Att E5_Ambulatory Surgical Centers and Outpatient Acute Care Facility

Vol. 79

Monday,

No. 217

November 10, 2014

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services
42 CFR Parts 411, 412, 416, et al.
Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment
and Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Physician-Owned Hospitals: Data Sources for Expansion
Exception; Physician Certification of Inpatient Hospital Services; Medicare
Advantage Organizations and Part D Sponsors: CMS-Identified
Overpayments Associated with Submitted Payment Data; Final Rule

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

Centers for Medicare & Medicaid
Services
42 CFR Parts 411, 412, 416, 419, 422,
423, and 424
[CMS–1613–FC]
RIN 0938–AS15

Medicare and Medicaid Programs:
Hospital Outpatient Prospective
Payment and Ambulatory Surgical
Center Payment Systems and Quality
Reporting Programs; Physician-Owned
Hospitals: Data Sources for Expansion
Exception; Physician Certification of
Inpatient Hospital Services; Medicare
Advantage Organizations and Part D
Sponsors: CMS-Identified
Overpayments Associated with
Submitted Payment Data
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
AGENCY:

This final rule with comment
period revises the Medicare hospital
outpatient prospective payment system
(OPPS) and the Medicare ambulatory
surgical center (ASC) payment system
for CY 2015 to implement applicable
statutory requirements and changes
arising from our continuing experience
with these systems. In this final rule
with comment period, we describe the
changes to the amounts and factors used
to determine the payment rates for
Medicare services paid under the OPPS
and those paid under the ASC payment
system. In addition, this final rule with
comment period updates and refines the
requirements for the Hospital
Outpatient Quality Reporting (OQR)
Program and the ASC Quality Reporting
(ASCQR) Program.
In this document, we also are making
changes to the data sources permitted
for expansion requests for physicianowned hospitals under the physician
self-referral regulations; changes to the
underlying authority for the
requirement of an admission order for
all hospital inpatient admissions and
changes to require physician
certification for hospital inpatient
admissions only for long-stay cases and
outlier cases; and changes to establish a
formal process, including a three-level
appeals process, to recoup
overpayments that result from the
submission of erroneous payment data
by Medicare Advantage (MA)
organizations and Part D sponsors in the
limited circumstances in which the
organization or sponsor fails to correct
these data.

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SUMMARY:

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Effective Date: This final rule
with comment period is effective on
January 1, 2015.
Comment Period: To be assured
consideration, comments on the
payment classifications assigned to
HCPCS codes identified in Addenda B,
AA, and BB to this final rule with
comment period with the ‘‘NI’’
comment indicator, and on other areas
specified throughout this final rule with
comment period must be received at one
of the addresses provided in the
ADDRESSES section no later than 5 p.m.
EST on December 30, 2014.
Application Deadline—New Class of
New Technology Intraocular Lenses:
Requests for review of applications for
a new class of new technology
intraocular lenses must be received by
5 p.m. EST on March 2, 2015, at the
following address: ASC/NTIOL,
Division of Outpatient Care, Mailstop
C4–05–17, Centers for Medicare and
Medicaid Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
ADDRESSES: In commenting, please refer
to file code CMS–1613–FC. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (no duplicates, please):
1. Electronically. You may (and we
encourage you to) submit electronic
comments on this regulation to http://
www.regulations.gov. Follow the
instructions under the ‘‘submit a
comment’’ tab.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1613–FC, P.O. Box 8013,
Baltimore, MD 21244–1850.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments via express
or overnight mail to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1613–FC, Mail Stop C4–26–05,
7500 Security Boulevard, Baltimore, MD
21244–1850.
4. By hand or courier. If you prefer,
you may deliver (by hand or courier)
your written comments before the close
of the comment period to either of the
following addresses:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
DATES:

DEPARTMENT OF HEALTH AND
HUMAN SERVICES

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Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal Government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address,
please call the telephone number (410)
786–7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses
indicated as appropriate for hand or
courier delivery may be delayed and
received after the comment period.
For information on viewing public
comments, we refer readers to the
beginning of the SUPPLEMENTARY
INFORMATION section.
FOR FURTHER INFORMATION:
Marjorie Baldo, (410) 786–4617, for
issues related to new CPT and Level
II HCPCS codes, revised process for
soliciting comments related to new
Category I and III CPT codes, and
exceptions to the 2 times rule.
Elizabeth Bainger, (410) 786–0529, for
issues related to the Hospital
Outpatient Quality Reporting—
Program Administration, Validation,
and Reconsideration Issues.
Anita Bhatia, (410) 786–7236, for issues
related to the Ambulatory Surgical
Center Quality Reporting (ASCQR)
Program—Program Administration
and Reconsideration Issues.
Chuck Braver, (410) 786–9379, for
issues related to the CMS Web posting
of the OPPS and ASC payment files.
Anne Calinger, (410) 786–3396, for
issues related to Medicare Advantage
(MA) organizations and Medicare Part
D sponsor overpayments.
Elisabeth Daniel, (410) 786–0237, for
issues related to OPPS drugs,
radiopharmaceuticals, biologicals,
blood clotting factors, packaged
items/services, and brachytherapy
sources payment.
Dexter Dickey, (410) 786–6856, or
Dorothy Myrick, (410) 786–9671, for
issues related to partial
hospitalization and community
mental health center (CMHC) issues.
Eva Fung, (410) 786–7539, or Vinitha
Meyyur, (410) 786–8819, for issues

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
related to Hospital OQR Program and
ASCQR measures issues and
publication of Hospital OQR Program
data issues.
Twi Jackson, (410) 786–1159, for issues
related to device-dependent APCs,
composite APCs (extended
assessment and management, low
dose brachytherapy, multiple
imaging), hospital outpatient visits,
inpatient procedures list, and no cost/
full credit and partial credit devices.
Marina Kushnirova, (410) 786–2682, for
issues related to OPPS status
indicators and comment indicators.
John McInnes, (410) 786–0791, for
issues related to new technology
intraocular lenses (NTIOLs).
Esther Markowitz, (410) 786–4595, for
issues related to comprehensive APCs
and ambulatory surgical center (ASC)
payments.
David Rice, (410) 786–6004, for issues
related to APC weights, blood and
blood products, cancer hospital
payments, conversion factor,
copayments, cost-to-charge ratios
(CCRs), data claims, geometric mean
calculation, off-campus providerbased issues, rural hospital payments,
outlier payments, and wage index.
Daniel Schroder, (410) 786–4487, for
issues related to physician
certification of hospital inpatient
services.
Carol Schwartz, (410) 786–0576, for
issues related to the Advisory Panel
on Hospital Outpatient Payment (HOP
Panel) and OPPS pass-through
devices.
Teresa Walden, (410) 786–3755, or
Patricia Taft, (410) 786–4561, for
issues related to the physician selfreferral law/physician-owned hospital
expansion exception process.
Marjorie Baldo, (410) 786–4617, for all
other issues related to hospital
outpatient and ambulatory surgical
center payments not previously
identified.

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SUPPLEMENTARY INFORMATION:

Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: http://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection,
generally beginning approximately 3

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weeks after publication of the rule, at
the headquarters of the Centers for
Medicare & Medicaid Services, 7500
Security Boulevard, Baltimore, MD
21244, on Monday through Friday of
each week from 8:30 a.m. to 4:00 p.m.
EST. To schedule an appointment to
view public comments, phone 1–800–
743–3951.
Electronic Access
This Federal Register document is
also available from the Federal Register
online database through Federal Digital
System (FDsys), a service of the U.S.
Government Printing Office. This
database can be accessed via the
Internet at http://www.gpo.gov/fdsys/.
Addenda Available Only Through the
Internet on the CMS Web Site
In the past, a majority of the Addenda
referred to in our OPPS/ASC proposed
and final rules were published in the
Federal Register as part of the annual
rulemakings. However, beginning with
the CY 2012 OPPS/ASC proposed rule,
all of the Addenda no longer appear in
the Federal Register as part of the
annual OPPS/ASC proposed and final
rules to decrease administrative burden
and reduce costs associated with
publishing lengthy tables. Instead, these
Addenda are published and available
only on the CMS Web site. The
Addenda relating to the OPPS are
available at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/
index.html. The Addenda relating to the
ASC payment system are available at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
ASCPayment/index.html.
Alphabetical List of Acronyms
Appearing in This Federal Register
Document
AHA American Hospital Association
AMA American Medical Association
AMI Acute myocardial infarction
APC Ambulatory Payment Classification
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center
Quality Reporting
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public
Law 105–33
BBRA Medicare, Medicaid, and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement Act
of 1999, Public Law 106–113
BIPA Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act
of 2000, Public Law 106–554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAHPS Consumer Assessment of
Healthcare Providers and Systems
CAP Competitive Acquisition Program

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C–APC Comprehensive Ambulatory
Payment Classification
CASPER Certification and Survey Provider
Enhanced Reporting
CAUTI Catheter-associated urinary tract
infection
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and
Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated
Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid
Services
CoP Condition of participation
CPI–U Consumer Price Index for All Urban
Consumers
CPT Current Procedural Terminology
(copyrighted by the American Medical
Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval
Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DIR Direct or indirect remuneration
DME Durable medical equipment
DMEPOS Durable Medical Equipment,
Prosthetic, Orthotics, and Supplies
DRA Deficit Reduction Act of 2005, Public
Law 109–171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and
management
ECG Electrocardiogram
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
ESRD QIP End-Stage Renal Disease Quality
Improvement Program
FACA Federal Advisory Committee Act,
Public Law 92–463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of
Healthcare Providers and Systems
HCERA Health Care and Education
Reconciliation Act of 2010, Public Law
111–152
HCP Health care personnel
HCPCS Healthcare Common Procedure
Coding System
HCRIS Healthcare Cost Report Information
System
HCUP Healthcare Cost and Utilization
Project
HH QRP Home Health Quality Reporting
Program
HHS Department of Health and Human
Services

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HIE Health information exchange
HEU Highly enriched uranium
HIPAA Health Insurance Portability and
Accountability Act of 1996, Public Law
104–191
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality
Data Reporting Program
HPMS Health Plan Management System
IBD Inflammatory bowel disease
ICC Interclass correlation coefficient
ICD Implantable cardioverter defibrillator
ICD–9–CM International Classification of
Diseases, Ninth Revision, Clinical
Modification
ICH In-center hemodialysis
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IHS Indian Health Service
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IORT Intraoperative radiation treatment
IPFQR Inpatient Psychiatric Facility
Quality Reporting
IPPS [Hospital] Inpatient Prospective
Payment System
IQR [Hospital] Inpatient Quality Reporting
IRF Inpatient rehabilitation facility
IRF QRP Inpatient Rehabilitation Facility
Quality Reporting
IT Information technology
LCD Local coverage determination
LDR Low dose rate
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality
Reporting
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory
Commission
MEG Magnetoencephalography
MFP Multifactor productivity
MGCRB Medicare Geographic Classification
Review Board
MIEA–TRHCA Medicare Improvements and
Extension Act under Division B, Title I of
the Tax Relief Health Care Act of 2006,
Public Law 109–432
MIPPA Medicare Improvements for Patients
and Providers Act of 2008, Public Law
110–275
MLR Medical loss ratio
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003, Public Law 108–173
MMEA Medicare and Medicaid Extenders
Act of 2010, Public Law 111–309
MMSEA Medicare, Medicaid, and SCHIP
Extension Act of 2007, Public Law 110–173
MPFS Medicare Physician Fee Schedule
MR Medical review
MRA Magnetic resonance angiography
MRgFUS Magnetic Resonance Image
Guided Focused Ultrasound
MRI Magnetic resonance imaging
MRSA Methicillin-Resistant
Staphylococcus Aures
MS–DRG Medicare severity diagnosisrelated group
MSIS Medicaid Statistical Information
System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NDC National Drug Code
NHSN National Healthcare Safety Network

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NOS Not otherwise specified
NPWT Negative Pressure Wound Therapy
NPI National provider identification
NQF National Quality Forum
NQS National Quality Strategy
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
of 1996, Public Law 99–509
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for
Health Information Technology
OPD [Hospital] Outpatient Department
OPO Organ Procurement Organization
OPPS [Hospital] Outpatient Prospective
Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality
Reporting
OT Occupational therapy
PBD Provider-Based Department
PCHQR PPS-Exempt Cancer Hospital
Quality Reporting
PCR Payment-to-cost ratio
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment
Patterns Electronic Report
PHP Partial hospitalization program
PHSA Public Health Service Act, Public
Law 96–88
PMA Premarket approval
PN Pneumonia
POS Place of service
PPI Producer Price Index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
QDC Quality data code
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RADV Risk Adjustment Data Validation
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data
for Annual Payment Update
RTI Research Triangle Institute,
International
RVU Relative value unit
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TIP Transprostatic implant procedure
TMS Transcranial Magnetic Stimulation
[Therapy]
TOPs Transitional Outpatient Payments
USPSTF United States Preventive Services
Task Force
VBP Value-based purchasing
WAC Wholesale acquisition cost

Table of Contents
I. Summary and Background
A. Executive Summary of This Document
1. Purpose
2. Summary of the Major Provisions
3. Summary of Costs and Benefits

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B. Legislative and Regulatory Authority for
the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient
Payment (the HOP Panel or the Panel)
1. Authority of the Panel
2. Establishment of the Panel
3. Panel Meetings and Organizational
Structure
F. Public Comments Received on the CY
2015 OPPS/ASC Proposed Rule
G. Public Comments Received on the CY
2014 OPPS/ASC Final Rule with
Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment
Weights
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure
Claims
c. Calculation and Use of Cost-to-Charge
Ratios (CCRs)
2. Data Development Process and
Calculation of Costs Used for Ratesetting
a. Claims Preparation
b. Splitting Claims and Creation of
‘‘Pseudo’’ Single Procedure Claims
(1) Splitting Claims
(2) Creation of ‘‘Pseudo’’ Single Procedure
Claims
c. Completion of Claim Records and
Geometric Mean Cost Calculations
(1) General Process
(2) Recommendations of the Panel
Regarding Data Development
d. Calculation of Single Procedure APC
Criteria-Based Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Brachytherapy Source Payment
e. Establishment of Comprehensive APCs
(1) Background
(2) CY 2015 Policy for C–APCs
(3) Public Comments
(4) Statement of Final Policy and List of CY
2015 C–APCs
f. Calculation of Composite APC CriteriaBased Costs
(1) Extended Assessment and Management
Composite APCs (APC 8009)
(2) Low Dose Rate (LDR) Prostate
Brachytherapy Composite APC (APC
8001)
(3) Mental Health Services Composite APC
(APC 0034)
(4) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and 8008)
3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging
in the OPPS
b. Revision of a Packaging Policy
Established in CY 2014—Procedures
Described by Add-On Codes
c. Packaging Policies for CY 2015
(1) Ancillary Services
(2) Prosthetic Supplies
4. Calculation of OPPS Scaled Payment
Weights
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. Adjustment for Rural SCHs and EACHs
under Section 1833(t)(13)(B) of the Act

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F. OPPS Payment to Certain Cancer
Hospitals Described by Section
1886(d)(1)(B)(v) of the Act
1. Background
2. Payment Adjustment for Certain Cancer
Hospitals for CY 2015
G. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Final Outlier Calculation
H. Calculation of an Adjusted Medicare
Payment from the National Unadjusted
Medicare Payment
I. Beneficiary Copayments
1. Background
2. OPPS Copayment Policy
3. Calculation of an Adjusted Copayment
Amount for an APC Group
III. OPPS Ambulatory Payment Classification
(APC) Group Policies
A. OPPS Treatment of New CPT and Level
II HCPCS Codes
1. Treatment of New CY 2014 Level II
HCPCS and CPT Codes Effective April 1,
2014 and July 1, 2014 for Which We
Solicited Public Comments in the CY
2015 OPPS/ASC Proposed Rule
2. Process for New Level II HCPCS Codes
That Will Be Effective October 1, 2014
and New CPT and Level II HCPCS Codes
That Will Be Effective January 1, 2015
for Which We Are Soliciting Public
Comments in this CY 2015 OPPS/ASC
Final Rule with Comment Period
3. Process for Soliciting Public Comments
for New and Revised CPT Codes
Released by the AMA
a. Current Process for Accepting Comments
on New and Revised CPT Codes for a
Year
b. Modification of Process for New and
Revised CPT Codes That Are Effective
January 1
B. OPPS Changes—Variations within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. OPPS APC-Specific Policies
1. Cardiovascular and Vascular Services:
Cardiac Telemetry (APC 0213)
2. Gastrointestinal (GI) Services: Upper GI
Procedures (APCs 0142, 0361, 0419, and
0422)
3. Genitourinary Services
a. Gynecologic Procedures (APCs 0188,
0189, 0192, 0193, and 0202)
b. Cystourethroscopy, Transprostatic
Implant Procedures, and Other
Genitourinary Procedures (APCs 0160,
0161, 0162, 0163, and 1564
c. Level IV Anal/Rectal Procedures (APC
0150)
d. Percutaneous Renal Cryoablation (APC
0423)
4. Nervous System Services
a. Chemodenervation (APC 0206)
b. Epidural Lysis (APCs 0203 and 0207)
c. Transcranial Magnetic Stimulation
Therapy (TMS) (APC 0218)
5. Ocular Services: Ophthalmic Procedures
and Services
6. Imaging
a. Echocardiography (APCs 0269, 0270,
and 0697)
b. Optical Coherence Tomography
Procedures of the Breast

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c. Parathyroid Planar Imaging (APCs 0263,
0317, 0406, 0414)
7. Radiology Oncology
a. Proton Beam Therapy and
Magnetoencephalography (MEG)
Services (APCs 0065, 0412, 0446, 0664,
and 0667)
b. Stereotactic Radiosurgery Services (SRS)
and Magnetic Resonance Image Guided
Focused Ultrasound (MRgFUS) (APC
0066)
8. Respiratory Services: Level II Endoscopy
Lower Airway (APC 0415)
9. Other Services
a. Epidermal Autograft (APC 0327)
b. Image-Guided Breast Biopsy Procedures
and Image-Guided Abscess Drainage
Procedures (APCs 0005 and 0007)
c. Negative Pressure Wound Therapy
(NPWT) (APCs 0012 and 0015)
d. Platelet Rich Plasma (PRP) (APC 0327)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through
Payments for Certain Devices
a. Background
b. CY 2015 Policy
2. Provisions for Reducing Transitional
Pass-Through Payments to Offset Costs
Packaged into APC Groups
a. Background
b. CY 2015 Policy
B. Adjustment to OPPS Payment for No
Cost/Full Credit and Partial Credit
Devices
1. Background
2. Policy for CY 2015
V. OPPS Payment Changes for Drugs,
Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through
Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals with Expiring
Pass-Through Status in CY 2014
3. Drugs, Biologicals, and
Radiopharmaceuticals with New or
Continuing Pass-Through Status in CY
2015
4. Provisions for Reducing Transitional
Pass-Through Payments for PolicyPackaged Drugs and Biologicals to Offset
Costs Packaged into APC Groups
a. Background
b. Payment Offset Policy for Diagnostic
Radiopharmaceuticals
c. Payment Offset Policy for Contrast
Agents
d. Payment Offset Policy for Drugs,
Biologicals, and Radiopharmaceuticals
That Function as Supplies When Used in
a Diagnostic Test or Procedure and Drugs
and Biologicals That Function as
Supplies When Used in a Surgical
Procedure
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals without PassThrough Status
1. Background
2. Criteria for Packaging Payment for
Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Cost Threshold for Packaging of Payment
for HCPCS Codes That Describe Certain
Drugs, Certain Biologicals, and

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Therapeutic Radiopharmaceuticals
(‘‘Threshold-Packaged Drugs’’)
c. High Cost/Low Cost Threshold for
Packaged Skin Substitutes
d. Pass-Through Evaluation Process for
Skin Substitutes
e. Packaging Determination for HCPCS
Codes That Describe the Same Drug or
Biological But Different Dosages
3. Payment for Drugs and Biologicals
without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs
and Biologicals
b. CY 2015 Payment Policy
4. Payment Policy for Therapeutic
Radiopharmaceuticals
5. Payment Adjustment Policy for
Radioisotopes Derived From Non-Highly
Enriched Uranium Sources
6. Payment for Blood Clotting Factors
7. Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals
with HCPCS Codes but without OPPS
Hospital Claims Data
VI. Estimate of OPPS Transitional PassThrough Spending for Drugs, Biologicals,
Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient
Visits
A. Payment for Hospital Outpatient Clinic
and Emergency Department Visits
B. Payment for Critical Care Services
VIII. Payment for Partial Hospitalization
Services
A. Background
B. PHP APC Update for CY 2015
C. Separate Threshold for Outlier Payments
to CMHCs
IX. Procedures That Will Be Paid Only as
Inpatient Procedures
A. Background
B. Changes to the Inpatient List
X. Nonrecurring Policy Changes: Collecting
Data on Services Furnished in OffCampus Provider-Based Departments of
Hospitals
XI. CY 2015 OPPS Payment Status and
Comment Indicators
A. CY 2015 OPPS Payment Status Indicator
Definitions
B. CY 2015 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical
Center (ASC) Payment System
A. Background
1. Legislative History, Statutory Authority,
and Prior Rulemaking for the ASC
Payment System
2. Policies Governing Changes to the Lists
of Codes and Payment Rates for ASC
Covered Surgical Procedures and
Covered Ancillary Services
B. Treatment of New Codes
1. Process for Recognizing New Category I
and Category III CPT Codes and Level II
HCPCS Codes
2. Treatment of New Level II HCPCS Codes
and Category III CPT Codes Implemented
in April 2014 and July 2014 for Which
We Solicited Public Comments in the CY
2015 OPPS/ASC Proposed Rule
3. Process for New Level II HCPCS Codes
and Category I and Category III CPT

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Codes for Which We Are Soliciting
Public Comments in this CY 2015 OPPS/
ASC Final Rule with Comment Period
C. Update to the Lists of ASC Covered
Surgical Procedures and Covered
Ancillary Services
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered
Surgical Procedures
b. Covered Surgical Procedures Designated
as Office-Based
(1) Background
(2) Changes for CY 2015 to Covered
Surgical Procedures Designated as
Office-Based
c. ASC Covered Surgical Procedures
Designated as Device-Intensive
(1) Background
(2) Changes to List of Covered ASC
Surgical Procedures Designated as
Device-Intensive for CY 2015
d. Adjustment to ASC Payments for No
Cost/Full Credit and Partial Credit
Devices
e. ASC Treatment of Surgical Procedures
Removed from the OPPS Inpatient List
for CY 2015
2. Covered Ancillary Services
D. ASC Payment for Covered Surgical
Procedures and Covered Ancillary
Services
1. ASC Payment for Covered Surgical
Procedures
a. Background
b. Update to ASC Covered Surgical
Procedure Payment Rates for CY 2015
c. Waiver of Coinsurance and Deductible
for Certain Preventive Services
d. Payment for Cardiac Resynchronization
Therapy Services
e. Payment for Low Dose Rate (LDR)
Prostate Brachytherapy Composite
2. Payment for Covered Ancillary Services
a. Background
b. Payment for Covered Ancillary Services
for CY 2015
E. New Technology Intraocular Lenses
(NTIOLs)
1. NTIOL Application Cycle
2. Requests to Establish New NTIOL
Classes for CY 2015
3. Payment Adjustment
4. Announcement of CY 2015 Deadline for
Submitting Requests for CMS Review of
Applications for a New Class of NTIOLs
F. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
G. Calculation of the ASC Conversion
Factor and the ASC Payment Rates
1. Background
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment
Weights for CY 2015 and Future Years
b. Transition Period to New OMB
Delineations for ASC Wage Index
c. Updating the ASC Conversion Factor
3. Display of CY 2015 ASC Payment Rates
XIII. Hospital Outpatient Quality Reporting
Program Updates
A. Background
1. Overview
2. Statutory History of the Hospital OQR
Program
3. Measure Updates and Data Publication
a. Maintenance of Technical Specifications
for Quality Measures

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b. Public Display of Quality Measures
B. Process for Retention of Hospital OQR
Program Measures Adopted in Previous
Payment Determinations
C. Removal of Quality Measures from the
Hospital OQR Program Measure Set
1. Considerations in Removing Quality
Measures from the Hospital OQR
Program
2. Criteria for Removal of ‘‘Topped-Out’’
Measures
3. Removal of Measures from the Hospital
OQR Program for the CY 2017 Payment
Determination and Subsequent Years
D. Quality Measures Previously Adopted
for the CY 2016 Payment Determination
and Subsequent Years
1. Data Submission Requirements for OP–
27: Influenza Vaccination Coverage
Among Healthcare Personnel (NQF
#0431) Reported via NHSN for the CY
2017 Payment Determination and
Subsequent Years
a. Clarification of Submission Deadline and
Data Submitted
b. Clarification on Reporting by CMS
Certification Number (CCN)
2. Delayed Data Collection for OP–29 and
OP–30
3. OP–31: Cataracts—Improvement in
Patient’s Visual Function within 90 Days
Following Cataract Surgery
a. Correction of Response to Public
Comments
b. Delayed Data Collection for OP–31 and
Exclusion from the CY 2016 Payment
Determination Measure Set
c. Voluntary Collection of Data for OP–31
for the CY 2017 Payment Determination
and Subsequent Years
E. New Quality Measure for the CY 2018
Payment Determination and Subsequent
Years
F. Possible Hospital OQR Program
Measures and Topics for Future
Consideration
1. Electronic Clinical Quality Measures
2. Partial Hospitalization Program
Measures
3. Behavioral Health Measures
4. National Quality Strategy and CMS
Quality Strategy Measure Domains
G. Payment Reduction for Hospitals That
Fail to Meet the Hospital Outpatient
Quality Reporting (OQR) Program
Requirements for the CY 2015 Payment
Update
1. Background
2. Reporting Ratio Application and
Associated Adjustment Policy for CY
2015
H. Requirements for Reporting Hospital
OQR Program Data for the CY 2017
Payment Determination and Subsequent
Years
1. Administrative Requirements for the CY
2017 Payment Determination and
Subsequent Years
2. Form, Manner, and Timing of Data
Submitted for the Hospital OQR Program
a. General Procedural Requirements
b. Requirements for Chart-Abstracted
Measures Where Data Are Submitted
Directly to CMS for the CY 2017
Payment Determination and Subsequent
Years

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c. Claims-Based Measure Data
Requirements for the CY 2017 and CY
2018 Payment Determination and
Subsequent Years
d. Data Submission Requirements for
Measure Data Submitted via the CMS
Web-Based Tool for the CY 2017
Payment Determination and Subsequent
Years
e. Population and Sampling Data
Requirements for the CY 2017 Payment
Determination and Subsequent Years
f. Review and Corrections Period for ChartAbstracted Measures
3. Hospital OQR Program Validation
Requirements for Chart-Abstracted
Measure Data Submitted Directly to CMS
for the CY 2017 Payment Determination
and Subsequent Years
a. Background
b. Selection of Hospitals for Data
Validation of Chart-Abstracted Measures
for the CY 2017 Payment Determination
and Subsequent Years
c. Targeting Criteria for Data Validation
Selection for the CY 2017 Payment
Determination and Subsequent Years
d. Methodology for Encounter Selection for
the CY 2017 Payment Determination and
Subsequent Years
e. Medical Record Documentation Requests
for Validation and Validation Score
Calculation for the CY 2017 Payment
Determination and Subsequent Years
I. Hospital OQR Program Reconsideration
and Appeals Procedures for the CY 2017
Payment Determination and Subsequent
Years
J. Extension or Exception Process for the
CY 2017 Payment Determination and
Subsequent Years
XIV. Requirements for the Ambulatory
Surgical Center Quality Reporting
(ASCQR) Program
A. Background
1. Overview
2. Statutory History of the Ambulatory
Surgical Center Quality Reporting
(ASCQR) Program
3. Regulatory History of the ASCQR
Program
B. ASCQR Program Quality Measures
1. Considerations in the Selection of
ASCQR Program Quality Measures
2. Policy for Removal of Quality Measures
from the ASCQR Program
3. Criteria for Removal of ‘‘Topped-Out’’
Measures
4. ASCQR Program Quality Measures
Adopted in Previous Rulemaking
5. New ASCQR Program Quality Measure
for the CY 2018 Payment Determination
and Subsequent Years
6. ASCQR Program Measures for Future
Consideration
7. Maintenance of Technical Specifications
for Quality Measures
8. Public Reporting of ASCQR Program
Data
C. Payment Reduction for ASCs That Fail
to Meet the ASCQR Program
Requirements
1. Statutory Background
2. Reduction to the ASC Payment Rates for
ASCs That Fail to Meet the ASCQR
Program Requirements for a Payment
Determination Year

