise
would not be available for ratesetting because they include multiple
separately payable procedures furnished on the same date of service.
The commenters remarked that the number of single bills available for
ratesetting for certain procedures (particularly those requiring coding
combinations to represent a complete service) remain a very small
percentage of total billed claims, and recommended that CMS develop
composite APCs in several clinical areas in order to improve OPPS
payment accuracy and include more correctly coded, multiple procedure
claims in ratesetting. For example, several commenters urged CMS to
create composite APCs for procedures involving cardiac
resynchronization therapy defibrillator (CRT-D) or cardiac
resynchronization therapy pacemaker (CRT-P) devices. The commenters
argued that the procedures involved in the implantation of CRT-D and
CRT-P devices are major, separately payable services that, if correctly
coded, are always represented by the submission of at least two CPT
codes. A number of commenters recommended the development of
``composite'' APCs to address their concerns regarding the proposed
packaging of certain items and services, specifically suggesting the
creation of ``composite'' APC payments for various combinations of
individual services and specific packaged items or services, such as
bronchoscopy procedures with endobronchial ultrasound or nuclear
medicine procedures combined with specific diagnostic
radiopharmaceuticals.
In contrast to the commenters requesting that CMS create additional
composite APCs, several commenters remarked generally that CMS should
proceed cautiously as it expands service bundling, and should not
implement additional composite methodologies until adequate data are
available to evaluate the effectiveness and impact on beneficiary
access to care of the composite policies implemented in CY 2008. Some
commenters urged CMS to reevaluate the concept of composite APCs to
ensure they are truly meeting the objective of encouraging more cost
efficient care, are not unfairly penalizing hospitals because of the
acuity of the patients they treat, and are not making the system
unnecessarily complex.
Response: We agree with commenters that the composite APC model is
an important and effective mechanism for promoting efficiency and
paying more appropriately for packages of services. The composite
payment methodology also enables us to use more claims data and
generates payment rates that more accurately reflect the reality of how
hospitals furnish services. Therefore, we will carefully explore the
commenters' suggestions for additional composite APCs when we assess
what payment policy changes might be appropriate in the future. We also
will consider bringing these and other composite ideas to the APC Panel
for further discussion.
We believe we are proceeding at an appropriate pace in the
development of composite APCs. We did not receive any comments on the
CY 2009 OPPS/ASC proposed rule indicating there were access problems
resulting from the implementation of composite APCs in CY 2008.
Furthermore, we believe that the composite payment methodology improves
the accuracy of OPPS payment, and we would not expect access problems
or other difficulties to arise from a methodology that utilizes more
complete and valid claims in ratesetting than our standard APC
ratesetting methodology. We also do not agree that the composite
methodology makes the OPPS payment system unnecessarily complex,
because it utilizes data from multiple procedure claims as reported by
hospitals and does not require hospitals to change their coding and
billing practices in any way.
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66650), our initial work on developing composite APCs arose, in
part, from our attempts to develop an approach to utilize common
multiple procedure claims that were not otherwise available for
ratesetting because they included multiple separately payable
procedures furnished on the same date of service. Composite APCs were
designed to expand the payment bundles of the OPPS by providing a
single payment for the totality of care provided in a hospital
outpatient encounter that would be reported with two or more HCPCS
codes for otherwise separately payable component services. Similarly,
in CY 2008 the expanded unconditional packaging of items and services
also allowed us to use more claims data from what would otherwise be
multiple procedure claims and to expand the OPPS payment bundles. We do
not consider some of the recommendations by commenters to provide
unique payments for specific combinations of separately payable
services with certain packaged items and services to be

[[Page 68552]]

``composite'' APCs that move toward a single payment for that totality
of a service because, in such cases, we are already providing only a
single payment for the totality of the service, including the packaged
items and services. Such an approach would lead to smaller OPPS payment
bundles, would not utilize additional multiple procedure claims, and
would reduce the incentives for hospital efficiency created by
packaging payment.
After consideration of the public comments received, for CY 2009 we
are finalizing our proposal, without modification, to continue our
established composite APC policies for extended assessment and
management, LDR prostate brachytherapy, cardiac electrophysiologic
evaluation and ablation, and mental health services, as discussed in
sections II.A.2.e.(1), II.A.2.e.(2), II.A.2.e.(3), and II.A.2.e.(4),
respectively, of this final rule with comment period. We also are
implementing a new composite payment methodology for multiple imaging
services provided on the same date of service, as discussed further in
section II.A.2.e.(5) of this final rule with comment period.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
In the CY 2009 OPPS/ASC proposed rule (73 FR 41443), we proposed to
continue to include composite APC 8002 (Level I Extended Assessment and
Management Composite) and composite APC 8003 (Level II Extended
Assessment and Management Composite) in the OPPS for CY 2009. In
addition, we proposed to include HCPCS code G0384 (Level 5 hospital
emergency department visit provided in a type B emergency department)
in the criteria that determine eligibility for payment for composite
APC 8003 (73 FR 41443) for CY 2009. For CY 2008, we created these two
new composite APCs to provide payment to hospitals in certain
circumstances when extended assessment and management of a patient
occur (an extended visit). In most circumstances, observation services
are supportive and ancillary to the other services provided to a
patient. In the circumstances when observation care is provided in
conjunction with a high level visit or direct admission and is an
integral part of a patient's extended encounter of care, payment is
made for the entire care encounter through one of two composite APCs as
appropriate.
As defined for the CY 2008 OPPS, composite APC 8002 describes an
encounter for care provided to a patient that includes a high level
(Level 5) clinic visit or direct admission to observation in
conjunction with observation services of substantial duration (72 FR
66648 through 66649). Composite APC 8003 describes an encounter for
care provided to a patient that includes a high level (Level 4 or 5)
emergency department visit or critical care services in conjunction
with observation services of substantial duration. HCPCS code G0378
(Observation services, per hour) is assigned status indicator ``N,''
signifying that its payment is always packaged. As noted in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66648 through 66649),
the I/OCE evaluates every claim received to determine if payment
through a composite APC is appropriate. If payment through a composite
APC is inappropriate, the I/OCE, in conjunction with the PRICER,
determines the appropriate status indicator, APC, and payment for every
code on a claim. The specific criteria that must be met for the two
extended assessment and management composite APCs to be paid are
provided below in the description of the claims that were selected for
the calculation of the proposed CY 2009 median costs for these
composite APCs. The general composite APC logic and observation care
reporting criteria have also been included in updates to the Claims
Processing and Benefit Policy Manuals through Change Request 5916
(Transmittals 82 and 1145), dated February 8, 2008, and we did not
propose to change these criteria for the CY 2009 OPPS (73 FR 41443).
When we created composite APCs 8002 and 8003 for CY 2008, we
retained as general reporting requirements for all observation services
those criteria related to physician order and evaluation;
documentation; and observation beginning and ending time as listed in
section XI. of the CY 2008 final rule with comment period (72 FR
66812). In the CY 2009 OPPS/ASC proposed rule (73 FR 41443), we did not
propose to change these reporting requirements for the CY 2009 OPPS.
These are more general requirements that encourage hospitals to provide
medically reasonable and necessary care and help to ensure the proper
reporting of observation services on correctly coded hospital claims
that reflect the full charges associated with all hospital resources
utilized to provide the reported services.
As noted in detail in sections IX.C. and XI. of the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66802 through 66805 and
66814), we saw a normal and stable distribution of clinic and emergency
department visit levels. We do not expect to see an increase in the
proportion of visit claims for high level visits as a result of the new
composite APCs adopted for CY 2008 and proposed for CY 2009. Similarly,
we expect that hospitals will not purposely change their visit
guidelines or otherwise upcode clinic and emergency department visits
reported with observation care solely for the purpose of composite
payment. As stated in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66648), we expect to carefully monitor any changes in
billing practices on a service-specific and hospital-specific level to
determine whether there is reason to request that Quality Improvement
Organizations (QIOs) review the quality of care furnished, or to
request that Benefit Integrity contractors or other contractors review
the claims against the medical record. However, we will not have claims
available for analysis that reflect the new CY 2008 payment policy for
the extended assessment and management composite APCs until the CY 2010
annual OPPS rulemaking cycle.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41444), we proposed to
continue the extended assessment and management composite APC payment
methodology for APCs 8002 and 8003 for CY 2009. As stated earlier, we
also proposed to continue the general reporting requirements for
observation services reported with HCPCS code G0378. We continue to
believe that the composite APCs 8002 and 8003 and the related policies
provide the most appropriate means of paying for these services. We
proposed to calculate the median costs for APCs 8002 and 8003 using all
single and ``pseudo'' single procedure claims for CY 2007 that meet the
criteria for payment of each composite APC.
Specifically, to calculate the proposed median costs for composite
APCs 8002 and 8003, we selected single and ``pseudo'' single claims
that met each of the following criteria:
1. Did not contain a HCPCS code to which we have assigned status
indicator ``T'' that is reported with a date of service 1 day earlier
than the date of service associated with HCPCS code G0378. (By
selecting these claims from single and ``pseudo'' single claims, we had
already assured that they would not contain a code for a service with
status indicator ``T'' on the same date of service.);
2. Contained 8 or more units of HCPCS code G0378; and
3. Contained one of the following codes:

[[Page 68553]]

In the case of composite APC 8002, HCPCS code G0379
(Direct admission of patient for hospital observation care) on the same
date of service as G0378; or CPT code 99205 (Office or other outpatient
visit for the evaluation and management of a new patient (Level 5)); or
CPT code 99215 (Office or other outpatient visit for the evaluation and
management of an established patient (Level 5)) provided on the same
date of service or one day before the date of service for HCPCS code
G0378.
In the case of composite APC 8003, CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)); CPT code 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes); or HCPCS code G0384
provided on the same date of service or one day before the date of
service for HCPCS code G0378. (As discussed in detail below, we
proposed to add HCPCS code G0384 to the eligibility criteria for
composite APC 8003 for CY 2009.)
We applied the standard packaging and trimming rules to the claims
before calculating the proposed CY 2009 median costs. The proposed CY
2009 median cost resulting from this process for composite APC 8002 was
approximately $364, which was calculated from 14,968 single and
``pseudo'' single bills that met the required criteria. The proposed CY
2009 median cost for composite APC 8003 was approximately $670, which
was calculated from 83,491 single and ``pseudo'' single bills that met
the required criteria. This is the same methodology we used to
calculate the medians for composite APCs 8002 and 8003 for the CY 2008
OPPS (72 FR 66649).
As discussed in more detail in section IX.B. of this final rule
with comment period, in the CY 2009 OPPS/ASC proposed rule (73 FR
41444), we proposed to reassign HCPCS code G0384 from APC 0608 (Level 5
Hospital Clinic Visits) to APC 0616 (Level 5 Emergency Visits) for CY
2009. Consistent with this change for CY 2009, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41444), we also proposed to add HCPCS code G0384
to the eligibility criteria for payment of composite APC 8003. Because
these visits are rare, we would not expect that adding HCPCS code G0384
to the eligibility criteria for payment for extended assessment and
management composite APC 8003 would significantly increase the relative
frequency of the Type B emergency department Level 5 visits reported
using HCPCS code G0384.
As discussed further in sections III.D and IX. of this final rule
with comment period and consistent with our CY 2008 final policy, when
calculating the median costs for the clinic, Type A emergency
department visit, Type B emergency department visit, and critical care
APCs (0604 through 0617 and 0626 through 0629), we would utilize our
methodology that excludes those claims for visits that are eligible for
payment through the two extended assessment and management composite
APCs, that is APC 8002 or APC 8003. We believe that this approach would
result in the most accurate cost estimates for APCs 0604 through 0617
and 0626 through 0629 for CY 2009.
Also as discussed in section XIII.A.1. of this final rule with
comment period, for CY 2009, in the CY 2009 OPPS/ASC proposed rule (73
FR 41520 through 41521), we proposed to replace current status
indicator ``Q'' with three new separate status indicators: ``Q1,''
``Q2,'' and ``Q3'' for CY 2009. In the CY 2009 OPPS, ASC proposed rule
(73 FR 41520 through 41521), we indicated our belief that this proposed
change would make our policy more transparent to hospitals and would
facilitate the use of status indicator-driven logic in our ratesetting
calculations, and in hospital billing and accounting systems. Under
this proposal, status indicator ``Q3'' would be assigned to all codes
that may be paid through a composite APC based on composite-specific
criteria or separately through single code APCs when the criteria are
not met. Therefore, we proposed that each of the direct admission,
clinic, and emergency department visit codes that may be paid through
composite APCs 8002 and 8003 be assigned status indicator ``Q3'' for CY
2009. We proposed that HCPCS code G0378 would continue to be always
packaged by assigning the HCPCS code status indicator ``N,'' its
current status indicator under the CY 2008 OPPS.
At its March 2008 meeting, the APC Panel recommended that CMS
provide additional data related to the frequency and median cost for
the extended assessment and management composite APCs and length-of-
stay frequency distribution data for observation services, with
additional detail at the 24-48 hour and greater than 48 hour levels. At
the APC Panel's August 2008 meeting, we provided the additional data as
requested. After reviewing the data presented, the APC Panel requested
that additional data on observation services with longer lengths of
stay, analyzed by hospital characteristics, be presented at the next
meeting of the APC Panel, that is, the APC Panel's first CY 2009
meeting. In addition, the APC Panel requested that an analysis of CY
2008 claims data for clinic visits, emergency department visits (Type A
and Type B), and extended assessment and management composite APCs be
presented at the first CY 2009 meeting of the APC Panel.
At its August 2008 meeting, the APC Panel also recommended that CMS
adopt the CY 2009 proposals related to the extended assessment and
management composite APCs, especially in reference to the inclusion of
the Level 5 Type B emergency department visit HCPCS code in APC 8003
(Level II Extended Assessment and Management Composite). Finally, the
APC Panel recommended continuation of the Visits and Observation
Subcommittee's work. We are accepting each of the APC Panel's
recommendations and will provide additional data and analyses as
requested at the first CY 2009 meeting of the APC Panel.
Comment: Several commenters expressed continued support for payment
of composite APC 8003, which includes a high level emergency department
visit or critical care billed with observation services. In addition,
several commenters supported CMS' proposal to include the Level 5 Type
B ED visits, reported with HCPCS code G0384, to the eligibility
criteria for payment of composite APC 8003 (Level II Extended
Assessment and Management Composite). Another commenter asserted that
the extended assessment and management APC criteria are arbitrary
because they do not include lower level emergency department and clinic
visits. The latter commenter believed that observation care is
medically necessary in association with low level visits in some cases
and that the observation care is often identical to the observation
provided to individuals in association with high level visits.
Therefore, the commenter concluded that the proposed composite payment
criteria were arbitrary because no payment is made for the medically
necessary observation care provided in association with a low level
visit.
Response: We appreciate the commenter's support for continued
payment of the extended assessment and management composite APCs and
for the addition of HCPCS code G0384 to the eligibility criteria for
payment of composite APC 8003.
In response to the commenter who stated that the composite APC
payment criteria are arbitrary, payment for all

