[Federal Register Volume 75, Number 85 (Tuesday, May 4, 2010)]
[Proposed Rules]
[Pages 23852-24322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9163]
[[Page 23851]]
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Part II
Book 2 of 2 Books
Pages 23851-24362
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413, et al.
Medicare Program; Proposed Rule
Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Proposed
Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, 440, 441, 482, 485, and 489
[CMS-1498-P]
RIN 0938-AP80
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Proposed Fiscal Year 2011
Rates; Effective Date of Provider Agreements and Supplier Approvals;
and Hospital Conditions of Participation for Rehabilitation and
Respiratory Care Services Medicaid Program: Accreditation Requirements
for Providers of Inpatient Psychiatric Services for Individuals Under
Age 21
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems. In addition, in the Addendum
to this proposed rule, we describe the proposed changes to the amounts
and factors used to determine the rates for Medicare acute care
hospital inpatient services for operating costs and capital-related
costs. These proposed changes would be applicable to discharges
occurring on or after October 1, 2010. We also are setting forth the
proposed update to the rate-of-increase limits for certain hospitals
excluded from the IPPS that are paid on a reasonable cost basis subject
to these limits. The proposed updated rate-of-increase limits would be
effective for cost reporting periods beginning on or after October 1,
2010.
We are proposing to update the payment policy and the annual
payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs). In the Addendum to this proposed rule, we also set forth the
proposed changes to the payment rates, factors, and other payment rate
policies under the LTCH PPS. These proposed changes would be applicable
to discharges occurring on or after October 1, 2010.
We are proposing changes affecting the Medicare conditions of
participation for hospitals relating to the types of practitioners who
may provide rehabilitation services and respiratory care services.
We are proposing changes affecting the determination of the
effective date of provider agreements and supplier approvals under
Medicare.
Finally, we are proposing to offer psychiatric hospitals, hospitals
with inpatient psychiatric programs, and psychiatric facilities that
are not hospitals increased flexibility in obtaining accreditation to
participate in the Medicaid program. Psychiatric hospitals would have
the choice of meeting the existing regulatory requirements to
participate in Medicare as a psychiatric hospital or to obtaining
accreditation from a national accrediting organization whose
psychiatric hospital accrediting program has been approved by CMS.
Hospitals with inpatient psychiatric programs would have the choice of
meeting the existing regulatory requirements for participation in
Medicare as a hospital or obtaining accreditation from a national
accrediting organization whose hospital accreditation program has been
approved by CMS. In addition, psychiatric facilities that are not
hospitals would be afforded the flexibility in obtaining accreditation
by a national accrediting organization whose program has been approved
by CMS, or by any other accrediting organization with comparable
standards that is recognized by the State.
DATES: To be assured consideration, comments on this proposed rule must
be received at one of the addresses provided below, no later than 5
p.m. Eastern Daylight Time (E.D.T.) on June 18, 2010.
ADDRESSES: When commenting on issues presented in this proposed rule,
please refer to file code CMS-1498-P. Because of staff and resource
limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation at http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the file code CMS-1498-P to submit
comments on this proposed rule.
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-1498-P, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1498-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either 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 telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487, and Ing-
Jye Cheng, (410) 786-4548, Operating Prospective Payment, MS-DRGs,
Hospital Acquired Conditions (HAC), Wage Index, New Medical Service and
Technology Add-On Payments, Hospital Geographic Reclassifications,
Acute Care Transfers, Capital Prospective Payment, Excluded Hospitals,
Direct and Indirect Graduate Medical Education Payments,
Disproportionate Share Hospital (DSH), and Critical Access Hospital
(CAH) Issues.
Michele Hudson, (410) 786-4487, and Judith Richter, (410) 786-2590,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
[[Page 23853]]
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
James Poyer, (410) 786-2261, Reporting of Hospital Quality Data for
Annual Payment Update--Program Administration, Validation, and
Reconsideration Issues.
Shaheen Halim, (410) 786-0641, Reporting of Hospital Quality Data
for Annual Payment Update--Measures Issues Except Hospital Consumer
Assessment of Healthcare Providers and Systems.
Elizabeth Goldstein, (410) 786-6665 Reporting of Hospital Quality
Data for Annual Payment Update--Hospital Consumer Assessment of
Healthcare Providers and Systems Measures Issues.
Marcia Newton, (410-786-5265) and CDR Scott Cooper (U.S. Public
Health Service), (410) 786-9465, Hospital Conditions of Participation
for Rehabilitation Services and Respiratory Therapy Care Issues.
Marilyn Dahl, (410) 786-8665, Provider Agreement and Supplier
Approval Issues.
Melissa Harris, (410) 786-3397 or Adrienne Delozier, (410) 786-
0278, Accreditation of Providers of Inpatient Psychiatric Services to
Individuals under Age 21 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 at that Web site to
view public comments.
Comments received timely will also be available for public
inspection, generally beginning approximately 3 weeks after publication
of a document, at the headquarters of the Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244,
Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule
an appointment to view public comments, phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web (the Superintendent of Documents' home Web page
address is http://www.gpoaccess.gov/), by using local WAIS client
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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).
Acronyms
3M 3M Health Information System
AAHKS American Association of Hip and Knee Surgeons
AAMC Association of American Medical Colleges
ACGME Accreditation Council for Graduate Medical Education
AHA American Hospital Association
AHIC American Health Information Community
AHIMA American Health Information Management Association
AHRQ Agency for Healthcare Research and Quality
ALOS Average length of stay
ALTHA Acute Long Term Hospital Association
AMA American Medical Association
AMGA American Medical Group Association
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASC Ambulatory surgical center
ASCA Administrative Simplification Compliance Act of 2002, Public
Law 107-105
ASITN American Society of Interventional and Therapeutic
Neuroradiology
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
BIC Beneficiary Identification Code
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CARE [Medicare] Continuity Assessment Record & Evaluation
[Instrument]
CART CMS Abstraction & Reporting Tool
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction Center
CDAD Clostridium difficile-associated disease
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99-
272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
CPI Consumer price index
CRNA Certified Registered Nurse Anesthetist
CY Calendar year
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
ECI Employment cost index
EDB [Medicare] Enrollment Database
EMR Electronic medical record
FAH Federation of Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FHA Federal Health Architecture
FIPS Federal information processing standards
FQHC Federally qualified health center
FTE Full-time equivalent
FY Fiscal year
GAAP Generally Accepted Accounting Principles
GAF Geographic Adjustment Factor
GME Graduate medical education
HACs Hospital-acquired conditions
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCO High-cost outlier
HCRIS Hospital Cost Report Information System
HHA Home health agency
HHS Department of Health and Human Services
HICAN Health Insurance Claims Account Number
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
HwH Hospital-within-a-hospital
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
ICR Information collection requirement
IHS Indian Health Service
IME Indirect medical education
I-O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPPS [Acute care hospital] inpatient prospective payment system
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IRF Inpatient rehabilitation facility
LAMCs Large area metropolitan counties
LOS Length of stay
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MA Medicare Advantage
MAC Medicare Administrative Contractor
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MCV Major cardiovascular condition
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and Health Care Act of 2006, Pub. L. 109-432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Pub. L. 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L.
110-173
MPN Medicare provider number
MRHFP Medicare Rural Hospital Flexibility Program
MRSA Methicillin-resistant Staphylococcus aureus
MSA Metropolitan Statistical Area
MS-DRG Medicare severity diagnosis-related group
MS-LTC-DRG Medicare severity long-term care diagnosis-related group
NAICS North American Industrial Classification System
NALTH National Association of Long Term Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NP Nurse practitioner
NQF National Quality Forum
NTIS National Technical Information Service
NTTAA National Technology Transfer and Advancement Act of 1991 (Pub.
L. 104-113)
NVHRI National Voluntary Hospital Reporting Initiative
OACT [CMS'] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation Act of 1996, Pub. L. 99-509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB Executive Office of Management and Budget
OPM U.S. Office of Personnel Management
O.R. Operating room
OSCAR Online Survey Certification and Reporting [System]
PA Physician assistant
PIP Periodic interim payment
PLI Professional liability insurance
PMSAs Primary metropolitan statistical areas
POA Present on admission
PPACA Patient Protection and Affordable Care Act, Pub. L. 111-148
PPI Producer price index
PPS Prospective payment system
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PRTFs Psychiatric residential treatment facilities
PSF Provider-Specific File
PS&R Provider Statistical and Reimbursement (System)
QIG Quality Improvement Group, CMS
QIO Quality Improvement Organization
RCE Reasonable compensation equivalent
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RNHCI Religious nonmedical health care institution
RPL Rehabilitation psychiatric long-term care (hospital)
RRC Rural referral center
RTI Research Triangle Institute, International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SFY State fiscal year
SIC Standard Industrial Classification
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSN Social Security number
SSO Short-stay outlier
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
TEP Technical expert panel
TMA TMA [Transitional Medical Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs Extension Act of 2007, Pub. L.
110-90
UHDDS Uniform hospital discharge data set
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded From the IPPS
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical Education (GME)
B. Provisions of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as Amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152)
C. Major Content of This Proposed Rule
1. Proposed Changes to MS-DRG Classifications and Recalibrations
of Relative Weights
2. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
3. Other Decisions and Proposed Changes to the IPPS for
Operating Costs and GME Costs
4. Proposed FY 2011 Policy Governing the IPPS for Capital-
Related Costs
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
6. Proposed Changes to the LTCH PPS
7. Proposed Changes Relating to Effective Date of Provider
Agreements and Supplier Approvals
8. Proposed Changes to Medicare Conditions of Participation
Affecting Hospital Rehabilitation Services and Respiratory Care
Services
9. Proposed Changes to the Accreditation Requirements for
Medicaid Providers of Inpatient Psychiatric Services for Individuals
under Age 21
10. Determining Proposed Prospective Payment Operating and
Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals
11. Determining Proposed Prospective Payments Rates for LTCHs
12. Impact Analysis
13. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
14. Discussion of Medicare Payment Advisory Commission
Recommendations
E. Interim Final Rule With Comment Period That Implemented
Certain Provisions of the ARRA Relating to Payments to LTCHs and
LTCH Satellite Facilities
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
1. General
2. Yearly Review for Making MS-DRG Changes
C. Adoption of the MS-DRGs in FY 2008
D. Proposed FY 2011 MS-DRG Documentation and Coding Adjustment,
Including the Applicability to the Hospital-Specific Rates and the
Puerto Rico-Specific Standardized Amount
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
2. Prospective Adjustment to the Average Standardized Amounts
Required by Section 7(b)(1)(A) of Public Law 110-90
3. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Public Law 110-90
4. Retrospective Evaluation of FY 2008 Claims Data
5. Retrospective Analysis of FY 2009 Claims Data
6. Prospective Adjustment for FY 2010 and Subsequent Years
Authorized by Section 7(b)(1)(A) of Public Law 110-90 and Section
1886(d)(3)(vi) of the Act
7. Recoupment or Repayment Adjustment for FY 2010 Authorized by
Section 7(b)(1)(B) of Public Law 110-90
8. Background on the Application of the Documentation and Coding
Adjustment to the Hospital-Specific Rates
9. Proposed Documentation and Coding Adjustment to the Hospital-
Specific
[[Page 23855]]
Rates for FY 2011 and Subsequent Fiscal Years
10. Background on the Application of the Documentation and
Coding Adjustment to the Puerto Rico-Specific Standardized Amount
11. Proposed Documentation and Coding Adjustment to the Puerto
Rico-Specific Standardized Amount
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
a. Summary of FY 2009 Changes and Discussion for FY 2011
b. Summary of the RAND Corporation Study of Alternative Relative
Weight Methodologies
2. Proposals for FY 2011 and Timeline for Changes to the
Medicare Cost Report
F. Preventable Hospital-Acquired Conditions (HACs), Including
Infections
1. Background
a. Statutory Authority
b. HAC Selection
c. Collaborative Process
d. Application of HAC Payment Policy to MS-DRG Classifications
e. Public Input Regarding Selected and Potential Candidate HACs
f. POA Indicator Reporting
2. Proposed HAC Conditions for FY 2011
3. RTI Program Evaluation Summary
a. Background
b. Preliminary RTI Analysis on POA Indicator Reporting Across
Medicare Discharges
c. Preliminary RTI Analysis on POA Indicator Reporting of
Current HACs
d. Preliminary RTI Analysis of Frequency of Discharges and POA
Indicator Reporting for Current HACs
e. Preliminary RTI Analysis of Circumstances When Application of
HAC Provisions Would Not Result in MS-DRG Reassignment for Current
HACs
f. Preliminary RTI Analysis of Coding Changes for HAC-Associated
Secondary Diagnoses for Current HACs
g. Preliminary RTI Analysis of Estimated Net Savings for Current
HACs
h. Previously Considered Candidate HACs--Preliminary RTI
Analysis of Frequency of Discharges and POA Indicator Reporting
i. Current and Previously Considered Candidate HACs--RTI Report
on Evidence-Based Guidelines
j. Proposals Regarding Current HACs and Previously Considered
Candidate HACs
G. Proposed Changes to Specific MS-DRG Classifications
1. Pre-Major Diagnostic Categories (MDCs
a. Postsurgical Hypoinsulinemia (MS-DRG 008 (Simultaneous
Pancreas/Kidney Transplant)
b. Bone Marrow Transplants
2. MDC 1 (Nervous System): Administration of Tissue Plasminogen
Activator (tPA) (rtPA)
3. MDC 5 (Diseases and Disorders of the Circulatory System):
Intraoperative Fluorescence Vascular Angiography (IFVA) and X-Ray
Coronary Angiography in Coronary Artery Bypass Graft Surgery
a. New MS-DRGs for Intraoperative Fluorescence Vascular
Angiography (IFVA) With CABG
b. New MS-DRG for Intraoperative Angiography, by Any Method,
With CABG
c. New Procedure Codes
d. MS-DRG Reassignment of Intraoperative Fluorescence Vascular
Angiography (IFVA)
4. MDC 6 (Diseases and Disorders of the Digestive System):
Gastrointestinal Stenting
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue): Pedicle-Based Dynamic Stabilization
6. MDC 15 (Newborns and Other Neonates With Conditions
Originating in the Perinatal Period)
a. Discharges/Transfers of Neonates to a Designated Cancer
Center or a Children's Hospital
b. Vaccination of Newborns
7. Medicare Code Editor (MCE) Changes
a. Unacceptable Principal Diagnosis Edit: Addition of Code for
Gastroparesis
b. Open Biopsy Check Edit
c. Noncovered Procedure Edit
8. Surgical Hierarchies
9. Complication or Comorbidity (CC) Exclusions List
a. Background
b. Proposed CC Exclusions List for FY 2011
10. Review of Procedure Codes in MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-
DRGs 987 Through 989 to MDCs
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
c. Adding Diagnosis or Procedure Codes to MDCs
11. Changes to the ICD-9-CM Coding System, Including Discussion
of the Replacement of the ICD-9-CM System With the ICD-10-CM and
ICD-10-PCS Systems in FY 2014
a. ICD-9-CM Coding System
b. Code Freeze
c. Processing of 25 Diagnosis Codes and 25 Procedure Codes on
Hospital Inpatient Claims
H. Recalibration of MS-DRG Weights
I. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. FY 2011 Status of Technologies Approved for FY 2010 Add-On
Payments
a. Spiration[supreg] IBV[supreg] Valve System
b. CardioWestTM Temporary Total Artificial Heart
System (CardioWestTM TAH-t)
4. FY 2011 Applications for New Technology Add-On Payments
a. Auto Laser Interstitial Thermal Therapy
(AutoLITTTM) System
b. LipiScanTM Coronary Imaging System
c. LipiScanTM Coronary Imaging System With
Intravascular Ultrasound (IVUS)
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
B. Wage Index Reform
1. Wage Index Study Required Under the MIEA-TRHCA
a. Legislative Requirement
b. Interim and Final Reports on Results of Acumen's Study
2. FY 2009 Policy Changes in Response to Requirements Under
Section 106(b) of the MIEA-TRHCA
a. Reclassification Average Hourly Wage Comparison Criteria
b. Budget Neutrality Adjustment for the Rural and Imputed Floors
C. Core-Based Statistical Areas for the Hospital Wage Index
D. Proposed Occupational Mix Adjustment to the Proposed FY 2011
Wage Index
1. Development of Data for the Proposed FY 2011 Occupational Mix
Adjustment Based on the 2007-2008 Occupational Mix Survey
2. New 2010 Occupational Mix Survey for the FY 2013 Wage Index
3. Calculation of the Proposed Occupational Mix Adjustment for
FY 2011
E. Worksheet S-3 Wage Data for the Proposed FY 2011 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Providers Other Than Acute Care
Hospitals Under the IPPS
F. Verification of Worksheet S-3 Wage Data
G. Method for Computing the Proposed FY 2011 Unadjusted Wage
Index
H. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2011 Occupational Mix Adjusted Wage
Index
I. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
1. General
2. Effects of Reclassification/Redesignation
3. FY 2011 MGCRB Reclassifications
a. FY 2011 Reclassification Requirements and Approvals
b. Applications for Reclassifications for FY 2012
c. Appeals of MGCRB Denials of Withdrawals and Terminations
4. Redesignations of Hospitals under Section 1886(d)(8)(B) of
the Act
5. Reclassifications Under Section 1886(d)(8)(B) of the Act
6. Reclassifications Under Section 508 of Public Law 108-173
J. Proposed FY 2011 Wage Index Adjustment Based on Commuting
Patterns of Hospital Employees
K. Process for Requests for Wage Index Data Corrections
L. Labor-Market Share for the Proposed FY 2011 Wage Index
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and GME Costs
A. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
1. Background
a. Overview
b. Hospital Quality Data Reporting Under Section 501(b) of
Public Law 108-173
[[Page 23856]]
c. Hospital Quality Data Reporting Under Section 5001(a) of
Public Law 109-171
2. Retirement of RHQDAPU Program Measures
a. Considerations in Retiring Quality Measures From the RHQDAPU
Program
b. Proposed Retirement of Quality Measures Under the RHQDAPU
Program for the FY 2011 Payment Determination and Subsequent Years
3. Proposed Expansion Plan for Quality Measures for the FY 2012,
FY 2013, and FY 2014 Payment Determinations
a. Considerations in Expanding and Updating Quality Measures
Under the RHQDAPU Program
b. Proposed RHQDAPU Program Quality Measures for the FY 2012
Payment Determination
c. Proposed RHQDAPU Program Quality Measures for the FY 2013
Payment Determination
d. Proposed RHQDAPU Program Quality Measures for the FY 2014
Payment Determination
4. Possible New Quality Measures for Future Years
5. Form, Manner, and Timing of Quality Data Submission
a. Proposed RHQDAPU Program Requirements for FY 2012, FY 2013,
and FY 2014
b. Additional Proposed RHQDAPU Program Procedural Requirements
for FY 2012, FY 2013, and FY 2014 Payment Determinations
6. RHQDAPU Program Disaster Extensions and Waivers
7. Proposed Chart Validation Requirements for Chart-Abstracted
Measures
a. Proposed Chart Validation Requirements and Methods for the FY
2012 Payment Determination
b. Proposed Supplements to the Chart Validation Process for the
FY 2013 Payment Determination and Subsequent Years
8. Data Accuracy and Completeness Acknowledgement Requirements
for the FY 2012 Payment Determination and Subsequent Years
9. Proposed Public Display Requirements for the FY 2012 Payment
Determination and Subsequent Years
10. Proposed Reconsideration and Appeal Procedures for the FY
2011 Payment Determination
11. Proposed RHQDAPU Program Withdrawal Deadlines
12. Electronic Health Records (EHRs)
a. Background
b. EHR Testing of Quality Measures Submission
c. HITECH Act EHR Provisions
13. Qualification of Registries for RHQDAPU Data Submission
B. Payment for Transfers of Cases From Medicare Participating
Acute Care Hospitals to Nonparticipating Hospitals and CAHs
1. Background
2. Proposed Policy Change
C. Technical Change to Regulations
D. Medicare-Dependent, Small Rural Hospitals (MDHs): Change to
Criteria
1. Background
2. Medicare-Dependency: Counting Medicare Inpatients
E. Rural Referral Centers (RRCs)
1. Case-Mix Index (CMI)
2. Discharges
F. Indirect Medical Education (IME) Adjustment
1. Background
2. IME Adjustment Factor for FY 2011
3. IME-Related Changes in Other Sections of this Proposed Rule
G. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs): Supplemental Security Income (SSI) Fraction
1. Background
2. CMS' Current Data Matching Process for the SSI Fraction
3. Baystate Medical Center v. Leavitt Court Decision
4. CMS' Proposed Process for Matching Medicare and SSI
Eligibility Data
a. Inclusion of Stale Records and Forced Pay Records in the SSI
Eligibility Data Files
b. Use of SSNs in the Revised Match Process
c. Timing of the Match
5. CMS Ruling
6. Clarification of Language on Inclusion of Medicare Advantage
Days in the SSI Fraction of the Medicare DSH Calculation
H. Payments for Direct Graduate Medical Education (GME) Costs
1. Background
2. Identifying ``Approved Medical Residency Programs''
a. Residents in Approved Medical Residency Programs
b. Determining Whether an Individual Is a Resident or a
Physician
c. Formal Enrollment and Participation in a Program
3. Electronic Submission of Affiliation Agreements
I. Certified Registered Nurse Anesthetist (CRNA) Services
Furnished in Rural Hospitals and CAHs
J. Rural Community Hospital Demonstration Program
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Exception Payments
C. New Hospitals
D. Hospitals Located in Puerto Rico
E. Proposed Changes for FY 2011: MS-DRG Documentation and Coding
Adjustment
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009
2. Retrospective Evaluation of FY 2008 Claims Data
3. Retrospective Analysis of FY 2009 Claims Data
4. Proposed Prospective MS-DRG Documentation and Coding
Adjustment to the National Capital Federal Rate for FY 2011 and
Subsequent Years
5. Proposed Documentation and Coding Adjustment to the Puerto
Rico-Specific Capital Rate
F. Other Proposed Changes for FY 2011
VI. Proposed Changes for Hospitals Excluded From the IPPS
A. Excluded Hospitals
B. Critical Access Hospitals (CAHs)
1. Background
2. CAH Optional Method Election for Payment of Outpatient
Services
3. Costs of Provider Taxes as Allowable Costs for CAHs
a. Background and Statutory Basis
b. Proposed Clarification of Payment Policy for Provider Taxes
VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2011
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as a LTCH
a. Classification as a LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification Compliance Act (ASCA) and
Health Insurance Portability and Accountability Act (HIPAA)
Compliance
B. Proposed Medicare Severity Long-Term Care Diagnosis-Related
Group (MS-LTC-DRG) Classifications and Relative Weights
1. Background
2. Patient Classifications into MS-LTC-DRGs
a. Background
b. Proposed Changes to the MS-LTC-DRGs for FY 2011
3. Development of the Proposed FY 2011 MS-LTC-DRG Relative
Weights
a. General Overview of the Development of the MS-LTC-DRG
Relative Weights
b. Development of the Proposed MS-LTC-DRG Relative Weights for
FY 2011
c. Data
d. Hospital-Specific Relative Value (HSRV) Methodology
e. Treatment of Severity Levels in Developing the Proposed MS-
LTC-DRG Relative Weights
f. Low-Volume MS-LTC-DRGs
g. Steps for Determining the Proposed RY 2011 MS-LTC-DRG
Relative Weights
C. Proposed Changes to the LTCH Payment Rates and Other Proposed
Changes to the FY 2011 LTCH PPS
1. Overview of Development of the LTCH Payment Rates
2. Market Basket for LTCHs Reimbursed Under the LTCH PPS
a. Overview
b. Market Basket Under the LTCH PPS for FY 2011
c. Proposed Market Basket Update for LTCHs for FY 2011
d. Proposed Labor-Related Share Under the LTCH PPS for FY 2011
3. Proposed Adjustment for Changes in LTCHs' Case-Mix Due to
Changes in Documentation and Coding Practices That Occurred in a
Prior Period
a. Background
b. Evaluation of FY 2009 Claims Data
c. Proposed FY 2011 Documentation and Coding Adjustment
D. Proposed Change in Terminology From ``Rate Year'' to ``Fiscal
Year'' and Other Proposed Changes
VIII. Determination of Effective Date of Provider Agreements and
Supplier Approvals
[[Page 23857]]
A. Background
B. Departmental Appeals Board Decision
C. Proposed Revisions to Regulations
IX. Proposed Changes to Medicare Conditions of Participation
Affecting Hospital Rehabilitation Services and Respiratory Care
Services
X. Proposed Changes to the Accreditation Requirements for Medicaid
Providers of Inpatient Psychiatric Services for Individuals Under
Age 21
A. Background
B. Proposed Revision of Policy and Regulations
XI. MedPAC Recommendations
XII. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
1. Legislative Requirement for Solicitation of Comments
2. Requirements in Regulation Text
a. ICRs Regarding Withdrawing an Application, Terminating an
Approved 3 Year Reclassification, or Canceling a Previous Withdrawal
or Termination (Proposed Revised Sec. 412.273)
b. ICRs Regarding Condition of Participation: Respiratory Care
Services (Sec. 482.57)
3. Additional Information Collection Requirements
a. Present on Admission (POA) Indicator Reporting
b. Add-On Payments for New Services and Technologies
c. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
d. Occupational Mix Adjustment to the FY 2011 Index (Hospital
Wage Index Occupational Mix Survey)
e. Hospital Applications for Geographic Reclassifications by the
MGCRB
f. Direct GME Payments: General Requirements
C. Response to Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
and Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning on or After October 1, 2010
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2011
A. Calculation of the Adjusted Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
C. Proposed MS-DRG Relative Weights
D. Calculation of the Proposed Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2011
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Proposed Inpatient Capital-Related
Prospective Payments for FY 2011
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
V. Proposed Changes to the Payment Rates for the LTCH PPS for FY
2011
A. Proposed LTCH PPS Standard Federal Rate for FY 2011
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2011
C. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
D. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2011
VI. Tables
Table 1A.--Proposed National Adjusted Operating Standardized
Amounts, Labor/Nonlabor (68.8 Percent Labor Share/31.2 Percent
Nonlabor Share If Wage Index Is Greater Than 1)
Table 1B.--Proposed National Adjusted Operating Standardized
Amounts, Labor/Nonlabor (62 Percent Labor Share/38 Percent Nonlabor
Share If Wage Index Is Less Than or Equal to 1)
Table 1C.--Proposed Adjusted Operating Standardized Amounts for
Puerto Rico, Labor/Nonlabor
Table 1D.--Proposed Capital Standard Federal Payment Rate
Table 1E.--Proposed LTCH Standard Federal Prospective Payment
Rate
Table 2.--Acute Care Hospitals Case-Mix Indexes for Discharges
Occurring in Federal Fiscal Year 2009; Proposed Hospital Wage
Indexes for Federal Fiscal Year 2011; Hospital Average Hourly Wages
for Federal Fiscal Years 2009 (2005 Wage Data), 2010 (2006 Wage
Data), and 2011 (2007 Wage Data); and 3-Year Average of Hospital
Average Hourly Wages
Table 3A.--FY 2011 and 3-Year Average Hourly Wage for Acute Care
Hospitals in Urban Areas by CBSA
Table 3B.--FY 2011 and 3-Year Average Hourly Wage for Acute Care
Hospitals in Rural Areas by CBSA
Table 4A.--Proposed Wage Index and Capital Geographic Adjustment
Factor (GAF) for Acute Care Hospitals in Urban Areas by CBSA and by
State--FY 2011
Table 4B.--Proposed Wage Index and Capital Geographic Adjustment
Factor (GAF) for Acute Care Hospitals in Rural Areas by CBSA and by
State--FY 2011
Table 4C.--Proposed Wage Index and Capital Geographic Adjustment
Factor (GAF) for Acute Care Hospitals That Are Reclassified by CBSA
and by State--FY 2011
Table 4D-1.--Proposed Rural Floor Budget Neutrality Factors for
Acute Care Hospitals--FY 2011
Table 4D-2.--Urban Areas with Acute Care Hospitals Receiving the
Proposed Statewide Rural Floor or Imputed Floor Wage Index--FY 2011
Table 4E.--Urban CBSAs and Constituent Counties for Acute Care
Hospitals--FY 2011
Table 4F.--Proposed Puerto Rico Wage Index and Capital
Geographic Adjustment Factor (GAF) for Acute Care Hospitals by
CBSA--FY 2011
Table 4J.--Proposed Out-Migration Adjustment for Acute Care
Hospitals--FY 2011
Table 5.--List of Medicare Severity Diagnosis-Related Groups
(MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic
Mean Length of Stay--FY 2011
Table 6A.--New Diagnosis Codes
Table 6B.--New Procedure Codes
Table 6C.--Invalid Diagnosis Codes
Table 6D.--Invalid Procedure Codes
Table 6E.--Revised Diagnosis Code Titles
Table 6F.--Revised Procedure Code Titles
Table 6G.--Additions to the CC Exclusions List (Available
Through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/)
Table 6H.--Deletions from the CC Exclusions List (Available
Through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/)
Table 6I.--Complete List of Complication and Comorbidity (CC)
Exclusions (Available only through the Internet on the CMS Web site
at: http:/www.cms.hhs.gov/AcuteInpatientPPS/)
Table 6J.--Major Complication and Comorbidity (MCC) List
(Available Through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/)
Table 6K.--Complication and Comorbidity (CC) List (Available
Through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/)
Table 7A.--Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2009 MedPAR Update--December 2009
GROUPER V27.0 MS-DRGs
Table 7B.--Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2009 MedPAR Update--December 2009
GROUPER V28.0 MS-DRGs
Table 8A.--Proposed Statewide Average Operating Cost-to-Charge
Ratios (CCRs) for Acute Care Hospitals--March 2009
Table 8B.--Proposed Statewide Average Capital Cost-to-Charge
Ratios (CCRs) for Acute Care Hospitals--March 2009
Table 8C.--Proposed Statewide Average Total Cost-to-Charge
Ratios (CCRs) for LTCHs--March 2009
Table 9A.--Hospital Reclassifications and Redesignations--FY
2011
Table 9C.--Hospitals Redesignated as Rural Under Section
1886(d)(8)(E) of the Act--FY 2011
Table 10.--Geometric Mean Plus the Lesser of .75 of the National
Adjusted Operating Standardized Payment Amount (Increased To Reflect
the Difference Between Costs and Charges) or .75 of One Standard
Deviation of Mean Charges by Medicare Severity Diagnosis-Related
Groups (MS-DRGs)--March 2009
Table 11.--Proposed MS-LTC-DRGs, Relative Weights, Geometric
Average Length of Stay, Short-Stay Outlier Threshold, and IPPS
Comparable Threshold for Discharges Occurring From October 1, 2010
Through
[[Page 23858]]
September 30, 2011 Under the LTCH PPS
Table 12A.--Proposed LTCH PPS Wage Index for Urban Areas for
Discharges Occurring from October 1, 2010 Through September 30, 2011
Table 12B.--Proposed LTCH PPS Wage Index for Rural Areas for
Discharges Occurring From October 1, 2010 Through September 30, 2011
Appendix A--Regulatory Impact Analysis
I. Overall Impact
II. Objectives of the IPPS
III. Limitations of Our Analysis
IV. Hospitals Included In and Excluded From the IPPS
V. Effects on Hospitals and Hospital Units Excluded From the IPPS
VI. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
A. Basis and Methodology of Estimates
B. Analysis of Table I
C. Effects of the Proposed Changes to the MS-DRG
Reclassifications and Relative Cost-Based Weights (Column 1)
D. Effects of the Application of Recalibration Budget Neutrality
(Column 2)
E. Effects of Proposed Wage Index Changes (Column 3)
F. Application of the Wage Budget Neutrality Factor (Column 4)
G. Combined Effects of Proposed MS-DRG and Wage Index Changes
(Column 5)
H. Effects of MGCRB Reclassifications (Column 6)
I. Effects of the Proposed Rural Floor and Imputed Floor,
Including Application of Budget Neutrality at the State Level
(Column 7)
J. Effects of the Proposed Wage Index Adjustment for Out-
Migration (Column 8)
K. Effects of All Proposed Changes Prior to Documentation and
Coding (Or CMI) Adjustment (Column 9)
L. Effects of All Proposed Changes With CMI Adjustment (Column
10)
M. Effects of Proposed Policy on Payment Adjustments for Low-
Volume Hospitals
N. Impact Analysis of Table II
VII. Effects of Other Proposed Policy Changes
A. Effects of Proposed Policy on HACs, Including Infections
B. Effects of Proposed Policy Changes Relating to New Medical
Service and Technology Add-On Payments
C. Effects of Proposed Requirements for Hospital Reporting of
Quality Data for Annual Hospital Payment Update
D. Effects of Proposed Policy on Payment for Transfer Cases From
Medicare Participating Hospitals to Nonparticipating Hospitals and
CAHs
E. Effects of Proposed Change in Criteria for MDHs
F. Effects of Proposed Change Relating to Payment Adjustment for
Disproportionate Share Hospitals
G. Effects of Proposed Changes Relating to Payments for IME and
Direct GME
1. Identifying ``Approved Medical Residency Programs''
2. Submission of Electronic Affiliation Agreements
H. Effects of Proposed Changes Relating to CRNA Services
Furnished in Rural Hospitals and CAHs
I. Effects of Implementation of Rural Community Hospital
Demonstration Program
J. Effects of Proposed Changes Relating to CAHs
1. CAH Optional Method of Payment for Outpatient Services
2. Consideration of Costs of Provider Taxes as Allowable Costs
for CAHs
K. Effects of Proposed Policy Relating to Effective Date of
Provider Agreements and Supplier Approvals
L. Effects of Proposed Changes Relating to Hospital
Rehabilitation Services and Respiratory Care Services Conditions of
Participation
VIII. Effects of Proposed Changes in the Capital IPPS
A. General Considerations
B. Results
IX. Effects of Proposed Payment Rate Changes and Proposed Policy
Changes Under the LTCH PPS
A. Introduction and General Considerations
B. Impact on Rural Hospitals
C. Anticipated Effects of Proposed LTCH PPS Payment Rate Change
and Proposed Policy Changes
D. Effect on the Medicare Program
E. Effect on Medicare Beneficiaries
X. Effects of Proposed Policy Changes Relating to Accreditation
Requirements for Medicaid Providers of Inpatient Psychiatric
Services to Individuals Under Age 21
XI. Alternatives Considered
XII. Overall Conclusion
A. Acute Care Hospitals
B. LTCHs
XIII. Accounting Statements
A. Acute Care Hospitals
B. LTCHs
XIV. Executive Order 12866
Appendix B--Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2011
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of low-income patients, it
receives a percentage add-on payment applied to the DRG-adjusted base
payment rate. This add-on payment, known as the disproportionate share
hospital (DSH) adjustment, provides for a percentage increase in
Medicare payments to hospitals that qualify under either of two
statutory formulas designed to identify hospitals that serve a
disproportionate share of low-income patients. For qualifying
hospitals, the amount of this adjustment may vary based on the outcome
of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS, known as
the indirect medical education (IME) adjustment. This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate based on
their costs in a base year. For example, sole community
[[Page 23859]]
hospitals (SCHs) receive the higher of a hospital-specific rate based
on their costs in a base year (the highest of FY 1982, FY 1987, FY
1996, or FY 2006) or the IPPS Federal rate based on the standardized
amount. Through and including FY 2006, a Medicare-dependent, small
rural hospital (MDH) received the higher of the Federal rate or the
Federal rate plus 50 percent of the amount by which the Federal rate is
exceeded by the higher of its FY 1982 or FY 1987 hospital-specific
rate. As discussed below, for discharges occurring on or after October
1, 2007, but before October 1, 2011, an MDH will receive the higher of
the Federal rate or the Federal rate plus 75 percent of the amount by
which the Federal rate is exceeded by the highest of its FY 1982, FY
1987, or FY 2002 hospital-specific rate. SCHs are the sole source of
care in their areas, and MDHs are a major source of care for Medicare
beneficiaries in their areas. Specifically, section 1886(d)(5)(D)(iii)
of the Act defines an SCH as a hospital that is located more than 35
road miles from another hospital or that, by reason of factors such as
isolated location, weather conditions, travel conditions, or absence of
other like hospitals (as determined by the Secretary), is the sole
source of hospital inpatient services reasonably available to Medicare
beneficiaries. In addition, certain rural hospitals previously
designated by the Secretary as essential access community hospitals are
considered SCHs. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as
a hospital that is located in a rural area, has not more than 100 beds,
is not an SCH, and has a high percentage of Medicare discharges (not
less than 60 percent of its inpatient days or discharges in its cost
reporting year beginning in FY 1987 or in two of its three most
recently settled Medicare cost reporting years). Both of these
categories of hospitals are afforded this special payment protection in
order to maintain access to services for beneficiaries.
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital IPPS, payments are adjusted by the same DRG for the case as
they are under the operating IPPS. Capital IPPS payments are also
adjusted for IME and DSH, similar to the adjustments made under the
operating IPPS. In addition, hospitals may receive outlier payments for
those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, Subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: rehabilitation hospitals and units; long-term
care hospitals (LTCHs); psychiatric hospitals and units; children's
hospitals; and cancer hospitals. Religious nonmedical health care
institutions (RNHCIs) are also excluded from the IPPS. Various sections
of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for rehabilitation hospitals and units (referred to as inpatient
rehabilitation facilities (IRFs)), LTCHs, and psychiatric hospitals and
units (referred to as inpatient psychiatric facilities (IPFs)). (We
note that the annual updates to the LTCH PPS are now included as part
of the IPPS annual update document. Updates to the IRF PPS and IPF PPS
are issued as separate documents.) Children's hospitals, cancer
hospitals, and RNHCIs continue to be paid solely under a reasonable
cost-based system subject to a rate-of-increase ceiling on inpatient
operating costs per discharge.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) effective for cost
reporting periods beginning on or after October 1, 2002. The LTCH PPS
was established under the authority of sections 123(a) and (c) of
Public Law 106-113 and section 307(b)(1) of Public Law 106-554 (as
codified under section 1886(m)(1) of the Act). During the 5-year
(optional) transition period, a LTCH's payment under the PPS was based
on an increasing proportion of the LTCH Federal rate with a
corresponding decreasing proportion based on reasonable cost
principles. Effective for cost reporting periods beginning on or after
October 1, 2006, all LTCHs are paid 100 percent of the Federal rate.
The existing regulations governing payment under the LTCH PPS are
located in 42 CFR part 412, Subpart O. Beginning October 1, 2009, we
issue the annual updates to the LTCH PPS in the same documents that
update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts
413 and 415.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
B. Provisions of the Patient Protection and Affordable Care Act (Pub.
L. 111-148), as Amended by the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152)
On March 23, 2010, the Patient Protection and Affordable Care Act
(PPACA), Public Law 111-148 was enacted. Following the enactment of
Public Law 111-148, the Health Care and Education Reconciliation Act of
2010, Public L. 111-152 (enacted on March 30, 2010), amended certain
provisions of Public Law 111-148. A number of the provisions of Public
Law 111-148, as amended by Public Law 111-152, affect the IPPS and the
LTCH PPS and the providers and suppliers addressed in this proposed
rule. However, due to the timing of the passage of the legislation, we
are unable to address those provisions in this proposed rule.
Therefore, the proposed policies and payment rates in this proposed
rule do not reflect the new
[[Page 23860]]
legislation. We plan to issue separate documents in the Federal
Register addressing the provisions of Public Law 111-148, as amended,
that affect our proposed policies and payment rates for FY 2011 under
the IPPS and the LTCH PPS. In addition, we plan to issue further
instructions implementing the provisions of Public Law 111-148, as
amended, that affect the policies and payment rates for FY 2010 under
the IPPS and for RY 2010 under the LTCH PPS.
C. Major Content of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs of
acute care hospitals in FY 2011. We also are setting forth proposed
changes relating to payments for IME costs and payments to certain
hospitals and units that continue to be excluded from the IPPS and paid
on a reasonable cost basis.
In addition, in this proposed rule, we are setting forth proposed
changes to the payment rates, factors, and other payment rate policies
under the LTCH PPS for FY 2011. We note that because the annual update
of payment rates for the LTCH PPS will now take place on the same
schedule and in the same publication as for the IPPS, for the sake of
clarity, in section VII.D. of this proposed rule, we are proposing to
use ``fiscal year (FY)'' instead of ``rate year (RY) when referring to
updates and changes to the LTCH PPS to be effective October 1, 2010.
Therefore, throughout this proposed rule, we are using the phrase
``fiscal year (FY)'' in referring to proposed updates and changes to
the LTCH PPS.
Below is a summary of the major changes that we are proposing to
make:
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we included--
Proposed changes to MS-DRG classifications based on our
yearly review.
Proposed application of the documentation and coding
adjustment to hospital-specific rates for FY 2011 resulting from
implementation of the MS-DRG system.
A discussion of the Research Triangle International, Inc.
(RTI) and RAND Corporation reports and recommendations relating to
charge compression.
Proposed recalibrations of the MS-DRG relative weights.
We also presented a listing and discussion of hospital-acquired
conditions (HACs), including infections, that are subject to the
statutorily required quality adjustment in MS-DRG payments for FY 2011.
We discuss the FY 2011 status of two new technologies approved for
add-on payments for FY 2010 and presented our evaluation and analysis
of the FY 2011 applicants for add-on payments for high-cost new medical
services and technologies (including public input, as directed by Pub.
L. 108-173, obtained in a town hall meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to this proposed rule, we are
proposing revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed include the
following:
Budget neutrality for the rural floor and imputed floor.
Changes to titles and principal cities of CBSA
designations.
The proposed FY 2011 wage index update using wage data
from cost reporting periods beginning in FY 2007.
Analysis and implementation of the proposed FY 2011
occupational mix adjustment to the wage index for acute care hospitals,
including discussion of the 2010 occupational mix survey.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications.
The proposed adjustment to the wage index for acute care
hospitals for FY 2011 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
The timetable for reviewing and verifying the wage data
used to compute the proposed FY 2011 hospital wage index.
Determination of the labor-related share for the proposed
FY 2011 wage index.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble of this proposed rule, we discussed
a number of the provisions of the regulations in 42 CFR parts 412, 413,
and 489, including the following:
The reporting of hospital quality data as a condition for
receiving the full annual payment update increase.
Payment for transfer cases from Medicare participating
hospitals to nonparticipating hospitals and CAHs.
A change to the definition criteria for MDHs.
The proposed updated national and regional case-mix values
and discharges for purposes of determining RRC status.
The statutorily required IME adjustment factor for FY
2011.
The proposed policy change relating to the determination
of the SSI ratio of the Medicare fraction in the formula for
determining the payment adjustments for disproportionate share
hospitals.
A proposed clarification of ``approved medical residency
programs'' policies relating to payment for IME and direct GME and our
proposal to accept the electronic submission of Medicare GME
affiliation agreements.
Proposed policy change for payments for services furnished
by certified registered nurse anesthetists (CRNAs) in rural hospitals
and CAHs.
Discussion of the status of the Rural Community Hospital
Demonstration Program.
4. Proposed FY 2011 Policy Governing the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discussed
the proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2011 and the proposed MS-DRG
documentation and coding adjustment for FY 2011.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VI. of the preamble of this proposed rule, we
discussed--
Proposed changes to payments to excluded hospitals.
Proposed changes relating to the election by CAHs of the
optional method of payment for outpatient services
Proposed clarification of the policies on costs of
provider taxes as allowable costs for CAHs.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of this proposed rule, we set forth
proposed changes to the payment rates, factors, and other payment rate
policies under the LTCH PPS for FY 2011, including the annual update of
the MS-LTC-DRG classifications and relative weights for use under the
LTCH PPS for FY 2011 and the proposed MS-DRG documentation and coding
adjustment for FY 2011.
7. Proposed Changes Relating to Effective Date of Provider Agreements
and Supplier Approvals
In section VIII. of the preamble of this proposed rule, we set
forth our proposed change in policies for
[[Page 23861]]
determining the effective date of provider agreements and supplier
approvals and to make changes to assure that accredited and
nonaccredited facilities are treated in the same manner in determining
this effective date.
8. Proposed Changes to Medicare Conditions of Participation Affecting
Hospital Rehabilitation Services and Respiratory Care Services
In section IX. of the preamble of this proposed rule, we are
proposing changes to the Medicare conditions of participation regarding
which practitioners are allowed to order rehabilitation and respiratory
care services in the hospital setting.
9. Proposed Changes to the Accreditation Requirements for Medicaid
Providers of Inpatient Psychiatric Services for Individuals under Age
21
In section X. of the preamble of this proposed rule, we are
proposing to remove the requirement for accreditation by The Joint
Commission of psychiatric hospitals and hospitals with inpatient
psychiatric programs. Hospitals with inpatient psychiatric programs
would be afforded the flexibility in obtaining accreditation by a
national accrediting organization whose hospital accrediting program
has been approved by CMS, and psychiatric rehabilitation treatment
facilities would be afforded flexibility in obtaining accreditation by
a national accrediting organization whose program has been approved by
CMS, or by any other accrediting organization with comparable standards
that is recognized by the State.
10. Determining Proposed Prospective Payment Operating and Capital
Rates and Rate-of-Increase Limits for Acute Care Hospitals
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2011
prospective payment rates for operating costs and capital-related costs
for acute care hospitals. We also are establishing the proposed
threshold amounts for outlier cases. In addition, we address the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2011 for certain hospitals
excluded from the IPPS.
11. Determining Proposed Prospective Payment Rates for LTCHs
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2011
prospective standard Federal rate. We also are establishing the
proposed adjustments for wage levels, the labor-related share, the
cost-of-living adjustment, and high-cost outliers, including the fixed-
loss amount, and the LTCH cost-to-charge ratios (CCRs) under the LTCH
PPS.
12. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected acute care
hospitals and LTCHs.
13. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2011 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The standard Federal rate for hospital inpatient services
furnished by LTCHs.
14. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 1 of each year, in which MedPAC
reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2010 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs under the IPPS, for hospitals
and distinct part hospital units excluded from the IPPS. We address
these recommendations in Appendix B of this proposed rule. For further
information relating specifically to the MedPAC March 2008 report or to
obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit
MedPAC's Web site at: http://www.medpac.gov.
E. Interim Final Rule With Comment Period That Implemented Certain
Provisions of the ARRA Relating to Payments to LTCHs and LTCH Satellite
Facilities
Section 4302 of the American Recovery and Reinvestment Act of 2009
(ARRA, Public Law 111-5) included several amendments to section 114 of
Public Law 110-173 (MMSEA) relating to payments to LTCHs and LTCH
satellite facilities that were discussed under section X. of the FY
2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43976 through 43990).
These amendments are effective as if they were enacted as part of
section 114 of Public Law 110-173 (MMSEA). We issued instructions to
the fiscal intermediaries and Medicare administrative contractors
(MACs) to interpret these amendments (Change Request 6444). In section
XI. of the FY 2010/RY 2010 LTCH PPS final rule (74 FR 43990), we
implemented the provisions of section 4302 of Public Law 111-5 through
an interim final rule with comment period. We will respond to the
public comments that we received in a timely manner on this interim
final rule with comment period and finalize the interim final rule with
any necessary modification in the final rule for this proposed rule.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS, we
pay for inpatient hospital services on a rate per discharge basis that
varies according to the DRG to which a beneficiary's stay is assigned.
The formula used to calculate payment for a specific case multiplies an
individual hospital's payment rate per case by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG, relative
to the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These
[[Page 23862]]
adjustments are made to reflect changes in treatment patterns,
technology, and any other factors that may change the relative use of
hospital resources.
B. MS-DRG Reclassifications
1. General
As discussed in the preamble to the FY 2008 IPPS final rule with
comment period (72 FR 47138), we focused our efforts in FY 2008 on
making significant reforms to the IPPS consistent with the
recommendations made by MedPAC in its ``Report to the Congress,
Physician-Owned Specialty Hospitals'' in March 2005. MedPAC recommended
that the Secretary refine the entire DRG system by taking severity of
illness into account and applying hospital-specific relative value
(HSRV) weights to DRGs.\1\ We began this reform process by adopting
cost-based weights over a 3-year transition period beginning in FY 2007
and making interim changes to the DRG system for FY 2007 by creating 20
new CMS DRGs and modifying 32 other DRGs across 13 different clinical
areas involving nearly 1.7 million cases. As described in more detail
below, these refinements were intermediate steps towards comprehensive
reform of both the relative weights and the DRG system as we undertook
further study. For FY 2008, we adopted 745 new Medicare Severity DRGs
(MS-DRGs) to replace the CMS DRGs. We refer readers to section II.D. of
the FY 2008 IPPS final rule with comment period for a full detailed
discussion of how the MS-DRG system, based on severity levels of
illness, was established (72 FR 47141).
---------------------------------------------------------------------------
\1\ Medicare Payment Advisory Commission: Report to the
Congress, Physician-Owned Specialty Hospitals, March 2005, page
viii.
---------------------------------------------------------------------------
Currently, cases are classified into MS-DRGs for payment under the
IPPS based on the following information reported by the hospital: The
principal diagnosis, up to eight additional diagnoses, and up to six
procedures performed during the stay. (We refer readers to section
II.G.11.c. of this proposed rule for a discussion of our efforts to
increase our internal systems capacity to process diagnosis and
procedures on hospital claims to 25 diagnosis codes and 25 procedure
codes prior to the use of the International Classification of Diseases,
10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding
and the International Classification of Diseases, 10th Revision,
Procedure Coding System (ICD-10 PCS) for inpatient hospital procedure
coding, effective October 1, 2013.) In a small number of MS-DRGs,
classification is also based on the age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM) prior to October 1,
2013. We refer readers to section II.G.11.b. of this proposed rule for
a reference to the replacement of ICD-9-CM, Volumes 1 and 2, including
the Official ICD-9-CM Guidelines for Coding and Reporting, Volume 3,
with the ICD-10-CM and ICD-10-PCS, including the Official ICD-10-CM and
ICM-10-PCS Guidelines for Coding and Reporting, effective October 1,
2013 (FY 2014).
The process of developing the MS-DRGs was begun by dividing all
possible principal diagnoses into mutually exclusive principal
diagnosis areas, referred to as Major Diagnostic Categories (MDCs). The
MDCs were formulated by physician panels to ensure that the DRGs would
be clinically coherent. The diagnoses in each MDC correspond to a
single organ system or etiology and, in general, are associated with a
particular medical specialty. Thus, in order to maintain the
requirement of clinical coherence, no final MS-DRG could contain
patients in different MDCs. For example, MDC 6 is Diseases and
Disorders of the Digestive System. This approach is used because
clinical care is generally organized in accordance with the organ
system affected. However, some MDCs are not constructed on this basis
because they involve multiple organ systems (for example, MDC 22
(Burns)). For FY 2010, cases are assigned to one of 746 MS-DRGs in 25
MDCs. The table below lists the 25 MDCs.
Major Diagnostic Categories (MDCs)
------------------------------------------------------------------------
------------------------------------------------------------------------
1...................... Diseases and Disorders of the Nervous System.
2...................... Diseases and Disorders of the Eye.
3...................... Diseases and Disorders of the Ear, Nose, Mouth,
and Throat.
4...................... Diseases and Disorders of the Respiratory
System.
5...................... Diseases and Disorders of the Circulatory
System.
6...................... Diseases and Disorders of the Digestive System.
7...................... Diseases and Disorders of the Hepatobiliary
System and Pancreas.
8...................... Diseases and Disorders of the Musculoskeletal
System and Connective Tissue.
9...................... Diseases and Disorders of the Skin,
Subcutaneous Tissue and Breast.
10..................... Endocrine, Nutritional and Metabolic Diseases
and Disorders.
11..................... Diseases and Disorders of the Kidney and
Urinary Tract.
12..................... Diseases and Disorders of the Male Reproductive
System.
13..................... Diseases and Disorders of the Female
Reproductive System.
14..................... Pregnancy, Childbirth, and the Puerperium.
15..................... Newborns and Other Neonates with Conditions
Originating in the Perinatal Period.
16..................... Diseases and Disorders of the Blood and Blood
Forming Organs and Immunological Disorders.
17..................... Myeloproliferative Diseases and Disorders and
Poorly Differentiated Neoplasms.
18..................... Infectious and Parasitic Diseases (Systemic or
Unspecified Sites).
19..................... Mental Diseases and Disorders.
20..................... Alcohol/Drug Use and Alcohol/Drug Induced
Organic Mental Disorders.
21..................... Injuries, Poisonings, and Toxic Effects of
Drugs.
22..................... Burns.
23..................... Factors Influencing Health Status and Other
Contacts with Health Services.
24..................... Multiple Significant Trauma.
25..................... Human Immunodeficiency Virus Infections.
------------------------------------------------------------------------
[[Page 23863]]
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to an MS-DRG. However, under the
most recent version of the Medicare GROUPER (Version 27.0), there are
13 MS-DRGs to which cases are directly assigned on the basis of ICD-9-
CM procedure codes. These MS-DRGs are for heart transplant or implant
of heart assist systems; liver and/or intestinal transplants; bone
marrow transplants; lung transplants; simultaneous pancreas/kidney
transplants; pancreas transplants; and tracheostomies. Cases are
assigned to these MS-DRGs before they are classified to an MDC. The
table below lists the 13 current pre-MDCs.
Pre-Major Diagnostic Categories (Pre-MDCs)
------------------------------------------------------------------------
------------------------------------------------------------------------
MS-DRG 001............... Heart Transplant or Implant of Heart Assist
System with MCC.
MS-DRG 002............... Heart Transplant or Implant of Heart Assist
System without MCC.
MS-DRG 003............... ECMO or Tracheostomy with Mechanical
Ventilation 96+ Hours or Principal Diagnosis
Except for Face, Mouth, and Neck Diagnosis
with Major O.R.
MS-DRG 004............... Tracheostomy with Mechanical Ventilation 96+
Hours or Principal Diagnosis Except for
Face, Mouth, and Neck Diagnosis with Major
O.R.
MS-DRG 005............... Liver Transplant with MCC or Intestinal
Transplant.
MS-DRG 006............... Liver Transplant without MCC.
MS-DRG 007............... Lung Transplant.
MS-DRG 008............... Simultaneous Pancreas/Kidney Transplant.
MS-DRG 009............... Bone Marrow Transplant.
MS-DRG 010............... Pancreas Transplant.
MS-DRG 011............... Tracheostomy for Face, Mouth, and Neck
Diagnoses with MCC.
MS-DRG 012............... Tracheostomy for Face, Mouth, and Neck
Diagnoses with CC.
MS-DRG 013............... Tracheostomy for Face, Mouth, and Neck
Diagnoses without CC/MCC.
------------------------------------------------------------------------
Once the MDCs were defined, each MDC was evaluated to identify
those additional patient characteristics that would have a consistent
effect on hospital resource consumption. Because the presence of a
surgical procedure that required the use of the operating room would
have a significant effect on the type of hospital resources used by a
patient, most MDCs were initially divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (0 to 17 years of age or greater than 17
years of age). Some surgical and medical DRGs are further
differentiated based on the presence or absence of a complication or
comorbidity (CC) or a major complication or comorbidity (MCC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect MS-DRG assignment for certain principal diagnoses. An example is
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones. Lithotripsy procedures are not routinely
performed in an operating room. Therefore, lithotripsy codes are not
classified as O.R. procedures. However, our clinical advisors believe
that patients with urinary stones who undergo extracorporeal shock wave
lithotripsy should be considered similar to other patients who undergo
O.R. procedures. Therefore, we treat this group of patients similar to
patients undergoing O.R. procedures.
Once the medical and surgical classes for an MDC were formed, each
diagnosis class was evaluated to determine if complications or
comorbidities would consistently affect hospital resource consumption.
Each diagnosis was categorized into one of three severity levels. These
three levels include a major complication or comorbidity (MCC), a
complication or comorbidity (CC), or a non-CC. Physician panels
classified each diagnosis code based on a highly iterative process
involving a combination of statistical results from test data as well
as clinical judgment. As stated earlier, we refer readers to section
II.D. of the FY 2008 IPPS final rule with comment period for a full
detailed discussion of how the MS-DRG system was established based on
severity levels of illness (72 FR 47141).
A patient's diagnosis, procedure, discharge status, and demographic
information is entered into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
After patient information is screened through the MCE and any
further development of the claim is conducted, the cases are classified
into the appropriate MS-DRG by the Medicare GROUPER software program.
The GROUPER program was developed as a means of classifying each case
into an MS-DRG on the basis of the diagnosis and procedure codes and,
for a limited number of MS-DRGs, demographic information (that is, sex,
age, and discharge status).
After cases are screened through the MCE and assigned to an MS-DRG
by the GROUPER, the PRICER software calculates a base MS-DRG payment.
The PRICER calculates the payment for each case covered by the IPPS
based on the MS-DRG relative weight and additional factors associated
with each hospital, such as IME and DSH payment adjustments. These
additional factors increase the payment amount to hospitals above the
base MS-DRG payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible MS-DRG
classification changes and to recalibrate the MS-DRG weights. However,
in the FY 2000 IPPS final rule (64 FR 41500), we discussed a process
for considering non-MedPAR data in the recalibration process. In order
for us to consider using particular non-MedPAR data, we must have
sufficient time to evaluate and test the data. The time necessary to do
so depends upon the nature and quality of the non-MedPAR data
submitted. Generally, however, a significant sample of the non-MedPAR
data should be submitted by mid-October for consideration in
conjunction with the next year's proposed rule. This date allows us
time to test the data and make a preliminary assessment as to the
feasibility of using the data. Subsequently, a complete database should
be submitted by early December for consideration in conjunction with
the next year's proposed rule.
[[Page 23864]]
As we indicated above, for FY 2008, we made significant
improvements in the DRG system to recognize severity of illness and
resource usage by adopting MS-DRGs that were reflected in the FY 2008
GROUPER, Version 25.0, and were effective for discharges occurring on
or after October 1, 2007. Our MS-DRG analysis for the FY 2009 final
rule was based on data from the March 2008 update of the FY 2007 MedPAR
file, which contained hospital bills received through March 31, 2008,
for discharges occurring through September 30, 2007. For this proposed
rule, for FY 2011, our MS-DRG analysis is based on data from the
September 2009 update of the FY 2009 MedPAR file, which contains
hospital bills received through September 30, 2009, for discharges
occurring through September 30, 2009.
2. Yearly Review for Making MS-DRG Changes
Many of the changes to the MS-DRG classifications we make annually
are the result of specific issues brought to our attention by
interested parties. We encourage individuals with comments about MS-DRG
classifications to submit these comments no later than early December
of each year so they can be carefully considered for possible inclusion
in the annual proposed rule and, if included, may be subjected to
public review and comment. Therefore, similar to the timetable for
interested parties to submit non-MedPAR data for consideration in the
MS-DRG recalibration process, comments about MS-DRG classification
issues should be submitted no later than early December in order to be
considered and possibly included in the next annual proposed rule
updating the IPPS.
The actual process of forming the MS-DRGs was, and will likely
continue to be, highly iterative, involving a combination of
statistical results from test data combined with clinical judgment. In
the FY 2008 IPPS final rule (72 FR 47140 through 47189), we described
in detail the process we used to develop the MS-DRGs that we adopted
for FY 2008. In addition, in deciding whether to make further
modification to the MS-DRGs for particular circumstances brought to our
attention, we considered whether the resource consumption and clinical
characteristics of the patients with a given set of conditions are
significantly different than the remaining patients in the MS-DRG. We
evaluated patient care costs using average charges and lengths of stay
as proxies for costs and relied on the judgment of our medical advisors
to decide whether patients are clinically distinct or similar to other
patients in the MS-DRG. In evaluating resource costs, we considered
both the absolute and percentage differences in average charges between
the cases we selected for review and the remainder of cases in the MS-
DRG. We also considered variation in charges within these groups; that
is, whether observed average differences were consistent across
patients or attributable to cases that were extreme in terms of charges
or length of stay, or both. Further, we considered the number of
patients who will have a given set of characteristics and generally
preferred not to create a new MS-DRG unless it would include a
substantial number of cases.
C. Adoption of the MS-DRGs in FY 2008
In the FY 2006, FY 2007, and FY 2008 IPPS final rules, we discussed
a number of recommendations made by MedPAC regarding revisions to the
DRG system used under the IPPS (70 FR 47473 through 47482; 71 FR 47881
through 47939; and 72 FR 47140 through 47189). As we noted in the FY
2006 IPPS final rule, we had insufficient time to complete a thorough
evaluation of these recommendations for full implementation in FY 2006.
However, we did adopt severity-weighted cardiac DRGs in FY 2006 to
address public comments on this issue and the specific concerns of
MedPAC regarding cardiac surgery DRGs. We also indicated that we
planned to further consider all of MedPAC's recommendations and
thoroughly analyze options and their impacts on the various types of
hospitals in the FY 2007 IPPS proposed rule.
For FY 2007, we began this process. In the FY 2007 IPPS proposed
rule, we proposed to adopt Consolidated Severity DRGs (CS DRGs) for FY
2008 (if not earlier). Based on public comments received on the FY 2007
IPPS proposed rule, we decided not to adopt the CS DRGs. In the FY 2007
IPPS final rule (71 FR 47906 through 47912), we discussed several
concerns raised by commenters regarding the proposal to adopt CS DRGs.
We acknowledged the many comments suggesting the logic of Medicare's
DRG system should continue to remain in the public domain as it has
since the inception of the PPS. We also acknowledged concerns about the
impact on hospitals and software vendors of moving to a proprietary
system. Several commenters suggested that CMS refine the existing DRG
classification system to preserve the many policy decisions that were
made over the last 20 years and were already incorporated into the DRG
system, such as complexity of services and new device technologies.
Consistent with the concerns expressed in the public comments, this
option had the advantage of using the existing DRGs as a starting point
(which was already familiar to the public) and retained the benefit of
many DRG decisions that were made in recent years. We stated our belief
that the suggested approach of incorporating severity measures into the
existing DRG system was a viable option that would be evaluated.
Therefore, we decided to make interim changes to the existing DRGs
for FY 2007 by creating 20 new DRGs involving 13 different clinical
areas that would significantly improve the CMS DRG system's recognition
of severity of illness. We also modified 32 DRGs to better capture
differences in severity. The new and revised DRGs were selected from 40
existing CMS DRGs that contained 1,666,476 cases and represented a
number of body systems. In creating these 20 new DRGs, we deleted 8
existing DRGs and modified 32 existing DRGs. We indicated that these
interim steps for FY 2007 were being taken as a prelude to more
comprehensive changes to better account for severity in the DRG system
by FY 2008.
In the FY 2007 IPPS final rule (71 FR 47898), we indicated our
intent to pursue further DRG reform through two initiatives. First, we
announced that we were in the process of engaging a contractor to
assist us with evaluating alternative DRG systems that were raised as
potential alternatives to the CMS DRGs in the public comments. Second,
we indicated our intent to review over 13,000 ICD-9-CM diagnosis codes
as part of making further refinements to the current CMS DRGs to better
recognize severity of illness based on the work that CMS (then HCFA)
did in the mid-1990's in connection with adopting severity DRGs. We
describe below the progress we have made on these two initiatives and
our actions for FYs 2008, 2009, and 2010, and our proposals for FY 2011
based on our continued analysis of reform of the DRG system. We note
that the adoption of the MS-DRGs to better recognize severity of
illness has implications for the outlier threshold, the application of
the postacute care transfer policy, the measurement of real case-mix
versus apparent case-mix, and the IME and DSH payment adjustments. We
discuss these implications for FY 2011 in other sections of this
preamble and in the Addendum to this proposed rule.