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
D. Administrative Requirements
1. Requirements Regarding QualityNet
Account and Security Administrator
2. Requirements Regarding Participation
Status
E. Form, Manner, and Timing of Data
Submitted for the ASCQR Program
1. Requirements Regarding Data Processing
and Collection Periods for Claims-Based
Measures Using Quality Data Codes
(QDCs)
2. Minimum Threshold, Minimum Case
Volume, and Data Completeness for
Claims-Based Measures Using QDCs
3. Requirements for Data Submitted Via a
CMS Online Data Submission Tool
a. Data Collection for ASC–6 and ASC–7
b. Delayed Data Collection for ASC–9 and
ASC–10
c. Delayed Data Collection and Exclusion
for ASC–11 for the CY 2016 Payment
Determination and Voluntary Data
Collection for ASC–11 for the CY 2017
Payment Determination and Subsequent
Years
4. Claims-Based Measure Data
Requirements for the New Measure for
the CY 2018 Payment Determination and
Subsequent Years
5. Data Submission Requirements for ASC–
8 (Influenza Vaccination Coverage
Among Healthcare Personnel) Reported
via the National Healthcare Safety
Network (NHSN) for the CY 2016
Payment Determination and Subsequent
Years
a. Previously Adopted Requirements for
the CY 2016 Payment Determination
b. Data Collection Timeframes for the CY
2017 Payment Determination and
Subsequent Years and Submission
Deadlines for the CY 2016 Payment
Determination and Subsequent Years
6. ASCQR Program Validation of ClaimsBased and CMS Web-Based Measures
7. Extraordinary Circumstances Extensions
or Exemptions for the CY 2017 Payment
Determination and Subsequent Years
8. ASCQR Program Reconsideration
Procedures for the CY 2017 Payment
Determination and Subsequent Years
XV. Changes to the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law: Expansion
Exception Process
A. Background
1. Statutory Basis
2. Affordable Care Act Amendments to the
Rural Provider and Hospital Ownership
Exceptions to the Physician Self-Referral
Law
B. Limitations Identified by Stakeholders
Regarding the Required Use of HCRIS
Data
C. Changes to the Physician-Owned
Hospital Expansion Exception Process
1. Supplemental Data Sources
a. Internal Data Sources
b. External Data Sources
c. Completeness of Supplemental Data
Sources
d. Other Issues Related to Supplemental
Data Sources
e. Summary of Final Provisions Regarding
Supplemental Data Sources
2. Fiscal Year Standard

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a. Summary of Public Comments and Our
Response Regarding the Fiscal Year
Standard
b. Summary of Final Provisions Regarding
the Fiscal Year Standard
3. Community Input and Timing of a
Complete Request
a. Summary of Public Comments and Our
Responses Regarding Community Input
and Timing of a Complete Request
b. Final Provisions Regarding Community
Input and Timing of a Complete Request
D. Additional Considerations
E. Summary of the Final Provisions
Regarding the Expansion Exception
Process under the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law
XVI. Revision of the Requirements for
Physician Certification of Hospital
Inpatient Services Other Than
Psychiatric Inpatient Services
XVII. CMS-Identified Overpayments
Associated with Payment Data
Submitted by Medicare Advantage (MA)
Organizations and Medicare Part D
Sponsors (§§ 422.330 and 423.352)
A. Background
1. Medicare Part C Payment Background
1. Medicare Part D Payment Background
B. Provisions of the Proposed Rule and
Final Policies
1. Definitions of ‘‘Payment Data’’ and
‘‘Applicable Reconciliation Date’’
2. Request for Corrections of Payment Data
3. Payment Offset
a. Offset Amount
b. Payment Offset Notification
4. Appeals Process for MA Organizations
and Part D Sponsors
a. Reconsideration
b. Informal Hearing
c. Review by Administrator
5. Matters Subject to Appeal and Burden of
Proof
6. Effective Date of Appeals Process
Provisions
XVIII. Files Available to the Public Via the
Internet
XIX. Collection of Information Requirements
A. Legislative Requirements for
Solicitation of Comments
B. Requirements in Regulation Text:
Changes to the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law: Expansion
Exception Process (§ 411.362)
C. Associated Information Collections Not
Specified in Regulatory Text
1. Hospital OQR Program
a. Revisions to the CY 2016 Payment
Determination Estimates
b. Hospital OQR Program Requirements for
the CY 2017 Payment Determination and
Subsequent Years
c. Review and Corrections Period
Requirements for the CY 2017 Payment
Determination and Subsequent Years
d. Hospital OQR Program Validation
Requirements for the CY 2017 Payment
Determination and Subsequent Years
e. Extraordinary Circumstances Extensions
or Exemptions Process
f. Reconsideration and Appeals
2. ASCQR Program Requirements
a. Background

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b. Revisions to the CY 2016 Payment
Determination Estimates
c. Claims-Based Measures for the CY 2014
Payment Determination and Subsequent
Years
d. Web-Based Measures for the CY 2017
Payment Determination and Subsequent
Years
e. Extraordinary Circumstances Extension
or Exemptions Process
f. Reconsiderations and Appeals
XX. Waiver of Proposed Rulemaking and
Response to Comments
A. Waiver of Proposed Rulemaking
B. Response to Comments
XXI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impacts for the OPPS and ASC
Payment Provisions
4. Detailed Economic Analyses
a. Estimated Effects of OPPS Changes in
this Final Rule with Comment Period
(1) Limitations of Our Analysis
(2) Estimated Effects of OPPS Changes on
Hospitals
(3) Estimated Effects of OPPS Changes on
CMHCs
(4) Estimated Effect of OPPS Changes on
Beneficiaries
(5) Estimated Effects of OPPS Changes on
Other Providers
(6) Estimated Effects of OPPS Changes on
the Medicare and Medicaid Programs
(7) Alternative OPPS Policies Considered
b. Estimated Effects of CY 2015 ASC
Payment System Policies
(1) Limitations of Our Analysis
(2) Estimated Effects of CY 2015ASC
Payment System Policies on ASCs
(3) Estimated Effects of ASC Payment
System Policies on Beneficiaries
(4) Alternative ASC Payment Policies
Considered
c. Accounting Statements and Tables
d. Effects of Requirements for the Hospital
OQR Program
e. Effects of CY 2014 Policies for the
ASCQR Program
f. Effects of Changes to the Rural Provider
and Hospital Ownership Exceptions to
the Physician Self-Referral Law
g. Effects of Policies Related to CMSIdentified Overpayments Associated
with Payment Data Submitted by
Medicare Advantage (MA) Organizations
and Medicare Part D Sponsors
B. Regulatory Flexibility Act (RFA)
Analysis
C. Unfunded Mandates Reform Act
Analysis
D. Conclusion
XXII. Federalism Analysis

I. Summary and Background
A. Executive Summary of This
Document
1. Purpose
In this final rule with comment
period, we are updating the payment
policies and payment rates for services
furnished to Medicare beneficiaries in
hospital outpatient departments and

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Ambulatory Surgical Centers (ASCs)
beginning January 1, 2015. Section
1833(t) of the Social Security Act (the
Act) requires us to annually review and
update the relative payment weights
and the conversion factor for services
payable under the Outpatient
Prospective Payment System (OPPS).
Under section 1833(i) of the Act, we
annually review and update the ASC
payment rates. We describe these and
various other statutory authorities in the
relevant sections of this final rule with
comment period. In addition, this final
rule with comment period updates and
refines the requirements for the Hospital
Outpatient Quality Reporting (OQR)
Program and the ASC Quality Reporting
(ASCQR) Program.
In this document, we also are making
changes to the data sources permitted
for expansion requests for physicianowned hospitals under the physician
self-referral regulations; changes to the
underlying authority for the
requirement of an admission order for
all hospital inpatient admissions and
changes to require physician
certification for hospital inpatient
admissions only for long-stay cases and
outlier cases; and changes to establish a
formal process, including a three-level
appeals process, to recoup
overpayments that result from the
submission of erroneous payment data
by Medicare Advantage (MA)
organizations and Part D sponsors in the
limited circumstances in which the
organization or sponsor fails to correct
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2. Summary of the Major Provisions
• OPPS Update: For CY 2015, we are
increasing the payment rates under the
OPPS by an Outpatient Department
(OPD) fee schedule increase factor of 2.2
percent. This increase is based on the
final hospital inpatient market basket
percentage increase of 2.9 percent for
inpatient services paid under the
hospital inpatient prospective payment
system (IPPS), minus the multifactor
productivity (MFP) adjustment of 0.5
percentage point, and minus a 0.2
percentage point adjustment required by
the Affordable Care Act. Under this final
rule with comment period, we estimate
that total payments for CY 2015,
including beneficiary cost-sharing, to
the approximate 4,000 facilities paid
under the OPPS (including general
acute care hospitals, children’s
hospitals, cancer hospitals, and
community mental health centers
(CMHCs)), will be approximately $56.1
billion, an increase of approximately
$5.1 billion compared to CY 2014
payments, or $900 million excluding

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our estimated changes in enrollment,
utilization, and case-mix.
We are continuing to implement the
statutory 2.0 percentage point reduction
in payments for hospitals failing to meet
the hospital outpatient quality reporting
requirements, by applying a reporting
factor of 0.980 to the OPPS payments
and copayments for all applicable
services.
• Rural Adjustment: We are
continuing the adjustment of 7.1 percent
to the OPPS payments to certain rural
sole community hospitals (SCHs),
including essential access community
hospitals (EACHs). This adjustment will
apply to all services paid under the
OPPS, excluding separately payable
drugs and biologicals, devices paid
under the pass-through payment policy,
and items paid at charges reduced to
cost.
• Cancer Hospital Payment
Adjustment: For CY 2015, we are
continuing to provide additional
payments to cancer hospitals so that the
cancer hospital’s payment-to-cost ratio
(PCR) after the additional payments is
equal to the weighted average PCR for
the other OPPS hospitals using the most
recently submitted or settled cost report
data. Based on those data, a target PCR
of 0.89 will be used to determine the CY
2015 cancer hospital payment
adjustment to be paid at cost report
settlement. That is, the payment
adjustments will be the additional
payments needed to result in a PCR
equal to 0.89 for each cancer hospital.
• Payment of Drugs, Biologicals, and
Radiopharmaceuticals: For CY 2015,
payment for the acquisition and
pharmacy overhead costs of separately
payable drugs and biologicals that do
not have pass-through status are set at
the statutory default of average sales
price (ASP) plus 6 percent.
• Packaging Policies: We are
conditionally packaging certain
ancillary services when they are
integral, ancillary, supportive,
dependent, or adjunctive to a primary
service. The initial set of services
packaged under this ancillary service
policy are the services assigned to APCs
having an APC geometric mean cost
(prior to application of status indicator
Q1) of less than or equal to $100. This
$100 geometric mean cost limit for the
APC is part of the methodology of
establishing an initial set of
conditionally packaged ancillary service
APCs, and is not meant to represent a
threshold above which a given ancillary
service will not be packaged, but as a
basis for selecting an initial set of APCs
that will likely be updated and
expanded in future years.

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• Implementation of Comprehensive
APCs: For CY 2015, we are
implementing, with several
modifications, the policy for
comprehensive APCs (C–APCs) that was
finalized in the CY 2014 OPPS/ASC
final rule with comment period effective
January 1, 2015. We are continuing to
define the services assigned to C–APCs
as primary services, and to define a C–
APC as a classification for the provision
of a primary service and all adjunctive
services and supplies provided to
support the delivery of the primary
service. We continue to consider the
entire hospital stay, defined as all
services reported on the hospital claim
reporting the primary service, to be one
comprehensive service for the provision
of a primary service into which all other
services appearing on the claim would
be packaged. This results in a single
Medicare payment and a single
beneficiary copayment under the OPPS
for the comprehensive service based on
all included charges on the claim.
We are establishing a total of 25 C–
APCs for CY 2015, including all of the
formerly device-dependent APCs
remaining after some restructuring and
consolidation of these APCs (except for
APCs 0427, 0622, and 0652) and two C–
APCs for other procedures that are
either largely device-dependent or
represent single session services with
multiple components (single-session
cranial stereotactic radiosurgery and
intraocular telescope implantation). We
are modifying the complexity
adjustment criteria finalized last year by
lowering volume and cost threshold
criteria for complexity adjustments.
Finally, we are packaging all add-on
codes furnished as part of a
comprehensive service, which is
consistent with our general add-on code
packaging policy. However, the add-on
codes assigned to the CY 2014 devicedependent APCs will be being evaluated
with a primary service for a potential
complexity adjustment.
• Ambulatory Surgical Center
Payment Update: For CY 2015, we are
increasing payment rates under the ASC
payment system by 1.4 percent. This
increase is based on a projected CPI–U
update of 1.9 percent minus a
multifactor productivity adjustment
required by the Affordable Care Act that
is projected to be 0.5 percentage point.
Based on this update, we estimate that
total payments to ASCs (including
beneficiary cost-sharing and estimated
changes in enrollment, utilization, and
case-mix), for CY 2015 will be
approximately $4.147 billion, an
increase of approximately $236 million
compared to estimated CY 2014
Medicare payments.

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• Hospital Outpatient Quality
Reporting (OQR) Program: For the
Hospital OQR Program, we are adding
one claims-based quality measure for
the CY 2018 payment determination and
subsequent years instead of the CY 2017
payment determination and subsequent
years as proposed. However, prior to
publicly reporting this measure, we plan
to conduct a dry run (a preliminary
analysis) for hospitals to review their
performance and provide feedback
using the most recently available data.
There will be no payment impact during
this dry-run period, and the results of
the dry run will not be publicly
reported. We are refining the criteria for
determining ‘‘topped-out’’ measures,
and we are removing the OP–6 and OP–
7 measures due to ‘‘topped-out’’ status.
In addition, we are updating several
previously adopted measures. We are
clarifying data submission requirements
for OP–27 and are noting a delayed data
collection for OP–29 and OP–30. We are
excluding one previously adopted
measure (OP–31) from the measure set
for the CY 2016 payment determination
and changing this measure from
required to voluntary for the CY 2017
payment determination and subsequent
years. We will not subject hospitals to
payment reductions with respect to the
OP–31 measure for the CY 2016
payment determination or during the
period of voluntary reporting. In
addition, we are formalizing a review
and corrections period for chartabstracted measures. We also are
updating validation procedures and
changes to regulation text to correct
typographical errors. We are changing
the eligibility criteria for validation; a
hospital will only be eligible for random
selection for validation if it submits at
least 12 cases to the Hospital OQR
Program Clinical Data Warehouse
during the quarter with the most
recently available data. Hospitals also
will have the option to submit
validation data using electronic
methods and must identify the medical
record staff responsible for submission
of records to the designated CMS
contractor. Finally, we are clarifying
how we refer to the extraordinary
circumstances extensions or exemptions
process.
• Ambulatory Surgical Center Quality
Reporting (ASCQR) Program: For the
ASCQR Program, we are adopting one
new quality measure (ASC–12) for the
CY 2018 payment determination and
subsequent years. This measure will be
computed using paid Medicare fee-forservice (FFS) claims data and will not
impose any additional burden on ASCs.
We also are excluding one measure

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(ASC–11) previously adopted for the CY
2016 payment determination and
providing that this measure may be
voluntarily rather than mandatorily
reported for the CY 2017 payment
determination and subsequent years. We
will not subject ASCs to payment
reductions with respect to this measure
for the CY 2016 payment determination
or during the period of voluntary
reporting. In addition, we are
establishing a measure removal process
and criteria, defining data collection
timeframes and submission deadlines,
and clarifying how we refer to the
extraordinary circumstances extensions
or exemptions process.
3. Summary of Costs and Benefits
In sections XXI. and XXII. of this final
rule with comment period, we set forth
a detailed analysis of the regulatory and
federalism impacts that the changes will
have on affected entities and
beneficiaries. Key estimated impacts are
described below.
a. Impacts of the OPPS Update
(1) Impacts of All OPPS Changes
Table 49 in section XXI. of this final
rule with comment period displays the
distributional impact of all the OPPS
changes on various groups of hospitals
and CMHCs for CY 2015 compared to all
estimated OPPS payments in CY 2014.
We estimate that the policies in this
final rule with comment period will
result in a 2.3 percent overall increase
in OPPS payments to providers. We
estimate that total OPPS payments for
CY 2015, including beneficiary costsharing, to the approximate 4,000
facilities paid under the OPPS
(including general acute care hospitals,
children’s hospitals, cancer hospitals,
and CMHCs) will be approximately
$56.1 billion, an increase of
approximately $5.1 billion compared to
CY 2014 payments, or $900 million,
excluding our estimated changes in
enrollment, utilization, and case-mix.
We estimated the isolated impact of
our OPPS policies on CMHCs because
CMHCs are only paid for partial
hospitalization services under the
OPPS. Continuing the provider-specific
structure that we adopted beginning in
CY 2011 and basing payment fully on
the type of provider furnishing the
service, we estimate a 1.3 percent
increase in CY 2015 payments to
CMHCs relative to their CY 2014
payments.
(2) Impacts of the Updated Wage
Indexes
We estimate that our update of the
wage indexes and application of the
frontier State wage index, including

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changes resulting from the adoption of
the new OMB labor market area
delineations and the transitional 1-year,
50/50 blended wage index, will mitigate
any negative changes due to the new
CBSA delineations.
(3) Impacts of the Rural Adjustment and
the Cancer Hospital Payment
Adjustment
There are no significant impacts of
our CY 2015 payment policies for
hospitals that are eligible for the rural
adjustment or for the cancer hospital
payment adjustment. We are not making
any change in policies for determining
the rural and cancer hospital payment
adjustments, and the adjustment
amounts do not significantly impact the
budget neutrality adjustments for these
policies.
(4) Impacts of the OPD Fee Schedule
Increase Factor
We estimate that, for most hospitals,
the application of the OPD fee schedule
increase factor of 2.2 percent to the
conversion factor for CY 2015 will
mitigate the small negative impacts of
the budget neutrality adjustments. As a
result of the OPD fee schedule increase
factor and other budget neutrality
adjustments, we estimate that urban and
rural hospitals will experience increases
of approximately 2.3 percent for urban
hospitals and 1.9 percent for rural
hospitals. Classifying hospitals by
teaching status or type of ownership
suggests that these hospitals will receive
similar increases.
b. Impacts of the ASC Payment Update
For impact purposes, the surgical
procedures on the ASC list of covered
procedures are aggregated into surgical
specialty groups using CPT and HCPCS
code range definitions. The percentage
change in estimated total payments by
specialty groups under the CY 2015
payment rates compared to estimated
CY 2014 payment rates ranges between
¥4.0 percent for ancillary items and
services and 14 percent for hematologic
and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
We do not expect our CY 2015
policies to significantly affect the
number of hospitals that do not receive
a full annual payment update.
d. Impacts of the ASCQR Program
We do not expect our CY 2015
proposed policies to significantly affect
the number of ASCs that do not receive
a full annual payment update.

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B. Legislative and Regulatory Authority
for the Hospital OPPS
When Title XVIII of the Social
Security Act was enacted, Medicare
payment for hospital outpatient services
was based on hospital-specific costs. In
an effort to ensure that Medicare and its
beneficiaries pay appropriately for
services and to encourage more efficient
delivery of care, the Congress mandated
replacement of the reasonable costbased payment methodology with a
prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA)
(Pub. L. 105–33) added section 1833(t)
to the Act authorizing implementation
of a PPS for hospital outpatient services.
The OPPS was first implemented for
services furnished on or after August 1,
2000. Implementing regulations for the
OPPS are located at 42 CFR Parts 410
and 419.
The Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106–113) made
major changes in the hospital OPPS.
The following Acts made additional
changes to the OPPS: The Medicare,
Medicaid, and SCHIP Benefits
Improvement and Protection Act of
2000 (BIPA) (Pub. L. 106–554); the
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173); the
Deficit Reduction Act of 2005 (DRA)
(Pub. L. 109–171), enacted on February
8, 2006; the Medicare Improvements
and Extension Act under Division B of
Title I of the Tax Relief and Health Care
Act of 2006 (MIEA–TRHCA) (Pub. L.
109–432), enacted on December 20,
2006; the Medicare, Medicaid, and
SCHIP Extension Act of 2007 (MMSEA)
(Pub. L. 110–173), enacted on December
29, 2007; the Medicare Improvements
for Patients and Providers Act of 2008
(MIPPA) (Pub. L. 110–275), enacted on
July 15, 2008; the Patient Protection and
Affordable Care Act (Pub. L. 111–148),
enacted on March 23, 2010, as amended
by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152), enacted on March 30, 2010 (these
two public laws are collectively known
as the Affordable Care Act); the
Medicare and Medicaid Extenders Act
of 2010 (MMEA, Pub. L. 111–309); the
Temporary Payroll Tax Cut
Continuation Act of 2011 (TPTCCA,
Pub. L. 112–78), enacted on December
23, 2011; the Middle Class Tax Relief
and Job Creation Act of 2012
(MCTRJCA, Pub. L. 112–96), enacted on
February 22, 2012; and the American
Taxpayer Relief Act of 2012 (Pub. L.
112–240), enacted January 2, 2013.
Under the OPPS, we pay for hospital
Part B services on a rate-per-service

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basis that varies according to the APC
group to which the service is assigned.
We use the Healthcare Common
Procedure Coding System (HCPCS)
(which includes certain Current
Procedural Terminology (CPT) codes) to
identify and group the services within
each APC. The OPPS includes payment
for most hospital outpatient services,
except those identified in section I.C. of
this final rule with comment period.
Section 1833(t)(1)(B) of the Act provides
for payment under the OPPS for
hospital outpatient services designated
by the Secretary (which includes partial
hospitalization services furnished by
CMHCs), and certain inpatient hospital
services that are paid under Part B.
The OPPS rate is an unadjusted
national payment amount that includes
the Medicare payment and the
beneficiary copayment. This rate is
divided into a labor-related amount and
a nonlabor-related amount. The laborrelated amount is adjusted for area wage
differences using the hospital inpatient
wage index value for the locality in
which the hospital or CMHC is located.
All services and items within an APC
group are comparable clinically and
with respect to resource use (section
1833(t)(2)(B) of the Act). In accordance
with section 1833(t)(2) of the Act,
subject to certain exceptions, items and
services within an APC group cannot be
considered comparable with respect to
the use of resources if the highest
median cost (or mean cost, if elected by
the Secretary) for an item or service in
the APC group is more than 2 times
greater than the lowest median cost (or
mean cost, if elected by the Secretary)
for an item or service within the same
APC group (referred to as the ‘‘2 times
rule’’). In implementing this provision,
we generally use the cost of the item or
service assigned to an APC group.
For new technology items and
services, special payments under the
OPPS may be made in one of two ways.
Section 1833(t)(6) of the Act provides
for temporary additional payments,
which we refer to as ‘‘transitional passthrough payments,’’ for at least 2 but not
more than 3 years for certain drugs,
biological agents, brachytherapy devices
used for the treatment of cancer, and
categories of other medical devices. For
new technology services that are not
eligible for transitional pass-through
payments, and for which we lack
sufficient clinical information and cost
data to appropriately assign them to a
clinical APC group, we have established
special APC groups based on costs,
which we refer to as New Technology
APCs. These New Technology APCs are
designated by cost bands which allow
us to provide appropriate and consistent

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payment for designated new procedures
that are not yet reflected in our claims
data. Similar to pass-through payments,
an assignment to a New Technology
APC is temporary; that is, we retain a
service within a New Technology APC
until we acquire sufficient data to assign
it to a clinically appropriate APC group.
C. Excluded OPPS Services and
Hospitals
Section 1833(t)(1)(B)(i) of the Act
authorizes the Secretary to designate the
hospital outpatient services that are
paid under the OPPS. While most
hospital outpatient services are payable
under the OPPS, section
1833(t)(1)(B)(iv) of the Act excludes
payment for ambulance, physical and
occupational therapy, and speechlanguage pathology services, for which
payment is made under a fee schedule.
It also excludes screening
mammography, diagnostic
mammography, and effective January 1,
2011, an annual wellness visit providing
personalized prevention plan services.
The Secretary exercises the authority
granted under the statute to also exclude
from the OPPS certain services that are
paid under fee schedules or other
payment systems. Such excluded
services include, for example, the
professional services of physicians and
nonphysician practitioners paid under
the Medicare Physician Fee Schedule
(MPFS); certain laboratory services paid
under the Clinical Laboratory Fee
Schedule (CLFS); services for
beneficiaries with end-stage renal
disease (ESRD) that are paid under the
ESRD prospective payment system; and
services and procedures that require an
inpatient stay that are paid under the
hospital IPPS. We set forth the services
that are excluded from payment under
the OPPS in regulations at 42 CFR
419.22.
Under § 419.20(b) of the regulations,
we specify the types of hospitals that are
excluded from payment under the
OPPS. These excluded hospitals
include: Critical access hospitals
(CAHs); hospitals located outside of the
50 States, the District of Columbia, and
Puerto Rico; and Indian Health Service
(IHS) hospitals.
D. Prior Rulemaking
On April 7, 2000, we published in the
Federal Register a final rule with
comment period (65 FR 18434) to
implement a prospective payment
system for hospital outpatient services.
The hospital OPPS was first
implemented for services furnished on
or after August 1, 2000. Section
1833(t)(9) of the Act requires the
Secretary to review certain components

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of the OPPS, not less often than
annually, and to revise the groups,
relative payment weights, and other
adjustments that take into account
changes in medical practices, changes in
technologies, and the addition of new
services, new cost data, and other
relevant information and factors.
Since initially implementing the
OPPS, we have published final rules in
the Federal Register annually to
implement statutory requirements and
changes arising from our continuing
experience with this system. These rules
can be viewed on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
E. Advisory Panel on Hospital
Outpatient Payment (the HOP Panel or
the Panel)
1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as
amended by section 201(h) of Public
Law 106–113, and redesignated by
section 202(a)(2) of Public Law 106–113,
requires that we consult with an
external advisory panel of experts to
annually review the clinical integrity of
the payment groups and their weights
under the OPPS. In CY 2000, based on
section 1833(t)(9)(A) of the Act and
section 222 of the Public Health Service
(PHS) Act, the Secretary established the
Advisory Panel on Ambulatory Payment
Classification Groups (APC Panel) to
fulfill this requirement. In CY 2011,
based on section 222 of the PHS Act
which gives discretionary authority to
the Secretary to convene advisory
councils and committees, the Secretary
expanded the panel’s scope to include
the supervision of hospital outpatient
therapeutic services in addition to the
APC groups and weights. To reflect this
new role of the panel, the Secretary
changed the panel’s name to the
Advisory Panel on Hospital Outpatient
Payment (the HOP Panel, or the Panel).
The Panel is not restricted to using data
compiled by CMS, and in conducting its
review it may use data collected or
developed by organizations outside the
Department.