[[Page 68554]]

observation care is packaged under the OPPS but, as we explained in the
CY 2008 OPPS/ASC final rule with comment period (72 FR 66648), we
believe that observation care only rises to the level of a major
component service that could be paid through a composite APC when it is
provided for 8 hours or more in association with a high level clinic or
emergency department visit. Therefore, we do not believe it would be
appropriate to provide payment for observation care in association with
a low level clinic or emergency department visit through a composite
APC because we do not believe that two major component services are
provided in such cases.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66649), we estimated that roughly 90 percent of the instances of
separately payable observation care reported in CY 2006 would be
eligible for payment through composite APCs 8002 and 8003, using the CY
2008 final criteria. We continue to believe that most instances of
observation that were separately payable in CY 2006 would have been
eligible for payment under composite APCs 8002 and 8003 under the CY
2009 OPPS. In addition, some of the packaged observation care that was
provided in CY 2006 would now be eligible for payment through composite
APCs 8002 and 8003 because we eliminated the diagnosis requirement for
CY 2008. However, for observation care provided under circumstances
that do meet the criteria for composite APC payment, including
observation in association with low level clinic or emergency
department visits, we continue to believe that the observation is
ancillary and supportive to those other services provided to the
patient on the same day. Therefore, in such cases, hospitals would
receive payment for the observation care as it is packaged into payment
for the other separately payable services, such as the low level clinic
or emergency department visit.
After consideration of the public comments received and the
recommendations of the APC Panel, we are finalizing our CY 2009
proposals, without modification, for payment of composite APCs 8002 and
8003. The CY 2008 criteria and payment methodology finalized for
composites APCs 8002 and 8003 will continue, consistent with the APC
Panel's August 2008 recommendation in support of our CY 2009 proposals
for payment of extended assessment and management composite APCs. As
discussed in section IX.B. of this final rule with comment period, we
are also finalizing our proposal to reassign HCPCS code G0384 from APC
0608 (Level 5 Hospital Clinic Visits) to APC 0616 (Level 5 Emergency
Visits). Moreover, we are finalizing our CY 2009 proposal, without
modification, to include HCPCS code G0384 in the criteria that
determine eligibility for payment of composite APC 8003, consistent
with the APC Panel's August 2008 recommendation that we should adopt
this proposal. The final CY 2009 median cost for composite APC 8002 is
approximately $367, which was calculated from 17,501 single and
``pseudo'' single bills that met the required criteria. The final CY
2009 median cost for composite APC 8003 is approximately $660, which
was calculated from 150,088 single and ``pseudo'' single bills that met
the required criteria.
Finally, as discussed in section XIII.A.1, of this final rule with
comment period, we are finalizing our CY 2009 proposal to replace
current status indicator ``Q'' with three new separate status
indicators: ``Q1,'' ``Q2,'' and ``Q3.'' Therefore, each of the direct
admission, clinic, and emergency department visit codes that may be
paid through composite APCs 8002 and 8003 are assigned status indicator
``Q3'' (Codes that May be Paid Through a Composite APC) for CY 2009 in
Addendum B to this final rule with comment period.
As we indicated in the CY 2008 OPPS ASC final rule with comment
period, (72 FR 66802 through 66805 and 66814), we saw a normal and
stable distribution of clinic and emergency department visits. We
continue not to expect to see an increase in the proportion of visit
claims for high level visits as a result of the new composite APCs
adopted for CY 2008 and proposed for CY 2009. Similarly, we expect that
hospitals will not purposely change their visit guidelines or otherwise
upcode clinic and emergency department visits reported with observation
care solely for the purpose of composite payment. We would also remind
readers that reasonable and necessary observation care is a supportive
and ancillary service for which payment is always packaged. When the
criteria for payment of either composite APC 8002 or 8003 are met, then
the costs associated with observation care reported with HCPCS code
G0378 are attributed to the total costs of that composite APC. When the
criteria are not met, the costs of observation care are packaged with
the costs of the separately payable independent services on the claim,
usually the clinic or emergency department visit. Those costs are
reflected in the APC payments for the independent services. Therefore,
payment is made for observation care as part of the payment for the
independent service. The absence of separate payment for observation
care does not equate to the absence of Medicare coverage for the
service.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41444), we also
proposed that the payment policy for separate payment of HCPCS code
G0379 that was finalized for the CY 2008 OPPS (72 FR 66814 through
66815) would continue to apply for CY 2009 when the criteria for
payment of this service through composite APC 8002 are not met. The
criteria for payment of HCPCS code G0379 under either composite APC
8002, as part of the extended assessment and management composite
service, or APC 0604, as a separately payable individual service are:
(1) Both HCPCS codes G0378 and G0379 are reported with the same date of
service; and (2) no service with a status indicator of ``T'' or ``V''
or Critical Care (APC 0617) is provided on the same date of service as
HCPCS code G0379. If either of the above criteria is not met, HCPCS
code G0379 is assigned status indicator ``N'' and its payment is
packaged into the payment for other separately payable services
provided in the same encounter.
We did not receive any public comments concerning this proposal.
Therefore, we are finalizing our CY 2009 proposal, without
modification, for separate or composite APC payment of HCPCS code G0379
under the same circumstances as the final CY 2008 policy. If the
criteria for separate or composite APC payment are not met, payment for
HCPCS code G0379 is packaged into payment for the other separately
payable services provided.
(2) LDR Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which needles or catheters are inserted into the prostate, followed by
permanent implantation of radioactive sources into the prostate through
hollow needles or catheters. At least two CPT codes are used to report
the composite treatment service because there are separate codes that
describe placement of the needles/catheters and the application of the
brachytherapy sources: CPT code 55875 (Transperineal placement of
needles or catheters into prostate for interstitial radioelement
application, with or without cystoscopy) and CPT code 77778
(Interstitial radiation source application; complex). Generally, the
component services represented by both codes are provided in the same
operative session in the same hospital

[[Page 68555]]

on the same date of service to the Medicare beneficiary treated with
LDR brachytherapy for prostate cancer. As discussed in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66653), OPPS payment
rates for CPT code 77778, in particular, have fluctuated over the
years. We were frequently informed by the public that reliance on
single procedure claims to set the median costs for these services
resulted in use of only incorrectly coded claims for LDR prostate
brachytherapy because a correctly coded claim should include, for the
same date of service, CPT codes for both needle/catheter placement and
application of radiation sources, as well as separately coded imaging
and radiation therapy planning services (that is, a multiple procedure
claim).
In order to base payment on claims for the most common clinical
scenario, and to contribute to our goal of providing payment under the
OPPS for a larger bundle of component services provided in a single
hospital encounter, beginning in CY 2008 we provide a single payment
for LDR prostate brachytherapy when the composite service, billed as
CPT codes 55875 and 77778, is furnished in a single hospital encounter.
We base the payment for composite APC 8001 (LDR Prostate Brachytherapy
Composite) on the median cost derived from claims for the same date of
service that contain both CPT codes 55875 and 77778 and that do not
contain other separately paid codes that are not on the bypass list. In
uncommon occurrences in which the services are billed individually,
hospitals continue to receive separate payments for the individual
services. We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66652 through 66655) for a full history of OPPS
payment for LDR prostate brachytherapy and a detailed description of
how we developed the LDR prostate brachytherapy composite APC.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41445), we proposed to
continue paying for LDR prostate brachytherapy services in CY 2009
using the composite APC methodology proposed and implemented for CY
2008. That is, we proposed to use CY 2007 claims on which both CPT
codes 55875 and 77778 were billed on the same date of service with no
other separately paid procedure codes (other than those on the bypass
list) to calculate the payment rate for composite APC 8001. Consistent
with our CY 2008 practice, we would not use the claims that meet these
criteria in the calculation of the median costs for APCs 0163 (Level IV
Cystourethroscopy and Other Genitourinary Procedures) and 0651 (Complex
Interstitial Radiation Source Application) to which CPT codes 55875 and
77778 are assigned respectively; median costs for APCs 0163 and 0651
would continue to be calculated using single procedure claims. We note
that we inadvertently cited APC 0313 instead of APC 0651 as the
assigned APC for CPT code 77778 in the CY 2009 OPPS/ASC proposed rule
at 73 FR 41445. However, the correct APC (0651) assignment for CPT code
77778 was included in Addenda B and M to the proposed rule, and our CY
2009 proposal was to continue to assign CPT code 77778 to APC 0651. As
discussed in section XIII.A.1. of this final rule with comment period,
we also proposed to use new status indicator ``Q3'' (Codes that May be
Paid Through a Composite APC), to denote HCPCS codes such as CPT codes
55875 and 77778 that may be paid through a composite APC for
publication and payment purposes for CY 2009, rather than status
indicator ``Q'' that is being used in CY 2008. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41520 through 41521), we proposed the status
indicator change to facilitate identification of HCPCS codes that may
be paid through composite APCs and to facilitate development of the
composite APC median costs for CY 2009.
We continue to believe that this composite APC contributes to our
goal of creating hospital incentives for efficiency and cost
containment, while providing hospitals with the most flexibility to
manage their resources. We also continue to believe that data from
claims reporting both services required for LDR prostate brachytherapy
provide the most accurate median cost upon which to base the composite
APC payment rate.
Using partial year CY 2007 claims data available for the CY 2009
proposed rule, we were able to use 6,897 claims that contained both CPT
code 77778 and 55875 to calculate the median cost upon which the CY
2009 proposed payment for composite APC 8001 was based. The proposed
median cost for composite APC 8001 for CY 2009 was approximately
$3,509. This was an increase compared to the CY 2008 OPPS/ASC final
rule with comment period in which we calculated a final median cost for
this composite APC of approximately $3,391 based on a full year of CY
2006 claims data. The CY 2009 proposed composite APC median was
slightly less than $3,581, the sum of the proposed median costs for
APCs 0163 and 0651 ($2,388 + $1,193), the APCs to which CPT codes 55875
and 77778 map if one service is billed on a claim without the other. We
stated in the CY 2009 OPPS/ASC proposed rule (73 FR 41445) that we
believe the proposed CY 2009 median cost for composite APC 8001 of
approximately $3,509, calculated from claims we believe to be correctly
coded, would result in a reasonable and appropriate payment rate for
this service in CY 2009.
Comment: One commenter supported the continuation of the LDR
prostate brachytherapy composite APC but urged CMS to closely monitor
utilization to ensure access to this therapy is not compromised by this
change in payment policy.
Response: We appreciate the commenter's thoughts on the LDR
prostate brachytherapy composite APC. As stated previously, we believe
that the composite payment methodology improves the accuracy of OPPS
payment, and we would not expect access problems or other difficulties
to arise from a methodology that utilizes more complete and valid
claims in ratesetting than our standard APC ratesetting methodology for
the services described by CPT codes 55875 and 77778 when performed
together on the same date of service. When the CY 2008 claims become
available for the CY 2010 OPPS rulemaking cycle, we will examine
utilization of LDR prostate brachytherapy services to ensure no
inappropriate changes in utilization have occurred.
After consideration of the public comment received, we are
finalizing our CY 2009 proposal, without modification, to continue
paying for LDR prostate brachytherapy services using the composite APC
methodology implemented for CY 2008. We were able to use 845 claims
that contained both CPT codes 77778 and 55875 to calculate the median
cost upon which the CY 2009 final payment for composite APC 8001 is
based. The final median cost for composite APC 8001 for CY 2009 is
approximately $2,967. We note that this is a decrease in median cost
compared to the CY 2009 OPPS/ASC proposed rule in which we calculated a
proposed median cost for this composite APC of approximately $3,509. We
also note that there is a significant decrease in the number of claims
used for calculating the median cost for APC from the CY 2009 proposed
rule to this final rule with comment period.
We believe that the decreases in both the median cost for APC 8001
and the number of claims used to calculate the median cost are
attributable to the removal of CPT codes in the radiation oncology
series of CPT codes from the