In the FY 2007 IPPS proposed rule, we discussed MedPAC's
recommendations to move to a cost-based HSRV weighting methodology
using HSRVs beginning with the FY
[[Page 23865]]
2007 IPPS proposed rule for determining the DRG relative weights.
Although we proposed to adopt the HSRV weighting methodology for FY
2007, we decided not to adopt the proposed methodology in the final
rule after considering the public comments we received on the proposal.
Instead, in the FY 2007 IPPS final rule, we adopted a cost-based
weighting methodology without the HSRV portion of the proposed
methodology. The cost-based weights were adopted over a 3-year
transition period in \1/3\ increments between FY 2007 and FY 2009. In
addition, in the FY 2007 IPPS final rule, we indicated our intent to
further study the HSRV-based methodology as well as other issues
brought to our attention related to the cost-based weighting
methodology adopted in the FY 2007 final rule. There was significant
concern in the public comments that our cost-based weighting
methodology does not adequately account for charge compression--the
practice of applying a higher percentage charge markup over costs to
lower cost items and services and a lower percentage charge markup over
costs to higher cost items and services. Further, public commenters
expressed concern about potential inconsistencies between how costs and
charges are reported on the Medicare cost reports and charges on the
Medicare claims. In the FY 2007 IPPS final rule, we used costs and
charges from the cost report to determine departmental level cost-to-
charge ratios (CCRs) which we then applied to charges on the Medicare
claims to determine the cost-based weights. The commenters were
concerned about potential distortions to the cost-based weights that
would result from inconsistent reporting between the cost reports and
the Medicare claims. After publication of the FY 2007 IPPS final rule,
we entered into a contract with RTI International (RTI) to study both
charge compression and to what extent our methodology for calculating
DRG relative weights is affected by inconsistencies between how
hospitals report costs and charges on the cost reports and how
hospitals report charges on individual claims. Further, as part of its
study of alternative DRG systems, the RAND Corporation analyzed the
HSRV cost-weighting methodology. We refer readers to section II.E. of
the preamble of this proposed rule for discussion of the issue of
charge compression and the cost-weighting methodology for FY 2011.
We believe that revisions to the DRG system to better recognize
severity of illness and changes to the relative weights based on costs
rather than charges are improving the accuracy of the payment rates in
the IPPS. We agree with MedPAC that these refinements should be
pursued. Although we continue to caution that any prospective payment
system based on grouping cases will always present some opportunities
for providers to specialize in cases they believe have higher margins,
we believe that the changes we have adopted and the continuing reforms
we are proposing to make in this proposed rule for FY 2011 will improve
payment accuracy and reduce financial incentives to create specialty
hospitals.
We refer readers to section II.D. of the FY 2008 IPPS final rule
with comment period for a full discussion of how the MS-DRG system was
established based on severity levels of illness (72 FR 47141).
D. Proposed FY 2011 MS-DRG Documentation and Coding Adjustment,
Including the Applicability to the Hospital-Specific Rates and the
Puerto Rico-Specific Standardized Amount
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
As we discussed earlier in this preamble, we adopted the MS-DRG
patient classification system for the IPPS, effective October 1, 2007,
to better recognize severity of illness in Medicare payment rates for
acute care hospitals. The adoption of the MS-DRG system resulted in the
expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008.
(Currently, there are 746 DRGs for FY 2010; there would be 747 DRGs in
FY 2011, with our proposals in this proposed rule to delete one MS-DRG
and to create two new MS-DRGs.) By increasing the number of MS-DRGs and
more fully taking into account patients' severity of illness in
Medicare payment rates for acute care hospitals, MS-DRGs encourage
hospitals to improve their documentation and coding of patient
diagnoses. In the FY 2008 IPPS final rule with comment period (72 FR
47175 through 47186), we indicated that the adoption of the MS-DRGs had
the potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percent to
the national standardized amount. We provided for phasing in this -4.8
percent adjustment over 3 years. Specifically, we established
prospective documentation and coding adjustments of -1.2 percent for FY
2008, -1.8 percent for FY 2009, and -1.8 percent for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007, Public Law 110-90. Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percent for FY 2008
and -0.9 percent for FY 2009. Section 7(a) of Public Law 110-90 did not
adjust the FY 2010 -1.8 percent documentation and coding adjustment
promulgated in the FY 2008 IPPS final rule with comment period. To
comply with section 7(a) of Public Law 110-90, we promulgated a final
rule on November 27, 2007 (72 FR 66886) that modified the IPPS
documentation and coding adjustment for FY 2008 to -0.6 percent, and
revised the FY 2008 payment rates, factors, and thresholds accordingly.
These revisions were effective on October 1, 2007.
For FY 2009, section 7(a) of Public Law 110-90 required a
documentation and coding adjustment of -0.9 percent instead of the -1.8
percent adjustment established in the FY 2008 IPPS final rule with
comment period. As discussed in the FY 2009 IPPS final rule (73 FR
48447) and required by statute, we applied a documentation and coding
adjustment of -0.9 percent to the FY 2009 IPPS national standardized
amount. The documentation and coding adjustments established in the FY
2008 IPPS final rule with comment period, as amended by Public Law 110-
90, are cumulative. As a result, the -0.9 percent documentation and
coding adjustment for FY 2009 was in addition to the -0.6 percent
adjustment for FY 2008, yielding a combined effect of -1.5 percent.
2. Prospective Adjustment to the Average Standardized Amounts Required
by Section 7(b)(1)(A) of Public Law 110-90
Section 7(b)(1)(A) of Public Law 110-90 requires that, if the
Secretary determines that implementation of the
[[Page 23866]]
MS-DRG system resulted in changes in documentation and coding that did
not reflect real changes in case-mix for discharges occurring during FY
2008 or FY 2009 that are different than the prospective documentation
and coding adjustments applied under section 7(a) of Public Law 110-90,
the Secretary shall make an appropriate adjustment under section
1886(d)(3)(A)(vi) of the Act. Section 1886(d)(3)(A)(vi) of the Act
authorizes adjustments to the average standardized amounts for
subsequent fiscal years in order to eliminate the effect of such coding
or classification changes. These adjustments are intended to ensure
that future annual aggregate IPPS payments are the same as the payments
that otherwise would have been made had the prospective adjustments for
documentation and coding applied in FY 2008 and FY 2009 reflected the
change that occurred in those years.
3. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Public Law 110-90
If, based on a retroactive evaluation of claims data, the Secretary
determines that implementation of the MS-DRG system resulted in changes
in documentation and coding that did not reflect real changes in case-
mix for discharges occurring during FY 2008 or FY 2009 that are
different from the prospective documentation and coding adjustments
applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of
Public Law 110-90 requires the Secretary to make an additional
adjustment to the standardized amounts under section 1886(d) of the
Act. This adjustment must offset the estimated increase or decrease in
aggregate payments for FYs 2008 and 2009 (including interest) resulting
from the difference between the estimated actual documentation and
coding effect and the documentation and coding adjustment applied under
section 7(a) of Public Law 110-90. This adjustment is in addition to
making an appropriate adjustment to the standardized amounts under
section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A)
of Public Law 110-90. That is, these adjustments are intended to recoup
(or repay) spending in excess of (or less than) spending that would
have occurred had the prospective adjustments for changes in
documentation and coding applied in FY 2008 and FY 2009 precisely
matched the changes that occurred in those years. Public Law 110-90
requires that the Secretary make these recoupment or repayment
adjustments for discharges occurring during FYs 2010, 2011, and 2012.
4. Retrospective Evaluation of FY 2008 Claims Data
In order to implement the requirements of section 7 of Public Law
110-90, we indicated in the FY 2009 IPPS final rule (73 FR 48450) that
we planned a thorough retrospective evaluation of our claims data. We
stated that the results of this evaluation would be used by our
actuaries to determine any necessary payment adjustments to the
standardized amounts under section 1886(d) of the Act to ensure the
budget neutrality of the MS-DRGs implementation for FY 2008 and FY
2009, as required by law. In the FY 2009 IPPS proposed rule (73 FR
23541 through 23542), we described our preliminary plan for a
retrospective analysis of inpatient hospital claims data and invited
public input on our proposed methodology.
In that proposed rule, we indicated that we intended to measure and
corroborate the extent of the overall national average changes in case-
mix for FY 2008 and FY 2009. We expected that the two largest parts of
this overall national average change would be attributable to
underlying changes in actual patient severity of illness and to
documentation and coding improvements under the MS-DRG system. In order
to separate the two effects, we planned to isolate the effect of shifts
in cases among base DRGs from the effect of shifts in the types of
cases within-base DRGs.
The MS-DRGs divide the base DRGs into three severity levels (with
MCC, with CC and without CC); the previously used CMS DRGs had only two
severity levels (with CC and without CC). Under the CMS DRG system, the
majority of hospital discharges had a secondary diagnosis which was on
the CC list, which led to the higher severity level. The MS-DRGs
significantly changed the code lists of what was classified as an MCC
or a CC. Many codes that were previously classified as a CC are no
longer included on the MS-DRG CC list because the data and clinical
review showed these conditions did not lead to a significant increase
in resource use. The addition of a new level of high severity
conditions, the MCC list, also provided a new incentive to code more
precisely in order to increase the severity level. We anticipated that
hospitals would examine the MS-DRG MCC and CC code lists and then work
with physicians and coders on documentation and coding practices so
that coders could appropriately assign codes from the highest possible
severity level. We note that there have been numerous seminars and
training sessions on this particular coding issue. The topic of
improving documentation practices in order to code conditions on the
MCC list was also discussed extensively by participants at the March
11-12, 2009 ICD-9-CM Coordination and Maintenance Committee meeting.
Participants discussed their hospitals' efforts to encourage physicians
to provide more precise documentation so that coders could
appropriately assign codes that would lead to a higher severity level.
Because we expected most of the documentation and coding changes under
the MS-DRG system would occur in the secondary diagnoses, we believed
that the shifts among base DRGs were less likely to be the result of
the MS-DRG system and the shifts within-base DRGs were more likely to
be the result of the MS-DRG system. We also anticipated evaluating data
to identify the specific MS-DRGs and diagnoses that contributed
significantly to the documentation and coding payment effect and to
quantify their impact. This step entailed analysis of the secondary
diagnoses driving the shifts in severity within specific base DRGs.
In that same proposed rule, we also stated that, while we believed
that the data analysis plan described previously would produce an
appropriate estimate of the extent of case-mix changes resulting from
documentation and coding changes, we might decide, if feasible, to use
historical data from our Hospital Payment Monitoring Program (HPMP) to
corroborate the within-base DRG shift analysis. The HPMP is supported
by the Medicare Clinical Data Abstraction Center (CDAC).
In the FY 2009 IPPS proposed rule, we solicited public comments on
the analysis plans described above, as well as suggestions on other
possible approaches for performing a retrospective analysis to identify
the amount of case-mix changes that occurred in FY 2008 and FY 2009
that did not reflect real increases in patients' severity of illness.
A few commenters, including MedPAC, expressed support for the
analytic approach described in the FY 2009 IPPS proposed rule. A number
of other commenters expressed concerns about certain aspects of the
approach and/or suggested alternate analyses or study designs. In
addition, one commenter recommended that any determination or
retrospective evaluation by the actuaries of the impact of the MS-DRGs
on case-mix be open to public scrutiny prior to the
[[Page 23867]]
implementation of the payment adjustments beginning in FY 2010.
We took these comments into consideration as we developed our
proposed analysis plan and in the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule (74 FR 24092 through 24101) solicited public comment on
our methodology and analysis. For the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule, we performed a retrospective evaluation of the FY 2008
data for claims paid through December 2008. Based on this evaluation,
our actuaries determined that implementation of the MS-DRG system
resulted in a 2.5 percent change due to documentation and coding that
did not reflect real changes in case-mix for discharges occurring
during FY 2008
In the analysis of data for that proposed rule, we found that the
within-base DRG increases were almost entirely responsible for the
case-mix change, supporting our conclusion that the 2.5 percent
estimate was an accurate reflection of the FY 2008 effect of changes in
documentation and coding under the MS-DRG system. In fact, almost every
base DRG that was split into different severity levels under the MS-DRG
system experienced increases in the within-base DRGs. We then further
analyzed the changes in the within-base DRGs to determine which MS-DRGs
had the highest contributions to this increase. The results of the
analysis for the proposed rule provided additional support for our
conclusion that the proposed 2.5 percent estimate accurately reflected
the FY 2008 increases in documentation and coding under the MS-DRG
system. While we attempted to use the CDAC data to distinguish real
increase in case-mix growth from documentation and coding in the
overall case-mix number, we found aberrant data and significant
variation across the FY 1999 through FY 2007 analysis period. It was
not possible to distinguish changes in documentation and coding from
changes in real case-mix in the CDAC data. Therefore, we concluded that
the CDAC data would not support analysis of real case-mix growth that
could be used in our retrospective evaluation of the FY 2008 claims
data.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43768
through 43772), we responded to comments on our methodology for the
retrospective evaluation of FY 2008 claims data. Commenters raised
concerns that CMS' estimate in the proposed rule did not fully consider
other potential causes of increased case-mix, such as patients
requiring less complex services receiving care in other settings and
``healthier'' patients enrolling in Medicare Advantage plans in
increasing numbers. Other commenters indicated that factors such as the
changes in the CC/MCC definitions, limitations on the number of codes
used by CMS for payment and ratesetting, resequencing of secondary
diagnoses, the transition to the cost-based weights, less use of ``not
otherwise specified'' codes, and increases in real case-mix due to
health reform efforts also resulted in an inaccurate documentation and
coding analysis. One commenter indicated that, of the overall case-mix
increase, 1.0 percent to 1.5 percent is ``real'' case-mix increase,
while 1.0 percent to 1.5 percent is due to documentation and coding or
other increases.
In considering these comments concerning historical real case-mix,
in the FY 2010 final rule, we calculated overall increases in case-mix
for the period from FY 2000 to FY 2007 using the cases from each year
and the GROUPER and relative weights applicable for each year. The
results are shown in the following chart:
Overall Case-Mix Increases for FY 2000 to FY 2007
------------------------------------------------------------------------
Overall case-mix
Year change from prior
year (in percent)
------------------------------------------------------------------------
FY 2000............................................. -0.7
FY 2001............................................. -0.4
FY 2002............................................. 1.0
FY 2003............................................. 1.4
FY 2004............................................. 1.0
FY 2005............................................. 0.9
FY 2006............................................. 1.2
FY 2007............................................. -0.2
------------------------------------------------------------------------
Overall case-mix growth is predominately comprised of three
factors: Real case-mix growth; a documentation and coding effect; and a
measurement effect. Under the reasonable assumption that there has been
a relatively small measurement effect in those years, the assertion
that there is a historical pattern of steady annual increases of 1.2 to
1.3 percent in real case-mix implies that the documentation and coding
effect in many of those years was negative. For example, as discussed
in that rule (74 FR 43769), we estimated a recent measurement effect of
+0.3 percent. The overall case-mix growth of -0.2 percent in FY 2007
net of a measurement effect of +0.3 percent results in growth of +0.1
percent. A real case-mix growth of +1.2 percent in FY 2007, therefore,
implies a negative documentation and coding effect of approximately -
1.1 percent. It is not obvious why documentation and coding would have
had such a large negative effect in FY 2007, or in any other year where
the overall case-mix change is significantly less than the commenter's
claimed average annual trend, calling into question the assertion that
real case-mix growth is a steady 1.2 to 1.3 percent per year.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43770
through 43771), we indicated that our estimate of the overall case-mix
growth for FY 2008 based on more recent data than the data used in the
FY 2010 proposed rule was 2.0 percent, still less than our actuaries'
estimate of a 2.5 percent documentation and coding increase. With
respect to the concerns raised by commenters about our finding of
negative real case-mix growth in FY 2008, a finding of negative real
case-mix growth is consistent with the fact that, in some years,
overall case-mix growth has been negative, as shown in the chart
presented above in this response.
5. Retrospective Analysis of FY 2009 Claims Data
We performed the same analysis for FY 2009 claims data using the
same methodology as we did for FY 2008 claims in the FY 2010 final
rule. We first divided the case-mix index (CMI) obtained by grouping
the FY 2009 claims data through the FY 2009 GROUPER (Version 26.0) by
the CMI obtained by grouping these same FY 2009 claims through the FY
2007 GROUPER (Version 24.0). This resulted in a value of 1.056. Because
these cases are the same FY 2009 cases grouped using the Versions 24.0
and 26.0 of the GROUPER, we attribute this increase primarily to two
factors: (1) The effect of changes in documentation and coding under
the MS-DRG system; and (2) the measurement effect from the calibration
of the GROUPER. We estimated the measurement effect from the
calibration of the GROUPER by dividing the CMI obtained by grouping
cases in the FY 2007 claims data through the FY 2009 GROUPER by the CMI
obtained by grouping cases in these same claims through the FY 2007
GROUPER. This resulted in a value of 1.0019. In order to isolate the
documentation and coding effect, we then divided the combined effect of
the changes in documentation and coding and measurement (1.056) by the
measurement effect (1.0019) to yield 1.054. Therefore, our estimate of
the documentation and coding increase that did not reflect real changes
in case-mix for discharges was 5.4 percent.
We then sought to corroborate this 5.4 percent estimate by
examining the increases in the within-base DRGs as compared to the
increases in the across
[[Page 23868]]
base DRGs as described earlier in our analysis plan. In other words, we
looked for improvements in code selection that would lead to a
secondary diagnosis increasing the severity level to either a CC or an
MCC level. We found that the within-base DRG increases were almost
entirely responsible for the case mix change, supporting our conclusion
that the 5.4 percent estimate was an accurate reflection of the FY 2009
effect of changes in documentation and coding under the MS-DRG system.
We then further analyzed the changes in the within-base DRGs to
determine which MS-DRGs had the highest contributions to this increase.
The results of the analysis for the proposed rule provided additional
support for our conclusion that the proposed 5.4 percent estimate
accurately reflected the FY 2009 increases in documentation and coding
under the MS-DRG system.
[GRAPHIC] [TIFF OMITTED] TP04MY10.000
As reflected in the above chart, for short-term acute care
hospitals, SCHs, and MDHs, there is an 8 percentage point increase in
the discharge severity with MCCs from 20 percent to 28 percent, and a
corresponding decrease of 8 percentage points in discharge severity
without CC/MCC from 57 percent to 49 percent.
Consistent with the expectations of our medical coding experts
concerning areas with potential for documentation and coding
improvements, the top contributors were heart failure, chronic
obstructive pulmonary disease, and simple pneumonia and pleurisy. Heart
failure is a very common secondary diagnosis among Medicare hospital
admissions. The heart failure codes are assigned to all three severity
levels. Some codes are classified as non-CCs, while other codes are on
the CC and MCC lists. By changing physician documentation to more
precisely identify the type of heart failure, coders are able to
appropriately change the severity level of cases from the lowest level
(non-CC) to a higher severity level (CC or MCC). This point was
stressed repeatedly at the March 11-12, 2009 ICD-9-CM Coordination and
Maintenance Committee meeting as coders discussed their work with
physicians on this coding issue. Many of the participants indicated
that additional work was still needed with their physicians in order to
document conditions in the medical record more precisely.
The results of the analysis for the proposed rule provided
additional support for our conclusion that the proposed 5.4 percent
estimate accurately reflected the FY 2009 increases in documentation
and coding under the MS-DRG system.
As in prior years, the FY 2008 and FY 2009 MedPAR files are
available to the public to allow independent analysis of the FY 2008
and FY 2009 documentation and coding effect. Interested individuals may
still order these files through the Web site at: http://www.cms.hhs.gov/LimitedDataSets/ by clicking on MedPAR Limited Data Set
(LDS)-Hospital (National). This Web page describes the file and
provides directions and further detailed instructions for how to order.
Persons placing an order must send the following: a Letter of
Request, the LDS Data Use Agreement and Research Protocol (refer to the
Web site for further instructions), the LDS Form, and a check for
$3,655 to:
Mailing address if using the U.S. Postal Service: Centers for
Medicare & Medicaid Services, RDDC Account, Accounting Division, P.O.
Box 7520, Baltimore, MD 21207-0520.
Mailing address if using express mail: Centers for Medicare &
Medicaid Services, OFM/Division of Accounting--RDDC, 7500 Security
Boulevard, C3-07-11, Baltimore, MD 21244-1850.
6. Prospective Adjustment for FY 2010 and Subsequent Years Authorized
by Section 7(b)(1)(A) of Public Law 110-90 and Section 1886(d)(3)(vi)
of the Act
Based on our evaluation of FY 2008 Medicare claims data that were
most current at the time of the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule, the estimated 2.5 percent change in FY 2008 case-mix due to
changes in documentation and coding that did not reflect real changes
in case-mix for discharges occurring during FY 2008 exceeded the -0.6
percent prospective documentation and coding adjustment applied under
section 7(a) of Public Law 110-90 by 1.9 percentage points. Under
section 7(b)(1)(A) of Public Law 119-90,
[[Page 23869]]
the Secretary is required to make an appropriate adjustment under
section 1886(d)(3)(A)(vi) of the Act to the average standardized
amounts for subsequent fiscal years in order to eliminate the full
effect of the documentation and coding changes on future payments. As
we have consistently stated since the initial implementation of the MS-
DRG system, we do not believe it is appropriate for expenditures to
increase due to MS-DRG-related changes in documentation and coding that
do not reflect real changes in case-mix.
We also estimated in the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule that the additional change in case-mix due to changes in
documentation and coding that do not reflect real changes in case-mix
for discharges occurring during FY 2009 was 2.3 percent, which would
exceed by 1.4 percentage points the -0.9 percent prospective
documentation and coding adjustment for FY 2009 applied under section
7(a) of Public Law 100-90. We had the statutory authority to adjust the
FY 2010 rates for this estimated 1.4 percentage point increase.
However, given that Public Law 100-90 requires a retrospective claims
evaluation for the additional adjustments (as described in section
II.D.3. of this preamble), we stated in the FY 2010 IPPS/RY 2010 LTCH
PPS proposed rule and final rule (74 FR 24096 and 43772, respectively)
that we believed our evaluation of the extent of the overall national
average changes in case-mix for FY 2009 should also be based on a
retrospective evaluation of all FY 2009 claims data. Because we did not
receive all FY 2009 claims data prior to publication of the FY 2010
final rule, we indicated we would address any difference between the
additional increase in FY 2009 case-mix due to changes in documentation
and coding that did not reflect real changes in case-mix for discharges
occurring during FY 2009 and the -0.9 percent prospective documentation
and coding adjustment applied under section 7(a) of Public Law 110-90
in the FY 2011 rulemaking cycle.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24096),
we solicited public comment on the proposed -1.9 percent prospective
adjustment to the standardized amounts under section 1886(d) of the Act
to address the effects of documentation and coding changes unrelated to
changes in real case-mix in FY 2008. In addition, we solicited public
comments on addressing in the FY 2011 rulemaking cycle any differences
between the increase in FY 2009 case-mix due to changes in
documentation and coding changes that do not reflect real changes in
case-mix for discharges occurring during FY 2009 and the -0.9 percent
prospective documentation and coding adjustment applied under section
7(a) of Public Law 110-90. In response to the proposed rule, MedPAC
summarized its comments on when CMS should reduce payment rates to
prevent further overpayments and to recover overpayments occurring in
2008 and 2009 as follows: ``We support CMS's proposal to reduce IPPS
payments in 2010 by 1.9 percent to prevent further overpayments. While
we and the CMS actuaries believe that a 1.9 percent reduction will not
fully prevent overpayments from continuing in 2010, this is a
reasonable first step toward reducing overpayments.'' Most of the other
commenters opposed the proposed -1.9 percent prospective FY 2010
adjustment for FY 2008 documentation and coding increases, but
supported the proposal not to apply a FY 2010 prospective adjustment
for estimated FY 2009 documentation and coding increases. Many
commenters expressed concern over the financial impact of the proposed
-1.9 percent adjustment and the methodology for calculating the
adjustment. Other commenters recommended that CMS seek to extend the
timeframe beyond 2 years to phase in the estimated -6.6 percent
adjustment to the standardized amount.
In the final FY 2010 IPPS/RY 2010 LTCH PPS rule in response to
these commenters, we indicated that we fully understood that our
proposed adjustment of -1.9 percent would reduce the increase in
payments that affected hospitals would have received in FY 2009 in the
absence of the adjustment. We explained that, although we are required
to make an prospective adjustment to eliminate the full effect of
coding or classification changes that did not reflect real changes in
case-mix for discharges occurring during FY 2008, we believed we had
some discretion regarding when to implement this adjustment. Section
7(b)(1)(A) of Public Law 110-90 requires that if the Secretary
determines that implementation of the MS-DRG system resulted in changes
in documentation and coding that did not reflect real changes in case-
mix for discharges occurring during FY 2008 or FY 2009 that are
different than the prospective documentation and coding adjustments
applied under section 7(a) of Public Law 110-90, the Secretary shall
make an ``appropriate'' adjustment under section 1886(d)(3)(A)(vi) of
the Act.
Thus, we determined that it would be appropriate to postpone
adopting documentation and coding adjustments as authorized under
section 7(a) of Public Law 110-90 and section 1886(d)(3)(A)(vi) of the
Act until a full analysis of case-mix changes could be completed. We
indicated that while we had the statutory authority to make this -1.9
percent prospective adjustment entirely in FY 2010, we believed it
would be prudent to wait until we had completed data on the magnitude
of the documentation and coding effect in FY 2009. Specifically, we
stated that if the documentation and coding effect were to be less in
FY 2009 than our then-current estimates, it could lessen the
anticipated adjustment that we had estimated we would have had to make
for FY 2008 and FY 2009 combined. We indicated that, in future
rulemaking, we would consider applying a prospective adjustment based
upon a complete analysis of FY 2008 and FY 2009 claims data, beginning
in FY 2011. We indicated that we intended to address any difference
between the increase in FY 2009 case-mix due to changes in
documentation and coding that did not reflect real changes in case-mix
for discharges occurring during FY 2009 and the -0.9 percent
prospective documentation and coding adjustment applied under section
7(a) of Public Law 110-90 in the FY 2011 rulemaking cycle.
After analysis of the FY 2009 claims data, we have found a total
prospective documentation and coding effect of 1.054. After accounting
for the -0.6 percent and the -0.9 percent documentation and coding
adjustments in FYs 2008 and 2009, we find a remaining documentation and
coding effect of 3.9 percent. As we have discussed, an additional
cumulative adjustment of -3.9 percent would be necessary to meet the
requirements of section 7(b)(1)(A) of Public Law 110-90 to make an
adjustment to the average standardized amounts in order to eliminate
the full effect of the documentation and coding changes on future
payments. Unlike section 7(b)(1)(B) of Public Law 110-90, section
7(b)(1)(A) does not specify when we must apply the prospective
adjustment, but merely requires us to make an ``appropriate''
adjustment. Therefore, we believe we have some discretion as to the
manner in which we apply the prospective adjustment of -3.9 percent.
Applying the full prospective adjustment of -3.9 percent for FY 2011,
in combination with the proposed recoupment adjustment of -2.9 percent,
discussed below, would require an aggregate adjustment of -6.8 percent.
As we discuss more fully
[[Page 23870]]
below, it has been our practice to moderate payment adjustments when
necessary to mitigate the effects of significant downward adjustments
on hospitals, to avoid what could be widespread, disruptive effects of
such adjustments on hospitals. As we also discuss below, we are
required to implement the adjustment in section 7(b)(1)(B) of Public
Law 110-90 no later than FY 2012, and accordingly, we are proposing an
adjustment under that section for FY 2011. Therefore, we believe it is
appropriate to not implement any or all of the -3.9 percent prospective
adjustment in FY 2011. Accordingly, we are not proposing a prospective
adjustment under section 7(b)(1)(A) of Public Law 110-90 for FY 2011.
We note that, as a result, payments in FY 2011 (and in each future year
until we implement the requisite adjustment) will be 3.9 percent higher
than they would have been if we had implemented an adjustment under
section 7(b)(1)(A) of Public Law 110-90.
We are seeking public comment on our proposal not to apply in FY
2011 the -3.9 percent prospective adjustment to the average
standardized amounts required under section 7(b)(1)(A) of Public Law
110-90 in order to eliminate the full effect of the documentation and
coding changes on future payments. We note that this proposal would
require us to apply the -3.9 percent adjustment in future payment
years, which may be applied all at once in a single year or phased in
over more than one year. We intend to update our analysis with FY 2009
data on claims paid through March 2009 for the FY 2011 IPPS/LTCH PPS
final rule.
7. Recoupment or Repayment Adjustment for FY 2010 Authorized by Section
7(b)(1)(B) of Public Law 110-90
As indicated in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43773), we estimated a 2.5 percent change (estimated from analysis of
more recent data for the FY 2010 final rule than the data used for that
proposed rule) due to documentation and coding that did not reflect
real changes in case-mix for discharges occurring during FY 2008,
exceeding the -0.6 percent prospective documentation and coding
adjustment applied under section 7(a) of Public Law 110-90 by 1.9
percentage points. We stated that our actuaries had estimated that this
1.9 percentage point increase resulted in an increase in aggregate
payments of approximately $2.2 billion. As described earlier, section
7(b)(1)(B) of Public Law 110-90 requires an adjustment for discharges
occurring in FYs 2010, 2011, and/or 2012 to offset the estimated amount
of this increase in aggregate payments (including interest). Although
section 7(b)(1)(B) of Public Law 110-90 requires us to make this
adjustment in FYs 2010, 2011, and/or 2012, we have discretion as to
when during this 3 year period we will apply the adjustment.
We did not propose to make an adjustment to the FY 2010 average
standardized amounts to offset, in whole or in part, the estimated
increase in aggregate payments for discharges occurring in FY 2008, but
stated in the proposed rule that we intended to address this issue in
future rulemaking. That is, we stated that we would address recouping
the additional expenditures that occurred in FY 2008 as a result of the
1.9 percentage point difference between the actual changes in
documentation and coding that do not reflect real changes in case-mix
(2.5 percent), and the -0.6 percent adjustment applied under Public Law
110-90 in FY 2011 and/or FY 2012, as required by law. We indicated
that, while we had the statutory authority to make this -1.9 percent
recoupment adjustment entirely in FY 2010, we were delaying the
adjustment until FY 2011 and FY 2012 because we did not yet have any
data on the magnitude of the documentation and coding effect in FY
2009. We stated that as we have the authority to recoup the aggregate
effect of this 1.9 percentage point difference in FY 2008 IPPS payments
in FY 2011 or FY 2012 (with interest), delaying this adjustment would
have no effect on Federal budget outlays. We indicated that we intended
to wait until we have a complete year of data on the FY 2009
documentation and coding effect before applying a recoupment adjustment
for IPPS spending that occurred in FY 2008 or we estimate will occur in
FY 2009.
As discussed above, section 7(b)(1)(B) of Public Law 110-90
requires the Secretary to make an adjustment to the standardized
amounts under section 1886(d) of the Act to offset the estimated
increase or decrease in aggregate payments for FY 2009 (including
interest) resulting from the difference between the estimated actual
documentation and coding effect and the documentation and coding
adjustments applied under section 7(a) of Public Law 110-90. This
determination must be based on a retrospective evaluation of claims
data. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43774), we
stated that because we would not receive all FY 2009 claims data prior
to publication of the final rule, we would address any increase or
decrease in FY 2009 payments in future rulemaking for FY 2011 and 2012
after we perform a retrospective evaluation of the FY 2009 claims data.
At that time, our actuaries estimated that this adjustment would be
approximately -3.3 percent. This reflected the difference between the
estimated 4.8 percent cumulative actual documentation and coding
changes for FY 2009 (2.5 percent for FY 2008 and an additional 2.3
percent for FY 2009) and the cumulative -1.5 percent documentation and
coding adjustments applied under section 7(a) of Public Law 110-90 (-
0.6 percent in FY 2008 and -0.9 percent in FY 2009). We noted that the
actual adjustments were multiplicative and not additive. This estimated
4.8 percent cumulative actual documentation and coding changes for FY
2009 included the impact of the changes in documentation and coding
first occurring in FY 2008 because we believed hospitals would continue
these changes in documentation and coding in subsequent fiscal years.
Consequently, we believed that these documentation and coding changes
would continue to impact payments under the IPPS absent a prospective
adjustment to account for the effect of these changes.
We note that, unlike the adjustment to the standardized amounts
under section 7(b)(1)(A) of Public Law 110-90 described earlier, any
adjustment to the standardized amounts under section 7(b)(1)(B) of
Public Law 110-90 would not be cumulative, but would be removed for
subsequent fiscal years once we have offset the increase in aggregate
payments for discharges for FY 2008 expenditures and FY 2009
expenditures, if any.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24096),
we did not propose to offset the 1.9 percent increase in aggregate
payments (including interest) for discharges occurring in FY 2008
resulting from the adoption of the MS-DRGs, but to instead address this
issue in future rulemaking for FYs 2011 and 2012.
In response to the FY 2010 proposed rule, MedPAC stated in its
comments on the adjustment to the standardized amounts under section
7(b)(1)(B) of Public Law 110-90: ``In addition, it would be desirable
for CMS to minimize year-to-year changes in payment adjustments it must
make to recover overpayments that were made in 2008 and 2009. To
achieve this goal, CMS should consider spreading the recovery of 2008
overpayments over 3 years, beginning in 2010.'' Some commenters
recommended that CMS seek to extend the timeframe beyond 2 years to
phase in the estimated -6.6 percent adjustment to the standardized
amount. The commenters asked CMS to seek
[[Page 23871]]
necessary legislative action to accommodate such a policy. Most
commenters expressed concern with the significant negative financial
impacts that would be incurred by providers if CMS adopted that
proposed -1.9 percent documentation and coding adjustment in FY 2010.
The commenters cited providers' already small or negative margins for
Medicare payments, and requested that CMS not further reduce payments
during the current period of economic instability and reduced State
funding. Other commenters indicated that it would be appropriate to
delay any adjustment to the standardized amounts under section
7(b)(1)(B) of Public Law 110-90 until after CMS has the opportunity to
fully examine the FY 2009 claims data.
In response to these comments in FY 2010, we indicated that we
recognized that any adjustment to account for the documentation and
coding effect observed in the FY 2008 and FY 2009 claims data may
result in significant future payment reductions for providers. However,
we indicated that we are required under section 7(b)(1)(B) of Public
Law 110-90 to recapture the difference of actual documentation and
coding effect in FY 2008 and FY 2009 that is greater than the prior
adjustments. We agreed with the commenters who requested that CMS delay
any adjustment and, for the reasons stated above, indicated that we
expect to address this issue in this FY 2011 rulemaking.
As indicated in section II.D.4. of this preamble, the change due to
documentation and coding that did not reflect real changes in case mix
for discharges occurring during FY 2008 and FY 2009 exceeded the -0.6
and -0.9 percent prospective documentation and coding adjustment
applied under section 7(a) of Public Law 110-90 for those 2 years
respectively by 1.9 percentage points in FY 2008 and 3.9 percentage
points in FY 2009. In total, this change exceeded the cumulative
prospective adjustments by 5.8 percentage points. Our actuaries
currently estimate that this 5.8 percentage point increase resulted in
an increase in aggregate payments of approximately $6.9 billion. We
note that there may be a need to actuarially adjust the recoupment
adjustment to accurately reflect accumulated interest. Therefore, an
aggregate adjustment of -5.8 percent in FYs 2011 and 2012, subject to
actuarial adjustment to reflect accumulated interest, is necessary in
order to meet the requirements of section 7(b)(1)(B) of Public Law 110-
90 to adjust the standardized amounts for discharges occurring in FYs
2010, 2011, and/or 2012 to offset the estimated amount of the increase
in aggregate payments (including interest) in FYs 2008 and 2009. We
intend to take into account the need to reflect accumulated interest in
proposing a recoupment adjustment under section (b)(1)(B) of Public Law
110-90 for FY 2012. We will invite comments on our proposal at that
time.
It is often our practice to phase in rate adjustments over more
than one year in order to moderate the effect on rates in any one year.
Therefore, consistent with the policies we have adopted in many similar
cases, we are proposing to make an adjustment to the standardized
amount of -2.9 percent, representing approximately half of the
aggregate adjustment required under section 7(b)(1)(B) of Public Law
110-90, for FY 2011. An adjustment of this magnitude allows us to
moderate the effects on hospitals in one year while simultaneously
making it possible to implement the entire adjustment within the
timeframe required under section 7(b)(1)(B) of Public Law 110-90. As we
have previously noted, unlike the prospective adjustment to the
standardized amounts under section 7(b)(1)(A) of Public Law 110-90
described earlier, the recoupment or repayment adjustment to the
standardized amounts under section 7(b)(1)(B) of Public Law 110-90 is
not cumulative, but would be removed for subsequent fiscal years once
we have offset the increase in aggregate payments for discharges for FY
2008 expenditures and FY 2009 expenditures. In keeping with our
practice of moderating payment adjustments wherever possible, we can
anticipate that this proposal will have an additional, and significant,
moderating effect on implementing the requirements of section
7(b)(1)(B) of Public Law 110-90 for FY 2012. Specifically, an advantage
of our proposal for FY 2011 is that we anticipate removing this
proposed FY 2011 -2.9 percent adjustment from the rates in FY 2012,
when it would also be necessary under current law to apply the
remaining approximately -2.9 percent adjustment required by section
7(b)(1)(B) of Public Law 110-90. These two steps in FY 2012, restoring
the FY 2011 -2.9 percent adjustment, and applying the remaining
adjustment of approximately -2.9 percent, would effectively cancel each
other out. The result would be an aggregate adjustment of approximately
0.0 percent (subject to the need to account for accumulated interest,
as discussed above) under section 7(b)(1)(B) of Public Law 110-90 in FY
2012. However, while we are noting this anticipated effect of our FY
2011 proposal, we are not making a formal proposal for the further
implementation of section 7(b)(1)(B) of Public Law 110-90 in FY 2012 in
this proposed rule.
We are seeking public comment on our proposal to offset part of the
total 5.8 percent increase in aggregate payments (including interest)
for discharges occurring in FY 2008 and FY 2009 resulting from the
adoption of the MS-DRGs in FY 2011, noting that this proposal would
result in a -2.9 percent adjustment to the standardized amount. We
intend to update our analysis with FY 2009 data on claims paid through
March 2009 for the FY 2011 IPPS/LTCH PPS final rule.
FY 2011 MS-DRG Documentation and Coding Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Required Required Proposed
prospective recoupment recoupment Remaining
adjustment for adjustment for Total adjustment adjustment for FY adjustment
FYs 2008-2009 FYs 2008-2009 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2011 Proposal Amount of Adjustment.................... -3.9 -5.8 -9.7 -2.9 -6.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
8. Background on the Application of the Documentation and Coding
Adjustment to the Hospital-Specific Rates
Under section 1886(d)(5)(D)(i) of the Act, SCHs are paid based on
whichever of the following rates yields the greatest aggregate payment:
the Federal rate; the updated hospital-specific rate based on FY 1982
costs per discharge; the updated hospital-specific rate based on FY
1987 costs per discharge; the updated hospital-specific rate based on
FY 1996 costs per discharge; or the updated hospital-specific rate
based on FY 2006 costs per discharge. Under
[[Page 23872]]
section 1886(d)(5)(G) of the Act, MDHs are paid based on the Federal
national rate or, if higher, the Federal national rate plus 75 percent
of the difference between the Federal national rate and the updated
hospital-specific rate based on the greatest of the FY 1982, FY 1987,
or FY 2002 costs per discharge. In the FY 2008 IPPS final rule with
comment period (72 FR 47152 through 47188), we established a policy of
applying the documentation and coding adjustment to the hospital-
specific rates. In that final rule with comment period, we indicated
that because SCHs and MDHs use the same DRG system as all other
hospitals, we believe they should be equally subject to the budget
neutrality adjustment that we are applying for adoption of the MS-DRGs
to all other hospitals. In establishing this policy, we relied on
section 1886(d)(3)(A)(vi) of the Act, which provides us with the
authority to adjust ``the standardized amount'' to eliminate the effect
of changes in coding or classification that do not reflect real change
in case-mix.
However, in the final rule that appeared in the Federal Register on
November 27, 2007 (72 FR 66886), we rescinded the application of the
documentation and coding adjustment to the hospital-specific rates
retroactive to October 1, 2007. In that final rule, we indicated that,
while we still believe it would be appropriate to apply the
documentation and coding adjustment to the hospital-specific rates,
upon further review, we decided that the application of the
documentation and coding adjustment to the hospital-specific rates is
not consistent with the plain meaning of section 1886(d)(3)(A)(vi) of
the Act, which only mentions adjusting ``the standardized amount''
under section 1886(d) of the Act and does not mention adjusting the
hospital-specific rates.
In the FY 2009 IPPS proposed rule (73 FR 23540), we indicated that
we continued to have concerns about this issue. Because hospitals paid
based on the hospital-specific rate use the same MS-DRG system as other
hospitals, we believe they have the potential to realize increased
payments from documentation and coding changes that do not reflect real
increases in patients' severity of illness. In section
1886(d)(3)(A)(vi) of the Act, Congress stipulated that hospitals paid
based on the standardized amount should not receive additional payments
based on the effect of documentation and coding changes that do not
reflect real changes in case-mix. Similarly, we believe that hospitals
paid based on the hospital-specific rates should not have the potential
to realize increased payments due to documentation and coding changes
that do not reflect real increases in patients' severity of illness.
While we continue to believe that section 1886(d)(3)(A)(vi) of the Act
does not provide explicit authority for application of the
documentation and coding adjustment to the hospital-specific rates, we
believe that we have the authority to apply the documentation and
coding adjustment to the hospital-specific rates using our special
exceptions and adjustment authority under section 1886(d)(5)(I)(i) of
the Act. The special exceptions and adjustment provision authorizes us
to provide ``for such other exceptions and adjustments to [IPPS]
payment amounts * * * as the Secretary deems appropriate.'' In the FY
2009 IPPS final rule (73 FR 48448 through 48449), we indicated that,
for the FY 2010 rulemaking, we planned to examine our FY 2008 claims
data for hospitals paid based on the hospital-specific rate. We further
indicated that if we found evidence of significant increases in case-
mix for patients treated in these hospitals that do not reflect real
changes in case-mix, we would consider proposing application of the
documentation and coding adjustments to the FY 2010 hospital-specific
rates under our authority in section 1886(d)(5)(I)(i) of the Act.
In response to public comments received on the FY 2009 IPPS
proposed rule, we stated in the FY 2009 IPPS final rule that we would
consider whether such a proposal is warranted for FY 2010. To gather
information to evaluate these considerations, we indicated that we
planned to perform analyses on FY 2008 claims data to examine whether
there has been a significant increase in case-mix for hospitals paid
based on the hospital-specific rate. If we found that application of
the documentation and coding adjustment to the hospital-specific rates
for FY 2010 is warranted, we indicated that we would include a proposal
to do so in the FY 2010 IPPS proposed rule.
9. Proposed Documentation and Coding Adjustment to the Hospital-
Specific Rates for FY 2011 and Subsequent Fiscal Years
In the FY 2010 IPPS/RY 2010 LTCH proposed rule and final rule (74
FR 24098 through 24100 and 74 FR 43775 through 43776, respectively), we
discussed our performance of a retrospective evaluation of the FY 2008
claims data for SCHs and MDHs using the same methodology described
earlier for other IPPS hospitals. We found that, independently for both
SCHs and MDHs, the change due to documentation and coding that did not
reflect real changes in case-mix for discharges occurring during FY
2008 slightly exceeded the proposed 2.5 percent result discussed
earlier, but did not significantly differ from that result.9
Again, for the FY 2010 proposed rule, we found that the within-base
DRG increases were almost entirely responsible for the case-mix change.
In that proposed rule, we presented two Figures to display our results.
Therefore, consistent with our statements in prior IPPS rules, we
proposed to use our authority under section 1886(d)(5)(I)(i) of the Act
to prospectively adjust the hospital-specific rates by the proposed -
2.5 percent in FY 2010 to account for our estimated documentation and
coding effect in FY 2008 that does not reflect real changes in case-
mix. We proposed to leave this adjustment in place for subsequent
fiscal years in order to ensure that changes in documentation and
coding resulting from the adoption of the MS-DRGs do not lead to an
increase in aggregate payments for SCHs and MDHs not reflective of an
increase in real case-mix. The proposed -2.5 percent adjustment to the
hospital-specific rates exceeded the -1.9 percent adjustment to the
national standardized amount under section 7(b)(1)(A) of Public Law
110-90 because, unlike the national standardized rates, the FY 2008
hospital-specific rates were not previously reduced in order to account
for anticipated changes in documentation and coding that do not reflect
real changes in case-mix resulting from the adoption of the MS-DRGs.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24100),
we solicited public comment on the proposed -2.5 percent prospective
adjustment to the hospital-specific rates under section
1886(d)(5)(I)(i) of the Act and our proposal to address in the FY 2011
rulemaking cycle any changes in FY 2009 case-mix due to changes in
documentation and coding that do not reflect real changes in case-mix
for discharges occurring during FY 2009. We also indicated that we
intended to update our analysis with FY 2008 data on claims paid
through March 2008 [sic] for the FY 2010 IPPS final rule. (We note that
the March 2008 update claims paid data date in the proposed rule should
have been March 2009.)
Consistent with our approach for IPPS hospitals discussed earlier,
in the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we also delayed
adoption of a documentation and coding adjustment to the hospital-
specific rate until FY 2011. Similar to our approach for IPPS
[[Page 23873]]
hospitals, we indicated that we would consider, through future
rulemaking, phasing in the documentation and coding adjustment over an
appropriate period. We also indicated that we would address, through
future rulemaking, any changes in documentation and coding that do not
reflect real changes in case-mix for discharges occurring during FY
2009. We noted that, unlike the national standardized rates, the FY
2009 hospital-specific rates were not previously reduced in order to
account for anticipated changes in documentation and coding that do not
reflect real changes in case-mix resulting from the adoption of the MS-
DRGs. However, as we noted earlier with regard to IPPS hospitals, if
the estimated documentation and coding effect determined based on a
full analysis of FY 2009 claims data is more or less than our current
estimates, it would change, possibly lessen, the anticipated cumulative
adjustments that we currently estimate we would have to make for the FY
2008 and FY 2009 combined adjustment. Therefore, we believed that it
would be more prudent to delay implementation of the documentation and
coding adjustment to allow for a more complete analysis of FY 2009
claims data for hospitals receiving hospital-specific rates.
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Consistent with our analysis of IPPS hospitals, the two charts
above show that we found after analysis of FY 2009 discharge data that
the distribution of severity discharges for MDH and SCH both
proportionally shifted from the
[[Page 23874]]
without CC/MCC to with MCC category. Similarly, we found using a
methodology consistent with our analysis of IPPS hospitals that,
independently for both SCHs and MDHs, the change due to documentation
and coding that did not reflect real changes in case-mix for discharges
occurring during FY 2009 slightly exceeded the proposed 2.5 percent
result discussed earlier, but did not significantly differ from that
result.
As we have noted above, because SCHs and MDHs use the same MS-DRG
system as all other hospitals, we believe they have the potential to
realize increased payments from documentation and coding changes that
do not reflect real increases in patients' severity of illness.
Therefore, we believe they should be equally subject to a prospective
budget neutrality adjustment that we are applying for adoption of the
MS-DRGs to all other hospitals. We believe the documentation and coding
estimates for all subsection (d) hospitals should be the same. While
the findings for the documentation and coding effect for all IPPS
hospitals are similar to the effect for SCHs and slightly different to
the effect for MDHs, we continue to believe that this is the
appropriate policy so as to neither advantage or disadvantage different
types of providers. As we have also discussed above, our best estimate,
based on the most recently available data, is that a cumulative
adjustment of -5.4 percent is required to eliminate the full effect of
the documentation and coding changes on future payments. Unlike the
case of standardized amounts paid to IPPS hospitals, we have not made
any previous adjustments to the hospital-specific rates paid to SCHs
and MDHs to account for documentation and coding changes. Therefore,
the entire -5.4 percent adjustment remains to be implemented.
As discussed above, we are proposing to make an adjustment to the
standardized amount for IPPS hospitals of -2.9 percent under section
7(b)(1)(B) of Public Law 110-90, for FY 2011. As we also discussed
above, it has been our practice to moderate payment adjustments when
necessary to mitigate the effects of significant downward adjustments
on hospitals, to avoid what could be widespread, disruptive effects of
such adjustments on hospitals. Because payments for non-SCH and non-MDH
IPPS hospitals and SCHs and MDHs are determined on the basis of the
same MS-DRG system, SCHs and MDHs have the potential to realize
increased payments from documentation and coding changes that do not
reflect real increases in patients' severity of illness. Therefore, in
determining the level and pace of adjustments to account for such
documentation and coding changes, we believe that it is important to
maintain, as much as possible, both consistency and equity among these
classes of hospitals. In addition, as in the case of the documentation
and coding adjustment for non-SCH and non-MDH IPPS hospitals, we also
believe that it is important to provide as much as possible for
moderating the effects of adjustments on hospital payments. Therefore
we are proposing an adjustment of -2.9 percent in FY 2011 to the
hospital-specific rates paid to SCHs and MDHs. This proposal is
consistent with our proposed adjustment for IPPS hospitals in two ways.
First, as in the case of the IPPS adjustment, we are not proposing to
implement the entire adjustment that is warranted by our data (in this
case, 5.4 percent) in one year. Second, we are maintaining consistency
by proposing the same numerical level of adjustment for both groups of
hospitals in FY 2011. While this proposed adjustment to the hospital-
specific rates represents somewhat over half of the of the entire
adjustment that is appropriate for SCHs and MDHs, it allows us to
maintain complete consistency, at least for FY 2011, in the effects on
the relevant classes of hospitals. Although the proposed adjustment for
SCHs and MDHs is cumulative and prospective, as opposed to the
noncumulative recoupment adjustment we are proposing for other IPPS
hospitals, we believe that proposing equal numerical adjustments in
this first year is the most appropriate means to maintain such
consistency and equity at this time. We will continue, as much as
possible, consistent with sections 7(b)(1) of Public Law 110-90 and
section 1886(d)(5)(I)(i) of the Act, to take such consistency and
equity into account in developing future proposals for implementing
documentation and coding adjustments.
We are seeking public comment on the proposed -2.9 percent
prospective adjustment to hospital-specific rates under section
1886(d)(5)(I)(i) of the Act and addressing in future rule making cycles
changes in FY 2008 and FY 2009 case-mix due to changes in documentation
and coding that do not reflect real changes in case-mix for discharges
occurring during FY 2008 and FY 2009, noting that our current estimates
of the remaining adjustment is -2.5 percent. We intend to update our
analysis with FY 2009 data on claims paid through March 2009 for the FY
2011 IPPS/LTCH PPS final rule.
10. Background on the Application of the Documentation and Coding
Adjustment to the Puerto Rico-Specific Standardized Amount
Puerto Rico hospitals are paid based on 75 percent of the national
standardized amount and 25 percent of the Puerto Rico-specific
standardized amount. As noted previously, the documentation and coding
adjustment we adopted in the FY 2008 IPPS final rule with comment
period relied upon our authority under section 1886(d)(3)(A)(vi) of the
Act, which provides the Secretary the authority to adjust ``the
standardized amounts computed under this paragraph'' to eliminate the
effect of changes in coding or classification that do not reflect real
changes in case-mix. Section 1886(d)(3)(A)(vi) of the Act applies to
the national standardized amounts computed under section 1886(d)(3) of
the Act, but does not apply to the Puerto Rico-specific standardized
amount computed under section 1886(d)(9)(C) of the Act. In calculating
the FY 2008 payment rates, we made an inadvertent error and applied the
FY 2008 -0.6 percent documentation and coding adjustment to the Puerto
Rico-specific standardized amount, relying on our authority under
section 1886(d)(3)(A)(vi) of the Act. However, section
1886(d)(3)(A)(vi) of the Act authorizes application of a documentation
and coding adjustment to the national standardized amount and does not
apply to the Puerto Rico specific standardized amount. In the FY 2009
IPPS final rule (73 FR 48449), we corrected this inadvertent error by
removing the -0.6 percent documentation and coding adjustment from the
FY 2008 Puerto Rico-specific rates.
While section 1886(d)(3)(A)(vi) of the Act is not applicable to the
Puerto Rico-specific standardized amount, we believe that we have the
authority to apply the documentation and coding adjustment to the
Puerto Rico-specific standardized amount using our special exceptions
and adjustment authority under section 1886(d)(5)(I)(i) of the Act.
Similar to SCHs and MDHs that are paid based on the hospital-specific
rate, we believe that Puerto Rico hospitals that are paid based on the
Puerto Rico-specific standardized amount should not have the potential
to realize increased payments due to documentation and coding changes
that do not reflect real increases in patients' severity of illness.
Consistent with the approach described for SCHs and
[[Page 23875]]
MDHs, in the FY 2009 IPPS final rule (73 FR 48449), we indicated that
we planned to examine our FY 2008 claims data for hospitals in Puerto
Rico. We indicated in the FY 2009 IPPS proposed rule (73 FR 23541) that
if we found evidence of significant increases in case-mix for patients
treated in these hospitals, we would consider proposing application of
the documentation and coding adjustments to the FY 2010 Puerto Rico-
specific standardized amount under our authority in section
1886(d)(5)(I)(i) of the Act.
11. Proposed Documentation and Coding Adjustment to the Puerto Rico-
Specific Standardized Amount
For the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule, we performed a
retrospective evaluation of the FY 2008 claims data for Puerto Rico
hospitals using the same methodology described earlier for IPPS
hospitals paid under the national standardized amounts under section
1886(d) of the Act. We found that, for Puerto Rico hospitals, the
increase in payments for discharges occurring during FY 2008 due to
documentation and coding that did not reflect real changes in case-mix
for discharges occurring during FY 2008 was approximately 1.1 percent.
When we calculated the within-base DRG changes and the across-base DRG
changes for Puerto Rico hospitals, we found that responsibility for the
case-mix change between FY 2007 and FY 2008 is much more evenly shared.
Across-base DRG shifts accounted for 44 percent of the changes, and
within-base DRG shifts accounted for 56 percent. Thus, the change in
the percentage of discharges with an MCC was not as large as that for
other IPPS hospitals. In Figure 4 in the FY 2010 proposed rule, we
showed that, for Puerto Rico hospitals, there was a 3 percentage point
increase in the discharges with an MCC from 22 percent to 25 percent
and a corresponding decrease of 3 percentage points from 58 percent to
55 percent in discharges without a CC or an MCC.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24101),
we solicited public comment on the proposed -1.1 percent prospective
adjustment to the hospital-specific rates under section
1886(d)(5)(I)(i) of the Act and our intent to address in the FY 2011
rulemaking cycle any changes in FY 2009 case-mix due to changes in
documentation and coding that did not reflect real changes in case-mix
for discharges occurring during FY 2009. We also stated that we
intended to update our analysis with FY 2008 data on claims paid
through March 2009 for the FY 2010 IPPS final rule.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43777), we
indicated that, given these documentation and coding increases,
consistent with our statements in prior IPPS rules, we would use our
authority under section 1886(d)(5)(I)(i) of the Act to adjust the
Puerto Rico-specific rate. However, in parallel to our decision to
postpone adjustments to the Federal standardized amount, we indicated
that we were adopting a similar policy for the Puerto Rico-specific
rate for FY 2010 and would consider the phase-in of this adjustment
over an appropriate time period through future rulemaking. The
adjustment would be applied to the Puerto Rico-specific rate that
accounts for 25 percent of payments to Puerto Rico hospitals, with the
remaining 75 percent based on the national standardized amount.
Consequently, the overall reduction to the payment rates for Puerto
Rico hospitals to account for documentation and coding changes will be
slightly less than the reduction for IPPS hospitals paid based on 100
percent of the national standardized amount. We noted that, as with the
hospital-specific rates, the Puerto Rico-specific standardized amount
had not previously been reduced based on estimated changes in
documentation and coding associated with the adoption of the MS-DRGs.
However, as we note earlier for IPPS hospitals and hospitals receiving
hospital-specific rates, if the estimated documentation and coding
effect are determined based on a full analysis of FY 2009 claims data
is more or less than our current estimates, it would change, possibly
lessen, the anticipated cumulative adjustments that we currently
estimate we would have to make for the FY 2008 and FY 2009 combined
adjustment. Therefore, we believed that it would be more prudent to
delay implementation of the documentation and coding adjustment to
allow for a more complete analysis of FY 2009 claims data for Puerto
Rico hospitals.
Consistent with our approach for IPPS hospitals for FY 2010, we
indicated that we would address in the FY 2011 rulemaking cycle any
change in FY 2009 case-mix due to documentation and coding that did not
reflect real changes in case-mix for discharges occurring during FY
2009. We noted that, unlike the national standardized rates, the FY
2009 hospital-specific rates were not previously reduced in order to
account for anticipated changes in documentation and coding that do not
reflect real changes in case-mix resulting from the adoption of the MS-
DRGs.
As we have noted above, similar to SCHs and MDHs, hospitals in
Puerto Rico use the same MS-DRG system as all other hospitals and we
believe they have the potential to realize increased payments from
documentation and coding changes that do not reflect real increases in
patients' severity of illness. Therefore, we believe they should be
equally subject to the prospective budget neutrality adjustment that we
intend to apply to prospective payment rates for IPPS hospitals
including SCHs and MDHs in order to eliminate the full effect of the
documentation and coding changes associated with implementation of the
MS-DRG system.
[[Page 23876]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.002
In the above chart, consistent with our findings for IPPS
hospitals, for Puerto Rico hospitals, there is a 4 percentage point
increase in the discharge severity with MCCs from 22 percent to 26
percent, and a corresponding decrease of 4 percentage points in
discharge severity without CC/MCC from 58 percent to 54 percent.
Using the same methodology we applied to estimate documentation and
coding changes under IPPS for non-Puerto Rico hospitals, as we have
also discussed above, our best estimate, based on the most recently
available data, is that a cumulative adjustment of -2.4 percent is
required to eliminate the full effect of the documentation and coding
changes on future payments from the Puerto Rico-specific rate. Unlike
the case of standardized amounts paid to IPPS hospitals, we have not
made any previous adjustments to the hospital-specific rates paid to
Puerto Rico hospitals to account for documentation and coding changes.
Therefore, the entire -2.4 percent adjustment remains to be
implemented.
As we stated above, we believe it important to maintain both
consistency and equity among all hospitals paid on the basis of the
same MS-DRG system. At the same time, however, we recognize that the
estimated cumulative impact on aggregate payment rates resulting from
implementation of the MD-DRG system was smaller for Puerto Rico
hospitals as compared to IPPS hospitals and SCHs and MDHs. We therefore
are proposing an adjustment of -2.4 percent in FY 2011 to Puerto Rico-
specific rate that accounts for 25 percent of payments to Puerto Rico
hospitals, with the remaining 75 percent based on the national
standardized amount, which we are proposing to adjust as described
above. Consequently, the overall reduction to rates for Puerto Rico
hospitals to account for the documentation and coding changes will be
slightly less than the reduction for IPPS hospitals based on 100
percent of the national standardized amount. We note that this proposed
-2.4 percent prospective adjustment would eliminate the full effect of
the documentation and coding changes on the portion of future payments
to Puerto Rico hospitals based on the Puerto Rico-specific rate. We
believe that this proposed adjustment is the most appropriate means to
take into full account the effect of documentation and coding changes
on payments, and to maintain equity as much as possible between
hospitals paid on the basis of different prospective rates. One reason
for proposing the full -2.4 percent adjustment for the Puerto Rico-
specific rate in FY 2011 is to maintain equity as much as possible in
the documentation and coding adjustments applied to various hospital
rates in FY 2011. Because this proposed -2.4 percent adjustment
represents the full adjustment that is warranted for the Puerto Rico-
specific rate, we do not anticipate proposing any additional
adjustments to the rate for documentation and coding effects.
We are seeking public comment on the proposed -2.4 percent
prospective adjustment to Puerto Rico-specific standardized amount
under section 1886(d)(5)(I)(i) of the Act. We intend to update our
analysis with FY 2009 data on claim paid through March 2009 for the FY
2011 IPPS/LTCH PPS final rule.
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
In the FY 2009 IPPS final rule (73 FR 48450), we continued to
implement significant revisions to Medicare's inpatient hospital rates
by completing our 3-year transition from charge-based relative weights
to cost-based relative weights. Beginning in FY 2007, we implemented
relative weights based on cost report data instead of based on charge
information. We had initially proposed to develop cost-based relative
weights using the hospital-specific relative value cost center (HSRVcc)
methodology as recommended by MedPAC. However, after considering
concerns expressed in the public comments we received on the proposal,
we modified MedPAC's methodology to exclude the hospital-specific
relative weight feature. Instead, we developed national CCRs based on
distinct hospital departments and engaged a contractor to evaluate the
HSRVcc methodology for future consideration. To mitigate payment
instability due to the adoption of cost-based relative weights, we
decided to transition cost-based weights over 3 years by blending them
with charge-based weights beginning in FY 2007. (We refer readers to
the FY 2007 IPPS final rule for details on the HSRVcc methodology and
the 3-year
[[Page 23877]]
transition blend from charge-based relative weights to cost-based
relative weights (71 FR 47882 through 47898).)
In FY 2008, we adopted severity-based MS-DRGs, which increased the
number of DRGs from 538 to 745. Many commenters raised concerns as to
how the transition from charge-based weights to cost-based weights
would continue with the introduction of new MS-DRGs. We decided to
implement a 2-year transition for the MS-DRGs to coincide with the
remainder of the transition to cost-based relative weights. In FY 2008,
50 percent of the relative weight for each DRG was based on the CMS DRG
relative weight and 50 percent was based on the MS-DRG relative weight.
In FY 2009, the third and final year of the transition from charge-
based weights to cost-based weights, we calculated the MS-DRG relative
weights based on 100 percent of hospital costs. We refer readers to the
FY 2007 IPPS final rule (71 FR 47882) for a more detailed discussion of
our final policy for calculating the cost-based DRG relative weights
and to the FY 2008 IPPS final rule with comment period (72 FR 47199)
for information on how we blended relative weights based on the CMS
DRGs and MS-DRGs.
a. Summary of the RTI Study of Charge Compression and CCR Refinement
As we transitioned to cost-based relative weights, some commenters
raised concerns about potential bias in the weights due to ``charge
compression,'' which is the practice of applying a higher percentage
charge markup over costs to lower cost items and services, and a lower
percentage charge markup over costs to higher cost items and services.