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2. Establishment of the Panel
On November 21, 2000, the Secretary
signed the initial charter establishing
the HOP Panel, at that time named the
APC Panel. This expert panel, which
may be composed of up to 19
appropriate representatives of providers
(currently employed full-time, not as
consultants, in their respective areas of
expertise), reviews clinical data and
advises CMS about the clinical integrity
of the APC groups and their payment

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weights. Since CY 2012, the Panel also
is charged with advising the Secretary
on the appropriate level of supervision
for individual hospital outpatient
therapeutic services. The Panel is
technical in nature, and it is governed
by the provisions of the Federal
Advisory Committee Act (FACA). The
current charter specifies, among other
requirements, that: The Panel continues
to be technical in nature; is governed by
the provisions of the FACA; may
convene up to three meetings per year;
has a Designated Federal Official (DFO);
and is chaired by a Federal Official
designated by the Secretary. The current
charter was amended on November 15,
2011, and the Panel was renamed to
reflect expanding the Panel’s authority
to include supervision of hospital
outpatient therapeutic services and
therefore to add CAHs to its
membership.
The current Panel membership and
other information pertaining to the
Panel, including its charter, Federal
Register notices, membership, meeting
dates, agenda topics, and meeting
reports, can be viewed on the CMS Web
site at: http://www.cms.gov/FACA/05_
AdvisoryPanelonAmbulatory
PaymentClassificationGroups.asp
#TopOfPage.
3. Panel Meetings and Organizational
Structure
The Panel has held multiple meetings,
with the last meeting taking place on
August 25, 2014. Prior to each meeting,
we publish a notice in the Federal
Register to announce the meeting and,
when necessary, to solicit nominations
for Panel membership and to announce
new members.
The Panel has established an
operational structure that, in part,
currently includes the use of three
subcommittees to facilitate its required
review process. The three current
subcommittees are the Data
Subcommittee, the Visits and
Observation Subcommittee, and the
Subcommittee for APC Groups and
Status Indicator (SI) Assignments.
The Data Subcommittee is responsible
for studying the data issues confronting
the Panel and for recommending
options for resolving them. The Visits
and Observation Subcommittee reviews
and makes recommendations to the
Panel on all technical issues pertaining
to observation services and hospital
outpatient visits paid under the OPPS
(for example, APC configurations and
APC relative payment weights). The
Subcommittee for APC Groups and SI
Assignments advises the Panel on the
following issues: The appropriate SIs to
be assigned to HCPCS codes, including

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66779

but not limited to whether a HCPCS
code or a category of codes should be
packaged or separately paid; and the
appropriate APC placement of HCPCS
codes regarding services for which
separate payment is made.
Each of these subcommittees was
established by a majority vote from the
full Panel during a scheduled Panel
meeting, and the Panel recommended at
the August 2014 meeting that the
subcommittees continue. We accepted
this recommendation.
Discussions of the other
recommendations made by the Panel at
the August 2014 Panel meeting are
included in the sections of this final
rule with comment period that are
specific to each recommendation. For
discussions of earlier Panel meetings
and recommendations, we refer readers
to previously published OPPS/ASC
proposed and final rules, the CMS Web
site mentioned earlier in this section,
and the FACA database at: http://
fido.gov/facadatabase/public.asp.
F. Public Comments Received on the CY
2015 OPPS/ASC Proposed Rule
We received approximately 719
timely pieces of correspondence on the
CY 2015 OPPS/ASC proposed rule that
appeared in the Federal Register on July
14, 2014 (79 FR 40915). We note that we
received some public comments that are
outside the scope of the CY 2015 OPPS/
ASC proposed rule. Out-of-scope public
comments are not addressed in this CY
2015 OPPS/ASC final rule with
comment period. Summaries of those
public comments that are within the
scope of the proposed rule and our
responses are set forth in the various
sections of this final rule with comment
period under the appropriate headings.
G. Public Comments Received on the CY
2014 OPPS/ASC Final Rule With
Comment Period
We received approximately 490
timely pieces of correspondence on the
CY 2014 OPPS/ASC final rule with
comment period that appeared in the
Federal Register on December 10, 2013
(78 FR 74826), some of which contained
comments on the interim APC
assignments and/or status indicators of
new or replacement HCPCS codes
(identified with comment indicator
‘‘NI’’ in Addenda B, AA, and BB to that
final rule). Summaries of the public
comments on new or replacement codes
are set forth in this CY 2015 OPPS/ASC
final rule with comment period under
the appropriate subject-matter headings.

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II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative
Payment Weights

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1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act
requires that the Secretary review not
less often than annually and revise the
relative payment weights for APCs. In
the April 7, 2000 OPPS final rule with
comment period (65 FR 18482), we
explained in detail how we calculated
the relative payment weights that were
implemented on August 1, 2000 for each
APC group.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40925), for the CY 2015
OPPS, we proposed to recalibrate the
APC relative payment weights for
services furnished on or after January 1,
2015, and before January 1, 2016 (CY
2015), using the same basic
methodology that we described in the
CY 2014 OPPS/ASC final rule with
comment period. That is, we proposed
to recalibrate the relative payment
weights for each APC based on claims
and cost report data for hospital
outpatient department (HOPD) services,
using the most recent available data to
construct a database for calculating APC
group weights. Therefore, for the
purpose of recalibrating the proposed
APC relative payment weights for CY
2015, we used approximately 149
million final action claims (claims for
which all disputes and adjustments
have been resolved and payment has
been made) for hospital outpatient
department services furnished on or
after January 1, 2013, and before January
1, 2014. For this final rule with
comment period, for the purpose of
recalibrating the final APC relative
payment weights for CY 2015, we used
approximately 161 million final action
claims (claims for which all disputes
and adjustments have been resolved and
payment has been made) for HOPD
services furnished on or after January 1,
2013, and before January 1, 2014. For
exact counts of claims used, we refer
readers to the claims accounting
narrative under supporting
documentation for the CY 2015 OPPS/
ASC proposed rule and this final rule
with comment period on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
Of the approximately 161 million
final action claims for services provided
in hospital outpatient settings used to
calculate the CY 2015 OPPS payment
rates for this final rule with comment
period, approximately 123 million
claims were the type of bill potentially

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appropriate for use in setting rates for
OPPS services (but did not necessarily
contain services payable under the
OPPS). Of the approximately 123
million claims, approximately 5 million
claims were not for services paid under
the OPPS or were excluded as not
appropriate for use (for example,
erroneous cost-to-charge ratios (CCRs) or
no HCPCS codes reported on the claim).
From the remaining approximately 118
million claims, we created
approximately 101 million single
records, of which approximately 50
million were ‘‘pseudo’’ single or ‘‘single
session’’ claims (created from
approximately 22 million multiple
procedure claims using the process we
discuss later in this section).
Approximately 1 million claims were
trimmed out on cost or units in excess
of ± 3 standard deviations from the
geometric mean, yielding approximately
101 million single bills for ratesetting.
As described in section II.A.2. of this
final rule with comment period, our
data development process is designed
with the goal of using appropriate cost
information in setting the APC relative
payment weights. The bypass process is
described in section II.A.1.b. of this
final rule with comment period. This
section discusses how we develop
‘‘pseudo’’ single procedure claims (as
defined below), with the intention of
using more appropriate data from the
available claims. In some cases, the
bypass process allows us to use some
portion of the submitted claim for cost
estimation purposes, while the
remaining information on the claim
continues to be unusable. Consistent
with the goal of using appropriate
information in our data development
process, we only use claims (or portions
of each claim) that are appropriate for
ratesetting purposes.
The final APC relative weights and
payments for CY 2015 in Addenda A
and B to this final rule with comment
period (which are available via the
Internet on the CMS Web site) were
calculated using claims from CY 2013
that were processed through June 30,
2014. While prior to CY 2013 we
historically based the payments on
median hospital costs for services in the
APC groups, beginning with the CY
2013 OPPS, we established the costbased relative payment weights for the
OPPS using geometric mean costs, as
discussed in the CY 2013 OPPS/ASC
final rule with comment period (77 FR
68259 through 68271). For the CY 2015
OPPS, we proposed and are using this
same methodology, basing payments on
geometric mean costs. Under this
methodology, we select claims for

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services paid under the OPPS and
match these claims to the most recent
cost report filed by the individual
hospitals represented in our claims data.
We continue to believe that it is
appropriate to use the most current full
calendar year claims data and the most
recently submitted cost reports to
calculate the relative costs
underpinning the APC relative payment
weights and the CY 2015 payment rates.
b. Use of Single and Multiple Procedure
Claims
For CY 2015, in general, and as we
proposed, we are continuing to use
single procedure claims to set the costs
on which the APC relative payment
weights are based. We generally use
single procedure claims to set the
estimated costs for APCs because we
believe that the OPPS relative weights
on which payment rates are based
should be derived from the costs of
furnishing one unit of one procedure
and because, in many circumstances, we
are unable to ensure that packaged costs
can be appropriately allocated across
multiple procedures performed on the
same date of service.
It is generally desirable to use the data
from as many claims as possible to
recalibrate the APC relative payment
weights, including those claims for
multiple procedures. As we have for
several years, we are continuing to use
date of service stratification and a list of
codes to be bypassed to convert
multiple procedure claims to ‘‘pseudo’’
single procedure claims. Through
bypassing specified codes that we
believe do not have significant packaged
costs, we are able to use more data from
multiple procedure claims. In many
cases, this enables us to create multiple
‘‘pseudo’’ single procedure claims from
claims that were submitted as multiple
procedure claims spanning multiple
dates of service, or claims that
contained numerous separately paid
procedures reported on the same date
on one claim. We refer to these newly
created single procedure claims as
‘‘pseudo’’ single procedure claims. The
history of our use of a bypass list to
generate ‘‘pseudo’’ single procedure
claims is well documented, most
recently in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74849
through 74851). In addition, for CY 2008
(72 FR 66614 through 66664), we
increased packaging and created the
first composite APCs, and continued
those policies through CY 2014.
Increased packaging and creation of
composite APCs also increased the
number of bills that we were able to use
for ratesetting by enabling us to use
claims that contained multiple major

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procedures that previously would not
have been usable. Further, for CY 2009,
we expanded the composite APC model
to one additional clinical area, multiple
imaging services (73 FR 68559 through
68569), which also increased the
number of bills we were able to use in
developing the OPPS relative weights
on which payments are based. We have
continued the composite APCs for
multiple imaging services through CY
2014, and as we proposed, we are
continuing this policy for CY 2015. We
refer readers to section II.A.2.f. of the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 74910 through
74925) for a discussion of the use of
claims in modeling the costs for
composite APCs and to section II.A.3. of
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74925 through
74948) for a discussion of our packaging
policies for CY 2014. In addition, as we
proposed, we are establishing additional
packaging policies for the CY 2015
OPPS, as discussed in section II.A.3. of
this final rule with comment period.
As we proposed, we are continuing to
apply these processes to enable us to
use as much claims data as possible for
ratesetting for the CY 2015 OPPS. This
methodology enabled us to create, for
this final rule with comment period,
approximately 50 million ‘‘pseudo’’
single procedure claims, including
multiple imaging composite ‘‘single
session’’ bills (we refer readers to
section II.A.2.f.(4) of this final rule with
comment period for further discussion),
to add to the approximately 51 million
‘‘natural’’ single procedure claims.
For CY 2015, we proposed to bypass
227 HCPCS codes that were identified
in Addendum N to the CY 2015 OPPS/
ASC proposed rule (which is available
via the Internet on the CMS Web site).
Since the inception of the bypass list,
which is the list of codes to be bypassed
to convert multiple procedure claims to
‘‘pseudo’’ single procedure claims, we
have calculated the percent of ‘‘natural’’
single bills that contained packaging for
each HCPCS code and the amount of
packaging on each ‘‘natural’’ single bill
for each code. Each year, we generally
retain the codes on the previous year’s
bypass list and use the updated year’s
data (for CY 2015, data available for the
March 10, 2014 meeting of the Advisory
Panel on Hospital Outpatient Payment
(the Panel) from CY 2013 claims
processed through September 30, 2013,
and CY 2012 claims data processed
through June 30, 2013, used to model
the payment rates for CY 2014) to
determine whether it would be
appropriate to add additional codes to
the previous year’s bypass list. For CY
2015, we proposed to continue to

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bypass all of the HCPCS codes on the
CY 2014 OPPS bypass list, with the
exception of HCPCS codes that we
proposed to delete for CY 2015, which
were listed in Table 1 of the proposed
rule (79 FR 40927 through 40929). We
also proposed to remove HCPCS codes
that are not separately paid under the
OPPS because the purpose of the bypass
list is to obtain more data for those
codes relevant to ratesetting. Some of
the codes we proposed to remove from
the CY 2015 bypass list are affected by
the CY 2015 final packaging policy,
discussed in section II.A.3. of this final
rule with comment period. In addition,
we proposed to add to the bypass list for
CY 2015 HCPCS codes not on the CY
2014 bypass list that, using either the
CY 2014 final rule with comment period
data (CY 2012 claims) or the March 10,
2014 Panel data (first 9 months of CY
2013 claims), met the empirical criteria
for the bypass list that are summarized
below. Finally, to remain consistent
with the CY 2015 proposal to continue
to develop OPPS relative payment
weights based on geometric mean costs,
we also proposed that the packaged cost
criterion continue to be based on the
geometric mean cost. The entire list
proposed for CY 2015 (including the
codes that remain on the bypass list
from prior years) was open to public
comment in the CY 2015 OPPS/ASC
proposed rule. Because we must make
some assumptions about packaging in
the multiple procedure claims in order
to assess a HCPCS code for addition to
the bypass list, we assumed that the
representation of packaging on
‘‘natural’’ single procedure claims for
any given code is comparable to
packaging for that code in the multiple
procedure claims. The criteria for the
bypass list are:
• There are 100 or more ‘‘natural’’
single procedure claims for the code.
This number of single procedure claims
ensures that observed outcomes are
sufficiently representative of packaging
that might occur in the multiple claims.
• Five percent or fewer of the
‘‘natural’’ single procedure claims for
the code have packaged costs on that
single procedure claim for the code.
This criterion results in limiting the
amount of packaging being redistributed
to the separately payable procedures
remaining on the claim after the bypass
code is removed and ensures that the
costs associated with the bypass code
represent the cost of the bypassed
service.
• The geometric mean cost of
packaging observed in the ‘‘natural’’
single procedure claims is equal to or
less than $55. This criterion also limits
the amount of error in redistributed

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costs. During the assessment of claims
against the bypass criteria, we do not
know the dollar value of the packaged
cost that should be appropriately
attributed to the other procedures on the
claim. Therefore, ensuring that
redistributed costs associated with a
bypass code are small in amount and
volume protects the validity of cost
estimates for low cost services billed
with the bypassed service.
We note that, as we did for CY 2014,
we proposed to continue to establish the
CY 2015 OPPS relative payment weights
based on geometric mean costs. To
remain consistent in the metric used for
identifying cost patterns, we proposed
to use the geometric mean cost of
packaging to identify potential codes to
add to the bypass list.
In response to public comments on
the CY 2010 OPPS/ASC proposed rule
requesting that the packaged cost
threshold be updated, we considered
whether it would be appropriate to
update the $50 packaged cost threshold
for inflation when examining potential
bypass list additions. As discussed in
the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60328), the real
value of this packaged cost threshold
criterion has declined due to inflation,
making the packaged cost threshold
more restrictive over time when
considering additions to the bypass list.
Therefore, adjusting the threshold by
the market basket increase would
prevent continuing decline in the
threshold’s real value. Based on the
same rationale described for the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74838), we
proposed for CY 2015 to continue to
update the packaged cost threshold by
the market basket increase. By applying
the final CY 2014 market basket increase
of 1.7 percent to the prior nonrounded
dollar threshold of $54.73 (78 FR
74838), we determined that the
threshold remains for CY 2015 at $55
($55.66 rounded to $55, the nearest $5
increment). Therefore, we proposed to
set the geometric mean packaged cost
threshold on the CY 2013 claims at $55
for a code to be considered for addition
to the CY 2015 OPPS bypass list.
• The code is not a code for an
unlisted service. Unlisted codes do not
describe a specific service, and thus
their costs would not be appropriate for
bypass list purposes.
In addition, we proposed to continue
to include on the bypass list HCPCS
codes that CMS medical advisors
believe have minimal associated
packaging based on their clinical
assessment of the complete CY 2015
OPPS proposal. Some of these codes
were identified by CMS medical

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advisors and some were identified in
prior years by commenters with
specialized knowledge of the packaging
associated with specific services. We
also proposed to continue to include
certain HCPCS codes on the bypass list
in order to purposefully direct the
assignment of packaged costs to a
companion code where services always
appear together and where there would
otherwise be few single procedure
claims available for ratesetting. For
example, we have previously discussed
our reasoning for adding HCPCS code
G0390 (Trauma response team
associated with hospital critical care
service) to the bypass list (73 FR 68513).
As a result of the multiple imaging
composite APCs that we established in
CY 2009, the program logic for creating
‘‘pseudo’’ single procedure claims from
bypassed codes that are also members of
multiple imaging composite APCs
changed. When creating the set of
‘‘pseudo’’ single procedure claims,
claims that contain ‘‘overlap bypass
codes’’ (those HCPCS codes that are
both on the bypass list and are members
of the multiple imaging composite
APCs) were identified first. These
HCPCS codes were then processed to
create multiple imaging composite
‘‘single session’’ bills, that is, claims
containing HCPCS codes from only one
imaging family, thus suppressing the
initial use of these codes as bypass
codes. However, these ‘‘overlap bypass
codes’’ were retained on the bypass list
because, at the end of the ‘‘pseudo’’
single processing logic, we reassessed
the claims without suppression of the
‘‘overlap bypass codes’’ under our
longstanding ‘‘pseudo’’ single process to
determine whether we could convert
additional claims to ‘‘pseudo’’ single
procedure claims. (We refer readers to
section II.A.2.b. of this final rule with
comment period for further discussion
of the treatment of ‘‘overlap bypass
codes.’’) This process also created
multiple imaging composite ‘‘single
session’’ bills that could be used for
calculating composite APC costs.
‘‘Overlap bypass codes’’ that are
members of the multiple imaging
composite APCs are identified by
asterisks (*) in Addendum N to this
final rule with comment period (which
is available via the Internet on the CMS
Web site).
Comment: One commenter supported
the CY 2015 proposal to remove certain
codes from the bypass list, in particular
for the anatomic pathology procedures,
and suggested that the bypass list
undervalues codes and artificially
lowers their estimated costs, as
evidenced by the estimated increase in

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Jkt 235001

payment for some of those services in
the CY 2015 OPPS/ASC proposed rule.
Response: We appreciate the
commenter’s support. The bypass list
process is used to extract more data
from claims that would otherwise be
unusable. We use a variety of
information in identifying codes that
could be potentially added to the bypass
list each year, including codes selected
based on the empirical criteria, CMS
medical advisor recommendations, and
commenter requests. In doing so, we
attempt to ensure that the amount of
packaged cost being redistributed as a
result of the process is limited.
After consideration of the public
comments we received, we are adopting
as final the proposed ‘‘pseudo’’ single
claims process. As discussed earlier in
this section, there are interactions
between the application of a bypass list
and various other OPPS payment
policies. As a result of modifications to
the packaging policies described in
section III. of this final rule with
comment period, we are adding codes
that we had originally proposed to
remove from the CY 2015 bypass list
back on the CY 2015 final OPPS bypass
list.
Addendum N to this final rule with
comment period (which is available via
the Internet on the CMS Web site)
includes the list of bypass codes for CY
2015. The list of bypass codes contains
codes that were reported on claims for
services in CY 2013 and, therefore,
includes codes that were in effect in CY
2013 and used for billing but were
deleted for CY 2014. We retained these
deleted bypass codes on the CY 2015
bypass list because these codes existed
in CY 2013 and were covered OPD
services in that period, and CY 2013
claims data are used to calculate CY
2015 payment rates. Keeping these
deleted bypass codes on the bypass list
potentially allows us to create more
‘‘pseudo’’ single procedure claims for
ratesetting purposes. ‘‘Overlap bypass
codes’’ that were members of the
multiple imaging composite APCs are
identified by asterisks (*) in the third
column of Addendum N to this final
rule with comment period. HCPCS
codes that we are adding for CY 2015
are identified by asterisks (*) in the
fourth column of Addendum N.
Table 1 of the proposed rule
contained the list of codes that we
proposed to remove from the CY 2015
bypass list (79 FR 40927 through
40929). Table 1 below contains the list
of codes that we are removing from the
final CY 2015 bypass list because these
codes were either deleted from the
HCPCS before CY 2013 (and therefore
were not covered OPD services in CY

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2013) or were not separately payable
codes under the CY 2015 OPPS because
these codes are not used for ratesetting
through the bypass process. The list of
codes for removal from the bypass list
includes those that will be affected by
the CY 2015 OPPS packaging policy
described in section II.A.3. of this final
rule with comment period.

TABLE 1—HCPCS CODES REMOVED
FROM THE CY 2015 BYPASS LIST
HCPCS
Code
11056
11300
11301
11719
11720
11721
17000
17110
29240
29260
29280
29520
29530
51741
51798
53601
53661
54240
67820
69210
69220
70030
70100
70110
70120
70130
70140
70150
70160
70200
70210
70220
70240
70250
70260
70320
70328
70330
70355
70360
71021
71022
71023
71030
71035
71100
71101
71110
71111
71120
71130
72020
72040
72050
72052
72069
72070
72072
72074

E:\FR\FM\10NOR2.SGM

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HCPCS Short descriptor
Trim skin lesions 2 to 4.
Shave skin lesion 0.5 cm/<.
Shave skin lesion 0.6–1.0 cm.
Trim nail(s) any number.
Debride nail 1–5.
Debride nail 6 or more.
Destruct premalg lesion.
Destruct b9 lesion 1–14.
Strapping of shoulder.
Strapping of elbow or wrist.
Strapping of hand or finger.
Strapping of hip.
Strapping of knee.
Electro-uroflowmetry first.
Us urine capacity measure.
Dilate urethra stricture.
Dilation of urethra.
Penis study.
Revise eyelashes.
Remove impacted ear wax uni.
Clean out mastoid cavity.
X-ray eye for foreign body.
X-ray exam of jaw <4 views.
X-ray exam of jaw 4/>≤ views.
X-ray exam of mastoids.
X-ray exam of mastoids.
X-ray exam of facial bones.
X-ray exam of facial bones.
X-ray exam of nasal bones.
X-ray exam of eye sockets.
X-ray exam of sinuses.
X-ray exam of sinuses.
X-ray exam pituitary saddle.
X-ray exam of skull.
X-ray exam of skull.
Full mouth x-ray of teeth.
X-ray exam of jaw joint.
X-ray exam of jaw joints.
Panoramic x-ray of jaws.
X-ray exam of neck.
Chest x-ray frnt lat lordotc.
Chest x-ray frnt lat oblique.
Chest x-ray and fluoroscopy.
Chest x-ray 4/> views.
Chest x-ray special views.
X-ray exam ribs uni 2 views.
X-ray exam unilat ribs/chest.
X-ray exam ribs bil 3 views.
X-ray exam ribs/chest4/> vws.
X-ray exam breastbone 2/> vws.
X-ray strenoclavic jt 3/>vws.
X-ray exam of spine 1 view.
X-ray exam neck spine 2–3 vw.
X-ray exam neck spine 4/5vws.
X-ray exam neck spine 6/>vws.
X-ray exam trunk spine stand.
X-ray exam thorac spine 2vws.
X-ray exam thorac spine 3vws.
X-ray exam thorac spine4/>vw.

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66783

TABLE 1—HCPCS CODES REMOVED
FROM THE CY 2015 BYPASS LIST—
Continued

TABLE 1—HCPCS CODES REMOVED
FROM THE CY 2015 BYPASS LIST—
Continued

TABLE 1—HCPCS CODES REMOVED
FROM THE CY 2015 BYPASS LIST—
Continued

HCPCS
Code

HCPCS
Code

HCPCS Short descriptor

HCPCS
Code

Rbc antibody identification.
Coombs test direct.
Coombs test indirect qual.
Coombs test indirect titer.
Blood typing abo.
Blood typing rh (d).
Blood typing patient serum.
Blood typing rbc antigens.
Blood typing rh phenotype.
Frozen blood prep.
Rbc pretx incubatj w/chemicl.
Rbc serum pretx incubj/inhib.
Cytopath fl nongyn smears.
Cytopath fl nongyn filter.
Cytopath fl nongyn sm/fltr.
Cytopath concentrate tech.
Cytopath cell enhance tech.
Cytp urne 3–5 probes ea spec.
Cytopath smear other source.
Cytopath smear other source.
Cytopath smear other source.
Cytp dx eval fna 1st ea site.
Cytopath eval fna report.
Cell marker study.
Flowcytometry/tc 1 marker.
Flowcytometry/read 16 & >.
Surgical path gross.
Tissue exam by pathologist.
Tissue exam by pathologist.
Tissue exam by pathologist.
Tissue exam by pathologist.
Special stains group 1.
Special stains group 2.
Microslide consultation.
Microslide consultation.
Comprehensive review of data.
Path consult introp.
Path consult intraop 1 bloc.
Immunohisto antibody slide.
Immunofluorescent study.
Immunofluorescent study.
Electron microscopy.
Analysis tumor.
Tumor immunohistochem/manual.
Tumor
immunohistochem/
comput.
Insitu hybridization (fish).
Insitu hybridization manual.
Eval molecul probes 51–250.
Eval molecul probes 251–500.
Chct for mal hyperthermia.
Sputum specimen collection.
Collect sweat for test.
Pathology lab procedure.
Special eye evaluation.
Corneal topography.
Special eye evaluation.
Visual field examination(s).
Visual field examination(s).
Visual field examination(s).
Cmptr ophth img optic nerve.
Cptr ophth dx img post segmt.
Ophthalmic biometry.
Special eye exam initial.
Special eye exam subsequent.
Eye exam with photos.
Eye exam with photos.
Eye photography.

92286 .......
92520 .......
92541 .......
92542 .......
92550 .......
92552 .......
92553 .......
92555 .......
92556 .......
92557 .......
92567 .......
92570 .......
92582 .......
92603 .......
92604 .......
92626 .......
93005 .......
93017 .......
93225 .......
93226 .......
93270 .......
93278 .......
93279 .......
93280 .......
93281 .......
93282 .......
93283 .......
93284 .......
93285 .......
93288 .......
93289 .......
93290 .......
93291 .......
93292 .......
93293 .......
93296 .......
93299 .......
93701 .......
93786 .......
93788 .......
93875 .......
94015 .......
94690 .......
95803 .......
95869 .......
95900 .......
95921 .......
95970 .......
96900 .......
96910 .......
96912 .......
96920 .......
96921 .......
98925 .......
98926 .......
98927 .......
98928 .......
98929 .......
98940 .......
98941 .......
98942 .......
G0127 ......
G0130 ......
G0166 ......
G0239 ......
G0389 ......
G0404 ......
G0424 ......
Q0091 ......