[[Page 68556]]

bypass list in response to public comments because the codes did not
meet the empirical criteria for inclusion on the bypass list, as
discussed in section II.A.1.b.of this final rule with comment period.
We believe that some of the CPT codes that were removed from the bypass
list, which are paid separately in addition to the LDR prostate
brachytherapy composite APC, occur so frequently on claims that meet
the criteria for LDR prostate brachytherapy composite payment that
their removal from the bypass list resulted in the significant drop in
the number of claims that could be used to calculate the median cost
for APC 8001. However, our final CY 2009 median cost for APC 8001
should be a more accurate reflection of the cost of the services for
which the composite payment is made than the proposed CY 2009 median
cost, because it is most likely that the packaged costs that should
have been associated with the radiation oncology codes on the bypass
list were wrongly attributed to the cost of the LDR prostate
brachytherapy composite APC in the CY 2009 proposed rule, as discussed
in more detail in response to public comments in section II.A.1.b. of
this final rule with comment period. The APC 8001 median cost that we
calculated for this final rule with comment period no longer includes
the packaging that should have been attributed to the codes that were
on the bypass list but did not meet the empirical criteria for the
bypass list. Moreover, the line-item costs for the radiation oncology
codes that failed the empirical criteria for the bypass list are no
longer being used as ``pseudo'' single claims without their associated
packaging to set the payment rates for those codes. The median costs
for these codes should also be more accurate because the ``pseudo''
single procedure claims that lacked the appropriate packaging are no
longer being used to set the medians for them.
The final CY 2009 median cost for composite APC 8001 of
approximately $2,967 is slightly less than $3,163, the sum of the
median costs for APC 0163 and APC 0651 ($2,316 + $847), the APCs to
which CPT codes 55875 and 77778 map if one service is billed on a claim
without the other. These CPT codes are assigned status indicator ``Q3''
in Addendum B to this final rule with comment period to identify their
status as potentially payable through a composite APC. Their composite
APC assignment is identified in Addendum M to this final rule with
comment period.
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC
(APC 8000)
Cardiac electrophysiologic evaluation and ablation services
frequently are performed in varying combinations with one another
during a single episode-of-care in the hospital outpatient setting.
Therefore, correctly coded claims for these services often include
multiple codes for component services that are reported with different
CPT codes and that, prior to CY 2008, were always paid separately
through different APCs (specifically, APC 0085 (Level II
Electrophysiologic Evaluation), APC 0086 (Ablate Heart Dysrhythm
Focus), and APC 0087 (Cardiac Electrophysiologic Recording/Mapping)).
As a result, there would never be many single bills for cardiac
electrophysiologic evaluation and ablation services, and those that are
reported as single bills would often represent atypical cases or
incorrectly coded claims. As described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66655 through 66659), the APC Panel and
the public expressed persistent concerns regarding the limited and
reportedly unrepresentative single bills available for use in
calculating the median costs for these services according to our
standard OPPS methodology.
Effective January 1, 2008, we established APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite) to pay for a
composite service made up of at least one specified electrophysiologic
evaluation service and one electrophysiologic ablation service.
Calculating a composite APC for these services allowed us to utilize
many more claims than were available to establish the individual APC
median costs for these services, and we also saw this composite APC as
an opportunity to advance our stated goal of promoting hospital
efficiency through larger payment bundles. In order to calculate the
median cost upon which the payment rate for composite APC 8000 was
based, we used multiple procedure claims that contained at least one
CPT code from group A for evaluation services and at least one CPT code
from group B for ablation services reported on the same date of service
on an individual claim. Table 9 in the CY 2008 OPPS/ASC final rule with
comment period, and Table 6 in the CY 2009 OPPS/ASC proposed rule,
reprinted as Table 7 below, identified the CPT codes that were assigned
to groups A and B. For a full discussion of how we identified the group
A and group B procedures and established the CY 2008 payment rate for
the cardiac electrophysiologic evaluation and ablation composite APC,
we refer readers to the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66655 through 66659). Where a service in group A is furnished on
a date of service that is different from the date of service for a code
in group B for the same beneficiary, payments are made under the
appropriate single procedure APCs and the composite APC does not apply.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41446), we proposed to
continue paying for cardiac electrophysiologic evaluation and ablation
services in CY 2009 using the composite APC methodology established for
CY 2008. Consistent with our CY 2008 practice, we would not use the
claims that met the composite payment criteria in the calculation of
the median costs for APCs 0085 (Level II Electrophysiologic Procedures)
and 0086 (Level III Electrophysiologic Procedures), to which the HCPCS
codes in both groups A and B for composite APC 8000 were otherwise
assigned. Median costs for APCs 0085 and 0086 would continue to be
calculated using single procedure claims. As discussed in section
XIII.A.1. of this final rule with comment period, we also proposed to
use new status indicator ``Q3'' (Codes that May be Paid Through a
Composite APC) to denote HCPCS codes such as the cardiac
electrophysiologic evaluation and ablation CPT codes that may be paid
through a composite APC for publication and payment purposes for CY
2009, rather than the status indicator ``Q'' that is being used in CY
2008.
We continue to believe that the composite APC for cardiac
electrophysiologic evaluation and ablation services is the most
efficient and effective way to use the claims data for the majority of
these services and best represents the hospital resources associated
with performing the common combinations of these services that are
clinically typical. Furthermore, this approach creates incentives for
efficiency by providing a single payment for a larger bundle of major
procedures when they are performed together, in contrast to continued
separate payment for each of the individual procedures.
Using partial year CY 2007 claims data available for the CY 2009
OPPS/ASC proposed rule, we were able to use 5,603 claims containing a
combination of group A and group B codes and calculated a proposed
median cost of approximately $9,174 for composite APC 8000. This was an
increase

[[Page 68557]]

compared to the CY 2008 OPPS/ASC final rule with comment period in
which we calculated a final median cost for this composite APC of
approximately $8,438 based on a full year of CY 2006 claims data. We
stated in the CY 2009 OPPS/ASC proposed rule (73 FR 41446) that we
believe that the proposed median cost of $9,174 calculated from a high
volume of correctly coded multiple procedure claims resulted in an
accurate and appropriate proposed payment for cardiac
electrophysiologic evaluation and ablation services when at least one
evaluation service is furnished during the same clinical encounter as
at least one ablation service. Table 6 of the CY 2009 OPPS/ASC proposed
rule, reprinted as Table 7 below, listed the groups of procedures upon
which we proposed to base composite APC 8000 for CY 2009.
Comment: One commenter expressed support for CMS' proposal to
continue using the composite APCs created in CY 2008, in particular the
composite APC for cardiac electrophysiologic evaluation and ablation
services.
Response: We appreciate the commenter's support for the composite
payment methodology in general and the composite APC for cardiac
electrophysiologic evaluation and ablation in particular.
After consideration of the public comment received, we are
finalizing our CY 2009 proposal, without modification, to continue
paying for cardiac electrophysiologic evaluation and ablation services
using the composite APC methodology implemented for CY 2008. For this
final rule with comment period, we were able to use 6,105 claims from
CY 2007 containing a combination of group A and group B codes and
calculated a final median cost of approximately $9,206 for composite
APC 8000. This is an increase compared to the CY 2008 OPPS/ASC final
rule with comment period in which we calculated a final median cost for
this composite APC of approximately $8,438 based on a full year of CY
2006 claims data. We believe that the final median cost of $9,206
calculated from a high volume of correctly coded multiple procedure
claims results in an accurate and appropriate final payment for cardiac
electrophysiologic evaluation and ablation services when at least one
evaluation service is furnished during the same clinical encounter as
at least one ablation service. Table 7, below, lists the groups of
procedures upon which we are basing composite APC 8000 for CY 2009.
These CPT codes are assigned status indicator ``Q3'' in Addendum B to
this final rule with comment period to identify their status as
potentially payable through a composite APC. Their composite APC
assignment is identified in Addendum M to this final rule with comment
period.

Table 7--Groups of Cardiac Electrophysiologic Evaluation and Ablation Procedures Upon Which Composite APC 8000
Is Based
----------------------------------------------------------------------------------------------------------------
Final single Final CY 2009
Codes used in combinations: At least one in Group A and one in CY 2009 HCPCS code CY 2009 SI
Group B code APC (composite)
----------------------------------------------------------------------------------------------------------------
Group A
����������������������������������������������������������������������������������������������������������������
Comprehensive electrophysiologic evaluation with right atrial 93619 0085 Q3
pacing and recording, right ventricular pacing and recording,
His bundle recording, including insertion and repositioning of
multiple electrode catheters, without induction or attempted
induction of arrhythmia........................................
Comprehensive electrophysiologic evaluation including insertion 93620 0085 Q3
and repositioning of multiple electrode catheters with
induction or attempted induction of arrhythmia; with right
atrial pacing and recording, right ventricular pacing and
recording, His bundle recording................................
----------------------------------------------------------------------------------------------------------------
Group B
----------------------------------------------------------------------------------------------------------------
Intracardiac catheter ablation of atrioventricular node 93650 0085 Q3
function, atrioventricular conduction for creation of complete
heart block, with or without temporary pacemaker placement.....
Intracardiac catheter ablation of arrhythmogenic focus; for 93651 0086 Q3
treatment of supraventricular tachycardia by ablation of fast
or slow atrioventricular pathways, accessory atrioventricular
connections or other atrial foci, singly or in combination.....
Intracardiac catheter ablation of arrhythmogenic focus; for 93652 0086 Q3
treatment of ventricular tachycardia...........................
----------------------------------------------------------------------------------------------------------------

(4) Mental Health Services Composite APC (APC 0034)
In the CY 2009 OPPS/ASC proposed rule (73 FR 41446), we proposed to
continue our longstanding policy of limiting the aggregate payment for
specified less intensive mental health services furnished on the same
date to the payment for a day of partial hospitalization, which we
consider to be the most resource intensive of all outpatient mental
health treatment for CY 2009. We refer readers to the April 7, 2000
OPPS final rule with comment period (65 FR 18455) for the initial
discussion of this longstanding policy. We continue to believe that the
costs associated with administering a partial hospitalization program
represent the most resource intensive of all outpatient mental health
treatment, and we do not believe that we should pay more for a day of
individual mental health services under the OPPS than the partial
hospitalization per diem payment.
For CY 2009, as discussed further in section X.B. of this final
rule with comment period, we proposed to create two new APCs, 0172
(Level I Partial Hospitalization (3 services)) and 0173 (Level II
Partial Hospitalization (4 or more services)), to replace APC 0033
(Partial Hospitalization), which we proposed to delete for CY 2009 (73
FR 41446). In summary, when a community mental health center (CMHC) or
hospital provides three units of partial hospitalization services and
meets all other partial hospitalization payment criteria, the CMHC or
hospital would be paid through APC 0172. When the CMHC or hospital
provides four or more units of partial hospitalization services and
meets all other partial hospitalization payment criteria, the hospital
would be paid through APC 0173. In the CY 2009 OPPS/ASC proposed rule
(73 FR 41446 through 41447), we proposed to set the CY 2009 payment
rate for mental health

[[Page 68558]]

composite APC 0034 at the same rate as APC 0173, which is the maximum
partial hospitalization per diem payment. In the proposed rule, we
explained that we believed this APC payment rate would provide the most
appropriate payment for composite APC 0034, taking into consideration
the intensity of the mental health services and the differences in the
HCPCS codes for mental health services that could be paid through this
composite APC compared with the HCPCS codes that could be paid through
partial hospitalization APC 0173. Through the I/OCE, when the payment
for specified mental health services provided by one hospital to a
single beneficiary on one date of service based on the payment rates
associated with the APCs for the individual services would exceed the
maximum per diem partial hospitalization payment [listed as APC 0173
(Level II Partial Hospitalization (4 or more services))], those
specified mental health services would be assigned to APC 0034 (Mental
Health Services Composite), which has the same payment rate as APC
0173, and the hospital would be paid one unit of APC 0034. In the CY
2008 OPPS/ASC final rule with comment period (72 FR 66651), we
clarified that this longstanding policy regarding payment of APC 0034
for combinations of independent mental health services provided in a
single hospital encounter resembles the payment policy for composite
APCs that we finalized for LDR prostate brachytherapy and cardiac
electrophysiologic evaluation and ablation services for CY 2008.
Similar to the logic for those two composite APCs, the I/OCE currently
determines, and we proposed for CY 2009 that it would continue to
determine, whether to pay these specified mental health services
individually or to make a single payment at the same rate as the APC
0173 per diem rate for partial hospitalization for all of the specified
mental health services furnished on that date of service. However, we
note that this established policy for payment of APC 0034 differs from
the payment policies for the LDR prostate brachytherapy and cardiac
electrophysiologic evaluation and ablation composite APCs because APC
0034 is only paid if the sum of the individual payment rates for the
specified mental health services provided on one date of service
exceeds the APC 0034 payment rate.
For CY 2008 (72 FR 66651), we changed the status indicator to ``Q''
for the HCPCS codes that describe the specified mental health services
to which APC 0034 applies because those codes are conditionally
packaged when the sum of the payment rates for the single code APCs to
which they are assigned exceeds the per diem payment rate for partial
hospitalization. For CY 2009, we proposed to change the status
indicator from ``Q'' (Packaged Services Subject to Separate Payment
under OPPS Payment Criteria) to ``Q3'' (Codes that May be Paid Through
a Composite APC), for those HCPCS codes that describe the specified
mental health services to which APC 0034 applies. This was consistent
with our proposal to change the status indicator from ``Q'' to ``Q3''
for all HCPCS codes that may be paid through composite APCs, in order
to further refine our identification of the different types of
conditionally packaged HCPCS codes that were previously all assigned
the same status indicator ``Q'' under the OPPS. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41447), we proposed to apply this status indicator
policy to the HCPCS codes that were assigned to composite APC 0034 in
Addendum M to the proposed rule. We also proposed to change the status
indicator from ``P'' (Partial Hospitalization) to ``S'' (Significant
Procedure, Not Discounted when Multiple), for APC 0034. Although APC
0034 has been historically assigned status indicator ``P'' under the
OPPS, this APC provides payment for mental health services that are
furnished in an HOPD outside of a partial hospitalization program. As
we noted in the CY 2009 OPPS/ASC proposed rule (73 FR 41447), this
proposed status indicator change should have no practical implications
for hospitals from a billing or payment perspective. Rather, we
believed that it would be more appropriate to assign status indicator
``S'' to an APC that describes mental health services that are provided
outside of a partial hospitalization program (73 FR 41447). We refer
readers to section XIII.A. of this final rule with comment period for a
complete discussion of status indicators and our status indicator
changes for CY 2009.
Comment: Several commenters were concerned that claims data from
CMHCs and hospitals were used to calculate the proposed payment for APC
0173. The payment for APC 0173 would be the upper limit of payment a
hospital could receive for outpatient mental health services provided
in one day. These commenters believed that hospital cost data, and not
CMHC cost data, should be used to set payment rates for hospital
services. One commenter believed that the proposed payment rate for APC
0173 was too low and, therefore, established the mental health cap on
payment of HOPD mental health services at an inappropriately low
payment rate. The commenter noted that most patients receiving hospital
outpatient mental health services generally receive four or more
services per day, for 1 to 3 days. In these cases, according to the
commenter, if an HOPD provided four particular mental health services
in one day, that department of the hospital would receive full payment
for the first two services, partial payment for the third service, and
no payment for the fourth service.
Response: As discussed in detail in section X. of this final rule
with comment period, the payment rates for APCs 0172 and 0173 are set
consistent with hospital-only cost data for CY 2009, instead of using
both hospital and CMHC cost data. This final policy results in an
increase of the median cost of APC 0173 from approximately $174 as
proposed to approximately $200, using hospital-only cost data.
Hospital-only data have been used in the past to set the PHP payment
rates when the CMHC data were unavailable or too volatile to use. This
year using the CMHC data would significantly reduce the current rate
and negatively impact hospital-based PHPs. Additionally, using only the
hospital-based PHP data results in a Level II Partial Hospitalization
rate (APC 0173) that is close to the current payment level ($203).
Therefore, we are finalizing the two-tiered payment rates as proposed,
but using hospital-based PHP data only.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66739), we continue to believe that the costs associated with
administering a partial hospitalization program represent the most
resource intensive of all outpatient mental health treatment, and we do
not believe that we should pay more for a day of individual mental
health services under the OPPS. The mental health payment limitation
will rise and fall in the same manner as payment for partial
hospitalization services. We note that our final CY 2009 policy which
sets the payment rate for APC 0173 for partial hospitalization services
based on hospital-only cost data for CY 2009 results in payment for APC
0034, the limit on aggregate payment for specified less intensive
mental health services provided on one day in the HOPD, to now be based
on hospital cost data, as requested by several commenters.
After consideration of the public comments received, we are
finalizing our CY 2009 proposal, without modification, to limit the
aggregate