As a result, the cost-based weights would undervalue high-cost items
and overvalue low-cost items if a single CCR is applied to items of
widely varying costs in the same cost center. To address this concern,
in August 2006, we awarded a contract to RTI to study the effects of
charge compression in calculating the relative weights and to consider
methods to reduce the variation in the CCRs across services within cost
centers. RTI issued an interim draft report in January 2007 with its
findings on charge compression (which was posted on the CMS Web site
at: http://www.cms.hhs.gov/reports/downloads/Dalton.pdf). In that
report, RTI found that a number of factors contribute to charge
compression and affect the accuracy of the relative weights. RTI's
findings demonstrated that charge compression exists in several CCRs,
most notably in the Medical Supplies and Equipment CCR.
In its interim draft report, RTI offered a number of
recommendations to mitigate the effects of charge compression,
including estimating regression-based CCRs to disaggregate the Medical
Supplies Charged to Patients, Drugs Charged to Patients, and Radiology
cost centers, and adding new cost centers to the Medicare cost report,
such as adding a ``Devices, Implants and Prosthetics'' line under
``Medical Supplies Charged to Patients'' and a ``CT Scanning and MRI''
subscripted line under ``Radiology-Diagnostics''. Despite receiving
public comments in support of the regression-based CCRs as a means to
immediately resolve the problem of charge compression, particularly
within the Medical Supplies and Equipment CCR, we did not adopt RTI's
recommendation to create additional regression-based CCRs. (For more
details on RTI's findings and recommendations, we refer readers to the
FY 2009 IPPS final rule (73 FR 48452).) RTI subsequently expanded its
analysis of charge compression beyond inpatient services to include a
reassessment of the regression-based CCR models using both outpatient
and inpatient charge data. This interim report was made available in
April 2008 during the public comment period on the FY 2009 IPPS
proposed rule and 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, were included in the July 3, 2008 RTI final
report entitled, ``Refining Cost-to-Charge Ratios for Calculating APC
[Ambulatory Payment Classification] and DRG Relative Payment Weights,''
that became available at the time of the development of the FY 2009
IPPS final 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 found that, under the IPPS and the OPPS,
accounting improvements to the cost reporting data reduce some of the
sources of aggregation bias without having to use regression-based
adjustments. In general, with respect to the regression-based
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 noted that cost-based weights are only one component of a
final prospective payment rate. There are other rate adjustments (wage
index, IME, and DSH) to payments 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. RTI endorsed
short-term regression-based adjustments, but 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. For a more detailed summary of RTI's findings,
recommendations, and public comments we received on the report, we
refer readers to the FY 2009 IPPS final rule (73 FR 48452 through
48453).
b. Summary of the RAND Corporation Study of Alternative Relative Weight
Methodologies
One of the reasons that we did not implement regression-based CCRs
at the time of the FY 2008 IPPS final rule with comment period was our
inability to investigate how regression-based CCRs would interact with
the implementation of MS-DRGs. In the FY 2008 final rule with comment
period (72 FR 47197), we stated that we engaged the RAND Corporation as
the contractor to evaluate the HSRV methodology in conjunction with
regression-based CCRs, and that we would consider its analysis as we
prepared for the FY 2009 IPPS rulemaking process.
RAND evaluated six different methods that could be used to
establish relative weights; CMS' current relative weight methodology of
15 national CCRs and 5 alternatives, including a method in which the 15
national CCRs are disaggregated using the regression-based methodology,
and a method using hospital-specific CCRs for the 15 cost center
groupings. In addition, RAND analyzed our standardization methodologies
that account for systematic cost differences across hospitals. The
purpose of standardization is to eliminate systematic facility-specific
differences in cost so that these cost differences do not influence the
relative weights. Overall, RAND found that none of the methods it
studied of calculating the relative weights represented a marked
improvement in payment accuracy over the current method, and there was
little difference across methods in their ability to predict cost at
either the discharge-level or the hospital-level. In their regression
analysis, RAND found
[[Page 23878]]
that, after controlling for hospital payment factors, the relative
weights are compressed (that is, understated). However, RAND also found
that the hospital payment factors are overstated and increase more
rapidly than cost. Therefore, while the relative weights are
compressed, these payment factors offset the compression such that
total payments to hospitals increase more rapidly than hospitals'
costs.
In the FY 2009 IPPS final rule (73 FR 48453 through 48457), we
provided a summary of the RAND report and the public comments we
received in response to the FY 2009 IPPS proposed rule. The report may
be found on RAND's Web site at: http://www.rand.org/pubs/working_papers/WR560/.
2. Proposals for FY 2011 and Timeline for Changes to the Medicare Cost
Report
In the FY 2009 IPPS final rule (73 FR 48458 through 48467), in
response to the RTI's recommendations concerning cost report
refinements, and because of RAND's finding that regression-based
adjustments to the CCRs do not significantly improve payment accuracy,
we discussed our decision to pursue changes to the cost report to split
the cost center for Medical Supplies Charged to Patients into one line
for ``Medical Supplies Charged to Patients'' and another line for
``Implantable Devices Charged to Patients.'' We acknowledged, as RTI
had found, that charge compression occurs in several cost centers that
exist on the Medicare cost report. However, as we stated in the final
rule, we focused on the CCR for Medical Supplies and Equipment because
RTI found that the largest impact on the MS-DRG relative weights could
result from correcting charge compression for devices and implants. In
determining what should be reported in these respective cost centers,
we adopted the commenters' recommendation that hospitals should use
revenue codes established by AHA's National Uniform Billing Committee
to determine what should be reported in the ``Medical Supplies Charged
to Patients'' and the ``Implantable Devices Charged to Patients'' cost
centers.
When we developed the FY 2009 IPPS final rule, we considered all of
the public comments we received both for and against adopting
regression-based CCRs. Also noteworthy is RAND's belief that
regression-based CCRs may not significantly improve payment accuracy,
and that it is equally, if not more, important to consider revisions to
the current IPPS hospital payment factor standardization method in
order to improve payment accuracy. For FY 2010, we solicited comments
on improving the standardization process, although we did not make any
changes to the standardization process for FY 2010. We also stated that
we continued to 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. Accordingly, a new
subscripted line 55.01 for Implantable Devices Charged to Patients was
created in July 2009 as part of CMS' Transmittal 20 update to the
existing cost report Form CMS-2552-96. This new subscripted cost center
is available for use for cost reporting periods beginning on or after
May 1, 2009.
With respect to the initiative to reform, update, and streamline
the Medicare cost report, which has been the subject of many comments
and our responses in the IPPS (and OPPS) Federal Register notices of
rulemaking over the past several years, CMS is continuing to work on
this project. The new draft hospital cost report Form CMS-2552-10 was
published in the Federal Register on July 2, 2009, and was subject to a
60-day review and comment period, which ended August 31, 2009. CMS
received numerous comments on the draft hospital cost report Form CMS-
2552-10, specifically regarding the creation of new cost centers from
which data would be ultimately used in the relative weights
calculation, even though CMS had not proposed to add these cost
centers. The public comments on the July 2, 2009 Federal Register
notice will be addressed in detail in the Federal Register notice that
will be issued to finalize Form CMS-2525-10. We now plan to issue the
revised draft of the hospital cost report Form CMS-2552-10, which will
include a standard cost center for Implantable Devices Charged to
Patients, through a notice in the Federal Register, which will allow
for a 30-day comment period, in the spring or summer of 2010. However,
in part in this IPPS proposed rule, we are providing a summary of the
public comments received on the July 2, 2009 notice that specifically
related to the relative weights and responding to those comments. Our
responses to the comments in this IPPS proposed rule constitute our
proposals for FY 2011 regarding the relative weights.
Several commenters asked that CMS create cost centers to house the
costs of magnetic resonance imaging (MRI), Computed Tomography (CT),
nuclear medicine services, cardiac catheterization, drugs that require
detailed coding, and magnetoencephalography (MEG). One commenter
indicated, that in RTI's July 2008 report (http://www.rti.org/reports/cms/), RTI made an argument that CMS should create new standard cost
centers in which hospitals would report the costs of MRI scans, CT
scans, cardiac catheterization, and drugs that require detailed coding,
in addition to the new cost center for ``Implantable Devices Charged to
Patients.'' The commenter stated that these additional lines are needed
to distinguish items and services that hospitals tend to markup
differently within existing revenue centers, citing RTI's finding that
CT scans have a significantly higher markup than most other radiology
services. The commenter indicated that when CMS uses the overall
radiology department CCR to convert charges for CT scans to costs, it
overestimates the cost of these services, resulting in overstated
relative weights for MS-DRGs under the IPPS and for APCs under the OPPS
that incorporate CT scanning. The commenter argued that having a
separate cost center for each of these services would resolve the
problem. The commenter also stated that, while CMS has done something
similar with the creation of the cost center for high cost medical
devices, making cost center changes for some services, but not others,
where such changes are warranted could create additional distortion in
the relative weights. The commenter further argued that cost center
changes should be made for all service areas with significant volume
where services with sizable differences in markup are currently
combined in a single cost center. The commenter asserted that creating
these cost centers should not create reporting burden for hospitals
because the RTI report indicated that roughly one-third of the
hospitals are already reporting costs for CT scans, MRI scans, and
cardiac catheterization under the specific nonstandard cost centers
currently available in the cost report.
Another commenter also recommended the creation of the cost centers
for CT scans, MRI scans, and nuclear medicine services, but for
different reasons than the first commenter. Specifically, this
commenter believed these new cost centers are necessary in order for
the high capital costs to be appropriately allocated to these services
and to be correctly reflected in the CCRs that are used in the
establishment of the MS-DRG and APC payment rates for the services. The
commenter stated that, under the existing cost report structure, some
providers are allocating high capital costs for these services in a
[[Page 23879]]
single radiology line, diluting the high capital costs associated with
CT scans, MRI scans, and nuclear medicine services across all radiology
services, including low cost services. Therefore, the commenter
concluded that the resulting radiology CCRs that CMS applies to charges
for CT scans, MRI scans, and nuclear medicine services to arrive at the
relative costs used to set payment rates for both the IPPS and OPPS
understate the cost of high cost radiology services and overstate the
cost of low cost radiology services, resulting in payments that are too
low for the high cost services. The commenter indicated that CMS should
not only create these new costs centers but should also require all
hospitals to use them, and should issue explicit instructions on how to
report the costs of these services in the new standard cost centers.
We agree that it is appropriate to create standard cost centers for
CT scans, MRI scans, and cardiac catheterization and to require that
hospitals report the costs and charges for these services under new
cost centers on the revised Medicare cost report Form CMS 2552-10. As
we discussed in the FY 2009 IPPS and CY 2009 OPPS proposed and final
rules, RTI found that the costs and charges of CT scans, MRI scans, and
cardiac catheterization differ significantly from the costs and charges
of other services included in the standard associated cost center. RTI
also concluded that both the IPPS and OPPS relative weights would
better estimate the costs of those services if CMS were to add standard
costs centers for CT scanning, MRIs, and cardiac catheterization in
order for hospitals to report separately the costs and charges for
those services and in order for CMS to calculate unique CCRs to
estimate the cost from charges on claims data.
In its analysis, RTI concluded that the estimated costs for CT
scanning and MRI scans would decline significantly and that the
estimated cost for cardiac catheterization would increase modestly if
specific standard cost centers were used. RTI found that cardiac
catheterization has very different cost inputs from most cardiac
testing (for example, electrocardiograms or cardiac stress testing)
captured in the 5300 ``Electrocardiology'' cost center and that the
accuracy of the CCR for both types of services, cardiac catheterization
and other cardiac testing, would improve with creation of a standard
cost center for cardiac catheterization. RTI also found that one-third
of hospitals already report cardiac catheterization costs and charges
separately through the available nonstandard cost center or through
subscripted lines to the ``Electrocardiology'' cost center. Similarly,
RTI found that approximately one-third of hospitals already separately
report the costs for CT scanning and MRI scans on their Medicare cost
report through subscripted lines and the available nonstandard cost
centers. We believe the current prevalence of reporting for the
nonstandard cost centers for these three services suggests a modest
hospital burden required to adopt these cost centers.
We discussed the possibility of creating standard cost centers for
these three different services in our CY 2009 OPPS proposed and final
rule with comment period (73 FR 41432 and 73 FR 68525) and solicited
general comments on RTI's recommendations. The commenters who objected
to the creation of the standard cost centers for CT scanning and MRI
scans largely did so based on RTI projected lower estimated costs for
these services if CMS created these cost centers. The commenters
suggested that the current CCRs for advanced imaging may reflect a
misallocation of capital costs and requested that CMS not adopt
separate cost centers or statistical adjustment simulating lower CCRs
for CT scanning and MRI until CMS could understand how providers are
allocating the extensive capital costs for these services to the
revenue producing cost centers. We also received comments suggesting
that the accuracy of estimated costs would improve with better
allocation, potentially increasing the CCR as more capital cost would
be appropriately allocated to both CT scanning and MRI and not spread
across all services in the radiology cost center. We noted in the CY
2009 OPPS/ASC final rule with comment period (73 FR 68525) that our
recommended allocation of moveable equipment costs in Worksheet A of
the Medicare cost report is based on dollar value, and that it would be
important to encourage improved accuracy of capital allocation through
dollar value or direct assignment if we were to make these cost centers
standard cost centers. At this time, we do not know the impact on CCRs
and estimated costs of adopting standard cost centers specific to CT
scanning and MRI. However, we believe that, because these areas
constitute significant payment under both the IPPS and OPPS and because
these are common imaging services already widely reported by hospitals,
we are proposing to adopt new standard cost centers for CT scanning and
MRI. We agree with those commenters who asserted that creation of
standard cost centers for CT scanning and MRI would improve the
accuracy of cost estimation for these services, in part by creating
incentives for hospitals to more accurately allocate the capital and
equipment associated with these services.
With regard to cardiac catheterization, we received one comment on
the CY 2009 OPPS/ASC proposed rule suggesting that hospitals might find
it difficult to allocate costs for these services to specific cost
centers, especially for cardiac catheterization, and that allocated
overhead costs would, in most cases, be an estimate (73 FR 68527).
However, given the number of hospitals already reporting the
nonstandard cost center for cardiac catheterization and the number
subscripting these costs and charges (approximately 50 percent,
according to RTI's July 2008 report (pages 71 and 72) at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_Final.pdf), we believe that hospitals do
allocate overhead costs to a cardiac catheterization-specific cost
center. For these reasons, we are proposing to create standard cost
centers for CT scanning, MRI, and cardiac catheterization in Form CMS
2552-10.
We also received public comments on the cost report notice urging
us to create standard cost centers for nuclear medicine services, for
drugs that require detailed coding, and for MEG. We continue to believe
that it is not appropriate to create standard cost centers for these
three services. The Medicare cost report already contains standard cost
center 4300 (Radioisotope) to capture the costs and charges for the
radioisotopes used in nuclear medicine services, the items that may
have significantly different costs and hospital markup than the
supplies and equipment used in other radiology services. Moreover, the
cost report already contains standard cost center 4100 (Diagnostic
Radiology) in which the costs of staff, equipment, and supplies for
diagnostic nuclear medicine services can be reported. Therefore, we
continue to believe that creating a new standard cost center for
nuclear medicine services is not necessary. We also continue to believe
that it is not appropriate to create a standard cost center for drugs
that require detailed coding. We refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68655) for a detailed discussion
on our final decision not to create this cost center. Finally, with
respect to MEG services, the extremely low volume of
[[Page 23880]]
claims for MEG services furnished to Medicare beneficiaries in the
hospital outpatient setting and the extremely low number of hospitals
that report these codes relative to the volumes we typically have
considered in adding both standard and nonstandard cost centers to the
cost report lead us to conclude that a specific cost center for MEG is
not justified at this time.
There is typically a 3-year lag between the availability of the
cost report data that we use to calculate the relative weights both
under the IPPS and the OPPS and a given fiscal or calendar year. We
expect the data from the proposed standard cost centers for CT scans,
MRI, and cardiac catheterization respectively, should they be
finalized, to be available for possible use in calculating the relative
weights not earlier than 3 years after Form CMS-2552-10 becomes
available. At that time, we would analyze the data and determine if it
is appropriate to use those data to create distinct CCRs from these
cost centers for use in the relative weights for the respective payment
systems. If we decide to finalize these proposed new cost centers, the
upcoming Federal Register notice that will finalize Form CMS-2552-10
will provide more information regarding the addition of these proposed
new standard cost centers for CT scans, MRI, and cardiac
catheterization, including the instructions for completing these cost
centers on the new cost report.
F. Preventable Hospital-Acquired Conditions (HACs), Including
Infections
1. Background
a. Statutory Authority
Section 1886(d)(4)(D) of the Act addresses certain hospital-
acquired conditions (HACs), including infections. Section 1886(d)(4)(D)
of the Act specifies that by October 1, 2007, the Secretary was
required to select, in consultation with the Centers for Disease
Control and Prevention (CDC), at least two conditions that: (a) Are
high cost, high volume, or both; (b) are assigned to a higher paying
MS-DRG when present as a secondary diagnosis (that is, conditions under
the MS-DRG system that are CCs or MCCs); and (c) could reasonably have
been prevented through the application of evidence-based guidelines.
Section 1886(d)(4)(D) of the Act also specifies that the list of
conditions may be revised, again in consultation with CDC, from time to
time as long as the list contains at least two conditions.
Section 1886(d)(4)(D)(iii) of the Act requires that hospitals,
effective with discharges occurring on or after October 1, 2007, submit
information on Medicare claims specifying whether diagnoses were
present on admission (POA). Section 1886(d)(4)(D)(i) of the Act
specifies that effective for discharges occurring on or after October
1, 2008, Medicare no longer assigns an inpatient hospital discharge to
a higher paying MS-DRG if a selected condition is not POA. Thus, if a
selected condition that was not POA manifests during the hospital stay,
it is considered a HAC and the case is paid as though the secondary
diagnosis was not present. However, even if a HAC manifests during the
hospital stay, if any nonselected CC/MCC appears on the claim, the
claim will be paid at the higher MS-DRG rate. Under the HAC payment
policy, all CCs/MCCs on the claim must be HACs in order to generate a
lower MS-DRG payment. In addition, Medicare continues to assign a
discharge to a higher paying MS-DRG if a selected condition is POA.
The POA indicator reporting requirement and the HAC payment
provision apply to IPPS hospitals only. Non-IPPS hospitals, including
CAHs, LTCHs, IRFs, IPFs, cancer hospitals, children's hospitals,
hospitals in Maryland operating under waivers, rural health clinics,
federally qualified health centers, RNHCIs, and Department of Veterans
Affairs/Department of Defense hospitals, are exempt from POA reporting
and the HAC payment provision. Throughout this section, the term
``hospital'' refers to an IPPS hospital.
The HAC provision found in section 1886(d)(4)(D) of the Act is part
of an array of Medicare value-based purchasing (VBP) tools that we are
using to promote increased quality and efficiency of care. Those tools
include measuring performance, using payment incentives, publicly
reporting performance results, applying national and local coverage
policy decisions, enforcing conditions of participation, and providing
direct support for providers through Quality Improvement Organization
(QIO) activities. The application of VBP tools, such as this HAC
provision, is transforming Medicare from a passive payer to an active
purchaser of higher value health care services. We are applying these
strategies for inpatient hospital care and across the continuum of care
for Medicare beneficiaries.
These VBP tools are highly compatible with the underlying purposes
as well as existing structural features of Medicare's IPPS. Under the
IPPS, hospitals are encouraged to treat patients efficiently because
they receive the same DRG payment for stays that vary in length and in
the services provided, which gives hospitals an incentive to avoid
unnecessary costs in the delivery of care. In some cases, conditions
acquired in the hospital do not generate higher payments than the
hospital would otherwise receive for cases without these conditions. To
this extent, the IPPS encourages hospitals to avoid complications.
However, the treatment of certain conditions can generate higher
Medicare payments in two ways. First, if a hospital incurs
exceptionally high costs treating a patient, the hospital stay may
generate an outlier payment. Because the outlier payment methodology
requires that hospitals experience large losses on outlier cases before
outlier payments are made, hospitals have an incentive to prevent
outliers. Second, under the MS-DRGs system that took effect in FY 2008
and that has been refined through rulemaking in subsequent years,
certain conditions can generate higher payments even if the outlier
payment requirements are not met. Under the MS-DRG system, there are
currently 258 sets of MS-DRGs that are split into 2 or 3 subgroups
based on the presence or absence of a CC or an MCC. The presence of a
CC or MCC generally results in a higher payment. However, since we
implemented the HAC provisions, if a secondary diagnosis acquired
during a hospital stay is a HAC and no other CCs or MCCs are present,
the hospital receives a payment under the MS-DRGs as if the HACs were
not present. (We refer readers to section II.D. of the FY 2008 IPPS
final rule with comment period for a discussion of DRG reforms (72 FR
47141).)
b. HAC Selection
In the FY 2007 IPPS proposed rule (71 FR 24100), we sought public
input regarding conditions with evidence-based prevention guidelines
that should be selected in implementing section 1886(d)(4)(D) of the
Act. The public comments we received were summarized in the FY 2007
IPPS final rule (71 FR 48051 through 48053).
In the FY 2008 IPPS proposed rule (72 FR 24716 through 24726), we
sought public comment on conditions that we proposed to select. In the
FY 2008 IPPS final rule with comment period (72 FR 47200 through
47218), we selected 8 categories to which the HAC payment provisions
would apply.
In the FY 2009 IPPS proposed rule (73 FR 23547), we proposed
several additional candidate HACs as well as refinements to the
previously selected HACs. In the FY 2009 IPPS final rule (73 FR 48471),
we expanded and refined
[[Page 23881]]
several of the previously selected HACs, and we selected 2 additional
categories of HACs.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24106),
we proposed the addition of ICD-9-CM codes 813.46 (Torus fracture of
ulna) and 813.47 (Torus fracture of radius and ulna) to more precisely
define the previously selected HAC category of Falls and Trauma. In the
FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43784), we finalized
the addition of these codes. A complete list of the 10 current
categories of HACs is included in section II.F.2. of this preamble.
c. Collaborative Process
In establishing the HAC payment policy under section 1886(d)(4)(D)
of the Act, our experts have worked closely with public health and
infectious disease professionals from across the Department of Health
and Human Services, including CDC, the Agency for Healthcare Research
and Quality (AHRQ), and the Office of Public Health and Science (OPHS),
to identify the candidate preventable HACs, review comments, and select
HACs. CMS and CDC have also collaborated on the process for hospitals
to submit a POA indicator for each diagnosis listed on IPPS hospital
Medicare claims and on the payment implications of the various POA
reporting options. As discussed below, we have also used rulemaking and
Listening Sessions to receive public input.
d Application of HAC Payment Policy to MS-DRG Classifications
As described above, in certain cases application of the HAC payment
policy provisions can result in MS-DRG reassignment to a lower paying
MS-DRG. The following diagram portrays the logic of the HAC payment
policy provision as adopted in the FY 2008 IPPS final rule (72 FR
47200) and in the FY 2009 IPPS final rule (73 FR 48471):
[GRAPHIC] [TIFF OMITTED] TP04MY10.003
e. Public Input Regarding Selected and Potential Candidate HACs
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24104
through 24106), we did not propose to add or remove categories of HACs.
However, as we indicated in that proposed rule, we continue to
encourage public dialogue about refinements to the HAC list. During and
after the December 18, 2008 Listening Session, we received many oral
and written stakeholder comments about both previously selected and
potential candidate HACs. In response to the Listening Session,
commenters strongly supported using information gathered from early
experience with the HAC payment provision to inform maintenance of the
HAC list and consideration of future potential candidate HACs.
Commenters also emphasized the need for a robust program evaluation
prior to modifying the HAC list.
In response to the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74
FR 24106), commenters expressed strong support for a program evaluation
prior to modifying the HAC list. We responded to these commenters and
expressed our appreciation for the public's support for our decision to
undertake a program evaluation. We indicated that we planned to include
updates and findings from the evaluation on CMS' Hospital-Acquired
Conditions and Present on Admission Indicator Web site available at:
http://www.cms.hhs.gov/HospitalAcqCond/. We also responded to
commenters regarding POA indicator reporting as well as to comments
addressing other topics related to HACs and POA reporting (74 FR
43785).
f. POA Indicator Reporting
Collection of POA indicator data is necessary to identify which
conditions were acquired during hospitalization for the HAC payment
provision as well as for broader public health uses of Medicare data.
Through Change Request No. 5679 (released on June 20, 2007), we issued
instructions requiring IPPS hospitals to submit POA indicator data for
all diagnosis codes on Medicare claims. We also issued Change Request
No. 6086 (released on June 13, 2008) regarding instructions for
processing non-IPPS claims. Specific instructions on how to select the
correct POA indicator for each diagnosis code are included in the ICD-
9-CM Official Guidelines for Coding and Reporting, available on the CDC
Web site at: http://www.cdc.gov/nchs/data/icd9/icdguide09.pdf.
Additional information regarding POA indicator reporting and
application of the POA reporting
[[Page 23882]]
options is available on the CMS Web site at: http://www.cms.hhs.gov/HospitalAcqCond. Historically we have not provided coding advice.
Rather, we collaborate with the American Hospital Association (AHA)
through the Coding Clinic for ICD-9-CM. We have been collaborating with
the AHA to promote the Coding Clinic for ICD-9-CM as the source for
coding advice about the POA indicator.
There are five POA indicator reporting options, as defined by the
ICD-9-CM Official Guidelines for Coding and Reporting:
----------------------------------------------------------------------------------------------------------------
Indicator Descriptor
----------------------------------------------------------------------------------------------------------------
Y................................................... Indicates that the condition was present on admission.
W................................................... Affirms that the hospital has determined that, based on
data and clinical judgment, it is not possible to
document when the onset of the condition occurred.
N................................................... Indicates that the condition was not present on admission.
U................................................... Indicates that the documentation is insufficient to
determine if the condition was present at the time of
admission.
1................................................... Signifies exemption from POA reporting. CMS established
this code as a workaround to blank reporting on the
electronic 4010A1. A list of exempt ICD-9-CM diagnosis
codes is available in the ICD-9-CM Official Guidelines
for Coding and Reporting.
----------------------------------------------------------------------------------------------------------------
In the FY 2009 IPPS final rule (73 FR 48486 through 48487), we
adopted as final our proposal to: (1) Pay the CC/MCC MS-DRGs for those
HACs coded with ``Y'' and ``W'' indicators; and (2) not pay the CC/MCC
MS-DRGs for those HACs coded with ``N'' and ``U'' indicators.
Beginning on or after January 1, 2011, hospitals will begin
reporting with the 5010 format. The 5010 format removes the need to
report a POA indicator of ``1'' for codes that are exempt from POA
reporting. The POA indicator of ``1'' is being used because of
reporting restrictions from the use of the 4010 format. Therefore,
hospitals that begin reporting with the 5010 format on and after
January 1, 2011, will no longer report a POA indicator of ``1'' for POA
exempt codes. The POA field will instead be left blank for codes exempt
from POA reporting. We are planning to issue CMS instructions on this
reporting change.
2. Proposed HAC Conditions for FY 2011
As changes to diagnosis codes and new diagnosis codes are proposed
and finalized for the list of CCs and MCCs, we will modify the list of
selected HACs to reflect these changes. In Table 6A in the Addendum to
this proposed rule, we have listed the proposed addition of five new
ICD-9-CM diagnosis codes to replace existing ICD-9-CM code 999.6 (ABO
incompatibility reaction) for FY 2011. ICD-9-CM code 999.6 is currently
the only code identified under the Blood Incompatibility HAC category.
We are proposing to delete code 999.6 and form a new subcategory of
999.6 to identify new diagnoses relating to ABO incompatibility
reaction due to transfusion of blood or blood products. These diagnoses
meet the criteria for the Blood Incompatibility HAC category based on
the predecessor code 999.6 being a selected HAC.
As shown in Table 6C in the Addendum to this proposed rule, we are
proposing that code 999.6 become invalid as a diagnosis code in FY 2011
with the creation of this new ICD-9-CM subcategory. This proposed new
subcategory would allow room for expansion and the creation of the
following new diagnosis codes:
----------------------------------------------------------------------------------------------------------------
ICD-9-CM code Code descriptor Proposed CC/MCC designation
----------------------------------------------------------------------------------------------------------------
999.60....................................... ABO incompatibility reaction, CC
unspecified.
999.61....................................... ABO incompatibility with CC
hemolytic transfusion reaction
not specified as acute or
delayed.
999.62....................................... ABO incompatibility with acute CC
hemolytic transfusion reaction.
999.63....................................... ABO incompatibility with delayed CC
hemolytic transfusion reaction.
999.69....................................... Other ABO incompatibility CC
reaction.
----------------------------------------------------------------------------------------------------------------
We are inviting public comments on the proposed adoption of the
five ICD-9-CM diagnosis codes as CCs that are listed above, which, if
finalized, would be added to the current HAC Blood Incompatibility
category.
The following table lists the current HACs categories and the ICD-
9-CM codes that identify the conditions that have been finalized
through FY 2010. For FY 2011, we are proposing that these conditions
continue to be subject to the HAC payment provision, with a proposed
refinement to the codes to identify blood incompatibility as described
above.
------------------------------------------------------------------------
HAC CC/MCC (ICD-9-CM code)
------------------------------------------------------------------------
Foreign Object Retained After Surgery........ 998.4 (CC)
998.7 (CC)
Air Embolism................................. 999.1 (MCC)
Blood Incompatibility........................ 999.6 (CC)
Pressure Ulcer Stages III & IV............... 707.23 (MCC)
707.24 (MCC)
Falls and Trauma............................. Codes within these ranges
on the CC/MCC list:
--Fracture............................... 800-829
--Dislocation............................ 830-839
--Intracranial Injury.................... 850-854
[[Page 23883]]
--Crushing Injury........................ 925-929
--Burn................................... 940-949
--Electric Shock......................... 991-994
Catheter-Associated Urinary Tract Infection 996.64 (CC)
(UTI).
Also excludes the
following from acting as
a CC/MCC:
112.2 (CC)
590.10 (CC)
590.11 (MCC)
590.2 (MCC)
590.3 (CC)
590.80 (CC)
590.81 (CC)
595.0 (CC)
597.0 (CC)
599.0 (CC)
Vascular Catheter-Associated Infection....... 999.31 (CC)
Manifestations of Poor Glycemic Control...... 250.10-250.13 (MCC)
250.20-250.23 (MCC)
251.0 (CC)
249.10-249.11 (MCC)
249.20-249.21 (MCC)
------------------------------------------------------------------------
Surgical Site Infections
------------------------------------------------------------------------
Surgical Site Infection, Mediastinitis, 519.2 (MCC)
Following Coronary Artery Bypass Graft And one of the following
(CABG). procedure codes:
36.10-36.19
Surgical Site Infection Following Certain 996.67 (CC)
Orthopedic Procedures. 998.59 (CC)
And one of the following
procedure codes: 81.01-
81.08, 81.23-81.24,
81.31-81.38, 81.83,
81.85
Surgical Site Infection Following Bariatric Principal Diagnosis--
Surgery for Obesity. 278.01
998.59 (CC)
And one of the following
procedure codes: 44.38,
44.39, or 44.95
Deep Vein Thrombosis and Pulmonary Embolism 415.11 (MCC)
Following Certain Orthopedic Procedures. 415.19 (MCC)
453.40-453.42 (CC)
And one of the following
procedure codes: 00.85-
00.87, 81.51-81.52, or
81.54
------------------------------------------------------------------------
We refer readers to section II.F.6. of the FY 2008 IPPS final rule
with comment period (72 FR 47202 through 47218) and to section II.F.7.
of the FY 2009 IPPS final rule (73 FR 48474 through 48486) for detailed
analyses supporting the selection of each of these HACs. We invite
public comments on our proposal that these conditions continue to be
subject to the HAC payment provision, with a proposed refinement of the
codes to identify blood incompatibility as described above.
3. RTI Program Evaluation Summary
a. Background
On September 30, 2009, a contract was awarded to Research Triangle
Incorporated (RTI) to evaluate the impact of the Hospital-Acquired
Condition-Present on Admission (HAC-POA) provisions on the changes in
the incidence of selected conditions, effects on Medicare payments,
impacts on coding accuracy, unintended consequences, and infection and
event rates. This is an intra-agency project with funding and technical
support coming from CMS, OPHS, AHRQ, and CDC. The evaluation will also
examine the implementation of the program and evaluate additional
conditions for future selection.
RTI's evaluation of the HAC-POA provisions is divided into several
parts, only some of which will be complete prior to the publication
date of this proposed rule. Below we summarize the analyses that are
complete. RTI's analyses of POA indicator reporting, frequencies and
net savings associated with current HACs, and frequencies of previously
considered candidate HACs reflect MedPAR claims from October 2008
through June 2009. In the final rule, we intend to update our summary
of these analyses with additional data that have become available.
b. Preliminary RTI Analysis on POA Indicator Reporting Across Medicare
Discharges
To better understand the impact of HACs on the Medicare program, it
is necessary to first examine the incidence of POA indicator reporting
across all eligible Medicare discharges. As mentioned previously, only
IPPS hospitals are required to submit POA indicator data for all
diagnosis codes on Medicare claims. Therefore, all non-IPPS hospitals
were excluded, as well as providers in waiver States (Maryland) and
territories other than Puerto Rico.
Using MedPAR claims data from October 2008 through June 2009, RTI
found a total of approximately 50.22 million secondary diagnoses across
approximately 7.17 million discharges. As shown in Chart A below, the
majority of all secondary diagnoses (83.52 percent) were reported with
a POA indicator of ``Y,'' meaning the condition was POA.
[[Page 23884]]
Chart A--POA Code Distribution Across All Secondary Diagnoses
------------------------------------------------------------------------
Number Percentage
------------------------------------------------------------------------
Total Discharges in Final File.......... 7,175,139 ..............
Total Number of Secondary Diagnoses 50,216,195 100.00
Across Total Discharges................
------------------------------------------------------------------------
POA Indicator Description
----------------------------------------------------------------------------------------------------------------
Y............................................. Condition present on admission.. 41,938,234 83.52
W............................................. Status cannot be clinically 12,547 0.02
determined.
N............................................. Condition not present on 3,440,815 6.85
admission.
U............................................. Documentation not adequate to 110,771 0.22
determine if condition was
present on admission.
1............................................. Exempted ICD-9-CM code.......... 4,713,828 9.39
----------------------------------------------------------------------------------------------------------------
Source: RTI Analysis of MedPAR IPPS Claims, October 2008 through June 2009.
c. Preliminary RTI Analysis on POA Indicator Reporting of Current HACs
Following the initial analysis of POA indicator reporting for all
secondary diagnoses, RTI then evaluated POA indicator reporting for
specific HAC-associated secondary diagnoses. The term ``HAC-associated
secondary diagnosis'' refers to those diagnoses that are on the
selected HAC list and were reported as a secondary diagnosis. Chart B
below shows a summary of the HAC categories with the frequency in which
each HAC was reported as a secondary diagnosis and the corresponding
POA indicators assigned on the claims. It is important to note that,
because more than one HAC-associated diagnosis code can be reported per
discharge (that is, on a single claim), the frequency of HAC-associated
diagnosis codes may be more than the actual number of discharges that
have a HAC-associated diagnosis code reported as a secondary diagnosis.
Below we discuss the frequency of each HAC-associated diagnosis code
and the POA indicators assigned to those claims.
RTI analyzed the frequency of each reported HAC-associated
secondary diagnosis (across all 7.17 million discharges) and the POA
indicator assigned to the claim. Chart B below shows that the most
frequently reported conditions were in the Falls and Trauma HAC
category, with a total of 132,666 HAC-associated diagnosis codes being
reported for that HAC category. Of these 132,666 diagnoses, 4,081
reported a POA indicator of ``N'' for not POA and 128,286 diagnoses
reported a POA indicator of ``Y'' for POA. The lowest frequency appears
in the Surgical Site Infection (SSI) Following Bariatric Surgery for
Obesity HAC category with only 12 HAC-associated secondary diagnosis
codes (and procedure codes) reported.
Chart B--POA Status of Current HACS: October 2008 Through June 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Not Present on Admission Present on Admission
Frequency ---------------------------------------------------------------------------------------
Selected HAC as a POA = N POA = U POA = Y POA = W
Secondary ---------------------------------------------------------------------------------------
Diagnosis Number Percent Number Percent Number Percent Number Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Foreign Object Retained After Surgery (CC)........ 378 172 45.5 0 0.0 206 54.5 0 0.0
2. Air Embolism (MCC)................................ 29 23 79.3 0 0.0 6 20.7 0 0.0
3. Blood Incompatibility (CC)........................ 23 8 34.8 0 0.0 15 65.2 0 0.0
4. Pressure Ulcer Stages III & IV (MCC).............. 80,190 944 1.2 56 0.1 79,165 98.7 25 0.0
5. Falls and Trauma (MCC & CC)....................... 132,666 4,081 3.1 232 0.2 128,286 96.7 67 0.1
6. Catheter-Associated UTI (CC)...................... 11,424 1,887 16.5 15 0.1 9,496 83.1 26 0.2
7. Vascular Catheter-Associated Infection (CC)....... 5,470 2,091 38.2 19 0.3 3,348 61.2 12 0.2
8. Poor Glycemic Control (MCC)....................... 11,070 344 3.1 9 0.1 10,711 96.8 6 0.1
9A. Surgical Site Infection Mediastinitis CABG (CC).. 29 21 72.4 0 0.0 8 27.6 0 0.0
9B. Surgical Site Infection Following Bariatric 12 10 83.3 0 0.0 2 16.7 0 0.0
Surgery for Obesity (CC)............................
9B. Surgical Site Infection Following Certain 202 125 61.9 1 0.5 75 37.1 1 0.5
Orthopedic Procedures (CC)..........................
10. Pulmonary Embolism & DVT Orthopedic (MCC)........ 2,706 2,029 75.0 15 0.6 647 23.9 15 0.6
--------------------------------------------------------------------------------------------------
Total *.......................................... 244,199 ......... ......... 347 ......... ......... ......... 152 .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Discharges can appear in more than one row. The total figure is not adjusted for the 47 discharges with more than one HAC that appear as secondary
diagnoses (15 of these discharges resulted in MS-DRG reassignment).
[[Page 23885]]
We welcome public comments on these data that can provide insight
into the accuracy of the data, using comparative data sets or analysis
such as how aspects of the coding system might influence these data.
As described earlier, in the FY 2009 IPPS final rule (73 FR 48486
through 48487), we adopted as final our proposal to: (1) Pay the CC/MCC
MS-DRGs for those HACs coded with ``Y'' and ``W'' indicators; and (2)
not pay the CC/MCC MS-DRGs for those HACs coded with ``N'' and ``U''
indicators. We also discussed the comments we received urging CMS to
strongly consider changing the policy and to pay for those HACs
assigned a POA indicator of ``U'' (documentation is insufficient to
determine if the condition was present at the time of admission). We
stated we would monitor the extent to which and under what
circumstances the ``U'' POA reporting option is used. In the FY 2010
IPPS/RY 2010 LTCH PPS final rule, we also discussed and responded to
comments regarding HACs coded with the ``U'' indicator (74 FR 43784 and
43785). As shown in Chart B above, RTI's analysis provides some initial
data on a total of 347 HAC-associated secondary diagnoses reported with
a POA indicator of ``U''. Of those diagnoses, 232 (0.2 percent) were
assigned to the Falls and Trauma HAC category.
We continue to believe that better documentation will result in
more accurate public health data. Because the RTI analysis is based on
preliminary data, at this time we are not proposing to change our
policy under which CMS does not pay at the higher CC/MCC amount when a
selected HAC diagnosis code is reported with a POA indicator of ``U.''
We encourage readers to further review the RTI detailed report
which demonstrates the frequency of each individual HAC-associated
diagnosis code within the HAC categories. For example, in the Foreign
Object Retained After Surgery HAC category, there are two unique ICD-9-
CM diagnosis codes to identify that condition: code 998.4 (Foreign body
accidentally left during a procedure) and code 998.7 (Acute reaction to
foreign substance accidentally left during a procedure). In the
detailed RTI report, readers can view that code 998.4 was reported 368
times and code 998.7 was reported 10 times, for a total of 378 times,
as shown in Chart B above. The RTI detailed report is available at the
following Web site: http://www.rti.org/reports/cms/.
d. Preliminary RTI Analysis of Frequency of Discharges and POA
Indicator Reporting for Current HACs
RTI further analyzed the effect of the HAC provision by studying
the frequency in which a HAC-associated diagnosis was reported as a
secondary diagnosis with a POA indicator of ``N'' or ``U'' and, of that
number, how many resulted in MS-DRG reassignment. In Chart C below,
Column A shows the number of discharges for each HAC category where the
HAC-associated diagnosis was reported as a secondary diagnosis. For
example, there were 29 discharges that reported Air Embolism as a
secondary diagnosis. Column C shows the number of discharges for each
HAC reported with a POA indicator of ``N'' or ``U.'' Continuing with
the example of Air Embolism, the chart shows that, of the 29 reported
discharges, 23 discharges (79.31 percent) had a POA indicator of ``N''
or ``U'' and was identified as a HAC discharge. There were a total of
23 discharges to which the HAC policy applies and that could,
therefore, have had an MS-DRG reassignment. Column E shows the number
of discharges where an actual MS-DRG reassignment occurred. As shown in
Column E, the number of discharges with an Air Embolism that resulted
in actual MS-DRG reassignments is 12 (52.17 percent of the 23
discharges with a POA indicator of ``N'' or ``U''). Thus, while there
were 23 discharges (79.31 percent of the original 29) with an Air
Embolism reported with a POA indicator of ``N'' or ``U'' identified as
a HAC discharge that could have caused MS-DRG reassignment, the end
result was 12 (52.17 percent) actual MS-DRG reassignments. There are a
number of reasons why a selected HAC reported with a POA indicator of
``N'' or ``U'' will not result in MS-DRG reassignment. These reasons
were illustrated with the diagram in section II.F.1.c. of this preamble
and will be discussed in further detail in section II.F.3.e. of this
preamble.
Chart C below also shows that, of the 216,764 discharges with a
HAC-associated diagnosis as a secondary diagnosis, 3,038 discharges
ultimately resulted in MS-DRG reassignment. As will be discussed below,
there were 15 claims that resulted in MS-DRG reassignment where two
HACs were reported on the same admission. The four HAC categories that
had the most discharges resulting in MS-DRG reassignment were: (1)
Falls and Trauma; (2) Pressure Ulcer Stages III & IV; (3) Pulmonary
Embolism and DVT Orthopedic (Orthopedic PE/DVT); and (4) Catheter-
Associated Urinary Tract Infection (UTI). Codes falling under the Falls
and Trauma HAC category were the most frequently reported secondary
diagnoses with 109,728 discharges. Of these 109,728 discharges, 3,852
(3.51 percent) were coded as not POA and identified as HAC discharges.
This category also contained the greatest number of discharges that
resulted in an MS-DRG reassignment. Of the 3,852 discharges within this
HAC category that were not POA, 1,476 (38.32 percent) resulted in an
MS-DRG reassignment.
Of the 216,764 total discharges reporting HAC-associated diagnoses
as a secondary diagnosis, 2,494 discharges were coded with a secondary
diagnosis of Orthopedic PE/DVT. Of these 2,494 discharges, 1,892 (75.86
percent) were coded as not POA and identified as HAC discharges. This
category contained the second greatest number of discharges resulting
in an MS-DRG reassignment. Of the 1,892 discharges in this HAC category
that were not POA, 845 discharges (44.66 percent) resulted in an MS-DRG
reassignment.
The Pressure Ulcer Stages III & IV category had the second most
frequently coded secondary diagnoses, with 76,014 discharges. Of these
discharges, 960 (1.26 percent) were coded as not POA and identified as
HAC discharges. This category contained the third greatest number of
discharges resulting in an MS-DRG reassignment. Of the 960 discharges
in this HAC category that were not POA, 337 discharges (35.10 percent)
resulted in an MS-DRG reassignment.
The Catheter-Associated UTI category had the third most frequently
coded secondary diagnoses, with 11,434 discharges. Of these discharges,
1,896 (16.60 percent) were coded as not POA and identified as HAC
discharges. This category contained the fourth greatest number of
discharges resulting in an MS-DRG reassignment. Of the 1,896 discharges
in this HAC category that were not POA, 197 discharges (10.39 percent)
resulted in a MS-DRG reassignment.
The remaining 6 HAC categories only had 183 discharges that
ultimately resulted in MS-DRG reassignment. We note that, even in cases
where a large number of HAC-associated secondary diagnoses were coded
as not POA, this finding did not necessarily translate into a large
number of discharges that resulted in MS-DRG reassignment. For example,
only 23 of the 2,107 Vascular Catheter-Associated Infection secondary
diagnoses that were coded as not POA and identified as HAC discharges
resulted in a MS-DRG reassignment.
[[Page 23886]]
There were a total of 277 discharges with a HAC-associated
secondary diagnosis reporting a POA indicator of ``N'' or ``U'' that
were excluded from acting as a HAC discharge (subject to MS-DRG
reassignment) due to the CC Exclusion List logic within the GROUPER.
The CC Exclusion List identifies secondary diagnosis codes designated
as a CC or MCC that are disregarded by the GROUPER logic when reported
with certain principal diagnoses. For example, a claim with the
principal diagnosis code of 250.83 (Diabetes with other specified
manifestations, type 1 [juvenile type], uncontrolled) and a secondary
diagnosis code of 250.13 (Diabetes with ketoacidosis, type 1, [juvenile
type], uncontrolled) with a POA indicator of ``N'' would result in the
HAC-associated secondary diagnosis code 250.13 being ignored as a CC.
According to the CC Exclusion List, code 250.13 is excluded from acting
as a CC when code 250.83 is the principal diagnosis. As a result, the
HAC logic would not be applicable to that case. For a detailed
discussion on the CC Exclusion List, we refer readers to section
II.G.9. of this preamble.
Discharges where the HAC logic was not applicable due to the CC
Exclusion List occurred among the following 4 HAC categories: Pressure
Ulcer Stages III and IV (29 cases), Falls and Trauma (206 cases),
Catheter-Associated UTI (6 cases), Vascular Catheter-Associated
Infection (3 cases), and Manifestations of Poor Glycemic Control (33
cases). Further information regarding the specific number of cases that
were excluded for each HAC-associated secondary diagnosis code within
each of the above mentioned HAC categories is also available. We refer
readers to the RTI detailed report at the following Web site: http://www.rti.org/reports/cms/.
In summary, Chart C below demonstrates that there were a total of
216,764 discharges with a reported HAC-associated secondary diagnosis.
Of the total 216,764 discharges, 11,383 (5.25 percent) discharges were
HACs reported with a POA indicator of ``N'' or ``U'' that were
identified as a HAC discharge. Of these 11,383 discharges, the number
of discharges resulting in MS-DRG reassignments was 3,038 (26.69
percent).
BILLING CODE 4310-10-P
[[Page 23887]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.004
[[Page 23888]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.005
BILLING CODE 4120-01-C
An extremely small number of discharges had multiple HACs reported
during the same stay. In reviewing the 7.17 million claims, RTI found
47 cases in which two HACs were reported on the same discharge. Chart D
below summarizes these cases. There were eight cases in which a Falls
and Trauma HAC was reported in addition to a Pressure Ulcer Stages III
& IV HAC. Eighteen of the cases with two HACs involved Pressure Ulcer
Stages III & IV and 15 cases involved Falls or Trauma. Other multiple
HAC cases included 9 Catheter-Associated UTI cases and 5 Vascular
Catheter-Associated Infection cases.
Some of these cases with multiple HACs reported had both HAC codes
ignored in the MS-DRG assignment. Of these 47 claims, 32 did not
receive higher payments based on the presence of one or both of these
reported HACs and we describe these claims below in section
II.F.3.f.(2) of this preamble. Depending on the MS-DRG to which the
cases were originally assigned, ignoring the HAC codes would have led
to a MS-DRG reassignment if there were no other MCCs or CCs reported,
if the MS-DRG was subdivided into severity levels, and if the case were
not already in the lowest severity level prior to ignoring the HAC
codes.
Chart D--Claims With More Than One HAC Secondary Diagnosis October 2008 Through June 2009
----------------------------------------------------------------------------------------------------------------
7. Vascular
4. Pressure 5. Falls and 6. Catheter- catheter-
HAC ulcer stages III trauma-- MCC & associated UTI-- associated
& IV--MCC CC CC infection--CC
----------------------------------------------------------------------------------------------------------------
2. Air embolism--MCC.................... ................ 1 ................ ................
5. Falls and Trauma--MCC & CC........... 8 ................ ................ ................
6. Catheter-Associated UTI--CC.......... 2 3 ................ ................
7. Vascular Catheter-Associated 5 4 6 ................
Infection--CC..........................
8. Poor Glycemic Control--MCC........... 1 ................ ................ 1
9C. Surgical Site Infection Following ................ ................ 2 1
Bariatric Surgery for Obesity--CC......
10. Pulmonary Embolism & DVT Orthopedic-- 2 7 1 3
MCC....................................
-----------------------------------------------------------------------
Total............................... 18 15 9 5
----------------------------------------------------------------------------------------------------------------
e. Preliminary RTI Analysis of Circumstances When Application of HAC
Provisions Would Not Result in MS-DRG Reassignment for Current HACs
As discussed in section II.F.1. and illustrated in the diagram in
section II.F.1.c. of this preamble, there are instances when the MS-DRG
assignment does not change even when a HAC-associated secondary
diagnosis has a POA indicator of either ``N'' or ``U.'' In analyzing
our claims data, RTI identified four main reasons why a MS-DRG
assignment would not change despite the presence of a HAC. Those four
reasons are described below and are shown in Chart E below. Column A
shows the frequency of discharges that included a HAC-associated
secondary diagnosis. Column B shows the frequency of discharges where
the HAC-associated secondary diagnosis was
[[Page 23889]]
coded as not POA and identified as a HAC discharge. Column C shows the
frequency of discharges in which the HAC-associated secondary diagnosis
coded as not POA resulted in a change in MS-DRG. Columns D, E, F, and G
show the frequency of discharges in which the HAC-associated secondary
diagnosis coded as not POA did not result in a change in MS-DRG
assignment. Columns D, E, F, and G are explained in more detail below.
(1) Other MCCs/CCs Prevent Reassignment
Column D (Other MCC/CCs that Prevent Reassignment) in Chart E below
indicates the number of cases reporting a HAC-associated secondary
diagnosis code that did not have a MS-DRG reassignment because of the
presence of other secondary diagnoses on the MCC or CC list. A claim
that is coded with a HAC-associated secondary diagnoses and a POA
status of either ``N'' or ``U'' may have other secondary diagnoses that
are classified as an MCC or a CC. In such cases, the presence of these
other MCC and CC diagnoses will still lead to the assignment of a
higher severity level, despite the fact that the GROUPER software is
disregarding the ICD-9-CM code that identifies the selected HAC in
making the MS-DRG assignment for that claim. For example, there were 83
cases in which the ICD-9-CM codes for the Foreign Object Retained After
Surgery HAC category were present, but the presence of other secondary
diagnoses that were MCCs or CCs resulted in no change to the MS-DRG
assignment. Chart E shows that a total of 6,074 cases did not have a
change in the MS-DRG assignment because of the presence of other
reported MCCs and CCs.
(2) Two Severity Levels Where HAC Does Not Impact MS-DRG Assignment
Column E (Number of MS-DRGs with Two Severity Levels Where HAC Does
Not Impact MS-DRG Assignment) shows the frequency with which discharges
with a HAC as a secondary diagnosis coded as not POA did not result in
an MS-DRG change because the MS-DRG is subdivided solely by the
presence or absence of an MCC. A claim with a HAC and a POA indicator
of either ``N'' or ``U'' may be assigned to an MS-DRG that is
subdivided solely by the presence or absence of an MCC. In such cases,
removing a HAC ICD-9-CM CC code will not lead to further changes in the
MS-DRG assignment. Examples of these MS-DRG subdivisions are shown in
the footnotes to the chart and include the following examples:
MS-DRGs 100 and 101 (Seizures with or without MCC,
respectively)
MS-DRGs 102 and 103 (Headaches with or without MCC,
respectively)
The codes that fall under the HAC category of Foreign Object
Retained After Surgery are CCs. If this case were assigned to a MS-DRG
with an MCC subdivision such as MS-DRGs 100 and 101, the presence of
the HAC code would not affect the MS-DRG severity level assignment. In
other words, if the Foreign Object Retained After Surgery code were the
only secondary diagnosis reported, then the case would be assigned to
MS-DRG 101. If the POA indicator was ``N,'' the HAC Foreign Object
Retained After Surgery code would be ignored in the MS-DRG assignment
logic. Despite the fact that the code was ignored, the case would still
be assigned to the same, lower severity level MS-DRG. Therefore, there
would be no impact on the MS-DRG assignment.
Column E in Chart E below shows that there were 1,446 cases where
the HAC code was ``N'' or ``U'' and the MS-DRG assignment did not
change because the case was already assigned to the lowest severity
level.
(3) No Severity Levels
Column F (Number of MS-DRGs with No Severity Levels) shows the
frequency with which discharges with an HAC as a secondary diagnosis
coded as not POA did not result in an MS-DRG change because the MS-DRG
is not subdivided by severity levels. A claim with a HAC and a POA of
``N'' or ``U'' may be assigned to a MS-DRG with no severity levels. For
instance, MS-DRG 311 (Angina Pectoris) has no severity level
subdivisions; this MS-DRG is not split based on the presence of an MCC
or a CC. If a patient assigned to this MS-DRG develops a secondary
diagnosis such as a Stage III pressure ulcer after admission, the
condition would be considered to be a HAC. The code for the Stage III
pressure ulcer would be ignored in the MS-DRG assignment because the
condition developed after the admission (the POA indicator was ``N'').
Despite the fact that the ICD-9-CM code for the HAC Stage III pressure
ulcer was ignored, the MS-DRG assignment would not change. The case
would still be assigned to MS-DRG 311. Chart E below shows that 818
cases reporting a HAC-associated secondary diagnosis did not undergo a
change in the MS-DRG assignment based on the fact that the case was
assigned to a MS-DRG that had no severity subdivisions (that is, the
MS-DRG is not subdivided based on the presence or absence of an MCC or
a CC, rendering the presence of the HAC irrelevant for payment
purposes).
(4) MS-DRG Logic
Column G (MS-DRG Logic Issues) shows the frequency with which a HAC
as a secondary diagnosis coded as not POA did not result in an MS-DRG
change because of MS-DRG assignment logic. There were seven discharges
where the HAC criteria were met and the HAC logic was applied, however,
due to the structure of the MS-DRG logic, these cases did not result in
MS-DRG reassignment. These cases may appear similar to those discharges
where the MS-DRG is subdivided into two severity levels by the presence
or absence of an MCC and did not result in MS-DRG reassignment;
however, these discharges differ slightly in that the MS-DRG logic also
considers specific procedures that were reported on the claim. In other
words, for certain MS-DRGs, a procedure may be considered the
equivalent of an MCC or CC. The presence of the procedure code dictates
the MS-DRG assignment despite the presence of the HAC-associated
secondary diagnosis code with a POA indicator of ``N'' or ``U''.
For example, a claim with the principal diagnosis code of 441.1
(Thoracic aneurysm, ruptured) with HAC-associated secondary diagnosis
code of 996.64 (Infection and inflammatory reaction due to indwelling
urinary catheter) and diagnosis code 599.0 (Urinary tract infection,
site not specified), having POA indicators of ``Y'', ``N'', ``N'',
respectively, and procedure code 39.73 (Endovascular implantation of
graft in thoracic aorta) results in an assignment to MS-DRG 237 (Major
Cardiovascular Procedures with MCC or Thoracic Aortic Aneurysm Repair).
In this case, the thoracic aortic aneurysm repair is what dictated the
MS-DRG assignment and the presence of the HAC-associated secondary
diagnosis code, 996.64, did not affect the MS-DRG assigned. Other
examples of MS-DRGs that are subdivided in this same manner are as
follows:
MS-DRG 029 (Spinal procedures with CC or Spinal
Neurostimulators)
MS-DRG 129 (Major Head & Neck Procedures with CC/MCC or
Major Device)
MS-DRG 246 (Percutaneous Cardiovascular Procedure with
Drug-Eluting Stent with MCC or 4+ Vessels/Stents)
Column G in the chart below shows that four of the seven cases that
did not result in MS-DRG reassignment due to the MS-DRG logic were in
the Catheter Associated UTI HAC category, one case was in the Foreign
Body Retained after
[[Page 23890]]
Surgery HAC Category, one case was in the Falls and Trauma HAC
category, and one case was in the Vascular Catheter-Associated
Infection HAC Category.
In conclusion, a total of 8,345 cases (6,074 + 1,446 + 818 + 7) did
not have a change in MS-DRG assignment, regardless of the presence of a
HAC. The reasons described above explain why only 3,038 cases had a
change in MS-DRG assignment despite the fact that there were 11,383 HAC
cases with a POA of ``N'' or ``U.''
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[[Page 23892]]
f. Preliminary RTI Analysis of Coding Changes for HAC-Associated
Secondary Diagnoses for Current HACs
In addition to studying claims from October 2008 through June 2009,
RTI evaluated claims data from 2 years prior to determine if there were
significant changes in the number of discharges with a HAC being
reported as a secondary diagnosis. To provide consistency with the FY
2009 data studied, RTI examined claims using discharge dates from
October 2006 through June 2007 (for FY 2007) and October 2007 through
June 2008 (for FY 2008) and compared these data to the FY 2009 data.
RTI's analysis found that there was an increase in the reporting of
secondary diagnoses that are currently designated as HACs from FY 2007
to FY 2008. The most significant increase was in the Falls and Trauma
HAC category, with 108,397 discharges being reported in FY 2007, while
116,832 discharges were reported in FY 2008, an increase of 8,435
cases.
However, the analysis found that there was a decrease in reported
HAC-associated secondary diagnoses from FY 2008 to FY 2009. The most
significant decrease was in the Falls and Trauma HAC category, with
116,832 discharges being reported in FY 2008, while 109,246 discharges
were reported in FY 2009, a decrease of 7,586 cases. We point out that
because diagnosis codes for the Pressure Ulcer Stages III & IV HAC did
not become effective until October 1, 2008, there are no data available
for FY 2007 or FY 2008.
We refer readers to the RTI detailed report for all the conditions
in each fiscal year (FY 2007 through FY 2009) as described above at the
following Web site: http://www.rti.org/reports/cms/.
g. Preliminary RTI Analysis of Estimated Net Savings for Current HACs
RTI determined preliminary estimates of the net savings generated
by the HAC payment policy based on MedPAR claims from October 2008
through June 2009 for the 9-month period.
(1) Net Savings Estimation Methodology
The payment impact of a HAC is the difference between the IPPS
payment amount under the initially assigned MS-DRG and the amount under
the reassigned MS-DRG. The amount for the reassigned MS-DRG appears on
the MedPAR files. To construct this, RTI modeled the IPPS payments for
each MS-DRG following the same approach that we use to model the impact
of IPPS annual rule changes. Specifically, RTI replicated the payment
computations carried out in the IPPS PRICER program using payment
factors for IPPS providers as identified in various CMS downloaded
files. The files used are as follows:
Version 26 of the Medicare Severity GROUPER software
(applicable to discharges between October 1, 2008 and September 30,
2009). IPPS MedPAR claims were run through this file to obtain needed
HAC-POA output variables.
The FY 2009 MS-DRG payment weight file. This file includes
the weights, geometric mean length of stay (GLOS), and the postacute
transfer payment indicators.
CMS standardized operating and capital rates. Tables 1A
through 1C, as downloaded from the Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/IPPS2009, include the full update and reduced update
amounts, as well as the information needed to compute the blended
amount for providers located in Puerto Rico.
The IPPS impact files for FY 2009, also as downloaded from
the Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/IPPS2009/.
This file includes the wage index and geographic adjustment factors,
plus the provider type variable to identify providers qualifying for
alternative hospital-specific amounts and their respective HSP rates.
The IPPS impact files for FY 2010, as downloaded from the
Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/10FR/. This file
includes indirect medical education (IME) and disproportionate share
(DSH) percent adjustments that were in effect as of March 2009.
CMS historical provider-specific files (PSF). This
includes the indicator to identify providers subject to the full or
reduced standardized rates and the applicable operating and capital
cost-to-charge ratios. An SAS version was downloaded from the Web site
at: http://www.cms.hhs.gov/ProspMedicareFeeSvcPmtGen/04_psf_SAS.asp.
There were 50 providers with discharges in the final HAC analysis file
that did not appear in the FY 2009 impact file, of which 11 also did
not appear in the FY 2010 impact file. For these providers, we
identified the geographic CBSA from the historical PSF and assigned the
wage index using values from Tables 4A and 4C as downloaded from the
Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/IPPS2009/. For
providers in the FY 2010 file but not the FY 2009 file, we used IME and
DSH rates from FY 2010. The 11 providers in neither impact file were
identified as non-IME and non-DSH providers in the historical PSF file.
The steps for estimating the HAC payment impact are as follows:
Step 1: Re-run the Medicare Severity GROUPER on all records in the
analysis file. This is needed to obtain information on actual HAC-
related MS-DRG reassignments in the file, and to identify the CCs and
MCCs that contribute to each MS-DRG assignment.
Step 2: Model the base payment and outlier amounts associated with
the initial MS-DRG if the HAC were excluded using the computations laid
out in the CMS file ``Outlier Example FY2007 new.xls,'' as downloaded
from the Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/04_outlier.asp#TopOfPage, and modified to accommodate FY 2009 factors.
RTI's first round of computations treated all claims as though paid
under standard IPPS rules without adjusting for short-stay transfers or
HSP amounts.
Step 3: Model the base payment and outlier amounts associated with
the final MS-DRG where the HAC was excluded using the computations laid
out in the CMS file ``Outlier Example FY2007 new.xls,'' as downloaded
from the Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/04_outlier.asp#TopOfPage and modified to accommodate FY 2009 factors.
RTI's first round of computations treated all claims as though paid
under standard IPPS rules without adjusting for short-stay transfers or
HSP amounts.
Step 4: Compute MS-DRG base savings as the difference between the
nonoutlier payments for the initial and final MS-DRGs. Compute outlier
amounts as the difference in outlier amounts due under the initial and
final reassigned MS-DRG. Compute net savings due to HAC reassignment as
the sum of base savings plus outlier amounts.
Step 5: Adjust the model to incorporate short-stay transfer payment
adjustments.
Step 6: Adjust the model to incorporate hospital-specific payments
for qualifying rural providers receiving the hospital-specific payment
rates.
It is important to mention that using the methods described above,
the MS-DRG and outlier payments amounts that are modeled for the final
assigned MS-DRG do not always match the DRG price and outlier amounts
that appear in the MedPAR record. There are several reasons for this.
Some discrepancies are caused by using single wage index, IME and DSH
factors for the full period
[[Page 23893]]
covered by the discharges, when in practice these payment factors can
be adjusted for individual providers during the course of the fiscal
year. In addition, RTI's approach disregards any Part A coinsurance
amounts owed by individual beneficiaries with greater than sixty
covered days in a spell of illness. Five percent of all HAC discharges
showed at least some Part A coinsurance amount due from the
beneficiary, although less than two percent of reassigned discharges
(55 cases in the analysis file) showed Part A coinsurance amounts due.