72080
72090
72100
72110
72114
72120
72170
72190
72202
72220
73000
73010
73020
73030
73050
73060
73070
73080
73090
73100
73110
73120
73130
73140
73510
73520
73540
73550
73560
73562
73564
73565
73590
73600
73610
73620
73630
73650
73660
74000
74010
74020
74022
76100
76510
76514
76516
76519
76645
76816
76882
76970
76977
77072
77073
77074
77076
77077
77078
77079
77080
77081
77082
77083
80500
80502
85097
86510
86850

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VerDate Sep<11>2014

HCPCS Short descriptor
X-ray exam trunk spine 2 vws.
X-ray exam scloiosis erect.
X-ray exam l-s spine 2/3 vws.
X-ray exam l-2 spine 4/>vws.
X-ray exam l-s spine bending.
X-ray bend only l-s spine.
X-ray exam of pelvis.
X-ray exam of pelvis.
X-ray exam si joints 3/> vws.
X-ray exam sacrum tailbone.
X-ray exam of collar bone.
X-ray exam of shoulder blade.
X-ray exam of shoulder.
X-ray exam of shoulder.
X-ray exam of shoulders.
X-ray exam of humerus.
X-ray exam of elbow.
X-ray exam of elbow.
X-ray exam of forearm.
X-ray exam of wrist.
X-ray exam of wrist.
X-ray exam of hand.
X-ray exam of hand.
X-ray exam of finger(s).
X-ray exam of hip.
X-ray exam of hips.
X-ray exam of pelvis & hips.
X-ray exam of thigh.
X-ray exam of knee 1 or 2.
X-ray exam of knee 3.
X-ray exam knee 4 or more.
X-ray exam of knees.
X-ray exam of lower leg.
X-ray exam of ankle.
X-ray exam of ankle.
X-ray exam of foot.
X-ray exam of foot.
X-ray exam of heel.
X-ray exam of toe(s).
X-ray exam of abdomen.
X-ray exam of abdomen.
X-ray exam of abdomen.
X-ray exam series abdomen.
X-ray exam of body section.
Ophth us b & quant a.
Echo exam of eye thickness.
Echo exam of eye.
Echo exam of eye.
Us exam breast(s).
Ob us follow-up per fetus.
Us xtr non-vasc lmtd.
Ultrasound exam follow-up.
Us bone density measure.
X-rays for bone age.
X-rays bone length studies.
X-rays bone survey limited.
X-rays bone survey infant.
Joint survey single view.
Ct bone density axial.
Ct bone density peripheral.
Dxa bone density axial.
Dxa bone density/peripheral.
Dxa bone density vert fx.
Radiographic absorptiometry.
Lab pathology consultation.
Lab pathology consultation.
Bone marrow interpretation.
Histoplasmosis skin test.
Rbc antibody screen.

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86870
86880
86885
86886
86900
86901
86904
86905
86906
86930
86970
86977
88104
88106
88107
88108
88112
88120
88160
88161
88162
88172
88173
88182
88184
88189
88300
88302
88304
88305
88307
88312
88313
88321
88323
88325
88329
88331
88342
88346
88347
88348
88358
88360

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88361 .......
88365
88368
88385
88386
89049
89220
89230
89240
92020
92025
92060
92081
92082
92083
92133
92134
92136
92225
92226
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HCPCS Short descriptor
Internal eye photography.
Laryngeal function studies.
Spontaneous nystagmus test.
Positional nystagmus test.
Tympanometry & reflex thresh.
Pure tone audiometry air.
Audiometry air & bone.
Speech threshold audiometry.
Speech audiometry complete.
Comprehensive hearing test.
Tympanometry.
Acoustic immitance testing.
Conditioning play audiometry.
Cochlear implt f/up exam 7/>.
Reprogram cochlear implt 7/>.
Eval aud rehab status.
Electrocardiogram tracing.
Cardiovascular stress test.
Ecg monit/reprt up to 48 hrs.
Ecg monit/reprt up to 48 hrs.
Remote 30 day ecg rev/report.
Ecg/signal-averaged.
Pm device progr eval sngl.
Pm device progr eval dual.
Pm device progr eval multi.
Icd device progr eval 1 sngl.
Icd device progr eval dual.
Icd device progr eval mult.
Ilr device eval progr.
Pm device eval in person.
Icd device interrogate.
Icm device eval.
Ilr device interrogate.
Wcd device interrogate.
Pm phone r-strip device eval.
Pm/icd remote tech serv.
Icm/ilr remote tech serv.
Bioimpedance cv analysis.
Ambulatory bp recording.
Ambulatory bp analysis.
Extracranial study.
Patient recorded spirometry.
Exhaled air analysis.
Actigraphy testing.
Muscle test thor paraspinal.
Motor nerve conduction test.
Autonomic nrv parasym inervj.
Analyze neurostim no prog.
Ultraviolet light therapy.
Photochemotherapy with uv-b.
Photochemotherapy with uv-a.
Laser tx skin < 250 sq cm.
Laser tx skin 250–500 sq cm.
Osteopath manj 1–2 regions.
Osteopath manj 3–4 regions.
Osteopath manj 5–6 regions.
Osteopath manj 7–8 regions.
Osteopath manj 9–10 regions.
Chiropract manj 1–2 regions.
Chiropract manj 3–4 regions.
Chiropractic manj 5 regions.
Trim nail(s).
Single energy x-ray study.
Extrnl counterpulse, per tx.
Oth resp proc, group.
Ultrasound exam aaa screen.
Ekg tracing for initial prev.
Pulmonary rehab w exer.
Obtaining screen pap smear.

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c. Calculation and Use of Cost-to-Charge
Ratios (CCRs)
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40929), we proposed to
continue to use the hospital-specific
overall ancillary and departmental costto-charge ratios (CCRs) to convert
charges to estimated costs through
application of a revenue code-to-cost
center crosswalk. To calculate the APC
costs on which the proposed CY 2015
APC payment rates were based, we
calculated hospital-specific overall
ancillary CCRs and hospital-specific
departmental CCRs for each hospital for
which we had CY 2013 claims data by
comparing these claims data to the most
recently available hospital cost reports,
which, in most cases, were from CY
2012. For the CY 2015 OPPS proposed
rates, we used the set of claims
processed during CY 2013. We applied
the hospital-specific CCR to the
hospital’s charges at the most detailed
level possible, based on a revenue codeto-cost center crosswalk that contains a
hierarchy of CCRs used to estimate costs
from charges for each revenue code.
That crosswalk is available for review
and continuous comment on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/
index.html.
To ensure the completeness of the
revenue code-to-cost center crosswalk,
we reviewed changes to the list of
revenue codes for CY 2013 (the year of
claims data we used to calculate the
proposed CY 2015 OPPS payment rates)
and found that the National Uniform
Billing Committee (NUBC) did not add
any new revenue codes to the NUBC
2013 Data Specifications Manual.
In accordance with our longstanding
policy, we calculated CCRs for the
standard and nonstandard cost centers
accepted by the electronic cost report
database. In general, the most detailed
level at which we calculated CCRs was
the hospital-specific departmental level.
For a discussion of the hospital-specific
overall ancillary CCR calculation, we
refer readers to the CY 2007 OPPS/ASC
final rule with comment period (71 FR
67983 through 67985). The calculation
of blood costs is a longstanding
exception (since the CY 2005 OPPS) to
this general methodology for calculation
of CCRs used for converting charges to
costs on each claim. This exception is
discussed in detail in the CY 2007
OPPS/ASC final rule with comment
period and discussed further in section
II.A.2.d.(2) of this final rule with
comment period.
For the CCR calculation process, we
used the same general approach that we

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used in developing the final APC rates
for CY 2007 and thereafter, using the
revised CCR calculation that excluded
the costs of paramedical education
programs and weighted the outpatient
charges by the volume of outpatient
services furnished by the hospital. We
refer readers to the CY 2007 OPPS/ASC
final rule with comment period for more
information (71 FR 67983 through
67985). We first limited the population
of cost reports to only those hospitals
that filed outpatient claims in CY 2013
before determining whether the CCRs
for such hospitals were valid.
We then calculated the CCRs for each
cost center and the overall ancillary
CCR for each hospital for which we had
claims data. We did this using hospitalspecific data from the Hospital Cost
Report Information System (HCRIS). We
used the most recent available cost
report data, which, in most cases, were
from cost reports with cost reporting
periods beginning in CY 2012. For the
proposed rule, we used the most
recently submitted cost reports to
calculate the CCRs to be used to
calculate costs for the proposed CY 2015
OPPS payment rates. If the most
recently available cost report was
submitted but not settled, we looked at
the last settled cost report to determine
the ratio of submitted to settled cost
using the overall ancillary CCR, and we
then adjusted the most recent available
submitted, but not settled, cost report
using that ratio. We then calculated both
an overall ancillary CCR and cost
center-specific CCRs for each hospital.
We used the overall ancillary CCR
referenced above for all purposes that
require use of an overall ancillary CCR.
We proposed to continue this
longstanding methodology for the
calculation of costs for CY 2015.
Since the implementation of the
OPPS, some commenters have raised
concerns about potential bias in the
OPPS cost-based weights due to ‘‘charge
compression,’’ which is the practice of
applying a lower charge markup to
higher cost services and a higher charge
markup to lower cost services. As a
result, the cost-based weights may
reflect some aggregation bias,
undervaluing high-cost items and
overvaluing low-cost items when an
estimate of average markup, embodied
in a single CCR, is applied to items of
widely varying costs in the same cost
center. This issue was evaluated in a
report by the Research Triangle
Institute, International (RTI). 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. For a complete discussion of

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the RTI recommendations, public
comments, and our responses, we refer
readers to the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68519
through 68527).
We addressed the RTI finding that
there was aggregation bias in both the
IPPS and the OPPS cost estimation of
expensive and inexpensive medical
supplies in the FY 2009 IPPS final rule
(73 FR 48458 through 45467).
Specifically, we created one cost center
for ‘‘Medical Supplies Charged to
Patients’’ and one cost center for
‘‘Implantable Devices Charged to
Patients,’’ essentially splitting the then
current cost center for ‘‘Medical
Supplies Charged to Patients’’ into one
cost center for low-cost medical
supplies and another cost center for
high-cost implantable devices in order
to mitigate some of the effects of charge
compression. In determining the items
that should be reported in these
respective cost centers, we adopted
commenters’ recommendations that
hospitals should use revenue codes
established by the AHA’s NUBC to
determine the items that should be
reported in the ‘‘Medical Supplies
Charged to Patients’’ and the
‘‘Implantable Devices Charged to
Patients’’ cost centers. For a complete
discussion of the rationale for the
creation of the new cost center for
‘‘Implantable Devices Charged to
Patients,’’ a summary of public
comments received, and our responses
to those public comments, we refer
readers to the FY 2009 IPPS final rule.
The cost center for ‘‘Implantable
Devices Charged to Patients’’ has been
available for use for cost reporting
periods beginning on or after May 1,
2009. In the CY 2013 OPPS/ASC final
rule with comment period, we
determined that a significant volume of
hospitals were utilizing the
‘‘Implantable Devices Charged to
Patients’’ cost center. Because a
sufficient amount of data from which to
generate a meaningful analysis was
available, we established in the CY 2013
OPPS/ASC final rule with comment
period a policy to create a distinct CCR
using the ‘‘Implantable Devices Charged
to Patients’’ cost center (77 FR 68225).
We retained this policy for the CY 2014
OPPS and, as we proposed, we are
continuing this practice for the CY 2015
OPPS.
In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50075 through 50080), we
finalized our proposal to create new
standard cost centers for ‘‘Computed
Tomography (CT),’’ ‘‘Magnetic
Resonance Imaging (MRI),’’ and
‘‘Cardiac Catheterization,’’ and to
require that hospitals report the costs

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
and charges for these services under
these 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/ASC proposed
and final rules, RTI also found that the
costs and charges of CT scans, MRIs,
and cardiac catheterization differ
significantly from the costs and charges
of other services included in the
standard associated cost center. RTI
concluded that both the IPPS and the
OPPS relative payment weights would
better estimate the costs of those
services if CMS were to add standard
costs centers for CT scans, 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. We refer readers to the FY
2011 IPPS/LTCH PPS final rule (75 FR
50075 through 50080) for a more
detailed discussion on the reasons for
the creation of standard cost centers for
CT scans, MRIs, and cardiac
catheterization. The new standard cost
centers for CT scans, MRIs, and cardiac
catheterization were effective for cost
report periods beginning on or after May
1, 2010, on the revised cost report Form
CMS–2552–10.
Using the HCRIS update for the CY
2015 final rule cycle, which we used to
estimate costs in the CY 2015 OPPS
ratesetting process, as discussed in the
CY 2015 OPPS/ASC proposed rule (79
FR 40930), we were able to calculate a
valid implantable device CCR for 2,895
hospitals, a valid MRI CCR for 1,934
hospitals, a valid CT scan CCR for 2,035

hospitals, and a valid Cardiac
Catheterization CCR for 1,397 hospitals.
In our CY 2014 OPPS/ASC proposed
rule discussion (78 FR 43549), we noted
that, for CY 2014, the estimated changes
in geometric mean estimated APC cost
of using data from the new standard cost
centers for CT scans and MRIs appeared
consistent with RTI’s analysis of cost
report and claims data in the July 2008
final report (pages 5 and 6). RTI
concluded that ‘‘in hospitals that
aggregate data for CT scanning, MRI, or
nuclear medicine services with the
standard line for Diagnostic Radiology,
costs for these services all appear
substantially overstated, while the costs
for plain films, ultrasound and other
imaging procedures are correspondingly
understated.’’ We also noted that there
were limited additional impacts in the
implantable device-related APCs from
adopting the new cost report Form CMS
2552–10 because we had used data from
the standard cost center for implantable
medical devices beginning in CY 2013
OPPS ratesetting, as discussed above.
As we indicated in prior rulemaking
(77 FR 68223 through 68225), once we
determined that cost report data for the
new standard cost centers were
sufficiently available, we would analyze
that data and, if appropriate, we would
propose to use the distinct CCRs for new
standard cost centers described above in
the calculation of the OPPS relative
payment weights. As stated in the CY
2014 OPPS/ASC proposed rule (78 FR
43550), we have conducted our analysis
and concluded that we should develop
distinct CCRs for each of the new cost
centers and use them in ratesetting.

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Therefore, we began in the CY 2014
OPPS, and proposed to continue for the
CY 2015 OPPS, to calculate the OPPS
relative payment weights using distinct
CCRs for cardiac catheterization, CT
scan, MRI, and implantable medical
devices. Section XXI. of this final rule
with comment period includes the
impacts of calculating the CY 2015
OPPS relative payment weights using
these new standard cost centers.
Comment: A few commenters
encouraged CMS to ensure data quality
and continue to test, refine, and
improve its CCR analysis for CT scans
and MRI.
Response: We will continue to
monitor the CCRs for these services.
After consideration of the public
comments we received, we are
finalizing our proposal to calculate the
OPPS relative payment weights using
distinct CCRs for cardiac
catheterization, CT scan, MRI, and
implantable medical devices for CY
2015 without modification.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74847), we
finalized a policy to remove claims from
providers that use a cost allocation
method of ‘‘square feet’’ to calculate
CCRs used to estimate costs associated
with the CT and MRI APCs. This change
allows hospitals additional time to use
one of the more accurate cost allocation
methods, and thereby improve the
accuracy of the CCRs on which the
OPPS relative payment weights are
developed. In Table 2 below, we display
CCR values for providers based on
various cost allocation methods.

TABLE 2—CCR STATISTICAL VALUES BASED ON USE OF DIFFERENT COST ALLOCATION METHODS
CT

MRI

Cost allocation method
Median CCR

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All Providers .....................................................................................................
Square Feet Only ............................................................................................
Direct Assign ....................................................................................................
Dollar Value .....................................................................................................
Direct Assign and Dollar Value .......................................................................

As part of this transitional policy to
estimate the CT and MRI APC relative
payment weights using only cost data
from providers that do not use ‘‘square
feet’’ as the cost allocation statistic, we
adopted a policy in the CY 2014 OPPS/
ASC final rule with comment period
that we will sunset this policy in 4 years
once the updated cost report data

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0.0464
0.0370
0.0640
0.0555
0.0554

become available for ratesetting
purposes. We stated that we believe 4
years is sufficient time for hospitals that
have not done so to transition to a more
accurate cost allocation method and for
the related data to be available for
ratesetting purposes. Therefore, in CY
2018, we will estimate the CT and MRI
APC relative payment weights using

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Mean CCR
0.0608
0.0502
0.0740
0.0718
0.0715

Median CCR
0.0901
0.0787
0.1063
0.1046
0.1047

Mean CCR
0.1151
0.1013
0.1294
0.1298
0.1297

cost data from all providers, regardless
of the cost allocation statistic employed.
In Table 3 below, we display the impact
of excluding claims based on the
‘‘square feet’’ cost allocation method
from estimates of CT and MRI costs in
CY 2015.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

TABLE 3—PERCENTAGE CHANGE IN ESTIMATED COST FOR CT AND MRI APCS WHEN EXCLUDING CLAIMS FROM
PROVIDERS USING ‘‘SQUARE FEET’’ AS THE COST ALLOCATION METHOD
CY 2015
APC
0283
0284
0331
0332
0333
0334
0336
0337
0383
0662
8005
8006
8007
8008

............
............
............
............
............
............
............
............
............
............
............
............
............
............

Computed Tomography with Contrast .......................................................................................................................
Magnetic Resonance Imaging and Magnetic Resonance Angiography with Contrast .............................................
Combined Abdomen and Pelvis CT without Contrast ...............................................................................................
Computed Tomography without Contrast ..................................................................................................................
Computed Tomography without Contrast followed by Contrast ................................................................................
Combined Abdomen and Pelvis CT with Contrast ....................................................................................................
Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast ........................................
Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast f ......................................
Cardiac Computed Tomographic Imaging .................................................................................................................
CT Angiography .........................................................................................................................................................
CT and CTA without Contrast Composite .................................................................................................................
CT and CTA with Contrast Composite ......................................................................................................................
MRI and MRA without Contrast Composite ...............................................................................................................
MRI and MRA with Contrast Composite ....................................................................................................................

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Comment: A few commenters
supported CMS’ proposal to continue
removing claims from providers that use
the ‘‘square feet’’ cost allocation method
from the cost model. One commenter
suggested that CMS continue removing
claims from providers that use this
method in CY 2018 and beyond.
Response: We thank the commenters
for their support and are finalizing this
policy as proposed. We will continue to
only include cost data from providers
that do not use ‘‘square feet’’ as the cost
allocation statistic in relative payment
weights through CY 2017. For CY 2018
and beyond, we will estimate the CT
and MRI APC relative payment weights
using cost data from all providers,
regardless of the cost allocation statistic
employed.
In summary, as we proposed, we are
continuing to use data from the
‘‘Implantable Devices Charged to
Patients’’ and ‘‘Cardiac Catheterization’’
cost centers to create distinct CCRs for
use in calculating the OPPS relative
payment weights for the CY 2015 OPPS.
For the ‘‘Magnetic Resonance Imaging
(MRI)’’ and ‘‘Computed Tomography
(CT) Scan’’ APCs identified in Table 3
of this final rule with comment period,
we are continuing our policy of
removing claims from cost modeling for
those providers using ‘‘square feet’’ as
the cost allocation statistic for CY 2015.
2. Data Development Process and
Calculation of Costs Used for Ratesetting
In this section of this final rule with
comment period, we discuss the use of
claims to calculate the OPPS payment
rates for CY 2015. The Hospital OPPS
page on the CMS Web site on which this
final rule with comment period is
posted (http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html)
provides an accounting of claims used

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change

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in the development of the final payment
rates. That accounting provides
additional detail regarding the number
of claims derived at each stage of the
process. In addition, below in this
section we discuss the file of claims that
comprises the data set that is available
for purchase under a CMS data use
agreement. The CMS Web site, http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html,
includes information about purchasing
the ‘‘OPPS Limited Data Set,’’ which
now includes the additional variables
previously available only in the OPPS
Identifiable Data Set, including ICD–9–
CM diagnosis codes and revenue code
payment amounts. This file is derived
from the CY 2013 claims that were used
to calculate the final payment rates for
the CY 2015 OPPS.
In the history of the OPPS, we have
traditionally established the scaled
relative weights on which payments are
based using APC median costs, which is
a process described in the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74188). However, as
discussed in more detail in section
II.A.2.f. of the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68259
through 68271), we finalized the use of
geometric mean costs to calculate the
relative weights on which the CY 2013
OPPS payment rates were based. While
this policy changed the cost metric on
which the relative payments are based,
the data process in general remained the
same, under the methodologies that we
used to obtain appropriate claims data
and accurate cost information in
determining estimated service cost. For
CY 2015, as we proposed, we are
continuing to use geometric mean costs
to calculate the relative weights on
which the CY 2015 OPPS payment rates
are based.

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9.6
4.0
12.1
14.5
12.3
10.1
7.5
6.4
3.6
10.3
12.8
9.4
6.7
6.9

We used the methodology described
in sections II.A.2.a. through II.A.2.f. of
this final rule with comment period to
calculate the costs we used to establish
the relative weights used in calculating
the OPPS payment rates for CY 2015
shown in Addenda A and B to this final
rule with comment period (which are
available via the Internet on the CMS
Web site). We refer readers to section
II.A.4. of this final rule with comment
period for a discussion of the
conversion of APC costs to scaled
payment weights.
a. Claims Preparation
For this final rule with comment
period, we used the CY 2013 hospital
outpatient claims processed through
June 30, 2014, to calculate the geometric
mean costs of APCs that underpin the
relative payment weights for CY 2015.
To begin the calculation of the relative
payment weights for CY 2015, we
pulled all claims for outpatient services
furnished in CY 2013 from the national
claims history file. This is not the
population of claims paid under the
OPPS, but all outpatient claims
(including, for example, critical access
hospital (CAH) claims and hospital
claims for clinical laboratory tests for
persons who are neither inpatients nor
outpatients of the hospital).
We then excluded claims with
condition codes 04, 20, 21, and 77
because these are claims that providers
submitted to Medicare knowing that no
payment would be made. For example,
providers submit claims with a
condition code 21 to elicit an official
denial notice from Medicare and
document that a service is not covered.
We then excluded claims for services
furnished in Maryland, Guam, the U.S.
Virgin Islands, American Samoa, and
the Northern Mariana Islands because
hospitals in those geographic areas are

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
not paid under the OPPS, and, therefore,
we do not use claims for services
furnished in these areas in ratesetting.
We divided the remaining claims into
the three groups shown below. Groups
2 and 3 comprise the 123 million claims
that contain hospital bill types paid
under the OPPS.
1. Claims that were not bill types 12X
(Hospital Inpatient (Medicare Part B
only)), 13X (Hospital Outpatient), 14X
(Hospital—Laboratory Services
Provided to Nonpatients), or 76X
(Clinic—Community Mental Health
Center). Other bill types are not paid
under the OPPS; therefore, these claims
were not used to set OPPS payment.
2. Claims that were bill types 12X,
13X or 14X. Claims with bill types 12X
and 13X are hospital outpatient claims.
Claims with bill type 14X are laboratory
specimen claims.
3. Claims that were bill type 76X
(CMHC).
To convert charges on the claims to
estimated cost, we multiplied the
charges on each claim by the
appropriate hospital-specific CCR
associated with the revenue code for the
charge as discussed in section II.A.1.c.
of this final rule with comment period.
We then flagged and excluded CAH
claims (which are not paid under the
OPPS) and claims from hospitals with
invalid CCRs. The latter included claims
from hospitals without a CCR; those
from hospitals paid an all-inclusive rate;
those from hospitals with obviously
erroneous CCRs (greater than 90 or less
than 0.0001); and those from hospitals
with overall ancillary CCRs that were
identified as outliers (that exceeded ± 3
standard deviations from the geometric
mean after removing error CCRs). In
addition, we trimmed the CCRs at the
cost center (that is, departmental) level
by removing the CCRs for each cost
center as outliers if they exceeded ± 3
standard deviations from the geometric
mean. We used a four-tiered hierarchy
of cost center CCRs, which is the
revenue code-to-cost center crosswalk,
to match a cost center to every possible
revenue code appearing in the
outpatient claims that is relevant to
OPPS services, with the top tier being
the most common cost center and the
last tier being the default CCR. If a
hospital’s cost center CCR was deleted
by trimming, we set the CCR for that
cost center to ‘‘missing’’ so that another
cost center CCR in the revenue center
hierarchy could apply. If no other cost
center CCR could apply to the revenue
code on the claim, we used the
hospital’s overall ancillary CCR for the
revenue code in question as the default
CCR. For example, if a visit was
reported under the clinic revenue code

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but the hospital did not have a clinic
cost center, we mapped the hospitalspecific overall ancillary CCR to the
clinic revenue code. The revenue codeto-cost center crosswalk is available for
inspection on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
Revenue codes that we do not use in
establishing relative costs or to model
impacts are identified with an ‘‘N’’ in
the revenue code-to-cost center
crosswalk.
We applied the CCRs as described
above to claims with bill type 12X, 13X,
or 14X, excluding all claims from CAHs
and hospitals in Maryland, Guam, the
U.S. Virgin Islands, American Samoa,
and the Northern Mariana Islands and
claims from all hospitals for which
CCRs were flagged as invalid.
We identified claims with condition
code 41 as partial hospitalization
services of hospitals and moved them to
another file. We note that the separate
file containing partial hospitalization
claims is included in the files that are
available for purchase as discussed
above.
We then excluded claims without a
HCPCS code. We moved to another file
claims that contained only influenza
and pneumococcal pneumonia (PPV)
vaccines. Influenza and PPV vaccines
are paid at reasonable cost; therefore,
these claims are not used to set OPPS
rates.
We next copied line-item costs for
drugs, blood, and brachytherapy sources
to a separate file (the lines stay on the
claim, but are copied onto another file).
No claims were deleted when we copied
these lines onto another file. These lineitems are used to calculate a per unit
arithmetic and geometric mean and
median cost and a per day arithmetic
and geometric mean and median cost for
drugs and nonimplantable biologicals,
therapeutic radiopharmaceutical agents,
and brachytherapy sources, as well as
other information used to set payment
rates, such as a unit-to-day ratio for
drugs.
Prior to CY 2013, our payment policy
for nonpass-through separately paid
drugs and biologicals was based on a
redistribution methodology that
accounted for pharmacy overhead by
allocating cost from packaged drugs to
separately paid drugs. This
methodology typically would have
required us to reduce the cost associated
with packaged coded and uncoded
drugs in order to allocate that cost.
However, for CY 2013, we paid for
separately payable drugs and biologicals
under the OPPS at ASP+6 percent,
based upon the statutory default

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66787

described in section
1833(t)(14)(A)(iii)(II) of the Act. Under
that policy, we did not redistribute the
pharmacy overhead costs from packaged
drugs to separately paid drugs. For the
CY 2014 OPPS, we continued the CY
2013 payment policy for separately
payable drugs and biologicals, and we
are continuing this payment policy for
CY 2015. We refer readers to section
V.B.3. of this final rule with comment
period for a complete discussion of our
CY 2015 final payment policy for
separately paid drugs and biologicals.
We then removed line-items that were
not paid during claim processing,
presumably for a line-item rejection or
denial. The number of edits for valid
OPPS payment in the Integrated
Outpatient Code Editor (I/OCE) and
elsewhere has grown significantly in the
past few years, especially with the
implementation of the full spectrum of
National Correct Coding Initiative
(NCCI) edits. To ensure that we are
using valid claims that represent the
cost of payable services to set payment
rates, we removed line-items with an
OPPS status indicator that were not paid
during claims processing in the claim
year, but have a status indicator of ‘‘S,’’
‘‘T,’’ and ‘‘V’’ in the prospective year’s
payment system. This logic preserves
charges for services that would not have
been paid in the claim year but for
which some estimate of cost is needed
for the prospective year, such as
services newly removed from the
inpatient list for CY 2014 that were
assigned status indicator ‘‘C’’ in the
claim year. It also preserves charges for
packaged services so that the costs can
be included in the cost of the services
with which they are reported, even if
the CPT codes for the packaged services
were not paid because the service is part
of another service that was reported on
the same claim or the code otherwise
violates claims processing edits.
For CY 2015, as we proposed, we are
continuing the policy we implemented
for CY 2013 and CY 2014 to exclude
line-item data for pass-through drugs
and biologicals (status indicator ‘‘G’’ for
CY 2013) and nonpass-through drugs
and biologicals (status indicator ‘‘K’’ for
CY 2013) where the charges reported on
the claim for the line were either denied
or rejected during claims processing.
Removing lines that were eligible for
payment but were not paid ensures that
we are using appropriate data. The trim
avoids using cost data on lines that we
believe were defective or invalid
because those rejected or denied lines
did not meet the Medicare requirements
for payment. For example, edits may
reject a line for a separately paid drug
because the number of units billed

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exceeded the number of units that
would be reasonable and, therefore, is
likely a billing error (for example, a line
reporting 55 units of a drug for which
5 units is known to be a fatal dose). As
with our trimming in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 74849) of line-items with
a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
‘‘X,’’ we believe that unpaid line-items
represent services that are invalidly
reported and, therefore, should not be
used for ratesetting. We believe that
removing lines with valid status
indicators that were edited and not paid
during claims processing increases the
accuracy of the data used for ratesetting
purposes.
For the CY 2015 OPPS, as part of our
continued packaging of clinical
diagnostic laboratory tests, we also are
applying the line item trim to these
services if they did not receive payment
in the claims year. Removing these lines
ensures that, in establishing the CY
2015 OPPS relative payment weights,
we appropriately allocate the costs
associated with packaging these
services.