[[Page 68559]]

payment for specified less intensive outpatient mental health services
furnished on the same date by a hospital to the payment for a day of
partial hospitalization, specifically APC 0173. For CY 2009, we are
also finalizing, without modification, our proposal to change the
status indicator from ``Q'' to ``Q3'' for those HCPCS codes that
describe the specified mental health services to which APC 0034
applies. For CY 2009, we also are finalizing the proposal to change the
status indicator for APC 0034 from ``P'' to ``S.''
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007,
and 8008)
Under current OPPS policy, hospitals receive a full APC payment for
each imaging service on a claim, regardless of how many procedures are
performed during a single session using the same imaging modality or
whether the procedures are performed on contiguous body areas. In
response to a 2005 MedPAC recommendation to reduce the technical
component payment for multiple imaging services performed on contiguous
body areas, CMS proposed a payment reduction policy for multiple
imaging procedures performed on contiguous body areas in both the CY
2006 MPFS proposed rule (70 FR 45849 through 45851) and the CY 2006
OPPS proposed rule (70 FR 42748 through 42751). In the March 2005
MedPAC report entitled, ``Report to the Congress: Medicare Payment
Policy,'' MedPAC concluded that Medicare's physician's office payment
rates for imaging services were based on each service being provided
independently and that the rates did not account for efficiencies that
may be gained when multiple studies using the same imaging modality are
performed in the same session. In both the CY 2006 MPFS proposed rule
(70 FR 45849) and the CY 2006 OPPS proposed rule (70 FR 42751), we
suggested that although each imaging procedure entails the use of
hospital resources, including certain staff, equipment, and supplies,
some of those resource costs are not incurred twice when the procedures
are performed in the same session and thus, should not be paid as if
they were incurred twice. Specifically, for CY 2006, for both the MPFS
and the OPPS, we proposed to apply a 50-percent reduction in the
payment for certain second and subsequent imaging procedures performed
during the same session, similar to the longstanding OPPS policy of
reducing payments for certain second and subsequent surgical procedures
performed during the same operative session. We developed the 50-
percent reduction estimate using MPFS input data to estimate the
practice expense resources associated with equipment time and indirect
costs that would not occur for the second and subsequent procedures. We
proposed that the reduction would apply only to individual services
within 11 designated imaging families, which were comprised of
procedures utilizing similar modalities across contiguous body areas
and developed based on MPFS billing data. The imaging modalities
included in the proposal were ultrasound, computed tomography (CT),
computed tomographic angiography (CTA), magnetic resonance imaging
(MRI), and magnetic resonance angiography (MRA). Prior to making the
proposal for the OPPS, we confirmed that the CY 2004 OPPS claims for
the CY 2006 OPPS update demonstrated comparable clustering of imaging
procedures by modality and within family. The OPPS and MPFS imaging
services provided across families would not be subject to the reduction
policy as proposed for CY 2006. The proposed 11 families of imaging
services for the proposed CY 2006 OPPS and MPFS multiple imaging
payment reduction policy were as follows:
Ultrasound (Chest/Abdomen/Pelvis-Non-Obstetrical)
CT and CTA (Chest/Thorax/Abd/Pelvis)
CT and CTA (Head/Brain/Orbit/Maxillofacial/Neck)
MRI and MRA (Chest/Abd/Pelvis)
MRI and MRA (Head/Brain/Neck)
MRI and MRA (Spine)
CT (Spine)
MRI and MRA (Lower Extremities)
CT and CTA (Lower Extremities)
MR and MRI (Upper Extremities and Joints)
CT and CTA (Upper Extremities)
In response to the multiple imaging payment reduction policy
proposed for the CY 2006 OPPS (70 FR 68707 through 68708), several
commenters requested that we postpone implementation until we performed
further analyses and were able to find more substantial, hospital-based
data to support the 50-percent payment reduction rather than base the
policy on MPFS data. The commenters argued that, unlike a relative
value unit (RVU) estimate of the total resources associated with a
single service for the MPFS, the OPPS cost-based methodology already
incorporates the efficiencies of performing multiple procedures during
the same session and that median cost estimates for single procedures
reflect these savings. Specifically, an imaging CCR consists of the
labor and allocated capital and overhead costs for all imaging provided
in a department specified by each hospital on its cost report, divided
by the total charges for all imaging services provided. In short,
commenters stated that because the OPPS cost estimates used for setting
the OPPS payment rates for imaging services already reflect costs for a
department in general, the CCR used to adjust charges to costs
currently incorporated savings from the imaging efficiencies associated
with multiple procedures provided in a single session. By applying this
CCR to every charge on a claim, the commenters noted that CMS averages
multiple imaging efficiencies for all imaging services across all
service costs estimated with the departmental CCR. At its August 2005
meeting, the APC Panel heard this and other arguments and recommended
that CMS postpone implementation of the policy for a year in order to
gather more data on the impact of the proposed changes.
In the CY 2006 OPPS final rule with comment period (70 FR 68516),
we acknowledged that, based on our analysis of how hospitals report
charges and costs for diagnostic radiology services, it may be correct
that the median costs from hospital claims data for the imaging
services in the 11 families proposed for the reduction policy already
reflect reduced median costs based, in part, on hospitals' provision of
multiple imaging services in a single session. However, we expressed
concern that the marginal effect of imaging efficiencies on a given CCR
may be negligible, thereby underestimating the impact of multiple
imaging efficiencies, especially where hospitals reported all
diagnostic radiology services in one cost center and did not split the
costs and charges for advanced imaging with CT, MRI, or ultrasound into
separate cost centers. Because efficiencies are inherent in our cost
methodology, our analysis did not provide a definitive answer regarding
how much, on average, the OPPS median costs for single imaging services
in the 11 families are reduced due to existing hospital efficiencies
related to multiple services provided in a single session. Accordingly,
we did not implement a multiple imaging payment reduction policy for
the OPPS in CY 2006 (a modified MPFS multiple imaging payment reduction
policy was implemented with a 25-percent reduction for certain second
and subsequent imaging services for CY 2006, and that same reduction
policy currently remains in effect under the MPFS). In the CY 2006 OPPS
final rule with comment period (70 FR 68707 through 68708), we stated
that, depending upon the results of future

[[Page 68560]]

analyses, we might revisit this issue and propose revisions to the
structure of our payment rates for imaging procedures in order to
ensure that those rates properly reflect the relative costs of initial
and subsequent imaging procedures. Since publication of the CY 2006
OPPS final rule with comment period, MedPAC has encouraged us to
continue our analyses in order to improve payment accuracy for imaging
services under the OPPS, including considering adoption of a multiple
procedure payment reduction policy.
In preparation for the CY 2009 OPPS proposed rule, we revisited the
issue of how we could improve the accuracy of OPPS payment for multiple
imaging procedures and incorporate the lower marginal cost for
conducting second and subsequent imaging procedures in the same imaging
session. As already noted, for CY 2008, we developed a composite APC
methodology to provide a single payment for two or more major
independent procedures that are typically performed together during a
single operative session and that result in the provision of a complete
service (72 FR 66650 through 66652). The composite APCs for LDR
prostate brachytherapy services and cardiac electrophysiologic
evaluation and ablation services discussed in sections II.A.2.e.(2) and
(3), respectively, of this final rule with comment period are classic
examples. Providing one payment for an entire session encourages
hospitals to closely evaluate the resources they use for all components
of the composite service in order to improve their payment relative to
the costs of performing the composite service. We decided to explore
capturing efficiencies for multiple imaging procedures through a
composite APC payment methodology when a hospital provides more than
one imaging procedure using the same modality during a single session.
We began by reexamining the 11 imaging families of HCPCS codes for
contiguous body areas involving a single imaging modality that we had
proposed for CY 2006 and that are currently in use under the MPFS for
the multiple imaging procedure payment reduction policy. We based this
code-specific analysis on the HCPCS codes recognized under the OPPS for
the same procedures that are included in the 11 CY 2008 MPFS imaging
families, and in addition, we incorporated the 10 HCPCS codes that were
proposed for inclusion in these 11 families for the CY 2009 MPFS. We
collapsed the 11 MPFS imaging families into 3 OPPS imaging families
according to their modality--1 for ultrasound, 1 for CT and CTA, and 1
for MRI and MRA services. These larger OPPS imaging families generally
corresponded to the larger APC groups of services paid under the OPPS
relative to the service-specific payment under the MPFS. We believed
that these larger OPPS imaging families were appropriate because
eliminating the contiguous body area concept that is central to the
MPFS imaging families should not significantly limit potential
efficiencies in an imaging session. For example, we would not expect
second and subsequent imaging procedures of the same modality involving
noncontiguous body areas to require duplicate facility services such as
greeting the patient, providing education and obtaining consent,
retrieving prior exams, setting up an intravenous infusion, and
preparing and cleaning the room, any more than second and subsequent
imaging procedures of the same modality on contiguous body areas. The
contiguous body area concept was a component of MedPAC's recommendation
for reducing physician payment, but we believed it was less appropriate
for a single, session-based OPPS composite imaging payment. In
addition, we estimated that using these collapsed OPPS families would
add only 12 percent additional claims to those eligible for composite
payment relative to using the 11 MPFS imaging families, suggesting that
under the OPPS, multiple imaging claims were within the same imaging
modality and involved contiguous body areas the vast majority of the
time. Nevertheless, the three OPPS imaging families would allow us to
capture additional claims for payment under an imaging composite
payment methodology.
Another unique aspect of imaging procedures for OPPS ratesetting,
in general, is their inclusion on our bypass list and contribution to
creating ``pseudo'' single claims, particularly those procedures that
are specifically performed without the administration of contrast. Our
creation of ``pseudo'' single claims from multiple procedure claims is
discussed in section II.A.1.b. of this final rule with comment period.
In beginning to model these potential multiple imaging composite APCs
for the CY 2009 OPPS/ASC proposed rule, we noted that there would be
overlap between the bypass list and noncontrast imaging HCPCS codes
that are included in the three OPPS imaging families. The bypass
process removes any line-item for a bypass HCPCS code, irrespective of
units, from multiple procedure claims. The line-item information is
used to make at least one ``pseudo'' single bill and the line-items
remaining on the claim are split by date and reassessed for single bill
status. To model the median costs for the potential multiple imaging
composite APCs for the CY 2009 OPPS/ASC proposed rule, we removed any
HCPCS codes in the OPPS imaging families that overlapped with codes on
our bypass list to avoid splitting claims with multiple units or
multiple occurrences of codes in an OPPS imaging family into new
``pseudo'' single claims. The imaging HCPCS codes that we removed from
the bypass list for purposes of calculating proposed multiple imaging
composite APC median costs appeared in Table 7 of the CY 2009 OPPS/ASC
proposed rule. We integrated the identification of imaging composite
``single session'' claims, that is, claims with multiple imaging
procedures within the same family on the same date of service, into the
creation of ``pseudo'' single claims to ensure that claims were split
in the ``pseudo'' single process into accurate reflections of either a
composite ``single session'' imaging service or a standard sole imaging
service resource cost. Like all single bills, the new composite
``single session'' claims were for the same date of service and
contained no other separately paid services in order to isolate the
session imaging costs. For the CY 2009 OPPS/ASC proposed rule, our last
step after processing all claims through the ``pseudo'' single process
was to make line-items for HCPCS codes in the OPPS imaging families
remaining on multiple procedure claims with one unit of the imaging
HCPCS code and no other imaging services in the families into
``pseudo'' single bills for use in calculating the median costs for
sole imaging services.
One final requirement of our assessment of multiple imaging
composite APCs was our expansion of the OPPS families for the three
modalities--ultrasound, CT and CTA, and MRI and MRA--into five
composite APCs to accommodate the statutory requirement in section
1833(t)(2)(G) of the Act, that the OPPS provide payment for imaging
services provided with contrast and without contrast through separate
payment groups. The ultrasound studies proposed for inclusion in the
multiple imaging composite policy do not utilize contrast and thus this
family constituted a single composite APC. However, we had to split the
families for CT and CTA, and MRI and MRA, into two separate composite
APCs each to reflect whether the procedures were performed with or
without contrast. We examined the HCPCS codes on our ``single session''
claims and, if the claim had at least one