Any Part A coinsurance payments would reduce the actual savings
incurred by the Medicare program.
There are also a number of less common special IPPS payment
situations that are not factored into RTI's modeling. These could
include new technology add-on payments, payments for blood clotting
factors, reductions for replacement medical devices, adjustments to the
capital rate for new providers, and adjustments to the capital rate for
certain classes of providers who are subject to a minimum payment level
relative to capital cost.
(2) Net Savings Estimate
Chart F below summarizes the estimated net savings of current HACs
based on MedPAR claims from October 2008 through 2009, based on the
methodology described above. Column A shows the number of discharges
where an MS-DRG reassignment for each HAC category occurred. For
example, there were 12 discharges with an Air Embolism that resulted in
an actual MS-DRG reassignment. Column B shows the total net savings
caused by MS-DRG reassignments for each HAC category. Continuing with
the example of Air Embolism, the chart shows that the 12 discharges
with an MS-DRG reassignment resulted in a total net savings of
$148,394. Column C shows the net savings per discharge for each HAC
category. For the Air Embolism HAC category, the net savings per
discharge is $12,366.
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[[Page 23895]]
As shown in Chart F above, the total net savings calculated for the
9-month period from October 2008 through June 2009 was roughly $16.44
million. The three HACs with the largest number of discharges resulting
in MS-DRG reassignment, Falls and Trauma, Orthopedic PE/DVT, and
Pressure Ulcer Stages III & IV, generated $15.10 million of net savings
for the 9-month period. Estimated net savings for the 9-month period
associated with the Falls and Trauma category were $7.58 million.
Estimated net savings associated with Orthopedic PE/DVT for the 9-month
period were $5.61 million. Estimated net savings for the 9-month period
associated with Pressure Ulcer Stages III & IV were $1.87 million.
The mean net savings per discharge calculated for the 9-month
period from October 2008 through June 2009 was roughly $5,456. The HAC
categories of Air Embolism; SSI, Mediastinitis, Following Coronary
Artery Bypass Graft (CABG); and SSI Following Certain Orthopedic
Procedures had the highest net savings per discharge, but represented a
small proportion of total net savings because the number of discharges
that resulted in MS-DRG reassignment for these HACs was low. With the
exception of Blood Incompatibility, where no savings occurred because
no discharges resulted in MS-DRG reassignment, SSI Following Bariatric
Surgery for Obesity and Catheter-Associated UTI had the lowest net
savings per discharge.
We refer readers to the RTI detailed report available at the
following Web site: http://www.rti.org/reports/cms/.
As mentioned previously, an extremely small number of cases in the
9-month period of FY 2009 analyzed by RTI had multiple HACs during the
same stay. In reviewing our 7.17 million claims, RTI found 47 cases
where two HACs were reported on the same admission as noted in section
II.F.3.g.(2) of this preamble. Of these 47 claims, 15 resulted in MS-
DRG reassignment. Chart G below summarizes these cases. There were 15
cases that had two HACs not POA that resulted in an MS-DRG
reassignment. Of these, 5 discharges involved Pressure Ulcer Stages III
& IV and Falls and Trauma and 4 discharges involved Orthopedic PE/DVT
and Falls and Trauma.
Chart G--Claims With More Than One HAC Secondary Diagnosis Where MS-DRG Reassignment Occurred October 2008
Through June 2009
----------------------------------------------------------------------------------------------------------------
4. Pressure 5. Falls and 6. Catheter-
Selected HAC ulcer stages trauma--MCC & associated
III & IV--MCC CC UTI--CC
----------------------------------------------------------------------------------------------------------------
3. Blood Incompatibility--CC.................................... .............. 1 ..............
5. Falls and Trauma--MCC & CC................................... 5 .............. ..............
6. Catheter-Associated Urinary Tract Infection (UTI)--CC........ 1 1 ..............
7. Vascular Catheter-Associated Infection--CC................... .............. 1 1
10. Pulmonary Embolism & DVT Orthopedic--MCC.................... 1 4 ..............
-----------------------------------------------
Total....................................................... 7 7 1
----------------------------------------------------------------------------------------------------------------
As we discuss in section II.F.1.b. of this preamble, implementation
of this policy is the part of an array of Medicare VBP tools that we
are using to promote increased quality and efficiency of care. We point
out that a decrease over time in the number of discharges where these
conditions are not POA is a desired consequence. We recognize that
estimated net savings would likely decline as the number of such
discharges decline. However, we believe that the sentinel effect
resulting from CMS identifying these conditions is critical. (We refer
readers to section IV.A. of this preamble for a discussion of the
inclusion of the incidence of these conditions in the RHQDAPU program.)
It is our intention to continue to monitor trends associated with the
frequency of these HACs and the estimated net payment impact through
RTI's program evaluation and possibly beyond.
h. Previously Considered Candidate HACs--Preliminary RTI Analysis of
Frequency of Discharges and POA Indicator Reporting
RTI evaluated the frequency of conditions previously considered,
but not adopted as HACs in prior rulemaking, that were reported as
secondary diagnoses (across all 7.17 million discharges) as well as the
POA indicator assignments for these conditions. Chart H below indicates
that the three previously considered candidate conditions most
frequently reported as a secondary diagnosis were: (1) Clostridium
Difficile-Associated Disease (CDAD), which demonstrated the highest
frequency, with a total of 66,502 secondary diagnoses codes being
reported for that condition, of which 23,323 reported a POA indicator
of ``N''; (2) Staphylococcus aureus Septicemia, with a total of 17,662
secondary diagnoses codes being reported for that condition, with 3,949
of those reporting a POA indicator of ``N''; and (3) Iatrogenic
Pneumothorax, with a total of 16,765 secondary diagnoses codes being
reported for that condition, with 14,604 of those reporting a POA
indicator of ``N.'' As these three conditions had the most significant
impact for reporting a POA indicator of ``N,'' it is reasonable to
believe that these same three conditions would have the greatest number
of potential MS-DRG reassignments. The frequency of discharges for the
previously considered HACs that could lead to potential changes in MS-
DRG assignment is discussed in the next section. We take this
opportunity to remind readers that because more than one previously
considered HAC diagnosis code can be reported per discharge (on a
single claim) that the frequency of these diagnosis codes may be more
than the actual number of discharges with a previously considered
candidate condition reported as a secondary diagnosis.
[[Page 23896]]
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In Chart I below, Column A shows the number of discharges for each
previously considered candidate HAC category when the condition was
reported as a secondary diagnosis. For example, there were 66,502
discharges that reported CDAD as a secondary diagnosis. Previously
considered candidate HACs reported with a POA indicator of ``N'' or
``U'' may cause MS-DRG reassignment (which would result in reduced
payment to the facility). Column C shows the discharges for each
previously considered candidate HAC reported with a POA indicator of
``N'' or ``U.'' Continuing with the example of CDAD, Chart I shows
that, of the 66,502 discharges, 23,702 discharges (35.64 percent) had a
POA indicator of ``N'' or ``U.'' Therefore, there were a total of
23,702 discharges that could potentially have had an MS-DRG
reassignment. Column E shows the number of discharges where an actual
MS-DRG reassignment could have occurred; the number of discharges with
CDAD that could have resulted in actual MS-DRG reassignments is 739
(3.12 percent). Thus, while there were 23,702 discharges with CDAD
reported with a POA indicator of ``N'' or ``U'' that could potentially
have had an MS-DRG reassignment, the result was 739 (3.12 percent)
potential MS-DRG reassignments. As discussed above, there are a number
of reasons why a condition reported with a POA indicator of ``N'' or
``U'' would not result in a MS-DRG reassignment.
In summary, Chart I below demonstrates there were a total of
159,485 discharges with a previously considered candidate HAC reported
as a secondary diagnosis. Of those, 47,010 discharges were reported
with a POA indicator of ``N'' or ``U.'' The total number of discharges
that could have resulted in MS-DRG reassignments is 2,932.
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i. Current and Previously Considered Candidate HACs--RTI Report on
Evidence-Based Guidelines
The RTI program evaluation includes a report that provides
references for all evidence-based guidelines available for each of the
selected and previously considered candidate HACs that provide
recommendations for the prevention of the corresponding conditions.
Guidelines were primarily identified using the AHRQ National Guidelines
Clearing House (NGCH) and the CDC, along with relevant professional
societies. Guidelines published in the United States were used, if
available. In the absence of U.S. guidelines for a specific condition,
international guidelines were included.
Evidence-based guidelines that included specific recommendations
for the prevention of the condition were identified for each of the 10
selected conditions. In addition, evidence-based guidelines were also
found for the previously considered candidate conditions.
RTI prepared a final report to summarize its findings regarding
evidence-based guidelines, which can be found on the Web site at:
http://www.rti.org/reports/cms.
j. Proposals Regarding Current HACs and Previously Considered Candidate
HACs
We believe that the RTI analysis summarized above does not provide
additional information that would require us to change our previous
determinations regarding either current HACs (as described in section
II.F.2. of this preamble) or previously considered candidate HACs in
the FY 2008 IPPS final rule with comment period and FY 2009 IPPS final
rule (72 FR 47200 through 47218 and 73 FR 48471 through 48491,
respectively). Accordingly, we are not proposing to add or remove
categories of HACs at this time, although we note that we are proposing
[[Page 23898]]
to revise the Blood Incompatibility HAC category as discussed in
section II.F.2. of this preamble. (We also note that, as discussed in
section II.F.3.b. of this preamble, we are not proposing to change our
current policy regarding the treatment of the ``U'' POA indicator.)
However, we continue to encourage public dialogue about refinements to
the HAC list.
We refer readers to section II.F.6. of the FY 2008 IPPS final rule
with comment period (72 FR 47202 through 47218) and to section II.F.7.
of the FY 2009 IPPS final rule (73 FR 48474 through 48491) for detailed
discussion supporting our determination regarding each of these
conditions.
G. Proposed Changes to Specific MS-DRG Classifications
We are inviting public comment on each of the MS-DRG classification
proposed changes described below, as well as our proposals to maintain
certain existing MS-DRG classifications, which are also discussed
below. In some cases, we are proposing changes to the MS-DRG
classifications based on our analysis of claims data. In other cases,
we are proposing to maintain the existing MS-DRG classification based
on our analysis of claims data.
1. Pre-Major Diagnostic Categories (MDCs)
a. Postsurgical Hypoinsulinemia (MS-DRG 008 (Simultaneous Pancreas/
Kidney Transplant)
Diabetes mellitus is a pancreatic disorder in which the pancreas
fails to produce sufficient insulin, or in which the body cannot
process insulin. Many patients with diabetes will eventually experience
complications of the disease, including poor kidney function. When
these patients show signs of advanced kidney disease, they are usually
referred for transplant evaluation. Currently, many doctors recommend
that individuals with diabetes being evaluated for kidney
transplantation also be considered for pancreas transplantation. A
successful pancreas transplant may prevent, stop, or reverse the
complications of diabetes.
Occasionally, secondary diabetes may be surgically induced
following a pancreas transplant. This condition would be identified by
using ICD-9-CM diagnosis code 251.3 (Postsurgical hypoinsulinemia).
However, currently the list of principal diagnosis codes assigned to
surgical MS-DRG 008 (Simultaneous Pancreas/Kidney Transplant) does not
include diagnosis code 251.3. Therefore, when diagnosis code 251.3 is
assigned to a case as a principal diagnosis, the case is not assigned
to MS-DRG 008. Instead, these cases are grouped to MS-DRG 652 (Kidney
Transplant) under MDC 11 (Diseases and Disorders of the Kidney and
Urinary Tract). In addition, the use of diagnosis code 251.3 as a
principal diagnosis without a secondary diagnosis of diabetes mellitus
and with a procedure code for pancreas transplant only during that
admission results in assignment of the case to MS-DRG 628, 629, or 630
(Other Endocrine, Nutritional & Metabolic Operating Room Procedures
with MCC, with CC, and without CC/MCC, respectively) under MDC 10
(Endocrine, Nutritional and Metabolic Diseases and Disorders).
We believe that the exclusion of diagnosis code 251.3 from the list
of principal diagnosis codes assigned to surgical MS-DRG 008 is an
error of omission. Therefore, we are proposing to add diagnosis code
251.3 to the list of principal or secondary diagnosis codes assigned to
MS-DRG 008. As a conforming change, we also are proposing to add
diagnosis code 251.3 to the list of principal or secondary diagnosis
codes assigned to MS-DRG 010 (Pancreas Transplant).
b. Bone Marrow Transplants
We received two requests to review whether cost differences between
an autologous bone marrow transplant (where the patient's own bone
marrow or stem cells are used) and an allogeneic bone marrow transplant
(where bone marrow or stem cells come from either a related or
unrelated donor) necessitate the creation of separate MS DRGs to more
appropriately account for the clinical nature of the services being
rendered as well as the costs. One of the requestors stated that there
are dramatic differences in the costs between the two types of
transplants where allogeneic cases are significantly more costly.
Bone marrow transplantation and peripheral blood stem cell
transplantation are used in the treatment of certain cancers and bone
marrow diseases. These procedures restore stem cells that have
destroyed by high doses of chemotherapy and/or radiation treatment.
Currently, all bone marrow transplants are assigned to MS-DRG 009 (Bone
Marrow Transplant).
We performed an analysis of the FY 2009 MedPAR data and found 1,664
total cases assigned to MS-DRG 009 with average costs of approximately
$43,877 and an average length of stay of approximately 21 days. Of
these MS-DRG 009 cases, 395 of them were allogeneic bone marrow
transplant cases reported with one of the following ICD-9-CM procedure
codes: 41.02 (Allogeneic bone marrow transplant with purging); 41.03
(Allogeneic bone marrow transplant without purging); 41.05 (Allogeneic
hematopoietic stem cell transplant without purging); 41.06 (Cord blood
stem cell transplant); or 41.08 (Allogeneic hematopoietic stem cell
transplant). The average costs of these allogeneic cases, approximately
$64,845, were higher than the overall average costs of all cases in MS-
DRG 009, approximately $43,877. The average length of stay for the
allogeneic cases, approximately 28 days, was slightly higher than the
average length of stay for all cases assigned to MS-DRG 009,
approximately 21 days.
We found 1,269 autologous bone marrow transplant cases reported
with one of the following ICD-9-CM procedure codes: 41.00 (Bone marrow
transplant, not otherwise specified); 41.01 (Autologous bone marrow
transplant without purging); 41.04 (Autologous hematopoietic stem cell
transplant without purging); 41.07 (Autologous hematopoietic stem cell
transplant with purging); or 41.09 (Autologous bone marrow transplant
with purging). The average costs of these cases, approximately $37,
350, was less than the overall average costs of all cases in MS-DRG 009
and the average costs associated with the allogeneic bone marrow
transplant cases. The average length of stay, of approximately 19 days,
was less than the average lengths of stay for all the cases assigned to
MS-DRG 009 and for the allogeneic bone marrow transplant cases. We
included in our analysis of the autologous bone marrow transplants
cases, 5 cases that were reported with procedure code 41.00 (Bone
marrow transplant, not otherwise specified). These 5 cases had average
costs of approximately $41,084 and an average length of stay of
approximately 12 days, which was similar to the other autologous bone
marrow transplant cases.
The table below illustrates our findings:
[[Page 23899]]
----------------------------------------------------------------------------------------------------------------
Number of Average length
MS-DRG cases of stay Average cost
----------------------------------------------------------------------------------------------------------------
009--All cases.................................................. 1,664 21.22 $43,877
009--Cases with allogeneic bone marrow transplants.............. 395 27.7 64,845
009--Cases with autologous bone marrow transplants.............. 1,269 19.1 37,350
----------------------------------------------------------------------------------------------------------------
As a result of our analysis, the data support the requestor's
suggestion that there are cost differences associated with the
autologous bone marrow transplants and allogeneic bone marrow
transplants and warrants a separate MS-DRG for these procedures.
Therefore, we are proposing to delete MS-DRG 009 and create two new MS-
DRGs: MS-DRG 014 (Allogeneic Bone Marrow Transplant) and MS-DRG 015
(Autologous Bone Marrow Transplant).
Proposed MS-DRG 014 would include cases reported with one of the
following ICD-9-CM procedure codes:
41.02, Allogeneic bone marrow transplant with purging
41.03, Allogeneic bone marrow transplant without purging
41.05, Allogeneic hematopoietic stem cell transplant
without purging
41.06, Cord blood stem cell transplant
41.08, Allogeneic hematopoietic stem cell transplant
Proposed MS-DRG 015 would include cases reported with one of the
following ICD-9-CM procedure codes:
41.00 (Bone marrow transplant, not otherwise specified)
41.01 (Autologous bone marrow transplant without purging)
41.04 (Autologous hematopoietic stem cell transplant
without purging)
41.07 (Autologous hematopoietic stem cell transplant with
purging)
41.09 (Autologous bone marrow transplant with purging)
2. MDC 1 (Nervous System): Administration of Tissue Plasminogen
Activator (tPA) (rtPA)
During the comment period for the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule, we received a public comment that had not been the
subject of a proposal in that proposed rule. The commenter had
requested that CMS conduct an analysis of diagnosis code V45.88 (Status
post administration of tPA (rtPA) in a different facility within the
last 24 hours prior to admission to current facility) under MDC 1
(Diseases and Disorders of the Nervous System). Diagnosis code V45.88
was created for use beginning October 1, 2008, to identify patients who
are given tissue plasminogen activator (tPA) at one institution and
then transferred and admitted to a comprehensive stroke center for
further care. This situation is referred to as the ``drip-and-ship''
issue that was discussed at detail in the FY 2009 IPPS final rule (73
FR 48493).
According to the commenter, the concern at the receiving facilities
is that the costs associated with [caring for] more complex stroke
patients that receive tPA are much higher than the cost of the drug,
presumably because stroke patients initially needing tPA have more
complicated strokes and outcomes. However, because these patients do
not receive the tPA at the second or transfer hospital, the receiving
hospital will not be assigned to one of the higher weighted tPA stroke
MS-DRGs when it admits these patients whose care requires the use of
intensive resources. The MS-DRGs that currently include codes for the
use of tPA are: 061 (Acute Ischemic Stroke with Use of Thrombolytic
Agent with MCC); 062 (Acute Ischemic Stroke with Use of Thrombolytic
Agent with CC); and 063 (Acute Ischemic Stroke with Use of Thrombolytic
Agent without CC/MCC). These MS-DRGs have higher relative weights than
the next six MS-DRGs relating to brain injury in the hierarchy. The
commenter requested an analysis of the use of diagnosis code V45.88
reflected in the MedPAR data for FY 2009 and FY 2010. The commenter
believed that the data would show that the use of this code could
potentially result in a new MS-DRG or a new set of MS-DRGs in FY 2011.
In addressing this public comment in the FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 43798), we noted that the comment was out of
scope for the FY 2010 proposed rule and reiterated that the deadline
for requesting data review and potential MS-DRG changes had been the
previous December. We are now able to address the commenter's concern
because we have been able to conduct an analysis of MedPAR claims data
for this diagnosis code for this proposed rule.
For this proposed rule, we undertook an analysis of MedPAR claims
data for FY 2009. For our analysis, we did not include claims for
patient cases assigned to MS-DRGs 061, 062, or 063 because patients
whose cases were assigned to these MS-DRGs would have been given the
tPA at the initial hospital, with assignment of procedure code 99.10
(Injection or infusion of thrombolytic agent), prior to their transfer
to a comprehensive stroke center. The tPA should not have been given at
the receiving hospital; therefore, inclusion of code 99.10 on their
claims would constitute erroneous coding. Likewise, we did not include
MS-DRGs 067 and 068 (Nonspecific CVA & Precerebral Occlusion without
Infarction with MCC, and without MCC, respectively), or MS-DRG 069
(Transient Ischemia). Claims assigned to MS-DRGs 067, 068, and 069 are
unlikely to contain cases in which tPA had been administered.
Our data analysis included MS-DRGs 064, 065, and 066 (Intracranial
Hemorrhage or Cerebral Infarction with MCC, with CC, and without CC/
MCC, respectively) because claims involving diagnosis code V45.88 would
be properly reported in the data for these MS-DRGs for FY 2009. The
following table reflects the results of our analysis of the MedPAR data
in which diagnosis code V45.88 was reported as a secondary diagnosis
for FY 2009.
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average cost
cases stay
----------------------------------------------------------------------------------------------------------------
MS-DRG 064--All Cases........................................... 65,884 6.80 $11,305
MS-DRG 064--Cases with secondary diagnosis code V45.88.......... 249 7.00 12,285
MS-DRG 065--All Cases........................................... 96,274 4.75 7,264
MS-DRG 065--Cases with secondary diagnosis code V45.88.......... 448 5.06 8,732
MS-DRG 066--All Cases........................................... 62,337 3.29 5,291
[[Page 23900]]
MS-DRG 066--Cases with secondary diagnosis code V45.88.......... 210 3.35 6,325
----------------------------------------------------------------------------------------------------------------
Based on our review of the data for all of the cases in MS-DRGs
064, 065, and 066, compared to the subset of cases containing the
V45.88 secondary diagnosis code, we concluded that the movement of
cases with diagnosis code V45.88 as a secondary diagnosis from MS-DRGs
064, 065, and 066 into MS-DRGs 061, 062, and 063 is not warranted. We
determined that the differences in the average lengths of stay and the
average costs are too small to warrant an assignment to the higher
weighted MS-DRGs. Likewise, neither the lengths of stay nor the average
costs are substantial enough to justify the creation of an additional
MS-DRG for transferred tPA cases, or to create separate MS-DRGs that
would mirror the MCC, CC or without CC/MCC severity levels.
Therefore, for FY 2011, we are not proposing any change to MS-DRGs
061, 062, 063, 064, 065, or 066, or any change involving the assignment
of diagnosis code V45.88.
3. MDC 5 (Diseases and Disorders of the Circulatory System):
Intraoperative Fluorescence Vascular Angiography (IFVA) and X-Ray
Coronary Angiography in Coronary Artery Bypass Graft Surgery
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR43785 through
43787), we discussed a request we received to reassign cases reporting
the use of intraoperative fluorescence vascular angiography (IFVA) with
coronary artery bypass graft (CABG) procedures from MS-DRGs 235 and 236
(Coronary Bypass without Cardiac Catheterization with and without MCC,
respectively) to MS-DRG 233 (Coronary Bypass with Cardiac
Catheterization with MCC) and MS-DRG 234 (Coronary Bypass with Cardiac
Catheterization without MCC). Effective October 1, 2007, procedure code
88.59 (Intraoperative fluorescence vascular angiography (IFVA)) was
established to describe this technology.
In addition, we also discussed receiving related requests (74 FR
43798 through 43799) that were outside the scope of issues addressed
for MDC 5 in the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule. There
were three components to these requests. The first component involved
the creation of new MS-DRGs. One request was to create four new MS-DRGs
that would differentiate the utilization of resources between
intraoperative angiography and IFVA when utilized with CABG. A second
request was to create only one new MS-DRG to separately identify the
use of intraoperative angiography, by any method, in CABG surgery. The
second component involved reviewing the ICD-9-CM procedure codes.
Currently, the ICD-9-CM procedure codes do not distinguish between
preoperative, intraoperative, and postoperative angiography. Procedure
code 88.59 (Intraoperative fluorescence vascular angiography (IFVA)) is
one intraoperative angiography technique that allows visualization of
the coronary vasculature. The third component involved reassigning
cases with procedure code 88.59 to the ``Other Cardiovascular MS-
DRG''s: MS-DRGs 228, 229, and 230 (Other Cardiothoracic Procedures with
MCC, CC, and without CC/MCC, respectively). We stated our intent to
consider these requests during the FY 2011 rulemaking process.
After publication of the FY 2010 IPPS/RY 2010 LTCH PPS final rule,
we were contacted by one of the requestors, the manufacturer of the
IFVA technology. We met with the requestor in mid-November 2009 to
discuss evaluating the data for IFVA (procedure code 88.59) again in
consideration of a proposal to create new MS-DRGs and to discuss a
request for a new procedure code(s).
IFVA technology consists of a mobile device imaging system with
software. It is used to test cardiac graft patency and technical
adequacy at the time of coronary artery bypass grafting (CABG). While
this system does not involve fluoroscopy or cardiac catheterization, it
has been suggested that it yields results that are similar to those
achieved with selective coronary arteriography and cardiac
catheterization. Intraoperative coronary angiography provides
information about the quality of the anastomosis, blood flow through
the graft, distal perfusion, and durability. For additional information
regarding IFVA technology, we refer readers to the September 28-29,
2006 ICD-9-CM Coordination and Maintenance Committee meeting handout at
the following Web site: http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp#TopOfPage.
a. New MS-DRGs for Intraoperative Fluorescence Vascular Angiography
(IFVA) With CABG
As stated earlier, the manufacturer requested that we create four
new MS-DRGs for CABG to distinguish CABG surgeries performed with IFVA
and those performed without IFVA. According to the requestor, these
four new MS-DRGs would correspond to the existing MS-DRG for CABG but
would also include intraoperative angiography. The requestor proposed
the following four new MS-DRGs:
MS-DRG XXX (Coronary Bypass with Cardiac Catheterization with MCC with
Intraoperative Angiography)
MS-DRG XXX (Coronary Bypass with Cardiac Catheterization without MCC
with Intraoperative Angiography)
MS-DRG XXX (Coronary Bypass without Cardiac Catheterization with MCC
with Intraoperative Angiography)
MS-DRG XXX (Coronary Bypass without Cardiac Catheterization without MCC
with Intraoperative Angiography)
Using claims data from the FY 2009 MedPAR file, we examined cases
identified by procedure code 88.59 in MS-DRGs 233, 234, 235, and 236.
As shown in the table below, for both MS-DRGs 235 and 236, the cases
utilizing IFVA technology (code 88.59) have a shorter length of stay
and lower average costs compared to all cases in MS-DRGs 235 and 236.
There were a total of 10,281 cases in MS-DRG 235 with an average length
of stay of 10.61 days and average costs of $34,639. There were 114
cases identified by procedure code 88.59 with an average length of stay
of 10.38 days with average costs of $28,238. In MS-DRG 236, there were
a total of 22,410 cases with an average length of stay of 6.37 days and
average costs of $23,402; and there were 186 cases identified by
procedure code 88.59 with an average length of stay of 6.54 days and
average costs of $19,305. Similar to the data reported last year, the
data for FY 2009 clearly demonstrate that the IFVA cases (identified by
procedure code 88.59) are assigned appropriately to MS-DRGs 235 and
236. We also examined cases identified by procedure code 88.59 in MS-
DRGs 233 and 234. Likewise, in MS-DRGs 233 and 234 cases identified by
code 88.59 reflect shorter lengths of stay and lower
[[Page 23901]]
average costs compared to the remainder of the cases in those MS-DRGs;
and there were a total of 16,475 cases in MS-DRG 233 with an average
length of stay of 13.47 days and average costs of $42,662. There were
58 cases identified by procedure code 88.59 with an average length of
stay of 12.12 days and average costs of $35,940. In MS-DRG 234, there
were a total of 23,478 cases with an average length of stay of 8.61
days and average costs of $29,615; and there were 67 cases identified
by procedure code 88.59 with an average length of stay of 8.85 days and
average costs of $25,379. The data clearly demonstrate the IFVA cases
(identified by procedure code 88.59) are appropriately assigned to MS-
DRGs 233 and 234.
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average cost
cases stay
----------------------------------------------------------------------------------------------------------------
235--All cases.................................................. 10,281 10.61 $34,639
235--Cases with procedure code 88.59............................ 114 10.38 28,238
235--Cases without procedure code 88.59......................... 10,167 10.62 34,711
236--All cases.................................................. 22,410 6.37 23,402
236--Cases with code procedure 88.59............................ 186 6.54 19,305
236--Cases without procedure code 88.59......................... 22,224 6.37 23,436
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Average
MS-DRG Number of length of Average cost
cases stay
----------------------------------------------------------------------------------------------------------------
233--All cases.................................................. 16,475 13.47 $42,662
233--Cases with procedure code 88.59............................ 58 12.12 35,940
233--Cases without procedure code 88.59......................... 16,417 13.47 42,686
234--All cases.................................................. 23,478 8.61 29,615
234--Cases with procedure code 88.59............................ 67 8.85 25,379
234--Cases without procedure code 88.59......................... 23,411 8.61 29,627
----------------------------------------------------------------------------------------------------------------
If the cases identified by procedure code 88.59 were proposed to be
reassigned from MS-DRGs 235 and 236 to MS-DRGs 233 and 234, they would
be significantly overpaid. In addition, because the cases in MS-DRGs
235 and 236 did not actually have a cardiac catheterization performed,
a proposal to reassign cases identified by procedure code 88.59 would
result in lowering the relative weights of MS-DRGs 233 and 234 where a
cardiac catheterization is truly performed.
In summary, the data do not support moving IFVA cases (procedure
code 88.59) from MS-DRGs 235 and 236 to MS-DRGs 233 and 234. Therefore,
we are not proposing to make any MS-DRG modifications for cases
reporting procedure code 88.59 for FY 2011.
b. New MS-DRG for Intraoperative Angiography, by Any Method, With CABG
We also received a request to create a single MS-DRG for any type
of intraoperative angiography utilized in CABG surgery. The requestor
suggested the following title for the proposed new MS-DRG: XXX Coronary
Bypass with Intraoperative Angiography, by any Method.
Currently, the only ICD-9-CM procedure code that identifies an
intraoperative angiography is procedure code 88.59 (Intraoperative
fluorescence vascular angiography), as described in the previous
section. Due to the structure of the ICD-9-CM procedure classification
system, it is not possible to distinguish when other types of
angiography are performed intraoperatively. Therefore, we are unable to
evaluate any data, other than that for procedure code 88.59, as shown
in the tables above. We are not proposing to create a new MS-DRG in FY
2011 for coronary bypass with intraoperative angiography, by any
method.
c. New Procedure Codes
In response to our invitation to submit public comments regarding
the proposal not to make any MS-DRG modifications for cases reporting
procedure code 88.59 in the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule
(74 FR 24106-24107), one requestor presented another option involving
the creation of new ICD-9-CM procedure codes. According to the
requestor, the purpose of these new codes would be to separately
identify the two technologies used to perform intraoperative coronary
angiography in CABG surgery: X-ray coronary angiography with cardiac
catheterization and fluoroscopy versus intraoperative fluorescence
coronary angiography (IFVA). The requestor stated that due to the
structure of the current codes and MS-DRGs for CABG, it is difficult to
identify when x-ray angiography is performed.
X-ray angiography is commonly performed as a separate procedure in
a catheterization laboratory. Currently, there are no procedure codes
to distinguish if this angiography was performed preoperatively,
intraoperatively, and/or postoperatively. We informed the requestor
that they could submit a proposal for creating a new procedure code(s)
to the ICD-9-CM Coordination and Maintenance Committee for its
consideration. Therefore, this topic will be further evaluated through
the ICD-9-CM Coordination and Maintenance Committee meeting process.
d. MS-DRG Reassignment of Intraoperative Fluorescence Vascular
Angiography (IFVA)
One requestor suggested reassigning procedure code 88.59
(Intraoperative Fluorescence Vascular Angiography), to the ``Other
Cardiovascular MS-DRGs:'' MS-DRGs 228, 229, and 230 (Other
Cardiothoracic Procedures with MCC, CC, and without CC/MCC,
respectively). The requestor noted that these MS-DRGs have three levels
of severity and that other procedures assigned to these MS-DRGs (for
example, transmyocardial revascularization) are frequently performed at
the same time as a CABG. The requestor believed that reassigning cases
that report IFVA (procedure code 88.59) to these MS-DRGs would not
result in a significant overpayment to hospitals.
We point out that, in the surgical hierarchy, MS-DRGs 228, 229, and
230 rank higher than MS-DRGs 233, 234, 235, and 236, which were
evaluated in the above tables for CABG procedures
[[Page 23902]]
performed with IFVA (procedure code 88.59). The surgical hierarchy
reflects the relative resource requirements of various surgical
procedures. For example, if a CABG surgery were performed along with
another procedure currently assigned to MS-DRGs 228, 229, and 230, the
case would be assigned to one of the ``Other Cardiothoracic Procedures
MS-DRGs'' (228, 229, and 230) because patients with multiple procedures
are assigned to the highest surgical hierarchy to which one of the
procedures is assigned.
Therefore, as the data shown above did not demonstrate that IFVA
utilized an equivalent (or additional) amount of resources as a cardiac
catheterization to warrant a proposal to reassign IFVA cases to MS-DRGs
233 and 234 and the fact that IFVA cases with CABG performed with a
procedure assigned to MS-DRGs 228, 229, and 230 would already be
grouped to those same MS-DRGs, we are not proposing to reassign cases
reporting procedure code 88.59 to MS-DRGs 228, 229, and 230 for FY
2011.
4. MDC 6 (Diseases and Disorders of the Digestive System):
Gastrointestinal Stenting
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR43799), we
discussed a request we received to create new MS-DRGs in FY 2011 to
better identify patients who undergo the insertion of a
gastrointestinal stent. The request was considered outside the scope of
issues addressed in the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule;
therefore, we stated our intent to consider this request during the FY
2011 rulemaking process.
Gastrointestinal stenting is performed by inserting a tube (stent)
into the esophagus, duodenum, biliary tract or colon to reestablish or
maintain patency of these structures and allow swallowing, drainage, or
passage of waste. The commenter requested that the new MS-DRGs be
subdivided into three severity levels (with MCC, with CC, and without
CC/MCC) to better align payment rates with resource consumption and
improve the clinical coherence of these cases.
In its own analysis using FY 2008 MedPAR data, the commenter
identified gastrointestinal stenting cases using relevant diagnosis
codes and a combination of procedure codes with revenue code 0278 in
MS-DRGs 374, 375, and 376 (Digestive Malignancy with MCC, with CC, and
without CC/MCC, respectively), MS-DRGs 391and 392 (Esophagitis,
Gastroenteritis and Miscellaneous Digestive Disorders with MCC and
without MCC, respectively), and MS-DRGs 393, 394, and 395 (Other
Digestive System Diagnoses with MCC, with CC, and without CC/MCC,
respectively) in MDC 6 (Diseases and Disorders of the Digestive
System); and MS-DRGs 435, 436, and 437 (Malignancy of Hepatobiliary
System or Pancreas with MCC, with CC, and without CC/MCC, respectively)
in MDC 7 (Diseases and Disorders of the Hepatobiliary System and
Pancreas).
As stated above, the commenter utilized a combination of procedure
codes along with revenue code 0278 for its analysis. There were a total
of six procedure codes included, of which, only three (procedure codes
42.81, 51.87, and 52.93) actually describe the insertion of a stent.
The complete list of procedure codes is as follows:
42.81 (Insertion of permanent tube into esophagus)
45.13 (Other endoscopy of small intestine)
45.22 (Endoscopy of large intestine through artificial
stoma)
46.85 (Dilation of intestine)
51.87 (Endoscopic insertion of stent (tube) into bile
duct)
52.93 (Endoscopic insertion of stent (tube) into
pancreatic duct)
The commenter aggregated the results by the previously mentioned
MS-DRG groupings and did not present results for individual stenting
procedures. According to the commenter, mean standardized charges for
gastrointestinal stenting procedures were higher than those for
nonstenting procedures across all levels of severity of illness. In
addition, the commenter believed that the difference in charges was not
simply related to the costs of the stents, but rather that the extent
of the difference in charges reflected the severity of illness and
resource intensity associated with gastrointestinal stenting
procedures.
In response to the commenter's request, we point out that we do not
utilize revenue codes in our process to evaluate if new MS-DRGs are
warranted. The use of revenue codes in the MS-DRG reclassification
process would require a major structural change from the current
process that has been utilized since the inception of the IPPS. In
addition, the commenter included procedure codes in its analysis that
do not identify the insertion of a stent; thereby, the data are
unreliable. Furthermore, two procedure codes describing the insertion
of a colonic stent were recently implemented, effective with discharges
occurring on or after October 1, 2009--procedure code 46.86 (Endoscopic
insertion of colonic stent(s)) and procedure code 46.87 (Other
insertion of colonic stent(s)). However, we do not have data currently
available on these two new procedure codes to include them in a
comprehensive analysis. Lastly, as the commenter indicated, the
differences between those procedures with and without stents is a
reflection on the severity of illness and resource consumption
associated with these types of procedures. The commenter also
acknowledged that patients receiving a gastrointestinal stent who are
severely debilitated due to prolonged illness are reflected by the fact
that the majority of cases are assigned to MS-DRGs for patients with
MCCs (major complications or comorbidities). Therefore, the medical MS-
DRGs to which these procedures are currently assigned already account
for the severity of illness and intensity of resources utilized.
Using FY 2009 MedPAR data, we analyzed the three procedure codes
that truly identify and describe the insertion of a stent (procedure
codes 42.81, 51.87, and 52.93) within the MS-DRGs referenced above.
Similar to the commenter's findings, our analysis demonstrated a small
volume of cases in which insertion of a gastrointestinal stent occurred
in the specified MS-DRGs. Of the 411,390 total cases across the
digestive system MS-DRGs the requestor identified, there were only
2,011cases that involved the actual insertion of a gastrointestinal
stent. These cases had average costs ranging from a low of $5,846 to a
high of $17,626. Based on these findings, we do not believe it is
appropriate to assign cases with such disparity in costs into a single,
new MS-DRG. Furthermore, in applying the five criteria used to
establish new MS-DRGs, the data do not support the creation of new MS-
DRGs with three severity levels (with MCC, with CC, and without CC/
MCC).
For the reasons stated above, we invite the public to submit
comments on our proposal not to make any MS-DRG modifications at this
time to cases involving the use of gastrointestinal stents for FY 2011.
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue): Pedicle-Based Dynamic Stabilization
As we did for FY 2009 (73 FR 45820), we received a request from a
manufacturer to reassign procedure code 84.82 (Insertion or replacement
of pedicle-based dynamic stabilization device(s)), effective October 1,
2007, from MS-DRG 490 (Back and Neck Procedures Except Spinal Fusion
with CC/MCC or Disc Device/Neurostimulator) to MS-DRG 460
[[Page 23903]]
(Spinal Fusion Except Cervical without MCC). According to the
manufacturer, the technology that is identified by this procedure code,
the Dynesys[supreg] Dynamic Stabilization System, is clinically similar
to lumbar spinal fusion and requires similar utilization of resources.
Dynamic stabilization is a concept that utilizes a flexible system
to stabilize the spine without fusion. The primary goals of dynamic
stabilization are to limit the amount of unnatural spinal motion and
preserve as much of the patient's natural anatomic structures as
possible. The Dynesys[supreg] Dynamic Stabilization System is comprised
of three components with specific functions: Titanium alloy pedicle
screws that anchor the system to the spine; a polyethylene-
terephthalate (PET) cord that connects the Dynesys[supreg] screws; and
a polycarbonate-urethane (PCU) spacer that runs over the cord between
the Dynesys[supreg] screws. The system is placed under tension creating
a dynamic interaction between the components.
The MS-DRGs are comprised of clinically coherent groups of patients
who consume similar utilization of resources and complexity of
services. The insertion of a Dynesys[supreg] Dynamic Stabilization
System is clinically not a lumbar fusion. As stated previously, dynamic
stabilization is a concept that utilizes a flexible system to stabilize
the spine without fusion. Therefore, it would be clinically
inappropriate to reassign cases reporting procedure code 84.82 in the
fusion MS-DRG.
In conclusion, the Dynesys[supreg] Dynamic Stabilization System is
currently FDA approved for use only as an adjunct to spinal fusion,
there is uncertainty regarding the coding and reporting of procedure
code 84.82, as well as off-label use, and currently, all other similar
nonfusion devices are assigned to MS-DRG 490.
For the reasons listed above, we are not proposing to reassign
cases reporting procedure code 84.82 from MS-DRG 490 to MS-DRG 460 for
FY 2011.
6. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
a. Discharges/Transfers of Neonates to a Designated Cancer Center or
Children's Hospital
We received a request to add patient discharge status code 05
(Discharged/transferred to a designated cancer center or children's
hospital) to the MS-DRG GROUPER logic for MS-DRG 789 (Neonates, Died or
Transferred to Another Acute Care Facility). Currently, neonate cases
with the discharge status code 05 are being assigned to MS-DRG 795
(Normal Newborn).
The definition of discharge status code 05 was changed on April 1,
2008, from ``discharged/transferred to another type of health care
institution not defined elsewhere in this code list'' to ``discharged/
transferred to a designated cancer center or children's hospital.'' We
examined cases in the FY 2009 MedPAR file but did not find any cases
with the discharge status code 05 that were assigned to either MS-DRG
789 or MS-DRG 795. However, we believe that the request has merit in
identifying neonate cases appropriately. Therefore, for FY 2011, we are
proposing to add discharge status code 05 to the MS-DRG GROUPER logic
for MS-DRG 789.
b. Vaccinations of Newborns
We received a request to examine the assignment of code V64.05
(Vaccination not carried out because of caregiver refusal) to MS-DRG
794 (Neonate with Other Significant Problems). Code V64.05 is currently
being reported when a physician documents that a parent/caregiver has
refused immunization for a child. The reporting of this code as a
principal or secondary diagnosis impacts the MS-DRG assignment for
normal newborns cases being assigned to MS-DRG 794.
We examined cases in the FY 2009 MedPAR file but did not find any
cases of code V64.05 assigned to MS-DRG 794. Our medical advisors agree
that code V64.05 should not be assigned to MS-DRG 794. We determined
that the presence of code V64.05 does not indicate that there is a
significant problem with the newborn and should not be assigned to MS-
DRG 794. Therefore, we believe that assignment of code V64.05 to MS-DRG
795 (Normal Newborn) would be more appropriate for this code because it
does not identify a significant problem.
The logic for MS-DRG 795 contains a list of principal diagnosis
codes for normal newborn and no secondary diagnosis or a list of only
secondary diagnosis codes. Therefore, in this proposed rule, for FY
2011, we are proposing to remove code V64.05 from MS-DRG 794 and add
this code to the only secondary diagnosis list for MS-DRG 795.
7. Medicare Code Editor (MCE) Changes
As explained under section II.B.1. of the preamble of this proposed
rule, the Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into a MS-DRG. For FY
2011, we intend to make the following changes to the MCE edits and
invite public input on whether or not we should do so:
a. Unacceptable Principal Diagnosis Edit: Addition of Code for
Gastroparesis
It has been brought to our attention that code 536.3
(Gastroparesis) has a ``code first underlying disease'' note. This note
indicates that code 536.3 should not be used as a principal diagnosis.
Therefore, code 536.3 should have been included on the list of
unacceptable principal diagnoses in the MCE.
We agree that code 536.3 should have been included on the list of
unacceptable principal diagnoses in the MCE. Therefore, for FY 2011, we
intend to add code 536.3 to that list.
b. Open Biopsy Check Edit
The Open Biopsy Check edit in the MCE dates back to the early years
of the IPPS when the surgical and medical DRGs were not as expansive as
they are today. In the mid-1980s when the Open Biopsy Check edit was
created, the ICD-9-CM codes did not have many biopsy procedure codes
that clearly showed the approach, such as codes for open, percutaneous,
and closed biopsies. Furthermore, under the current MS-DRGs, the open
biopsy codes do not have as significant an impact as they did in the
early versions of the DRGs. We believe that the Open Biopsy Check edit
no longer serves a useful purpose. Therefore, for FY 2011, we intend to
delete the entire Open Biopsy Check edit from the MCE, which means
removing the following 63 codes from the edit:
01.11 (Closed [Percutaneous] [Needle] biopsy of cerebral
meninges)
01.12 (Open biopsy of cerebral meninges)
01.13 (Closed [Percutaneous] [Needle] biopsy of brain)
01.14 (Open biopsy of brain)
04.11 (Closed [Percutaneous] [Needle] biopsy of cranial or
peripheral nerve or ganglion)
04.12 (Open biopsy of cranial or peripheral nerve or
ganglion)
06.11 (Closed [Percutaneous] [Needle] biopsy of thyroid
gland)
06.12 (Open biopsy of thyroid gland)
07.11 (Closed [Percutaneous] [Needle] biopsy of adrenal
gland)
07.12 (Open biopsy of adrenal gland)
[[Page 23904]]
22.11 (Closed [Endoscopic] [Needle] biopsy of nasal sinus)
22.12 (Open biopsy of nasal sinus)
25.01 (Closed [Needle] biopsy of tongue)
25.02 (Open biopsy of tongue)
26.11 (Closed [Needle] biopsy of salivary gland or duct)
26.12 (Open biopsy of salivary gland or duct)
31.43 (Closed [Endoscopic] biopsy of larynx)
31.44 (Closed [Endoscopic] biopsy of trachea)
31.45 (Open biopsy of larynx or trachea)
33.24 (Closed [Endoscopic] biopsy of bronchus)
33.25 (Open biopsy of bronchus)
33.26 (Closed [Percutaneous] [Needle] biopsy of lung)
33.28 (Open biopsy of lung)
34.25 (Closed [Percutaneous] [Needle] biopsy of
mediastinum)
34.26 (Open mediastinal biopsy)
41.32 (Closed [Aspiration] [Percutaneous] biopsy of
spleen)
41.33 (Open biopsy of spleen)
42.24 (Closed [Endoscopic] biopsy of esophagus)
42.25 (Open biopsy of esophagus)
44.14 (Closed [Endoscopic] biopsy of stomach)
44.15 (Open biopsy of stomach)
45.14 (Closed [Endoscopic] biopsy of small intestine)
45.15 (Open biopsy of small intestine)
45.25 (Closed [Endoscopic] biopsy of large intestine)
45.26 (Open biopsy of large intestine)
48.24 (Closed [Endoscopic] biopsy of rectum)
48.25 (Open biopsy of rectum)
50.11 (Closed (Percutaneous) [Needle] biopsy of liver)
50.12 (Open biopsy of liver)
51.12 (Percutaneous biopsy of gallbladder or bile ducts)
51.13 (Open biopsy of gallbladder or bile ducts)
52.11 (Closed [Aspiration] [Needle] [Percutaneous] biopsy
of pancreas)
52.12 (Open biopsy of pancreas)
54.23 (Biopsy of peritoneum)
54.24 (Closed [Percutaneous] [Needle] biopsy of intra-
abdominal mass)
55.23 (Closed [Percutaneous] [Needle] biopsy of kidney)
55.24 (Open biopsy of kidney)
56.32 (Closed percutaneous biopsy of ureter)
56.34 (Open biopsy of ureter)
57.33 (Closed [Transurethral] biopsy of bladder)
57.34 (Open biopsy of bladder)
60.11 (Closed [Percutaneous] [Needle] biopsy of prostate)
60.12 (Open biopsy of prostate)
60.13 (Closed [Percutaneous] biopsy of seminal vesicles)
60.14 (Open biopsy of seminal vesicles)
62.11 (Closed [Percutaneous] [Needle] biopsy of testis)
62.12 (Open biopsy of testis)
68.13 (Open biopsy of uterus)
68.14 (Open biopsy of uterine ligaments)
68.15 (Closed biopsy of uterine ligaments)
68.16 (Closed biopsy of uterus)
85.11 (Closed [Percutaneous] [Needle] biopsy of breast)
85.12 (Open biopsy of breast)
c. Noncovered Procedure Edit
The ICD-9-CM procedure codes 52.80 (Pancreatic transplant, not
otherwise specified) and 52.82 (Homotransplant of pancreas) alone (that
is, without procedure code 55.69 (Other kidney transplantation)) are
considered noncovered procedures, except when either one is combined
with at least one specific principal or secondary diagnosis code. These
specific diagnosis codes identify Type I diabetes mellitus, not stated
as uncontrolled, or else identified as uncontrolled.
To conform to the proposed change to Pre-MDC MS-DRGs 008 and 010 as
discussed in section II.G.1. of this preamble, in which we are
proposing to add code 251.3 (Postsurgical hypoinsulinemia) to those MS-
DRGs, we intend to add procedure code 251.3 to the list of acceptable
principal or secondary diagnosis codes in the MCE.
8. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of MS-DRG reclassification and recalibrations, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications and recalibrations, to determine if the ordering of
classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 1 and 2 and surgical class B includes MS-DRGs
3, 4, and 5. Assume also that the average costs of MS-DRG 1 is higher
than that of MS-DRG 3, but the average costs of MS-DRGs 4 and 5 are
higher than the average costs of MS-DRG 2. To determine whether
surgical class A should be higher or lower than surgical class B in the
surgical hierarchy, we would weigh the average costs of each MS-DRG in
the class by frequency (that is, by the number of cases in the MS-DRG)
to determine average resource consumption for the surgical class. The
surgical classes would then be ordered from the class with the highest
average resource utilization to that with the lowest, with the
exception of ``other O.R. procedures'' as discussed below.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients in the MDC with these
diagnoses. Therefore, assignment to these surgical classes should only
occur
[[Page 23905]]
if no other surgical class more closely related to the diagnoses in the
MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has a lower average costs than the class ordered
below it.
Based on the changes that we are proposing for FY 2011, as
discussed in section II.C.2 of this preamble, we are proposing to
revise the surgical hierarchy for Pre-MDCs and MDC 10 (Endocrine,
Nutritional and Metabolic Diseases and Disorders) to reflect the
resource intensiveness of the MS-DRGs, as follows:
In Pre-MDCs, we are proposing to reorder proposed new MS-DRG 014
(Allogeneic Bone Marrow Transplant) above MS-DRG 007 (Lung Transplant);
and proposed new MS-DRG 015 (Autologous Bone Marrow Transplant) above
MS-DRG 010 (Pancreas Transplant).
In MDC 10, we are proposing to reorder MS-DRG 614 (Adrenal and
Pituitary Procedures With CC/MCC) and MS-DRG 615 (Adrenal and Pituitary
Procedures Without CC/MCC) above MS-DRG 625 (Thyroid, Parathyroid and
Thyroglossal Procedures With MCC).
9. Complications or Comorbidity (CC) Exclusions List
a. Background
As indicated earlier in the preamble of this proposed rule, under
the IPPS MS-DRG classification system, we have developed a standard
list of diagnoses that are considered CCs. Historically, we developed
this list using physician panels that classified each diagnosis code
based on whether the diagnosis, when present as a secondary condition,
would be considered a substantial complication or comorbidity. A
substantial complication or comorbidity was defined as a condition
that, because of its presence with a specific principal diagnosis,
would cause an increase in the length of stay by at least 1 day in at
least 75 percent of the patients. We refer readers to section II.D.2.
and 3. of the preamble of the FY 2008 IPPS final rule with comment
period for a discussion of the refinement of CCs in relation to the MS-
DRGs we adopted for FY 2008 (72 FR 47121 through 47152).
b. Proposed CC Exclusions List for FY 2011
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As we indicated above, we
developed a list of diagnoses, using physician panels, to include those
diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity. In previous
years, we have made changes to the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another.
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another.
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another.
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC.\2\
---------------------------------------------------------------------------
\2\ See the FY 1989 final rule (53 FR 38485, September 30,
1988), for the revision made for the discharges occurring in FY
1989; the FY 1990 final rule (54 FR 36552, September 1, 1989), for
the FY 1990 revision; the FY 1991 final rule (55 FR 36126, September
4, 1990), for the FY 1991 revision; the FY 1992 final rule (56 FR
43209, August 30, 1991) for the FY 1992 revision; the FY 1993 final
rule (57 FR 39753, September 1, 1992), for the FY 1993 revision; the
FY 1994 final rule (58 FR 46278, September 1, 1993), for the FY 1994
revisions; the FY 1995 final rule (59 FR 45334, September 1, 1994),
for the FY 1995 revisions; the FY 1996 final rule (60 FR 45782,
September 1, 1995), for the FY 1996 revisions; the FY 1997 final
rule (61 FR 46171, August 30, 1996), for the FY 1997 revisions; the
FY 1998 final rule (62 FR 45966, August 29, 1997) for the FY 1998
revisions; the FY 1999 final rule (63 FR 40954, July 31, 1998), for
the FY 1999 revisions; the FY 2001 final rule (65 FR 47064, August
1, 2000), for the FY 2001 revisions; the FY 2002 final rule (66 FR
39851, August 1, 2001), for the FY 2002 revisions; the FY 2003 final
rule (67 FR 49998, August 1, 2002), for the FY 2003 revisions; the
FY 2004 final rule (68 FR 45364, August 1, 2003), for the FY 2004
revisions; the FY 2005 final rule (69 FR 49848, August 11, 2004),
for the FY 2005 revisions; the FY 2006 final rule (70 FR 47640,
August 12, 2005), for the FY 2006 revisions; the FY 2007 final rule
(71 FR 47870) for the FY 2007 revisions; the FY 2008 final rule (72
FR 47130) for the FY 2008 revisions, the FY 2009 final rule (73 FR
48510), and the FY 2010 final rule (74 FR 43799). In the FY 2000
final rule (64 FR 41490, July 30, 1999, we did not modify the CC
Exclusions List because we did not make any changes to the ICD-9-CM
codes for FY 2000.
---------------------------------------------------------------------------
(1) Proposed Limited Revisions Based on Changes to the ICD-9-CM
Diagnosis Codes
For FY 2011, we are proposing to make limited revisions to the CC
Exclusions List for FY 2011 to take into account the changes made in
the ICD-9-CM diagnosis coding system effective October 1, 2009. (We
refer readers to section II.G.11. of the preamble of this proposed rule
for a discussion of ICD-9-CM changes.) We are proposing to make these
changes in accordance with the principles established when we created
the CC Exclusions List in 1987. In addition, we are indicating on the
CC Exclusions List some changes as a result of updates to the ICD-9-CM
codes to reflect the exclusion of codes from being MCCs under the MS-
DRG system that we adopted in FY 2008.
(2) Suggested Changes to Severity Levels for Obesity-Related and Major
Osseous Defect Diagnosis Codes
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43793
through 43794), we indicated that several commenters on the FY 2010
IPPS proposed rule recommended that CMS consider making further
adjustments to the MS-DRG assignments based on obesity and major
osseous defects. The commenters stated that obesity, high Body Mass
Index (BMI) ratings, and major osseous defects add to the complexity of
care for patients such as those patients undergoing orthopedic
procedures. The commenters recommended the following changes to the
list of MCCs and CCs:
Several commenters recommended that CMS add the following diagnosis
codes, which are classified as non-CCs, to the CC or MCC list:
[[Page 23906]]
731.3 (Major osseous defects)
V85.35 (Body mass index 35.0-35.9, adult)
V85.36 (Body mass index 36.0-36.9, adult)
V85.37 (Body mass index 37.0-37.9, adult)
V85.38 (Body mass index 38.0-38.9, adult)
V85.39 (Body mass index 39.0-39.9, adult)
Several commenters recommended that CMS add the following diagnosis
code, which is on the CC list, to the MCC list:
V85.40 (Body mass index 40 and over, adult)
We stated that we believed these comments were outside the scope of
the proposal in the proposed rule. We did not propose significant
revisions to the MS-DRGs in the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule (74 FR 24091) for these codes. We stated that we were encouraging
individuals with comments about MS-DRG classifications to submit these
comments no later than early December of each year so they can be
carefully considered for possible inclusion in the annual proposed rule
and, if included, may be subjected to public review and comment.
Therefore, we did not add these codes to the MCC list or the CC list
for FY 2010. We stated that we would consider their appropriateness for
inclusion in next year's annual proposed rule.
In addition to the diagnosis codes mentioned above, we also have
received requests that we consider changing the following diagnosis
codes from a non-CC to a CC:
278.00 (Obesity NOS)
278.01 (Morbid obesity)
278.02 (Overweight)
We analyzed claims data for the diagnosis codes mentioned above
related to obesity and major osseous defects. We used the same approach
we used in initially creating the MS-DRGs and classifying secondary
diagnosis codes as non-CCs, CCs, or MCC. A detailed discussion of the
process and criteria we used in this process is described in the FY
2008 IPPS final rule (72 FR 47158 through 47161). We refer the readers
to this discussion for complete information on our approach to
developing the non-CC, CC, and MCC lists. Each diagnosis for which
Medicare data were available was evaluated to determine its impact on
resource use and to determine the most appropriate CC subclass (non-CC,
CC, or MCC) assignment. In order to make this determination, the
average cost for each subset of cases was compared to the expected cost
for cases in that subset. The following format was used to evaluate
each diagnosis:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
----------------------------------------------------------------------------------------------------------------
Count (Cnt) is the number of patients in each subset. C1, C2, and
C3 are a measure of the impact on resource use of patients in each of
the subsets. The C1, C2, and C3 values are a measure of the ratio of
average costs for patients with these conditions to the expected
average cost across all cases. The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a MCC. The C3 value
reflects a patient with at least one other secondary diagnosis that is
a MCC. A value close to 1.0 in the C1 field would suggest that the
diagnosis code produces the same expected value as a non-CC. A value
close to 2.0 suggests the condition is more like a CC than a non-CC but
not as significant in resource usage as an MCC. A value close to 3.0
suggests the condition is expected to consume resources more similar to
an MCC than a CC or non-CC. For additional details on this analysis, we
refer readers to the FY 2008 IPPS final rule at 72 FR 47158 through
47161.
The following chart shows the analysis for each of the obesity
related and major osseous defect diagnosis codes that are currently
classified as non-CCs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
--------------------------------------------------------------------------------------------------------------------------------------------------------
278.00........................................ Obesity NOS........................... 130,310 1.0755 116,304 1.7234 45,565 2.3843
278.01........................................ Morbid obesity........................ 51,832 1.2619 106,169 1.9630 52,398 2.6787
278.02........................................ Overweight............................ 5,242 0.9948 3,594 1.7042 1,033 2.3471
731.3......................................... Major osseous defects................. 215 1.3833 575 2.3390 186 2.7627
V85.35........................................ BMI 35.0-35.9, adult.................. 2,621 0.9759 1,480 1.6932 499 2.3664
V85.36........................................ BMI 36.0-36.9, adult.................. 2,359 0.9729 1,298 1.6536 466 2.3107
V85.37........................................ BMI 37.0-37.9, adult.................. 2,305 0.9849 1,271 1.7225 473 2.4032
V85.38........................................ BMI 38.0-38.9, adult.................. 2,152 0.9713 1,231 1.5964 432 2.2743
V85.39........................................ BMI 39.0-39.9, adult.................. 2,253 0.9857 1,141 1.7741 445 2.4919
--------------------------------------------------------------------------------------------------------------------------------------------------------
The C1 findings do not support a reclassification of any of these
diagnosis codes from a non-CC to a CC. As can be seen by the C1
findings, the codes range from a low of 0.9729 for code V85.35 to a
high of 1.3833 for diagnosis code 731.3. These findings are consistent
with a classification as a non-CC. Therefore, for FY 2011, we are not
proposing to change the CC classification of any of the diagnosis codes
mentioned in the chart above from a non-CC to a CC. Our clinical
advisors agree with this recommendation.
We also examined claims data for diagnosis code V85.4 (Body mass
index 40 and over, adult), which is classified as a CC. We received a
request to reclassify this code as a MCC. The following chart summaries
our findings for this diagnosis code:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
--------------------------------------------------------------------------------------------------------------------------------------------------------
V85.4......................................... BMI 40 and over, adult................ 51,871 1.2323 59,941 2.1711 57,220 3.0465
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 23907]]
We note that the C1 finding of 1.2323 does not support a
reclassification of this diagnosis code from a CC to a MCC. This
finding is much more consistent with classifying the code as a non-CC.
Our clinical advisors recommended that CMS not reclassify this
diagnosis code from a CC to a non-CC at this time. They recommended
that CMS analyze data associated with this diagnosis code again in the
future to determine if it continues to act like a non-CC. We are not
recommending any change in the severity classification of diagnosis
code V85.4. We are proposing to retain it as a CC for FY 2011.
We welcome public comments on our proposal not to change the
severity levels of the diagnosis codes mentioned above.
(3) Suggested Change to the Severity Level for Alzheimer's Disease
Diagnosis Code
We received a request to change the severity classification for
diagnosis code 331.0 (Alzheimer's disease). Currently, this diagnosis
code is classified as a non-CC. We analyzed claims data for this
diagnosis code. The following chart shows our findings:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
--------------------------------------------------------------------------------------------------------------------------------------------------------
331.0......................................... Alzheimer's disease................... 83,743 1.1381 114,445 1.8890 77,841 2.4185
--------------------------------------------------------------------------------------------------------------------------------------------------------
The C1 finding of 1.1381 for Alzheimer's disease supports the
current classification of this diagnosis code as a non-CC. Our clinical
advisors agree with this classification. Therefore, we are not
proposing to change the severity classification of diagnosis code 331.0
from a non-CC to a CC for FY 2011. We believe the code is appropriately
classified as a non-CC.
(4) Proposed Change to the Severity Level for Acute Renal Failure,
Unspecified Diagnosis Code
We received a request to reclassify diagnosis code 584.9 (Acute
renal failure, unspecified) from a MCC to a CC. The commenter stated
that this code is being widely used to capture degrees of renal failure
that range from that which is caused by mild dehydration with only
minor laboratory abnormalities all the way through severe renal failure
that requires dialysis. The commenter pointed out that there are no
clinical criteria for assigning diagnosis code 584.9 (Acute renal
failure, unspecified). The attending physician must simply document the
presence of acute renal failure for the diagnosis code to be assigned.
The concern is that the diagnosis code for Acute renal failure,
unspecified (diagnosis code 584.9) is being assigned to patients with a
low clinical severity level.
We also point out that the Editorial Advisory Board of Coding
Clinic for ICD-9-CM has received a number of requests to clarify the
use of diagnosis code 584.9. Coders are observing the terminology of
``acute renal failure'' being applied to patients who are simply
dehydrated. These patients do not require renal dialysis, and they do
not appear to be severely ill. Coders have stated that there appears to
be an increase in the use of the terminology of acute renal failure for
patients who were previously referred to as acute renal insufficiency.
When acute renal insufficiency is documented, the ICD-9-CM index
directs the use of code 593.9 (Unspecified disorder of kidney and
ureter). Diagnosis code 593.9 includes acute renal insufficiency and is
classified as a non-CC. The problem is further compounded by the fact
that there is no consistent convention among clinicians for documenting
acute renal insufficiency versus acute renal failure.
We examined claims data on diagnosis code 584.9, and our findings
are shown in the table below:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
--------------------------------------------------------------------------------------------------------------------------------------------------------
584.9..................................... Acute kidney failure, unspecified......... 124,428 1.8364 411,667 2.6151 417,359 3.2429
--------------------------------------------------------------------------------------------------------------------------------------------------------
The C1 finding of 1.8364 is more consistent with a classification
of a CC. Our clinical advisors agreed that cases captured by diagnosis
code 584.9 are more appropriately classified as a CC. This unspecified
type of kidney failure is clearly not capturing patients with a MCC
severity level. Therefore, we are proposing to change the severity
level for diagnosis code 584.9 from a MCC to a CC for FY 2011.