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b. Splitting Claims and Creation of
‘‘Pseudo’’ Single Procedure Claims
(1) Splitting Claims
For the CY 2015 OPPS, we then split
the remaining claims into five groups:
single majors; multiple majors; single
minors; multiple minors; and other
claims. (Specific definitions of these
groups are presented below.) We note
that, under the proposed CY 2015 OPPS
packaging policy (79 FR 40933), we
proposed to delete status indicator ‘‘X’’
and revise the title and description of
status indicator ‘‘Q1’’ to reflect that
deletion, as discussed in sections II.A.3.
and XI. of this final rule with comment
period. We note that we also proposed
to create status indicator ‘‘J1’’ to reflect
the comprehensive APCs (C–APCs)
discussed in section II.A.2.e. of this
final rule with comment period. For CY
2015, we proposed to define major
procedures as any HCPCS code having
a status indicator of ‘‘J1,’’ ‘‘S,’’ ‘‘T,’’ or
‘‘V,’’ define minor procedures as any
code having a status indicator of ‘‘F,’’
‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N,’’
and classify ‘‘other’’ procedures as any
code having a status indicator other
than one that we have classified as
major or minor. For CY 2015, we
proposed to continue to assign status
indicator ‘‘R’’ to blood and blood
products; status indicator ‘‘U’’ to
brachytherapy sources; status indicator
‘‘Q1’’ to all ‘‘STV-packaged codes;’’
status indicator ‘‘Q2’’ to all ‘‘T-packaged
codes;’’ and status indicator ‘‘Q3’’ to all

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codes that may be paid through a
composite APC based on compositespecific criteria or paid separately
through single code APCs when the
criteria are not met.
As discussed in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68709), we established status
indicators ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ to
facilitate identification of the different
categories of codes. As we proposed, we
are treating these codes in the same
manner for data purposes for CY 2015
as we have treated them since CY 2008.
Specifically, we are continuing to
evaluate whether the criteria for
separate payment of codes with status
indicator ‘‘Q1’’ or ‘‘Q2’’ are met in
determining whether they are treated as
major or minor codes. Codes with status
indicator ‘‘Q1’’ or ‘‘Q2’’ are carried
through the data either with status
indicator ‘‘N’’ as packaged or, if they
meet the criteria for separate payment,
they are given the status indicator of the
APC to which they are assigned and are
considered as ‘‘pseudo’’ single
procedure claims for major codes. Codes
assigned status indicator ‘‘Q3’’ are paid
under individual APCs unless they
occur in the combinations that qualify
for payment as composite APCs and,
therefore, they carry the status indicator
of the individual APC to which they are
assigned through the data process and
are treated as major codes during both
the split and ‘‘pseudo’’ single creation
process. The calculation of the
geometric mean costs for composite
APCs from multiple procedure major
claims is discussed in section II.A.2.f. of
this final rule with comment period.
Specifically, we divided the
remaining claims into the following five
groups:
1. Single Procedure Major Claims:
Claims with a single separately payable
procedure (that is, status indicator ‘‘S,’’
‘‘T,’’ or ‘‘V’’ which includes codes with
status indicator ‘‘Q3’’); claims with
status indicator ‘‘J1,’’ which receive
special processing for C–APCs, as
discussed in section II.A.2.e. of this
final rule with comment period; claims
with one unit of a status indicator ‘‘Q1’’
code (‘‘STV-packaged’’) where there was
no code with status indicator ‘‘S,’’ ‘‘T,’’
or ‘‘V’’ on the same claim on the same
date; or claims with one unit of a status
indicator ‘‘Q2’’ code (‘‘T-packaged’’)
where there was no code with a status
indicator ‘‘T’’ on the same claim on the
same date.
2. Multiple Procedure Major Claims:
Claims with more than one separately
payable procedure (that is, status
indicator ‘‘S,’’ ‘‘T,’’ or ‘‘V’’ which
includes codes with status indicator
‘‘Q3’’), or multiple units of one payable

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procedure. These claims include those
codes with a status indicator ‘‘Q2’’ code
(‘‘T-packaged’’) where there was no
procedure with a status indicator ‘‘T’’
on the same claim on the same date of
service but where there was another
separately paid procedure on the same
claim with the same date of service (that
is, another code with status indicator
‘‘S’’ or ‘‘V’’). We also include in this set
claims that contained one unit of one
code when the bilateral modifier was
appended to the code and the code was
conditionally or independently
bilateral. In these cases, the claims
represented more than one unit of the
service described by the code,
notwithstanding that only one unit was
billed.
3. Single Procedure Minor Claims:
Claims with a single HCPCS code that
was assigned status indicator ‘‘F,’’ ‘‘G,’’
‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N’’ and
not status indicator ‘‘Q1’’ (‘‘STVpackaged’’) or status indicator ‘‘Q2’’ (‘‘Tpackaged’’) code.
4. Multiple Procedure Minor Claims:
Claims with multiple HCPCS codes that
are assigned status indicator ‘‘F,’’ ‘‘G,’’
‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N;’’ claims
that contain more than one code with
status indicator ‘‘Q1’’ (‘‘STV-packaged’’)
or more than one unit of a code with
status indicator ‘‘Q1’’ but no codes with
status indicator ‘‘S,’’ ‘‘T,’’ or ‘‘V’’ on the
same date of service; or claims that
contain more than one code with status
indicator ‘‘Q2’’ (T-packaged), or ‘‘Q2’’
and ‘‘Q1,’’ or more than one unit of a
code with status indicator ‘‘Q2’’ but no
code with status indicator ‘‘T’’ on the
same date of service.
5. Non-OPPS Claims: Claims that
contain no services payable under the
OPPS (that is, all status indicators other
than those listed for major or minor
status). These claims were excluded
from the files used for the OPPS. NonOPPS claims have codes paid under
other fee schedules, for example,
durable medical equipment, and do not
contain a code for a separately payable
or packaged OPPS service. Non-OPPS
claims include claims for therapy
services paid sometimes under the
OPPS but billed, in these non-OPPS
cases, with revenue codes indicating
that the therapy services would be paid
under the Medicare Physician Fee
Schedule (MPFS).
The claims listed in numbers 1, 2, 3,
and 4 above are included in the data file
that can be purchased as described
above. Claims that contain codes to
which we have assigned status
indicators ‘‘Q1’’ (‘‘STV-packaged’’) and
‘‘Q2’’ (‘‘T-packaged’’) appear in the data
for the single major file, the multiple
major file, and the multiple minor file

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used for ratesetting. Claims that contain
codes to which we have assigned status
indicator ‘‘Q3’’ (composite APC
members) appear in both the data of the
single and multiple major files used in
this final rule with comment period,
depending on the specific composite
calculation.
(2) Creation of ‘‘Pseudo’’ Single
Procedure Claims
To develop ‘‘pseudo’’ single
procedure claims for this final rule with
comment period, we examined both the
multiple procedure major claims and
the multiple procedure minor claims.
We first examined the multiple major
procedure claims for dates of service to
determine if we could break them into
‘‘pseudo’’ single procedure claims using
the dates of service for all lines on the
claim. If we could create claims with
single major procedures by using dates
of service, we created a single procedure
claim record for each separately payable
procedure on a different date of service
(that is, a ‘‘pseudo’’ single procedure
claim).
As proposed, we also use the bypass
codes listed in Addendum N to this
final rule with comment period (which
is available via the Internet on our Web
site) and discussed in section II.A.1.b. of
this final rule with comment period to
remove separately payable procedures
which we determined contained limited
or no packaged costs or that were
otherwise suitable for inclusion on the
bypass list from a multiple procedure
bill. As discussed above, we ignore the
‘‘overlap bypass codes,’’ that is, those
HCPCS codes that are both on the
bypass list and are members of the
multiple imaging composite APCs, in
this initial assessment for ‘‘pseudo’’
single procedure claims. The final CY
2015 ‘‘overlap bypass codes’’ are listed
in Addendum N to this final rule with
comment period (which is available via
the Internet on the CMS Web site).
When one of the two separately payable
procedures on a multiple procedure
claim was on the bypass list, we split
the claim into two ‘‘pseudo’’ single
procedure claim records. The single
procedure claim record that contained
the bypass code did not retain packaged
services. The single procedure claim
record that contained the other
separately payable procedure (but no
bypass code) retained the packaged
revenue code charges and the packaged
HCPCS code charges. We also removed
lines that contained multiple units of
codes on the bypass list and treated
them as ‘‘pseudo’’ single procedure
claims by dividing the cost for the
multiple units by the number of units
on the line. If one unit of a single,

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separately payable procedure code
remained on the claim after removal of
the multiple units of the bypass code,
we created a ‘‘pseudo’’ single procedure
claim from that residual claim record,
which retained the costs of packaged
revenue codes and packaged HCPCS
codes. This enabled us to use claims
that would otherwise be multiple
procedure claims and could not be used.
We then assessed the claims to
determine if the criteria for the multiple
imaging composite APCs, discussed in
section II.A.2.f.(5) of this final rule with
comment period, were met. If the
criteria for the imaging composite APCs
were met, we created a ‘‘single session’’
claim for the applicable imaging
composite service and determined
whether we could use the claim in
ratesetting. For HCPCS codes that are
both conditionally packaged and are
members of a multiple imaging
composite APC, we first assessed
whether the code would be packaged
and, if so, the code ceased to be
available for further assessment as part
of the composite APC. Because the
packaged code would not be a
separately payable procedure, we
considered it to be unavailable for use
in setting the composite APC costs on
which the CY 2015 OPPS relative
payment weights are based. Having
identified ‘‘single session’’ claims for
the imaging composite APCs, we
reassessed the claim to determine if,
after removal of all lines for bypass
codes, including the ‘‘overlap bypass
codes,’’ a single unit of a single
separately payable code remained on
the claim. If so, we attributed the
packaged costs on the claim to the
single unit of the single remaining
separately payable code other than the
bypass code to create a ‘‘pseudo’’ single
procedure claim. We also identified
line-items of overlap bypass codes as a
‘‘pseudo’’ single procedure claim. This
allowed us to use more claims data for
ratesetting purposes.
As we proposed, we also examined
the multiple procedure minor claims to
determine whether we could create
‘‘pseudo’’ single procedure claims.
Specifically, where the claim contained
multiple codes with status indicator
‘‘Q1’’ (‘‘STV-packaged’’) on the same
date of service or contained multiple
units of a single code with status
indicator ‘‘Q1,’’ we selected the status
indicator ‘‘Q1’’ HCPCS code that had
the highest CY 2014 relative payment
weight, and set the units to one on that
HCPCS code to reflect our policy of
paying only one unit of a code with a
status indicator of ‘‘Q1.’’ We then
packaged all costs for the following into
a single cost for the ‘‘Q1’’ HCPCS code

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66789

that had the highest CY 2014 relative
payment weight to create a ‘‘pseudo’’
single procedure claim for that code:
additional units of the status indicator
‘‘Q1’’ HCPCS code with the highest CY
2014 relative payment weight; other
codes with status indicator ‘‘Q1;’’ and
all other packaged HCPCS codes and
packaged revenue code costs. We
changed the status indicator for the
selected code from the data status
indicator of ‘‘N’’ to the status indicator
of the APC to which the selected
procedure was assigned for further data
processing and considered this claim as
a major procedure claim. We used this
claim in the calculation of the APC
geometric mean cost for the status
indicator ‘‘Q1’’ HCPCS code.
Similarly, if a multiple procedure
minor claim contained multiple codes
with status indicator ‘‘Q2’’ (‘‘Tpackaged’’) or multiple units of a single
code with status indicator ‘‘Q2,’’ we
selected the status indicator ‘‘Q2’’
HCPCS code that had the highest CY
2014 relative payment weight and set
the units to one on that HCPCS code to
reflect our policy of paying only one
unit of a code with a status indicator of
‘‘Q2.’’ We then packaged all costs for the
following into a single cost for the ‘‘Q2’’
HCPCS code that had the highest CY
2014 relative payment weight to create
a ‘‘pseudo’’ single procedure claim for
that code: additional units of the status
indicator ‘‘Q2’’ HCPCS code with the
highest CY 2014 relative payment
weight; other codes with status
indicator ‘‘Q2’’; and other packaged
HCPCS codes and packaged revenue
code costs. We changed the status
indicator for the selected code from a
data status indicator of ‘‘N’’ to the status
indicator of the APC to which the
selected code was assigned, and we
considered this claim as a major
procedure claim.
If a multiple procedure minor claim
contained multiple codes with status
indicator ‘‘Q2’’ (‘‘T-packaged’’) and
status indicator ‘‘Q1’’ (‘‘STVpackaged’’), we selected the T-packaged
status indicator ‘‘Q2’’ HCPCS code that
had the highest relative payment weight
for CY 2014 and set the units to one on
that HCPCS code to reflect our policy of
paying only one unit of a code with a
status indicator of ‘‘Q2.’’ We then
packaged all costs for the following into
a single cost for the selected (‘‘Tpackaged’’) HCPCS code to create a
‘‘pseudo’’ single procedure claim for
that code: additional units of the status
indicator ‘‘Q2’’ HCPCS code with the
highest CY 2014 relative payment
weight; other codes with status
indicator ‘‘Q2;’’ codes with status
indicator ‘‘Q1’’ (‘‘STV-packaged’’); and

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other packaged HCPCS codes and
packaged revenue code costs. We
selected status indicator ‘‘Q2’’ HCPCS
codes instead of ‘‘Q1’’ HCPCS codes
because ‘‘Q2’’ HCPCS codes have higher
CY 2014 relative payment weights. If a
status indicator ‘‘Q1’’ HCPCS code had
a higher CY 2014 relative payment
weight, it became the primary code for
the simulated single bill process. We
changed the status indicator for the
selected status indicator ‘‘Q2’’ (‘‘Tpackaged’’) code from a data status
indicator of ‘‘N’’ to the status indicator
of the APC to which the selected code
was assigned and we considered this
claim as a major procedure claim.
We then applied our process for
creating ‘‘pseudo’’ single procedure
claims to the conditionally packaged
codes that do not meet the criteria for
packaging, which enabled us to create
single procedure claims from them, if
they met the criteria for single
procedure claims. Conditionally
packaged codes are identified using
status indicators ‘‘Q1’’ and ‘‘Q2,’’ and
are described in section XI.A. of this
final rule with comment period.
Lastly, we excluded those claims that
we were not able to convert to single
procedure claims even after applying all
of the techniques for creation of
‘‘pseudo’’ single procedure claims to
multiple procedure major claims and to
multiple procedure minor claims. As
has been our practice in recent years, we
also excluded claims that contained
codes that were viewed as
independently or conditionally bilateral
and that contained the bilateral modifier
(Modifier 50 (Bilateral procedure))
because the line-item cost for the code
represented the cost of two units of the
procedure, notwithstanding that
hospitals billed the code with a unit of
one.
We proposed to continue to apply the
methodology described above for the
purpose of creating ‘‘pseudo’’ single
procedure claims for the CY 2015 OPPS.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal to
continue to apply the methodology
described above for the purpose of
creating ‘‘pseudo’’ single procedure
claims for the CY 2015 OPPS.

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c. Completion of Claim Records and
Geometric Mean Cost Calculations
(1) General Process
We then packaged the costs of
packaged HCPCS codes (codes with
status indicator ‘‘N’’ listed in
Addendum B to this final rule with
comment period (which is available via
the Internet on the CMS Web site) and

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the costs of those lines for codes with
status indicator ‘‘Q1’’ or ‘‘Q2’’ when
they are not separately paid), and the
costs of the services reported under
packaged revenue codes in Table 4
below that appeared on the claim
without a HCPCS code into the cost of
the single major procedure remaining on
the claim. For a more complete
discussion of our final CY 2015 OPPS
packaging policy, we refer readers to
section II.A.3. of this final rule with
comment period.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66606), for the CY 2008 OPPS, we
adopted an APC Panel recommendation
that CMS should review the final list of
packaged revenue codes for consistency
with OPPS policy and ensure that future
versions of the I/OCE edit accordingly.
As we have in the past, and as we
proposed, we are continuing to compare
the final list of packaged revenue codes
that we adopt for CY 2015 to the
revenue codes that the I/OCE will
package for CY 2015 to ensure
consistency.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68531), we
replaced the NUBC standard
abbreviations for the revenue codes
listed in Table 2 of the CY 2009 OPPS/
ASC proposed rule with the most
current NUBC descriptions of the
revenue code categories and
subcategories to better articulate the
meanings of the revenue codes without
changing the list of revenue codes. In
the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60362 through
60363), we finalized changes to the
packaged revenue code list based on our
examination of the updated NUBC
codes and public comment on the CY
2010 proposed list of packaged revenue
codes.
For CY 2015, as we did for CY 2014,
we reviewed the changes to revenue
codes that were effective during CY
2013 for purposes of determining the
charges reported with revenue codes but
without HCPCS codes that we proposed
to package for CY 2015. We believe that
the charges reported under the revenue
codes listed in Table 4 of the proposed
rule continue to reflect ancillary and
supportive services for which hospitals
report charges without HCPCS codes.
Therefore, for CY 2015, we proposed to
continue to package the costs that we
derive from the charges reported
without HCPCS codes under the
revenue codes displayed in Table 4 of
the proposed rule for purposes of
calculating the geometric mean costs on
which the final CY 2015 OPPS/ASC
payment rates are based.

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Comment: One commenter
recommended that CMS include, in the
list of packaged revenue codes, revenue
codes 0331 (Radiology—Therapeutic
and/or Chemotherapy Administration;
Chemotherapy Admin—Injected), 0332
(Radiology—Therapeutic and/or
Chemotherapy Administration;
Chemotherapy Admin—Oral), 0335
(Radiology—Therapeutic and/or
Chemotherapy Administration;
Chemotherapy Admin—IV), 0360
(Operating Room Services; General
Classification), 0361 (Operating Room
Services; Minor Surgery), 0362
(Operating Room Services; Organ
Transplant—Other than Kidney), 0369
(Operating Room Services; Other OR
Services), 0410 (Respiratory Services;
General Classification), 0412
(Respiratory Services; Inhalation
Services), 0413 (Respiratory Services;
Hyperbaric Oxygen Therapy), 0419
(Respiratory Services; Other Respiratory
Services), 0722 (Labor Room/Delivery;
Delivery Room), 0724 (Labor Room/
Delivery; Birthing Center), 0729 (Labor
Room/Delivery; Other Labor Room/
Delivery), 0760 (Specialty Services;
General Classification), 0761 (Specialty
Services; Treatment Room), 0762
(Specialty Services; Observation), 0769
(Specialty Services; Other Specialty
Services), 0770 (Preventive Care
Services; General Classification). The
commenter stated that charge data on
claim lines with these revenue codes is
currently included in OPPS modeling,
and including them when they appear
without a HCPCS would more
accurately capture the costs from these
lines.
Response: On the OPPS revenue codeto-cost center modeling crosswalk that
we make available online, we indicate
which revenue codes we believe are
appropriately used for OPPS ratesetting
purposes. As the commenter noted,
coded lines billed using these specific
revenue codes are already currently
included for ratesetting purposes. While
we note that including the packaged
costs associated with uncoded lines
billed with these revenue codes has a
minimal impact on the relative payment
weights, we believe that including them
when establishing the OPPS relative
payment weights would better estimate
the full range of costs for services to
which these lines are packaged.
Including the uncoded lines and
capturing the costs billed using these
revenue codes would generally be
appropriate in establishing the OPPS
relative payment weights and our
ratesetting methodology. Therefore, we
have updated Table 4 which appeared
in the proposed rule (79 FR 40935

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
through 40936) (also Table 4 in this
final rule with comment period) to
reflect the addition of these packaged
revenue codes and incorporated these
changes into our cost modeling logic.

We will also ensure that this list
corresponds with that used for I/OCE
purposes.
After consideration of the public
comments we received, we are

finalizing the proposed packaged
revenue codes for CY 2015, which are
identified in Table 4 below, with
modification to include the revenue
codes described earlier in this section.

TABLE 4—CY 2015 PACKAGED REVENUE CODES

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Revenue code
250
251
252
254
255
257
258
259
260
261
262
263
264
269
270
271
272
275
276
278
279
280
289
331
332
335
343
344
360
361
362
369
370
371
372
379
390
392
399
410
412
413
419
621
622
623
624
630
631
632
633
681
682
683
684
689
700
710
720
721
722
724
729
732
760
761

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Description
Pharmacy; General Classification.
Pharmacy; Generic Drugs.
Pharmacy; Non-Generic Drugs.
Pharmacy; Drugs Incident to Other Diagnostic Services.
Pharmacy; Drugs Incident to Radiology.
Pharmacy; Non-Prescription.
Pharmacy; IV Solutions.
Pharmacy; Other Pharmacy.
IV Therapy; General Classification.
IV Therapy; Infusion Pump.
IV Therapy; IV Therapy/Pharmacy Svcs.
IV Therapy; IV Therapy/Drug/Supply Delivery.
IV Therapy; IV Therapy/Supplies.
IV Therapy; Other IV Therapy.
Medical/Surgical Supplies and Devices; General Classification.
Medical/Surgical Supplies and Devices; Non-sterile Supply.
Medical/Surgical Supplies and Devices; Sterile Supply.
Medical/Surgical Supplies and Devices; Pacemaker.
Medical/Surgical Supplies and Devices; Intraocular Lens.
Medical/Surgical Supplies and Devices; Other Implants.
Medical/Surgical Supplies and Devices; Other Supplies/Devices.
Oncology; General Classification.
Oncology; Other Oncology.
Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—Injected.
Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—Oral.
Radiology—Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin—IV.
Nuclear Medicine; Diagnostic Radiopharmaceuticals.
Nuclear Medicine; Therapeutic Radiopharmaceuticals.
Operating Room Services; General Classification.
Operating Room Services; Minor Surgery.
Operating Room Services; Organ Transplant—Other than Kidney.
Operating Room Services; Other OR Services.
Anesthesia; General Classification.
Anesthesia; Anesthesia Incident to Radiology.
Anesthesia; Anesthesia Incident to Other DX Services.
Anesthesia; Other Anesthesia.
Administration, Processing and Storage for Blood and Blood Components; General Classification.
Administration, Processing and Storage for Blood and Blood Components; Processing and Storage.
Administration, Processing and Storage for Blood and Blood Components; Other Blood Handling.
Respiratory Services; General Classification.
Respiratory Services; Inhalation Services.
Respiratory Services; Hyperbaric Oxygen Therapy.
Respiratory Services; Other Respiratory Services.
Medical Surgical Supplies—Extension of 027X; Supplies Incident to Radiology.
Medical Surgical Supplies—Extension of 027X; Supplies Incident to Other DX Services.
Medical Supplies—Extension of 027X, Surgical Dressings.
Medical Surgical Supplies—Extension of 027X; FDA Investigational Devices.
Pharmacy—Extension of 025X; Reserved.
Pharmacy—Extension of 025X; Single Source Drug.
Pharmacy—Extension of 025X; Multiple Source Drug.
Pharmacy—Extension of 025X; Restrictive Prescription.
Trauma Response; Level I Trauma.
Trauma Response; Level II Trauma.
Trauma Response; Level III Trauma.
Trauma Response; Level IV Trauma.
Trauma Response; Other.
Cast Room; General Classification.
Recovery Room; General Classification.
Labor Room/Delivery; General Classification.
Labor Room/Delivery; Labor.
Labor Room/Delivery; Delivery Room.
Labor Room/Delivery; Birthing Center.
Labor Room/Delivery; Other Labor Room/Delivery.
EKG/ECG (Electrocardiogram); Telemetry.
Specialty Services; General Classification.
Specialty Services; Treatment Room.

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TABLE 4—CY 2015 PACKAGED REVENUE CODES—Continued

Revenue code

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762
769
770
801
802
803
804
809
810
819
821
824
825
829
942
943
948

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Description
Specialty services; Observation Hours.
Specialty Services; Other Specialty Services.
Preventive Care Services; General Classification.
Inpatient Renal Dialysis; Inpatient Hemodialysis.
Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD).
Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal Dialysis (CAPD).
Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis (CCPD).
Inpatient Renal Dialysis; Other Inpatient Dialysis.
Acquisition of Body Components; General Classification.
Acquisition of Body Components; Other Donor.
Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate.
Hemodialysis-Outpatient or Home; Maintenance—100%.
Hemodialysis-Outpatient or Home; Support Services.
Hemodialysis-Outpatient or Home; Other OP Hemodialysis.
Other Therapeutic Services (also see 095X, an extension of 094x); Education/Training.
Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac Rehabilitation.
Other Therapeutic Services (also see 095X, an extension of 094X), Pulmonary Rehabilitation.

In accordance with our longstanding
policy, we proposed to continue to
exclude: (1) Claims that had zero costs
after summing all costs on the claim;
and (2) claims containing packaging flag
number 3. Effective for services
furnished after July 1, 2014, the I/OCE
assigned packaging flag number 3 to
claims on which hospitals submitted
token charges less than $1.01 for a
service with status indicator ‘‘S’’ or ‘‘T’’
(a major separately payable service
under the OPPS) for which the Medicare
Administrative Contractor (MAC) was
required to allocate the sum of charges
for services with a status indicator
equaling ‘‘S’’ or ‘‘T’’ based on the
relative payment weight of the APC to
which each code was assigned. We do
not believe that these charges, which
were token charges as submitted by the
hospital, are valid reflections of hospital
resources. Therefore, we deleted these
claims. We also deleted claims for
which the charges equaled the revenue
center payment (that is, the Medicare
payment) on the assumption that, where
the charge equaled the payment, to
apply a CCR to the charge would not
yield a valid estimate of relative
provider cost. We proposed to continue
these processes for the CY 2015 OPPS.
For the remaining claims, we
proposed to then standardize 60 percent
of the costs of the claim (which we have
previously determined to be the laborrelated portion) for geographic
differences in labor input costs. We
made this adjustment by determining
the wage index that applied to the
hospital that furnished the service and
dividing the cost for the separately paid
HCPCS code furnished by the hospital
by that wage index. The claims
accounting that we provide for the
proposed rule and final rule with
comment period contains the formula

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we use to standardize the total cost for
the effects of the wage index. As has
been our policy since the inception of
the OPPS, we proposed to use the prereclassified wage indices for
standardization because we believe that
they better reflect the true costs of items
and services in the area in which the
hospital is located than the postreclassification wage indices and,
therefore, would result in the most
accurate unadjusted geometric mean
costs. We proposed to use these prereclassified wage indices for
standardization using the new OMB
labor market area delineations described
in section II.C. of this final rule with
comment period.
In accordance with our longstanding
practice, we also proposed to exclude
single and ‘‘pseudo’’ single procedure
claims for which the total cost on the
claim was outside 3 standard deviations
from the geometric mean of units for
each HCPCS code on the bypass list
(because, as discussed above, we used
claims that contain multiple units of the
bypass codes).
After removing claims for hospitals
with error CCRs, claims without HCPCS
codes, claims for immunizations not
covered under the OPPS, and claims for
services not paid under the OPPS,
approximately 118 million claims were
left. Using these approximately 118
million claims, we created
approximately 100 million single and
‘‘pseudo’’ single procedure claims, of
which we used approximately 51
million single bills (after trimming out
approximately 1 million claims as
discussed in section II.A.1.a. of this
final rule with comment period) in the
CY 2015 geometric mean cost
development and ratesetting.
As discussed above, the OPPS has
historically developed the relative

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weights on which APC payments are
based using APC median costs. For the
CY 2013 OPPS and the CY 2014 OPPS,
we calculated the APC relative payment
weights using geometric mean costs,
and we are continuing this practice for
CY 2015. Therefore, the following
discussion of the 2 times rule violation
and the development of the relative
payment weight refers to geometric
means. For more detail about the CY
2015 OPPS/ASC policy to calculate
relative payment weights based on
geometric means, we refer readers to
section II.A.2.f. of this final rule with
comment period.
We proposed to use these claims to
calculate the CY 2015 geometric mean
costs for each separately payable HCPCS
code and each APC. The comparison of
HCPCS code-specific and APC
geometric mean costs determines the
applicability of the 2 times rule. Section
1833(t)(2) of the Act provides that,
subject to certain exceptions, the items
and services within an APC group shall
not be treated as comparable with
respect to the use of resources if the
highest median cost (or mean cost, if
elected by the Secretary) for an item or
service within the group is more than 2
times greater than the lowest median
cost (or mean cost, if so elected) for an
item or service within the same group
(the 2 times rule). While we have
historically applied the 2 times rule
based on median costs, in the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68270), as part of the CY
2013 policy to develop the OPPS
relative payment weights based on
geometric mean costs, we also applied
the 2 times rule based on geometric
mean costs. For the CY 2015 OPPS, we
are continuing to develop the APC
relative payment weights based on
geometric mean costs.