[[Page 68561]]

HCPCS code that was performed with contrast, we classified the ``single
session'' bill as ``with contrast.'' For both CT and CTA, and MRI and
MRA, some claims classified as ``with contrast'' contained one or more
``without contrast'' HCPCS code. We then recalculated the median costs
for the standard (sole service) imaging APCs based on single and
``pseudo'' single bills and the imaging composite APC median costs
based on appropriate ``single session'' bills with multiple imaging
procedures.
For the CY 2009 OPPS/ASC proposed rule, we were able to identify
1.7 million ``single session'' claims out of an estimated 3 million
potential composite cases from our ratesetting claims database to
calculate the proposed median costs for the 5 OPPS multiple imaging
composite APCs. We specifically noted that the proposed CY 2009 payment
rates for multiple imaging services provided during the same session
and within the same OPPS imaging family were based entirely on median
costs derived empirically from OPPS claims and Medicare cost report
data.
In general, we found that the per procedure median cost for each of
the multiple imaging procedures performed during a single session, and
reflected in the composite APC median costs, was modestly less than the
sole service median cost when only one imaging procedure was performed
during a single session, as reflected in the median cost of the
standard (sole service) imaging APCs (that is, those imaging services
that would not have qualified for payment through a multiple imaging
composite APC under the proposed composite methodology). We also
noticed that the proposed CY 2009 median costs for the standard (sole
service) imaging APCs increased slightly compared to the median costs
that we would calculate using the current OPPS imaging service payment
policy. These variations in median costs were consistent with our
expectations. Because the OPPS cost-based payment weight methodology
estimates a standard cost per imaging procedure for each hospital,
these results suggested that the imaging composite ``single session''
claims disproportionately represented services furnished by more
efficient providers that frequently performed more than one imaging
procedure during a single session. The lower cost claims also may have
included more providers that reported costs and charges for nonstandard
cost centers for advanced imaging on their Medicare hospital cost
reports.
In light of these findings, we determined that a proposal to revise
our methodology for paying for multiple imaging procedures was
warranted because the current OPPS policy of providing a full APC
payment for each imaging procedure on a claim, regardless of how many
procedures are performed during a single session using the same imaging
modality, neither reflects nor promotes the efficiencies hospitals can
achieve when they perform multiple imaging procedures during a single
session, as seen in the claims data.
Therefore, in the CY 2009 OPPS/ASC proposed rule (73 FR 41450
through 41451), we proposed to utilize the three OPPS imaging families
discussed above, incorporating statutory requirements to differentiate
OPPS payment for imaging services provided with contrast and without
contrast as required by section 1833(t)(2)(G) of the Act, to create
five multiple imaging composite APCs for payment in CY 2009. The
proposed APCs were: APC 8004 (Ultrasound Composite); APC 8005 (CT and
CTA without Contrast Composite); APC 8006 ( CT and CTA with Contrast
Composite); APC 8007 (MRI and MRA without Contrast Composite); and APC
8008 (MRI and MRA with Contrast Composite). We calculated the proposed
median costs for these APCs using CY 2007 claims data by isolating
``single session'' claims with more than one imaging procedure within a
family as discussed above. Unlike our CY 2006 proposal where we would
have applied a 50-percent payment reduction for second and subsequent
imaging procedures comparable to the proposed MPFS policy, the CY 2009
OPPS proposal calculated the composite APC payment amounts empirically
from estimated costs on claims for multiple imaging procedures provided
in a single session. This proposed composite methodology for multiple
imaging services paralleled the payment methodologies that we proposed
for other composite APCs under the CY 2009 OPPS. Table 8 of the CY 2009
OPPS/ASC proposed rule presented the HCPCS codes comprising the three
OPPS imaging families and five composite APCs that would be created
under this proposal for CY 2009, along with the proposed median costs
upon which the proposed payment rates for these composite APCs were
based.
During the August 2008 APC Panel meeting, the APC Panel recommended
that CMS work with stakeholders to review the proposed multiple imaging
composite APCs and to assess the potential impact of the proposal on
Medicare beneficiaries affected by trauma or cancer.
Comment: Some commenters stated that the proposed multiple imaging
composite payment methodology would improve the accuracy of OPPS
payment for imaging services and that CMS should implement the policy
as proposed. In particular, MedPAC stated that the proposed multiple
imaging composite APCs are consistent with larger payment bundles and
should increase hospitals' incentives to furnish care efficiently.
MedPAC further asserted that the multiple imaging composite policy
could serve as a starting point for creating more comprehensive payment
bundles that reflect encounters or episodes of care.
However, many commenters urged CMS to perform additional data
analyses of CY 2007 claims with multiple imaging services and,
depending on the results, modify the final policy to ensure sufficient
payments are made to hospitals for providing an appropriate number of
imaging services. In particular, commenters indicated that the proposed
policy could have a disproportionately negative effect on cancer
centers and trauma units, where patients frequently require more than
two imaging services and hospitals have limited flexibility to gain
greater efficiencies. The commenters also questioned the adequacy of
the proposed multiple imaging composite payment rates for sessions
involving three or more or four or more procedures, particularly in the
case of CT and CTA procedures, expressing general concern that the
proposed payment rates would limit beneficiary access to imaging
services. According to these commenters, the proposed policy could
create incentives for hospitals to require patients who need more than
two imaging procedures to return for additional visits if the costs for
sessions in which more than two procedures are performed far exceed the
multiple imaging composite APC payment rates. Some commenters also
requested that CMS thoroughly evaluate the impact of the multiple
imaging composite APCs after the policy has been implemented to ensure
that hospitals are being adequately compensated for providing multiple
imaging services. Other commenters remarked generally that CMS should
proceed cautiously as it expands service bundling, should accompany
composite proposals with data and a clear and transparent description
of the data-generating process, and should not implement additional
composite methodologies until adequate data are available to evaluate
the effectiveness

[[Page 68562]]

and impact on beneficiary access to care of the composite policies
implemented in CY 2008.
In order to address perceived payment inadequacies or incentives
for hospitals to require patients to return on separate days for
multiple imaging services, the commenters suggested a variety of
alternative approaches to the proposed multiple imaging composite
payment methodology, such as a multiple imaging payment reduction
policy for second and subsequent imaging procedures, additional
composite APCs for sessions involving three or more imaging procedures,
or an exemption from composite payment for multiple imaging services
provided to cancer or trauma patients. One commenter specifically
recommended two new composite APCs for CT scans of the chest, abdomen,
and pelvis with and without contrast.
Some commenters, however, opposed the implementation of any payment
policy to account for the efficiencies of multiple imaging procedures
provided during the same session, arguing that the OPPS cost-based
methodology already incorporates the efficiencies of performing
multiple procedures during the same session. They believed that adding
a composite policy essentially ``double counts'' imaging efficiencies.
One commenter opposed the policy because, according to the commenter,
hospitals do not have the option of refusing to provide services that
are ordered by a physician, and cannot control the cost of providing a
service in relationship to the cost of the equipment. Another commenter
noted that MRI equipment costs are fixed in the short term.
Response: We have reviewed all of the public comments we received
on the proposed multiple imaging composite methodology, and we have
decided to finalize our proposal to provide a single composite payment
each time a hospital bills more than one procedure from an imaging
family on a single date of service for CY 2009. We appreciate the
commenters' thoughtful observations and suggestions.
In response to the commenters' concerns about the adequacy of the
proposed composite APC payment rates for sessions involving more than
two imaging procedures, we analyzed data from the CY 2007 claims from
which the median costs used to calculate those payment rates were
calculated. We found that the vast majority of CY 2007 claims used for
ratesetting included two procedures, ranging from 73 percent of
multiple imaging procedure claims for APC 8008, to 97 percent of
multiple imaging procedure claims for APC 8004. We do not believe that,
in aggregate, OPPS payment for multiple imaging services will be
inadequate under the multiple imaging composite payment methodology,
even considering the minority of cases in which hospitals provide more
than two imaging procedures on a single date of service. The median
costs upon which the payment rates for the multiple imaging composite
APCs are based are calculated using CY 2007 claims that would have
qualified for composite payment, including those with only two imaging
procedures and those with substantially higher numbers of imaging
procedures. Payment based on a measure of central tendency is a
principle of any prospective payment system. In some individual cases
payment exceeds the average cost and in other cases payment is less
than the average cost. On balance, however, payment should approximate
the relative cost of the average case, recognizing that, as a
prospective payment system, the OPPS is a system of averages.
Furthermore, the purpose of the composite payment methodology
overall is to establish incentives for efficiency through larger
payment bundles. Based on our observations of only small to moderate
percentages of single sessions with three or more imaging procedures,
we do not believe it would be appropriate to create additional multiple
imaging composite APCs for sessions involving more than two or three
imaging procedures. The various suggestions by some commenters
regarding the creation of additional composite APCs for payment of
three or more procedures or for specific combinations of scans all
would remove some of the efficiency incentives associated with a single
bundled payment and would make the multiple imaging policy more closely
resemble standard payment for single procedures. Additional composite
APCs would not be consistent with encouraging value-based purchasing
under the OPPS. We note that the OPPS does have an outlier policy for
cases involving extremely high costs, as discussed in section II.F. of
this final rule with comment period.
We also do not believe that the multiple imaging composite payment
methodology will inhibit beneficiary access to imaging services,
because the policy will result in only relatively modest payment
redistributions in the short term. We estimate that total payment
impact among classes of hospitals attributable to changes in imaging
payment will be relatively small, and we expect that the multiple
imaging composite policy will redistribute about 0.4 percent of total
OPPS payment. We believe this policy does more to redesign incentives
in providing imaging services than to significantly reduce imaging
payment to hospitals for CY 2009.
Further, we do not agree with some commenters that the multiple
imaging composite payment methodology would result in hospitals
requiring patients who need more than two imaging procedures to return
for additional visits. We do not believe that, in general, hospitals
would routinely and for purposes of financial gain put patients at
unnecessary risk of harm from radiation or contrast exposure, or
inconvenience them or risk lack of timely follow up to the point of
making them return to the hospital on separate days to receive
medically necessary diagnostic studies. However, we note that we do
have the capacity to examine our claims data for patterns of fragmented
care. If we were to find a pattern in which a hospital appears to be
fragmenting care across multiple days, we could refer it for review by
the Quality Improvement Organizations (QIOs) with respect to the
quality of care furnished, or for review by the Program Safeguard
Contractors of claims against the medical record, as appropriate to the
circumstances we found.
In addition, we explored data from the CY 2007 claims from which
the median costs used to calculate the multiple imaging composite APC
payment rates were calculated in response to comments that the policy
would have a disproportionate effect on cancer centers and trauma units
and the recommendation by the APC Panel at its August 2008 meeting,
which we are accepting. An analysis of diagnosis codes present on the
CY 2007 multiple imaging ``single session'' claims did show more
variability in the number of scans for cancer patients compared to
other types of patients, consistent with commenters' concerns. We saw
that, for several of the more commonly reported cancer diagnoses, more
than half of the patients received more than two imaging procedures,
while lower proportions of other types of patients received more than
two imaging procedures on a single date of service. We did not observe
the same pattern for trauma diagnoses. We do not believe that the
higher rate of variability that we observed in the number of scans
cancer patients receive was so extreme, however, that the mix of
services hospitals provide to patients with diagnoses other than cancer
would not balance out higher numbers of scans for cancer patients.