Tables 6G and 6H, Additions to and Deletions from the CC Exclusion
List, respectively, which are effective for discharges occurring on or
after October 1, 2010, are not being published in the Addendum to this
proposed rule because of the length of the two tables. Instead, we are
making them available through the Internet on the CMS Web site at:
http://www.cms.hhs.gov/AcuteInpatientPPS. Each of these principal
diagnoses for which there is a CC exclusion is shown in Tables 6G and
6H in the Addendum to this proposed rule with an asterisk, and the
conditions that will not count as a CC, are provided in an indented
column immediately following the affected principal diagnosis.
A complete updated MCC, CC, and Non-CC Exclusions List is also
available through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS. Beginning with discharges on or
after October 1, 2010, the indented diagnoses will not be recognized by
the GROUPER as valid CCs for the asterisked principal diagnosis.
To assist readers in identifying the changes to the MCC and CC
lists that occurred as a result of updates to the ICD-9-CM codes, as
described in Tables 6A, 6C, and 6E of the Addendum to this proposed
rule, we are providing the following summaries of those MCC and CC
changes.
There were no additions to the MS-DRG MCC List for FY 2011 (Table
6I.1).
BILLING CODE 4120-01-P
[[Page 23908]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.012
[GRAPHIC] [TIFF OMITTED] TP04MY10.013
BILLING CODE 4120-10-C
[[Page 23909]]
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with CMS, is
responsible for updating and maintaining the GROUPER program. The
current MS-DRG Definitions Manual, Version 27.0, is available for
$250.00, which includes shipping and handling. Version 27.0 of the
manual is also available on a CD for $200.00; a combination hard copy
and CD is available for $400.00. Version 28.0 of this manual, which
will include the final FY 2011 MS-DRG changes, will be available on CD
only for $225.00. These manuals may be obtained by writing 3M/HIS at
the following address: 100 Barnes Road, Wallingford, CT 06492; or by
calling (203) 949-0303, or by obtaining an order form at the Web site:
http://www.3MHIS.com. Please specify the revision or revisions
requested.
10. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned to former CMS DRG 468
(Extensive O.R. Procedure Unrelated to Principal Diagnosis), CMS DRG
476 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis), and
CMS DRG 477 (Nonextensive O.R. Procedure Unrelated to Principal
Diagnosis) to determine whether it would be appropriate to change the
procedures assigned among these CMS DRGs. Under the MS-DRGs that we
adopted for FY 2008, CMS DRG 468 was split three ways and became MS-
DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively). CMS DRG
476 became MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively). CMS DRG 477 became MS-DRGs 987, 988, and 989
(Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively).
MS-DRGs 981 through 983, 984 through 986, and 987 through 989
(formerly CMS DRGs 468, 476, and 477, respectively) are reserved for
those cases in which none of the O.R. procedures performed are related
to the principal diagnosis. These MS-DRGs are intended to capture
atypical cases, that is, those cases not occurring with sufficient
frequency to represent a distinct, recognizable clinical group. MS-DRGs
984 through 986 (previously CMS DRG 476) are assigned to those
discharges in which one or more of the following prostatic procedures
are performed and are unrelated to the principal diagnosis:
60.0, Incision of prostate
60.12, Open biopsy of prostate
60.15, Biopsy of periprostatic tissue
60.18, Other diagnostic procedures on prostate and
periprostatic tissue
60.21, Transurethral prostatectomy
60.29, Other transurethral prostatectomy
60.61, Local excision of lesion of prostate
60.69, Prostatectomy, not elsewhere classified
60.81, Incision of periprostatic tissue
60.82, Excision of periprostatic tissue
60.93, Repair of prostate
60.94, Control of (postoperative) hemorrhage of prostate
60.95, Transurethral balloon dilation of the prostatic
urethra
60.96, Transurethral destruction of prostate tissue by
microwave thermotherapy
60.97, Other transurethral destruction of prostate tissue
by other thermotherapy
60.99, Other operations on prostate
All remaining O.R. procedures are assigned to MS-DRGs 981 through
983 and 987 through 989, with MS-DRGs 987 through 989 assigned to those
discharges in which the only procedures performed are nonextensive
procedures that are unrelated to the principal diagnosis.\3\
---------------------------------------------------------------------------
\3\ The original list of the ICD-9-CM procedure codes for the
procedures we consider nonextensive procedures, if performed with an
unrelated principal diagnosis, was published in Table 6C in section
IV. of the Addendum to the FY 1989 final rule (53 FR 38591). As part
of the FY 1991 final rule (55 FR 36135), the FY 1992 final rule (56
FR 43212), the FY 1993 final rule (57 FR 23625), the FY 1994 final
rule (58 FR 46279), the FY 1995 final rule (59 FR 45336), the FY
1996 final rule (60 FR 45783), the FY 1997 final rule (61 FR 46173),
and the FY 1998 final rule (62 FR 45981), we moved several other
procedures from DRG 468 to DRG 477, and some procedures from DRG 477
to DRG 468. No procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962); in FY 2000 (64 FR 41496); in FY 2001 (65
FR 47064); or in FY 2002 (66 FR 39852). In the FY 2003 final rule
(67 FR 49999) we did not move any procedures from DRG 477. However,
we did move procedure codes from DRG 468 and placed them in more
clinically coherent DRGs. In the FY 2004 final rule (68 FR 45365),
we moved several procedures from DRG 468 to DRGs 476 and 477 because
the procedures are nonextensive. In the FY 2005 final rule (69 FR
48950), we moved one procedure from DRG 468 to 477. In addition, we
added several existing procedures to DRGs 476 and 477. In the FY
2006 (70 FR 47317), we moved one procedure from DRG 468 and assigned
it to DRG 477. In FY 2007, we moved one procedure from DRG 468 and
assigned it to DRGs 479, 553, and 554. In FYs 2008, 2009, and FY
2010, no procedures were moved, as noted in the FY 2008 final rule
with comment period (72 FR 46241), the FY 2009 final rule (73 FR
48513), and the FY 2010 final rule (74 FR 43796).
---------------------------------------------------------------------------
Our review of MedPAR claims data showed that there were 59 cases in
which procedures related to the prostate were arrayed across 10
different MDCs. None of the 59 cases were cases that should logically
be assigned to any of the other MDCs. For example, there were a total
of 16 cases of other transurethral prostate surgery that occurred in
MDC 5 (Diseases and Disorders of the Circulatory System). In addition,
none of the cases had lengths of stay or average charges that would
indicate that these cases were anything other than some of the expected
irregularities of medical care. Therefore, for FY 2011, we are not
proposing to change the procedures assigned among these MS-DRGs.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. procedure unrelated to
principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. procedure
unrelated to principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
Our review of claims data showed that there were 4,443 cases in MS-DRGs
981 through 983. These 4,443 cases were arrayed across 18 MDCs. The
single most common procedure was code 00.66 (Percutaneous transluminal
coronary angioplasty [PTCA] of coronary atherectomy), 21 cases, located
in MDC 1 (Diseases and Disorders of the Nervous System). These cases
represent a very small volume of cases that are unlikely to indicate
medical practice trends. In addition, from a clinical coherence
standpoint, we do not believe it benefits the GROUPER system to add
cardiac procedures to the nervous system MDC. The same situation was
evident in MS-DRGs 987 through 989. There were a total of 1,601 cases
across 17 MDCs and, again, the cases did not
[[Page 23910]]
represent clinically coherent examples of medical care that warranted
movement of procedure codes into additional MS-DRGs. Examples of cases
that we reviewed included six cases of bone biopsies in MDC 21
(Injuries, Poisonings and Toxic Effects of Drugs) and one case of a
destruction of a lesion of the knee in MDC 13 (Diseases and Disorders
of the Female Reproductive System). Again, the volume of these cases is
negligible, and clinical coherence is not demonstrated to the degree
that a change in the MS-DRGs is warranted. Therefore, for FY 2011, we
are not proposing to remove any procedures from MS-DRGs 981 through 983
or MS-DRGs 987 through 989 into one of the surgical MS-DRGs for the MDC
into which the principal diagnosis is assigned.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also annually review the list of ICD-9-CM procedures that, when
in combination with their principal diagnosis code, result in
assignment to MS-DRGs 981 through 983, 984 through 986 (Prostatic O.R.
procedure unrelated to principal diagnosis with MCC, with CC, or
without CC/MCC, respectively), and 987 through 989, to ascertain
whether any of those procedures should be reassigned from one of these
three MS-DRGs to another of the three MS-DRGs based on average charges
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep the MS-DRGs clinically similar or
to provide payment for the cases in a similar manner. Generally, we
move only those procedures for which we have an adequate number of
discharges to analyze the data.
To reiterate, our review of claims data showed that 18 MDCs were
represented in MS-DRGs 981 through 983, for a total of 4,443 cases.
There were 10 MDCs represented in MS-DRGs 984 through 986, which
contained 59 cases. In addition, our review of claims data for MS-DRGs
987 through 989 showed 1,601 cases across 17 MDCs. However, these cases
represent such disparate situations as one case of a large bowel
incision assigned to MDC 1 (Diseases and Disorders of the Nervous
System) and one case of a revision of the femoral component of a hip
replacement assigned to MDC 3 (Diseases and Disorders of the Ear, Nose,
Mouth, and Throat). We do not believe that any of these cases represent
shifts in either treatment practice or reporting practice. As these
types of cases do not represent clinical coherence, we do not believe
that the addition of these procedure codes identified in our review
would positively benefit the overall MS-DRG logic. Therefore, for FY
2011, we are not proposing to move any procedure codes among these MS-
DRGs.
c. Adding Diagnosis or Procedure Codes to MDCs
Based on the review of cases in the MDCs as described above in
sections G.10.a. and b., we are not proposing to add any diagnosis or
procedure codes to MDCs for FY 2011.
11. Changes to the ICD-9-CM Coding System, Including Discussion of the
Replacement of the ICD-9-CM Coding System With the ICD-10-CM and ICD-
10-PCS Systems in FY 2014
a. ICD-9-CM Coding System
As described in section II.B.1. of the preamble of this proposed
rule, the ICD-9-CM is a coding system currently used for the reporting
of diagnoses and procedures performed on a patient. In September 1985,
the ICD-9-CM Coordination and Maintenance Committee was formed. This is
a Federal interdepartmental committee, co-chaired by the National
Center for Health Statistics (NCHS), the Centers for Disease Control
and Prevention, and CMS, charged with maintaining and updating the ICD-
9-CM system. The Committee is jointly responsible for approving coding
changes, and developing errata, addenda, and other modifications to the
ICD-9-CM to reflect newly developed procedures and technologies and
newly identified diseases. The Committee is also responsible for
promoting the use of Federal and non-Federal educational programs and
other communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The Official Version of the ICD-9-CM contains the list of valid
diagnosis and procedure codes. (The Official Version of the ICD-9-CM is
available from the Government Printing Office on CD-ROM for $19.00 by
calling (202) 512-1800.) Complete information on ordering the CD-ROM is
also available at: http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/05_CDROM.asp#TopOfPage. The Official Version of the ICD-9-CM is no
longer available in printed manual form from the Federal Government; it
is only available on CD-ROM. Users who need a paper version are
referred to one of the many products available from publishing houses.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2011 at a public meeting held on September 16-17,
2009 and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 20, 2009. Those
coding changes are announced in Tables 6A through 6F in the Addendum to
this proposed rule. The Committee held its 2010 meeting on March 9-10,
2010. New codes for which there was a consensus of public support and
for which complete tabular and indexing changes are made by May 2010
will be included in the October 1, 2010 update to ICD-9-CM. Code
revisions that were discussed at the March 9-10, 2010 Committee meeting
but that could not be finalized in time to include them in the Addendum
to this proposed rule will be included in Tables 6A through 6F of the
final rule and will be marked with an asterisk (*).
Copies of the minutes of the procedure codes discussions at the
Committee's September 16-17, 2009 meeting and March 9-10, 2010 meeting
can be obtained from the CMS Web site at: http://cms.hhs.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the
diagnosis codes discussions at the September 16-17, 2009 meeting and
March 9-10, 2010 meeting are found at: http://www.cdc.gov/nchs/icd.htm.
These Web sites also provide detailed
[[Page 23911]]
information about the Committee, including information on requesting a
new code, attending a Committee meeting, and timeline requirements and
meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-9-CM
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by e-mail to:
[email protected].
Questions and comments concerning the procedure codes should be
addressed to: Patricia E. Brooks, Co-Chairperson, ICD-9-CM Coordination
and Maintenance Committee, CMS, Center for Medicare Management,
Hospital and Ambulatory Policy Group, Division of Acute Care, C4-08-06,
7500 Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent
by e-mail to: [email protected].
The ICD-9-CM code changes that have been approved will become
effective October 1, 2010. The new ICD-9-CM codes are listed, along
with their MS-DRG classifications, in Tables 6A and 6B (New Diagnosis
Codes and New Procedure Codes, respectively) in the Addendum to this
proposed rule. As we stated above, the code numbers and their titles
were presented for public comment at the ICD-9-CM Coordination and
Maintenance Committee meetings. Both oral and written comments were
considered before the codes were approved.
In this proposed rule, we are soliciting comments on the proposed
classification of these new codes, which are shown in Tables 6A and 6B
of the Addendum to this proposed rule.
For codes that have been replaced by new or expanded codes, the
corresponding new or expanded diagnosis codes are included in Table 6A
in the Addendum to this proposed rule. New procedure codes are shown in
Table 6B in the Addendum to this proposed rule. Diagnosis codes that
have been replaced by expanded codes or other codes or have been
deleted are in Table 6C (Invalid Diagnosis Codes) in the Addendum to
this proposed rule. These invalid diagnosis codes will not be
recognized by the GROUPER beginning with discharges occurring on or
after October 1, 2010. Table 6D in the Addendum to this proposed rule
contains invalid procedure codes. These invalid procedure codes will
not be recognized by the GROUPER beginning with discharges occurring on
or after October 1, 2010. Revisions to diagnosis code titles are in
Table 6E (Revised Diagnosis Code Titles) in the Addendum to this
proposed rule, which also includes the MS-DRG assignments for these
revised codes. Table 6F in the Addendum to this proposed rule includes
revised procedure code titles for FY 2011.
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October. As stated previously,
ICD-9-CM codes discussed at the March 9-10, 2010 Committee meeting that
receive consensus and that are finalized by May 2010 will be included
in Tables 6A through 6F in the Addendum to the final rule.
Section 503(a) of Public Law 108-173 included a requirement for
updating ICD-9-CM codes twice a year instead of a single update on
October 1 of each year. This requirement was included as part of the
amendments to the Act relating to recognition of new technology under
the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by
adding a clause (vii) which states that the ``Secretary shall provide
for the addition of new diagnosis and procedure codes on April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) * * * until the fiscal year that begins after such
date.'' This requirement improves the recognition of new technologies
under the IPPS system by providing information on these new
technologies at an earlier date. Data will be available 6 months
earlier than would be possible with updates occurring only once a year
on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
in order to identify and report the new codes.
The ICD-9-CM Coordination and Maintenance Committee holds its
meetings in the spring and fall in order to update the codes and the
applicable payment and reporting systems by October 1 of each year.
Items are placed on the agenda for the ICD-9-CM Coordination and
Maintenance Committee meeting if the request is received at least 2
months prior to the meeting. This requirement allows time for staff to
review and research the coding issues and prepare material for
discussion at the meeting. It also allows time for the topic to be
publicized in meeting announcements in the Federal Register as well as
on the CMS Web site. The public decides whether or not to attend the
meeting based on the topics listed on the agenda. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all changes to ICD-9-CM, both tabular and index,
is published on the CMS and NCHS Web sites in May of each year.
Publishers of coding books and software use this information to modify
their products that are used by health care providers. This 5-month
time period has proved to be necessary for hospitals and other
providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee minutes. The public agreed that there was a need to hold the
fall meetings earlier, in September or October, in order to meet the
new implementation dates. The public provided comment that additional
time would be needed to update hospital systems and obtain new code
books and coding software. There was considerable concern expressed
about the impact this new April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-9-CM
Coordination and Maintenance Committee meeting are considered for an
April 1 update if a strong and convincing case is made by the requester
at the Committee's public meeting. The request must identify the reason
why a new code is needed in April for purposes of the new technology
process. The participants at
[[Page 23912]]
the meeting and those reviewing the Committee meeting summary report
are provided the opportunity to comment on this expedited request. All
other topics are considered for the October 1 update. Participants at
the Committee meeting are encouraged to comment on all such requests.
There were no requests approved for an expedited April 1, 2010
implementation of an ICD-9-CM code at the September 16-17, 2009
Committee meeting. Therefore, there were no new ICD-9-CM codes
implemented on April 1, 2010.
Current addendum and code title information is published on the CMS
Web site at: http://www.cms.hhs.gov/icd9ProviderDiagnosticCodes/01_overview.asp#TopofPage. Information on ICD-9-CM diagnosis codes, along
with the Official ICD-9-CM Coding Guidelines, can be found on the Web
site at: http://www.cdc.gov/nchs/icd9.htm. Information on new, revised,
and deleted ICD-9-CM codes is also provided to the AHA for publication
in the Coding Clinic for ICD-9-CM. AHA also distributes information to
publishers and software vendors.
CMS also sends copies of all ICD-9-CM coding changes to its
Medicare contractors for use in updating their systems and providing
education to providers.
These same means of disseminating information on new, revised, and
deleted ICD-9-CM codes will be used to notify providers, publishers,
software vendors, contractors, and others of any changes to the ICD-9-
CM codes that are implemented in April. The code titles are adopted as
part of the ICD-9-CM Coordination and Maintenance Committee process.
Thus, although we publish the code titles in the IPPS proposed and
final rules, they are not subject to comment in the proposed or final
rules. We will continue to publish the October code updates in this
manner within the IPPS proposed and final rules. For codes that are
implemented in April, we will assign the new procedure code to the same
MS-DRG in which its predecessor code was assigned so there will be no
MS-DRG impact as far as MS-DRG assignment. Any midyear coding updates
will be available through the Web sites indicated above and through the
Coding Clinic for ICD-9-CM. Publishers and software vendors currently
obtain code changes through these sources in order to update their code
books and software systems. We will strive to have the April 1 updates
available through these Web sites 5 months prior to implementation
(that is, early November of the previous year), as is the case for the
October 1 updates.
b. Code Freeze
The International Classification of Diseases, 10th Revision (ICD-
10) coding system applicable to hospital inpatient services will be
implemented on October 1, 2013, as described in the Health Insurance
Portability and Accountability Act (HIPAA) Administrative
Simplification: Modifications to Medical Data code Set Standards to
Adopt ICD-10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362,
January 16, 2009). The ICD-10 coding system includes the International
Classification of Diseases, 10th Revision, Clinical Modification (ICD-
10-CM) for diagnosis coding and the International Classification of
Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for
inpatient hospital procedure coding, as well as the Official ICD-10-CM
and ICM-10-PCS Guidelines for Coding and Reporting. In the January 16,
2009 ICD-10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362),
there was a discussion of the need for a partial or total freeze in the
annual updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS codes. The
public comment addressed in this final rule stated that the annual code
set updates should cease l year prior to the implementation of ICD-10.
The commenters stated that this freeze of code updates would allow for
instructional and/or coding software programs to be designed and
purchased early, without concern that an upgrade would take place
immediately before the compliance date, necessitating additional
updates and purchases.
We responded to comments in the ICD-10 final rule that the ICD-9-CM
Coordination and Maintenance Committee has jurisdiction over any action
impacting the ICD-9-CM and ICD-10 code sets. Therefore, the issue of
consideration of a moratorium on updates to the ICD-9-CM, ICD-10-CM,
and ICD-10-PCS code sets in anticipation of the adoption of ICD-10-CM
and ICD-10-PCS would be addressed through the Committee at a future
public meeting.
At the March 11-12, 2009 ICD-9-CM Coordination and Maintenance
Committee meeting, the public was notified that there would be a
discussion of whether there was a need to freeze updates to ICD-9-CM
and/or ICD-10-CM and ICD-10-PCS prior to the implementation of ICD-10.
The audience was asked to consider this issue and be prepared to
discuss the topic at the September 16-17, 2009 ICD-9-CM Coordination
and Maintenance Committee meeting. Advance written comments on this
topic were welcomed. The first part of the meeting was devoted to this
topic.
CMS received comments in advance of the meeting. CMS staff
summarized these advanced comments at the meeting as follows:
No ICD-9-CM or ICD-10-CM/PCS updates beginning October 1, 2010 (36
months for implementation activities without annual code updates). This
approach involves updating ICD-9-CM and ICD-10 codes on October 1,
2010, and not updating them again until after ICD-10 implementation on
October 1, 2013. The commenters mentioned the extensive work needed to
prepare for the transition to ICD-10 which will affect vendors, payers,
providers, trainers, clearinghouses, and all claims handling
organizations. The commenters stated that the 36 months between the
last ICD-9-CM and ICD-10 updates on October 1, 2010 and the
implementation of ICD-10 on October 1, 2013, were necessary to prepare
and train for the transition.
No ICD-9-CM or ICD-10-CM/PCS updates beginning October 1, 2011 (24
months for implementation activities without annual code updates). This
approach involves updating ICD-9-CM and ICD-10 codes on October 1,
2011, and not updating them again until after ICD-10 implementation on
October 1, 2013. The commenters raised similar concerns to those
mentioned above. The commenters stated that, if codes continue to
change, the changes would make it difficult for vendors, payers, and
providers to be ready and for coder training to be successful. One
commenter suggested that a provision be developed to perform limited
annual updates to capture new technologies or new diagnoses.
No ICD-10-CM/PCS updates beginning October 1, 2012 but continue
annual updates to ICD-9-CM. This commenter supported annual updates to
ICD-9-CM to capture advances in medical science. However, the commenter
supported a freeze of ICD-10 beginning October 1, 2012, to give the
industry time to update systems and prepare for ICD-10 implementation.
No ICD-10 updates on October 1, 2012, but update ICD-9-CM without
interruption. (No period for implementation activities without annual
code updates.) The commenter recommended no ICD-10 updates on October
1, 2012, but then updating ICD-10 again on October 1, 2013. The
commenter recommended updating ICD-9-CM continuously through a final
update on October 1, 2012. The commenter stated that having a two or
three year gap between updating the
[[Page 23913]]
code books would lead to a loss of data. The commenter stated that
there is a need to retain the ability to update the code books to
capture conditions such as Swine flu.
Update both ICD-9-CM and ICD-10-CM/PCS annually through October 1,
2013 (no period for implementation activities without annual code
updates). The commenter stated that codes should not be frozen prior to
the implementation of ICD-10. The commenter stated that freezing the
updates would inhibit the recognition of new technologies.
Many of the commenters suggested a resumption of updates to ICD-10-
CM and ICD-10-PCS beginning on October 1, 2014. However, one commenter
suggested annual updates of ICD-10-CM and ICD-10-PCS without
interruptions, including on October 1, 2013.
The topic was then opened for public discussion at the Committee
meeting. CMS received a variety of comments from the participants that
mirrored the advance written comments. These comments ranged from those
supporting a complete freeze for both coding systems to those who
recommended that both coding systems continue to be updated annually
prior to ICD-10 implementation. There were also many comments that
supported a more limited update process beginning on October 1, 2011,
or October 1, 2012, which would allow only a small number of new codes
to capture new technologies or new diseases. A number of commenters
pointed out that section 503(a) of Public Law 108-173 included a
requirement for updating ICD-9-CM codes twice a year to capture new
technologies. The commenters stated that CMS must make a provision to
capture new technologies despite any requests to freeze code updates.
Commenters voiced concerns about the impact on vendors creating new
ICD-10 products when both ICD-9-CM and ICD-10-CM and ICD-10-PCS codes
were extensively updated on an annual basis. Commenters stated that
vendors and educators were reluctant to begin ICD-10 products and
training materials until there was a period of stability without
extensive annual updates. Some commenters stated that it was important
for physician offices to have time to prepare for the implementation of
ICD-10. Reducing the annual ICD-9-CM and ICD-10 annual updates would be
helpful to physician offices.
Other commenters stated that it was important to update codes
annually so that information on new diseases and technologies can be
captured. These commenters stated that vendors, providers, system
maintainers, and coders were used to annual code updates, and that they
should continue.
One commenter requested that ICD-10-CM codes be frozen on October
1, 2011 so that ICD-10-CM codes could be coordinated with the
Diagnostic and Statistical Manual of Mental Disorders (DSM), Fifth
Edition. The commenter stated that the American Psychiatric Association
plans to publish the fifth edition in 2012. Updates to ICD-10-CM on or
after October 1, 2011, would disrupt those plans.
One commenter suggested an approach that would greatly reduce the
number of updates and provide more stability in the coding systems
during the implementation period. This commenter suggested that the
large, regular code updates on ICD-9-CM be discontinued beginning on
October 1, 2011, or October 1, 2012. The commenter suggested that CMS
and CDC raise the bar for new code requests at that time and only
consider requests for new codes that clearly describe a new technology
or a new disease. The commenter stated that this may lead to the
creation of some new procedure codes which do not ultimately receive
FDA approval, as is the case now.
CMS and CDC have carefully reviewed the comments received at the
ICD-9-CM Coordination and Maintenance Committee meeting as well as the
written comments submitted. Most commenters proposed a limited freeze
on code updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS code
sets, with an exception made for adding codes for new technologies and
diseases. Providing this exception would comply with section 503(a) of
Public Law 108-173, which, as previously stated, includes a requirement
for updating ICD-9-CM codes twice a year to capture new technologies.
There was support for making the last regular update on October 1,
2011. The commenters recommended that the ICD-9-CM Coordination and
Maintenance Committee continue to discuss any new code updates for both
coding systems. However, new codes would only be added to ICD-9-CM or
ICD-10 to capture new technologies, as required by section 503(a) of
Public Law 108-173. Other coding issues raised would be held for
consideration after ICD-10 is implemented.
In this proposed rule, we are soliciting additional input on this
subject, especially in light of the requirements on hospitals for
meaningful use of electronic health records. We welcome public comments
that explore whether a freeze is needed to help with adoption of health
IT, given other priorities such as achievement of meaningful use and
implementation of ICD-10 by FY 2013. We welcome input on having the
last regular, annual update to both ICD-9-CM and ICD-10 be made on
October 1, 2011. On October 1, 2012, there would be only limited code
updates to both the ICD-9-CM and ICD-10 coding systems to capture new
technologies and diseases. On October 1, 2013, there would be only
limited code updates to ICD-10 to capture new technologies and
diagnoses. Any other issues raised would be considered for
implementation in ICD 10 on October 1, 2014, a year after ICD-10 is
implemented. We agree with commenters that there is a need to provide
the provider, payer, and vendor community time to prepare for the
implementation of ICD-10 and the accompanying system and product
updates. The vendor community is especially interested in providing a
more stable code set for ICD-10 while they are developing new products.
We believe that this advance notice of a partial code freeze would
provide the health care industry ample time to request last major code
updates to ICD-9-CM and ICD-10, which could be discussed at the
September 15-16, 2010 and the March 2011 ICD-9-CM Coordination and
Maintenance Committee meeting. Codes discussed at these two meetings
would be considered for the final major code updates on October 1,
2011. Any code issues raised after that time would be addressed at the
ICD-9-CM Coordination and Maintenance Committee meetings in September
2011 through March 2013 to determine if they represented new
technologies or new diseases. Any new technologies and diseases would
be added during the regular annual updates. Other code requests would
be held for implementation on October 1, 2014.
We welcome additional input on having the last regular code updates
to ICD-9-CM and ICD-10 on October 1, 2011, and to only add codes for
new technologies and diseases on October 1, 2012 and 2013. We also
welcome additional input on having the next regular update to ICD-10
occur again on October 1, 2014.
Information on ICD-10 can be found on the CMS Web site at: http://www.cms.hhs.gov/ICD10. The final ICD-10 version of MS-DRGs would be
adopted under the formal rulemaking process as part of our annual IPPS
updates.
[[Page 23914]]
c. Processing of 25 Diagnosis Codes and 25 Procedure Codes on Hospital
Inpatient Claims
We have received repeated requests from the hospital community to
process all 25 diagnosis codes and 25 procedure codes submitted on
electronic hospital inpatient claims. Hospitals can submit up to 25
diagnoses and 25 procedures; however, CMS' current system limitations
allow for the processing of only the first 9 diagnoses and 6
procedures. While CMS accepts all 25 diagnoses and 25 procedures
submitted on the claims, we do not process all of the codes because of
these system limitations. We recognize that much valuable information
is lost by not processing the additional diagnosis and procedure codes
that are reported by hospitals.
We responded to hospitals' requests that we process up to 25
diagnosis codes and 25 procedure codes in the FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 43798). In that final rule, we referred readers
to the ICD-10 final rule (74 FR 3328 through 3362) where we discuss the
updating of Medicare systems prior to the implementation of ICD-10 on
October 1, 2013. We mentioned that part of the system updates in
preparation for ICD-10 is the ``expansion of our ability to process
more diagnosis and procedure codes.'' In the FY 2009 IPPS final rule
(73 FR 48433 through 48444), we also responded to multiple requests to
increase the number of codes processed from 9 diagnosis and 6 procedure
codes to 25 diagnosis and 25 procedure codes.
CMS is currently undergoing extensive system updates as part of the
move to 5010, which includes the ability to accept ICD-10 codes. This
complicated transition involves converting many internal systems prior
to October 1, 2013, when ICD-10 will be implemented. One important step
in this planned conversion process is the expansion of our ability to
process additional diagnosis and procedure codes. We are currently
planning to complete the expansion of this internal system capability
so that we are able to process up to 25 diagnoses and 25 procedures on
hospital inpatient claims as part of the HIPPA ASC X12 Technical
Reports Type 3, Version 005010 (Version 5010) standards system update.
CMS will be able to process up to 25 diagnosis codes and 25 procedure
codes when received on the 5010 format starting on January 1, 2011. We
recognize the value of the additional information provided by this
coded data for multiple uses such as for payment, quality measures,
outcome analysis, and other important uses. We will continue to pursue
this additional processing capacity as aggressively as possible in
response to the multiple requests from the hospital industry. We
appreciate the support of the health care community for this extensive
system update process that will allow us to process more of this
important data. Therefore, for claims submitted on the 5010 format
beginning January 1, 2011, we will increase the capacity to process
diagnosis and procedure codes on hospital inpatient claims from the
current 9 diagnoses and 6 procedures up to 25 diagnoses and 25
procedures.
H. Recalibration of MS-DRG Weights
In developing the proposed FY 2011 system of weights, we used two
data sources: Claims data and cost report data. As in previous years,
the claims data source is the MedPAR file. This file is based on fully
coded diagnostic and procedure data for all Medicare inpatient hospital
bills. The FY 2009 MedPAR data used in this proposed rule include
discharges occurring on October 1, 2008, through September 30, 2009,
based on bills received by CMS through December 31, 2009, from all
hospitals subject to the IPPS and short-term, acute care hospitals in
Maryland (which are under a waiver from the IPPS under section
1814(b)(3) of the Act). The FY 2009 MedPAR file used in calculating the
proposed relative weights includes data for approximately 11,004,046
Medicare discharges from IPPS providers. Discharges for Medicare
beneficiaries enrolled in a Medicare Advantage managed care plan are
excluded from this analysis. The data exclude CAHs, including hospitals
that subsequently became CAHs after the period from which the data were
taken. The second data source used in the cost-based relative weighting
methodology is the FY 2008 Medicare cost report data files from HCRIS
(that is, cost reports beginning on or after October 1, 2007, and
before October 1, 2008), which represents the most recent full set of
cost report data available. We used the December 31, 2009 update of the
HCRIS cost report files for FY 2008 in setting the relative cost-based
weights.
The methodology we used to calculate the DRG cost-based relative
weights from the FY 2009 MedPAR claims data and FY 2008 Medicare cost
report data is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2011 MS-DRG classifications discussed in sections
II.B. and G. of the preamble of this proposed rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2009 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is necessary to subtract the acquisition charges from
the total charges on each transplant bill that showed acquisition
charges before computing the average cost for each MS-DRG and before
eliminating statistical outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $10.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
special equipment charges, therapy services charges, operating room
charges, cardiology charges, laboratory charges, radiology charges,
other service charges, labor and delivery charges, inhalation therapy
charges, emergency room charges, blood charges, and anesthesia charges
were also deleted.
At least 96.1 percent of the providers in the MedPAR file
had charges for 10 of the 15 cost centers. Claims for providers that
did not have charges greater than zero for at least 10 of the 15 cost
centers were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the mean of the log
distribution of both the total charges per case and the total charges
per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim.
[[Page 23915]]
Specifically, if the particular condition is present on admission (that
is, a ``Y'' indicator is associated with the diagnosis on the claim),
then it is not a HAC, and the hospital is paid for the higher severity
(and, therefore, the higher weighted MS-DRG). If the particular
condition is not present on admission (that is, an ``N'' indicator is
associated with the diagnosis on the claim) and there are no other
complicating conditions, the DRG GROUPER assigns the claim to a lower
severity (and, therefore, the lower weighted MS-DRG) as a penalty for
allowing a Medicare inpatient to contract a HAC. While the POA
reporting meets policy goals of encouraging quality care and generates
program savings, it presents an issue for the relative weight-setting
process. Because cases identified as HACs are likely to be more complex
than similar cases that are not identified as HACs, the charges
associated with HACs are likely to be higher as well. Thus, if the
higher charges of these HAC claims are grouped into lower severity MS-
DRGs prior to the relative weight-setting process, the relative weights
of these particular MS-DRGs would become artificially inflated,
potentially skewing the relative weights. In addition, we want to
protect the integrity of the budget neutrality process by ensuring
that, in estimating payments, no increase to the standardized amount
occurs as a result of lower overall payments in a previous year that
stem from using weights and case-mix that are based on lower severity
MS-DRG assignments. If this would occur, the anticipated cost savings
from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have a ``N'' or an ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
Once the MedPAR data were trimmed and the statistical outliers were
removed, the charges for each of the 15 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals in Alaska and Hawaii, the
applicable cost-of-living adjustment. Because hospital charges include
charges for both operating and capital costs, we standardized total
charges to remove the effects of differences in geographic adjustment
factors, cost-of-living adjustments, and DSH payments under the capital
IPPS as well. Charges were then summed by MS-DRG for each of the 15
cost groups so that each MS-DRG had 15 standardized charge totals.
These charges were then adjusted to cost by applying the national
average CCRs developed from the FY 2008 cost report data.
The 15 cost centers that we used in the relative weight calculation
are shown in the following table. The table shows the lines on the cost
report and the corresponding revenue codes that we used to create the
15 national cost center CCRs.
BILLING CODE 4120-01-P
[[Page 23916]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.014
[[Page 23917]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.015
[[Page 23918]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.016
[[Page 23919]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.017
[[Page 23920]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.018
[[Page 23921]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.019
[[Page 23922]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.020
BILLING CODE 4120-01-C
We developed the national average CCRs as follows:
Taking the FY 2008 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland as we are including their charges in our
claims database. We then created CCRs for each provider for each cost
center (see prior table for line items used in the calculations) and
removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-4 and deriving the Medicare-specific
costs by applying the hospital-specific departmental CCRs to the
Medicare-specific charges for each line item from Worksheet D-4. Once
each hospital's Medicare-specific costs were established, we summed the
total Medicare-specific costs and divided by the sum of the total
Medicare-specific charges to produce national average, charge-weighted
CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 15 cost centers by the corresponding national average CCR, we
summed the 15 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the relative weight.
The new cost-based relative weights were then normalized by an
adjustment factor of 1.57461 so that the average case weight after
recalibration was equal to the average case weight before
recalibration. The normalization adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
The 15 proposed national average CCRs for FY 2011 are as follows:
------------------------------------------------------------------------
Group CCR
------------------------------------------------------------------------
Routine Days............................... 0.553
Intensive Days............................. 0.480
Drugs...................................... 0.200
Supplies & Equipment....................... 0.348
Therapy Services........................... 0.415
Laboratory................................. 0.163
Operating Room............................. 0.282
Cardiology................................. 0.181
Radiology.................................. 0.161
Emergency Room............................. 0.278
Blood and Blood Products................... 0.424
Other Services............................. 0.426
Labor & Delivery........................... 0.462
Inhalation Therapy......................... 0.201
Anesthesia................................. 0.136
------------------------------------------------------------------------
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. In this FY 2011 proposed rule, we are
proposing to use that same case threshold in recalibrating the MS-DRG
weights for FY 2011. Using the FY 2009 MedPAR data set, there are 8 MS-
DRGs that contain fewer than 10 cases. Under the MS-DRGs, we have fewer
low-volume DRGs than under the CMS DRGs because we no longer have
separate DRGs for patients age 0 to 17 years. With the exception of
newborns, we previously separated some DRGs based on whether the
patient was age 0 to 17 years or age 17 years and older. Other than the
age split, cases grouping to these DRGs are identical. The DRGs for
patients age 0 to 17 years generally have very low volumes because
children are typically ineligible for Medicare. In the past, we have
found that the low volume of cases for the pediatric DRGs could lead to
significant year-to-year instability in their relative weights.
Although we have always encouraged non-Medicare payers to develop
weights applicable to their own patient populations, we have heard
frequent complaints from providers about the use of the Medicare
relative weights in the pediatric population. We believe that
eliminating this age split in the MS-DRGs will provide more stable
payment for pediatric cases by determining their payment using adult
cases that are much higher in total volume. Newborns are unique and
require separate MS-DRGs that are not mirrored in the adult population.
Therefore, it remains necessary to retain separate MS-DRGs for
newborns. All of the low-volume MS-DRGs listed below are for newborns.
In FY 2011, because we do not have sufficient MedPAR data to set
accurate and stable cost weights for these low-volume MS-DRGs, we are
proposing to compute weights for the low-volume MS-DRGs by adjusting
their FY 2010 weights by the percentage change in the average weight of
the cases in other MS-DRGs. The crosswalk table is shown below:
[[Page 23923]]
------------------------------------------------------------------------
Low[dash]Volume MS-DRG MS-DRG title Crosswalk to MS-DRG
------------------------------------------------------------------------
768.................... Vaginal Delivery with FY 2010 FR weight
O.R. Procedure Except (adjusted by percent
Sterilization and/or change in average
D&C. weight of the cases
in other MS-DRGs).
789.................... Neonates, Died or FY 2010 FR weight
Transferred to Another (adjusted by percent
Acute Care Facility. change in average
weight of the cases
in other MS-DRGs).
790.................... Extreme Immaturity or FY 2010 FR weight
Respiratory Distress (adjusted by percent
Syndrome, Neonate. change in average
weight of the cases
in other MS-DRGs).
791.................... Prematurity with Major FY 2010 FR weight
Problems. (adjusted by percent
change in average
weight of the cases
in other MS-DRGs).
792.................... Prematurity without FY 2010 FR weight
Major Problems. (adjusted by percent
change in average
weight of the cases
in other MS-DRGs).
793.................... Full-Term Neonate with FY 2010 FR weight
Major Problems. (adjusted by percent
change in average
weight of the cases
in other MS-DRGs).
794.................... Neonate with Other FY 2010 FR weight
Significant Problems. (adjusted by percent
change in average
weight of the cases
in other MS-DRGs).
795.................... Normal Newborn......... FY 2010 FR weight
(adjusted by percent
change in average
weight of the cases
in other MS-DRGs).
------------------------------------------------------------------------
I. Proposed Add-On Payments for New Services and Technologies
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, ``based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate.'' We note that
beginning with FY 2008, CMS transitioned from CMS-DRGs to MS-DRGs.
The regulations implementing these provisions specify three
criteria for a new medical service or technology to receive the
additional payment: (1) The medical service or technology must be new;
(2) the medical service or technology must be costly such that the DRG
rate otherwise applicable to discharges involving the medical service
or technology is determined to be inadequate; and (3) the service or
technology must demonstrate a substantial clinical improvement over
existing services or technologies. These three criteria are explained
below in the ensuing paragraphs in further detail.
Under the first criterion, as reflected in 42 CFR 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments until
such time as Medicare data are available to fully reflect the cost of
the technology in the MS-DRG weights through recalibration. Typically,
there is a lag of 2 to 3 years from the point a new medical service or
technology is first introduced on the market (generally on the date
that the technology receives FDA approval/clearance) and when data
reflecting the use of the medical service or technology are used to
calculate the MS-DRG weights. For example, data from discharges
occurring during FY 2009 are used to calculate the proposed FY 2011 MS-
DRG weights in this proposed rule. Section 412.87(b)(2) of the
regulations therefore provides that ``a medical service or technology
may be considered new within 2 or 3 years after the point at which data
begin to become available reflecting the ICD-9-CM code assigned to the
new medical service or technology (depending on when a new code is
assigned and data on the new medical service or technology become
available for DRG recalibration). After CMS has recalibrated the MS-
DRGs, based on available data to reflect the costs of an otherwise new
medical service or technology, the medical service or technology will
no longer be considered `new' under the criterion for this section.''
The 2-year to 3-year period during which a medical service or
technology can be considered new would ordinarily begin on the date on
which the medical service or technology received FDA approval or
clearance. (We note that, for purposes of this section of this proposed
rule, we generally refer to both FDA approval and FDA clearance as FDA
``approval.'') However, in some cases, there may be few to no Medicare
data available for the new service or technology following FDA
approval. For example, the newness period could extend beyond the 2-
year to 3-year period after FDA approval is received in cases where the
product initially was generally unavailable to Medicare patients
following FDA approval, such as in cases of a national noncoverage
determination or a documented delay in bringing the product onto the
market after that approval (for instance, component production or drug
production has been postponed following FDA approval due to shelf life
concerns or manufacturing issues). After the MS-DRGs have been
recalibrated to reflect the costs of an otherwise new medical service
or technology, the medical service or technology is no longer eligible
for special add-on payment for new medical services or technologies (as
specified under Sec. 412.87(b)(2)). For example, an approved new
technology that received FDA approval in October 2008 and entered the
market at that time may be eligible to receive add-on payments as a new
technology for discharges occurring before October 1, 2011 (the start
of FY 2012). Because the FY 2012 MS-DRG weights would be calculated
using FY 2010 MedPAR data, the costs of such a new technology would be
fully reflected in the FY 2012 MS-DRG weights. Therefore, the new
technology would no longer be eligible to receive add-on payments as a
new technology for discharges occurring in FY 2012 and thereafter.
We do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar'' to a technology that was
approved by FDA and has been on the market for more than 2 to 3 years.
In the FY 2006 IPPS final rule (70 FR
[[Page 23924]]
47351), we explained our policy regarding substantial similarity in
detail and its relevance for assessing if the hospital charge data used
in the development of the relative weights for the relevant DRGs
reflect the costs of the technology. In that final rule, we stated
that, for determining substantial similarity, we consider (1) whether a
product uses the same or a similar mechanism of action to achieve a
therapeutic outcome, and (2) whether a product is assigned to the same
or a different DRG. We indicated that both of the above criteria should
be met in order for a technology to be considered ``substantially
similar'' to an existing technology. However, in that same final rule,
we also noted that, due to the complexity of issues regarding the
substantial similarity component of the newness criterion, it may be
necessary to exercise flexibility when considering whether technologies
are substantially similar to one another. Specifically, we stated that
we may consider additional factors, depending on the circumstances
specific to each application.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 and
43814), we noted that the discussion of substantial similarity in the
FY 2006 IPPS final rule related to comparing two separate technologies
made by different manufacturers. Nevertheless, we stated that the
criteria discussed in the FY 2006 IPPS final rule also are relevant
when comparing the similarity between a new use and existing uses of
the same technology (or a very similar technology manufactured by the
same manufacturer). In other words, we stated that it is necessary to
establish that the new indication for which the technology has received
FDA approval is not substantially similar to that of the prior
indication. We explained that such a distinction is necessary to
determine the appropriate start date of the newness period in
evaluating whether the technology would qualify for add-on payments
(that is, the date of the ``new'' FDA approval or that of the prior
approval), or whether the technology could qualify for separate new
technology add-on payments under each indication.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43814), we
added a third factor of consideration to our analysis of whether a new
technology is substantially similar to one or more existing
technologies. Specifically, in making a determination of whether a
technology is substantially similar to an existing technology, we will
consider whether the new use of the technology involves the treatment
of the same or similar type of disease and the same or similar patient
population (74 FR 24130), in addition to considering the already
established factors described in the FY 2006 IPPS final rule (that is,
(1) whether a product uses the same or a similar mechanism of action to
achieve a therapeutic outcome; and (2) whether a product is assigned to
the same or a different DRG). As we noted in the FY 2010 IPPS/RY 2010
LTCH PPS final rule, if all three components are present and the new
use is deemed substantially similar to one or more of the existing uses
of the technology (that is beyond the newness period), we would
conclude that the technology is not new and, therefore, is not eligible
for the new technology add-on payment.
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to the discharge involving the new medical services or technologies
must be assessed for adequacy. Under the cost criterion, to assess the
adequacy of payment for a new technology paid under the applicable MS-
DRG prospective payment rate, we evaluate whether the charges for cases
involving the new technology exceed certain threshold amounts. In the
FY 2004 IPPS final rule (68 FR 45385), we established the threshold at
the geometric mean standardized charge for all cases in the MS-DRG plus
75 percent of 1 standard deviation above the geometric mean
standardized charge (based on the logarithmic values of the charges and
converted back to charges) for all cases in the MS-DRG to which the new
medical service or technology is assigned (or the case-weighted average
of all relevant MS-DRGs, if the new medical service or technology
occurs in more than one MS-DRG).
However, section 503(b)(1) of Public Law 108-173 amended section
1886(d)(5)(K)(ii)(I) of the Act to provide that, beginning in FY 2005,
CMS will apply ``a threshold * * * that is the lesser of 75 percent of
the standardized amount (increased to reflect the difference between
cost and charges) or 75 percent of one standard deviation for the
diagnosis-related group involved.'' (We refer readers to section IV.D.
of the preamble to the FY 2005 IPPS final rule (69 FR 49084) for a
discussion of the revision of the regulations to incorporate the change
made by section 503(b)(1) of Pub. L. 108-173.) Table 10 that was
included in the final rule published in the Federal Register on August
27, 2009, contains the final thresholds that are being used to evaluate
applications for new technology add-on payments for FY 2011 (74 FR
44173). We note that we plan to issue separate documents in the Federal
Register addressing the provisions of Public Law 111-148, as amended,
that affect our proposed policies and payment rates for FY 2011 under
the IPPS and the LTCH PPS. In addition, we plan to issue further
instructions addressing the provisions of Public Law 111-148, as
amended, that affect the policies and payment rates for FY 2010 under
the IPPS and the LTCH PPS. At the time we issue those documents, we
plan to update Table 10 that was published in the Federal Register on
August 27, 2009 and Table 10 in the Addendum to this proposed rule.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the HIPAA Privacy Rule at 45 CFR Parts 160 and 164
applies to claims information that providers submit with applications
for new technology add-on payments. Specifically, we explained that
health plans, including Medicare, and providers that conduct certain
transactions electronically, including the hospitals that would be
receiving payment under the FY 2001 IPPS final rule, are required to
comply with the HIPAA Privacy Rule. We further explained how such
entities could meet the applicable HIPAA requirements by discussing how
the HIPAA Privacy Rule permitted providers to share with health plans
information needed to ensure correct payment, if they had obtained
consent from the patient to use that patient's data for treatment,
payment, or health care operations. We also explained that, because the
information to be provided within applications for new technology add-
on payment would be needed to ensure correct payment, no additional
consent would be required. The HHS Office for Civil Rights has since
amended the HIPAA Privacy Rule, but the results remain. The HIPAA
Privacy Rule no longer requires covered entities to obtain consent from
patients to use or disclose protected health information for treatment,
payment, or health care operations, and expressly permits such entities
to use or to disclose protected health information for any of these
purposes. (We refer readers to 45 CFR 164.502(a)(1)(ii), and
164.506(c)(1) and (c)(3), and the Standards for Privacy of Individually
Identifiable Health Information published in the Federal Register on
August 14, 2002, for a full discussion of changes in consent
requirements.)
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations
[[Page 23925]]
provides that a new technology is an appropriate candidate for an
additional payment when it represents ``an advance that substantially
improves, relative to technologies previously available, the diagnosis
or treatment of Medicare beneficiaries.'' For example, a new technology
represents a substantial clinical improvement when it reduces
mortality, decreases the number of hospitalizations or physician
visits, or reduces recovery time compared to the technologies
previously available. (We refer readers to the September 7, 2001 final
rule for a complete discussion of this criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost to
charge ratios (``CCRs'') as described in Sec. 412.84(h)) exceed the
full DRG payment (including payments for IME and DSH, but excluding
outlier payments), Medicare will make an add-on payment equal to the
lesser of: (1) 50 percent of the estimated costs of the new technology
(if the estimated costs for the case including the new technology
exceed Medicare's payment); or (2) 50 percent of the difference between
the full DRG payment and the hospital's estimated cost for the case.
Unless the discharge qualifies for an outlier payment, Medicare payment
is limited to the full MS-DRG payment plus 50 percent of the estimated
costs of the new technology.
Section 1886(d)(4)(C)(iii) of the Act requires that the adjustments
to annual MS-DRG classifications and relative weights must be made in a
manner that ensures that aggregate payments to hospitals are not more
or less than they were in the prior fiscal year (i.e., they are
``budget neutral''). Therefore, in the past, we accounted for projected
payments under the new medical service and technology provision during
the upcoming fiscal year, while at the same time estimating the payment
effect of changes to the MS-DRG classifications and recalibration. The
impact of additional payments under this provision was then included in
the budget neutrality factor, which was applied to the standardized
amounts and the hospital-specific amounts. However, section 503(d)(2)
of Public Law 108-173 provides that there shall be no reduction or
adjustment in aggregate payments under the IPPS due to add-on payments
for new medical services and technologies. Therefore, in accordance
with section 503(d)(2) of Public Law 108-173, add-on payments for new
medical services or technologies for FY 2005 and later years have not
been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our current practice
of how CMS evaluates the eligibility criteria for new medical service
or technology add-on payment applications. We also amended Sec.
412.87(c) to specify that all applicants for new technology add-on
payments must have FDA approval for their new medical service or
technology by July 1 of each year prior to the beginning of the fiscal
year that the application is being considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies between CMS and other
entities. The CTI, composed of senior CMS staff and clinicians, was
established under section 942(a) of Public Law 108-173. The Council is
co-chaired by the Director of the Office of Clinical Standards and
Quality (OCSQ) and the Director of the Center for Medicare Management
(CMM), who is also designated as the CTI's Executive Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CMM, OCSQ, and the local claims-payment contractors (in
the case of local coverage and payment decisions). The CTI supplements,
rather than replaces, these processes by working to assure that all of
these activities reflect the agency-wide priority to promote high-
quality, innovative care. At the same time, the CTI also works to
streamline, accelerate, and improve coordination of these processes to
ensure that they remain up to date as new issues arise. To achieve its
goals, the CTI works to streamline and create a more transparent coding
and payment process, improve the quality of medical decisions, and
speed patient access to effective new treatments. It is also dedicated
to supporting better decisions by patients and doctors in using
Medicare-covered services through the promotion of better evidence
development, which is critical for improving the quality of care for
Medicare beneficiaries.
CMS plans to continue its Open Door forums with stakeholders who
are interested in CTI's initiatives. In addition, to improve the
understanding of CMS' processes for coverage, coding, and payment and
how to access them, the CTI has developed an ``innovator's guide'' to
these processes. The intent is to consolidate this information, much of
which is already available in a variety of CMS documents and in various
places on the CMS Web site, in a user-friendly format. This guide was
published in August 2008 and is available on the CMS Web site at:
http://www.cms.hhs.gov/CouncilonTechInnov/Downloads/InnovatorsGuide8_25_08.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical
technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
[email protected] or from the ``Contact Us'' section of the CTI home page
(http://www.cms.hhs.gov/CouncilonTechInnov/).
We note that applicants for add-on payments for new medical
services or technologies for FY 2012 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on our Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/08_newtech.asp. To allow interested parties to
identify the new medical services or technologies under review before
the publication of the proposed rule for FY 2012, the Web
[[Page 23926]]
site also will list the tracking forms completed by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2011 prior
to publication of this FY 2011 IPPS/RY 2011 LTCH PPS proposed rule, we
published a notice in the Federal Register on November 27, 2009 (74 FR
62339 through 62342), and held a town hall meeting at the CMS
Headquarters Office in Baltimore, MD, on February 19, 2010. In the
announcement notice for the meeting, we stated that the opinions and
alternatives provided during the meeting would assist us in our
evaluations of applications by allowing public discussion of the
substantial clinical improvement criterion for each of the FY 2011 new
medical service and technology add-on payment applications before the
publication of this FY 2011 proposed rule.
Approximately 80 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. Each of the three FY 2011 applicants presented
information on its technology, including a discussion of data
reflecting the substantial clinical improvement aspect of the
technology. We considered each applicant's presentation made at the
town hall meeting, as well as written comments submitted on the
applications, in our evaluation of the new technology add-on
applications for FY 2011 in this proposed rule.
In response to the published notice and the new technology town
hall meeting, we received 11 written comments regarding applications
for FY 2011 new technology add-on payments. We summarized these
comments or, if applicable, indicated that there were no comments
received, at the end of each discussion of the individual applications
in this proposed rule.
Comment: One commenter, a medical technology association,
recommended that CMS, in its consideration as to whether a new
technology meets the substantial clinical improvement criterion, judge
a diagnostic device on the basis of a diagnostic outcome (improved
diagnosis) rather than a therapeutic outcome, recognizing that earlier
and improved detection of disease often leads to improved patient
outcomes.
Response: We thank the commenter for its comments on the
substantial clinical improvement criterion. Similar to our statements
in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43817 through
43819), section 1886(d)(5)(K)(vi) of the Act authorizes the Secretary
to establish through notice and comment rulemaking the criteria that a
new medical service or technology must meet in order to be eligible for
the new technology add-on payment. Under this authority, in the
September 7, 2001 final rule, we established three criteria through
notice and comment rulemaking--the newness criterion, the cost
criterion, and the substantial clinical improvement criterion (66 FR
46924). Specifically, Sec. 412.87(b)(1) of the regulations provides
that a new medical service or technology must ``represent an advance
that substantially improves, relating to technologies previously
available, the diagnosis or treatment of Medicare beneficiaries.''
As we explained in the September 7, 2001 final rule, we consider a
diagnostic technology to meet the substantial clinical improvement
criterion if the technology not only ``offers the ability to diagnose a
medical condition in a patient population where that medical condition
is currently undetectable or offers the ability to diagnose a medical
condition earlier in a patient population than allowed by currently
available methods,'' but also if ``use of the device to make a
diagnosis affects the management of the patient'' (66 FR 46914). We
believe that this evidence is necessary to determine whether the new
technology affords a ``clear improvement over the use of previously
available technologies.'' We do not consider any particular type of
evidence to be dispositive; instead, we consider all information
presented for each application to determine whether there is evidence
to support a conclusion that ``use of the device to make a diagnosis
affects the management of the patient'' (in the case of a diagnostic
technology). Specifically, we consider whether the peer-reviewed
medical literature supports or clinical studies indicate that the
diagnostic device should generally be used by providers in guiding the
management of their patients. In addition, we consider evidence
demonstrating clinically accepted use of the device in a manner that
actually affects the management of patients.
Under the commenter's recommendation, a diagnostic technology
effectively would only need to receive FDA approval and be the only
technology approved for a particular diagnostic capability in order to
be deemed a ``substantial improvement'' for purposes of new technology
add-on payments, regardless of its ability to positively affect patient
management. This approach would deem a device that led to the
identification of new information as a substantial improvement in
diagnosis even if such detection has not been ``demonstrated to
represent a substantial improvement in caring for Medicare
beneficiaries'' and was not linked to evidence-based, significant, and
positive changes in the management of patients or, ultimately, to
changes in clinical outcomes. We do not believe this rationale is
consistent with our prior statements regarding the substantial clinical
improvement criterion of the new technology add-on payment provision.
Comment: One commenter, a medical device association, recommended
that CMS ``deem a device to satisfy the substantial clinical
improvement criteria if it was granted a humanitarian device exemption
or priority review based on the fact that it represents breakthrough
technologies, which offer significant advantages over existing approved
alternatives, for which no alternatives exist, or the availability of
which is in the best interests of the patients.'' In addition, the
commenter
[[Page 23927]]
remarked that this process would simplify CMS' evaluation of
applications for new technology add-on payments and would promote
access to innovative treatments, as intended by Congress. Although the
commenter also made remarks that were unrelated to substantial clinical
improvement, because the purpose of the town hall meeting was
specifically to discuss substantial clinical improvement of pending new
technology applications, those comments are not summarized in this
proposed rule.
Response: We thank the commenter for its comments. We note that we
have previously addressed the comment concerning automatically
approving technologies that have a humanitarian device exemption (HDE)
in the FY 2008 IPPS final rule (72 FR 47302). We refer readers to that
rule for our response. A further discussion of our evaluation of the
applications and the documentation for new technology add-on payments
submitted for FY 2011 approval is provided under the specified areas
under this section.
3. FY 2011 Status of Technologies Approved for FY 2010 Add-On Payments
a. Spiration[supreg] IBV[supreg] Valve System
Spiration, Inc. submitted an application for new technology add-on
payments for the Spiration[supreg] IBV[supreg] Valve System
(Spiration[supreg] IBV[supreg]). The Spiration[supreg] IBV[supreg] is a
device that is used to place, via bronchoscopy, small, one-way valves
into selected small airways in the lung in order to limit airflow into
selected portions of lung tissue that have prolonged air leaks
following surgery while still allowing mucus, fluids, and air to exit,
thereby reducing the amount of air that enters the pleural space. The
device is intended to control prolonged air leaks following three
specific surgical procedures: lobectomy; segmentectomy; or lung volume
reduction surgery (LVRS). According to the applicant, an air leak that
is present on postoperative day 7 is considered ``prolonged'' unless
present only during forced exhalation or cough. In order to help
prevent valve migration, there are five anchors with tips that secure
the valve to the airway. The implanted valves are intended to be
removed no later than 6 weeks after implantation.
With regard to the newness criterion, the Spiration[supreg]
IBV[supreg] received an HDE approval from the FDA on October 24, 2008.
We were unaware of any previously FDA-approved predicate devices, or
otherwise similar devices, that could be considered substantially
similar to the Spiration[supreg] IBV[supreg]. However, the applicant
asserted that the FDA had precluded the device from being used in the
treatment of any patients until Institutional Review Board (IRB)
approvals regarding its study sites. Therefore, the Spiration[supreg]
IBV[supreg] met the newness criterion once it obtained at least one IRB
approval because the device would then be available on the market to
treat Medicare beneficiaries.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the
Spiration[supreg] IBV[supreg] and consideration of the public comments
we received on the FY 2010 IPPS proposed rule, including the additional
analysis of clinical data and supporting information submitted by the
applicant, we approved the Spiration[supreg] IBV[supreg] for new
technology add-on payments for FY 2010. The Spiration[supreg]
IBV[supreg] is the only device currently approved for the purpose of
treating prolonged air leaks following lobectomy, segmentectomy, and
LVRS patients in the United States. We stated that without the
availability of this device, patients with prolonged air leaks
(following lobectomy, segmentectomy, and LVRS) might otherwise remain
inpatients in the hospital (and have a longer length of stay than they
might otherwise have without the Spiration[supreg] IBV[supreg]) or
might even require additional invasive surgeries to resolve the air
leak. We also noted that use of the Spiration[supreg] IBV[supreg] may
lead to more rapid beneficial resolution of prolonged air leaks and
reduce recovery time following the three lung surgeries mentioned
above.
However, in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43823), we indicated that we remained interested in seeing whether the
clinical evidence continues to find it to be effective. This approval
was on the basis of using the Spiration[supreg] IBV[supreg] consistent
with the FDA approval (HDE), and we emphasized the need for appropriate
patient selection accordingly. Therefore, we limited the add-on payment
to cases involving prolonged air leaks following lobectomy,
segmentectomy and LVRS in MS-DRGs 163, 164, and 165. Cases involving
the Spiration[supreg] IBV[supreg] that are eligible for the new
technology add-on payment are identified by assignment to MS-DRGs 163,
164, and 165 with procedure code 33.71 or 33.73 in combination with one
of the following procedure codes: 32.22, 32.30, 32.39, 32.41, or 32.49.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we stated that the
average cost of the Spiration[supreg] IBV[supreg] is reported as
$2,750. Based on data from the FY 2010 application, the average amount
of valves per case is 2.5. Therefore, the total maximum cost for the
Spiration[supreg] IBV[supreg] was expected to be $6,875 per case
($2,750 x 2.5). Under Sec. 412.88(a)(2) of our regulations, new
technology add-on payments are limited to the lesser of 50 percent of
the average cost of the device or 50 percent of the costs in excess of
the MS-DRG payment for the case. As a result, we finalized a maximum
add-on payment for a case involving the Spiration[supreg] IBV[supreg]
as $3,437.50.
b. CardioWestTM Temporary Total Artificial Heart System
(CardioWestTM TAH-t)
SynCardia Systems, Inc. submitted an application for approval of
the CardioWestTM temporary Total Artificial Heart system
(TAH-t) in FY 2009. The TAH-t is a technology that is used as a bridge
to heart transplant device for heart transplant-eligible patients with
end-stage biventricular failure. The TAH-t pumps up to 9.5 liters of
blood per minute. This high level of perfusion helps improve
hemodynamic function in patients, thus making them better heart
transplant candidates.
The TAH-t was approved by the FDA on October 15, 2004, for use as a
bridge to transplant device in cardiac transplant-eligible candidates
at risk of imminent death from biventricular failure. The TAH-t is
intended to be used in hospital inpatients. One of the FDA's post-
approval requirements is that the manufacturer agrees to provide a
post-approval study demonstrating that success of the device at one
center can be reproduced at other centers. The study was to include at
least 50 patients who would be followed up to 1 year, including (but
not limited to) the following endpoints: survival to transplant;
adverse events; and device malfunction.
In the past, Medicare did not cover artificial heart devices,
including the TAH-t. However, on May 1, 2008, CMS issued a final
national coverage determination (NCD) expanding Medicare coverage of
artificial hearts when they are implanted as part of a study that is
approved by the FDA and is determined by CMS to meet CMS' Coverage with
Evidence Development (CED) clinical research criteria. (The final NCD
is available on the CMS Web site at: http://www.cms.hhs.gov/mcd/viewdecisionmemo.asp?id=211.)