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We note that, for purposes of
identifying significant HCPCS codes for
examination in the 2 times rule, we
consider codes that have more than
1,000 single major claims or codes that
have both greater than 99 single major
claims and contribute at least 2 percent
of the single major claims used to
establish the APC geometric mean cost
to be significant. This longstanding
definition of when a HCPCS code is
significant for purposes of the 2 times
rule was selected because we believe
that a subset of 1,000 claims is
negligible within the set of
approximately 100 million single
procedure or single session claims we
use for establishing geometric mean
costs. Similarly, a HCPCS code for
which there are fewer than 99 single
bills and which comprises less than 2
percent of the single major claims
within an APC will have a negligible
impact on the APC geometric mean. We
note that this method of identifying
significant HCPCS codes within an APC
for purposes of the 2 times rule was
used in prior years under the medianbased cost methodology. Under our CY
2015 policy to continue to base the
relative payment weights on geometric
mean costs, we believe that this same
consideration for identifying significant
HCPCS codes should apply because the
principles are consistent with their use
in the median-based cost methodology.
Unlisted codes are not used in
establishing the percent of claims
contributing to the APC, nor are their
costs used in the calculation of the APC
geometric mean. Finally, we reviewed
the geometric mean costs for the
services for which we pay separately
under this final rule with comment
period, and we reassigned HCPCS codes
to different APCs where it was
necessary to ensure clinical and
resource homogeneity within the APCs.
The APC geometric means were
recalculated after we reassigned the
affected HCPCS codes. Both the HCPCS
code-specific geometric means and the
APC geometric means were weighted to
account for the inclusion of multiple
units of the bypass codes in the creation
of ‘‘pseudo’’ single procedure claims.
We did not receive any public
comments on our proposed CY 2015
methodology for calculating the
geometric mean costs upon which the
CY 2015 OPPS payment rates are based,
and therefore are finalizing our
methodology as proposed.
As we discuss in sections II.A.2.d.,
II.A.2.f., and VIII.B. of this final rule
with comment period, in some cases,
APC geometric mean costs are
calculated using variations of the
process outlined above. Specifically,

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section II.A.2.d. of this final rule with
comment period addresses the
calculation of single APC criteria-based
geometric mean costs. Section II.A.2.f.
of this final rule with comment period
discusses the calculation of composite
APC criteria-based geometric mean
costs. Section VIII.B. of this final rule
with comment period addresses the
methodology for calculating the
geometric mean costs for partial
hospitalization services.
(2) Recommendations of the Panel
Regarding Data Development
At the August 2014 meeting of the
Panel, we discussed changes in APC
geometric mean cost between the CY
2015 Proposed OPPS and the CY 2014
Final OPPS, the CY 2015 proposed
comprehensive APC policy, and a study
examining the packaged codes most
commonly appearing with clinic visit
codes.
At the August 2014 Panel meeting, the
Panel made a number of
recommendations related to the data
process. The Panel’s data-related
recommendations and our responses
follow.
Recommendation: The Panel
recommends that the work of the Data
Subcommittee continue.
CMS Response: We are accepting this
recommendation.
Recommendation: The Panel
recommends that Jim Nelson serve as
the Chair of the Data Subcommittee.
CMS Response: We are accepting this
recommendation.
Recommendation: The Panel
recommends that CMS provide the
Panel with a list of APCs for which costs
fluctuate by more than 20 percent
relative to the APCs in the most recent
prior rulemaking cycle.
CMS Response: We are accepting this
recommendation and will provide this
information regarding fluctuating APC
costs at the next HOP Panel meeting.
d. Calculation of Single Procedure APC
Criteria-Based Costs
(1) Device-Dependent APCs
Historically, device-dependent APCs
are populated by HCPCS codes that
usually, but not always, require that a
device be implanted or used to perform
the procedure. The standard
methodology for calculating devicedependent APC costs utilizes claims
data that generally reflect the full cost
of the required device by using only the
subset of single procedure claims that
pass the procedure-to-device and
device-to-procedure edits; do not
contain token charges (less than $1.01)
for devices; and, until January 1, 2014,

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66793

did not contain the ‘‘FB’’ modifier
signifying that the device was furnished
without cost to the provider, or where
a full credit was received; and do not
contain the ‘‘FC’’ modifier signifying
that the hospital received partial credit
for the device. For a full history of how
we have calculated payment rates for
device-dependent APCs in previous
years and a detailed discussion of how
we developed the standard devicedependent APC ratesetting
methodology, we refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66739 through
66742). Overviews of the procedure-todevice edits and device-to-procedure
edits used in ratesetting for devicedependent APCs are available in the CY
2005 OPPS final rule with comment
period (69 FR 65761 through 65763) and
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68070 through
68071).
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74857
through 74859), we finalized a policy to
define 29 device-dependent APCs as
single complete services and to assign
them to comprehensive APCs (C–APCs)
that provide all-inclusive payments for
those services, but we delayed
implementation of this policy until CY
2015 (78 FR 74862). This policy is a
further step toward improving the
prospective nature of our payments for
these services where the cost of the
device is relatively high compared to
the other costs that contribute to the
cost of the service. Table 5 of the CY
2014 OPPS/ASC final rule with
comment period provided a list of the
39 APCs recognized as devicedependent APCs and identified the 29
device-dependent APCs that would
have been converted to C–APCs. In
addition, in the CY 2014 OPPS/ASC
final rule with comment period, we
finalized a policy for the treatment of
the remaining 10 device-dependent
APCs that applied our standard APC
ratesetting methodology to calculate the
CY 2014 payment rates for these APCs,
but implementation of the entire policy
was delayed until CY 2015.
In the CY 2014 OPPS/ASC proposed
rule (78 FR 43556 through 43557) and
in the CY 2015 OPPS/ASC proposed
rule (79 FR 40937 through 40938), for
CY 2015, we proposed to no longer
implement procedure-to-device edits
and device-to-procedure edits for any
APC. Under this proposed policy, which
was discussed but not finalized in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 74857 through
74858), hospitals are still expected to
adhere to the guidelines of correct
coding and append the correct device

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code to the claim, when applicable.
However, claims would no longer be
returned to providers when specific
procedure and device code pairings do
not appear on a claim. As we stated in
both the CY 2014 OPPS/ASC proposed
rule (78 FR 43556 through 43557) and
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74857 through
74858), we believe that this is
appropriate because of hospitals’
multiyear experience in coding and
reporting charges for medical device
implantation procedures. We also
believe that the C–APCs will reliably
reflect the cost of the devices as the C–
APCs will include all costs on the claim
(except for the few categories of items
and services that are excluded from the
comprehensive APC policy). Therefore,
we do not believe that the burden
imposed upon hospitals to adhere to the
procedure-to-device edits and device-toprocedure edits and the burden imposed
upon the Medicare program to maintain
those edits continue to be necessary. As
with all other items and services
recognized under the OPPS, we expect
hospitals to code and report their costs
appropriately, regardless of whether
there are claims processing edits in
place.
The CY 2015 comprehensive APC
policy that we proposed in the CY 2015
OPPS/ASC proposed rule consolidates
and restructures the 39 current devicedependent APCs into 26 (of the total 28)
proposed C–APCs, which were listed in
Table 5 of the proposed rule. The final
CY 2015 comprehensive APC policy is
discussed in section II.A.2.e. of this
final rule with comment period. As a
result of the final CY 2015
comprehensive APC policy, only 3 of
the current 39 device-dependent APCs
will remain in the CY 2015 OPPS
because all other device-dependent
APCs are being converted to C–APCs.
All of the remaining device-dependent
APCs were either deleted due to the
consolidation and restructuring of these
APCs or they were converted to C–
APCs. In conjunction with the
conversion of almost all of the 39
device-dependent APCs into C–APCs,
and as discussed in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 74857 through 74858), in the CY
2015 OPPS/ASC proposed rule, we
proposed to no longer use procedure-todevice edits and device-to-procedure
edits for any APC because we continue
to believe that the elimination of deviceto-procedure edits and procedure-todevice edits is appropriate considering
the experience that hospitals now have
in coding and reporting these claims
fully and, for the more costly devices,

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the C–APCs will reliably reflect the cost
of the device if it is included anywhere
on the claim.
While we believe that device-toprocedure edits and procedure-to-device
edits are no longer necessary, we are
sensitive to the concerns raised by
stakeholders in the past about the costs
of devices being reported and captured.
In light of these concerns, in the CY
2015 OPPS/ASC proposed rule (79 FR
40937 through 40938), we proposed to
create claims processing edits that
require any of the device codes used in
the previous device-to-procedure edits
for device-dependent APCs to be
present on the claim whenever a
procedure code assigned to any of the
former device-dependent APCs (most of
which are being converted to C–APCs)
is reported on the claim to ensure that
device costs are captured by hospitals.
We stated that we expect that hospitals
would use an appropriate device code
consistent with correct coding in order
to ensure that device costs are always
reported on the claim, so that costs are
appropriately captured in claims that
CMS uses for ratesetting.
Comment: The majority of
commenters requested that CMS
maintain device-to-procedure and
procedure-to-device edits in order to
ensure continued complete and accurate
cost reporting by hospitals. One
commenter recommended that CMS
adopt its proposal to require any
appropriate device code used in the
previous device-to-procedure edits to be
present on the claim, if CMS
discontinues the current edits and
educates hospitals on the continued
need to report the actual device used in
the procedure for accurate ratesetting.
One commenter was cautiously
optimistic that CMS’ proposal requiring
any appropriate device code used in the
previous device-to-procedure edits to be
present on the claim for most
comprehensive APCs could promote
complete reporting in a potentially less
prescriptive way for hospitals. Another
commenter believed CMS’ proposed
policy change would result in
‘‘ridiculous’’ combinations of device
and procedure codes for some services
and thus would result in invalid mean
costs for the procedures. Other
commenters recommended that CMS
modify its proposed policy to
incorporate edit logic that will allow
exceptions for comprehensive APCs that
do not require device codes to be
reported with every assigned procedural
code. One commenter recommended
that the claims edits be implemented
initially on a 1-year trial/interim basis.
Other commenters suggested that CMS

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eliminate the device claims processing
edits altogether.
Response: We continue to believe that
the elimination of device-to-procedure
edits and procedure-to-device edits is
appropriate due to the experience
hospitals now have in coding and
reporting these claims fully. More
specifically, for the more costly devices,
we believe the C–APCs will reliably
reflect the cost of the device if charges
for the device are included anywhere on
the claim. We remind commenters that,
under our proposed policy, hospitals
would still be expected to adhere to the
guidelines of correct coding and append
the correct device code to the claim
when applicable. We also remind
commenters that, as with all other items
and services recognized under the
OPPS, we expect hospitals to code and
report their costs appropriately,
regardless of whether there are claims
processing edits in place. We do not
believe that our proposed policy will
result in ridiculous combinations of
device and procedure codes for some
services, as this would require
deliberate miscoding by hospitals,
which we do not believe would result
from this change to the device code
reporting requirements. We continue to
expect that hospitals would use an
appropriate device code consistent with
correct coding in order to ensure that
device costs are always reported on the
claim, so that costs are appropriately
captured in claims that CMS uses for
ratesetting. While we believe that
device-to-procedure edits and
procedure-to-device edits are no longer
necessary at this time, we are sensitive
to commenters’ concerns that all
relevant costs for the APCs currently
recognized as device-dependent APCs
are appropriately included in the claims
that CMS will use for ratesetting. In
light of those concerns, we believe
creating a claims processing edit
requiring a device code to be present on
the claim whenever a procedure code
from the APCs currently recognized as
a device-dependent APCs will help to
ensure continued complete and accurate
cost reporting by hospitals. Device edits
will not apply to procedures assigned to
C–APCs that either do not use
implantable medical devices or
procedures that do not have device-toprocedure or procedure-to-device edits
assigned to them currently for CY 2014.
This will ensure that the proposed
device edit policy (requiring only that
any device code be reported on a claim
containing a procedure assigned to one
of the formerly device-dependent APCs)
will only apply to those procedures that
currently have device-to-procedure or

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procedure-to-device edits currently
assigned to them.
After consideration of the public
comments we received, we are
finalizing our proposal to no longer
implement specific procedure-to-device
and device-to-procedure edits for any
APC. We also are finalizing our proposal
to create claims processing edits that
require any of the device codes used in
the previous device-to-procedure edits
to be present on the claim whenever a
procedure code assigned to any of the
current device-dependent APCs (that
remain after the consolidation and
restructuring of these APCs) listed in
Table 5 below is reported on the claim
to ensure that device costs are captured
by hospitals. CMS will monitor the
claims data to ensure that hospitals
continue reporting appropriate device
codes on the claims for the formerly
device-dependent APCs. We note that
while we proposed to make all 26 of the
APCs listed in Table 5 C–APCs for CY
2015, in section II.A.2.e. of this final
rule with comment period, we are not
finalizing our proposal to recognize
APCs 0427, 0622, and 0652 as C–APCs.
While APCs 0427, 0622, and 0652 will
not be recognized as comprehensive
APCs for CY 2015, our finalized device
edit policy will apply to these 3 APCs,
as these 3 APCs are formerly devicedependent APCs. The term ‘‘devicedependent APC’’ will no longer be
employed beginning in CY 2015. We
will refer to APCs with a device offset
of more than 40 percent as ‘‘deviceintensive’’ APCs. Device-intensive APCs
will be subject to the no cost/full credit
and partial credit device policy. For a
discussion of device-intensive APCs and
the no cost/full credit and partial credit
device policy, we refer readers to
section IV.B. of this final rule with
comment period. For a discussion of
ASC procedures designated as device
intensive, we refer readers to section
XII.C.1.c. of this final rule with
comment period.

TABLE 5—APCS THAT WILL REQUIRE
A DEVICE CODE TO BE REPORTED
ON A CLAIM WHEN A PROCEDURE
ASSIGNED TO ONE OF THESE APCS
IS REPORTED

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APC
0039
0061
0083
0084
0085
0086
0089
0090
0107

.....
.....
.....
.....
.....
.....
.....
.....
.....

APC Title
Level
Level
Level
Level
Level
Level
Level
Level
Level

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III Neurostimulator.
II Neurostimulator.
I Endovascular.
I EP.
II EP.
III EP.
III Pacemaker.
II Pacemaker.
I ICD.

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TABLE 5—APCS THAT WILL REQUIRE
A DEVICE CODE TO BE REPORTED
ON A CLAIM WHEN A PROCEDURE
ASSIGNED TO ONE OF THESE APCS
IS REPORTED—Continued
APC
0108
0202
0227
0229
0259
0293
0318
0319
0384
0385
0386
0425
0427
0622
0648
0652
0655

.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....
.....

APC Title
Level II ICD.
Level V Female Reproductive.
Implantation of Drug Infusion.
Level II Endovascular.
Level VII ENT Procedures.
Level IV Intraocular.
Level IV Neurostimulator.
Level III Endovascular.
GI Procedures with Stents.
Level I Urogenital.
Level II Urogenital.
Level V Musculoskeletal.
Level II Tube/Catheter.
Level II Vascular Access.
Level IV Breast Surgery.
Insertion of IP/Pl. Cath.
Level IV Pacemaker.

(2) Blood and Blood Products
Since the implementation of the OPPS
in August 2000, we have made separate
payments for blood and blood products
through APCs rather than packaging
payment for them into payments for the
procedures with which they are
administered. Hospital payments for the
costs of blood and blood products, as
well as for the costs of collecting,
processing, and storing blood and blood
products, are made through the OPPS
payments for specific blood product
APCs.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40938), for CY 2015, we
proposed to continue to establish
payment rates for blood and blood
products using our blood-specific CCR
methodology, which utilizes actual or
simulated CCRs from the most recently
available hospital cost reports to convert
hospital charges for blood and blood
products to costs. This methodology has
been our standard ratesetting
methodology for blood and blood
products since CY 2005. It was
developed in response to data analysis
indicating that there was a significant
difference in CCRs for those hospitals
with and without blood-specific cost
centers, and past public comments
indicating that the former OPPS policy
of defaulting to the overall hospital CCR
for hospitals not reporting a bloodspecific cost center often resulted in an
underestimation of the true hospital
costs for blood and blood products.
Specifically, in order to address the
differences in CCRs and to better reflect
hospitals’ costs, we proposed to
continue to simulate blood CCRs for
each hospital that does not report a
blood cost center by calculating the ratio

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66795

of the blood-specific CCRs to hospitals’
overall CCRs for those hospitals that do
report costs and charges for blood cost
centers. We proposed to apply this
mean ratio to the overall CCRs of
hospitals not reporting costs and
charges for blood cost centers on their
cost reports in order to simulate bloodspecific CCRs for those hospitals. We
proposed to calculate the costs upon
which the proposed CY 2015 payment
rates for blood and blood products are
based using the actual blood-specific
CCR for hospitals that reported costs
and charges for a blood cost center and
a hospital-specific simulated bloodspecific CCR for hospitals that did not
report costs and charges for a blood cost
center.
Comment: Commenters supported the
proposal to continue to separately pay
for blood and blood products using a
blood-specific CCR methodology.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to continue to
establish payment rates for blood and
blood products using our blood-specific
CCR methodology, which utilizes actual
or simulated CCRs from the most
recently available hospital cost reports
to convert hospital charges for blood
and blood products to costs.
We continue to believe that the
hospital-specific simulated bloodspecific CCR methodology better
responds to the absence of a bloodspecific CCR for a hospital than
alternative methodologies, such as
defaulting to the overall hospital CCR or
applying an average blood-specific CCR
across hospitals. Because this
methodology takes into account the
unique charging and cost accounting
structure of each hospital, we believe
that it yields more accurate estimated
costs for these products. We continue to
believe that this methodology in CY
2015 will result in costs for blood and
blood products that appropriately reflect
the relative estimated costs of these
products for hospitals without blood
cost centers and, therefore, for these
blood products in general.
We note that, as discussed in section
II.A.2.e. of the CY 2014 OPPS/ASC final
rule with comment period and this final
rule with comment period, we
established comprehensive APCs that
will provide all-inclusive payments for
certain device-dependent procedures.
Under this policy, we include the costs
of blood and blood products when
calculating the overall costs of these
comprehensive APCs. We proposed to
continue to apply the blood-specific
CCR methodology described in this

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section when calculating the costs of the
blood and blood products that appear
on claims with services assigned to the
comprehensive APCs (79 FR 40939).
Because the costs of blood and blood
products will be reflected in the overall
costs of the comprehensive APCs (and,
as a result, in the final payment rates of
the comprehensive APCs), we proposed
to not make separate payments for blood
and blood products when they appear
on the same claims as services assigned
to the comprehensive APCs (79 FR
40939).
We did not receive any public
comments on this proposal and are
finalizing the policy as proposed. We
refer readers to Addendum B to this
final rule with comment period (which
is available via the Internet on the CMS
Web site) for the final CY 2015 payment
rates for blood and blood products
(which are identified with status
indicator ‘‘R’’). For a more detailed
discussion of the blood-specific CCR
methodology, we refer readers to the CY
2005 OPPS proposed rule (69 FR 50524
through 50525). For a full history of
OPPS payment for blood and blood
products, we refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66807 through
66810).
(3) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act
mandates the creation of additional
groups of covered OPD services that
classify devices of brachytherapy
consisting of a seed or seeds (or
radioactive source) (‘‘brachytherapy
sources’’) separately from other services
or groups of services. The statute
provides certain criteria for the
additional groups. For the history of
OPPS payment for brachytherapy
sources, we refer readers to prior OPPS
final rules, such as the CY 2012 OPPS/
ASC final rule with comment period (77
FR 68240 through 68241). As we have
stated in prior OPPS updates, we
believe that adopting the general OPPS
prospective payment methodology for
brachytherapy sources is appropriate for
a number of reasons (77 FR 68240). The
general OPPS payment methodology
uses costs based on claims data to set
the relative payment weights for
hospital outpatient services. This
payment methodology results in more
consistent, predictable, and equitable
payment amounts per source across
hospitals by averaging the extremely
high and low values, in contrast to
payment based on hospitals’ charges
adjusted to costs. We believe that the
OPPS prospective payment
methodology, as opposed to payment
based on hospitals’ charges adjusted to

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cost, also would provide hospitals with
incentives for efficiency in the provision
of brachytherapy services to Medicare
beneficiaries. Moreover, this approach is
consistent with our payment
methodology for the vast majority of
items and services paid under the OPPS.
We refer readers to the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66779 through 66787), the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68668 through 68670, the
CY 2010 OPPS/ASC final rule with
comment period (74 FR 60533 through
60537), the CY 2011 OPPS/ASC final
rule with comment period (75 FR 71978
through 71981), the CY 2012 OPPS/ASC
final rule with comment period (76 FR
74160 through 74163), the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68240 through 68242),
and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74860) for
further discussion of the history of
OPPS payment for brachytherapy
sources.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40939 through 40940), for
CY 2015, we proposed to use the costs
derived from CY 2013 claims data to set
the proposed CY 2015 payment rates for
brachytherapy sources, as we proposed
to use to set the proposed payment rates
for most other items and services that
would be paid under the CY 2015 OPPS.
We based the proposed payment rates
for brachytherapy sources on the
geometric mean unit costs for each
source, consistent with the methodology
proposed for other items and services
paid under the OPPS, as discussed in
section II.A.2. of the proposed rule. We
also proposed to continue the other
payment policies for brachytherapy
sources that we finalized and first
implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR
60537). We proposed to pay for the
stranded and non-stranded not
otherwise specified (NOS) codes,
HCPCS codes C2698 and C2699, at a
rate equal to the lowest stranded or nonstranded prospective payment rate for
such sources, respectively, on a per
source basis (as opposed to, for
example, a per mCi), which is based on
the policy we established in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66785). We also
proposed to continue the policy we first
implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR
60537) regarding payment for new
brachytherapy sources for which we
have no claims data, based on the same
reasons we discussed in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66786; which was

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delayed until January 1, 2010 by section
142 of Pub. L. 110–275). That policy is
intended to enable us to assign new
HCPCS codes for new brachytherapy
sources to their own APCs, with
prospective payment rates set based on
our consideration of external data and
other relevant information regarding the
expected costs of the sources to
hospitals.
The proposed CY 2015 payment rates
for brachytherapy sources were
included in Addendum B to the
proposed rule (which is available via
the Internet on the CMS Web site) and
were identified with status indicator
‘‘U.’’
We invited public comment on this
proposed policy and also requested
recommendations for new HCPCS codes
to describe new brachytherapy sources
consisting of a radioactive isotope,
including a detailed rationale to support
recommended new sources. In the CY
2015 OPPS/ASC proposed rule, we
provided an appropriate address for
receipt of these recommendations; the
address is repeated at the end of this
section. We indicated that we will
continue to add new brachytherapy
source codes and descriptors to our
systems for payment on a quarterly
basis.
Comment: Commenters expressed a
number of concerns regarding CMS’
outpatient hospital claims data used to
set prospective payment rates for
brachytherapy sources. Commenters
stated that high dose rate (HDR)
brachytherapy devices decay over a 90day period and are used to treat
multiple patients during this time
period. According to the commenters,
the true cost of brachytherapy sources
depends on the number of patients
treated by a hospital within a 90-day
period, as well as the number of
treatments required and the intensity of
the treatments. For this reason, the
commenters believed that it is difficult
to establish fair and adequate
prospective payment rates for
brachytherapy sources. Commenters
also noted that the brachytherapy source
payment data continue to show huge
variation in per unit cost across
hospitals. In addition, the commenters
believed that CMS’ claims data contain
rank order anomalies, causing the usual
cost relationship between the high
activity palladium-103 source (HCPCS
code C2635, Brachytherapy source, nonstranded, high activity, palladium-103,
greater than 2.2 mci (NIST) per source)
and the low activity palladium-103
sources (HCPCS codes C2640,
Brachytherapy source, stranded,
palladium-103, per source and C2641,
Brachytherapy source, non-stranded,

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palladium-103, per source) to be
reversed. The commenters noted that
the proposed geometric mean costs of
the brachytherapy source HCPCS codes
are approximately $26, $69, and $72,
respectively. The commenters stated
that stranded palladium-103 sources
(HCPCS code C2640) always cost more
than non-stranded palladium-103
sources (HCPCS code C2641), which is
not reflected in the proposed rule claims
data.
Response: As stated above, we believe
that geometric mean costs based on
hospital claims data for brachytherapy
sources have produced reasonably
consistent per-source cost estimates
over the past several years, comparable
to the patterns we have observed for
many other OPPS services whose
payments are set based upon relative
payment weights from claims data. We
believe that our per-source payment
methodology specific to each source’s
radioisotope, radioactive intensity, and
stranded or non-stranded configuration,
supplemented by payment based on the
number of sources used in a specific
clinical case, adequately accounts for
the major expected sources of variability
across treatments. (We refer readers to
the CY 208 OPPS final rule with
comment period (72 FR 66782); the CY
2010 OPPS/ASC final rule with
comment period (74 FR 60534); the CY
2011 OPPS/ASC final rule with
comment period (75 FR 71979); the CY
2012 OPPS/ASC final rule with
comment period (76 FR 74161); the CY
2013 OPPS/ASC final rule with
comment period (77 FR 68241); and the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 74861)). We
believe that the CY 2013 brachytherapy
source claims data used for CY 2015
ratesetting produce adequate payment
for these services. Also, as we have
explained previously, a prospective
payment system relies upon the concept
of averaging, where the payment may be
more or less than the estimated cost of
providing a service for a particular
patient. With the exception of outlier
cases, the payment for services is
adequate to ensure access to appropriate
care. In the case of brachytherapy
sources for which the law requires
separate payment groups, without
packaging, the costs of these individual
items could be expected to show greater
variation than some other APCs under
the OPPS because higher variability in
costs for some component items and
services is not balanced with lower
variability in costs for others, and
because relative payment weights are
typically estimated using a smaller set
of claims. Nevertheless, we believe that