[[Page 68563]]

We do not have a current list of cancer centers other than those
held permanently harmless under section 1833(t)(7)(D)(ii) of the Act or
a current list of hospitals with significant trauma units in order to
assess outcomes for these particular classes of hospitals. However, as
noted above, we do not estimate significant redistributions among
hospitals as a result of this policy. Further, the goal of introducing
a single composite payment for any multiple imaging session is to
encourage hospitals to consider their patterns of service provision in
general, and not payment per patient. Therefore, we do not believe that
the multiple imaging composite methodology will result in
disproportionate effects on either hospitals with cancer centers or
trauma units, and we do not agree with some commenters that it would be
appropriate to exempt services provided to cancer and trauma patients
from the multiple imaging composite APC payment policy. We see no
justification for paying differently for the same imaging services
according to patient diagnosis or care setting, because we believe that
most hospitals demonstrate sufficient variability in the number of
imaging procedures they provide to a single patient on the same day
that it is unlikely that certain hospitals would disproportionately
experience negative financial effects from the multiple imaging
composite APC payment policy.
We also do not agree that the multiple imaging composite APCs are
unnecessary, as some commenters argued, because the OPPS cost-based
methodology already incorporates the efficiencies of performing
multiple imaging procedures during the same session. While we agree
that efficiencies due to multiple imaging procedures are generally
reflected in hospitals' CCRs used to develop costs, we believe that the
advantage of a composite methodology for imaging services is that it
allows us to use naturally occurring multiple procedure claims to
calculate the median costs for sessions involving multiple procedures,
rather than using single procedure claims which do not reflect as
accurately how hospitals provide care in those instances. The lower per
case median cost for multiple imaging services suggests that hospitals
providing more multiple imaging services generally have lower costs. We
note that a small increase in the median cost of standard (sole
service) APCs accompanied our lower multiple imaging composite APC
median costs. The multiple imaging policy does not ``double count''
efficiencies for imaging; rather, it more accurately estimates the
costs of single versus multiple imaging sessions.
We believe that we are proceeding with an appropriate level of
caution, as several commenters recommended, by developing one new
composite APC policy for CY 2009. We did not receive any comments to
the CY 2009 OPPS/ASC proposed rule indicating there were access
problems resulting from the implementation of composite APCs in CY
2008, which was consistent with our expectations given the composite
methodology improves the accuracy of the OPPS payment rates by
utilizing more complete and valid claims in ratesetting. With regard to
providing data and a transparent methodology, we point out that we make
our claims data available to the public, and we discuss our calculation
of these multiple imaging composite APC payment rates in both this
section and in section II.A.1. of the CY 2009 OPPS/ASC proposed rule
(73 FR 41423 through 41425). We also have a claims accounting narrative
available under supporting documentation for this final rule with
comment period on the CMS Web site at: http://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/.
We disagree with commenters who asserted that we should not
implement the multiple imaging composite methodology because hospitals
do not have the option of refusing to provide services that are ordered
by a physician, and cannot control the cost of providing a service in
relationship to the cost of the equipment. While physicians, rather
than hospital staff, may order specific services for patients,
hospitals decide what services they will and will not furnish, and how
they will furnish those services. We also disagree that fixed capital
equipment costs are a deterrent to implementing a multiple imaging
composite payment methodology. As discussed earlier, data analyses
performed for the CY 2009 OPPS/ASC proposed rule showed that some
hospitals are more efficient than other hospitals when providing
multiple imaging services. A prospective payment system sets payments
based on a median or average cost to encourage providers to carefully
consider their costs of providing services, and in any individual case
payment may exceed the average or median cost. We would expect less
efficient hospitals to construct ways to become more efficient, such as
negotiating lower costs on equipment, even if they do not have the
latitude to perform fewer imaging services.
Comment: Some commenters urged CMS to standardize cost reporting
for both advanced imaging procedures and other problematic cost centers
before it makes any methodological changes to OPPS payment
methodologies, including a composite policy for multiple imaging
procedures. According to the commenters, additional efficiencies can
only be gained from improved accuracy in cost reporting for diagnostic
radiology services, including use of several standard cost centers for
diagnostic imaging services. The commenters were concerned that
observed efficiencies in the multiple imaging composite median costs
are the result of inaccurate cost report data only and do not reflect
true efficiencies from multiple imaging services provided during a
single session. These commenters stated that the implementation of
separate cost centers for CT and MRI procedures, as recommended in the
July 2008 report by RTI entitled, ``Refining Cost to Charge Ratios for
Calculating APC and DRG Relative Payment Weights,'' would provide much
more accurate charge and cost data for these imaging modalities, and
that the efficiencies associated with providing multiple imaging
procedures in a single session may only be discernable once these data
are available. The commenters recommended that CMS analyze claims data
for a 2 to 3 year period following cost reporting changes before
considering a multiple imaging composite payment methodology.
Response: As discussed in section II.A.1.c.(2) of this final rule
with comment period, we agree with commenters that improved and more
precise cost reporting would improve OPPS payment accuracy. Even if we
were to make changes to create new diagnostic radiology cost centers
for CT and MRI procedures as recommended by the commenters for future
years, it would be several years after initial implementation before
data would be available to reevaluate OPPS payment rates for imaging
services. In the meantime, we see no reason not to move forward with
other changes in OPPS payment policies, such as the multiple imaging
composite APC payment methodology, that could improve the accuracy of
OPPS payment rates and promote efficiency among hospitals. The most
recent hospital cost report data are the best and most consistent
estimate of relative costs that we have available to us for all
hospitals for all hospital services. We will continue to use these data
to estimate APC median costs. Our goal in creating this new payment
structure is to encourage long-term efficiencies in the provision of

[[Page 68564]]

multiple imaging services. Should improved, revised cost report data
become available for CT and MRI procedures, our composite methodology
would automatically incorporate that additional precision into the
multiple imaging composite APC median cost estimates.
Comment: Several commenters expressed concern that the proposed
composite payment methodology for multiple imaging procedures may not
comply with the statutory requirement in section 1833(t)(2)(G) of the
Act that the OPPS provide payment for imaging services furnished with
and without contrast through separate payment groups. They requested
that CMS not use data from services performed without contrast to set
the payment rates for the ``with contrast'' composite APCs, arguing
that the inclusion of cost data from procedures performed without
contrast in the median cost calculation for the ``with contrast''
composite APCs may fail to capture the full costs of imaging services
provided with contrast agents. A handful of commenters sought
clarification about whether CMS had included ``single session'' claims
that incorporated ``without contrast'' HCPCS codes in the ``with
contrast'' composite. Another commenter requested that the more costly
CT and MRI studies performed without contrast and then followed by
contrast, and described by a single combination CPT code, be paid
through separate composite APCs. According to the commenter, the
inclusion of these procedures with other ``with contrast'' studies
would cause their median payment level to decrease.
Response: We believe that the composite payment methodology for
multiple imaging procedures complies with the statutory requirement in
section 1833(t)(2)(G) of the Act that the OPPS provide separate payment
groups for imaging services provided with and without contrast. As
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66650), section 1833(t)(1)(B) of the Act permits us to define what
constitutes a covered HOPD ``service'' for purposes of payment under
the OPPS, and we have not restricted a ``service'' to a single HCPCS
code. Defining the service paid under the OPPS by combinations of HCPCS
codes for procedures that are commonly performed in the same encounter
and that result in the provision of a complete service enables us to
use more claims data and establish payment rates that we believe more
appropriately capture the costs of services paid under the OPPS.
Consistent with our statutory flexibility to define what constitutes a
service under the OPPS, we have redefined an imaging service for
purposes of the multiple imaging composite methodology as a ``single
session'' involving multiple imaging procedures within an imaging
family performed on the same date of service. Furthermore, if a
contrast agent is provided to a Medicare beneficiary as part of any
imaging procedure furnished during that single imaging session, then we
have defined that session as a ``with contrast'' imaging session to
allow for payment through a separate group from a ``without contrast''
single imaging session.
Therefore, in order to calculate the median costs for the multiple
imaging composite APCs, we designate an entire session as a ``with
contrast'' service and use the claim to calculate the median cost for
the ``with contrast'' composite APC when at least one of the imaging
procedures within an imaging family performed on the same date of
service involves contrast. If none of the imaging procedures within an
imaging family performed on the same date of service involve contrast,
we designate the entire session a ``without contrast'' service and use
the claim to calculate the median cost for the ``without contrast''
composite APC.
The statutory requirement that we create separate payment groups to
classify imaging procedures performed with contrast and without
contrast allows us to recognize that imaging services involving
contrast require different hospital resources than imaging services
performed without contrast. As shown in Table 8 below, the median costs
upon which payment rates are calculated for the ``with contrast''
composite APCs (APC 8006 and APC 8008) are higher than the median costs
for the ``without contrast'' composite APCs (APC 8005 and APC 8007). We
believe that when multiple imaging services are provided in a single
imaging session and only one of the studies uses contrast, hospitals
still incur many of the same costs as they would incur if all of the
studies used contrast, such as a screening by hospital staff for
patient allergies, the establishment of venous access, and the
initiation of necessary monitoring. As such, we would not expect that
the costs of sessions involving a ``with contrast'' procedure along
with other ``with contrast'' procedures in the same family would differ
significantly from the costs of sessions involving a ``with contrast''
procedure and procedures that do not involve contrast. Our analysis of
the CY 2007 claims data used to calculate the median costs for the
multiple imaging composite APCs supported this argument. If we were to
remove all ``single session'' claims that included procedures both with
contrast and without contrast from the median cost calculation of the
two ``with contrast'' composite APCs, the impact on the APC median
costs would be negligible--the median cost for APC 8006 would increase
by less than 1 percent, and the median cost for APC 8008 would increase
by only 4 percent.
In addition, we do not believe it would be appropriate to create a
separate composite APC for payment of CT or MRI procedures performed
without contrast and then followed by contrast, as described by a
single combination CPT code. In effect, these codes already describe a
multiple imaging session--a ``without contrast'' imaging service
followed by a ``with contrast'' imaging service. This is comparable to
some of the other ``single session'' claims in the CT/CTA and MRI/MRA
``with contrast'' composite APCs (APC 8006 and APC 8008, respectively),
in that these composite APCs incorporate in some ``single session''
claims certain ``without contrast'' imaging services. We believe that
our definition of a single session with contrast as including the costs
associated with providing a contrast agent for any one or more
individual procedures appropriately places these combination CPT codes
in APCs 8006 and 8008 and meets the statutory requirements.
Finally, we agree with several commenters that APC 8004 includes
only ultrasound studies performed without contrast. Should we revise
the HCPCS codes in APC 8004 to include ultrasound imaging services
performed with contrast in the future, we would create a new composite
APC for ``with contrast'' ultrasound procedures to comply with section
1833(t)(2)(G) of the Act.
In summary, we believe the payment differential between the ``with
contrast'' composite APCs and the ``without contrast'' composite APCs
is appropriate, regardless of whether or not the other imaging
procedures provided within the same session as an imaging procedure
performed with contrast are also performed with contrast. We believe we
are in full compliance with the statutory requirement that we create
groups of covered OPPS services that utilize contrast agents and those
that do not utilize contrast agents by redefining multiple imaging
services provided in one encounter as a ``single session'' in which
more than one procedure from an imaging family is provided on the same
date of service and assigning ``with

[[Page 68565]]

contrast'' composite APCs when at least one of the procedures involves
contrast.
Comment: One commenter stated that, before implementing the
multiple imaging composite policy, CMS should consult with relevant
stakeholders about which CPT codes should be subject to the policy. The
commenter also urged CMS to provide hospitals with instructions to
continue coding for packaged and bundled services to ensure adequate
data collection. Another commenter stated that CMS should delay
implementation of the multiple imaging composite policy to allow
hospitals that use the charging of single CPT codes to determine staff
levels and productivity to adjust to the proposed changes. One
commenter recommended that CMS work with the AMA to create new CPT
codes that describe combined procedures so that providers could use
those codes when they provide multiple imaging services in a single
session. The commenter argued that utilization of such codes would be
easier for providers and would facilitate the capturing of charge data
that could be used to create new APCs or payment policies that reflect
economies of scale for combined procedures reported through claims
data.
Response: Consistent with our standard process for securing the
views of stakeholders through the rulemaking cycle, we published a
detailed account of the multiple imaging composite payment methodology
proposed for CY 2009 in the CY 2009 OPPS/ASC proposed rule (73 FR 41447
through 41451) and requested comment. Table 8 of the CY 2009 OPPS/ASC
proposed rule presented the HCPCS codes comprising the three OPPS
imaging families and five composite APCs that would be created under
the multiple imaging composite proposal for CY 2009. We did not receive
any comments on the particular imaging HCPCS codes or the families of
codes we proposed for composite payment. Therefore, we will apply the
multiple imaging composite methodology to the HCPCS codes listed in
Table 8 below, for CY 2009. These HCPCS codes are assigned status
indicator ``Q3'' in Addendum B to this final rule with comment period
to identify their status as potentially payable through a composite
APC. Their composite APC assignments are identified in Addendum M to
this final rule with comment period.
We continue to encourage hospitals to report the HCPCS codes and
associated charges for all services they provide, taking into
consideration all CPT, CMS, and local Medicare contractor instructions,
whether payment for those HCPCS codes is packaged or separately
provided. We note that the multiple imaging composite APC payment
policy should have no operational impact on hospital billing practices,
because hospitals should continue reporting the same HCPCS codes they
currently use to report imaging procedures. The I/OCE will assess
claims to determine whether a composite APC or a standard (sole
service) imaging APC should be assigned. We believe that an advantage
of the multiple imaging composite methodology is that it can improve
the accuracy of OPPS payment without imposing burdens on hospitals to
use different codes or change the way they report services.
We do not agree with the commenter that it would be necessary to
create new CPT codes that describe combined services to ease the burden
of hospital billing and improve claims data for ratesetting. As
discussed earlier, certain combination CPT codes, specifically those
single codes that describe imaging procedures without contrast and then
followed by contrast, already allow for hospitals to report commonly
performed combinations of imaging procedures in one anatomic area using
a single CPT code. Hospitals can continue to use existing codes to
report combined services by reporting multiple HCPCS codes, and for
ratesetting, we use the charges reported to us by hospitals for
combined services to calculate composite APC payment rates.
Comment: The commenters asked for clarifications and offered
recommendations regarding how the multiple imaging composite policy
would be implemented. A few commenters also requested that CMS clarify
what constitutes a ``single session'' and provide guidance on how
hospitals are to bill and receive payment for multiple imaging
procedures provided on the same date of service but during different
encounters. According to the commenters, a composite payment would not
be appropriate in such cases because facility resources are expended
each and every time a patient is seen for a separate procedure. Some
commenters suggested CMS address these cases by allowing the use of the
``59'' modifier to signify a distinct procedural service and
implementing I/OCE logic that would not assign composite payment in
those instances. Other commenters stated that hospitals would not track
whether multiple scans took place during single or separate sessions on
the same day, and asked that CMS provide standard (sole service) APC
payment when hospitals provide imaging services that would otherwise be
subject to the composite methodology on the same date of service but at
different times.
Response: A single imaging session for purposes of the multiple
imaging composite APC payment policy involves more than one procedure
within the same family provided on a single date of service. We believe
that composite payment is appropriate even when procedures are provided
on the same date of service but at different times, because hospitals
do not expend the same facility resources each and every time a patient
is seen for a distinct imaging service in a separate imaging session.
In most cases, we expect that patients in these circumstances would
receive imaging procedures at different times during a single prolonged
hospital outpatient encounter. The efficiencies that may be gained from
providing multiple imaging procedures during a single session are
achieved in ways other than merely not having to reposition the
patient. For example, a patient who has two MRI procedures three hours
apart during a single hospital outpatient encounter would not have to
be registered again, and hospital staff might not have to explain the
procedure in detail prior to the second scan. In the case of multiple
procedures involving contrast that are provided at different times
during a single hospital outpatient encounter, establishment of new
intravenous access for the second study would not be necessary. Even if
the same level of efficiencies could not be gained for multiple imaging
procedures performed on the same date of service but at different
times, we expect that any higher costs associated with these cases
would be reflected in the claims data and cost reports we use to
calculate the median costs for the multiple imaging composite APCs, and
therefore, in the payment rates for the multiple imaging composite
APCs. We do not believe it is necessary or appropriate for hospitals to
report imaging procedures provided on the same date of service but
during different encounters any differently than they would report
imaging procedures performed consecutively with no time in between.
In all cases, hospitals that furnish more than one imaging
procedure to a Medicare beneficiary in the HOPD on the same date of
service must bill all imaging services on the same claim. We expect to
carefully monitor any changes in billing practices on a service-
specific and hospital-specific basis to determine whether there is
reason to request that QIOs review the quality of care furnished or to
request that Program Safeguard Contractors review the claims against
the medical record.