We indicated in the FY 2009 IPPS/RY 2009 LTCH PPS final rule (73 FR
48555) that, because Medicare's previous coverage policy with respect
to this device had precluded payment from Medicare, we did not expect
the costs associated with this technology to be
[[Page 23928]]
currently reflected in the data used to determine the relative weights
of MS-DRGs. As we have indicated in the past, and as we discussed in
the FY 2009 IPPS/RY 2009 LTCH PPS final rule, although we generally
believe that the newness period would begin on the date that FDA
approval was granted, in cases where the applicant can demonstrate a
documented delay in market availability subsequent to FDA approval, we
would consider delaying the start of the newness period. This
technology's situation represented such a case. We also noted that
section 1886(d)(5)(K)(ii)(II) of the Act requires that we provide for
the collection of cost data for a new medical service or technology for
a period of at least 2 years and no more than 3 years ``beginning on
the date on which an inpatient hospital code is issued with respect to
the service or technology.'' Furthermore, the statute specifies that
the term ``inpatient hospital code'' means any code that is used with
respect to inpatient hospital services for which payment may be made
under the IPPS and includes ICD-9-CM codes and any subsequent
revisions. Although the TAH-t has been described by the ICD-9-CM
code(s) since the time of its FDA approval, because the TAH-t had not
been covered under the Medicare program (and, therefore, no Medicare
payment had been made for this technology), this code could not be
``used with respect to inpatient hospital services for which payment''
is made under the IPPS, and thus we assumed that none of the costs
associated with this technology would be reflected in the Medicare
claims data used to recalibrate the MS-DRG relative weights for FY
2009. For this reason, as discussed in the FY 2009 IPPS/RY 2009 LTCH
PPS final rule, despite the FDA approval date of the technology, we
determined that TAH-t would still be eligible to be considered ``new''
for purposes of the new technology add-on payment because the TAH-t met
the newness criterion on the date that Medicare coverage began,
consistent with issuance of the final NCD, effective on May 1, 2008.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the TAH-t
and consideration of the public comments we received in response to the
FY 2009 IPPS/RY 2009 LTCH PPS proposed rule, we approved the TAH-t for
new technology add-on payments for FY 2009 (73 FR 48557). We indicated
that we believed the TAH-t offered a new treatment option that
previously did not exist for patients with end-stage biventricular
failure. However, we indicated that we recognized that Medicare
coverage of the TAH-t is limited to approved clinical trial settings.
The new technology add-on payment status does not negate the
restrictions under the NCD nor does it obviate the need for continued
monitoring of clinical evidence for the TAH-t. We remain interested in
seeing whether the clinical evidence demonstrates that the TAH-t
continues to be effective. If evidence is found that the TAH-t may no
longer offer a substantial clinical improvement, we reserve the right
to discontinue new technology add-on payments, even within the 2- to 3-
year period that the device may still be considered to be new. We also
continued to make new technology add-on payments for the TAH-t in FY
2010. We welcome public comment regarding whether there is new evidence
that demonstrates that the TAH-t continues to be effective and whether
it should still be considered to be a substantial clinical improvement
for FY 2011.
The new technology add-on payment for the TAH-t for FY 2010 is
triggered by the presence of ICD-9-CM procedure code 37.52
(Implantation of total heart replacement system), condition code 30,
and the diagnosis code reflecting clinical trial--V70.7 (Examination of
participant in clinical trial). For FY 2010, we finalized a maximum
add-on payment of $53,000 (that is, 50 percent of the estimated
operating costs of the device of $106,000) for cases that involve this
technology.
Our practice has been to begin and end new technology add-on
payments on the basis of a fiscal year. In general, we extend add-on
payments for an additional year only if the 3-year anniversary date of
the product's entry on the market occurs in the latter half of the
fiscal year (70 FR 47362). The TAH-t is still eligible to be considered
``new'' for purposes of the new technology add-on payment because the
3-year anniversary date of the TAH-t entry on the market was in the
second half of the fiscal year and the TAH-t met the newness criterion
on the date that Medicare coverage began, consistent with issuance of
the final NCD, effective on May 1, 2008. Therefore, for FY 2011, we are
proposing to continue new technology add-on payments for cases
involving the TAH-t in FY 2011 with a maximum add-on payment of
$53,000.
4. FY 2011 Applications for New Technology Add-On Payments
We received five applications to be considered for new technology
add-on payment for FY 2011. However, two applicants withdrew their
applications: Nycomed Austria GmbH, which submitted an application for
new technology add-on payments for FY 2011 for TachoSil[supreg]; and
Zimmer, which submitted an application for new technology add-on
payments for FY 2011 for the Dynesys Dynamic Stabilization System.
Nycomed Austria GmbH withdrew its application from further review in
January 2010, and Zimmer withdrew its application in February 2010.
Because both applications were withdrawn prior to the town hall meeting
and publication of this proposed rule, we are not discussing these two
applications in this proposed rule.
A discussion of the remaining three applications is presented
below. At the time this proposed rule was developed, one of the
technologies had not yet received FDA approval. Consequently, our
discussion below of this application may be limited.
a. Auto Laser Interstitial Thermal Therapy (AutoLITTTM)
System
Monteris Medical submitted an application for new technology add-on
payments for FY 2011 for the AutoLITTTM. We note that the
applicant submitted an application for new technology add-on payments
for FY 2010 but withdrew its application prior to the FY 2010 IPPS/RY
2010 LTCH PPS final rule. AutoLITTTM is a minimally
invasive, MRI-guided catheter tipped laser designed to destroy
malignant brain tumors with interstitial thermal energy causing
immediate coagulation and necrosis of diseased tissue. The applicant
asserts that the AutoLITTTM delivers laser energy to the
lesion with a proprietary 3mm diameter probe that directs the energy
radially (that is, at right angle to the axis of the probe, or side-
firing) toward the targeted tumor tissue in a narrow beam profile and
at the same time, a proprietary probe cooling system removes heat from
tissue not directly in the path of the laser beam, ostensibly
protecting it from thermal damage and enabling the physician to
selectively ablate only targeted tissue. The AutoLITTTM
received a 510K FDA clearance in May 2009. The AutoLITTTM is
indicated for use to necrotize or coagulate soft tissue through
interstitial irradiation or thermal therapy in medicine and surgery in
the discipline of neurosurgery with 1064 nm lasers. The
AutoLITTTM may be used in patients with glioblastoma
multiforme brain tumors. The applicant stated in its application and
through supplemental information that, due to required
[[Page 23929]]
updates, the technology was actually introduced to the market in
December 2009. The applicant explained that it was necessary to reduce
the thermal damage lines from three to one and complete International
Electrotechnical Commission/Underwriter Laboratory testing, which led
to the introduction of the technology to the market in December 2009,
although the technology was approved by FDA in May 2009. The applicant
also stated through supplementary information to its application that
the first sale of the product took place on March 19, 2010. However,
because the product was already available for use in December 2009, it
appears that the newness date would begin in December 2009. We welcome
public comments on this issue.
With regard to the newness criterion, we are concerned that the
AutoLITTTM may be substantially similar to the device that
it listed as its predicate device in its application to the FDA for
approval. Specifically, in making a determination of substantial
similarity, we consider the following: (1) Whether a product uses the
same or similar mechanism of action to achieve a therapeutic action;
and (2) whether a product is assigned to the same of different MS-DRG;
and (3) whether the new use of a technology involves the treatment of
the same or similar type of disease and the same or similar patient
population. The applicant identified Visual-ase as its predicate device
(which was approved by the FDA in 2006), which is also used to treat
tumors of the brain. The applicant maintains that
AutoLITTTM; can be distinguished from the Visual-ase by its
mechanism of action (that is, side-firing laser versus elliptical
firing). Additionally, as mentioned above, the technology contains a
proprietary probe cooling system that removes heat from tissue not
directly in the path of the laser beam. We welcome comments from the
public regarding whether or not the AutoLITTTM is
substantially similar to the Visual-ase and if it meets the newness
criteria.
The technology can be identified by ICD-9-CM procedure codes 17.61
(Laser interstitial thermal therapy [LITT] of lesion or tissue of brain
under guidance), and 17.62 (Laser interstitial thermal therapy [LITT]
of lesion or tissue of head and neck under guidance), which were
effective on October 1, 2009.
In an effort to demonstrate that AutoLITTTM meets the
cost criterion, the applicant used 2007 Medicare data from the
Healthcare Cost and Utilization Project (HCUP). We first note that the
applicant believes that cases eligible for the AutoLITTTM
will map to MS-DRG 25 (Craniotomy and Endovascular Intracranial
Procedures with MCC), MS-DRG 26 (Craniotomy and Endovascular
Intracranial Procedures with CC), and MS-DRG 27 (Craniotomy and
Endovascular Intracranial Procedures without CC or MCC). The applicant
explained through supplemental information to its application that most
cases of the AutoLITTTM would map to MS-DRG 25 in the near-
term. As the technology becomes more widely available, clinicians will
use the technology instead of performing a craniotomy for brain cancer
and on other different types of brain cancers including metastases,
which would map to other MS-DRGs aside from MS-DRG 25. The applicant
further stated that life expectancy with brain cancer is predicated on
the removal of as much of the cancer as possible and asserted that over
time the AutoLITTTM will do a better job of removing the
majority of the cancer that is present within the brain tissue compared
to other procedures. The applicant believes that physicians with the
AutoLITTTM have a better tool at removing more cancer and
killing it more precisely and accessing parts of the brain that
surgical resection cannot access. Lastly, the applicant believes that
the minimally invasive nature of the procedure will also result in
broader usage to other less complicated procedures (as clinical and
patient awareness expands).
The applicant searched HCUP hospital data for cases potentially
eligible for the AutoLITTTM that was assigned one of the
following ICD-9-CM diagnosis codes: a diagnosis code that begins with a
prefix of 191 (Malignant neoplasm of brain); diagnosis code 225.0
(Benign neoplasm of brain and other parts of nervous system); or
diagnosis code 239.6 (Neoplasm of the brain of unspecified nature). The
applicant found 41,021 cases and weighted the standardized charge per
case based on the number of cases found within each of the diagnosis
codes listed above rather than the percentage of cases that would group
to different MS-DRGs. Based on this analysis, the applicant calculated
an average standardized charge per case was $57,511. While the
applicant's analysis established a case-weighted average charge per
case in the aggregate, it did not provide a case-weighted average
standardized charge per case by MS-DRG (as required by the
application).
The applicant also noted that their estimate of the case-weighted
average standardized charge per case of $57,511 did not include charges
related to the AutoLITTTM. Therefore, it is necessary to add
the charges related to the device to the case-weighted average
standardized charge per case in evaluating the cost threshold
criterion. Although the applicant submitted data related to the
estimated cost of the AutoLITTTM per case, the applicant
stated that the cost of the device was proprietary information. Based
on a study of charge compression data by RTI \4\ and charge master data
from Stanford University and University of California, San Francisco,
the applicant estimates $38,886 in charges related to the
AutoLITTTM (we note that some of the data used a markup of
294 percent of the costs). Adding the estimated charges related to the
device to the average standardized charge per case resulted in a total
average standardized charge per case of $96,397 ($57,511 plus $38,886).
We note, in the applicant's discussion of substantial clinical
improvement below, the applicant maintains that improved clinical
outcomes using nonfocused LITT included reduced recovery time and a
reduced rate of complications. Therefore, we are seeking comment on how
reduced recovery time and a reduced rate of complications would affect
the total case-weighted average standardized charge per case and the
average length of stay (for cases eligible for the
AutoLITTTM).
---------------------------------------------------------------------------
\4\ RTI International, A Study of Charge Compression in
Calculating DRG Relative Weights, RTI Project No. 0207964.012.008;
January 2007.
---------------------------------------------------------------------------
As noted above, the applicant's analysis established a case-
weighted average charge per case in the aggregate, but it did not
provide a case-weighted average standardized charge per case by MS-DRG.
However, the applicant explained through supplemental information to
its application that the total average standardized charge per case
significantly exceeds the cost threshold established by CMS for FY 2011
in Table 10 (74 FR 44173) of $84,185 for MS-DRG 25. Additionally, the
applicant further explained that the total average standardized charge
per case would also exceed the cost thresholds established by CMS of
$58,612 for MS-DRGs 26 and $47,053 for MS-DRG 27. Because the total
average standardized charge per case exceeds the threshold amount for
each individual MS-DRG to which the technology would map (MS-DRGs 25,
26, and 27), the applicant maintains that the AutoLITTTM
would meet the cost criterion. We invite public comment on whether or
not the AutoLITTTM meets the cost criterion for a new
technology add-on payment for FY 2011.
[[Page 23930]]
With respect to the substantial clinical improvement criterion, the
applicant maintains that it meets this criterion in its application.
Specifically, the applicant stated that several non-
AutoLITTTM clinical trials have demonstrated that nonfocused
LITT (and more recently, the use of LITT plus MRI) improved survival,
quality of life, and recovery in patients with advanced glioblastoma
multiforme tumors and advanced metastatic brain tumors that cannot be
effectively treated with surgery, radiosurgery, radiation,
chemotherapy, or any currently available clinical procedure. In a
number of these patients, nonfocused LITT was the treatment of last
resort, due to either the unresponsiveness or inability of these
therapies to treat the brain tumor (due to tumor location, type, or
size, among others). The applicant also maintains that when compared to
craniotomy, it offers improved clinical outcomes using nonfocused LITT,
including reduced recovery time and a reduced rate of complications
(that is, infection, brain edema). The applicant stated that these
factors, as discussed in the FY 2001 final rule (66 FR 46914 through
46915) demonstrate that the AutoLITTTM meets the new
technology criterion for substantial clinical improvement.
The applicant further asserts that AutoLITTTM would
represent a substantial clinical improvement over existing standards of
care for a number of reasons and should build upon less sophisticated,
nonfocused LITT therapies. These clinical improvements cited by the
applicant include: A less invasive method of tumor ablation,
potentially leading to lower complication rates post procedure
(infection, edema); an ability to employ multiple interventions over
shorter periods of time and an ability to be used as a treatment of
last resort (radiosurgery is limited due to radiation dosing and
craniotomy is limited to 1 to 2 procedures); an ability to be used in
hard-to-reach brain tumors (the AutoLITTTM may be used as a
treatment of last resort); and a shorter recovery time (the possibility
for same day surgery, which has been demonstrated above with nonfocused
LITT).
We appreciate the applicant's summary of why this technology
represents a substantial clinical improvement. While we recognize the
future potential of this interesting therapy, we have concerns that to
date the AutoLITTTM has been used for the treatment of only
a few patients as part of a safety evaluation with no comparative
efficacy data and, therefore, there may not be sufficient objective
clinical evidence to determine if the AutoLITTTM meets the
substantial clinical improvement criteria. The applicant did note in
its presentation at the new technology town hall meeting that it is
currently conducting a clinical trial with a summary report expected in
the near future. We welcome additional clinical data to demonstrate
whether the AutoLITTTM meets the substantial clinical
improvement criterion and invite public comment on whether or not the
AutoLITTTM meets the substantial clinical improvement
criterion.
We did not receive any written public comments regarding this
application for new technology add-on payments concerning the new
technology town hall meeting.
b. LipiScanTM Coronary Imaging System
InfraReDx, Inc. submitted an application for new technology add-on
payments for FY 2011 for the LipiScanTM Coronary Imaging
System (LipiScanTM). We note that an application was also
submitted for FY 2010, but the application was denied on the grounds
that it did not meet the substantial clinical improvement criterion at
that time. The application for FY 2011 contains some additional
clinical and charge data that were not available at the time that the
FY 2010 new technology add-on payment decisions were made.
The LipiScanTM device is a diagnostic tool that uses
Intravascular Near Infrared Spectroscopy (INIRS) during an invasive
coronary catheterization to scan the artery wall in order to determine
coronary plaque composition. The purpose of the device is to identify
lipid-rich areas in the artery because such areas have been shown to be
more prone to rupture. The procedure does not require flushing or
occlusion of the artery. INIRS identifies the chemical content of
plaque by focusing near infrared light at the vessel wall and measuring
reflected light at different wavelengths (that is, spectroscopy). The
LipiScanTM system collects approximately 1,000 measurements
per 12.5 mm of pullback, with each measurement interrogating an area of
1 to 2 mm\2\ of lumen surface perpendicular to the longitudinal axis of
the catheter. When the catheter is in position, the physician activates
the pullback and rotation device and the scan is initiated providing
360 degree images of the length of the artery. The rapid acquisition
speed for the image freezes the motion of the heart and permits
scanning of the inside of the arterial wall in less than 2 minutes.
When the catheter pullback is completed, the console displays the scan
results, which are referred to as a ``chemogram'' image. The chemogram
image requires reading by a trained user, but, according to the
applicant was designed to be simple to interpret.
With regard to the newness criterion, the LipiScanTM
received a 510K FDA clearance for a new indication on April 25, 2008,
and was available on the market immediately thereafter. On June 23,
2006, InfraReDx, Inc. was granted a 510K FDA clearance for the
``InfraReDx Near Infrared (NIR) Imaging System.'' Both devices are
under the common name of ``Near Infrared Imaging System'' according to
the 510K summary document from the FDA. However, the InfraReDx NIR
Imaging System device that was approved by the FDA in 2006 was approved
``for the near infrared imaging of the coronary arteries,'' whereas the
LipiscanTM device cleared by the FDA in 2008 is for a
modified indication. The modified indication specified that
LipiscanTM is ``intended for the near-infrared examination
of coronary arteries* * *, the detection of lipid-core-containing
plaques of interest* * *[and] for the assessment of coronary artery
lipid core burden.'' In the FY 2010 IPPS/RY 201 LTCH PPS proposed rule
(74 FR 24132 through 24134), we noted that we had concerns with whether
LipiscanTM was substantially similar to its predicate device
that was approved by the FDA in 2006. However, those concerns were
addressed by the manufacturer during the comment period. Specifically,
the manufacturer stated that there were technical problems with the
original device and that LipiScanTM had to be modified in
the following ways:
------------------------------------------------------------------------
Marketed 2008
2006 NIRS device lipiScan
------------------------------------------------------------------------
Console..................... No display of Results displayed
results of scan. immediately.
Catheter.................... Saline-filled with Air-filled with no
microbubble problem microbubble
obscuring many problem.
scans.
[[Page 23931]]
Algorithm................... No algorithmic Algorithm validated
processing of NIR in over 1,000
signals--no means autopsy
of certifying that measurements
lipid core plaque proving that NIRS
is present. can detect lipid
core plaque, and
providing diagnosis
of lipid core
plaque to the MD
during the case.
------------------------------------------------------------------------
The problems with the LipiScanTM device that was
approved in 2006 were addressed in the second device that was granted
FDA approval in April 2008. The LipiScanTM device was not
marketed until after its second FDA clearance. Therefore, we no longer
needed to make a determination as to whether the newer device was
substantially similar to the predicate device and we determined in the
FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43815) that
LipiscanTM would be considered to be ``new'' to the market
as of the date of its FDA approval in April 2008. Because a technology
may be considered new for a period of up to 3 years if, during the
third year, the technology is new for more than 6 months of the fiscal
year, it appears that the technology would still be in the newness
period for FY 2011. We welcome public comment on whether
LipiscanTM meets the newness criterion.
We note that the LipiscanTM technology is identified by
ICD-9-CM procedure code 38.23 (Intravascular spectroscopy), which
became effective October 1, 2008, and cases involving the use of this
device generally map to MS-DRG 246 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent(s) with MCC or 4+ Vessels/Stents);
MS-DRG 247 (Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent(s) without MCC); MS-DRG 248 (Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent(s) with MCC or 4+ Vessels/
Stents); MS-DRG 249 (Percutaneous Cardiovascular Procedures with Non-
Drug-Eluting Stent(s) without MCC); MS-DRG 250 (Percutaneous
Cardiovascular Procedures without Coronary Artery Stent with MCC); and
MS-DRG 251 (Percutaneous Cardiovascular Procedures without Coronary
Artery Stent without MCC).
In an effort to demonstrate that the technology meets the cost
criterion, the applicant used the FY 2010 final rule After Outliers
Removed (AOR) file (posted on the CMS Web site) to identify cases
potentially eligible for LipiscanTM. The applicant believes
that every case within MS-DRGs 246, 247, 248, 249, 250, and 251 is
eligible for LipiscanTM. In addition, the applicant believes
that LipiscanTM will be evenly distributed across patients
in each of those six MS-DRGs (16.7 percent within each MS-DRG). Using
data from the AOR file, the applicant found the average standardized
charge per case for MS-DRGs 246, 247, 248, 249, 250, and 251 was
$67,531, $44,485, $62,936, $40,149, $59,416, and $38,864, respectively,
equating to a case-weighted average standardized charge per case of
$52,230 (calculation performed using unrounded numbers). The applicant
indicated that the case-weighted average standardized charge per case
does not include charges related to LipiscanTM; therefore,
it is necessary to add the charges related to the device to the average
case-weighted standardized charge per case to evaluate the cost
threshold criterion. Although the applicant submitted data related to
the estimated cost per case of LipiscanTM, the applicant
stated that the cost of the device is proprietary information. Based on
a sampling of all 10 non-VA hospitals that are actively using the
device, the applicant determined that the average charge for the device
was $7,497. Adding the estimated average charge related for the device
to the case-weighted standardized charge per case (based on the case
distribution from the applicant's FY 2010 AOR analysis) results in a
total case-weighted average standardized charge per case of $59,727
($52,230 plus $7,497). Using the FY 2011 thresholds published in Table
10 of the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 44173), the
case-weighted threshold for MS-DRGs 246, 247, 248, 249, 250, and 251 is
$56,487 (all calculations above were performed using unrounded
numbers). Because the applicant's calculation of the total case-
weighted average standardized charge per case for the applicable MS-
DRGs exceeds the case-weighted threshold amount, the applicant
maintains that LipiscanTM meets the cost criterion.
We note that in the applicant's analysis of the cost criterion,
instead of determining the case-weighted average standardized charge
per case and the case-weighted threshold amount based on the actual
number of cases from the FY 2010 AOR file in the applicable MS-DRGs
that are eligible for the LipiscanTM, the applicant's
analysis assumed an even distribution of patients in the applicable MS-
DRGs. However, the data from the FY 2010 AOR file shows a varied
distribution of cases in each of the applicable MS-DRGs. We believe the
more appropriate way to determine the case-weighted average
standardized charge per case and the case-weighted threshold amount for
evaluating the cost criterion is to use the actual distribution of
cases in the applicable MS-DRGs based on the number of cases from the
AOR file because this would more accurately reflect the number and type
of Medicare cases typically treated in the applicable MS-DRGs.
Moreover, this would better conform with the applicant's assertion that
the probability of use of LipiscanTM is the same in each of
those six MS-DRGs. Using data from the FY 2010 AOR file, for MS-DRGs
246, 247, 248, 249, 250, and 251, there were 30,411, 147,952, 19,736,
67,964, 8,184, and 38,091 cases, respectively. Using this case
distribution and the average standardized charge per case for MS-DRGs
246, 247, 248, 249, 250, and 251 from the application (that is,
$67,531, $44,485, $62,936, $40,149, $59,416, and $38,864, respectively,
as stated above), the case-weighted average standardized charge per
case is $46,657. As the applicant indicated above, the case-weighted
average standardized charge per case does not include charges related
to LipiscanTM. Therefore, it is necessary to add the average
charge of $7,497 related to the device to the case-weighted
standardized charge per case to evaluate the cost threshold criterion.
Adding the estimated charges related to the device to the case-weighted
average standardized charge per case (based on the case distribution
from the FY 2010 AOR final rule file) results in a total case-weighted
average standardized charge per case of $54,154 ($46,657 plus $7,497).
Using the FY 2011 thresholds published in Table 10 of the FY 2010 IPPS/
RY 2010 LTCH PPS final rule (74 FR 44173) and the actual case
distribution from the AOR file, the case-weighted threshold for MS-DRGs
246, 247, 248, 249, 250, and 251 is $52,700 (all calculations above
were performed using unrounded numbers). Because this alternative
calculation of total case-weighted average standardized charge per case
for the applicable MS-DRGs also exceeds the case-weighted threshold
amount, it appears that LipiscanTM would meet the cost
criterion. We invite public comment on
[[Page 23932]]
whether or not LipiscanTM meets the cost criterion.
With regard to substantial clinical improvement, CMS determined
that the FY 2010 new technology add-on payment application for
LipiscanTM did not meet the substantial clinical improvement
criterion because the evidence and information available at the time
the new technology decisions were made did not allow CMS to determine
that the application represented a substantial clinical improvement
over existing technologies. Specifically, CMS found that there was a
lack of evidence that demonstrated that LipiscanTM affected
the medical management of patients in which the device was used.
The applicant maintains that the device meets this criterion for
the following reasons. The applicant noted that from November 2008 to
2009, the number of patients in whom LipiscanTM has been
used for clinical purposes has increased from 100 to 500 and during the
same period, the number of hospitals using the product has increased
from 6 to 16. In addition, the applicant asserts that ``during the past
year, two LipiscanTM publications demonstrate that dilation
of a lipid core plaque is responsible for slow or no reflow and
myocardial infarction during the procedure.'' The applicant noted that
this is important because ``several treatments are available that could
prevent this stenting complication.'' The applicant referenced the
``700 patient PROSPECT Study'' which was presented at Transcatheter
Cardiovascular Therapeutics Conference in September 2009 and found that
20.4 percent of patients experience a new event in the 3.4 years
following stenting. The applicant pointed to that finding as evidence
that there is a need for improved safety and efficacy of stenting and
maintained that LipiscanTM offers clinicians the ability to
make decisions that result in such improvements.
The PROSPECT (Providing Regional Observations to Study Predictors
of Events in the Coronary Tree) study is a cohort study of patients
with acute coronary syndrome who underwent percutaneous coronary
angioplasty and stenting (percutaneous coronary intervention).
Following the procedure, angiography and intravascular ultrasound
(IVUS) were performed. If a patient had a subsequent event, a new
angiogram and IVUS image were obtained and compared to the original
results. The investigators reported that ``angiographically mild
lesions with certain morphologic features on grayscale and IVUS present
with a 3 year cardiac event rate of 17%, versus other morphologies
(indistinguishable by conventional angiograms) with three year event
risks of less than 1%.'' We are concerned that with this type of study
design, it is not possible to determine whether the information for the
IVUS image would have altered the angioplasty and stenting procedures
since the images were collected after the procedure. The results are
suggestive, but a prospective study is needed to determine the clinical
utility of IVUS and whether use of IVUS leads to changes in clinical
practice or improvements in health outcomes. The PROSPECT study
generated a hypothesis that use of IVUS may help determine which
plaques are vulnerable to future events but further clinical research
is needed to confirm this hypothesis. We note that the PROSPECT study
was presented at the Transcatheter Cardiovascular Therapeutics
Conference in 2009, but that the study results have yet to be published
in a peer-reviewed journal. We also note that methods and conclusions
from a study may change from what was verbally presented during the
peer review process that is required to publish the study results.
As it did in its prior application, the applicant noted that the
September 1, 2001 final rule states that one facet of the criterion for
substantial clinical improvement is ``the device offers the ability to
diagnose a medical condition in a patient population where the medical
condition is currently undetectable or offers the ability to diagnose a
medical condition earlier in a patient population than allowed by
currently available methods. There must also be evidence that use of
the device to make a diagnosis affects the management of the patient''
(66 FR 46914). The applicant believes that LipiscanTM meets
all facets of this criterion. The applicant asserted that the device is
able to detect a condition that is not currently detectable. The
applicant explained that LipiScanTM is the first device of
its kind to be able to detect lipid-core-containing plaques of interest
and to assess of coronary artery lipid core burden. The applicant
further noted that FDA, in its approval documentation, has indicated
that ``This is the first device that can help assess the chemical
makeup of coronary artery plaques and help doctors identify those of
particular concern.''
In addition, the applicant stated that the LipiScanTM
chemogram permits a clinician to detect lipid-core-containing plaques
in the coronary arteries compared to other currently available devices
that do not have this ability. The applicant explained that the
angiogram, the conventional test for coronary atherosclerosis, shows
only minimal coronary narrowing. However, the applicant indicated that
the LipiScanTM chemogram has the ability to reveal when an
artery contains extensive lipid-core-containing plaque at an earlier
stage.
The applicant also noted that the device has the ability to make a
diagnosis that better affects the management of the patient.
Specifically, the applicant asserted that LipiScanTM ``is
currently used in the management of patients undergoing coronary
stenting to improve the safety and efficacy of the procedure'' and that
while stenting has steadily improved, its results are not optimal in
approximately 30 percent of cases due to 3 problems: (1) Peri-stenting
MI due to embolization of lipid core contents and side branch
occlusion; (2) major adverse coronary events (MACE) post stenting from
difficulties at the stented site; and (3) MACE post stenting for non-
stented vulnerable sites. We note that in order to demonstrate that the
technology represents a substantial clinical improvement, there must be
evidence that use of the device to make a diagnosis affects the medical
management of the patient and leads to improved clinical outcomes.
The applicant described three case studies where each of the above
problems was addressed by use of the LipiScanTM. In
addition, the applicant asserts that the chemogram results are
available to the interventional cardiologist during the PCI procedure,
and have been found to be useful in decision-making. According to the
applicant, physicians have reported changes in therapy based on
LipiScanTM findings in 20 to 50 percent of patients in which
the device has been used. According to the applicant, the most common
use of LipiScanTM results has been by physicians for
selection of the length of artery to be stented. In some cases a longer
stent has been used when there is a lipid-core-containing plaque
adjacent to the area that is being stented because a flow-limiting
stenosis is present. The applicant also noted that, in some cases,
physicians have chosen to use down-stream protective devices during
stenting procedures on the basis of information gathered by use of
LipiscanTM in several patients, and that this has directly
impacted their outcome by capturing emboli and preventing further
cardiac damage. Therefore, the applicant contends that the use of
LipiScanTM by clinicians to select the length of artery to
be stented and as an aid in selection of intensity of lipid-altering
therapy, demonstrates that
[[Page 23933]]
LipiScanTM affects the management of patients.
While we recognize that the identification of lipid-rich plaques in
the coronary vasculature holds promise in the management of coronary
artery disease, we are concerned that statements in the FDA approval
documents, as well as statements made by investigators in the
literature, suggest that the clinical implications of identifying these
lipid-rich plaques are not yet certain and that further studies need to
be done to understand the clinical implications of obtaining this
information.
The applicant also submitted commentary from Interventional
Cardiologists (a group of clinicians who currently utilize the
LipiScanTM device) explaining the clinical benefits of the
device. The applicant further noted that the device may have other
potential uses that would be of clinical benefit, and studies are
currently being conducted to investigate these other potential uses.
The applicant explained that LipiScanTM offers promise as a
means to enhance progress against the two leading problems in coronary
disease management: (1) The high rate of second events that occur even
after catheterization, revascularization, and the institution of
optimal medical therapy; and (2) the failure to diagnose coronary
disease early, which results in sudden death or MI being the first sign
of the disease in most patients. The applicant further stated that the
identification of coronary lipid-core-containing plaques, which can
most readily be done in those already undergoing catheterization, is
likely to be of benefit in the prevention of second events. In the
longer term, the applicant stated that the identification of lipid-
core-containing plaques by LipiScanTM may contribute to the
important goal of primary prevention of coronary events, which, in the
absence of adequate diagnostic methods, continue to cause extensive
morbidity, mortality and health care expenditures in Medicare
beneficiaries and the general population.
We welcome public comment regarding whether or not the
LipiScanTM technology represents a substantial clinical
improvement in the Medicare population.
We received approximately nine public comments during the town hall
meeting public comment period on the LipiScanTM and
LipiScanTM IVUS. The comments relating to
LipiScanTM IVUS are summarized at the end of the
LipiScanTM IVUS application.
Comment: Several commenters supported approving the
LipiScanTM device for new technology add-on payments. They
stated (using nearly identical language) that LipiScanTM
provided accurate information about the presence of lipid core plaques
that was previously unavailable. They also stated that the device
``permits the detection of an earlier stage of coronary artery
disease.'' The commenters also stated that, ``over the past year
evidence has been obtained documenting that the presence of a lipid-
core plaque at a stenotic site (as detected by LipiScanTM)
is an excellent predictor or peri-stenting myocardial infarction due to
distal embolization of the lipid core following balloon dilation. This
valuable diagnostic information can be combined with well-established
treatments (prophylactic administration of vasodilators and/or direct
stenting) as a means to reduce the stenting complication of peri-
stenting MI.''
One commenter stated that ``the knowledge that a patient possesses
lipid laden atheroma will markedly alter medical therapy in order to
prevent thrombotic events. These heretofore unrecognized (asymptomatic)
patients identified to be at high risk by the Lipiscan chemogram will
be treated with intensive antihyperlipdemic therapy and other medical
strategies that otherwise would not have been implemented to modify
risk.'' Some commenters indicated that other potential uses of
LipiScanTM include ``determination of the length of the
artery to be stented and selection of the intensity of lipid-altering
therapy.''
Several commenters stated that the ``lack of specific
reimbursement'' for the technology was an impediment to the use and
development of it.
Response: We thank the commenters for their comments. We have
considered the comments concerning the town hall meeting in this
proposed rule. As stated above, we invite additional public comment on
objective data regarding the assertions made by the commenters.
Specifically, we welcome additional information (including specific
case-descriptions) regarding how the use of the technology has affected
the medical management of patients and how the changes in management
have led to improved clinical outcomes for those patients (again,
specific examples are welcomed).
In response to the comments concerning Medicare reimbursement for
LipiScanTM, we note that LipiScanTM is currently
covered by Medicare and would thus be included in the MS-DRG payment
made to the hospital. In general, the MS-DRG payment is considered to
cover all costs associated with the case including those of new
technologies. As noted above, typically, there is a lag of 2 to 3 years
from the point a new medical service or technology is first introduced
on the market (generally on the date that the technology receives FDA
approval/clearance) and when data reflecting the use of the medical
service or technology are used to calculate the MS-DRG weights. In
addition, Congress specified that a new medical service or technology
may be considered for new technology add-on payment if, ``based on the
estimated costs incurred with respect to discharges involving such
service or technology, the DRG prospective payment rate otherwise
applicable to such discharges under this subsection is inadequate.''
While we agree with the commenter that at this time there is no
specific reimbursement for LipiscanTM within the MS-DRGs in
the form of a new technology add-on payment, because
LipiscanTM has applied for new technology add-on payments,
we will evaluate it to determine whether it meets the criteria to
receive new technology add-on payments in FY 2011. If the technology
does not meet the new technology add-on payment criteria, it will
continue to be paid as part of the regular MS-DRG payment and once the
lag of 2 to 3 years is over, the costs associated of
LipiscanTM will be fully reflected in the relative weights
that are used to recalibrate the MS-DRGs.
c. LipiScanTM Coronary Imaging System With Intravascular
Ultrasound (IVUS)
InfraReDx, Inc. submitted an application for new technology add-on
payments for FY 2011 for the LipiScanTM Coronary Imaging
System with Intravascular Ultrasound (LipiScanTM IVUS). The
LipiScanTM IVUS device is a diagnostic device that uses
Intravascular near infrared spectroscopy (INIRS) combined with
intravascular ultrasound (IVUS) during an invasive coronary angiography
to determine the chemical composition of coronary plaques, which is
accomplished using near infrared spectroscopy (INIRS) and to visualize
stents and the structural features of coronary lesions, which is
accomplished using IVUS. This new technology combines both capabilities
in a single catheter. The IVUS part of the device utilizes sound to
interrogate the artery and, according to the applicant, provides an
image of the size of the plaque, the degree of stenosis produced by the
plaque, the size of the artery and the degree of expansion of the
stent. The device consists of a single-use catheter, a console and a
``single pullback with the artery.'' The
[[Page 23934]]
device is intended to be used in patients already undergoing coronary
stenting.
With respect to the newness criterion, we note that this device is
not currently approved by the FDA, but the manufacturer anticipates
that FDA approval will be granted in the second quarter of 2010. We
also note that IVUS has existed for over 20 years. Therefore, IVUS, on
its own, would not meet the newness criterion. The applicant asserts
that one difference from the LipiscanTM product, for which
it has also submitted an application for new technology add-on
payments, is that the catheter for the combined product is filled with
saline (which is required for transmission of sound). The manufacturer
has also stated that the combined device only requires the use of one
catheter, as opposed to two separate ones. The manufacturer asserts
that the single-use catheter for the combined technologies is only
supplied by InfraRedX (the manufacturer of LipiScanTM).
However, we note that a physician could use LipiScanTM and
IVUS as two separate products in the same patient (through the use of
two catheters) and still be able to obtain the INIRS image and the
ultrasound that are achieved through the combined product albeit
separately.
We welcome public comments regarding whether the combined
LipiScanTM IVUS device should be considered to be ``new'' as
of the date of the existing LipiScanTM device received FDA
approval or whether it should be considered new from the FDA approval
date for LipiScanTM IVUS (should such an approval be
granted). We also welcome public comments regarding whether
LipiScanTM IVUS, as a combined technology, should be
considered to be substantially similar to each individual technology
separately as of the date that each separate technology received FDA
approval (or the date that each technology became available on the
market, if either technology was not available on the market until a
date after FDA approval).
As stated above, in making a determination of substantial
similarity, we consider the following: (1) Whether a product uses the
same or similar mechanism of action to achieve a therapeutic action;
(2) whether a product is assigned to the same or a different DRG; and
(3) whether new use of a technology involves treatment of the same or
similar type of disease and the same or similar patient population. In
the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we stated that ``due to
the complexity of issues regarding the substantial similarity component
of the newness criterion, it may be necessary to exercise flexibility
when considering whether technologies are substantially similar to one
another (74 FR 43813).
We note that the LipiScanTM IVUS device is identified by
ICD-9-CM procedure codes 38.23 (Intravascular spectroscopy) and 00.24
(Intravascular imaging of coronary vessels). Cases involving the use of
this device generally map to MS-DRG 246 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent(s) with MCC or 4+ Vessels/Stents);
MS-DRG 247 (Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent(s) without MCC); MS-DRG 248 (Percutaneous Cardiovascular
Procedures with Non-Drug-Eluting Stent(s) with MCC or 4+ Vessels/
Stents); MS-DRG 249 (Percutaneous Cardiovascular Procedures with Non-
Drug-Eluting Stent(s) without MCC); MS-DRG 250 (Percutaneous
Cardiovascular Procedures without Coronary Artery Stent with MCC); and
MS-DRG 251 (Percutaneous Cardiovascular Procedures without Coronary
Artery Stent without MCC).
In an effort to demonstrate that the technology meets the cost
criterion, the applicant used the FY 2010 final rule After Outliers
Removed (AOR) file (posted on the CMS Web site) to identify cases
potentially eligible for LipiscanTM IVUS. The applicant
believes that every case within MS-DRGs 246, 247, 248, 249, 250, and
251 is eligible for LipiscanTM IVUS. In addition, the
applicant believes that LipiscanTM IVUS will be evenly
distributed across patients in each of those six MS-DRGs (16.7 percent
within each MS-DRG). Using data from the AOR file, the applicant found
the average standardized charge per case for MS-DRGs 246, 247, 248,
249, 250, and 251 was $67,531, $44,485, $62,936, $40,149, $59,416, and
$38,864 respectively, equating to a case-weighted average standardized
charge per case of $52,230 (calculation performed using unrounded
numbers). The applicant indicated that the case-weighted average
standardized charge per case does not include charges related to
LipiscanTM IVUS. Therefore, it is necessary to add the
charges related to the device to the average case-weighted standardized
charge per case to evaluate the cost threshold criterion. Although the
applicant submitted data related to the estimated cost per case of
LipiscanTM IVUS, the applicant stated that the cost of the
device is proprietary information. The applicant analyzed Hospital Cost
Report Information System (``HCRIS'') data from 2008 to determine the
charges related to the device. Specifically, the applicant searched for
the 100 cardiac catheterization labs that had the highest volume of
cases in the United States. Based on the HCRIS data from these 100
labs, the applicant determined the mean cost-to-charge ratio was 0.188
with a mark-up of 532 percent yielding a charge of $15,957 for
LipiscanTM IVUS. (We note that this estimate of charges
related to the LipiscanTM IVUS is significantly higher than
the estimate of charges related to the LipiscanTM device.)
Adding the estimated average charge related for the device to the case-
weighted standardized charge per case (based on the case distribution
from the applicant's FY 2010 AOR analysis) results in a total case-
weighted average standardized charge per case of $68,190 ($52,230 plus
$15,960). Using the FY 2011 thresholds published in Table 10 of the FY
2011 IPPS/RY 2010 LTCH PPS final rule (74 FR 44173), the case-weighted
threshold for MS-DRGs 246, 247, 248, 249, 250, and 251 is $56,487 (all
calculations above were performed using unrounded numbers). Because the
applicant's calculation of the total case-weighted average standardized
charge per case for the applicable MS-DRGs exceeds the case-weighted
threshold amount, the applicant maintains that LipiscanTM
IVUS meets the cost criterion.
We note that in the applicant's analysis of the cost criterion,
instead of determining the case-weighted average standardized charge
per case and the case-weighted threshold amount based on the actual
number of cases from the FY 2010 AOR file in the applicable MS-DRGs
that are eligible for the LipiscanTM IVUS, the applicant's
analysis assumed an even distribution of patients in the applicable MS-
DRGs. However, the data from the FY 2010 AOR file shows a varied
distribution of cases in each of the applicable MS-DRGs. We believe the
more appropriate way to determine the case-weighted average
standardized charge per case and the case-weighted threshold amount for
evaluating the cost criterion is to use the actual distribution of
cases in the applicable MS-DRGs based on the number of cases from the
AOR file because this would more accurately reflect the number and type
of Medicare cases typically treated in the applicable MS-DRGs.
Moreover, this would better conform with the applicant's assertion that
that the probability of use of LipiscanTM is the same in
each of those six MS-DRGs. Using data from the FY 2010 AOR file, for
MS-DRGs 246, 247, 248, 249, 250, and 251, there were 30,411, 147,952,
19,736, 67,964, 8,184, and 38,091 cases, respectively. Using this case
distribution and the average standardized charge per case for MS-
[[Page 23935]]
DRGs 246, 247, 248, 249, 250, and 251 from the application (that is,
$67,531, $44,485, $62,936, $40,149, $59,416, and $38,864, respectively,
as stated above), the case-weighted average standardized charge per
case is $46,657. As the applicant indicated above, the case-weighted
average standardized charge per case does not include charges related
to LipiscanTM IVUS. Therefore, it is necessary to add the
average charge of $15,960 related to the device to the case-weighted
standardized charge per case to evaluate the cost threshold criterion.
Adding the estimated charges related to the device to the case-weighted
average standardized charge per case (based on the case distribution
from the FY 2010 AOR final rule file) results in a total case-weighted
average standardized charge per case of $62,617 ($46,657 plus $15,960).
Using the FY 2011 thresholds published in Table 10 of the FY 2010 IPPS/
RY 2010 LTCH PPS final rule (74 FR 44173) and the actual case
distribution from the AOR file, the case-weighted threshold for MS-DRGs
246, 247, 248, 249, 250, and 251 is $52,700 (all calculations above
were performed using unrounded numbers). Because this alternative
calculation of total case-weighted average standardized charge per case
for the applicable MS-DRGs exceeds the case-weighted threshold amount,
it appears that LipiscanTM IVUS would meet the cost
criterion.
In addition to the analysis above, the applicant searched the FY
2008 MedPAR file for cases potentially eligible for use of the
LipiscanTM IVUS. Because the technology can potentially be
used for all cases within MS-DRGs 246 through 251, the applicant
searched the FY 2008 MedPAR file for all cases within these MS-DRGs.
The applicant found 30,265 cases (or 9.7 percent of all cases) in MS-
DRG 246; 147,695 cases (or 47.4 percent of all cases) in MS-DRG 247;
19,642 cases (or 6.3 percent of all cases) in MS-DRG 248; 67,840 cases
(or 21.8 percent of all cases) in MS-DRG 249; 8,120 cases (or 2.6
percent of all cases) in MS-DRG 250; and 38,022 cases (or 12.2 percent
of all cases) in MS-DRG 251. The average standardized charge per case
was $66,958 for MS-DRG 246, $50,192 for MS-DRG 247, $72,099 for MS-DRG
248, $45,086 for MS-DRG 249, $71,355 for MS-DRG 250, and $46,141 for
MS-DRG 251, equating to a case-weighted average standardized charge per
case of $45,964.
Similar to above, the average standardized charge per case does not
include charges related to the LipiscanTM IVUS; therefore,
it is necessary to add the charges related to the device to the average
standardized charge per case in evaluating the cost threshold
criterion. Although the applicant submitted data related to the
estimated cost of LipiscanTM IVUS per case, the applicant
noted that the cost of the device was proprietary information. Based on
2008 HCRIS data from the cardiac catheterization laboratories for all
IPPS hospitals, the applicant determined a mean cost-to-charge ratio of
0.246 with a markup of 351 percent, yielding a charge of $10,543 for
LipiscanTM IVUS. Assuming that the LipiscanTM
IVUS device was marked up 351 percent, the total case-weighted average
standardized charge per case for cases involving the use of
LipiscanTM IVUS would be $56,507 ($45,964 plus $10,543)
across MS-DRGs 246 through 251.
Using the FY 2011 thresholds published in Table 10 of the FY 2010
IPPS/RY 2010 LTCH PPS final rule (74 FR 44173), the case-weighted
threshold for MS-DRGs 246, 247, 248, 249, 250, and 251 is $52,692 (all
calculations above were performed using unrounded numbers). Because the
applicant's calculation of the total case-weighted average standardized
charge per case for the applicable MS-DRGs exceeds the case-weighted
threshold amount, the applicant maintains that LipiscanTM
IVUS meets the cost criterion. We invite public comment on whether or
not LipiscanTM IVUS meets the cost criterion.
With regard to substantial clinical improvement, the applicant
asserts that LipiScanTM IVUS lends all the same benefits of
LipiScanTM by itself (see discussion of
LipiScanTM with respect to clinical improvement in the above
application analysis) and also gives added benefits of IVUS.
Specifically, the applicant maintains that LipiScanTM IVUS
is superior to perfusion imaging and coronary angiography because those
procedures only provide information about the lumen, but not the wall
of the vessel. The applicant asserts that it is superior to IVUS (by
itself) because IVUS alone cannot identify plaque composition. The
applicant further maintains that LipiScanTM IVUS provides a
substantial clinical benefit over Optical Coherence Tomography (OCT)
because OCT cannot be used if blood is present in the field of view and
identification of lipid by OCT is ``time-consuming with a requirement
for expert interpretation.'' In contrast, ``the LipiScanTM
signal is available immediately after the coronary pullback and does
not require expert interpretation.''
The applicant also states that LipiScanTM IVUS makes it
possible to find the lipid core plaques that are strongly associated
with peri-stenting MI and adverse events post MI that current methods
of diagnosis fail to find.
Finally, the applicant asserts that LipiScanTM IVUS
affects the management of the patient by improving the safety and
efficacy of stenting. Further, the applicant states that while stenting
has steadily improved, its results are not optimal in approximately 30%
of cases due to 3 problems: (1) Peri-stenting MI due to embolization of
lipid core contents and side branch occlusion; (2) major adverse
coronary events (MACE) post stenting from difficulties at the stented
site; and (3) MACE post stenting for non-stented vulnerable sites.''
The applicant described three case studies where each of the above
problems were addressed by use of the LipiScanTM IVUS.
LipiScanTM IVUS achieves its utility to differentiate lipid
core plaque from fibrotic plaque, a differentiation that cannot be made
by angiography or grayscale IVUS.
The applicant referenced the ``700 patient PROSPECT Study'' which
was presented at Transcatheter Cardiovascular Therapeutic Conference in
September 2009 and found that 20.4 percent of patients experience a new
event in the 3.4 years following stenting. The applicant pointed to
that finding as evidence that there is a need for improved safety and
efficacy of stenting and maintained that LipiscanTM offers
clinicians the ability to make decisions that result in such
improvements.
The PROSPECT (Providing Regional Observations to Study Predictors
of Events in the Coronary Tree) study is a cohort study of patients
with acute coronary syndrome who underwent percutaneous coronary
angioplasty and stenting (percutaneous coronary intervention).
Following the procedure, angiography and IVUS were performed. If a
patient had a subsequent event, a new angiogram and IVUS image were
obtained and compared to the original results. The investigators
reported that ``angiographically mild lesions with certain morphologic
features on grayscale and IVUS present with a 3 year cardiac event rate
of 17%, versus other morphologies (indistinguishable by conventional
angiograms) with three year event risks of less than 1%.'' We are
concerned that with this type of study design, it is not possible to
determine whether the information for the IVUS image would have altered
the angioplasty and stenting procedures since the images were collected
after the procedure. The results are suggestive, but a prospective
study is needed to determine the clinical utility of IVUS
[[Page 23936]]
and whether use of IVUS leads to changes in clinical practice or
improvements in health outcomes. The PROSPECT study generated a
hypothesis that use of IVUS may help determine which plaques are
vulnerable to future events but further clinical research is needed to
confirm this hypothesis. We note that the PROSPECT study was presented
at the Transcatheter Cardiovascular Therapeutics Conference in 2009,
but that the study results have yet to be published in a peer reviewed
journal. We also note that methods and conclusions from a study may
change from what was verbally presented during the peer review process
that is required to publish the study results.
We are concerned that, in the LipiScanTM IVUS
application, the applicant has generally repeated the statements made
regarding use of LipiScanTM alone and has not provided
information that indicates that combined use of LipiScanTM
plus IVUS offers additional clinical benefit. Indeed, we note that most
of the studies that were presented in an effort to support that
LipiScanTM by itself was a substantial clinical improvement,
were also included to support the LipiScanTM IVUS
application. The applicant did not present any published peer-reviewed
journal articles that were specifically related to the clinical merits
of the combined LipiScanTM IVUS device.
We welcome public comments on whether the LipiScanTM
IVUS represents a substantial clinical improvement over existing
technologies as well as public comments on what is the appropriate
comparison for LipiScanTM IVUS.
As we noted at the end of the discussion of the
LipiScanTM application, we received approximately nine
public comments on both the LipiScanTM and the
LipiScanTM IVUS applications.
Comment: Several commenters acknowledged that LipiScanTM
IVUS is not yet approved by the FDA, but stated that they would support
the LipiScanTM IVUS being approved for new technology add-on
payments should FDA approval be granted. With regard to the clinical
merits of LipiScanTM IVUS, the commenters stated that the
LipiScanTM IVUS afforded all the same diagnostic abilities
of the LipiScanTM, but also provided the added benefit of
IVUS, which has ``been used in patients for over 20 years [and] is
already supported by the [American College of Cardiologists and the
American Hospital Association] for usage in stenting.''
One commenter stated that once the LipiScanTM IVUS
becomes approved by the FDA, he plans to use it in all of his patients
who need IVUS imaging ``because of the wealth of added information
regarding the presence of lipid laden plaque, a harbinger of myocardial
infarction and sudden death.''
Response: We thank the commenters for their comments. However, we
note that unless the technology is approved by the FDA by July 1, 2010,
it cannot be approved for add-on payments in FY 2011 since it would not
be considered ``new.'' Should the technology receive FDA approval by
July 1, 2010, we will take these comments into consideration in our
review of the application for new technology add-on payments for FY
2011.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary must adjust the standardized amounts ``for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level.'' In
accordance with the broad discretion conferred under the Act, we
currently define hospital labor market areas based on the definitions
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2011 hospital wage index based
on the statistical areas, including OMB's revised definitions of
Metropolitan Areas, appears under section III.C. of this preamble.
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act
requires that we update the wage index annually. Furthermore, this
section of the Act provides that the Secretary base the update on a
survey of wages and wage-related costs of short-term, acute care
hospitals. The survey must exclude the wages and wage-related costs
incurred in furnishing skilled nursing services. This provision also
requires us to make any updates or adjustments to the wage index in a
manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The proposed adjustment for
FY 2011 is discussed in section II.B. of the Addendum to this proposed
rule.
As discussed below in section III.I. of this preamble, we also take
into account the geographic reclassification of hospitals in accordance
with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating
IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the
Secretary is required to adjust the standardized amounts so as to
ensure that aggregate payments under the IPPS after implementation of
the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the
Act are equal to the aggregate prospective payments that would have
been made absent these provisions. The proposed budget neutrality
adjustment for FY 2011 is discussed in section II.A.4.b. of the
Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are proposing to
apply beginning October 1, 2010 (the proposed FY 2011 wage index)
appears under section III.D. of this preamble.
B. Wage Index Reform
1. Wage Index Study Required under the MIEA-TRHCA
a. Legislative Requirement
Section 106(b)(1) of the MIEA-TRHCA (Pub. L. 109-432) required
MedPAC to submit to Congress, not later than June 30, 2007, a report on
the Medicare wage index classification system applied under the
Medicare IPPS. Section 106(b) of MIEA-TRHCA required the report to
include any alternatives that MedPAC recommends to the method to
compute the wage index under section 1886(d)(3)(E) of the Act.
In addition, section 106(b)(2) of the MIEA-TRHCA instructed the
Secretary of Health and Human Services, taking into account MedPAC's
recommendations on the Medicare wage index classification system, to
include in the FY 2009 IPPS proposed rule one or more proposals to
revise the wage index adjustment applied under section 1886(d)(3)(E) of
the Act for purposes of the IPPS. The Secretary was also to consider
each of the following:
Problems associated with the definition of labor markets
for the wage index adjustment.
The modification or elimination of geographic
reclassifications and other adjustments.
The use of Bureau of Labor of Statistics (BLS) data or
other data or methodologies to calculate relative wages for each
geographic area.
[[Page 23937]]
Minimizing variations in wage index adjustments between
and within MSAs and statewide rural areas.
The feasibility of applying all components of CMS'
proposal to other settings.
Methods to minimize the volatility of wage index
adjustments while maintaining the principle of budget neutrality.
The effect that the implementation of the proposal would
have on health care providers on each region of the country.
Methods for implementing the proposal(s), including
methods to phase in such implementations.
Issues relating to occupational mix such as staffing
practices and any evidence on quality of care and patient safety
including any recommendation for alternative calculations to the
occupational mix.
In the FY 2009 IPPS final rule (73 FR 48563 through 48567), we
discussed the MedPAC's study and recommendations, the CMS contract with
Acumen, L.L.C. for assistance with impact analysis and study of wage
index reform, and public comments we received on the MedPAC
recommendations and the CMS/Acumen study and analysis.
b. Interim and Final Reports on Results of Acumen's Study
(1) Interim Report on Impact Analysis of Using MedPAC's Recommended
Wage Index
In the FY 2009 IPPS final rule (73 FR 48566 through 48567), we
discussed the analysis conducted by Acumen comparing use of the MedPAC
recommended wage indices to the current CMS wage index. We refer
readers to section III.B.1.e. of that final rule for a full discussion
of the impact analysis as well as to Acumen's interim report available
on the Web site: http://www.acumenllc.com/reports/cms.
(2) Acumen's Final Report on Analysis of the Wage Index Data and
Methodology
Acumen's final report addressing the issues in section 106(b)(2) of
the MIEA-TRHCA is divided into two parts. In the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43824), we provided a description of
Acumen's analyses for both parts. The first part of Acumen's final
report analyzed the strengths and weaknesses of the data sources used
to construct the MedPAC and CMS indexes. The first part of the report
was published on Acumen's Web site after the publication of the FY 2010
IPPS/RY 2010 LTCH PPS proposed rule. In its conclusion, Acumen
suggested that MedPAC's recommended methods for revising the wage index
represented an improvement over the existing methods, and that the BLS
data should be used so that the MedPAC approach can be implemented.
The second part of Acumen's final report focuses on the methodology
of wage index construction and covers issues related to the definition
of wage areas and methods of adjusting for differences among
neighboring wage areas, as well as reasons for differential impacts of
shifting to a new index. Acumen published the second part of its final
report in March 2010 on its Web site at: http:/www./acumenllc.com/
reports/cms. In particular, the report analyzes MedPAC's recommended
method of improving upon the definition of the wage areas used in the
current wage index. MedPAC's method first blends MSA and county-level
wages and then implements a ``smoothing'' step that limits differences
in wage index values between adjacent counties to no more than 10
percent. Acumen found MedPAC's method to be an improvement over the
current wage index construct. However, although MedPAC's method
diminishes the size of differences between adjacent areas, Acumen
suggested that MedPAC's method does not guarantee an accurate
representation of a hospital labor market and would not necessarily
eliminate or reduce hospitals' desire to reclassify for a higher wage
index. Acumen recommended further exploration of labor market area
definitions using a wage area framework based on hospital-specific
characteristics, such as commuting times from hospitals to population
centers, to construct a more accurate hospital wage index. Acumen
suggested that such an approach offers the greatest potential for
replacing or greatly reducing the need for hospital reclassifications
and exceptions.
We indicated in the FY 2009 IPPS final rule (73 FR 48566) that, in
developing any proposal(s) for additional wage index reform that may be
included in the FY 2010 IPPS proposed rule, we would consider all of
the public comments on the MedPAC recommendations that we had received
in that proposed rulemaking cycle, along with the interim and final
reports to be submitted to us by Acumen. As Acumen's study was not
complete at the time of issuance of the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule, we did not propose any additional changes to the
hospital wage index for the FY 2010 IPPS. We also are not proposing any
additional changes regarding reforming the wage index for the FY 2011
IPPS. We welcome comments regarding the second part of Acumen's final
report.
2. FY 2009 Policy Changes in Response to Requirements Under Section
106(b) of the MIEA-TRHCA
To implement the requirements of section 106(b) of the MIEA-TRHCA
and respond to MedPAC's recommendations in its June 2007 report to
Congress, in the FY 2009 IPPS final rule (73 FR 48567 through 48574),
we made the following policy changes relating to the hospital wage
index. (We refer readers to the FY 2009 IPPS final rule for a full
discussion of the basis for the proposals, the public comments
received, and the FY 2009 final policy.) In the FY 2010 IPPS final rule
(74 FR 43825), we reiterated these policy changes, especially as they
related to the FY 2010 IPPS.
a. Reclassification Average Hourly Wage Comparison Criteria
In the FY 2009 IPPS final rule, we adopted the policy to adjust the
reclassification average hourly wage standard, comparing a
reclassifying hospital's (or county hospital group's) average hourly
wage relative to the average hourly wage of the area to which it seeks
reclassification. We provided for a phase-in of the adjustment over 2
years. For applications for reclassification for the first transitional
year, FY 2010, the average hourly wage standards were set at 86 percent
for urban hospitals and group reclassifications and 84 percent for
rural hospitals. For applications for reclassification for FY 2011 (for
which the application deadline was September 1, 2009) and for
subsequent fiscal years, the average hourly wage standards are 88
percent for urban and group reclassifications and 86 percent for rural
hospitals (Sec. Sec. 412.230, 412.232, and 412.234 of the
regulations). As stated above, these policies were adopted in the FY
2009 IPPS final rule and are reflected in the wage index in the
Addendum to this proposed rule. We note that these criteria were
recently changed by provisions of section 3137(c) of the PPACA (Pub. L.
111-148). We will address the changes made by Public Law 111-148 in a
separate rulemaking document in the Federal Register.
b. Budget Neutrality Adjustment for the Rural and Imputed Floors
In the FY 2009 IPPS final rule (73 FR 48574 through 48575), we
adopted State level budget neutrality (rather than the national budget
neutrality adjustment) for the rural and imputed floors, effective
beginning with the FY 2009
[[Page 23938]]
wage index. The transition from the national budget neutrality
adjustment to the State level budget neutrality adjustment was phased
in over a 3-year period. In FY 2009, hospitals received a blended wage
index that was 20 percent of a wage index with the State level rural
and imputed floor budget neutrality adjustment and 80 percent of a wage
index with the national budget neutrality adjustment. In FY 2010, the
blended wage index reflects 50 percent of the State level adjustment
and 50 percent of the national adjustment. In FY 2011, as reflected in
the IPPS wage index in this proposed rule, the adjustment will be
completely transitioned to the State level methodology.
In the FY 2009 IPPS final rule, we incorporated this policy in our
regulation at Sec. 412.64(e)(4). Specifically, the regulations specify
that CMS makes an adjustment to the wage index to ensure that aggregate
payments after implementation of the rural floor under section 4410 of
the Balanced Budget Act of 1997 (Pub. L. 105-33) and the imputed floor
under Sec. 412.64(h)(4) are made in a manner that ensures that
aggregate payments to hospitals are not affected and that, beginning
October 1, 2008, CMS would transition from a nationwide adjustment to a
statewide adjustment, with a statewide adjustment fully in place by
October 1, 2010.
As stated above, these policies for the rural and imputed floors
were adopted in the FY 2009 IPPS final rule and are reflected in the
wage index in the Addendum to this proposed rule. However, these
policies were recently changed by the provisions of section 3141 of the
PPACA (Pub. L. 111-148). We will address the provisions of section 3141
of Public Law 111-148 in a separate rulemaking document in the Federal
Register.
C. Core-Based Statistical Areas for the Hospital Wage Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. In
accordance with the broad discretion under section 1886(d)(3)(E) of the
Act, beginning with FY 2005, we define hospital labor market areas
based on the Core-Based Statistical Areas (CBSAs) established by OMB
and announced in December 2003 (69 FR 49027). For a discussion of OMB's
revised definitions of CBSAs and our implementation of the CBSA
definitions, we refer readers to the preamble of the FY 2005 IPPS final
rule (69 FR 49026 through 49032).
As with the FY 2010 final rule, in this FY 2011 proposed rule, we
are proposing to provide that hospitals receive 100 percent of their
wage index based upon the CBSA configurations. Specifically, for each
hospital, we are proposing to determine a wage index for FY 2011
employing wage index data from hospital cost reports for cost reporting
periods beginning during FY 2007 and using the CBSA labor market
definitions. We consider CBSAs that are MSAs to be urban, and CBSAs
that are Micropolitan Statistical Areas as well as areas outside of
CBSAs to be rural. In addition, it has been our longstanding policy
that where an MSA has been divided into Metropolitan Divisions, we
consider the Metropolitan Division to comprise the labor market areas
for purposes of calculating the wage index (69 FR 49029) (regulations
at Sec. 412.64(b)(1)(ii)(A)).
On December 1, 2009, OMB announced changes to the principal cities
and, if applicable, titles of a number of CBSAs and Metropolitan
Divisions (OMB Bulletin No. 10-2). The changes to the principal cities
and titles are as follows:
San Marcos, TX qualifies as a new principal city of the
Austin-Round Rock, TX CBSA. The new title is Austin-Round Rock-San
Marcos, TX CBSA.
Delano, CA qualifies as a new principal city of the
Bakersfield, CA CBSA. The new title: Bakersfield-Delano, CA CBSA.
Conroe, TX qualifies as a new principal city of the
Houston-Sugar Land-Baytown, TX CBSA. The CBSA title is unchanged.
North Port, FL qualifies as a new principal city of the
Bradenton-Sarasota-Venice, FL CBSA. The new title is North Port-
Bradenton-Sarasota, FL CBSA. The new code is CBSA 35840.
Sanford, FL qualifies as a new principal city of the
Orlando-Kissimmee, FL CBSA. The new title is Orlando-Kissimmee-Sanford,
FL CBSA.
Glendale, AZ qualifies as a new principal city of the
Phoenix-Mesa-Scottsdale, AZ CBSA. The new title is Phoenix-Mesa-
Glendale, AZ CBSA.
Palm Desert, CA qualifies as a new principal city of the
Riverside-San Bernardino-Ontario, CA CBSA. The CBSA title is unchanged.
New Braunfels, TX qualifies as a new principal city of the
San Antonio, TX CBSA. The new title is San Antonio-New Braunfels, TX
CBSA.