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prospective payment for brachytherapy
sources based on geometric mean costs
of the services reported on claims
calculated according to the standard
OPPS methodology is appropriate and
provides hospitals with the greatest
incentives for efficiency in furnishing
brachytherapy treatment.
Under the budget neutral provision
for the OPPS, it is the relativity of costs,
not the absolute costs, that is important,
and we believe that brachytherapy
sources are appropriately paid
according to the standard OPPS
payment approach. Furthermore, some
sources may have geometric mean costs
and payment rates based on 50 or fewer
providers because it is not uncommon
for OPPS prospective payment rates to
be based on claims from a relatively
small number of hospitals that
furnished the service in the year of
claims data available for the OPPS
update year. Fifty hospitals may report
hundreds of brachytherapy source
services on claims for many cases and
comprise the universe of providers
using particular low volume sources, for
which we are required to pay separately
by statute. Further, our methodology for
estimating geometric mean costs for
brachytherapy sources utilizes all lineitem charges for those sources, which
allows us to use all hospital reported
charge and estimated cost information
to set payment rates for these items.
Therefore, no brachytherapy source
claims are excluded from the estimate of
geometric means costs. We have no
reason to believe that prospective
payment rates based on claims data
from those providers furnishing a
particular source do not appropriately
reflect the cost of that source to
hospitals. As for most other OPPS
services, we note that the geometric
mean costs for brachytherapy sources
are based upon the costs of those
providers sources in CY 2013. Hospitals
individually determine their charge for
an item or service, and one of
Medicare’s primary requirements for
setting a charge is that it be reasonably
and consistently related to the cost of
the item or service for that facility. (We
refer readers to the Medicare Provider
Reimbursement Manual, Part I, Section
2203, which is available on the CMS
Web site at: http://www.cms.gov/
Regulations-and-Guidance/Guidance/
Manuals/Paper-Based-Manuals-Items/
CMS021929.html?DLPage=1&
DLSort=0&DLSortDir=ascending.) We
then estimate a cost from that charge
using the hospital’s most recent
Medicare hospital cost report data in
our standard OPPS ratesetting process.
We acknowledge that HDR
brachytherapy sources such as HDR

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66797

iridium-192 have a fixed active life and
must be replaced every 90 days. As a
result, a hospital’s per treatment cost for
the source would be dependent on the
number of treatments furnished per
source. The source’s cost must be
amortized over the life of the source.
Therefore, when establishing charges for
HDR iridium-192, we expect hospitals
to project the number of treatments that
would be provided over the life of the
source and establish charges for the
source accordingly (72 FR 66783; 74 FR
60535; 75 FR 71980; 76 FR 74162; 77 FR
68242; and 78 FR 74861). For most
payable services under the OPPS, our
practice is to establish prospective
payment rates based on the geometric
mean costs determined from hospitals’
claims data to provide incentives for
efficient and cost effective delivery of
these services.
In the case of high-activity and lowactivity iodine-125 sources, our CY 2013
claims data show that the hospitals’
relative costs for the high-activity source
are greater than the costs of the lowactivity sources. As we have stated in
the past, we do not have any
information about the expected cost
differential between high-activity and
low-activity sources of various isotopes
other than what is available in our
claims and hospital cost report data (75
FR 71979; 76 FR 74162; 77 FR 68242;
and 78 FR 74861). In the case of the
relationship between high-activity and
low-activity palladium-103, our claims
data consistently have shown higher
average costs for low-activity palladium103. For the high-activity palladium-103
sources (HCPCS code C2635), 8
hospitals reported this service in CY
2013, compared to 104 and 159
hospitals that reported services for the
low-activity palladium-103 sources
described by HCPCS codes C2640 and
C2641, respectively. It is clear that fewer
hospitals furnished the high-activity
palladium-103 source than the lowactivity palladium-103 sources, and we
expect that the hospital cost distribution
for those hospitals could be different
than the cost distribution of the large
numbers of hospitals reporting the lowactivity palladium-103 sources, as
previously stated (74 FR 60535; 75 FR
71979; 76 FR 74162; 77 FR 68242; and
78 FR 74861). These varied cost
distributions clearly contribute to the
observed relationship in geometric
mean cost between the different types of
sources. However, we see no reason
why our standard ratesetting
methodology for brachytherapy sources
that relies on all claims data from all
hospitals furnishing brachytherapy
sources would not yield valid geometric

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mean costs for those hospitals
furnishing the different brachytherapy
sources upon which CY 2015
prospective payments are based.
Comment: One commenter, a
developer of a linear non-stranded
palladium-103 source described by
HCPCS code C2636 (Brachytherapy
linear source, nonstranded, palladium103, per 1 mm), believed that CY 2013
claims data for services furnished prior
to November 2013 used to determine the
CY 2015 payment rates are invalid
because the claims data do not reflect
the costs of its linear non-stranded
palladium-103 source, which became
commercially available in November
2013. Further, the commenter stated
that there were no other linear nonstranded palladium-103 sources
commercially available prior to
November 2013. Therefore, the
commenter requested that payment for
HCPCS code C2636 remain at the
current CY 2014 payment rate until
claims data for HCPCS code C2636
become available in CY 2016.
Response: We understand the
commenter’s claim that its linear nonstranded palladium-103 source
described by HCPCS code C2636
became commercially available in
November 2013. However, we disagree
with the commenter’s assertion that
there were no other commercially
available linear non-stranded
palladium-103 sources described by
HCPCS code C2636 prior to November
2013. We also disagree with the
commenter that the CY 2013 claims data
used to determine the CY 2015 payment
rate for HCPCS code C2636 are invalid.
As discussed in the CY 2005 OPPS final
rule (69 FR 65840), we established
HCPCS code C2636 to uniquely identify
linear non-stranded Palladium-103
brachytherapy sources. Since the
HCPCS code became effective January 1,
2005, we have used historical claims
data to set the prospective payment
rates. To determine the CY 2015 OPPS
payment rate for HCPCS code C2636, we
used CY 2013 claims data, which
include brachytherapy sources costs for
linear non-stranded palladium-103
sources. Despite the date of commercial
availability for the commenter’s linear
non-stranded palladium-103
brachytherapy source, we do have CY
2013 claims data for HCPCS code
C2636. Therefore, in accordance with
our above-mentioned methodology and
consistent with our policy used to set
the prospective payment rates for
brachytherapy sources, we are finalizing
our proposed payment rate for HCPCS
code C2636 based on CY 2013 claims
data.

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Comment: One commenter expressed
concern regarding CMS’ CY 2014
payment rate for a new brachytherapy
source described by HCPCS code C2644
(Brachytherapy source, cesium-131
chloride solution, per millicurrie),
which became effective July 1, 2014. In
the July 2014 OPPS Change Request
(CR) 8776, dated May 23, 2014, CMS
established a payment rate for HCPCS
code C2644 of $18.97. The commenter,
who also petitioned for the initial
establishment of HCPCS code C2644 to
describe the new brachytherapy source,
requested clarification on how the
payment rate was established by CMS,
given that the cost of the new
brachytherapy source is $25 per
millicurie and claims data are not yet
available.
Response: As discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66786), we
assign new HCPCS codes that describe
new brachytherapy sources to their own
APCs, with prospective payment rates
set based on consideration of external
data and other relevant information
regarding the expected costs of the
sources to hospitals. The commenter
provided CMS with clinical information
on the brachytherapy source cesium-131
chloride solution within its petition for
the establishment of the new HCPCS
code, and noted the source’s clinical
similarities with the liquid iodine-125
solution source, which is described by
HCPCS code A9527 (Iodine I–125
sodium iodide). The commenter stated
that both iodine I–125 sodium iodide
and cesium-131 chloride solution ‘‘have
similar energies, are capable of
delivering the same radiation dose to
the planned treatment volume, are
supplied in liquid form, and are
compatible with the GliaSite RTS
Catheter’’. Based on clinical information
provided by the commenter and a
clinical review by CMS’ medical
advisors, we believe that the
brachytherapy sources described by
HCPCS code C2644 and HCPCS code
A9527 are clinical substitutes.
Therefore, we set a payment rate for
HCPCS code C2644 that is equal to the
payment rate for HCPCS code A9527
when it became effective in CY 2014,
and proposed to apply the same
methodology for CY 2015. We are
finalizing our proposal for CY 2015 to
set the payment rate for HCPCS code
C2644 as the equivalent of the payment
rate for HCPCS code A9527. (We refer
readers to Addendum B of this final rule
with comment period for the CY 2015
OPPS payment rate. Addendum B is
available via the Internet on the CMS
Web site.)

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After consideration of the public
comments we received, we are
finalizing our proposal to continue to
set the payment rates for brachytherapy
sources using our established
prospective payment methodology,
which is based on geometric mean costs.
The CY 2015 final payment rates for
brachytherapy sources are found in
Addendum B to this final rule with
comment period (which is available via
the Internet on the CMS Web site).
As stated in the CY 2015 OPPS/ASC
proposed rule (79 FR 40940), we
continue to invite hospitals and other
parties to submit recommendations to
CMS for new HCPCS codes that describe
new brachytherapy sources consisting of
a radioactive isotope, including a
detailed rationale to support
recommended new sources. Such
recommendations should be directed to
the Division of Outpatient Care, Mail
Stop C4–03–27, Centers for Medicare
and Medicaid Services, 7500 Security
Boulevard, Baltimore, MD 21244.
e. Comprehensive APCs
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74861
through 74910), we finalized a
comprehensive payment policy that
packages payment for adjunctive and
secondary items, services, and
procedures into the most costly primary
procedure (primarily medical device
implantation procedures) under the
OPPS at the claim level, effective
January 1, 2015. We defined a
comprehensive APC (C–APC) as a
classification for the provision of a
primary service and all adjunctive
services provided to support the
delivery of the primary service. We
established comprehensive APCs as a
category broadly for OPPS payment and
established 29 C–APCs to prospectively
pay for 167 of the most costly devicedependent services assigned to these 29
APCs beginning in CY 2015 (78 FR
74910). Under this policy, we
designated each service described by a
HCPCS code assigned to a C–APC as the
primary service and, with few
exceptions described below, consider all
other services reported on a hospital
outpatient claim in combination with
the primary service to be related to the
delivery of the primary service (78 FR
74869). In addition, under this policy,
we calculate a single payment for the
entire hospital stay, defined by a single
claim, regardless of the date of service
span over which the primary service
and all related services are delivered.
This comprehensive APC packaging
policy packages payment for all items
and services typically packaged under
the OPPS, but also packages payment

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for other items and services that are not
typically packaged under the OPPS (78
FR 74909).
Because of the overall complexity of
this new policy and our introduction of
complexity adjustments in the CY 2014
OPPS/ASC final rule with comment
period, we modeled the policy as if we
were implementing it for CY 2014, but
delayed the effective date until January
1, 2015, to allow additional time for
further analysis, opportunity for public
comment, and systems preparation. In
the CY 2015 OPPS/ASC proposed rule
(79 FR 40941 through 40953), we
discussed our review of the policies
finalized in the CY 2014 OPPS/ASC
final rule with comment period for C–
APCs, and summarized and responded
to public comments received in
response to the CY 2014 OPPS/ASC
final rule with comment period relating
to the comprehensive APC payment
policy. We then outlined our proposed
policy for CY 2015, which included
several clarifications and proposed
modifications in response to public
comments received. In this section, we
use the terms ‘‘service’’ and
‘‘procedure’’ interchangeably.
(1) Background
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74861
through 74910), we finalized a policy,
with a delayed implementation date of
CY 2015, that designated certain
covered OPD services as primary
services (identified by a new OPPS
status indicator of ‘‘J1’’) assigned to C–
APCs. When such a primary service is
reported on a hospital outpatient claim,
taking into consideration the few
exceptions that are discussed below, we
treat all other items and services
reported on the claim as integral,
ancillary, supportive, dependent, and
adjunctive to the primary service
(hereinafter collectively referred to as
‘‘adjunctive services’’) and representing
components of a comprehensive service
(78 FR 74865). This results in a single
prospective payment for the primary,
comprehensive service based on the cost
of all reported services at the claim
level. We only exclude charges for
services that are statutorily excluded
from the OPPS, such as certain
mammography and ambulance services
that are never covered OPD services in
accordance with section
1833(t)(1)(B)(iv) of the Act; charges for
brachytherapy seeds, which must
receive separate payment under section
1833(t)(2)(H) of the Act; charges for
pass-through drugs and devices, which
also require separate payment under
section 1833(t)(6) of the Act; and
charges for self-administered drugs

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(SADs) that are not otherwise packaged
as supplies because they are not covered
under Medicare Part B under section
1861(s)(2)(B) of the Act (78 FR 74865).
The ratesetting process set forth in the
CY 2014 OPPS/ASC final rule with
comment period for the comprehensive
APC payment policy is summarized as
follows (78 FR 74887):
APC assignment of primary (‘‘J1’’)
services. HCPCS codes assigned to
status indicator ‘‘J1’’ are assigned to C–
APCs based on our usual APC
assignment methodology of evaluating
the geometric mean cost of the primary
service claims to establish resource
similarity and the clinical
characteristics of each procedure to
establish clinical similarity within each
APC. Claims reporting multiple
procedures described by HCPCS codes
assigned to status indicator ‘‘J1’’ are
identified and the procedures are then
assigned to a C–APC based on the
primary HCPCS code that has the
highest APC geometric mean cost. This
ensures that multiple procedures
described by HCPCS codes assigned to
status indicator ‘‘J1’’ reported on claims
are always paid through and assigned to
the C–APC that would generate the
highest APC payment. If multiple
procedures described by HCPCS codes
assigned to status indicator ‘‘J1’’ that are
reported on the same claim have the
same APC geometric mean estimated
cost, as would be the case when two
different procedures described by
HCPCS codes assigned to status
indicator ‘‘J1’’ are assigned to the same
APC, identification of the primary
service is then based on the procedure
described by the HCPCS code assigned
to status indicator ‘‘J1’’ with the highest
HCPCS-level geometric mean cost.
When there is no claims data available
upon which to establish a HCPCS-level
comprehensive geometric mean cost, we
use the geometric mean cost for the APC
to which the HCPCS code is assigned.
Complexity adjustments and
determination of final C–APC groupings.
We then considered reassigning
complex subsets of claims for each
primary service described by a HCPCS
code assigned to status indicator ‘‘J1.’’
All claims reporting more than one
procedure described by HCPCS codes
assigned to status indicator ‘‘J1’’ are
evaluated for the existence of commonly
occurring pairs of procedure codes
reported on claims that exhibit a
materially greater comprehensive
geometric mean cost relative to the
geometric mean cost of the claims
reporting that primary service. This
indicates that the subset of procedures
identified by the secondary HCPCS code
has increased resource requirements

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relative to less complex subsets of that
primary procedure (78 FR 74887). The
CY 2014 complexity adjustment criteria
are as follows:
• The comprehensive geometric mean
cost of the claims reporting the
combination of procedures is more than
two times the comprehensive geometric
mean cost of the single major claims
reporting only the primary service;
• There are more than 100 claims in
the data year reporting the specific code
combination;
• The number of claims reporting the
specific code combination exceed 5
percent of the volume of all claims
reporting the designated primary
service; and
• There would be no violation of the
‘‘2 times’’ rule within the receiving C–
APC (78 FR 74886).
If a pair of procedure codes reported
on claims is identified that meets these
requirements, that is, commonly
occurring and exhibiting materially
greater resource requirements, the pair
of procedure codes is further evaluated
to confirm clinical validity as a complex
subset of the primary procedure and the
pair of procedure codes is then
identified as complex, and primary
service claims with that combination of
procedure codes are subsequently
reassigned as appropriate. If a pair of
procedure codes does not meet the
requirement for a materially greater
resource requirement or does not occur
commonly, the pair of procedure codes
is not considered to be complex, and
primary service claims with that
combination of procedure codes are not
reassigned. All pairs of procedures
described by HCPCS codes assigned to
status indicator ‘‘J1’’ for each primary
service are similarly evaluated. Once all
pairs of procedures described by HCPCS
codes assigned to status indicator ‘‘J1’’
have been evaluated, all claims
identified for reassignment for each
primary service are combined and the
group is assigned to a higher level C–
APC within a clinical family of C–APCs,
that is, an APC with greater estimated
resource requirements than the initially
assigned C–APC and with appropriate
clinical homogeneity. We assessed
resource variation for reassigned claims
within the receiving APC using the
geometric mean cost for all reassigned
claims for the primary service relative to
other services assigned to that APC
using the 2 times rule criteria (78 FR
74887).
For new HCPCS codes and codes
without data, we use the best
information available to us to identify
combinations of procedure codes that
represent a more complex form of the
primary service and warrant

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reassignment to a higher level APC. In
the proposed rule, we stated that we
would reevaluate our APC assignments
and identification and APC placement
of complex claims once claims data
become available.

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(2) CY 2015 Policy for C–APCs
(a) Methodology
Basic C–APC Methodology. After
consideration of the public comments
we received on the CY 2014 OPPS/ASC
final rule with comment period, in the
CY 2015 OPPS/ASC proposed rule (79
FR 40941 through 40953), we described
our proposed payment methodology for
C–APCs for CY 2015. For CY 2015, we
proposed to establish a policy that
services assigned to C–APCs would be
designated as the primary services for
C–APCs, using new status indicator ‘‘J1’’
as listed in Addendum J and Addendum
B to the CY 2015 OPPS/ASC proposed
rule (which are available via the Internet
on the CMS Web site). We stated that
the basic steps for calculating the C–
APC payments remain the same as those
finalized in the CY 2014 OPPS/ASC
final rule with comment period, except
for the complexity adjustment criteria
described briefly above (78 FR 74885
through 74888). For CY 2015, we
proposed to restructure and consolidate
some of the current device-dependent
APCs to improve both the resource and
clinical homogeneity of these APCs. In
addition, instead of assigning any addon codes to status indicator ‘‘J1’’ as
finalized in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
74873 through 74883), we proposed to
package all add-on codes, consistent
with our CY 2014 OPPS policy to
package add-on codes (78 FR 74942),
but to allow certain add-on codes to
qualify a primary J1 procedure codeadd-on code combination for a
complexity adjustment. For CY 2015,
similar to other procedures described by
add-on codes under the OPPS and
according to 42 CFR 419.2(b)(18),
procedures described by add-on codes
furnished in conjunction with primary
comprehensive services would be
packaged instead of being assigned to an
APC with a separately payable status
indicator in accordance with the CY
2014 OPPS policy for add-on codes
assigned to device-dependent APCs.
However, the add-on codes currently
assigned to device-dependent APCs
(that are converted to C–APCs) may
qualify as a secondary code in a
complexity adjustment code pair.
Further, we proposed to convert all
current device-dependent APCs
remaining after the proposed
restructuring and consolidation of some

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of these APCs to C–APCs. We also
proposed to create two new C–APCs: C–
APC 0067 for single-session cranial
stereotactic radiosurgery services (SRS)
and C–APC 0351 for intraocular
telescope implantation. In addition, we
proposed to reassign CPT codes 77424
and 77425 that describe intraoperative
radiation therapy (IORT) to C–APC 0648
(Level IV Breast and Skin Surgery). We
discuss in detail below our proposed
new complexity adjustment criteria and
our proposal to package all add-on
codes, but to allow complexity
adjustments for qualifying code
combinations of primary codes and addon codes currently assigned to deviceintensive C–APCs.
As stated in the CY 2014 OPPS/ASC
final rule with comment period, we
define the comprehensive APC payment
policy as including all covered OPD
services on a hospital outpatient claim
reporting a primary service that is
assigned to status indicator ‘‘J1,’’
excluding services that cannot be
covered OPD services or that cannot by
statute be paid under the OPPS.
Services packaged for payment under
the comprehensive APC payment
packaging policy, that is, services that
are typically integral, ancillary,
supportive, dependent, or adjunctive to
the primary service, provided during the
delivery of the comprehensive service,
include diagnostic procedures,
laboratory tests and other diagnostic
tests and treatments that assist in the
delivery of the primary procedure; visits
and evaluations performed in
association with the procedure;
uncoded services and supplies used
during the service; durable medical
equipment as well as prosthetic and
orthotic items and supplies when
provided as part of the outpatient
service; and any other components
reported by HCPCS codes that are
provided during the comprehensive
service, except excluded services that
are described below (78 FR 74865). In
addition, payment for outpatient
department services that are similar to
therapy services and delivered either by
therapists or nontherapists is packaged
as part of the comprehensive service.
These services that are provided during
the perioperative period are adjunctive
services and not therapy services as
described in section 1834(k) of the Act,
regardless of whether the services are
delivered by therapists or other
nontherapist health care workers. We
have previously noted that therapy
services are those provided by therapists
under a plan of care in accordance with
section 1835(a)(2)(C) and section
1835(a)(2)(D) of the Act and are paid

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under section 1834(k) of the Act subject
to annual therapy caps, as applicable
(78 FR 74867). However, certain other
services similar to therapy services are
considered and paid as outpatient
services. Payment for these nontherapy
outpatient department services that are
reported with therapy codes and
provided with a comprehensive service
is packaged with the comprehensive
service. We note that these services,
even though they are reported with
therapy codes, are outpatient
department services and not therapy
services. Therefore, the requirement for
functional reporting under the
regulations at 42 CFR 410.59(a)(4) and
42 CFR 410.60(a)(4) does not apply.
Items packaged for payment provided
in conjunction with the primary service
also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost,
except those drugs with pass-through
payment status and those drugs that are
usually self-administered (SADs), unless
they function as packaged supplies (78
FR 74868 through 74869 and 74909).
We refer readers to the Medicare Benefit
Policy Manual, Chapter 15, Covered
Medical and Other Health Services,
Section 50.2.M, for a description of our
policy on self-administered drugs
treated as hospital outpatient supplies,
including lists of SADs that function as
supplies and those that do not function
as supplies.
Services excluded from the
comprehensive APC payment policy are
as follows: SADs that are not considered
supplies, because they are not covered
under Medicare Part B under section
1861(s)(2)(B) of the Act; services
excluded from the OPPS according to
section 1833(t)(1)(B) of the Act
including recurring therapy services,
which we considered unrelated to the
comprehensive service (defined as
therapy services reported on a separate
facility claim for recurring services),
ambulance services, diagnostic and
screening mammography, the annual
wellness visit providing personalized
prevention plan services, and passthrough drugs and devices that are paid
according to section 1833(t)(6) of the
Act.
We also exclude preventive services
defined in 42 CFR 410.2, ‘‘(1) [t]he
specific services listed in section
1861(ww)(2) of the Act, with the
explicit exclusion of electrocardiograms;
(2) [t]he Initial Preventive Physical
Examination (IPPE) (as specified by
section 1861(ww)(1) of the Act); and (3)
Annual Wellness Visit (AWV),
providing Personalized Prevention Plan
Services (PPPS) (as specified by section
1861(hhh)(1) of the Act).’’ These
preventive services are listed by their

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HCPCS codes in Addendum J to this
final rule with comment period and
include: Annual wellness visits
providing personalized prevention plan
services; initial preventive physical
examinations; pneumococcal, influenza,
and hepatitis B vaccines and
administrations; mammography
screenings; pap smear screenings and
pelvic examination screenings; prostate
cancer screening tests; colorectal cancer
screening tests; diabetes outpatient selfmanagement training services; bone
mass measurements; glaucoma
screenings; medical nutrition therapy
services; cardiovascular screening blood
tests; diabetes screening tests;
ultrasound screenings for abdominal
aortic aneurysm; and additional
preventive services as defined in section
1861(ddd)(1) of the Act. We defined and
discussed these services in detail for
hospital billing purposes in the CY 2011
OPPS/ASC final rule with comment
period pursuant to coverage and
payment provisions in the Affordable
Care Act (75 FR 72013 through 72020).

This policy is consistent with our
policy to exclude preventive services
from the ancillary services packaging
policy, will encourage the provision of
preventive services, and provide
maximum flexibility to beneficiaries
across different sites of service in
receiving preventive services. In
addition, the statute does not permit
assessment of beneficiary cost-sharing
for most preventive services, and some
receive cost-based payment (75 FR
72013 through 72020 and 78 FR 74962).
While any beneficiary cost-sharing
attributable to preventive services, if
they were packaged, would be very
small in relation to the comprehensive
service overall, we believe that we
should exclude these services from the
OPPS beneficiary copayment
calculations, as discussed in section II.I.
of this final rule with comment period.
We note that payment for one
preventive service (HCPCS code G0102
(Prostate cancer screening; digital rectal
examination)) will continue to be
packaged under the OPPS in CY 2015,

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both broadly and in the context of
comprehensive services. Currently,
payment for the procedure described by
this HCPCS code is packaged because it
is included in evaluation and
management services. We note that
beneficiary cost-sharing is not waived
for the service described by HCPCS code
G0102.
Consistent with the policy finalized in
the CY 2014 OPPS/ASC final rule with
comment period, we exclude
brachytherapy services and passthrough drugs, biologicals and devices
that are separately payable by statute (78
FR 74868 and 74909). In addition, we
exclude services assigned to OPPS
status indicator ‘‘F’’ that are not paid
under the OPPS and are instead paid on
a reasonable cost basis (certain CRNA
services, Hepatitis B vaccines, and
corneal tissue acquisition, which is not
part of a comprehensive service for CY
2015). In Table 6 below, we list the
services that are excluded from the
comprehensive APC payment policy.