[[Page 68566]]

Comment: Several commenters asked whether the multiple imaging
composite policy would affect application of section 5102(b)(1) of the
Deficit Reduction Act (DRA), which requires CMS to cap the technical
component of the MPFS payment amount by the OPPS payment amount for
certain imaging procedures. One commenter asked if the savings from
this proposal are budget neutral.
Response: The payment comparison for the DRA cap on the MPFS
technical component payment for imaging services will continue to be
made between the applicable MPFS technical component payment and the
payment for the standard (sole service) imaging APC payment for
services subject to the cap, even if multiple MPFS imaging services
subject to the DRA cap are provided in one imaging session.
Modest imaging savings from the multiple imaging composite
methodology of 0.4 percent are budget neutral and are redistributed to
other services paid under the OPPS for CY 2009.
In summary, after consideration of the public comments received, we
are adopting our CY 2009 proposal, without modification, to utilize the
three OPPS imaging families discussed above in this section,
incorporating statutory requirements to differentiate OPPS payment for
imaging services provided with contrast and without contrast as
required by section 1833(t)(2)(G) of the Act, to create five multiple
imaging composite APCs for payment in CY 2009. The multiple imaging
composite APCs for CY 2009 are: APC 8004 (Ultrasound Composite); APC
8005 (CT and CTA without Contrast Composite); APC 8006 ( CT and CTA
with Contrast Composite); APC 8007 (MRI and MRA without Contrast
Composite); and APC 8008 (MRI and MRA with Contrast Composite). The
composite APCs have status indicators of ``S,'' signifying that payment
for the APC is not reduced when it appears on the same claim with other
significant procedures.
We will provide one composite APC payment each time a hospital
bills more than one procedure described by the HCPCS codes in an OPPS
imaging family displayed in Table 8 below, on a single date of service.
If the hospital performs a procedure without contrast during the same
session as at least one other procedure with contrast using the same
imaging modality, then the hospital will receive payment for the ``with
contrast'' composite APC. A single imaging procedure, or imaging
procedures reported with HCPCS codes assigned to different OPPS imaging
families, will be paid according to the standard OPPS methodology
through the standard (sole service) imaging APCs to which they are
assigned in CY 2009. Hospitals will continue to use the same HCPCS
codes to report imaging procedures, and the I/OCE will determine when
combinations of imaging procedures qualify for composite APC payment or
map to standard (sole service) APCs for payment. We will make a single
payment for those imaging procedures that qualify for composite APC
payment, as well as any packaged services furnished on the same date of
service.
To calculate the final rule median costs for the five multiple
imaging composite APCs, we removed any HCPCS codes in the OPPS imaging
families that overlapped with codes on our bypass list to avoid
splitting claims with multiple units or multiple occurrences of codes
in an OPPS imaging family into new ``pseudo'' single claims. The
imaging HCPCS codes that we removed from the bypass list for purposes
of calculating the multiple imaging composite APC median costs appear
in Table 9 below. (We refer readers to section II.A.1.b. of this final
rule with comment period for further discussion of how we treat claims
with HCPCS codes in the OPPS imaging families that are also on the
bypass list.) We integrated the identification of imaging composite
``single session'' claims, that is, claims with multiple imaging
procedures within the same family on the same date of service, into the
creation of ``pseudo'' single claims to ensure that claims were split
in the ``pseudo'' single process into accurate reflections of either a
composite ``single session'' imaging service or a standard sole imaging
service resource cost. Like all single bills, the new composite
``single session'' claims were for the same date of service and
contained no other separately paid services in order to isolate the
session imaging costs. Our last step after processing all claims
through the ``pseudo'' single process was to reassess the remaining
multiple procedure claims using the full bypass list and bypass
process. This enhanced our proposed rule methodology of only
identifying line-item costs for HCPCS codes in the OPPS imaging
families remaining on multiple procedure claims with one unit of the
imaging HCPCS code and no other imaging services in the families as
potential ``pseudo'' single bills for use in calculating the median
costs for sole imaging services. For this final rule with comment
period, we not only made ``pseudo'' single bills out of line-items for
the HCPCS codes in the OPPS imaging families overlapping with the HCPCS
codes on the bypass list, which appear in Table 9 below, but we
reassessed each claim after removing these line-items in order to see
if we could make other ``pseudo'' single bills. That is, we assessed
whether a single separately paid service remained on the claim after
removing line-items for the ``overlap bypass codes.'' In particular,
this change significantly increased the number of single bills
available for APC 0274 (Myelography) for this final rule with comment
period. We were able to identify 1.8 million ``single session'' claims
out of an estimated 3 million potential composite cases from our
ratesetting claims database, or over half of all eligible claims, to
calculate median costs for the 5 final CY 2009 OPPS multiple imaging
composite APCs.

Table 8--OPPS Imaging Families and Multiple Imaging Procedure Composite
APCs
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
Final CY 2009 APC 8004 (Ultrasound Final CY 2009 Approximate APC
Composite) Median Cost = $188
------------------------------------------------------------------------
76604............................ Us exam, chest.
76700............................ Us exam, abdom, complete.
76705............................ Echo exam of abdomen.
76770............................ Us exam abdo back wall, comp.
76775............................ Us exam abdo back wall, lim.
76776............................ Us exam k transpl w/Doppler.
76831............................ Echo exam, uterus.
76856............................ Us exam, pelvic, complete.
76870............................ Us exam, scrotum.

[[Page 68567]]

76857............................ Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
Final CY 2009 APC 8005 (CT and CTA Final CY 2009 Approximate APC
without Contrast Composite) * Median Cost = $406
------------------------------------------------------------------------
0067T............................ Ct colonography;dx.
70450............................ Ct head/brain w/o dye.
70480............................ Ct orbit/ear/fossa w/o dye.
70486............................ Ct maxillofacial w/o dye.
70490............................ Ct soft tissue neck w/o dye.
71250............................ Ct thorax w/o dye.
72125............................ Ct neck spine w/o dye.
72128............................ Ct chest spine w/o dye.
72131............................ Ct lumbar spine w/o dye.
72192............................ Ct pelvis w/o dye.
73200............................ Ct upper extremity w/o dye.
73700............................ Ct lower extremity w/o dye.
------------------------------------------------------------------------
Final CY 2009 APC 8006 (CT and CTA Final CY 2009 Approximate APC
with Contrast Composite) Median Cost = $621
------------------------------------------------------------------------
70487............................ Ct maxillofacial w/dye.
70460............................ Ct head/brain w/dye.
70470............................ Ct head/brain w/o & w/dye.
70481............................ Ct orbit/ear/fossa w/dye.
70482............................ Ct orbit/ear/fossa w/o&w/dye.
70488............................ Ct maxillofacial w/o & w/dye.
70491............................ Ct soft tissue neck w/dye.
70492............................ Ct sft tsue nck w/o & w/dye.
70496............................ Ct angiography, head.
70498............................ Ct angiography, neck.
71260............................ Ct thorax w/dye.
71270............................ Ct thorax w/o & w/dye.
71275............................ Ct angiography, chest.
72126............................ Ct neck spine w/dye.
72127............................ Ct neck spine w/o & w/dye.
72129............................ Ct chest spine w/dye.
72130............................ Ct chest spine w/o & w/dye.
72132............................ Ct lumbar spine w/dye.
72133............................ Ct lumbar spine w/o & w/dye.
72191............................ Ct angiograph pelv w/o&w/dye.
72193............................ Ct pelvis w/dye.
72194............................ Ct pelvis w/o & w/dye.
73201............................ Ct upper extremity w/dye.
73202............................ Ct uppr extremity w/o&w/dye.
73206............................ Ct angio upr extrm w/o&w/dye.
73701............................ Ct lower extremity w/dye.
73702............................ Ct lwr extremity w/o&w/dye.
73706............................ Ct angio lwr extr w/o&w/dye.
74160............................ Ct abdomen w/dye.
74170............................ Ct abdomen w/o & w/dye.
74175............................ Ct angio abdom w/o & w/dye.
75635............................ Ct angio abdominal arteries.
------------------------------------------------------------------------
Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
Final CY 2009 APC 8007 (MRI and MRA Final CY 2009 Approximate APC
without Contrast Composite) * Median Cost = $695
------------------------------------------------------------------------
70336............................ Magnetic image, jaw joint.
70540............................ Mri orbit/face/neck w/o dye.
70544............................ Mr angiography head w/o dye.
70547............................ Mr angiography neck w/o dye.
70551............................ Mri brain w/o dye.
70554............................ Fmri brain by tech.
71550............................ Mri chest w/o dye.
72141............................ Mri neck spine w/o dye.
72146............................ Mri chest spine w/o dye.
72148............................ Mri lumbar spine w/o dye.
72195............................ Mri pelvis w/o dye.
73218............................ Mri upper extremity w/o dye.
73221............................ Mri joint upr extrem w/o dye.
73718............................ Mri lower extremity w/o dye.

[[Page 68568]]

73721............................ Mri jnt of lwr extre w/o dye.
74181............................ Mri abdomen w/o dye.
75557............................ Cardiac mri for morph.
75559............................ Cardiac mri w/stress img.
C8901............................ MRA w/o cont, abd.
C8904............................ MRI w/o cont, breast, uni.
C8907............................ MRI w/o cont, breast, bi.
C8910............................ MRA w/o cont, chest.
C8913............................ MRA w/o cont, lwr ext.
C8919............................ MRA w/o cont, pelvis.
------------------------------------------------------------------------
Final CY 2009 APC 8008 (MRI and MRA Final CY 2009 Approximate APC
with Contrast Composite) Median Cost = 968
------------------------------------------------------------------------
70549............................ Mr angiograph neck w/o&w/dye.
70542............................ Mri orbit/face/neck w/dye.
70543............................ Mri orbt/fac/nck w/o & w/dye.
70545............................ Mr angiography head w/dye.
70546............................ Mr angiograph head w/o&w/dye.
70548............................ Mr angiography neck w/dye.
70552............................ Mri brain w/dye.
70553............................ Mri brain w/o & w/dye.
71551............................ Mri chest w/dye.
71552............................ Mri chest w/o & w/dye.
72142............................ Mri neck spine w/dye.
72147............................ Mri chest spine w/dye.
72149............................ Mri lumbar spine w/dye.
72156............................ Mri neck spine w/o & w/dye.
72157............................ Mri chest spine w/o & w/dye.
72158............................ Mri lumbar spine w/o & w/dye.
72196............................ Mri pelvis w/dye.
72197............................ Mri pelvis w/o & w/dye.
73219............................ Mri upper extremity w/dye.
73220............................ Mri uppr extremity w/o&w/dye.
73222............................ Mri joint upr extrem w/dye.
73223............................ Mri joint upr extr w/o&w/dye.
73719............................ Mri lower extremity w/dye.
73720............................ Mri lwr extremity w/o&w/dye.
73722............................ Mri joint of lwr extr w/dye.
73723............................ Mri joint lwr extr w/o&w/dye.
74182............................ Mri abdomen w/dye.
74183............................ Mri abdomen w/o & w/dye.
75561............................ Cardiac mri for morph w/dye.
75563............................ Card mri w/stress img & dye.
C8900............................ MRA w/cont, abd.
C8902............................ MRA w/o fol w/cont, abd.
C8903............................ MRI w/cont, breast, uni.
C8905............................ MRI w/o fol w/cont, brst, un.
C8906............................ MRI w/cont, breast, bi.
C8908............................ MRI w/o fol w/cont, breast,
C8909............................ MRA w/cont, chest.
C8911............................ MRA w/o fol w/cont, chest.
C8912............................ MRA w/cont, lwr ext.
C8914............................ MRA w/o fol w/cont, lwr ext.
C8918............................ MRA w/cont, pelvis.
C8920............................ MRA w/o fol w/cont, pelvis.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
same session as a ``with contrast'' CT or CTA procedure, the I/OCE
will assign APC 8006 rather than 8005.
* If a ``without contrast'' MRI or MRA procedure is performed during the
same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
will assign APC 8008 rather than 8007.