Auburn, WA qualifies as a new principal city of the
Seattle-Tacoma-Bellevue, WA CBSA. The CBSA title is unchanged.
The changes to titles resulting from changes to the order of
principal cities based on population are as follows:
Rockville, MD replaces Frederick, MD as the second most
populous principal city in the Bethesda-Frederick-Rockville, MD
Metropolitan Division. The new title is Bethesda-Rockville-Frederick,
MD Metropolitan Division.
Rock Hill, SC replaces Concord, NC as the third most
populous principal city in the Charlotte-Gastonia-Concord, NC-SC CBSA.
The new title is Charlotte-Gastonia-Rock Hill, NC-SC CBSA.
Joliet, IL replaces Naperville, IL as the second most
populous principal city in the Chicago-Naperville-Joliet, IL
Metropolitan Division. The new title is Chicago-Joliet-Naperville, IL
Metropolitan Division.
Crestview, FL replaces Fort Walton Beach, FL as the most
populous principal city in the Fort Walton Beach-Crestview-Destin, FL
CBSA. The new title is Crestview-Fort Walton Beach-Destin, FL CBSA. The
new code is 18880.
Hillsboro, OR replaces Beaverton, OR as the third most
populous principal city in the Portland-Vancouver-Beaverton, OR-WA
CBSA. The new title is Portland-Vancouver-Hillsboro, OR-WA CBSA.
Steubenville, OH replaces Weirton, WV as the most populous
principal city in the Weirton-Steubenville, WV-OH CBSA. The new title
is Steubenville-Weirton, OH-WV CBSA. The new CBSA code is 44600.
The OMB bulletin is available on the OMB Web site at http://www.whitehouse.gov/OMB--go to ``Agency Information'' and click on
``Bulletins''. CMS will apply these changes to the IPPS beginning
October 1, 2010.
D. Proposed Occupational Mix Adjustment to the Proposed FY 2011 Wage
Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather
[[Page 23939]]
than geographic differences in the costs of labor.
1. Development of Data for the Proposed FY 2011 Occupational Mix
Adjustment Based on the 2007-2008 Occupational Mix Survey
As provided for under section 1886(d)(3)(E) of the Act, we collect
data every 3 years on the occupational mix of employees for each short-
term, acute care hospital participating in the Medicare program.
For the FY 2010 hospital wage index, we used occupational mix data
collected on a revised 2007-2008 Medicare Wage Index Occupational Mix
Survey (the 2007-2008 survey) to compute the occupational mix
adjustment for FY 2010. (We refer readers to the FY 2010 IPPS final
rule (74 FR 43827) for a detailed discussion of the 2007-2008 survey.)
Again, for the proposed FY 2011 hospital wage index, we used data from
the 2007-2008 survey (including revised data for 45 hospitals) to
compute the proposed FY 2011 adjustment.
2. New 2010 Occupational Mix Survey for the FY 2013 Wage Index
As stated earlier, section 304(c) of Public Law 106-554 amended
section 1886(d)(3)(E) of the Act to require CMS to collect data every 3
years on the occupational mix of employees for each short-term, acute
care hospital participating in the Medicare program. We used
occupational mix data collected on the 2007-2008 survey to compute the
occupational mix adjustment for FY 2010 and the proposed FY 2011 wage
index in this proposed rule. We also plan to use the 2007-2008 survey
data for the FY 2012 wage index. Therefore, a new measurement of
occupational mix will be required for FY 2013.
Since we implemented the 2007-2008 survey, we received several
public comments suggesting further improvements to the occupational mix
survey. Specifically, commenters recommended that CMS use the calendar
year (that is, January 1 through December 31) as the 1-year reporting
period instead of July 1 through June 30. Commenters also requested
that CMS allow for a 6-month period after the end of the survey
reporting period for hospitals to complete and submit their data to
their Medicare fiscal intermediaries and MACs. The commenters suggested
that these changes will allow hospitals more time to develop their
occupational mix data before submitting the data to the Medicare
contractors and CMS for use in development of the wage index. Based on
these comments, we revised the occupational mix survey. The new 2010
survey (Form CMS-10079 (2010)) will provide for the collection of
hospital-specific wages and hours data for calendar year 2010 (that is,
payroll periods ending between January 1, 2010 and December 31, 2010)
and will be applied beginning with the FY 2013 wage index.
On September 4, 2009, we published in the Federal Register a notice
soliciting comments on the proposed 2010 survey (74 FR 45860). The
comment period for the notice ended on November 3, 2009. After
considering the comments we received, we made a few minor editorial
changes and published the final 2010 survey in the Federal Register on
January 15, 2010 (75 FR 2548). The survey was approved by OMB on
February 26, 2010 (OMB control number 0938-0907) and is available on
the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp#TopOfPage, and through the fiscal intermediaries/MACs.
Hospitals are required to submit their completed 2010 surveys to their
fiscal intermediaries/MACs by July 1, 2011. The preliminary, unaudited
2010 survey data will be released in early October 2011, along with the
FY 2009 Worksheet S-3 wage data, for the FY 2013 wage index review and
correction process.
3. Calculation of the Proposed Occupational Mix Adjustment for FY 2011
For FY 2011 (as we did for FY 2010), we are proposing to calculate
the occupational mix adjustment factor using the following steps:
Step 1--For each hospital, determine the percentage of the total
nursing category attributable to a nursing subcategory by dividing the
nursing subcategory hours by the total nursing category's hours. Repeat
this computation for each of the four nursing subcategories: registered
nurses; licensed practical nurses; nursing aides, orderlies, and
attendants; and medical assistants.
Step 2--Determine a national average hourly rate for each nursing
subcategory by dividing a subcategory's total salaries for all
hospitals in the occupational mix survey database by the subcategory's
total hours for all hospitals in the occupational mix survey database.
Step 3--For each hospital, determine an adjusted average hourly
rate for each nursing subcategory by multiplying the percentage of the
total nursing category (from Step 1) by the national average hourly
rate for that nursing subcategory (from Step 2). Repeat this
calculation for each of the four nursing subcategories.
Step 4--For each hospital, determine the adjusted average hourly
rate for the total nursing category by summing the adjusted average
hourly rate (from Step 3) for each of the nursing subcategories.
Step 5--Determine the national average hourly rate for the total
nursing category by dividing total nursing category salaries for all
hospitals in the occupational mix survey database by total nursing
category hours for all hospitals in the occupational mix survey
database.
Step 6--For each hospital, compute the occupational mix adjustment
factor for the total nursing category by dividing the national average
hourly rate for the total nursing category (from Step 5) by the
hospital's adjusted average hourly rate for the total nursing category
(from Step 4).
If the hospital's adjusted average hourly rate is less than the
national average hourly rate (indicating the hospital employs a less
costly mix of nursing employees), the occupational mix adjustment
factor is greater than 1.0000. If the hospital's adjusted average
hourly rate is greater than the national average hourly rate, the
occupational mix adjustment factor is less than 1.0000.
Step 7--For each hospital, calculate the occupational mix adjusted
salaries and wage-related costs for the total nursing category by
multiplying the hospital's total salaries and wage-related costs (from
Step 5 of the unadjusted wage index calculation in section III.G. of
this preamble) by the percentage of the hospital's total workers
attributable to the total nursing category (using the occupational mix
survey data, this percentage is determined by dividing the hospital's
total nursing category salaries by the hospital's total salaries for
``nursing and all other'') and by the total nursing category's
occupational mix adjustment factor (from Step 6 above).
The remaining portion of the hospital's total salaries and wage-
related costs that is attributable to all other employees of the
hospital is not adjusted by the occupational mix. A hospital's all
other portion is determined by subtracting the hospital's nursing
category percentage from 100 percent.
Step 8--For each hospital, calculate the total occupational mix
adjusted salaries and wage-related costs for a hospital by summing the
occupational mix adjusted salaries and wage-related costs for the total
nursing category (from Step 7) and the portion of the hospital's
[[Page 23940]]
salaries and wage-related costs for all other employees (from Step 7).
To compute a hospital's occupational mix adjusted average hourly
wage, divide the hospital's total occupational mix adjusted salaries
and wage-related costs by the hospital's total hours (from Step 4 of
the unadjusted wage index calculation in section III.G. of this
preamble).
Step 9--To compute the occupational mix adjusted average hourly
wage for an urban or rural area, sum the total occupational mix
adjusted salaries and wage-related costs for all hospitals in the area,
then sum the total hours for all hospitals in the area. Next, divide
the area's occupational mix adjusted salaries and wage-related costs by
the area's hours.
Step 10--To compute the national occupational mix adjusted average
hourly wage, sum the total occupational mix adjusted salaries and wage-
related costs for all hospitals in the Nation, then sum the total hours
for all hospitals in the Nation. Next, divide the national occupational
mix adjusted salaries and wage-related costs by the national hours. The
proposed FY 2011 occupational mix adjusted national average hourly wage
is $34.9124.
Step 11--To compute the occupational mix adjusted wage index,
divide each area's occupational mix adjusted average hourly wage (Step
9) by the national occupational mix adjusted average hourly wage (Step
10).
Step 12--To compute the Puerto Rico specific occupational mix
adjusted wage index, follow Steps 1 through 11 above. The proposed FY
2011 occupational mix adjusted Puerto Rico-specific average hourly wage
is $14.7567.
The table below is an illustrative example of the occupational mix
adjustment.
BILLING CODE 4120-01-P
[[Page 23941]]
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[[Page 23942]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.022
BILLING CODE 4120-01-C
[[Page 23943]]
Because the occupational mix adjustment is required by statute, all
hospitals that are subject to payments under the IPPS, or any hospital
that would be subject to the IPPS if not granted a waiver, must
complete the occupational mix survey, unless the hospital has no
associated cost report wage data that are included in the proposed FY
2011 wage index. For the FY 2007-2008 survey, the response rate was
90.4 percent.
In computing the proposed FY 2011 wage index, if a hospital did not
respond to the occupational mix survey, or if we determined that a
hospital's submitted data were too erroneous to include in the wage
index, we assigned the hospital the average occupational mix adjustment
for the labor market area. We believe this method had the least impact
on the wage index for other hospitals in the area. For areas where no
hospital submitted data for purposes of calculating the proposed
occupational mix adjustment, we applied the national occupational mix
factor of 1.0000 in calculating the area's proposed FY 2011
occupational mix adjusted wage index. In addition, if a hospital
submitted a survey, but that survey data could not be used because we
determine it to be aberrant, we also assigned the hospital the average
occupational mix adjustment for its labor market area. For example, if
a hospital's individual nurse category average hourly wages were out of
range (that is, unusually high or low), and the hospital did not
provide sufficient documentation to explain the aberrancy, or the
hospital did not submit any registered nurse salaries or hours data, we
assigned the hospital the average occupational mix adjustment for the
labor market area in which it is located.
In calculating the average occupational mix adjustment factor for a
labor market area, we replicated Steps 1 through 6 of the calculation
for the occupational mix adjustment. However, instead of performing
these steps at the hospital level, we aggregated the data at the labor
market area level. In following these steps, for example, for CBSAs
that contain providers that did not submit occupational mix survey
data, the occupational mix adjustment factor ranged from a low of
0.9252 (CBSA 17780, College Station-Bryan, TX), to a high of 1.1199
(CBSA 40980, Saginaw-Saginaw Township North, MI). Also, in computing a
hospital's occupational mix adjusted salaries and wage-related costs
for nursing employees (Step 7 of the calculation), in the absence of
occupational mix survey data, we multiplied the hospital's total
salaries and wage-related costs by the percentage of the area's total
workers attributable to the area's total nursing category. For FY 2011,
there are 5 CBSAs (that include 5 hospitals) for which we did not have
occupational mix data for any of its hospitals. The CBSAs are:
CBSA 21940 Fajardo, PR (one hospital)
CBSA 22140 (Farmington, NM (one hospital)
CBSA 36140 Ocean City, NJ (one hospital)
CBSA 41900 San German-Cabo Rojo, PR (two hospitals)
CBSA 49500 Yauco, PR (one hospital)
Since the FY 2007 IPPS final rule, we have periodically discussed
applying a hospital-specific penalty to hospitals that fail to submit
occupational mix survey data. (71 FR 48013 through 48014; 72 FR 47314
through 47315; 73 FR 48580; and 74 FR 43832). During the FY 2008
rulemaking cycle, some commenters suggested a penalty equal to a 1- to
2-percent reduction in the hospital's wage index value or a set
percentage of the standardized amount. During the FY 2009 and FY 2010
rulemaking cycles, several commenters reiterated their view that full
participation in the occupational mix survey is critical, and that CMS
should develop a methodology that encourages hospitals to report
occupational mix survey data but does not unfairly penalize neighboring
hospitals. We indicated in the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule that, while we were not proposing a penalty at that time, we would
consider the public comments we previously received, as well as any
public comments on the proposed rule, as we develop the proposed FY
2011 wage index.
To gain a better understanding of why some hospitals are not
submitting the occupational mix data, beginning with the new 2010
occupational mix survey (discussed in section III.D.2. of this
preamble), we will require hospitals that do not submit occupational
mix data to provide an explanation for not complying with the
submission requirements. We will instruct fiscal intermediaries/MACs to
gather this information as part of the FY 2013 wage index desk review
process. We note that we reserve the right to apply a different
approach in future years, including potentially penalizing
nonresponsive hospitals.
E. Worksheet S-3 Wage Data for the Proposed FY 2011 Wage Index
The proposed FY 2011 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2007 (the FY 2010 wage index was
based on data from cost reporting periods beginning during FY 2006).
1. Included Categories of Costs
The proposed FY 2011 wage index includes the following categories
of data associated with costs paid under the IPPS (as well as
outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty)
Home office costs and hours
Certain contract labor costs and hours (which includes
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315))
Wage-related costs, including pensions and other deferred
compensation costs. We note that, for developing pension and deferred
compensation costs for purposes of the wage index, CMS requires
hospitals to comply with the requirements in 42 CFR 413.100, the
Provider Reimbursement Manual (PRM), Part I, Sections 2140, 2141, and
2142, and related Medicare program instructions, as discussed in the
cost reporting instructions for Worksheet S-3, Part II, Lines 13
through 20, and in the FY 2006 IPPS final rule (70 FR 47369). On March
28, 2008, CMS published Revision 436, a technical clarification to the
PRM, Part I policies for pension and deferred compensation costs. In
addition, in November 2009, CMS released, through a Joint Signature
Memorandum, instructions and a spreadsheet to assist hospitals and
Medicare contractors in determining the annual allowable defined
benefit pension cost for the FY 2011 wage index (JSM/TDL-10061, 11-20-
09, December 3, 2009). These instructions and spreadsheet crosswalk the
current interest, liability, and normal cost terminology found in the
Medicare reimbursement policies under Section 2142 of the PRM, Part I
to the new terminology applicable under the Pension Protection Act of
2006. The spreadsheet and instructions can be downloaded from the CMS
Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=3&sortOrder=descending&itemID=CMS1231035&intNumPerPage=10.
[[Page 23944]]
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2009, the wage
index for FY 2010 also excludes the direct and overhead salaries and
hours for services not subject to IPPS payment, such as SNF services,
home health services, costs related to GME (teaching physicians and
residents) and certified registered nurse anesthetists (CRNAs), and
other subprovider components that are not paid under the IPPS. The
proposed FY 2011 wage index also excludes the salaries, hours, and
wage-related costs of hospital-based rural health clinics (RHCs), and
Federally qualified health centers (FQHCs) because Medicare pays for
these costs outside of the IPPS (68 FR 45395). In addition, salaries,
hours, and wage-related costs of CAHs are excluded from the wage index,
for the reasons explained in the FY 2004 IPPS final rule (68 FR 45397).
3. Use of Wage Index Data by Providers Other Than Acute Care Hospitals
under the IPPS
Data collected for the IPPS wage index are also currently used to
calculate wage indices applicable to other providers, such as SNFs,
home health agencies (HHAs), and hospices. In addition, they are used
for prospective payments to IRFs, IPFs, and LTCHs, and for hospital
outpatient services. We note that, in the IPPS rules, we do not address
comments pertaining to the wage indices for non-IPPS providers, other
than for LTCHs. Such comments should be made in response to separate
proposed rules for those providers.
F. Verification of Worksheet S-3 Wage Data
The wage data for the proposed FY 2011 wage index were obtained
from Worksheet S-3, Parts II and III of the Medicare cost report for
cost reporting periods beginning on or after October 1, 2006, and
before October 1, 2007. For wage index purposes, we refer to cost
reports during this period as the ``FY 2007 cost report,'' the ``FY
2007 wage data,'' or the ``FY 2007 data.'' Instructions for completing
Worksheet S-3, Parts II and III are in the Provider Reimbursement
Manual (PRM), Part II, sections 3605.2 and 3605.3. The data file used
to construct the wage index includes FY 2007 data submitted to us as of
March 3, 2010. As in past years, we performed an intensive review of
the wage data, mostly through the use of edits designed to identify
aberrant data.
We asked our fiscal intermediaries/MACs to revise or verify data
elements that resulted in specific edit failures. For the proposed FY
2011 wage index, we identified and excluded 14 providers with data that
was too aberrant to include in the proposed wage index, although if
data elements for some of these providers are corrected, we intend to
include some of these providers in the FY 2011 final wage index. We
instructed fiscal intermediaries/MACs to complete their data
verification of questionable data elements and to transmit any changes
to the wage data no later than April 14, 2010. We believe all
unresolved data elements will be resolved by the date the final rule is
issued. The revised data will be reflected in the FY 2011 IPPS final
rule.
In constructing the proposed FY 2011 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2007, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397). For this proposed rule, we
removed 8 hospitals that converted to CAH status between February 16,
2009, the cut-off date for CAH exclusion from the FY 2010 wage index,
and February 15, 2010, the cut-off date for CAH exclusion from the FY
2011 wage index. After removing hospitals with aberrant data and
hospitals that converted to CAH status, the proposed FY 2011 wage index
is calculated based on 3,513 hospitals.
In the FY 2008 final rule with comment period (72 FR 47317) and the
FY 2009 IPPS final rule (73 FR 48582), we discussed our policy for
allocating a multicampus hospital's wages and hours data, by full-time
equivalent (FTE) staff, among the different labor market areas where
its campuses are located. During the FY 2011 wage index desk review
process, we requested fiscal intermediaries/MACs to contact multicampus
hospitals that had campuses in different labor market areas to collect
the data for the allocation. The proposed FY 2011 wage index in this
proposed rule includes separate wage data for campuses of three
multicampus hospitals.
For FY 2011, we are again allowing hospitals to use FTE or
discharge data for the allocation of a multicampus hospital's wage data
among the different labor market areas where its campuses are located.
The Medicare cost report was updated in May 2008 to provide for the
reporting of FTE data by campus for multicampus hospitals. Because the
data from cost reporting periods that begin in FY 2008 will not be used
in calculating the wage index until FY 2012, a multicampus hospital
will still have the option, through the FY 2011 wage index, to use
either FTE or discharge data for allocating wage data among its
campuses by providing the information from the applicable cost
reporting period to CMS through its fiscal intermediary/MAC. Two of the
three multicampus hospitals chose to have their wage data allocated by
their Medicare discharge data for the FY 2011 wage index. One of the
hospitals provided FTE staff data for the allocation. The average
hourly wage associated with each geographical location of a multicampus
hospital is reflected in Table 2 of the Addendum to this proposed rule.
G. Method for Computing the Proposed FY 2011 Unadjusted Wage Index
The method used to compute the proposed FY 2011 wage index without
an occupational mix adjustment follows:
Step 1--As noted above, we are basing the proposed FY 2011 wage
index on wage data reported on the FY 2007 Medicare cost reports. We
gathered data from each of the non-Federal, short-term, acute care
hospitals for which data were reported on the Worksheet S-3, Parts II
and III of the Medicare cost report for the hospital's cost reporting
period beginning on or after October 1, 2006, and before October 1,
2007. In addition, we included data from some hospitals that had cost
reporting periods beginning before October 2006 and reported a cost
reporting period covering all of FY 2007. These data are included
because no other data from these hospitals would be available for the
cost reporting period described above, and because particular labor
market areas might be affected due to the omission of these hospitals.
However, we generally describe these wage data as FY 2007 data. We note
that, if a hospital had more than one cost reporting period beginning
during FY 2007 (for example, a hospital had two short cost reporting
periods beginning on or after October 1, 2006, and before October 1,
2007), we included wage data from only one of the cost reporting
periods, the longer, in the wage index calculation. If there was more
than one cost reporting period and
[[Page 23945]]
the periods were equal in length, we included the wage data from the
later period in the wage index calculation.
Step 2--Salaries--The method used to compute a hospital's average
hourly wage excludes certain costs that are not paid under the IPPS.
(We note that, beginning with FY 2008 (72 FR 47315), we include Lines
22.01, 26.01, and 27.01 of Worksheet S-3, Part II for overhead services
in the wage index. However, we note that the wages and hours on these
lines are not incorporated into Line 101, Column 1 of Worksheet A,
which, through the electronic cost reporting software, flows directly
to Line 1 of Worksheet S-3, Part II. Therefore, the first step in the
wage index calculation for FY 2011 is to compute a ``revised'' Line 1,
by adding to the Line 1 on Worksheet S-3, Part II (for wages and hours
respectively) the amounts on Lines 22.01, 26.01, and 27.01.) In
calculating a hospital's average salaries plus wage-related costs, we
subtract from Line 1 (total salaries) the GME and CRNA costs reported
on Lines 2, 4.01, 6, and 6.01, the Part B salaries reported on Lines 3,
5 and 5.01, home office salaries reported on Line 7, and exclude
salaries reported on Lines 8 and 8.01 (that is, direct salaries
attributable to SNF services, home health services, and other
subprovider components not subject to the IPPS). We also subtract from
Line 1 the salaries for which no hours were reported. To determine
total salaries plus wage-related costs, we add to the net hospital
salaries the costs of contract labor for direct patient care, certain
top management, pharmacy, laboratory, and nonteaching physician Part A
services (Lines 9 and 10), home office salaries and wage-related costs
reported by the hospital on Lines 11 and 12, and nonexcluded area wage-
related costs (Lines 13, 14, and 18).
We note that contract labor and home office salaries for which no
corresponding hours are reported are not included. In addition, wage-
related costs for nonteaching physician Part A employees (Line 18) are
excluded if no corresponding salaries are reported for those employees
on Line 4.
Step 3--Hours--With the exception of wage-related costs, for which
there are no associated hours, we compute total hours using the same
methods as described for salaries in Step 2.
Step 4--For each hospital reporting both total overhead salaries
and total overhead hours greater than zero, we then allocate overhead
costs to areas of the hospital excluded from the wage index
calculation. First, we determine the ratio of excluded area hours (sum
of Lines 8 and 8.01 of Worksheet S-3, Part II) to revised total hours
(Line 1 minus the sum of Part II, Lines 2, 3, 4.01, 5, 5.01, 6, 6.01,
7, and Part III, Line 13 of Worksheet S-3). We then compute the amounts
of overhead salaries and hours to be allocated to excluded areas by
multiplying the above ratio by the total overhead salaries and hours
reported on Line 13 of Worksheet S-3, Part III. Next, we compute the
amounts of overhead wage-related costs to be allocated to excluded
areas using three steps: (1) We determine the ratio of overhead hours
(Part III, Line 13 minus the sum of lines 22.01, 26.01, and 27.01) to
revised hours excluding the sum of lines 22.01, 26.01, and 27.01 (Line
1 minus the sum of Lines 2, 3, 4.01, 5, 5.01, 6, 6.01, 7, 8, 8.01,
22.01, 26.01, and 27.01). (We note that for the FY 2008 and subsequent
wage index calculations, we are excluding the sum of lines 22.01,
26.01, and 27.01 from the determination of the ratio of overhead hours
to revised hours because hospitals typically do not provide fringe
benefits (wage-related costs) to contract personnel. Therefore, it is
not necessary for the wage index calculation to exclude overhead wage-
related costs for contract personnel. Further, if a hospital does
contribute to wage-related costs for contracted personnel, the
instructions for Lines 22.01, 26.01, and 27.01 require that associated
wage-related costs be combined with wages on the respective contract
labor lines.); (2) we compute overhead wage-related costs by
multiplying the overhead hours ratio by wage-related costs reported on
Part II, Lines 13, 14, and 18; and (3) we multiply the computed
overhead wage-related costs by the above excluded area hours ratio.
Finally, we subtract the computed overhead salaries, wage-related
costs, and hours associated with excluded areas from the total salaries
(plus wage-related costs) and hours derived in Steps 2 and 3.
Step 5--For each hospital, we adjust the total salaries plus wage-
related costs to a common period to determine total adjusted salaries
plus wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2003, through April 15,
2005, for private industry hospital workers from the BLS' Compensation
and Working Conditions. We use the ECI because it reflects the price
increase associated with total compensation (salaries plus fringes)
rather than just the increase in salaries. In addition, the ECI
includes managers as well as other hospital workers. This methodology
to compute the monthly update factors uses actual quarterly ECI data
and assures that the update factors match the actual quarterly and
annual percent changes. We also note that, since April 2006 with the
publication of March 2006 data, the BLS' ECI uses a different
classification system, the North American Industrial Classification
System (NAICS), instead of the Standard Industrial Codes (SICs), which
no longer exist. We have consistently used the ECI as the data source
for our wages and salaries and other price proxies in the IPPS market
basket and we are not proposing to make any changes to the usage for FY
2011. The factors used to adjust the hospital's data were based on the
midpoint of the cost reporting period, as indicated below.
[[Page 23946]]
[GRAPHIC] [TIFF OMITTED] TP04MY10.023
For example, the midpoint of a cost reporting period beginning
January 1, 2007, and ending December 31, 2007, is June 30, 2007. An
adjustment factor of 1.02153 would be applied to the wages of a
hospital with such a cost reporting period. In addition, for the data
for any cost reporting period that began in FY 2007 and covered a
period of less than 360 days or more than 370 days, we annualize the
data to reflect a 1-year cost report. Dividing the data by the number
of days in the cost report and then multiplying the results by 365
accomplishes annualization.
Step 6--Each hospital is assigned to its appropriate urban or rural
labor market area before any reclassifications under section
1886(d)(8)(B), section 1886(d)(8)(E), or section 1886(d)(10) of the
Act. Within each urban or rural labor market area, we add the total
adjusted salaries plus wage-related costs obtained in Step 5 for all
hospitals in that area to determine the total adjusted salaries plus
wage-related costs for the labor market area.
Step 7--We divide the total adjusted salaries plus wage-related
costs obtained under both methods in Step 6 by the sum of the
corresponding total hours (from Step 4) for all hospitals in each labor
market area to determine an average hourly wage for the area.
Step 8--We add the total adjusted salaries plus wage-related costs
obtained in Step 5 for all hospitals in the Nation and then divide the
sum by the national sum of total hours from Step 4 to arrive at a
national average hourly wage. Using the data as described above, the
proposed national average hourly wage (unadjusted for occupational mix)
is $34.9330.
Step 9--For each urban or rural labor market area, we calculate the
hospital wage index value, unadjusted for occupational mix, by dividing
the area average hourly wage obtained in Step 7 by the national average
hourly wage computed in Step 8.
Step 10--Following the process set forth above, we develop a
separate Puerto Rico-specific wage index for purposes of adjusting the
Puerto Rico standardized amounts. (The national Puerto Rico
standardized amount is adjusted by a wage index calculated for all
Puerto Rico labor market areas based on the national average hourly
wage as described above.) We add the total adjusted salaries plus wage-
related costs (as calculated in Step 5) for all hospitals in Puerto
Rico and divide the sum by the total hours for Puerto Rico (as
calculated in Step 4) to arrive at an overall proposed average hourly
wage (unadjusted for occupational mix) of $14.7351 for Puerto Rico. For
each labor market area in Puerto Rico, we calculate the Puerto Rico-
specific wage index value by dividing the area average hourly wage (as
calculated in Step 7) by the overall Puerto Rico average hourly wage.
Step 11--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision are
identified in Table 4D-2 of the Addendum to this proposed rule.
In the FY 2005 IPPS final rule (69 FR 49109), we adopted the
``imputed'' floor as a temporary 3-year measure to address a concern by
some individuals that hospitals in all-urban States were disadvantaged
by the absence of rural hospitals to set a wage index floor in those
States. The imputed floor was originally set to expire in FY 2007, but
we extended it an additional year in the FY 2008 IPPS final rule with
comment period (72 FR 47321). In the FY 2009 IPPS final rule (73 FR
48570 through 48574 and 48584), we extended the imputed floor for an
additional 3 years, through FY 2011.
[[Page 23947]]
H. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2011 Occupational Mix Adjusted Wage
Index
As discussed in section III.D. of this preamble, for FY 2011, we
are proposing to apply the occupational mix adjustment to 100 percent
of the proposed FY 2011 wage index. We calculated the proposed
occupational mix adjustment using data from the 2007-2008 occupational
mix survey data, using the methodology described in section III.D.3. of
this preamble.
Using the occupational mix survey data and applying the
occupational mix adjustment to 100 percent of the proposed FY 2011 wage
index results in a proposed national average hourly wage of $34.9124
and a proposed Puerto-Rico specific average hourly wage of $14.7567.
After excluding data of hospitals that either submitted aberrant data
that failed critical edits, or that do not have FY 2007 Worksheet S-3
cost report data for use in calculating the proposed FY 2011 wage
index, we calculated the proposed FY 2011 wage index using the
occupational mix survey data from 3,178 hospitals. Using the Worksheet
S-3 cost report data of 3,513 hospitals and occupational mix survey
data from 3,178 hospitals represents a 90.4 percent survey response
rate. The proposed FY 2011 national average hourly wages for each
occupational mix nursing subcategory as calculated in Step 2 of the
occupational mix calculation are as follows:
------------------------------------------------------------------------
Average hourly
Occupational mix nursing subcategory wage
------------------------------------------------------------------------
National RN........................................... 36.100857731
National LPN and Surgical Technician.................. 20.877391755
National Nurse Aide, Orderly, and Attendant........... 14.632232352
National Medical Assistant............................ 16.482939594
National Nurse Category............................... 30.504184147
------------------------------------------------------------------------
The proposed national average hourly wage for the entire nurse
category as computed in Step 5 of the occupational mix calculation is
$30.504184147. Hospitals with a nurse category average hourly wage (as
calculated in Step 4) of greater than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of less than 1.0. Hospitals with a nurse category
average hourly wage (as calculated in Step 4) of less than the national
nurse category average hourly wage receive an occupational mix
adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2007-2008 occupational mix survey data, we determined
(in Step 7 of the occupational mix calculation) that the national
percentage of hospital employees in the nurse category is 44.32
percent, and the national percentage of hospital employees in the all
other occupations category is 55.68 percent. At the CBSA level, the
percentage of hospital employees in the nurse category ranged from a
low of 29.08 percent in one CBSA, to a high of 70.76 percent in another
CBSA.
We compared the proposed FY 2011 occupational mix adjusted wage
indices for each CBSA to the proposed unadjusted wage indices for each
CBSA. As a result of applying the occupational mix adjustment to the
wage data, the proposed wage index values for 203(51.9 percent) urban
areas and 32 (68.1 percent) rural areas would increase. One hundred
five (26.9 percent) urban areas would increase by 1 percent or more,
and 6 (1.5 percent) urban areas would increase by 5 percent or more.
Eighteen (38.3 percent) rural areas would increase by 1 percent or
more, and no rural areas would increase by 5 percent or more. However,
the wage index values for 188 (48.1 percent) urban areas and 15 (31.9
percent) rural areas would decrease. Ninety (23.0 percent) urban areas
would decrease by 1 percent or more, and no urban area would decrease
by 5 percent or more. Seven (14.9 percent) rural areas would decrease
by 1 percent or more, and no rural areas will decrease by 5 percent or
more. The largest positive impacts are 7.83 percent for an urban area
and 2.87 percent for a rural area. The largest negative impacts are
3.98 percent for an urban area and 2.41 percent for a rural area. No
urban or rural areas are unaffected. These results indicate that a
larger percentage of rural areas (68.1 percent) benefit from the
occupational mix adjustment than do urban areas (51.9 percent). While
these results are more positive overall for rural areas than under the
previous occupational mix adjustment that used survey data from 2006,
approximately one-third (31.9 percent) of rural CBSAs will still
experience a decrease in their wage indices as a result of the
occupational mix adjustment.
The proposed wage index values for FY 2011 (except those for
hospitals receiving wage index adjustments under section 1886(d)(13) of
the Act) included in Tables 4A, 4B, 4C, and 4F of the Addendum to this
proposed rule include the proposed occupational mix adjustment.
Tables 3A and 3B in the Addendum to this proposed rule list the 3-
year average hourly wage for each labor market area before the
redesignation or reclassification of hospitals based on FYs 2009, 2010,
and 2011 cost reporting periods. Table 3A lists these data for urban
areas and Table 3B lists these data for rural areas. In addition, Table
2 in the Addendum to this proposed rule includes the adjusted average
hourly wage for each hospital from the FY 2005 and FY 2006 cost
reporting periods, as well as the FY 2007 period used to calculate the
proposed FY 2011 wage index. The 3-year averages are calculated by
dividing the sum of the dollars (adjusted to a common reporting period
using the method described previously) across all 3 years, by the sum
of the hours. If a hospital is missing data for any of the previous
years, its average hourly wage for the 3-year period is calculated
based on the data available during that period. The proposed average
hourly wages in Tables 2, 3A, and 3B in the Addendum to this proposed
rule include the proposed occupational mix adjustment. The proposed
wage index values in Tables 4A, 4B, 4C, and 4D-1 also include the
proposed State-specific rural floor and imputed floor budget neutrality
adjustments.
I. Revisions to the Wage Index Based on Hospital Redesignations and
Reclassifications
1. General
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. Hospitals must apply to the MGCRB to
reclassify 13 months prior to the start of the fiscal year for which
reclassification is sought (generally by September 1). Generally,
hospitals must be proximate to the labor market area to which they
[[Page 23948]]
are seeking reclassification and must demonstrate characteristics
similar to hospitals located in that area. The MGCRB issues its
decisions by the end of February for reclassifications that become
effective for the following fiscal year (beginning October 1). The
regulations applicable to reclassifications by the MGCRB are located in
42 CFR 412.230 through 412.280.
Section 1886(d)(10)(D)(v) of the Act provides that, beginning with
FY 2001, a MGCRB decision on a hospital reclassification for purposes
of the wage index is effective for 3 fiscal years, unless the hospital
elects to terminate the reclassification. Section 1886(d)(10)(D)(vi) of
the Act provides that the MGCRB must use average hourly wage data from
the 3 most recently published hospital wage surveys in evaluating a
hospital's reclassification application for FY 2003 and any succeeding
fiscal year.
Section 304(b) of Public Law 106-554 provides that the Secretary
must establish a mechanism under which a statewide entity may apply to
have all of the geographic areas in the State treated as a single
geographic area for purposes of computing and applying a single wage
index, for reclassifications beginning in FY 2003. The implementing
regulations for this provision are located at 42 CFR 412.235.
Section 1886(d)(8)(B) of the Act requires the Secretary to treat a
hospital located in a rural county adjacent to one or more urban areas
as being located in the labor market area to which the greatest number
of workers in the county commute, if the rural county would otherwise
be considered part of an urban area under the standards for designating
MSAs and if the commuting rates used in determining outlying counties
were determined on the basis of the aggregate number of resident
workers who commute to (and, if applicable under the standards, from)
the central county or counties of all contiguous MSAs. In light of the
CBSA definitions and the Census 2000 data that we implemented for FY
2005 (69 FR 49027), we undertook to identify those counties meeting
these criteria. Eligible counties are discussed and identified under
section III.I.5. of this preamble.
2. Effects of Reclassification/Redesignation
Section 1886(d)(8)(C) of the Act provides that the application of
the wage index to redesignated hospitals is dependent on the
hypothetical impact that the wage data from these hospitals would have
on the wage index value for the area to which they have been
redesignated. These requirements for determining the wage index values
for redesignated hospitals are applicable both to the hospitals deemed
urban under section 1886(d)(8)(B) of the Act and hospitals that were
reclassified as a result of the MGCRB decisions under section
1886(d)(10) of the Act. Therefore, as provided in section 1886(d)(8)(C)
of the Act, the wage index values were determined by considering the
following:
If including the wage data for the redesignated hospitals
would reduce the wage index value for the area to which the hospitals
are redesignated by 1 percentage point or less, the area wage index
value determined exclusive of the wage data for the redesignated
hospitals applies to the redesignated hospitals.
If including the wage data for the redesignated hospitals
reduces the wage index value for the area to which the hospitals are
redesignated by more than 1 percentage point, the area wage index
determined inclusive of the wage data for the redesignated hospitals
(the combined wage index value) applies to the redesignated hospitals.
If including the wage data for the redesignated hospitals
increases the wage index value for the urban area to which the
hospitals are redesignated, both the area and the redesignated
hospitals receive the combined wage index value. Otherwise, the
hospitals located in the urban area receive a wage index excluding the
wage data of hospitals redesignated into the area.
Rural areas whose wage index values would be reduced by excluding
the wage data for hospitals that have been redesignated to another area
continue to have their wage index values calculated as if no
redesignation had occurred (otherwise, redesignated rural hospitals are
excluded from the calculation of the rural wage index). The wage index
value for a redesignated rural hospital cannot be reduced below the
wage index value for the rural areas of the State in which the hospital
is located.
CMS also has adopted the following policies:
The wage data for a reclassified urban hospital is
included in both the wage index calculation of the urban area to which
the hospital is reclassified (subject to the rules described above) and
the wage index calculation of the urban area where the hospital is
physically located.
In cases where hospitals have reclassified to rural areas,
such as urban hospitals reclassifying to rural areas under 42 CFR
412.103, the hospital's wage data are: (a) Included in the rural wage
index calculation, unless doing so would reduce the rural wage index;
and (b) included in the urban area where the hospital is physically
located. The effect of this policy, in combination with the statutory
requirement at section 1886(d)(8)(C)(ii) of the Act, is that rural
areas may receive a wage index based upon the highest of: (1) Wage data
from hospitals geographically located in the rural area; (2) wage data
from hospitals geographically located in the rural area, but excluding
all data associated with hospitals reclassifying out of the rural area
under section 1886(d)(8)(B) or section 1886(d)(10) of the Act; or (3)
wage data associated with hospitals geographically located in the area
plus all hospitals reclassified into the rural area.
In addition, in accordance with the statutory language referring to
``hospitals'' in the plural under sections 1886(d)(8)(C)(i) and
1886(d)(8)(C)(ii) of the Act, our longstanding policy is to consider
reclassified hospitals as a group when deciding whether to include or
exclude them from both urban and rural wage index calculations.
3. FY 2011 MGCRB Reclassifications
a. FY 2011 Reclassifications Requirements and Approvals
Under section 1886(d)(10) of the Act, the MGCRB considers
applications by hospitals for geographic reclassification for purposes
of payment under the IPPS. The specific procedures and rules that apply
to the geographic reclassification process are outlined in 42 CFR
412.230 through 412.280.
At the time this proposed rule was constructed, the MGCRB had
completed its review of FY 2011 reclassification requests. Based on
such reviews, there were 311 hospitals approved for wage index
reclassifications by the MGCRB for FY 2011. Because MGCRB wage index
reclassifications are effective for 3 years, for FY 2011, hospitals
reclassified during FY 2009 or FY 2010 are eligible to continue to be
reclassified to a particular labor market area based on such prior
reclassifications. There were 258 hospitals approved for wage index
reclassifications in FY 2009 and 254 hospitals approved for wage index
reclassifications in FY 2010. Of all of the hospitals approved for
reclassification for FY 2009, FY 2010, and FY 2011, based upon the
review at the time of this proposed rule, 832 hospitals are in a
reclassification status for FY 2011.
Under 42 CFR 412.273, hospitals that have been reclassified by the
MGCRB are permitted to withdraw their applications within 45 days of
the
[[Page 23949]]
publication of a proposed rule. Generally stated, the request for
withdrawal of an application for reclassification or termination of an
existing 3-year reclassification that would be effective in FY 2011 has
to be received by the MGCRB within 45 days of the publication of the
proposed rule. Hospitals may also cancel prior reclassification
withdrawals or terminations in certain circumstances. For further
information about withdrawing, terminating, or canceling a previous
withdrawal or termination of a 3-year reclassification for wage index
purposes, we refer the reader to 42 CFR 412.273, as well as the FY 2002
IPPS final rule (66 FR 39887) and the FY 2003 IPPS final rule (67 FR
50065). Additional discussion on withdrawals and terminations, and
clarifications regarding reinstating reclassifications and ``fallback''
reclassifications, were included in the FY 2008 IPPS final rule (72 FR
47333).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2011 will be incorporated
into the wage index values published in the FY 2011 IPPS/LTCH PPS final
rule. These changes affect not only the wage index value for specific
geographic areas, but also the wage index value redesignated/
reclassified hospitals receive; that is, whether they receive the wage
index that includes the data for both the hospitals already in the area
and the redesignated/reclassified hospitals. Further, the wage index
value for the area from which the hospitals are redesignated/
reclassified may be affected.
b. Applications for Reclassifications for FY 2012
Applications for FY 2012 reclassifications are due to the MGCRB by
September 1, 2010. We note that this is also the deadline for canceling
a previous wage index reclassification withdrawal or termination under
42 CFR 412.273(d). Applications and other information about MGCRB
reclassifications may be obtained, beginning in mid-July 2010, via the
CMS Internet Web site at: http://cms.hhs.gov/MGCRB/02_instructions_and_applications.asp, or by calling the MGCRB at (410) 786-1174. The
mailing address of the MGCRB is: 2520 Lord Baltimore Drive, Suite L,
Baltimore, MD 21244-2670.
c. Appeals of MGCRB Denials of Withdrawals and Terminations
Section 412.278 of the regulations permits a hospital or a group of
hospitals dissatisfied with the MGCRB's decision regarding its
geographic designation to request the Administrator's review of the
decision. Section 412.273(e) permits a hospital to file an appeal to
the Administrator regarding the MGCRB's denial of the hospital's
request for withdrawal of an application. However, currently, this
section of the regulations does not address Administrator review of the
MGCRB's denial of a hospital's request for termination; that is,
``terminations'' are not specified in the regulations at Sec.
412.273(e).
We are proposing to revise the regulations to specify the
availability of Administrator review of MGCRB decisions regarding
withdrawals and terminations, as well as cancellations of withdrawals
or terminations. Because reclassifications are considered budget
neutral actions, we believe these proposed revisions would have no
impact on total IPPS payments.
In addition, during our review of Sec. 412.273, we determined that
some of the existing language in the section could be clarified to make
it more easily understood. For example, we believe it would be helpful
to clarify the distinction between terminations and withdrawals by
defining these terms in a new paragraph (a), which would also include
the timing provisions now under existing paragraph (b)(1)(ii). To
account for this new paragraph, we are proposing to redesignate the
existing contents of paragraph (e) as paragraph (f) and also to revise
the language to specify the ability of a hospital to appeal an MGCRB
denial of a request for ``termination'' of an approved
reclassification, as well as cancellation of a withdrawal or
termination. We also believe it would be helpful (1) to establish the
introductory language of existing paragraph (a) as a general rule under
new paragraph (b); (2) to establish a new paragraph (c) that addresses
the timing provisions currently in paragraphs (a)(1), (a)(2), and
(b)(1)(i); (3) to clarify the existing language of paragraphs
(b)(2)(i), (b)(2)(ii), (b)(2)(iii), and (d) and incorporate it under
new paragraph (d); and (4) to redesignate the existing contents of
paragraph (c) as new paragraph (e).
4. Redesignations of Hospitals Under Section 1886(d)(8)(B) of the Act
Section 1886(d)(8)(B) of the Act requires us to treat a hospital
located in a rural county adjacent to one or more urban areas as being
located in the MSA if certain criteria are met. Effective beginning FY
2005, we use OMB's 2000 CBSA standards and the Census 2000 data to
identify counties in which hospitals qualify under section
1886(d)(8)(B) of the Act to receive the wage index of the urban area.
Hospitals located in these counties have been known as ``Lugar''
hospitals and the counties themselves are often referred to as
``Lugar'' counties. We provide the FY 2011 chart below with the listing
of the rural counties containing the hospitals designated as urban
under section 1886(d)(8)(B) of the Act. For discharges occurring on or
after October 1, 2010, hospitals located in the rural county in the
first column of this chart will be redesignated for purposes of using
the wage index of the urban area listed in the second column.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
As in the past, hospitals redesignated under section 1886(d)(8)(B)
of the Act are also eligible to be reclassified to a different area by
the MGCRB. Affected hospitals may compare the reclassified wage index
for the labor market area in Table 4C in the Addendum to the proposed
rule into which they would be reclassified by the MGCRB to the wage
index for the area to which they are redesignated under section
1886(d)(8)(B) of the Act. Hospitals may withdraw from an MGCRB
reclassification within 45 days of the publication of this proposed
rule.
5. Reclassifications Under Section 1886(d)(8)(B) of the Act
As discussed in the FY 2009 IPPS final rule (73 FR 48588), Lugar
hospitals are treated like reclassified hospitals for purposes of
determining their applicable wage index and receive the reclassified
wage index for the urban area to which they have been redesignated.
Because Lugar hospitals are treated like reclassified hospitals, when
they are seeking reclassification by the MGCRB, they are subject to the
rural reclassification rules set forth at 42 CFR 412.230. The
procedural rules set forth at Sec. 412.230 list the criteria that a
hospital must meet in order to reclassify as a rural hospital. Lugar
hospitals are subject to the proximity criteria and payment thresholds
that apply to rural hospitals. Specifically, the hospital must be no
more than 35 miles from the area to which it seeks reclassification
(Sec. 412.230(b)(1)); and the hospital must show that its average
hourly wage is at least 106 percent of the average hourly wage of all
other hospitals in the area in which the hospital is located (Sec.
412.230(d)(1)(iii)(C)). In accordance with policy adopted in the FY
2009 IPPS final rule (73 FR 48568 and 48569), beginning with
reclassifications for the FY 2010 wage index, a Lugar hospital must
also demonstrate that its average hourly wage is equal to at least 84
percent (for FY 2010 reclassifications) and 86 percent (for
reclassifications for FY 2011 and subsequent fiscal years) of the
average hourly wage of hospitals in the area to which it seeks
redesignation (Sec. 412.230(d)(1)(iv)(C)).
Hospitals not located in a Lugar county seeking reclassification to
the urban area where the Lugar hospitals have been redesignated are not
permitted to measure to the Lugar county to demonstrate proximity (no
more than 15 miles for an urban hospital, and no more than 35 miles for
a rural hospital or the closest urban or rural area for RRCs or SCHs)
in order to be reclassified to such urban area. These hospitals must
measure to the urban area exclusive of the Lugar County to meet the
proximity or nearest urban or rural area requirement. We treat New
England deemed counties in a manner consistent with how we treat Lugar
counties. (We refer readers to FY 2008 IPPS final rule with comment
period (72 FR 47337) for a discussion of this policy.)
6. Reclassifications Under Section 508 of Public Law 108-173
Section 508 of Public Law 108-173 allowed certain qualifying
hospitals to receive wage index reclassifications and assignments that
they otherwise would not have been eligible to receive under the law.
Although section 508 originally was scheduled to expire after a 3-year
period, Congress extended the provision several times, as well as
certain special exceptions that would have otherwise expired. For a
discussion of the original section 508 provision and its various
extensions, we refer readers to the FY 2009 IPPS final rule (73 FR
48588). The most recent extension of the provision was included in
section 124 of Public Law 110-275 (MIPPA). Section 124 extended,
through FY 2009, section 508 reclassifications as well as certain
special exceptions. Because the section 124 extension of these
provisions expired on September 30, 2009 (and, therefore, will not be
applicable in FY 2011 unless there is intervening legislation to extend
the provisions), we are not proposing to make any changes related to
these provisions in this proposed rule for FY 2011.
[[Page 23953]]
We note that section 508 and special exceptions reclassifications
were recently extended again, through September 30, 2010, under section
10317 of the PPACA (Pub. L. 111-148). We intend to imminently issue
instructions regarding implementation of section 10317 of Public Law
111-148.
J. Proposed FY 2011 Wage Index Adjustment Based on Commuting Patterns
of Hospital Employees
In accordance with the broad discretion under section 1886(d)(13)
of the Act, as added by section 505 of Public Law 108-173, beginning
with FY 2005, we established a process to make adjustments to the
hospital wage index based on commuting patterns of hospital employees
(the ``out-migration'' adjustment). The process, outlined in the FY
2005 IPPS final rule (69 FR 49061), provides for an increase in the
wage index for hospitals located in certain counties that have a
relatively high percentage of hospital employees who reside in the
county but work in a different county (or counties) with a higher wage
index. Such adjustments to the wage index are effective for 3 years,
unless a hospital requests to waive the application of the adjustment.
A county will not lose its status as a qualifying county due to wage
index changes during the 3-year period, and counties will receive the
same wage index increase for those 3 years. However, a county that
qualifies in any given year may no longer qualify after the 3-year
period, or it may qualify but receive a different adjustment to the
wage index level. Hospitals that receive this adjustment to their wage
index are not eligible for reclassification under section 1886(d)(8) or
section 1886(d)(10) of the Act. Adjustments under this provision are
not subject to the budget neutrality requirements under section
1886(d)(3)(E) of the Act.
Hospitals located in counties that qualify for the wage index
adjustment are to receive an increase in the wage index that is equal
to the average of the differences between the wage indices of the labor
market area(s) with higher wage indices and the wage index of the
resident county, weighted by the overall percentage of hospital workers
residing in the qualifying county who are employed in any labor market
area with a higher wage index. Beginning with the FY 2008 wage index,
we use post-reclassified wage indices when determining the out-
migration adjustment (72 FR 47339).
For the proposed FY 2011 wage index, we are proposing to calculate
the out-migration adjustment using the same formula described in the FY
2005 IPPS final rule (69 FR 49064), with the addition of using the
post-reclassified wage indices, to calculate the out-migration
adjustment. This adjustment is calculated as follows:
Step 1--Subtract the wage index for the qualifying county from the
wage index of each of the higher wage area(s) to which hospital workers
commute.
Step 2--Divide the number of hospital employees residing in the
qualifying county who are employed in such higher wage index area by
the total number of hospital employees residing in the qualifying
county who are employed in any higher wage index area. For each of the
higher wage index areas, multiply this result by the result obtained in
Step 1.
Step 3--Sum the products resulting from Step 2 (if the qualifying
county has workers commuting to more than one higher wage index area).
Step 4--Multiply the result from Step 3 by the percentage of
hospital employees who are residing in the qualifying county and who
are employed in any higher wage index area.
These adjustments will be effective for each county for a period of
3 fiscal years. For example, hospitals that received the adjustment for
the first time in FY 2010 will be eligible to retain the adjustment for
FY 2011. For hospitals in newly qualified counties, adjustments to the
wage index are effective for 3 years, beginning with discharges
occurring on or after October 1, 2010.
Hospitals receiving the wage index adjustment under section
1886(d)(13)(F) of the Act are not eligible for reclassification under
sections 1886(d)(8) or (d)(10) of the Act unless they waive the out-
migration adjustment. Consistent with our FYs 2005 through 2010 IPPS
final rules, we are specifying that hospitals redesignated under
section 1886(d)(8) of the Act or reclassified under section 1886(d)(10)
of the Act will be deemed to have chosen to retain their redesignation
or reclassification. Section 1886(d)(10) hospitals that wish to receive
the out-migration adjustment, rather than their reclassification
adjustment, should follow the termination/withdrawal procedures
specified in 42 CFR 412.273 and section III.I.3. of the preamble of
this proposed rule. Otherwise, they will be deemed to have waived the
out-migration adjustment. Hospitals redesignated under section
1886(d)(8) of the Act will be deemed to have waived the out-migration
adjustment unless they explicitly notify CMS within 45 days from the
publication of this proposed rule that they elect to receive the out-
migration adjustment instead. These notifications should be sent to the
following address: Centers for Medicare and Medicaid Services, Center
for Medicare Management, Attention: Wage Index Adjustment Waivers,
Division of Acute Care, Room C4-08-06, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
Table 4J in the Addendum to this proposed rule lists the proposed
out-migration wage index adjustments for FY 2011. Hospitals that are
not otherwise reclassified or redesignated under section 1886(d)(8) or
section 1886(d)(10) of the Act will automatically receive the listed
adjustment. In accordance with the procedures discussed above,
redesignated/reclassified hospitals will be deemed to have waived the
out-migration adjustment unless CMS is otherwise notified within the
necessary timeframe. In addition, hospitals eligible to receive the
out-migration wage index adjustment and that withdraw their application
for reclassification will automatically receive the wage index
adjustment listed in Table 4J in the Addendum to this proposed rule.
The wage index is updated annually and, as such, hospitals wishing to
waive their Lugar redesignation in order to receive their home area
wage index plus the out-migration adjustment must request the waiver
annually.
K. Process for Requests for Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data and occupational
mix survey data files for the proposed FY 2011 wage index were made
available on October 5, 2009, through the Internet on the CMS Web site
at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp#TopOfPage.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional public use
file on our Web site that reflects the actual data that are used in
computing the proposed wage index. The release of this new file does
not alter the current wage index process or schedule. We notified the
hospital community of the availability of these data as we do with the
current public use wage data files through our Hospital Open Door
forum. We encouraged hospitals to sign up for automatic notifications
of information about hospital issues and the scheduling of the Hospital
Open Door forums at: http://www.cms.hhs.gov/OpenDoorForums/.
[[Page 23954]]
In a memorandum dated October 21, 2009, we instructed all fiscal
intermediaries/MACs to inform the IPPS hospitals they service of the
availability of the wage index data files and the process and timeframe
for requesting revisions (including the specific deadlines listed
below). We also instructed the fiscal intermediaries/MACs to advise
hospitals that these data were also made available directly through
their representative hospital organizations.
If a hospital wished to request a change to its data as shown in
the October 5, 2009 wage and occupational mix data files, the hospital
was to submit corrections along with complete, detailed supporting
documentation to its fiscal intermediary/MAC by December 7, 2009.
Hospitals were notified of this deadline and of all other possible
deadlines and requirements, including the requirement to review and
verify their data as posted on the preliminary wage index data files on
the Internet, through the October 21, 2009 memorandum referenced above.
In the October 21, 2009 memorandum, we also specified that a
hospital requesting revisions to its occupational mix survey data was
to copy its record(s) from the CY 2007-2008 occupational mix
preliminary files posted to our Web site in October, highlight the
revised cells on its spreadsheet, and submit its spreadsheet(s) and
complete documentation to its fiscal intermediary/MAC no later than
December 7, 2009.
The fiscal intermediaries/MACs notified the hospitals by mid-
February 2010 of any changes to the wage index data as a result of the
desk reviews and the resolution of the hospitals' early-December
revision requests. The fiscal intermediaries/MACs also submitted the
revised data to CMS by mid-February 2010. CMS published the proposed
wage index public use files that included hospitals' revised wage index
data on February 22, 2010. Hospitals had until March 8, 2010, to submit
requests to the fiscal intermediaries/MACs for reconsideration of
adjustments made by the fiscal intermediaries/MACs as a result of the
desk review, and to correct errors due to CMS's or the fiscal
intermediary's (or, if applicable, the MAC's) mishandling of the wage
index data. Hospitals also were required to submit sufficient
documentation to support their requests.
After reviewing requested changes submitted by hospitals, fiscal
intermediaries/MACs are to transmit any additional revisions resulting
from the hospitals' reconsideration requests by April 14, 2010. The
deadline for a hospital to request CMS intervention in cases where the
hospital disagrees with the fiscal intermediary's (or, if applicable,
the MAC's) policy interpretations is April 21, 2010.
Hospitals should examine Table 2 in the Addendum to this proposed
rule. Table 2 in the Addendum to this proposed rule contains each
hospital's adjusted average hourly wage used to construct the wage
index values for the past 3 years, including the FY 2007 data used to
construct the proposed FY 2011 wage index. We note that the hospital
average hourly wages shown in Table 2 only reflect changes made to a
hospital's data and transmitted to CMS in March 2010.
We will release the final wage index data public use files by May
7, 2010 on the Internet at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp#TopOfPage. The May 2010 public use files are made
available solely for the limited purpose of identifying any potential
errors made by CMS or the fiscal intermediary/MAC in the entry of the
final wage index data that resulted from the correction process
described above (revisions submitted to CMS by the fiscal
intermediaries/MACs by April 14, 2010). If, after reviewing the May
2010 final files, a hospital believes that its wage or occupational mix
data are incorrect due to a fiscal intermediary/MAC or CMS error in the
entry or tabulation of the final data, the hospital should send a
letter to both its fiscal intermediary/MAC and CMS that outlines why
the hospital believes an error exists and provide all supporting
information, including relevant dates (for example, when it first
became aware of the error). CMS and the fiscal intermediaries (or, if
applicable, the MACs) must receive these requests no later than June 7,
2010.
Each request also must be sent to the fiscal intermediary/MAC. The
fiscal intermediary/MAC will review requests upon receipt and contact
CMS immediately to discuss any findings.
At this point in the process, that is, after the release of the May
2010 wage index data files, changes to the wage and occupational mix
data will only be made in those very limited situations involving an
error by the fiscal intermediary/MAC or CMS that the hospital could not
have known about before its review of the final wage index data files.
Specifically, neither the fiscal intermediary/MAC nor CMS will approve
the following types of requests:
Requests for wage index data corrections that were
submitted too late to be included in the data transmitted to CMS by
fiscal intermediaries or the MACs on or before April 21, 2010.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the February 22,
2010 wage index public use files.
Requests to revisit factual determinations or policy
interpretations made by the fiscal intermediary or the MAC or CMS
during the wage index data correction process.
Verified corrections to the wage index data received timely by CMS
and the fiscal intermediaries or the MACs (that is, by June 7, 2010)
will be incorporated into the final wage index in the FY 2011 IPPS/LTCH
PPS final rule, which will be effective October 1, 2010.
We created the processes described above to resolve all substantive
wage index data correction disputes before we finalize the wage and
occupational mix data for the FY 2011 payment rates. Accordingly,
hospitals that did not meet the procedural deadlines set forth above
will not be afforded a later opportunity to submit wage index data
corrections or to dispute the fiscal intermediary's (or, if applicable,
the MAC's) decision with respect to requested changes. Specifically,
our policy is that hospitals that do not meet the procedural deadlines
set forth above will not be permitted to challenge later, before the
Provider Reimbursement Review Board, the failure of CMS to make a
requested data revision. (See W. A. Foote Memorial Hospital v. Shalala,
No. 99-CV-75202-DT (E.D. Mich. 2001) and Palisades General Hospital v.
Thompson, No. 99-1230 (D.D.C. 2003).) We refer readers also to the FY
2000 IPPS final rule (64 FR 41513) for a discussion of the parameters
for appealing to the PRRB for wage index data corrections.
Again, we believe the wage index data correction process described
above provides hospitals with sufficient opportunity to bring errors in
their wage and occupational mix data to the fiscal intermediary's (or,
if applicable, the MAC's) attention. Moreover, because hospitals have
access to the final wage index data by early May 2010, they have the
opportunity to detect any data entry or tabulation errors made by the
fiscal intermediary or the MAC or CMS before the development and
publication of the final FY 2011 wage index by August 2010, and the
implementation of the FY 2011 wage index on October 1, 2010. If
hospitals availed themselves of the opportunities afforded to provide
and make corrections to the wage and occupational mix data, the wage
index implemented on October 1 should be accurate. Nevertheless, in the
event that
[[Page 23955]]
errors are identified by hospitals and brought to our attention after
June 7, 2010, we retain the right to make midyear changes to the wage
index under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our
existing regulations, we make midyear corrections to the wage index for
an area only if a hospital can show that: (1) The fiscal intermediary
or the MAC or CMS made an error in tabulating its data; and (2) the
requesting hospital could not have known about the error or did not
have an opportunity to correct the error, before the beginning of the
fiscal year. For purposes of this provision, ``before the beginning of
the fiscal year'' means by the June 7 deadline for making corrections
to the wage data for the following fiscal year's wage index. This
provision is not available to a hospital seeking to revise another
hospital's data that may be affecting the requesting hospital's wage
index for the labor market area. As indicated earlier, because CMS
makes the wage index data available to hospitals on the CMS Web site
prior to publishing both the proposed and final IPPS rules, and the
fiscal intermediaries or the MACs notify hospitals directly of any wage
index data changes after completing their desk reviews, we do not
expect that midyear corrections will be necessary. However, under our
current policy, if the correction of a data error changes the wage
index value for an area, the revised wage index value will be effective
prospectively from the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385), we revised 42 CFR
412.64(k)(2) to specify that, effective on October 1, 2005, that is,
beginning with the FY 2006 wage index, a change to the wage index can
be made retroactive to the beginning of the Federal fiscal year only
when: (1) The fiscal intermediary (or, if applicable, the MAC) or CMS
made an error in tabulating data used for the wage index calculation;
(2) the hospital knew about the error and requested that the fiscal
intermediary (or, if applicable, the MAC) and CMS correct the error
using the established process and within the established schedule for
requesting corrections to the wage index data, before the beginning of
the fiscal year for the applicable IPPS update (that is, by the June 7,
2010 deadline for the FY 2011 wage index); and (3) CMS agreed that the
fiscal intermediary (or, if applicable, the MAC) or CMS made an error
in tabulating the hospital's wage index data and the wage index should
be corrected.
In those circumstances where a hospital requested a correction to
its wage index data before CMS calculates the final wage index (that
is, by the June 7, 2010 deadline), and CMS acknowledges that the error
in the hospital's wage index data was caused by CMS' or the fiscal
intermediary's (or, if applicable, the MAC's) mishandling of the data,
we believe that the hospital should not be penalized by our delay in
publishing or implementing the correction. As with our current policy,
we indicated that the provision is not available to a hospital seeking
to revise another hospital's data. In addition, the provision cannot be
used to correct prior years' wage index data; and it can only be used
for the current Federal fiscal year. In other situations where our
policies would allow midyear corrections, we continue to believe that
it is appropriate to make prospective-only corrections to the wage
index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a judicial decision reverses a CMS denial of a
hospital's wage index data revision request.
L. Labor-Related Share for the Proposed FY 2011 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related: ``The Secretary
shall adjust the proportion (as estimated by the Secretary from time to
time) of hospitals' costs which are attributable to wages and wage-
related costs of the DRG prospective payment rates * * *'' We refer to
the portion of hospital costs attributable to wages and wage-related
costs as the labor-related share. The labor-related share of the
prospective payment rate is adjusted by an index of relative labor
costs, which is referred to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this ``would result in lower payments to a
hospital than would otherwise be made.'' However, this provision of
Public Law 108-173 did not change the legal requirement that the
Secretary estimate ``from time to time'' the proportion of hospitals'
costs that are ``attributable to wages and wage-related costs.'' We
believe that this reflected Congressional intent that hospitals receive
payment based on either a 62-percent labor-related share, or the labor-
related share estimated from time to time by the Secretary, depending
on which labor-related share resulted in a higher payment.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43850
through 43856), we rebased and revised the hospital market basket for
operating costs. We established a FY 2006-based IPPS hospital market
basket to replace the FY 2002-based IPPS hospital market basket,
effective October 1, 2009. In that final rule, we presented our
analysis and conclusions regarding the frequency and methodology for
updating the labor-related share for FY 2010. We also recalculated a
labor-related share of 68.8 percent, using the FY 2006-based IPPS
market basket, for discharges occurring on or after October 1, 2009. In
addition, we implemented this revised and rebased labor-related share
in a budget neutral manner, but consistent with section 1886(d)(3)(E)
of the Act, we did not take into account the additional payments that
would be made as a result of hospitals with a wage index less than or
equal to 1.0 being paid using a labor-related share lower than the
labor-related share of hospitals with a wage index greater than 1.0.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. In this proposed rule, we are not proposing to make any
further changes to the national average proportion of operating costs
that are attributable to wages and salaries, fringe benefits, contract
labor, the labor-related portion of professional fees, administrative
and business support services, and all other labor-related services
(previously referred to in the FY 2002-based IPPS market basket as
labor-intensive). Therefore, we are proposing to continue to use a
labor-related share of 68.8 percent for discharges occurring on or
after October 1, 2010. Tables 1A and 1B in the Addendum to this
proposed rule reflects this proposed labor-related share. We note that
section 403 of Public Law 108-173 amended sections 1886(d)(3)(E) and
1886(d)(9)(C)(iv) of the Act to provide that the Secretary must employ
62 percent as the labor-related share unless this employment ``would
result in lower payments to a hospital than would otherwise be made.''
Therefore, for all IPPS hospitals whose wage indices are less than
1.0000, we are applying the wage index to a labor-related share of 62
[[Page 23956]]
percent of the national standardized amount. For all IPPS hospitals
whose wage indices are greater than 1.0000, we are applying the wage
index to a labor-related share of 68.8 percent of the national
standardized amount.
For Puerto Rico hospitals, the national labor-related share will
always be 62 percent because the wage index for all Puerto Rico
hospitals is less than 1.0. We are proposing to continue to use a
labor-related share for the Puerto Rico-specific standardized amounts
of 62.1 percent for discharges occurring on or after October 1, 2010.
This Puerto Rico labor-related share of 62.1 percent was also adopted
in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43857) at the time the
FY 2006-based hospital market basket was established, effective October
1, 2009. Consistent with our methodology for determining the national
labor-related share, we added the Puerto Rico-specific relative weights
for wages and salaries, fringe benefits, contract labor, the labor-
related portion of professional fees, administrative and business
support services, and all other labor-related services (previously
referred to in the FY 2002-based IPPS market basket as labor-intensive)
to determine the labor-related share. Puerto Rico hospitals are paid
based on 75 percent of the national standardized amounts and 25 percent
of the Puerto Rico-specific standardized amounts. The labor-related
share of a hospital's Puerto Rico-specific rate will be either the
Puerto Rico-specific labor-related share of 62.1 percent or 62
perecent, depending on which results in higher payments to the
hospital. If the hospital has a Puerto Rico-specific wage index of
greater than 1.0, we will set the hospital's rates using a labor-
related share of 62.1 percent for the 25 percent portion of the
hospital's payment determined by the Puerto Rico standardized amounts
because this amount will result in higher payments. Conversely, a
hospital with a Puerto Rico-specific wage index of less than 1.0 will
be paid using the Puerto Rico-specific labor-related share of 62
percent of the Puerto Rico-specific rates because the lower labor-
related share will result in higher payments. The proposed Puerto Rico
labor-related share of 62.1 percent for FY 2011 is reflected in the
Table 1C of the Addendum to this proposed rule.
V. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
A. Reporting of Hospital Quality Data for Annual Hospital Payment
Update
1. Background
a. Overview
CMS is seeking to promote higher quality and more efficient health
care for Medicare beneficiaries. This effort is supported by the
adoption of an increasing number of widely-agreed upon quality
measures. CMS has worked with relevant stakeholders to define measures
of quality in almost every setting and currently measures some aspect
of care for almost all Medicare beneficiaries. These measures assess
structural aspects of care, clinical processes, patient experiences
with care, and, increasingly, outcomes.
CMS has implemented quality measure reporting programs for multiple
settings of care. To measure the quality of hospital inpatient
services, CMS implemented the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU) program. In addition, CMS has
implemented quality reporting programs for hospital outpatient
services, the Hospital Outpatient Quality Data Reporting Program (HOP
QDRP), and for physicians and other eligible professionals, the
Physician Quality Reporting Initiative (PQRI). CMS has also implemented
quality reporting programs for home health agencies and skilled nursing
facilities that are based on conditions of participation, and an end-
stage renal disease quality reporting program that is based on
conditions for coverage.
b. Hospital Quality Data Reporting Under Section 501(b) of Public Law
108-173
Section 501(b) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), Public Law 108-173, added section
1886(b)(3)(B)(vii) to the Act. This section established the authority
for the RHQDAPU program and revised the mechanism used to update the
standardized payment amount for inpatient hospital operating costs.
Specifically, section 1886(b)(3)(B)(vii)(I) of the Act, before it was
amended by section 5001(a) of Public Law 109-171, provided for a
reduction of 0.4 percentage points to the update percentage increase
(also known as the market basket update) for FY 2005 through FY 2007
for any subsection (d) hospital that did not submit data on a set of 10
quality indicators established by the Secretary as of November 1, 2003.
It also provides that any reduction would apply only to the fiscal year
involved, and would not be taken into account in computing the
applicable percentage increase for a subsequent fiscal year. The
statute thereby established an incentive for IPPS hospitals to submit
data on the quality measures established by the Secretary, and also
built upon the previously established Voluntary Hospital Quality Data
Reporting Program that we described in the FY 2009 IPPS final rule (73
FR 48598).
We implemented section 1886(b)(3)(B)(vii) of the Act in the FY 2005
IPPS final rule (69 FR 49078) and codified the applicable percentage
change in Sec. 412.64(d) of our regulations. We adopted additional
requirements under the RHQDAPU program in the FY 2006 IPPS final rule
(70 FR 47420).
c. Hospital Quality Data Reporting Under Section 5001(a) of Public Law
109-171
Section 5001(a) of the Deficit Reduction Act of 2005 (DRA), Public
Law 109-171, further amended section 1886(b)(3)(B) of the Act to revise
the mechanism used to update the standardized payment amount for
hospital inpatient operating costs, in particular, by adding new
section 1886(b)(3)(B)(viii) to the Act. Specifically, sections
1886(b)(3)(B)(viii)(I) and (II) of the Act provide that the payment
update for FY 2007 and each subsequent fiscal year be reduced by 2.0
percentage points for any subsection (d) hospital that does not submit
quality data in a form and manner, and at a time, specified by the
Secretary. Section 1886(b)(3)(B)(viii)(I) of the Act also provides that
any reduction in a hospital's payment update will apply only with
respect to the fiscal year involved, and will not be taken into account
for computing the applicable percentage increase for a subsequent
fiscal year. In the FY 2007 IPPS final rule (71 FR 48045), we amended
our regulations at Sec. 412.64(d)(2) to reflect the 2.0 percentage
point reduction in the payment update for FY 2007 and subsequent fiscal
years for subsection (d) hospitals that do not comply with requirements
for reporting quality data, as provided for under section
1886(b)(3)(B)(viii) of the Act.
(1) Quality Measures
Section 1886(b)(3)(B)(viii)(III) of the Act requires that the
Secretary expand the ``starter set'' of 10 quality measures that was
established by the Secretary as of November 1, 2003, as the Secretary
[[Page 23957]]
determines to be appropriate for the measurement of the quality of care
furnished by a hospital in inpatient settings. In expanding this set of
measures, section 1886(b)(3)(B)(viii)(IV) of the Act requires that,
effective for payments beginning with FY 2007, the Secretary begin to
adopt the baseline set of performance measures as set forth in a report
issued by the Institute of Medicine (IOM) of the National Academy of
Sciences under section 238(b) of Public Law 108-173.\5\
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\5\ Institute of Medicine, ``Performance Measurement:
Accelerating Improvement,'' December 1, 2005, available at: http://www.iom.edu/CMS/3809/19805/31310.aspx. IOM set forth these baseline
measures in a November 2005 report. However, the IOM report was not
released until December 1, 2005 on the IOM Web site.
---------------------------------------------------------------------------
Section 1886(b)(3)(B)(viii)(V) of the Act requires that, effective
for payments beginning with FY 2008, the Secretary add other quality
measures that reflect consensus among affected parties, and to the
extent feasible and practicable, have been set forth by one or more
national consensus building entities. The NQF is a voluntary consensus
standard-setting organization with a diverse representation of
consumer, purchaser, provider, academic, clinical, and other health
care stakeholder organizations. The NQF was established to standardize
health care quality measurement and reporting through its consensus
development process. We have generally adopted NQF-endorsed measures.
However, we believe that consensus among affected parties also can be
reflected by other means, including consensus achieved during the
measure development process, consensus shown through broad acceptance
and use of measures, and consensus through public comment.
Section 1886(b)(3)(B)(viii)(VI) of the Act authorizes the Secretary
to replace any quality measures or indicators in appropriate cases,
such as where all hospitals are effectively in compliance with a
measure, or the measures or indicators have been subsequently shown to
not represent the best clinical practice. Thus, the Secretary is
granted broad discretion to replace measures that are no longer
appropriate for the RHQDAPU program.
In the FY 2007 IPPS final rule, we began to expand the RHQDAPU
program measures by adding 11 quality measures to the 10-measure
starter set to establish an expanded set of 21 quality measures for the
FY 2007 payment determination (71 FR 48033 through 48037, 48045).
In the CY 2007 OPPS/ASC final rule (71 FR 68201), we adopted six
additional quality measures for the FY 2008 payment determination, for
a total of 27 measures. Two of these measures (30-Day Risk Standardized
Mortality Rates for Heart Failure and 30-Day Risk Standardized
Mortality Rates for AMI) were calculated using existing administrative
Medicare claims data; thus, no additional data submission by hospitals
was required for these two measures. The measures used for the FY 2008
payment determination included, for the first time, the HCAHPS patient
experience of care survey.
In the FY 2008 IPPS final rule (72 FR 47348 through 47358) and the
CY 2008 OPPS/ASC final rule with comment period (72 FR 66875 through
66877), we added three additional process measures to the RHQDAPU
program measure set. (These three measures are SCIP-Infection-4:
Cardiac Surgery Patients with Controlled 6AM Postoperative Serum
Glucose, SCIP-Infection-6: Surgery Patients with Appropriate Hair
Removal, and Pneumonia 30-day mortality (Medicare patients).) The
addition of these 3 measures brought the total number of RHQDAPU
program measures to be used for the FY 2009 payment determination to 30
(72 FR 66876). The 30 measures used for the FY 2009 annual payment
determination are listed in the FY 2009 IPPS final rule (73 FR 48600
through 48601).
For the FY 2010 payment determination, we added 15 new measures to
the RHQDAPU program measure set and retired one measure from the
program (PN-1: Oxygenation Assessment). Of the new measures, 13 were
adopted in the FY 2009 IPPS final rule (73 FR 48602 through 48611) and
two additional measures were finalized in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68780 through 68781). This resulted in
an expansion of the RHQDAPU program measures from 30 measures for the
FY 2009 payment determination to 44 measures for the FY 2010 payment
determination. The RHQDAPU program measures for the FY 2010 payment
determination consist of: 26 chart-abstracted process measures, which
measure quality of care provided for Acute Myocardial Infarction (AMI),
Heart Failure (HF), Pneumonia (PN), and Surgical Care Improvement
(SCIP); 6 claims-based measures, which evaluate 30-day mortality and
30-day readmission rates for AMI, HF, or PN; 9 claims-based AHRQ
patient safety indicators and inpatient quality indicators; 1 claims-
based nursing sensitive measure; 1 structural measure that assesses
participation in a systematic database for cardiac surgery; and the
HCAHPS patient experience of care survey. The measures are listed in
the IPPS FY 2009 final rule at 73 FR 46809 and in the CY 2009 OPPS/ASC
final rule with comment period at 73 FR 68781.
On December 31, 2008, CMS advised hospitals that they would no
longer be required to submit data for the RHQDAPU program measure AMI-
6-Beta blocker at arrival, beginning with discharges occurring on April
1, 2009. This change was based on the evolving evidence regarding AMI
patient care, as well as changes in the American College of Cardiology/
American Heart Association (ACC/AHA) practice guidelines for ST-segment
elevation myocardial infarction and non-ST segment elevation myocardial
infarction, upon which AMI-6 is based. CMS took action to remove the
measure from reporting initiatives based on the lack of support by the
measure developer and the clinical and scientific considerations
described in the FY 2010 IPPS/RY 2010 LTCH PPS final rule at 74 FR
43863.
We had previously discussed considerations relating to retiring or
replacing measures in the FY 2008 IPPS final rule with comment period
and the FY 2009 IPPS final rule, including the ``topping out'' of
hospitals' performance under a measure (72 FR 47358 through 47359 and
73 FR 48603 through 48604, respectively). However, in this instance,
the measure no longer ``represent[s] the best clinical practice,'' an
additional basis under section 1886(b)(3)(B)(viii)(VI) of the Act for
retiring a measure. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we
formally retired the AMI-6 measure from the RHQDAPU program for the FY
2011 payment determination and subsequent payment determinations.
For the FY 2011 payment determination, we retained 41 of the FY
2010 quality measures; harmonized two FY 2010 RHQDAPU program quality
measures (combining PSI 04--Death among surgical patients with
treatable serious complications; and Nursing Sensitive-Failure to
rescue into a single measure (Death among surgical inpatients with
serious, treatable complications); added two chart-abstracted measures
(SCIP-Infection-9: Postoperative Urinary Catheter Removal on Post
Operative Day 1 or 2 and SCIP-Infection-10: Perioperative Temperature
Management); and added two structural measures (1) Participation in a
Systematic Clinical Database Registry for Stroke Care; and (2)
Participation in a Systematic Clinical Database Registry for Nursing
Sensitive Care) (74 FR 43868 through 43873). The 46 measures
[[Page 23958]]
we adopted for the FY 2011 payment determination are:
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[[Page 23960]]
(2) Maintenance of Technical Specifications for Quality Measures
The technical specifications for the RHQDAPU program measures, or
links to Web sites hosting technical specifications, are contained in
the CMS/The Joint Commission Specifications Manual for National
Hospital Inpatient Quality Measures (Specifications Manual). This
Specifications Manual is posted on the CMS QualityNet Web site at
https://www.QualityNet.org/. We maintain the technical specifications
by updating this Specifications Manual semiannually, or more frequently
in unusual cases, and include detailed instructions and calculation
algorithms for hospitals to use when collecting and submitting data on
required measures. These semiannual updates are accompanied by
notifications to users, providing sufficient time between the change
and the effective date in order to allow users to incorporate changes
and updates to the specifications into data collection systems.
(3) Public Display of Quality Measures
Section 1886(b)(3)(B)(viii)(VII) of the Act requires that the
Secretary establish procedures for making quality data available to the
public after ensuring that a hospital has the opportunity to review its
data before they are made public. To meet this requirement, data from
the RHQDAPU program are typically displayed on CMS Web sites such as
the Hospital Compare Web site, http://www.hospitalcompare.hhs.gov after
a 30-day preview period. An interactive Web tool, this Web site assists
beneficiaries by providing information on hospital quality of care to
those who need to select a hospital. It further serves to encourage
beneficiaries to work with their doctors and hospitals to discuss the
quality of care hospitals provide to patients, thereby providing an
additional incentive to hospitals to improve the quality of care that
they furnish. The RHQDAPU program currently includes process of care
measures, risk adjusted outcome measures, the HCAHPS patient experience
of care survey, and structural measures, all of which are featured on
the Hospital Compare Web site. However, information that may not be
salient to or understood by beneficiaries and information for which
there are unresolved display issues or design considerations for
inclusion on Hospital Compare may be made available on other CMS Web
sites that are not intended to be used as an interactive Web tool, such
as http://www.cms.hhs.gov/HospitalQualityInits/. Publicly reporting the
information in this manner, though not on the Hospital Compare Web
site, allows CMS to meet the requirement under section
1886(b)(3)(B)(viii)(VII) of the Act for establishing procedures to make
quality data used for RHQDAPU payment determinations available to the
public following a preview period. In such circumstances, affected
parties are notified via CMS listservs, CMS e-mail blasts, national
provider calls, and QualityNet announcements regarding the release of
preview reports followed by the posting of data on a Web site other
than Hospital Compare.
2. Retirement of RHQDAPU Program Measures
a. Considerations in Retiring Quality Measures From the RHQDAPU Program
Unless stated otherwise, we generally retain measures from the
current year's RHQDAPU program measure set for subsequent years'
measure set. We have previously retired one measure, PN-1: Oxygenation
Assessment for Pneumonia, from the RHQDAPU program on the basis of high
unvarying performance among hospitals, as measures with very high
performance among hospitals present little opportunity for improvement,
and do not provide meaningful distinctions in performance for
consumers. We also have retired one measure from the program because it
no longer ``represent[ed] the best clinical practice,'' as stated under
section 1886(b)(3)(B)(viii)(VI) of the Act. In this latter situation,
we stated that when there is reason to believe that the continued
collection of a measure as it is currently specified raises potential
patient safety concerns that it is appropriate for CMS to take
immediate action to remove a measure from the RHQDAPU program and not
wait for the annual rulemaking cycle. Therefore, in the FY 2010 IPPS/RY
2010 LTCH PPS final rule, we stated that we would promptly retire such
measures followed by subsequent confirmation of the retirement in the
next IPPS rulemaking. When we do so, we will notify hospitals and the
public through the usual hospital and QIO communication channels used
for the RHQDAPU program, which include memo and email notification and
QualityNet Web site articles and postings.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule, we invited
public comment regarding additional RHQDAPU program measures that
should be considered for retirement along with criteria that should be
used for retiring measures. In the FY 2010 IPPS/RY 2010 LTCH PPS final
rule, commenters recommended 11 RHQDAPU program measures for retirement
for various reasons (74 FR 43865). Among the criteria suggested by
commenters that CMS should consider when determining whether to retire
RHQDAPU program measures were: (1) Measure performance among hospitals
is so high and unvarying that meaningful distinctions and improvements
in performance can no longer be made; (2) performance or improvement on
a measure does not result in better patient outcomes; (3) a measure
does not align with current clinical guidelines or practice; (4) the
availability of a more broadly applicable (across settings,
populations, or conditions) quality measure for the topic; (5) the
availability of a measure that is more proximal in time to desired
patient outcomes for the particular topic; (6) the availability of a
measure that is more strongly associated with desired patient outcomes
for the particular topic; (7) collection and/or public reporting of a
measure leads to negative unintended consequences other than patient
harm. We agreed with commenters that these criteria should be among
those considered in evaluating current RHQDAPU program measures for
retirement. We again invite commenters to submit suggestions for
additional measure retirement criteria for CMS to consider.
b. Proposed Retirement of Quality Measures Under the RHQDAPU Program
for the FY 2011 Payment Determination and Subsequent Years
In the FY 2009 IPPS final rule, for the FY 2010 payment
determination we adopted nine measures that were developed by the
Agency for Healthcare Research and Quality (AHRQ), and in the FY 2010
IPPS/RY 2010 LTCH PPS we subsequently retained these measures for the
FY 2011 payment determination. One of these measures was the AHRQ
Mortality for Selected Surgical Procedures Composite, which is
comprised of measures from the AHRQ Inpatient Quality Indicator (IQI)
measure set. In late June of 2009, following an NQF steering committee
evaluation of the AHRQ Mortality for Selected Surgical Procedures
composite, the AHRQ issued guidance \6\ that this composite is ``not
recommended for comparative reporting'' as specified due to significant
evidence gaps, and that these significant evidence gaps are
[[Page 23961]]
unlikely to be addressed with further development or validation work.
This guidance is available at: http://www.qualityindicators.ahrq.gov/downloads/publications/AHRQ%20QI%20Guide%20to%20Comparative%20Reporting%20v10.pdf.
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\6\ AHRQ. Guidance on Using the AHRQ QI for Hospital-Level
Comparative Reporting. June 2009. http://www.qualityindicators.ahrq.gov/downloads/publications/AHRQ%20QI%20Guide%20to%20Comparative%20Reporting%20v10.pdf.
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For this reason, we are proposing to retire the Mortality for
Selected Procedures Composite from the RHQDAPU program measure set from
the RHQDAPU program measure set for the FY 2011 payment determination
and for subsequent payment determinations because the measure is not
considered suitable for purposes of comparative reporting by the
measure developer. We will neither calculate this measure for the FY
2011 payment determination, nor display results for this measure on
Hospital Compare. We invite comment on our proposal to retire this
measure from the RHQDAPU program for the FY 2011 payment determination
and for subsequent payment determinations. We also invite commenters to
submit suggestions and rationales for retirement of other RHQDAPU
program measures.
Set out below are the RHQDAPU program quality measures for the FY
2011 payment determination reflecting our proposed retirement of one
measure:
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3. Proposed Expansion Plan for Quality Measures for the FY 2012, FY
2013, and FY 2014 Payment Determinations
a. Considerations in Expanding and Updating Quality Measures Under the
RHQDAPU Program
In the FY 2009 IPPS final rule (73 FR 48613) and the FY 2010 IPPS/
RY 2010 LTCH PPS final rule (74 FR 43866 through 43869), we
acknowledged the data collection burden for hospitals participating in
the RHQDAPU program, and reiterated our desire to expand the RHQDAPU
program measure set while minimizing burden and seeking to provide
alternative mechanisms for data submission for the RHQDAPU program. In
the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we also stated that in
future expansions and updates to the RHQDAPU program measure set, we
would be taking into consideration several important goals. These goals
include: (a) Expanding the types of measures beyond process of care
measures to include an increased number of outcome measures, efficiency
measures, and patients' experience-of-care measures; (b) expanding the
scope of hospital services to which the measures apply; (c) considering
the burden on hospitals in collecting chart-abstracted data; (d)
harmonizing the measures used in the RHQDAPU program with other CMS
quality programs to align incentives and promote coordinated efforts to
improve quality; (e) seeking to use measures based on alternative
sources of data that do not require chart abstraction or that utilize
data already being reported by many hospitals, such as data that
hospitals report to clinical data registries, or all-payer claims data
bases; and (f) weighing the relevance and utility of the measures
compared to the burden on hospitals in submitting data under the
RHQDAPU program. Specifically, we give priority to quality measures
that assess performance on: (a) Conditions that result in the greatest
mortality and morbidity in the Medicare population; (b) conditions that
are high volume and high cost for the Medicare program; and (c)
conditions for which wide cost and treatment variations have been
reported, despite established clinical guidelines. We have used and
continue to use these criteria to guide our decisions regarding what
measures to add to the RHQDAPU program measure set.
RHQDAPU program measures were initially based solely on a
hospital's submission of chart-abstracted quality measure data.
However, in recent years we have adopted measures that do not require
chart abstraction, including structural and claims-based quality
measures which we can calculate using other data sources. This supports
our goal of expanding the measures for the RHQDAPU program while
minimizing the burden on hospitals and, in particular, without
significantly increasing the chart abstraction burden.
In addition to structural and claims-based measures, we previously
noted that registries \7\ and electronic health records (EHRs) are
potential alternative sources of hospital data for the RHQDAPU program.
We observed that many hospitals already submit data to and participate
in existing registries, and that registries often capture outcome
information and provide ongoing quality improvement feedback to
registry participants. We envisioned that instead of requiring
hospitals to submit the same data to CMS that many hospitals are
already submitting to registries, that we would collect the data
directly from the registries. This could enable the expansion of the
RHQDAPU program measure set without increasing the burden of data
collection for those hospitals participating in the registries. We
cited as examples of registries actively used by hospitals the Society
of Thoracic Surgeons (STS) Cardiac Surgery Registry (with approximately
90 percent participation by cardiac surgery programs), the AHA Stroke
Registry (with approximately 1200 hospitals participating), and the
American Nursing Association (ANA) Nursing Sensitive Measures Registry
(with approximately 1400 hospitals participating). In the FY 2009 IPPS
final rule (73 FR 48608 through 48609), we adopted the first RHQDAPU
program measure related to registries: Participation in a Systematic
Database for Cardiac Surgery. Subsequently, in the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43870 through 43872), we adopted two
additional structural measures of registry participation for the topics
of Stroke and Nursing Sensitive Care. We continue to evaluate the
feasibility of leveraging registry-based data collection mechanisms for
the RHQDAPU program and we are proposing to collect such data for the
FY 2013 payment determination.
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\7\ A registry is a collection of clinical data for purposes of
assessing clinical performance, quality of care, and opportunities
for quality improvement.
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We also stated our intention to explore mechanisms for data
submission using EHRs (73 FR 48614; 74 FR 43866, 43892). Establishing
such a system will require interoperability between EHRs and CMS data
collection systems, additional infrastructure development on the part
of hospitals and CMS, and the adoption of standards for the capturing,
formatting, and transmission of data elements that make up the
measures. However, once these activities are accomplished, the adoption
of measures that rely on data obtained directly from EHRs will enable
us to expand the RHQDAPU program measure set with less cost and burden
to hospitals.
In the FY 2009 IPPS final rule, we adopted nine AHRQ measures for
the RHQDAPU program, one of which is now proposed for retirement for
the FY 2011 payment determination and subsequent payment determinations
in this proposed rule. We stated that we would initially calculate the
measures using Medicare claims data (73 FR 48608). However, we also
stated that we remained interested in using all-payer claims data to
calculate them and that we might propose to collect such data in the
future. In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR
24169), we invited input and suggestions on how all-payer claims data
can be collected and used by CMS to calculate these measures, as well
as on additional AHRQ measures that we should consider adopting for
future RHQDAPU program payment determinations.
In summary, we will continue to pursue goals regarding the
expansion and updating of quality measures under the RHQDAPU program
while minimizing burden. We will take into account the public comments
we receive on the possible uses of EHRs, registries, and all-payer
claims data in the RHQDAPU program. We also will consider the measure
selection criteria suggested by various commenters in prioritizing and
selecting quality measures for the future.'' In particular, we are
concerned about the lack of progress in reducing the rates of
healthcare associated infections that was recently reported in the 2009
National Healthcare Quality Report (http://www.ahrq.gov/qual/nhqr09/nhqr09.pdf). For example, the report found that rates of postoperative
sepsis increased by 8 percent. It is evident that more attention needs
to be paid to ensure health care does not result in avoidable harm and
that patients are informed about hospitals' performance. We are
soliciting comment on the option to include among our prioritization
criteria quality measures that assess performance on healthcare
associated infections. Also, while the current and proposed measures
cover many aspects of healthcare associated infections, we are
soliciting public comment on additional measures that could be added to
those hospitals would
[[Page 23965]]
report and that CMS would make available to the public in order promote
improvement in healthcare associated infection rates.
In the past, we have proposed to add new RHQDAPU program measures
for one year's payment determination in a given rulemaking cycle.
Although in prior years we have identified various measures for future
consideration, we have not proposed or finalized measures for the
RHQDAPU program beyond those to be collected for the purpose of the
next sequential payment determination. In this FY 2011 rulemaking
cycle, we are proposing an expansion to the RHQDAPU program that will
take place over three payment years, and are proposing to add measures
not only for the FY 2012 payment determination, but also for the FY
2013 and FY 2014 payment determinations. To the extent we finalize some
or all of these proposed measures this year, we believe that we will be
providing greater certainty for hospitals to plan to meet future
reporting requirements and implement related quality improvement
efforts. We will also have more time to prepare, organize and implement
the necessary infrastructure necessary to collect data on the measures
and make payment determinations.
Finally, in section V.A.5.(2) of this proposed rule, we discuss a
proposal to make RHQDAPU payment determinations beginning with FY 2013
using, in part, a consecutive calendar year of quality measure data.
This proposed approach, of synchronizing the quarters for which data on
these measures must be submitted during each year with the quarters we
will use to make payment determinations, would apply beginning with
January 1, 2011 discharges although it would not affect our payment
determinations until FY 2013. We invite public comment on the measures
and timeframe for their addition to the RHQDAPU program measure set.
b. Proposed RHQDAPU Program Quality Measures for the FY 2012 Payment
Determination
(1) Proposed Retention of 45 Existing RHQDAPU Program Quality Measures
for the FY 2012 Payment Determination
As noted above, we are proposing to retire the AHRQ Mortality for
Selected Surgical Procedures Composite for the FY 2011 payment
determination. We are proposing that the remaining 45 of the 46 quality
measures for the FY 2011 RHQDAPU program payment determination will be
used for the FY 2012 RHQDAPU program payment determination. Details
regarding data submission requirements are discussed in section V.A.5.
of this proposed rule. We invite comment on the proposal to include all
FY 2011 measures except for the AHRQ Mortality for Selected Surgical
Procedures Composite in the FY 2012 RHQDAPU measure set.
In proposing to retain 45 of the 46 FY 2011 measures, we recognize
that we are not significantly reducing the burden for hospitals, since
the one measure that we are proposing to remove is a measure that
currently is calculated based on Medicare claims. At the same time, we
are proposing to expand the measures for the FY 2012 and subsequent
years' payment determinations, which may add additional reporting
burdens and new focus areas for hospital quality improvement efforts.
In view of our concern about the burden of reporting for hospitals,
especially when it comes to reporting chart-abstracted measures,
another option that we have considered to accommodate the expansion of
the measure set is the retirement of additional measures. Specifically,
we have considered retiring one or more of those measures suggested by
various commenters that were listed in the FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 43865). We noted in that final rule that 11
RHQDAPU program chart-abstracted measures were recommended for
retirement by commenters. Seven of these 11 measures were recommended
for retirement based on their performance being uniformly high
nationwide, with little variability among hospitals. Information on the
performance rates for hospitals reporting is available at: http://www.cms.hhs.gov/HospitalQualityInits/downloads/HospitalNationalLevelPerformance.pdf. These measures are:
AMI-1 Aspirin at arrival
AMI-3 ACEI/ARB for left ventricular systolic dysfunction
AMI-4 Adult smoking cessation advice/counseling
AMI-5 Beta-blocker prescribed at discharge
HF-4 Adult smoking cessation advice/counseling
PN-4 Adult smoking cessation advice/counseling
SCIP-Infection-6: Surgery patients with appropriate hair
removal
In addition to these ``topped out'' measures, commenters
recommended we retire four additional measures listed below for reasons
unrelated to high unvarying performance. These measures are:
HF-1 Discharge instructions
PN-3b Blood culture performed before first antibiotic
received in hospital
SCIP-Infection-2: Prophylactic antibiotic selection for
surgical patients
SCIP-Infection-4: Cardiac Surgery Patients with Controlled
6AM Postoperative Serum Glucose
Reasons given by commenters included the following: (1) Care
process measured has weak or no relationship to better outcomes; (2)
Collection burden of measure negates or outweighs the benefit of
reporting the measure; and (3) Measure perceived to be discordant with
current guidelines.
We invite comments on the option to retire one or more of these 11
measures that were suggested for retirement by commenters to the FY
2010 IPPS proposed rule. We note that some of these measures were
proposed for electronic reporting under the program for payment
incentives for meaningful use of electronic health records (75 FR
1896).
In addition, we are considering an option under which if we propose
and finalize measures that are specified to more broadly address a
clinical topic, and thus would require hospitals to submit the same
data that they are already submitting on more narrowly specified
measures that we previously adopted for the RHQDAPU program, we would
propose to retire the more narrowly specified measures from the RHQDAPU
measure set. An example of this that we are considering would be to
retire the current Influenza and Pneumoccocal vaccination measures that
apply only to the Pneumonia admission inpatient population (PN-2
Pneumococcal vaccination status; and PN-7 Influenza vaccination status)
if we proposed and finalized measures of Influenza and Pneumoccocal
vaccination that apply to all inpatients. We invite comments on this
option to retire narrowly specified measures in order to accommodate
more broadly specified measures on a given topic.
(2) Proposed New Claims-Based Measures
We are proposing to add 10 claims-based measures to the RHQDAPU
program measure set for the FY 2012 payment determination: 2 AHRQ
Patient Safety Indicators and 8 Hospital Acquired Condition measures.
These proposed measures would be calculated using up to three years' of
Medicare claims for discharges prior to January 1, 2011. These measures
are discussed below.
[[Page 23966]]
(A) Proposed AHRQ Patient Safety Indicators
In the FY 2009 IPPS final rule we adopted a number of AHRQ Patient
Safety Indicators and Inpatient Quality Indicators for the RHQDAPU
program to be calculated using Medicare claims. The addition of these
measures to the RHQDAPU program allowed us to expand the RHQDAPU
program measure set to include measures of patient safety, in-hospital
mortality, adverse events and complications without increasing the data
submission burden on hospitals. In the FY 2010 IPPS/RY 2010 LTCH PPS
final rule, we retained these measures for the FY 2011 payment
determination. In this proposed rule, we are proposing to retire one of
those measures (Mortality for Selected Surgical Procedures Composite)
from the RHQDAPU program measure set for the FY 2011 payment
determination. For the FY 2012 payment determination, we are proposing
to adopt 2 additional Patient Safety Indicators developed by the AHRQ.
These are: PSI-11: Post-Operative Respiratory Failure and PSI-12: Post-
Operative Pulmonary Embolism (PE) or Deep Vein Thrombosis (DVT). Both
measures address post-operative complications, a topic that is
currently not well represented in the RHQDAPU program measure set. Both
measures are NQF-endorsed, and have a Tier 1 evidence rating by AHRQ,
the measure developer. Indicators given this level of evidentiary
rating by AHRQ have the strongest evidence base, with established
evidence in several or most evidentiary areas established by AHRQ, no
substantial evidence suggesting that the indicators may not be useful
for comparative reporting purposes, and in most cases the indicators
have been NQF-endorsed.\8\ The specific measures that we are proposing
to add are NQF-endorsed, thus reflecting consensus among affected
parties, and are deemed appropriate for comparative public reporting by
the measure developer. Like the current AHRQ measures in the RHQDAPU
program, these indicators are risk-adjusted outcome measures that can
be calculated based on existing Medicare claims, placing no additional
reporting burden on hospitals while allowing us to expand outcomes
measurement in the RHQDAPU program. The specifications for these
measures can be found at http://www.qualityindicators.ahrq.gov/TechnicalSpecs41.htm#PSI41. We invite comment on our proposal to adopt
these two AHRQ Patient Safety Indicators for the FY 2012 payment
determination.
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\8\ http://www.qualityindicators.ahrq.gov/downloads/publications/AHRQ%20QI%20Guide%20to%20Comparative%20Reporting%20v10.pdf.
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(B) Proposed Hospital Acquired Condition (HAC) Measures
Section 1886(d)(4)(D) of the Act required the Secretary to select,
in consultation with the Centers for Disease Control and Prevention
(CDC), at least two conditions that: (a) Are high cost, high volume, or
both; (b) are assigned to a higher paying MS-DRG when present as a
secondary diagnosis (that is, conditions under the MS-DRG system that
are CCs or MCCs); and (c) could reasonably have been prevented through
the application of evidence based guidelines. We currently have 10
categories of Hospital Acquired Conditions (HACs). We refer readers to:
section II.F. of the FY 2008 IPPS final rule with comment period (72 FR
47202 through 47218); section II.F. of the FY 2009 IPPS final rule with
comment period (73 FR 48474 through 48486); and section II.F. of the FY
2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43782 through 43785) for
detailed discussions regarding the selection of the current 10 HAC
categories. We refer readers to section II.F. of this proposed rule for
additional discussion and our proposals for HAC policy for FY 2011.
We have worked collaboratively with public health and infectious
disease professionals from across HHS, including CDC, AHRQ, and the
Office of Public Health and Science, to identify and select preventable
HACs with input and comment from affected parties. CMS and CDC have
also collaborated on the process for hospitals to submit a present on
admission (POA) indicator for each diagnosis listed on IPPS hospital
Medicare claims and on the payment implications for POA reporting (74
FR 43783).
CMS, CDC and AHRQ held jointly sponsored HAC and POA Listening
Sessions (December 17, 2007 and December 18, 2008) to receive input
from affected parties, individuals, and organizations regarding the
selection and definition of HACs. The adoption of HACs were informed
and continue to be informed by feedback received during the listening
sessions, as well as through public comment received during the IPPS
rulemaking process. In addition to receiving comments regarding the
selection of conditions and POA indicator reporting, in the FY 2010
IPPS/LTCH PPS final rule (74 FR 43785), commenters suggested that CMS
consider making aggregate POA information publicly available, and
providing comparative information as a means of facilitating
improvements in preventing the incidence of HACs.
We are proposing to adopt as RHQDAPU measures for the FY 2012
payment determination eight (of 10) current HACs defined in section
II.F. of this proposed rule, six of which have been identified by NQF
as serious reportable events, and to publicly report these measures as
we do other RHQDAPU program measures. These measures are:
Foreign Object Retained After Surgery
Air Embolism
Blood Incompatibility
Pressure Ulcer Stages III & IV
Falls and Trauma: (Includes: Fracture, Dislocation,
Intracranial Injury, Crushing, Injury, Burn, Electric Shock)
Vascular Catheter-Associated Infection
Catheter-Associated Urinary Tract Infection (UTI)
Manifestations of Poor Glycemic Control
We do not believe that it is necessary to propose to adopt the
other two current HAC categories as RHQDAPU measures because the topics
that they deal with would substantially overlap with other RHQDAPU
program measures discussed below that we are proposing to adopt for
future payment determinations as chart-abstracted measures (which
allows us to collect data on all patients). By contrast, the eight
proposed HAC measures are claims-based measures for which we can only
(at this time) collect data only on Medicare beneficiaries.
We are proposing to utilize Medicare claims data to calculate
measure rates for these eight HACs using the ICD-9-CM codes in
conjunction with POA coding of ``N'' or ``U,'' as defined in IPPS
rulemaking. We refer readers to section II.F.6. of the FY 2008 IPPS
final rule with comment period (72 FR 47202 through 47218), section
II.F.7. of the FY 2009 IPPS final rule (73 FR 48474 through 48486),
section II.F.6. (74 FR 43782 through 43785) of the FY 2010 IPPS/RY 2010
LTCH PPS final rule, and section II.F. of this proposed rule for
detailed discussions regarding the use of the POA indicator in
conjunction with ICD-9-CM coding to determine the presence of HACs. We
also refer readers to the current ICD-9-CM codes and proposed updates
for these eight HAC categories in this proposed rule. We are proposing
to use the ICD-9-CM codes in conjunction with the ``N'' and ``U'' POA
indicators for the HAC categories that will be finalized in the FY 2011
IPPS/RY 2011 LTCH PPS final rule to
[[Page 23967]]
calculate the eight HAC measures for the RHQDAPU program.
We believe that these HAC measures reflect consensus among affected
parties as required for RHQDAPU program measures by section
1886(b)(3)(B)(viii)(V) of the Act. In addition to meeting the consensus
requirement through rulemaking and public comment, Vascular Catheter-
Associated Infection and Catheter-Associated UTI are the subject of a
quality measure which gained NQF endorsement in August 2009. The
remaining six HAC categories have been identified as serious reportable
events through the NQF consensus process and have also been selected as
HACs through rulemaking and public comment. Data reporting requirements
for these measures are provided in section V.A.5. of this proposed
rule. We invite comment on our proposal to adopt these eight HAC
measures for the FY 2012 payment determination.
(3) Proposed All-Patient Volume Data for Selected MS-DRGs
CMS currently displays volume data for 70 MS-DRGs, 55 of which
relate to RHQDAPU program measures on the Hospital Compare Web site.
However, the volume data currently shown on Hospital Compare is based
on Medicare claims only. Although we do not consider volume alone to be
a quality measure unless volume has been determined to be an indicator
of quality, we believe that to the extent all-patient volume data are
related to the measures, as they provide context for the quality
measures in the inpatient hospital setting, and may assist Hospital
Compare users in understanding the measure calculations. In general, in
implementing RHQDAPU program measures, we have sought where currently
possible to measure the care rendered to all patients within a
hospital, and not just Medicare patients. For this reason, the chart-
abstracted process of care measures we collect and display on Hospital
Compare are based on the entire inpatient population for the hospital.
We are proposing that hospitals begin submitting as data on
measures selected for the RHQDAPU program the all-patient data elements
discussed in section V.A.5. of this proposed rule for 55 MS-DRGs
displayed on Hospital Compare that relate to adopted RHQDAPU program
measures. The specific MS-DRGs are listed below. As stated above, we
believe that the addition of this data will enable us and Medicare
beneficiaries to better understand and evaluate the quality of care
provided by hospitals with respect to both the chart-abstracted and
claims-based measures. We intend to publicly display this volume data
along with the corresponding measure results on Hospital Compare.
Hospitals would begin reporting these data once annually beginning with
January 1, 2011 discharges by submitting the all-patient data elements
needed to calculate MS-DRG volume to QualityNet so we can determine the
volume of cases treated by a hospital for the 55 MS-DRGs currently
displayed on Hospital Compare. Rather than require hospitals to group
their all-patient claims data by MS-DRG category themselves, CMS would
use the data to be submitted by hospitals to group the data.We invite
comments on this proposal.
We also invite comment on an alternative that hospitals submit all-
patient volume data based upon specific ICD-9-CM codes related to the
proposed MS-DRGs rather than all data necessary to calculate the MS-
DRGs.
The proposed RHQDAPU measure set for the FY 2012 payment
determination is listed below:
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We invite comment on these proposed measures for the FY 2012
payment determination.
c. Proposed RHQDAPU Program Quality Measures for the FY 2013 Payment
Determination
(1) Proposed Retention of FY 2012 Payment Determination Measures for
the FY 2013 Payment Determination
We generally propose to retain RHQDAPU program measures from one
year to the next. Consistent with this approach, we are proposing to
retain all of the proposed measures for the FY 2012 RHQDAPU payment
determination, if finalized, for the FY 2013 payment determination. We
invite public comment on this proposal.
(2) Proposed New Chart-Abstracted Measure for the FY 2013 Payment
Determination
We are proposing to add one new chart-abstracted measure for the FY
2013 payment determination--AMI-statin at discharge. This measure is
similar to the NQF-endorsed stroke measure ``Ischemic stroke patients
with LDL >/= 100 mg/dL, or LDL not measured, or, who were on
cholesterol reducing therapy prior to hospitalization are discharged on
a statin medication'' (NQF 0439), only specified for the AMI
population. Current scientific evidence supports the continuation of
statins more strongly for AMI patients than for stroke patients.
Several randomized clinical trials have proven the benefits of statin
drugs (also known as HMG Co-A reductase inhibitors) in reducing the
risk of death and recurrent cardiovascular events in a broad range of
patients with established cardiovascular disease, including those with
prior myocardial infarction. Current ACC/AHA guidelines place a strong
emphasis on the initiation or maintenance of statin drugs for patients
hospitalized with AMI, particularly those with LDL-cholesterol levels
at or above 100 mg/dL. As a result of the strength of the evidence and
guideline support, the ACC/AHA has developed a performance measure to
assess this aspect of care for AMI patients.
Because statins are generally well-tolerated, most AMI patients are
appropriate candidates for this therapy. As a result of this clinical
evidence, the NQF has been asked to review whether it should broaden
the current endorsed measure specification to include the AMI
population. This ad hoc review is occurring now and is expected to be
completed prior to publication of the FY 2011 IPPS/LTCH PPS final rule.
Information on this project can be found at: http://www.qualityforum.org/Projects/a-b/Ad_Hoc_Reviews/Statin_Medication/Ad_Hoc_Review__Discharged_on_Statin.aspx. We will decide whether
to finalize this measure based on whether it achieves NQF endorsement
and public comments. We believe that minimal additional burden would
result from adoption of this measure into the RHQDAPU program because
the AMI population that is the focus of this measure is already part of
data collection efforts for RHQDAPU, and very few additional data
elements would be needed to be abstracted for the proposed new measure
on this existing measurement population. We proposed that hospitals
would begin submission of data for the AMI-statin at discharge measure
beginning with January 1, 2011 dischares for the RHQDAPU 2013 payment
determination.
(3) Proposed New Healthcare Associated Infection (HAI) Measures for the
FY 2013 Payment Determination
In the FY 2009 and FY 2010 IPPS rulemakings, we listed several
Healthcare Associated Infection (HAI) measures as being under
consideration for future adoption. Commenters to the FY 2010 IPPS/RY
2010 LTCH PPS proposed rule supported the HAI measures that were listed
as being under consideration for the future and encouraged CMS to
consider others as well (74 FR 43876). For the measure set to be used
for the FY 2013 payment determination, we are proposing to adopt two
new measures of Healthcare Acquired Infections that are currently being
collected by the CDC via the National Healthcare Safety Network (NHSN).
These measures are: (1) Central Line Associated Blood Stream Infection
(NQF 0139) and (2) Surgical Site Infection (NQF
0299).
The NHSN is a secure, Internet-based surveillance system maintained
and managed by the CDC, and can be
[[Page 23971]]
utilized by all types of healthcare facilities in the United States,
including acute care hospitals, long term acute care hospitals,
psychiatric hospitals, rehabilitation hospitals, outpatient dialysis
centers, ambulatory surgery centers, and long term care facilities. The
NHSN enables healthcare facilities to collect and use data about HAIs,
adherence to clinical practices known to prevent HAIs, the incidence or
prevalence of multidrug-resistant organisms within their organizations,
and other adverse events. Some States use NHSN as a means for
healthcare facilities to submit data on HAIs mandated through their
specific State legislation. Currently, 21 States require hospitals to
report HAIs using NHSN, and CDC supports more than 2000 hospitals that
are using NHSN.\9\
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\9\ http://www.cdc.gov/nhsn/.
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Both the Central Line Associated Blood Stream Infection measure and
the Surgical Site Infection measure are NQF-endorsed, and therefore
meet the statutory requirement for measure selection of reflecting
consensus among affected parties. The measures address HAIs, a topic
area widely acknowledged by the HHS, IOM, the National Priorities
Partnership and others as a high priority requiring measurement and
improvement. HAIs are among the leading causes of death in the United
States. CDC estimates that as many as 2 million infections are acquired
each year in hospitals and result in approximately 90,000 deaths per
year.\10\ It is estimated that more Americans die each year from HAIs
than from auto accidents and homicides combined. HAIs not only put the
patient at risk, but also increase the days of hospitalization required
for patients and add considerable health care costs.
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\10\ McKibben L, Horan T Guidance on public reporting of
healthcare-associated infections: recommendations of the Healthcare
Infection Control Practices Advisory Committee. AJIC 2005;33:217-26.
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HAIs are largely preventable through interventions such as better
hygiene and advanced scientifically tested techniques for surgical
patients. Therefore, many health care consumers and organizations are
calling for public disclosure of HAIs, arguing that public reporting of
HAI rates provides the information health care consumers need to choose
the safest hospitals, and gives hospitals an incentive to improve
infection control efforts. Both of the measures we are proposing to add
for the FY 2013 payment determination are NQF-endorsed, and are
currently collected using the NHSN as part of State-mandated reporting
and surveillance requirements for hospitals. NHSN data collection
occurs via a Web-based tool hosted by CDC provided free of charge to
hospitals. Additionally, data submission for these measures through
EHRs may be possible in the near future.
(A) Central Line Associated Blood Stream Infection
This HAI measure assesses the rate of laboratory-confirmed cases of
bloodstream infection or clinical sepsis among ICU patients. It was
endorsed by the NQF in 2004 and was adopted by the HQA in 2007. The
measure can be stratified by the type of ICU.
(B) Surgical Site Infection
This HAI measure assesses the number of NHSN-defined operative
procedures with a surgical site infection (deep incisional or organ
space) within 30 days, or 1 year if an implant is in place. Infections
are identified on original admission or upon readmission to the
facility of original operative procedure within the relevant time frame
(30 days for no implants; within 1 year for implants). The measure can
be stratified by procedure type or risk factors. This measure was NQF-
endorsed in 2007 and was adopted by the HQA in 2008.
We invite comment on our proposal to adopt these two HAI measures
into the RHQDAPU program for the FY 2013 payment determination.
Collection of these measures would begin with January 1, 2011
discharges for the FY 2013 payment determination. We are proposing that
hospitals use the NHSN infrastructure to report the measures for
RHQDAPU program purposes. The proposed reporting mechanism for these
HAI measures is discussed in greater detail in section V.A.5. of this
proposed rule.
(4) Proposed New Registry-Based Measures
For the FY 2013 payment determination, we are proposing that
hospitals choose one of the following four proposed measure topics: (1)
Implantable Cardioverter Defibrillator (ICD) Complications; (2) Cardiac
Surgery; (3) Stroke; or (4) Nursing-Sensitive Care. With respect to the
proposed measure topic selected by a hospital, we are proposing that
the hospital report data on the proposed measure(s) applicable to the
measure topic (discussed below) to a qualified registry for the
specific topic, and direct the registry to both calculate the measure
results for the hospital and release those results (along with the
numerator/denominator information and exclusion information) to CMS for
the RHQDAPU program. We are proposing that hospitals begin submitting
data to the qualified registry of its choosing for discharges on or
after January 1, 2011, and we intend to release a list of qualified
registries before that date. In section V.A.13. of this proposed rule,
we specify the self-nomination process we are proposing to use to
qualify registries for each proposed registry-based measure topic.
Proposed procedural and submission requirements for the proposed
registry-based measures are discussed in section V.A.5. of this
proposed rule. Below is a discussion of the proposed registry-based
measure topics and specific registry-based measures that fall within
each topic that we are proposing to add to the RHQDAPU program for the
FY 2013 payment determination.
(A) Proposed Implantable Cardioverter Defibrillator (ICD) Complications
Registry-Based Topic and Measure
Implantable Cardioverter Defibrillators (ICDs) reduce the risk of
sudden cardiac death for select high risk patients, and the number of
patients undergoing ICD implantation increased from 5,600 in 1990 to
108,680 by 2005.\11\ ICD implantation is an expensive procedure
performed on patients with advanced cardiovascular disease and, often,
significant comorbidities. Despite improvements in technology and
increasing experience with device implantation, the procedure carries a
significant risk of complications,\12\ which in turn increases its
cost, the patient's length of stay, and the patient's risk of
mortality.\13\ In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43873 through 43875), our list of potential future quality measures
under consideration included a measure of ICD complications. This
measure is a risk-adjusted complication and mortality rate following
implantation of ICDs in Medicare Fee for Service (FFS) patients at
least 65 years of age, with complication specific outcome time frames.
The measure (NQF OT1-007-09) is currently undergoing NQF
review
[[Page 23972]]
under Phase 1 of a call for Patient Outcome Measures initiated in Fall
of 2009. We are proposing to add the ICD complications topic and
measure to the RHQDAPU measure set for collection beginning with
January 1, 2011 discharges for the FY 2013 RHQDAPU payment
determination pending NQF endorsement. We anticipate that a final
endorsement decision will occur in the fall of 2010, after publication
of the FY 2011 IPPS/LTCH PPS final rule. Therefore, the decision
whether to finalize this measure for the FY 2013 payment determination
will be made in the CY 2011OPPS/ASC final rule with comment period.
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\11\ Brown, D.W., Croft, J.B., et al. (2008). ``Trends in
Hospitalizations for the Implantation of Cardioverter-Defibrillators
in the United States, 1990-2005.'' American Journal of Cardiology
101 (12): 1753-1755.
\12\ Hammill S and Curtis J. Publicly Reporting Implantable
Cardioverter Defibrillator Outcomes--Grading the Report Card. Circ
Arrhythmia Electrophysiol. 2008;1:235-237).
\13\ Al-Khatib SM, Greiner MA, Peterson ED, Hernandez AF,
Schulman KA, Curtis LH. Patient and Implanting Physician Factors
Associated With Mortality and Complications After Implantable
Cardioverter-Defibrillator Implantation, 2002-2005. Circ Arrhythmia
Electrophysiol. 2008;1:240-249.
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The proposed ICD complications measure was developed based upon
data submitted to the American College of Cardiology-National
Cardiovascular Data Registry's (ACC-NCDR) ICD registry, and data from
that registry has been linked with CMS administrative claims data used
to identify procedural complications. For this proposed measure, the
measured outcome for each ICD index admission is one or more
complications or mortality within 30 or 90 days (depending on the
complication) following ICD implantation. Complications are counted in
the measure only if they occur during a hospital admission.
Complications measured for 30 days include: (1) Pneumothorax or
hemothorax plus a chest tube; (2) Hematoma plus a blood transfusion or
evacuation; (3) Cardiac tamponade or pericardiocentesis; and (4) Death.
Complications measured for 90 days include: (5) Mechanical
complications requiring a system revision; (6) Device related
infection; and (7) Additional ICD implantation.
To comply with a January 2005 National Coverage Determination for
ICDs for primary prevention, all hospitals in which ICD procedures are
performed are currently submitting to the ACC-NCDR ICD registry patient
information needed for us to determine whether the procedure was
reasonable and necessary. This requirement is documented in section
20.4 of the following Medicare National Coverage Determination Manual:
http://www.cms.hhs.gov/manuals/downloads/ncd103c1_Part1.pdf. For
purposes of the 2005 National Coverage Determination, we require that
hospitals submit data to the ACC-NCDR ICD registry for primary
prevention patients only but do not require hospitals to submit data on
patients undergoing ICD implantation for secondary prevention. However,
the ICD complication measure as submitted to the NQF for endorsement is
specified such that it includes all ICD patients, regardless of whether
they receive an ICD for the primary or secondary prevention of sudden
cardiac death.
Therefore, hospitals that choose this registry-based measure topic
for the RHQDAPU program would submit data on the ICD complications
measure for both primary and secondary prevention patients to the
qualified registry. For risk adjustment, data matching, and secondary
prevention population identification purposes, we are proposing that
hospitals also submit to the qualified ICD complications registry an
additional 11 data elements not currently required under the NCD in
order for the measure to be calculated for RHQDAPU program purposes.
In sum, we are proposing to add the ICD complications measure topic
as one of four proposed measure topics that hospitals can choose from
to submit required data elements to a qualified registry for the FY
2013 RHQDAPU payment determination. The only measure that we are
proposing to include in this proposed topic at this time would be the
ICD complications measure. Because the ICD complications measure is a
risk-adjusted outcome measure, it is necessary that all data for the
measure be collected by a single qualified registry in order for that
registry to be able to accurately calculate the risk adjustment model
and subsequent measure results. Therefore, we are proposing to qualify
one registry for this topic. Proposed registry qualification criteria
are discussed in section V.A.13. of this proposed rule. We note that
the ACC-NCDR ICD registry has already been qualified to receive and
transmit data to CMS for a Medicare National Coverage Determination,
and is currently the only registry to which hospitals submit data for
this NCD. However, this would not preclude another registry from self-
nominating to become a qualified registry for this proposed topic for
the RHQDAPU program. Because the ICD complication measure is a risk
adjusted measure, it requires that all data be collected at a single
repository for calculation of the measure. Therefore, we anticipate
qualifying a single registry to collect all of the data for the
proposed ICD complications registry-based topic.
(B) Proposed Stroke Registry-Based Topic and Measures
We proposed to add five stroke measures to the RHQDAPU measure set
in the FY 2009 IPPS proposed rule (73 FR 23648). We indicated that we
would again consider these measures once NQF reviewed and endorsed the
measures. Since that time, eight stroke measures received NQF
endorsement in July of 2008, and in the FY 2010 IPPS/RY 2010 LTCH PPS
final rule we included these measures in the list of potential future
measures. We also included these measures in the preview section of the
Specifications Manual, and have worked with the Office of the National
Coordinator for Health Information Technology (ONC) and its partners to
create a set of electronic specifications for these measures to
facilitate collection through EHRs.
We are also aware that a number of hospitals are already submitting
these measures to registries, and in the FY 2010 IPPS/RY 2010 LTCH PPS
final rule, we finalized a structural measure of participation in a
systematic clinical database registry for stroke care. Stroke is a
topic of great relevance to the Medicare population due to its impact
on morbidity and mortality, and is an area of great potential
improvement for hospitals. Commenters on the FY 2010 IPPS/RY 2010 LTCH
PPS proposed rule expressed support for these measures, indicating that
they accurately measure evidence-based care of the stroke patient to
minimize secondary strokes and other complications, are widely
recognized, and have great potential for quality improvement (74 FR
43875).
Therefore, we are proposing to include the following eight measures
in the Stroke registry-based topic:
Proposed Measures for Stroke Registry-Based Topic
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STK-1: Venous Thromboembolism Patients with an ischemic stroke or a
(VTE) Prophylaxis for hemorrhagic stroke and who are non-
patients with ischemic or ambulatory should start receiving DVT
hemorrhagic stroke (NQF prophylaxis by end of hospital day two.
0434).
STK-2: Ischemic stroke Patients with an ischemic stroke
patients discharged on prescribed antithrombotic therapy at
antithrombotic therapy. (NQF discharge.
0435).
STK-3: Anticoagulation Patients with an ischemic stroke with
therapy for atrial atrial fibrillation discharged on
fibrillation/flutter. (NQF anticoagulation therapy.
0436).
[[Page 23973]]
STK-4: Thrombolytic Therapy Acute ischemic stroke patients who arrive
for Acute ischemic stroke at the hospital within 120 minutes (2
patients. (NQF 0437). whom IV t-PA was initiated at this
hospital within 180 minutes (3 hours) of
time last known well.
STK-5: Antithrombotic therapy Patients with ischemic stroke who receive
by the end of hospital day antithrombotic therapy by the end of
two. (NQF 0438). hospital day two.
STK-6: Discharged on statin Ischemic stroke patients with LDL >/= 100
medication. (NQF 0439). on cholesterol reducing therapy prior to
hospitalization are discharged on a
statin medication.
STK-8: Stroke education. (NQF Patients with ischemic or hemorrhagic
0440). stroke or their caregivers who were
given education or educational materials
during the hospital stay addressing all
of the following: personal risk factors
for stroke, warning signs for stroke,
activation of emergency.
STK-10: Assessed for Patients with an ischemic stroke or
rehabilitation services. hemorrhagic stroke who were assessed for
(NQF 0441). rehabilitation services.
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We are proposing to add the stroke registry-based topic, which
would include these eight registry-based stroke measures, to the
RHQDAPU program measure set as one of the four proposed measure topics
that hospitals can choose from to submit data to a qualified registry
for the FY 2013 payment determination beginning with January 1, 2011
discharges. We invite comment on the measures as well as the timing of
their addition to the RHQDAPU measure set.
(C) Proposed Nursing Sensitive Care Registry-Based Topic and Measures
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule, we indicated that
we were considering adopting a number of nursing-sensitive care
measures for future RHQDAPU program payment determinations. Also in
that rule, we adopted a structural measure of participation in a
registry for nursing-sensitive care, under which hospitals submit data
directly to the QIO Clinical Warehouse.
For the FY 2013 payment determination, we are proposing to add a
nursing sensitive care registry-based topic to the RHQDAPU measure set,
which would include the eight nursing-sensitive care measures listed
below. All of the proposed nursing sensitive measures are NQF-endorsed.
Hospitals selecting this topic would begin reporting data on the eight
proposed nursing-sensitive care registry-based measures to a qualified
nursing-sensitive care registry beginning with January 1, 2011
discharges. Hospitals would continue reporting the nursing-sensitive
care structural measure previously adopted for the RHQDAPU program
directly to the QIO Clinical Warehouse.
We invite comment on the proposed addition of a nursing sensitive
care registry-based topic, which would include 8 proposed nursing
sensitive care measures, as well as the timing of this addition to the
RHQDAPU program for the FY 2013 payment determination.
Proposed Measures for Nursing Sensitive Care Registry-Based Topic
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Patient Falls: All documented falls with or without injury, experienced
by patients on an eligible unit in a calendar month. (NQF 0141).
Falls with Injury: All documented patient falls with an injury level of
minor or greater. (NQF 0202).
Pressure Ulcer Prevalence (NQF 0201).
Restraint Prevalence (vest and limb) (NQF 0203).
Skill Mix: Percentage of hours worked by: RN, LPN/LVN, UAP, Contract/
Agency (NQF 0204).
Hours per patient day worked by RN, LPN, and UAP (NQF 0205).
Practice Environment Scale-Nursing Work Index (NQF 0206).
Voluntary turnover for RN, APN, LPN, UAP (NQF 0207).
------------------------------------------------------------------------
(D) Proposed Cardiac Surgery Registry-Based Topic and Measures
We have previously proposed to add several measures on the topic of
cardiac surgery to the RHQDAPU measure set (73 FR 48608), and have also
listed a set of NQF-endorsed cardiac surgery measures in prior rules as
being under consideration for future adoption (74 FR 43874). We also
adopted a structural measure of cardiac surgery participation in the FY
2010 IPPS/RY 2010 LTCH PPS final rule. Cardiac surgery procedures carry
a significant risk of morbidity and mortality. We believe that the
nationwide public reporting of the 15 proposed cardiac surgery
registry-based measures would provide highly meaningful information for
Medicare beneficiaries because they address procedures widely performed
on Medicare beneficiaries. Analysis of the structural measure data we
have received from hospitals indicates that nearly 90 percent of
hospitals performing these procedures already report these data to
clinical registries. Therefore, if we adopt this proposed registry-
based topic, a hospital would not face any additional data submission
burden if it chooses this registry-based topic for purposes of the FY
2013 payment determination and the registry to which it already submits
data is qualified for this proposed topic.
For the FY 2013 payment determination, we are proposing to include
15 cardiac surgery registry-based measures in the cardiac surgery
registry-based measure topic. These proposed registry-based measures
are listed below, and hospitals would submit data on these measures to
a qualified registry for the cardiac surgery registry-based topic.
Hospitals would continue submitting data for the cardiac surgery
structural measure previously adopted for the RHQDAPU program directly
to the QIO Clinical Warehouse.
[[Page 23974]]
Proposed Measures for Proposed Cardiac Surgery Registry-Based Topic
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Post-operative Renal Failure (NQF 0114).
Surgical Re-exploration (NQF 0115).
Anti-Platelet Medication at Discharge (NQF 0116).
Beta Blockade at Discharge (NQF 0117).
Anti-Lipid Treatment Discharge (NQF 0118).
Risk-Adjusted Operative Mortality for Coronary Artery Bypass Graft CABG
(NQF 0119)*.
Risk-Adjusted Operative Mortality for Aortic Valve Replacement (AVR)
(NQF 0120)*.
Risk-Adjusted Operative Mortality for Mitral Valve Replacement/Repair
(MVR) (NQF 0121)*.
Risk-Adjusted Operative Mortality MVR+CABG Surgery (NQF 0122)*.
Risk-Adjusted Operative Mortality for AVR+CABG (NQF 0123)*.
Pre-Operative Beta Blockade (NQF 0127).
Duration of Prophylaxis for Cardiac Surgery Patients (NQF
0128).
Prolonged Intubation (ventilation) (NQF 0129).
Deep Sternal Wound Infection Rate (NQF 0130).
Stroke/Cerebrovascular Accident (NQF