Table 9--OPPS Imaging Family Services Overlapping With HCPCS Codes on
the CY 2009 Bypass List
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
76700........................ Us exam, abdom, complete.
76705........................ Echo exam of abdomen.
76770........................ Us exam abdo back wall, comp.
76775........................ Us exam abdo back wall, lim.
76776........................ Us exam k transpl w/doppler.
76856........................ Us exam, pelvic, complete.
76870........................ Us exam, scrotum.
76857........................ Us exam, pelvic, limited.
------------------------------------------------------------------------

[[Page 68569]]

Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
70450........................ Ct head/brain w/o dye.
70480........................ Ct orbit/ear/fossa w/o dye.
70486........................ Ct maxillofacial w/o dye.
70490........................ Ct soft tissue neck w/o dye.
71250........................ Ct thorax w/o dye.
72125........................ Ct neck spine w/o dye.
72128........................ Ct chest spine w/o dye.
72131........................ Ct lumbar spine w/o dye.
72192........................ Ct pelvis w/o dye.
73200........................ Ct upper extremity w/o dye.
73700........................ Ct lower extremity w/o dye.
74150........................ Ct abdomen w/o dye.
------------------------------------------------------------------------
Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
70336........................ Magnetic image, jaw joint.
70544........................ Mr angiography head w/o dye.
70551........................ Mri brain w/o dye.
72141........................ Mri neck spine w/o dye.
72146........................ Mri chest spine w/o dye.
72148........................ Mri lumbar spine w/o dye.
73218........................ Mri upper extremity w/o dye.
73221........................ Mri joint upr extrem w/o dye.
73718........................ Mri lower extremity w/o dye.
73721........................ Mri jnt of lwr extre w/o dye.
------------------------------------------------------------------------

3. Calculation of OPPS Scaled Payment Weights
Using the APC median costs discussed in sections II.A.1. and 2. of
this final rule with comment period, we calculated the final relative
payment weights for each APC for CY 2009 shown in Addenda A and B to
this final rule with comment period. In years prior to CY 2007, we
standardized all the relative payment weights to APC 0601 (Mid Level
Clinic Visit) because mid-level clinic visits were among 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.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to APC 0606 (Level 3 Clinic Visits)
because we deleted APC 0601 as part of the reconfiguration of the visit
APCs. We selected APC 0606 as the base because APC 0606 was the middle
level clinic visit APC (that is, Level 3 of five levels). We had
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 were among the most frequently
performed services in the hospital outpatient setting. Therefore, for
CY 2009, to maintain consistency in using a median for calculating
unscaled weights representing the median cost of some of the most
frequently provided services, we proposed to continue to use the median
cost of the mid-level clinic visit APC, proposed APC 0606, to calculate
unscaled weights. Following our standard methodology, but using the
proposed CY 2009 median cost for APC 0606, for CY 2009 we assigned APC
0606 a relative payment weight of 1.00 and divided the median cost of
each APC by the proposed 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 budget neutral manner. Budget neutrality ensures that
estimated aggregate payments under the OPPS for CY 2009 are neither
greater than nor less than the estimated aggregate payments that would
have been made without the changes. To comply with this requirement
concerning the APC changes, we proposed to compare aggregate payments
using the CY 2008 scaled relative weights to aggregate payments using
the CY 2009 unscaled relative weights. Again this year, we included
payments to CMHCs in our comparison. Based on this comparison, we
adjusted the unscaled relative weights for purposes of budget
neutrality. The unscaled relative payment weights were adjusted by a
weight scaler of 1.3354 for budget neutrality in the CY 2009 OPPS/ASC
proposed rule (73 FR 41452). In addition to adjusting for increases and
decreases in weight due to the recalibration of APC medians, the scaler
also accounts for any change in the base, other than changes in volume
which are not a factor in the weight scaler.
Section 1833(t)(14)(H) of the Act, as added by section 621(a)(1) of
Public Law 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 final rule with comment period) is included in the budget
neutrality calculations for the CY 2009 OPPS.
We did not receive any public comments on the proposed methodology
for calculating scaled weights from the median costs for the CY 2009
OPPS. Therefore, we are finalizing our proposed methodology, without
modification, including updating of the budget neutrality scaler for
this final rule with comment period,

[[Page 68570]]

as we proposed. Under this methodology, the final unscaled payment
weights were adjusted by a weight scaler of 1.3585 for this final rule
with comment period. The final scaled relative payment weights listed
in Addenda A and B to this final rule with comment period incorporate
the recalibration adjustments discussed in sections II.A.1. and 2. of
this final rule with comment period.
4. Changes to Packaged Services
a. Background
The OPPS, like other prospective payment systems, relies on the
concept of averaging, where the payment may be more or less than the
estimated costs of providing a service or package of services for a
particular patient, but with the exception of outlier cases, is
adequate to ensure access to appropriate care. Packaging and bundling
payment for multiple interrelated services into a single payment create
incentives for providers to furnish services in the most efficient way
by enabling hospitals to manage their resources with maximum
flexibility, thereby encouraging long-term cost containment. For
example, where there are a variety of supplies that could be used to
furnish a service, some of which are more expensive than others,
packaging encourages hospitals to use the least expensive item that
meets the patient's needs, rather than to routinely use a more
expensive item. Packaging also encourages hospitals to negotiate
carefully with manufacturers and suppliers to reduce the purchase price
of items and services or to explore alternative group purchasing
arrangements, thereby encouraging the most economical health care.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while carefully
scrutinizing the services ordered by practitioners to maximize the
efficient use of hospital resources. Finally, packaging payments into
larger payment bundles promotes the stability of payment for services
over time. Packaging and bundling also may reduce the importance of
refining service-specific payment because there is more opportunity for
hospitals to average payment across higher cost cases requiring many
ancillary services and lower cost cases requiring fewer ancillary
services.
Decisions about packaging and bundling payment involve a balance
between ensuring some separate payment for individual services and
establishing incentives for efficiency through larger units of payment.
Over the past several years of the OPPS, greater unpackaging of payment
has occurred simultaneously with continued growth in OPPS expenditures
as a result of increasing volumes of individual services. In an attempt
to address this increase in volume of services, in the CY 2008 OPPS/ASC
final rule with comment period, we finalized additional packaging for
the CY 2008 OPPS, which included the establishment of four new
composite APCs for CY 2008, specifically APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite), APC 8001 (LDR
Prostate Brachytherapy Composite), APC 8002 (Level I Extended
Assessment & Management Composite), and APC 8003 (Level II Extended
Assessment & Management Composite) (72 FR 66650 through 66659). HCPCS
codes that may be paid through a composite APC if certain composite-
specific criteria are met or otherwise may be paid separately are
assigned status indicator ``Q'' for CY 2008, and we consider them to be
conditionally packaged. We discuss composite APCs in more detail in
section II.A.2.e. of this final rule with comment period.
In addition, in the CY 2008 OPPS/ASC final rule with comment
period, (72 FR 66610 through 66659), we adopted the packaging of
payment for items and services in the seven categories listed below
into the payment for the primary diagnostic or therapeutic modality to
which we believe these items and services are typically ancillary and
supportive. The seven categories are: guidance services, image
processing services, intraoperative services, imaging supervision and
interpretation services, diagnostic radiopharmaceuticals, contrast
media, and observation services. We specifically chose these categories
of HCPCS codes for packaging because we believe that the items and
services described by the codes in these categories are the HCPCS codes
that are typically ancillary and supportive to a primary diagnostic or
therapeutic modality and, in those cases, are an integral part of the
primary service they support. We finalized our assignment of status
indicator ``N'' to those HCPCS codes that we believe are always
integral to the performance of the primary modality, so we always
package their costs into the costs of the separately paid primary
services with which they are billed. Services assigned status indicator
``N'' in CY 2008 are unconditionally packaged. We also finalized our
assignment of status indicator ``Q'' to those HCPCS codes that we
believe are typically integral to the performance of the primary
modality and, in such cases, we package payment for their costs into
the costs of the separately paid primary services with which they are
usually billed. An ``STVX-packaged code'' describes a HCPCS code whose
payment is packaged when one or more separately paid primary services
are furnished in the hospital outpatient encounter. A ``T-packaged
code'' describes a code whose payment is packaged when one or more
separately paid surgical procedures are provided during the hospital
encounter. ``STVX-packaged codes'' and ``T-packaged codes'' are paid
separately in those uncommon cases when they do not meet their
respective criteria for packaged payment. ``STVX-packaged codes'' and
``T-packaged HCPCS codes'' assigned status indicator ``Q'' in CY 2008
are conditionally packaged.
We use the term ``dependent service'' to refer to the HCPCS codes
that represent services that are typically ancillary and supportive to
a primary diagnostic or therapeutic modality. We use the term
``independent service'' to refer to the HCPCS codes that represent the
primary therapeutic or diagnostic modality into which we package
payment for the dependent service. We note that, in future years as we
consider the development of larger payment groups that more broadly
reflect services provided in an encounter or episode-of-care, it is
possible that we might propose to bundle payment for a service that we
now refer to as ``independent.''
An example of a CY 2008 change in the OPPS packaging status for a
dependent HCPCS code that is ancillary and supportive is CPT code 61795
(Stereotactic computer-assisted volumetric (navigational) procedure,
intracranial, extracranial, or spinal (List separately in addition to
code for primary procedure)). CPT code 61795 was assigned separate
payment in CY 2007 but its payment is packaged during CY 2008. This
service is only performed during the course of a surgical procedure.
Several of the surgical procedures that we would expect to be reported
in association with CPT code 61795 are assigned to APC 0075 (Level V
Endoscopy Upper Airway) for CY 2008. We consider the stereotactic
guidance service to be an ancillary and supportive service that may be
performed only in the same operative session as a procedure that could
otherwise be performed independently of the stereotactic guidance
service.
During its March 2008 meeting, the APC Panel recommended that CMS
report to the APC Panel at its first CY 2009 meeting the impact of
packaging on the net payments for patient care. We will take this
recommendation into

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consideration and determine which data we can provide at the first CY
2009 APC Panel meeting that would best respond to this recommendation.
The APC Panel also recommended that CMS present data at the first CY
2009 APC Panel meeting on usage and frequency, geographic distribution,
and size and type of hospitals performing nuclear medicine examinations
and using radioisotopes to ensure that access to these services is
preserved for Medicare beneficiaries. This recommendation is discussed
in more detail in section V.B.2.c. of this final rule with comment
period.
Hospitals include charges for packaged services on their claims,
and the costs associated with those packaged services are then added to
the costs of separately payable procedures on the same claims in
establishing payment rates for the separately payable services. We
encourage hospitals to report all HCPCS codes that describe packaged
services that were provided, unless CPT or CMS provide other guidance.
If a HCPCS code is not reported when a packaged service is provided, it
can be challenging to track utilization patterns and resource costs.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41453), we proposed to
further refine our identification of the different types of
conditionally packaged HCPCS codes that were previously all assigned
status indicator ``Q'' (Packaged Services Subject to Separate Payment
under OPPS Payment Criteria) under the OPPS for CY 2009. We proposed to
create and assign status indicators ``Q1'' (``STVX-Packaged Codes''),
``Q2'' (``T-Packaged Codes''), or ``Q3'' (Codes that may be paid
through a composite APC) to each conditionally packaged HCPCS code. We
refer readers to section XIII.A.1. of this final rule with comment
period for a complete discussion of status indicators and our status
indicator changes for CY 2009.
While most conditionally packaged HCPCS codes are assigned to only
one of the conditionally packaged categories described above, in the CY
2009 OPPS/ASC proposed rule (73 FR 41453), we proposed to assign one
particular HCPCS code to two conditionally packaged categories for CY
2009. Specifically, we proposed to treat CPT code 75635 (Computed
tomographic angiography, abdominal aorta and bilateral iliofemoral
lower extremity runoff, with contrast material(s), including
noncontrast images, if performed, and image postprocessing) as both a
``T-packaged code'' and a component of composite APC 8006 (CT and CTA
with Contrast Composite). We proposed to assign this code status
indicator ``Q2'' in Addendum B and ``Q3'' in Addendum M, to signify its
dual treatment. For CY 2009, we proposed to first assess whether CPT
code 75635 would be packaged or separately payable, based on its status
as a ``T-packaged code.'' If the service reported with CPT code 75635
would be separately payable due to the absence of another procedure on
the claim with status indicator ``T'' for the same date of service, the
code would then be assessed in the context of any other relevant
imaging services reported on the claim for the same date of service to
determine whether payment for CPT code 75635 under composite APC 8006
would be appropriate. If the criteria for payment of the code under
composite APC 8006 are not met, then CPT code 75635 would be separately
paid based on APC 0662 (CT Angiography) and its corresponding payment
rate displayed in Addendum B to this final rule with comment period.
We received many public comments related to the CY 2009 proposals
for payment of packaged services that are not drugs. We have responded
to public comments on the packaging of payment for drugs, including
contrast media and diagnostic radiopharmaceuticals, in section V.B.2.c.
of this final rule with comment period.
Comment: Several commenters were pleased that CMS did not propose
to extend packaging to additional categories of services for CY 2009.
These commenters believed that it was appropriate for CMS to study the
effects of newly packaging many services for CY 2008 before choosing to
package additional services. One commenter asked that we reconsider all
packaging in general because of the adverse financial impact it has on
some hospitals.
Many commenters recommended that CMS define principles and/or
thresholds to determine whether a HCPCS code should be packaged,
consistent with the August 2008 APC Panel recommendation that CMS
establish a threshold (for example, a proportion of cases in which the
service is provided ancillary and dependent to another service, rate of
change in utilization over time, and market penetration) when packaging
will be considered. While the APC Panel recommendation was discussed in
the context of packaging intravascular ultrasound, intracardiac
echoca