TABLE 6—COMPREHENSIVE APC PAYMENT POLICY EXCLUSIONS FOR CY 2015
Ambulance services
Brachytherapy
Diagnostic and mammography screenings
Physical therapy, speech-language pathology and occupational therapy services—Therapy services reported on a separate facility claim for recurring services
Pass-through drugs, biologicals and devices
Preventive services defined in 42 CFR 410.2:
• Annual wellness visits providing personalized prevention plan services
• Initial preventive physical examinations
• Pneumococcal, influenza, and hepatitis B vaccines and administrations
• Mammography Screenings
• Pap smear screenings and pelvic examination screenings
• Prostate cancer screening tests
• Colorectal cancer screening tests
• Diabetes outpatient self-management training services
• Bone mass measurements
• Glaucoma screenings
• Medical nutrition therapy services
• Cardiovascular screening blood tests
• Diabetes screening tests
• Ultrasound screenings for abdominal aortic aneurysm
• Additional preventive services (as defined in section 1861(ddd)(1) of the Act)
Self-administered drugs—Drugs that are usually self-administered and do not function as supplies in the provision of the comprehensive service
Services assigned to OPPS status indicator ‘‘F’’ (Certain CRNA services, Hepatitis B vaccines and corneal tissue acquisition)
Services assigned to OPPS status indicator ‘‘L’’ (Influenza and pneumococcal pneumonia vaccines)

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Certain Part B inpatient services—Ancillary Part B inpatient services payable under Part B when the primary ‘‘J1’’ service for the claim is not a
payable Part B inpatient service (for example, exhausted Medicare Part A benefits, beneficiaries with Part B only)

We proposed to continue to define
each hospital outpatient claim reporting
a single unit of a single primary service
assigned to status indicator ‘‘J1’’ as a

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single ‘‘J1’’ unit procedure claim (78 FR
74871). We proposed to sum all line
item charges for services included in the
C–APC payment, convert the charges to

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costs, and calculate the
‘‘comprehensive’’ geometric mean cost
of one unit of each service assigned to
status indicator ‘‘J1.’’ (We note that we

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use the term ‘‘comprehensive’’ to
describe the geometric mean cost of a
claim reporting ‘‘J1’’ service(s) or the
geometric mean cost of a C–APC,
inclusive of all of the items and services
in the C–APC payment bundle). Charges
for services that would otherwise have
been separately payable are added to the
charges for the primary service. This
process differs from our traditional cost
accounting methodology only in that all
such services on the claim are packaged
(except certain services as described
above). We proposed to apply our
standard data trims, excluding claims
with extremely high primary units or
extreme costs.
The comprehensive geometric mean
costs are used to establish resource
similarity and, along with clinical
similarity, dictate the assignment of the
primary services to the C–APCs. We
proposed to establish a ranking of each
primary service (single unit only)
assigned to status indicator ‘‘J1’’
according to their comprehensive
geometric mean costs. For the minority
of claims reporting more than one
primary service assigned to status
indicator ‘‘J1’’ or units thereof
(approximately 20 percent of CY 2013
claims), we proposed to continue to
identify one ‘‘J1’’ service as the primary
service for the claim based on our costbased ranking of primary services. We
then assign these multiple ‘‘J1’’
procedure claims to the C–APC to
which the service designated as the
primary service is assigned. If the
reported ‘‘J1’’ services reported on a
claim map to different C–APCs, we
designate the ‘‘J1’’ service assigned to
the C–APC with the highest
comprehensive geometric mean cost as
the primary service for that claim. If the
reported multiple ‘‘J1’’ services on a
claim map to the same C–APC, we
designate the most costly service (at the
HCPCS code level) as the primary
service for that claim. This process
results in initial assignments of claims
for the primary services assigned to
status indicator ‘‘J1’’ to the most
appropriate C–APCs based on both
single and multiple procedure claims
reporting these services and clinical and
resource homogeneity.
Complexity Adjustments. We
proposed to use complexity adjustments
to provide increased payment for certain
comprehensive services. We proposed
to apply a complexity adjustment by
promoting qualifying ‘‘J1’’ service code
combinations or code combinations of
‘‘J1’’ services and certain add-on codes
(as described further below) from the
originating C–APC (the C–APC to which
the designated primary service is first
assigned) to a higher paying C–APC in

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the same clinical family of C–APCs, if
reassignment is clinically appropriate
and the reassignment would not create
a violation of the 2 times rule in the
receiving APC (the higher paying C–
APC in the same clinical family of C–
APCs). We proposed to implement this
type of complexity adjustment when the
code combination represents a complex,
costly form or version of the primary
service according to the following
criteria:
• Frequency of 25 or more claims
reporting the code combination
(frequency threshold); and
• Violation of the 2 times rule (cost
threshold).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40947 through 40948, we
explained in detail in response to a
comment to the CY 2014 OPPS/ASC
final rule with comment period the
differences between the finalized CY
2014 complexity adjustment criteria and
the CY 2015 proposed complexity
adjustment criteria and our rationale for
the proposed changes.
After designating a single primary
service for a claim, we proposed to
evaluate that service in combination
with each of the other procedure codes
reported on the claim assigned to status
indicator ‘‘J1’’ (or certain add-on codes)
to determine if they meet the
complexity adjustment criteria. For new
HCPCS codes, we proposed to
determine initial C–APC assignments
and complexity adjustments using the
best data available, cross-walking the
new HCPCS codes to predecessor codes
wherever possible.
Once we have determined that a
particular code combination of ‘‘J1’’
services (or combinations of ‘‘J1’’
services reported in conjunction with
certain add-on codes) represents a
complex version of the primary service
because it is sufficiently costly,
frequent, and a subset of the primary
comprehensive service overall
according to the criteria described
above, we proposed to promote the
complex version of the primary service
as described by the code combination to
the next higher cost C–APC within the
clinical family, unless the APC
reassignment is not clinically
appropriate, the reassignment would
create a violation of the 2 times rule in
the receiving APC, or the primary
service is already assigned to the highest
cost APC within the C–APC clinical
family or assigned to the only C–APC in
a clinical family (79 FR 40944). We did
not propose to create new APCs with a
geometric mean cost that is higher than
the highest cost (or only) C–APC in a
clinical family just to accommodate
potential complexity adjustments.

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Therefore, the highest payment for any
code combination for services assigned
to a C–APC would be the highest paying
C–APC in the clinical family.
As discussed below, we proposed that
add-on codes reported in conjunction
with a ‘‘J1’’ service would receive
complexity adjustments when a
qualifying add-on code is reported in
conjunction with the primary service
assigned to status indicator ‘‘J1’’ and
satisfies the criteria described above for
a complexity adjustment. Any
combinations of HCPCS codes that fail
to meet the proposed complexity
adjustment criteria (frequency and cost
thresholds) would not be identified as
complex subsets of the primary
procedure and would not be reassigned
to a higher paying C–APC within the
same clinical family of C–APCs. We
provided a proposed list of qualifying
code combinations (including add-on
codes) in Addendum J to the proposed
rule (which is available via the Internet
on the CMS Web site).
We proposed to package payment for
all add-on codes into the payment for
the C–APC. However, we indicated that
add-on codes that are assigned to the
current device-dependent APCs listed in
Table 5 of the proposed rule (79 FR
40938) would be evaluated for a
possible complexity adjustment when
they are reported in conjunction with a
designated primary service assigned to
status indicator ‘‘J1.’’ We proposed to
only evaluate the add-on codes that are
assigned to the current devicedependent APCs listed in Table 5 of the
proposed rule for potential complexity
adjustments because we believe that, in
certain cases, these procedure codes
may represent services with additional
medical device costs that result in
significantly more complex and costly
procedures. To determine which
combinations of primary service codes
reported in conjunction with the add-on
code may qualify for a complexity
adjustment for CY 2015, we proposed to
apply the proposed frequency and cost
criteria discussed above, testing claims
reporting one unit of a single primary
service assigned to status indicator ‘‘J1’’
and any number of units of a single addon code. If the frequency and cost
criteria for a complexity adjustment
were met, and reassignment to the next
higher cost APC in the clinical family is
appropriate, we proposed to make a
complexity adjustment for the code
combination; that is, we proposed to
reassign the primary service code
reported in conjunction with the add-on
code combination to a higher cost C–
APC within the same clinical family of
C–APCs. If any add-on code
combination reported in conjunction

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with the primary service code did not
qualify for a complexity adjustment,
payment for these services would be
packaged. We listed the complexity
adjustments proposed for add-on code
combinations for CY 2015, along with
all of the other proposed complexity
adjustments, in Addendum J to the
proposed rule (which is available via
the Internet on the CMS Web site). One
primary service code and add-on code
combination (CPT code 37225 and
37233) that satisfied the frequency and
cost criteria was not proposed for a
complexity adjustment because we
believe that these claims are miscoded.
Of the 35 qualifying claims reporting
this code combination, only 3 claims
contained the appropriate base code
(CPT code 37228) for CPT add-on code
37233.
We provided in Addendum J to the
proposed rule a breakdown of cost
statistics for each code combination that
would qualify for a complexity
adjustment (including primary code and
add-on code combinations). Addendum
J to the proposed rule also contained
summary cost statistics for each of the
code combinations proposed to be
reassigned under a given primary code.
The combined statistics for all proposed
reassigned complex code combinations
are represented by an alphanumeric
code with the last 4 digits of the
designated primary service followed by
‘‘A’’ (indicating ‘‘adjustment’’). For
example, the geometric mean cost listed
in Addendum J for the code
combination described by CPT code
33208A assigned to C–APC 0655
included all code combinations that
were proposed to be reassigned to C–
APC 0655 when CPT code 33208 is the
primary code. Providing the information
contained in Addendum J in the
proposed rule allowed stakeholders the
opportunity to better assess the impact
associated with the proposed
reassignment of each of the code
combinations eligible for a complexity
adjustment.
(b) Additional C–APCs
Several commenters to the CY 2014
OPPS/ASC proposed rule questioned
why CMS only converted a subset of the
device-dependent APCs to C–APCs (78
FR 74864). We responded that while we
were initially adopting a subset of the
most costly device-dependent services,
we may extend comprehensive
payments to other procedures in future
years as part of a broader packaging
initiative (78 FR 74864). Upon further
review for CY 2015, we stated in the CY
2015 OPPS/ASC proposed rule (79 FR
40944 through 40945) that we believe
that the entire set of the currently

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device-dependent APCs (after the
proposed reorganization and
consolidation of the current devicedependent APCs) are appropriate
candidates for C–APC payment because
the device-dependent APCs not
included in last year’s comprehensive
APC payment proposal are similar to the
original 29 device-dependent APCs that
were proposed as C–APCs in CY 2014.
Similar to the original 29 devicedependent APCs for CY 2014 that were
converted to C–APCs, the additional
device-dependent APCs that were
proposed for conversion to C–APCs
contain comprehensive services
primarily intended for the implantation
of costly medical devices. Therefore, in
the CY 2015 OPPS/ASC proposed rule,
we proposed to apply the
comprehensive APC payment policy to
the remaining device-dependent APCs
for CY 2015.
In addition, since the publication of
the CY 2014 OPPS/ASC final rule with
comment period, stakeholders brought
several services to our attention as
appropriate candidates for C–APC
payment. Stakeholders recommended
that we create C–APCs for these
procedures and technologies or assign
them to a previously proposed C–APC.
We agreed with the stakeholders.
Similar to the other services designated
as comprehensive in CY 2014, these
procedures are comprehensive singlesession services with high-cost
implantable devices or high-cost
equipment. For CY 2015, we proposed
to convert the following existing APCs
into C–APCs: APC 0067 (Single Session
Cranial Stereotactic Radiosurgery) and
APC 0351 (Level V Intraocular
Surgery)). C–APC 0351 only contains
one procedure—CPT code 0308T
(Insertion of ocular telescope prosthesis
including removal of crystalline lens).
We also proposed to assign the CPT
codes for IORT (CPT codes 77424 and
77425) to C–APC 0648 (Level IV Breast
and Skin Surgery) because IORT is a
single session comprehensive service
that includes breast surgery combined
with a special type of radiation therapy
that is delivered inside the surgical
cavity but is not technically
brachytherapy. The HCPCS codes that
we proposed to assign to these C–APCs
in CY 2015 would be assigned to status
indicator ‘‘J1.’’
(c) Reconfiguration and Restructuring of
the C–APCs
Based on further examination of the
structure of the C–APCs illustrated in
the CY 2014 OPPS/ASC final rule with
comment period and an evaluation of
their comprehensive geometric mean
costs (using the updated CY 2013 claims

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data), in the CY 2015 OPPS/ASC
proposed rule (79 FR 40945), we
proposed to reorganize, combine, and
restructure some of the C–APCs. The
purpose of this APC restructuring is to
improve resource and clinical
homogeneity among the services
assigned to certain C–APCs and to
eliminate APCs for clinically similar
services, but with overlapping geometric
mean costs. The services we proposed to
assign to each of the C–APCs for CY
2015, along with the relevant cost
statistics, were provided in Addendum
J to the proposed rule. Addendum J is
available at the CMS Web site at:
http://www.cms.hhs.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
Table 7 of the proposed rule (79 FR
40952) listed the additional 28 APCs
proposed under the CY 2015
comprehensive APC policy.
In summary, our proposal to
reorganize, combine, and restructure
some of the C–APCs included the
following proposed changes:
• Endovascular clinical family
(renamed Vascular Procedures, VASCX).
We proposed to combine C–APCs 0082,
0083, 0104, 0229, 0319, and 0656
illustrated for CY 2014 to form three
proposed levels of comprehensive
endovascular procedure APCs: C–APC
0083 (Level I Endovascular Procedures);
C–APC 0229 (Level II Endovascular
Procedures); and C–APC 0319 (Level IV
Endovascular Procedures).
• Automatic Implantable Cardiac
Defibrillators, Pacemakers, and Related
Devices (AICDP). We proposed to
combine C–APCs 0089, 0090, 0106,
0654, 0655, and 0680 as illustrated for
CY 2014 to form three proposed levels
of C–APCs within a broader series of
APCs for pacemaker implantation and
similar procedures as follows: APC 0105
(Level I Pacemaker and Similar
Procedures), a non-comprehensive APC;
C–APC 0090 (Level II Pacemaker and
Similar Procedures); C–APC 0089 (Level
III Pacemaker and Similar Procedures);
and C–APC 0655 (Level IV Pacemaker
and Similar Procedures).
• We proposed to delete the clinical
family for Event Monitoring, which only
had one C–APC (C–APC 0680 (Insertion
of Patient Activated Event)) with a
single CPT code 33282 as illustrated for
CY 2014. We also proposed to reassign
CPT code 33282 to C–APC 0090, which
contains clinically similar procedures.
• In the urogenital family, we
proposed two levels instead of three
levels for urogenital procedures, and to
reassign several codes from APC 0195 to
C–APC 0202 (Level V Female
Reproductive Procedures).

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• We proposed to rename the
arthroplasty family of APCs to
‘‘Orthopedic Surgery.’’ We also
proposed to reassign several codes from
APC 0052 to C–APC 0425, which we
proposed to rename ‘‘Level V
Musculoskeletal Procedures Except
Hand and Foot.’’
• We proposed three levels of
electrophysiologic procedures, using the
current inactive APC ‘‘0086’’ instead of
APC 0444, to have consecutive APC
grouping numbers for this clinical
family and to rename APC 0086 ‘‘Level
III Electrophysiologic Procedures.’’ In
addition, we proposed to replace
composite APC 8000 with proposed C–
APC 0086 as illustrated in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 74870).
We also proposed three new clinical
families: Gastrointestinal Procedures
(GIXXX) for gastrointestinal stents,
Tube/Catheter Changes (CATHX) for
insertion of various catheters, and
Radiation Oncology (RADTX), which
would include C–APC 0067 for single
session cranial SRS.
(3) Public Comments
Comment: Commenters were
generally supportive of the proposed
changes to the comprehensive APC
payment policy for CY 2015 when
compared to the CY 2014 final policy,
and urged CMS to monitor
implementation for payment adequacy
and access to quality care. Some
commenters requested that CMS delay
implementation until at least July 1,
2015, to allow time to fully test systems
changes. Some commenters requested
that CMS delay implementation for a
year or more until CMS addresses
assorted concerns or so that hospitals
can continue to analyze the policy and
budget for the financial impact.
Response: We appreciate the
commenters’ support. We plan to
monitor the implementation of this C–
APC payment policy and will consider
future revisions as necessary. We will
not further delay implementation of this
policy. We have already delayed
implementation of the C–APC payment
policy for a year, which we believe
provided ample time for hospitals to
evaluate the policy.
Comment: We received feedback from
commenters regarding the data
resources that CMS provided to support
the proposed rule. Some commenters
commended CMS for the technical
support and assistance provided that
enabled the commenters to replicate
CMS’ methodology and match CMS’
results. Other commenters expressed
concern that the data resources were
insufficient, inconsistent, and unclear.

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Some commenters also requested that
CMS enhance transparency, expand the
data resources available to the public,
and engage stakeholders in future
comprehensive APC payment policy
development. Some commenters asked
that CMS provide cost data on all of the
code combinations that were evaluated
for the complexity adjustments,
including the code combinations that
qualified for a complexity adjustment.
One commenter stated that
discrepancies in some of the number
entries between Addendum J and
Addendum B violate the Administrative
Procedures Act (APA) because these
discrepancies ‘‘make it impossible to
understand what CMS is proposing.’’
Response: We appreciate the
commenters’ support for the proposed
expansion of available data resources
related to the comprehensive APC
payment policy methodology. In
response to the commenters who
expressed concern regarding the
insufficiency of the data files provided,
we understand that the OPPS is
technically complex. However, we
believe that the data made available to
the public as part of the proposed rule
were appropriate, clear, and sufficient.
We acknowledge the commenters’
concerns regarding the transparency of
related data and the desire for
additional resources. Therefore, for this
final rule with comment period, we are
providing additional data in Addendum
J, such as cost statistics related to code
combinations that are not eligible for
complexity adjustments. Regarding any
indications of discrepancies in some of
the number entries between Addendum
J and Addendum B, as the commenter
suggested, we understand and
acknowledge that minor discrepancies
may sometimes occur with complex
payment rules that include various files
with many different types of data.
However, we do not believe any such
discrepancies would limit commenters’
ability to understand the proposed
policies or to evaluate the impacts or
effects of the proposed policy changes.
The comprehensive APC payment
policy has been open for public
comment during three consecutive
OPPS rulemaking cycles: the CY 2014
OPPS/ASC proposed rule; the CY 2014
OPPS/ASC final rule with comment
period; and the CY 2015 OPPS/ASC
proposed rule. Therefore, we do not
believe that we provided insufficient
notice of the policies that are a part of
the comprehensive APC payment
policy.
Comment: Commenters expressed
concern regarding the misalignment
between hospitals’ billing practices and
systems and the proposal to package all

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services (except for the few exceptions
noted above) on a claim into the
payment for the comprehensive service.
The commenters observed that a
significant number of comprehensive
service claims spanned more than 5
days, with some claims spanning close
to 30 days. The commenters
recommended that CMS limit the
payment bundle to services provided
within 1 or 2 days of the primary
service, or defining the bundle based on
episodes of care. Commenters also
requested that CMS clarify the guidance
provided and educate providers on how
to report comprehensive services that
fall within the span of a recurring
service claim. Some commenters
expressed concern that policies which
reduce or eliminate series billing for
recurring services may create an
operational burden for hospitals;
increase claims processing activity for
Medicare contractors; and increase the
amount of paperwork sent to a
beneficiary.
Response: Our intent is to capture all
of the services associated with the
primary service assigned to a C–APC,
except those services that would still be
separately paid under the OPPS, even
when provided in conjunction with a
comprehensive service. The 219
procedures assigned to the C–APCs are
a small fraction of the total services
provided in HOPDs. We believe that it
would not be an undue hardship for
some hospitals to alter their processes
such that they file separate claims for
services that are unrelated both
clinically and in regard to time to the
comprehensive service. With regard to
recurring services, we have previously
issued manual guidance in the Internet
Only Manual, Pub. 100–4, Chapter 1,
Section 50.2.2, that provides that only
recurring services should be billed
monthly. We also have specified that, in
the event that a recurring service occurs
on the same day as an acute service that
falls within the span of the recurring
service claim, hospitals should bill
separately for recurring services on a
monthly claim (repetitive billing) and
submit a separate claim for the acute
service. We also do not expect that these
claims for comprehensive services in
the outpatient setting would extend
beyond a few days because the 219
procedures assigned to the 25 C–APCs
are almost entirely surgical procedures.
If a physician determined that
furnishing one of these services would
be medically necessary for the treatment
of a Medicare beneficiary and expected
the beneficiary to require hospital care
for more than 2 midnights, inpatient
admission would be appropriate.

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Comment: Commenters generally
supported the proposed packaging of all
add-on codes reported in conjunction
with comprehensive service claims with
the allowance of complexity
adjustments for add-on codes currently
assigned to device-dependent APCs in
CY 2014. One commenter requested that
CMS assign add-on CPT code 57267
(Insertion of mesh or other prosthesis
for repair of pelvic floor defect, each site
(anterior, posterior compartment),
vaginal approach (List separately in
addition to code for primary procedure)
to C–APC 0202 because this code has
high device costs.
Response: We appreciate the
commenters’ support. According to 42
CFR 419.2(b)(18), add-on codes are
packaged under the OPPS. Because
implementation of the finalized
comprehensive APC payment policy
was delayed until CY 2015, for CY 2014
we maintained the structure and code
assignments for the device-dependent
APCs, which continued separate
payment for add-on codes assigned to
device-dependent APCs for CY 2014.
We refer readers to Table 7 of the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74859). The
add-on code complexity adjustment
policy is limited only to certain add-on
codes that were previously assigned to
device-dependent APCs and that, along
with a primary comprehensive service,
meet the complexity adjustment criteria.
We refer readers to Table 9 of the CY
2015 OPPS/ASC proposed rule (79 FR
40959) for a listing of these add-on
codes. Our intent is not to make a higher
payment in every case that an add-on
procedure results in higher costs.
Therefore, we are finalizing the CY 2015
proposal to package all add-on codes
reported on a claim in conjunction with
a comprehensive service, and also to
allow a limited number of add-on codes
to be evaluated for a complexity
adjustment when billed with a primary
comprehensive service. We are not
extending the complexity adjustment
policy beyond those add-on codes that
were assigned to device-dependent
APCs. The list of add-on codes that we
evaluated for a complexity adjustment is
included later in this section in Table 8.
Comment: Some commenters
requested that CMS divide the
restructured C–APCs into more discrete
groupings to increase clinical coherence
and resource cost homogeneity. Some
commenters believed that improved
clinical coherence among the
procedures within the C–APCs would
increase the stability of C–APC
payments from year-to-year and
decrease opportunities for ‘‘gaming’’ the
system. Some commenters also

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expressed concern with the high
variation in geometric mean costs for
services assigned to the C–APCs that do
not create a violation of the 2 times rule,
but would result in inadequate payment
for the highest cost procedures assigned
to the C–APC.
Response: We disagree with the
commenters. We believe that the
categorization of the restructured C–
APCs better represents clinical and
resource homogeneity when compared
to the CY 2014 structure of the C–APCs.
We also note that the OPPS is a
prospective payment system that relies
on groupings of procedures resulting in
a weighted-average cost payment based
on all of the procedures in the group.
Too much discretization of APC
groupings would move the OPPS more
toward a fee schedule, which would
have individual payments for each
HCPCS code and presents an
undesirable outcome for the OPPS. In
addition, we encourage all members of
the stakeholder public to report all
suspected incidents of fraud and abuse
to the Office of Inspector General or the
CMS Center for Program Integrity. As
required by statute, we will review and
evaluate, on an annual basis, any yearto-year changes in APC and HCPCS
geometric mean costs.
Comment: A few commenters
disagreed with CMS’ proposal to expand
the C–APCs to include all of the current
device-dependent APCs. The
commenters noted that a significant
percentage of claims for some of the
lower paying C–APCs (specifically, C–
APCs 0084 (Level I Electrophysiologic
Procedures), 0427 (Level II Tube or
Catheter Changes or Repositioning),
0622 (Level II Vascular Access
Procedures), and 0652 (Insertion of
Intraperitoneal and Pleural Catheters)
report services assigned to
noncomprehensive APCs that are
significantly more costly than the
primary service that is motivating the
C–APC payment. Commenters believed
that procedures assigned to these APCs
are not infrequently performed as
secondary procedures to other more
costly procedures that are assigned to
noncomprehensive APCs. Commenters
recommended various approaches for
addressing this concern: (1) Applying
complexity adjustments to these claims;
(2) excluding high-cost procedures from
the comprehensive APC packaging
policy; (3) paying for the higher-cost
service and applying a multiple
procedure reduction to the C–APC; or
(4) eliminating the lower paying C–
APCs from the comprehensive APC
payment policy methodology.
Response: Our analysis shows a
significant number of claims in APCs

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0427 and 0622 that contain
noncomprehensive services that are
more costly than the procedures
assigned to the proposed C–APC. In
addition, similar to APCs 0427 and
0622, APC 0652 contains a total of three
catheter-insertion procedures. These
procedures are not similar to the other
major procedures assigned to C–APCs,
but are sometimes supportive of other
procedures. For example, APC 0652
includes the procedure that describes
the placement of a pleural catheter that
can be used for drug delivery, but is not
a definitive therapeutic procedure
similar to most of the other procedures
assigned to that C–APC. Also, APCs
0427, 0622, and 0652 are not deviceintensive APCs, meaning that the device
offsets are not greater than 40 percent.
Therefore, we are accepting the
commenters’ recommendation. We are
not converting APCs 0427, 0622, and
0652 into C–APCs for CY 2015. In
addition, because we are not converting
APC 0427 into a C–APC, we will not
evaluate add-on CPT code 49435 for
complexity adjustments because the
APC that contains the base codes for
CPT code 49435 are assigned to APC
0427. However, we are finalizing the
proposal to convert APC 0084 into a C–
APC. We did not find that a significant
number of higher cost
noncomprehensive procedures are
performed in conjunction with the
procedures assigned to APC 0084.
Unlike many of the catheter insertion
procedures assigned to APCs 0427,
0622, and 0652, the electrophysiology
procedures assigned to APC 0084 are
not supportive of other services, but are
the definitive therapeutic procedures
intended to treat a patient’s cardiac
condition.
Comment: Commenters urged CMS to
develop adjustments to C–APC
payments based on patient acuity or
diagnosis to account for clinical
complexity and patient characteristics,
which could help mitigate the negative
payment impact of expanding the
comprehensive APC payment policy on
hospitals that treat more clinically
complex patients, such as academic
medical centers, cancer hospitals, and
trauma centers.
Response: As we stated in the CY
2015 OPPS/ASC proposed rule (79 FR
40951), section 1833(t)(2) of the Act
provides a procedure-based payment
methodology for the OPPS, which is
unlike the IPPS that makes payments
based on both diagnoses and
procedures. Currently OPPS payments
are not based on patient severity or
diagnosis like payments under the IPPS.
Therefore, we are unable to make

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payment adjustments based on
diagnoses.
Comment: Commenters expressed
concern that not implementing C–APCs
in the ASC setting distorts the payment
relationship between ASCs and HOPDs
and could result in incentives to direct
patients from one setting to another.
Commenters recommended that CMS
reprogram the ASC payment system
software, as soon as possible, to allow
the system to perform the complex logic
needed to implement and provide
adequate payment for the C–APCs for
ASCs.
Response: The commenters are correct
that the comprehensive APC payment
policy methodology is not being
adopted under the ASC payment
system. However, we do not believe that
this policy decision will result in siteof-service shifts, but we will continue to
monitor procedure volumes in both
settings. Although OPPS payments for
individual surgical procedures assigned
to C–APCs are higher than ASC
payments for the same procedures,
under the standard noncomprehensive
service payment methodology that
applies in the ASC for all APCs and in
the OPPS for noncomprehensive
services, there remains separate
payment for covered procedures and
covered ancillary services that are not
packaged under a general packaging
policy. This continuation of separate
payment for covered procedures and
covered ancillary services performed in
the ASC (which is not available in the
OPPS for procedures performed in
addition to the primary procedures
assigned to C–APCs) should help
mitigate any incentive to perform
procedures assigned to C–APCs in the
HOPD. However, given the significant
difference between ASC and OPPS
payment rates, we do not believe that
separate payment (at the multiple
procedure reduction reduced rate) for
additional procedures performed in the
ASC setting along with a procedure that
is assigned to a C–APC will draw cases
away from the HOPD because, in most
cases, the overall HOPD will be higher
than the ASC payment for the same set
of procedures. We will consider the
commenters’ suggestion that we develop
new payment software for the ASC
payment system should an opportunity
to do so arise in the future.
Comment: Commenters requested that
CMS provide separate payment for
certain services reported on a
comprehensive claim. Some
commenters requested that CMS
exclude the following additional
services from the packaging provision
under the comprehensive APC payment
policy:

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• Dialysis and emergency dialysis
services.
• Blood products.
• Expensive diagnostic tests, such as
angiography.
• High-cost drugs and devices that
account for a high percentage of the
geometric mean cost of a C–APC.
• Outpatient services paid under a
payment schedule, such as laboratory
services.
The commenters believed that the C–
APC payment would not adequately
cover the cost of these services. One
commenter believed that packaging
payment for an otherwise separately
payable drug when provided in
conjunction with a comprehensive
service may cause hospitals, in
consultation with physicians, to choose
a less-expensive alternative drug.
Response: We responded to similar
comments that disagreed with CMS’
proposal to package payment for various
items and services into the C–APC
payment in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
74865 through 74910). As previously
stated, we disagree with the
commenters. We believe that the central
attribute of the comprehensive APC
payment policy is the packaging of all
adjunctive services, with the exception
of those services described above that,
according to the statute, cannot be
packaged or the list of preventive
services that generally would not be
provided at the time of a major
procedure assigned to a C–APC. We
note that (as stated above in section
II.A.3.a. of this final rule with comment
period) where there are a variety of
devices, drugs, items, and supplies that
could be used to furnish a service, some
of which are more expensive than
others, packaging encourages hospitals
to use the most cost-efficient item that
meets the patient’s needs, rather than
routinely using a more expensive item,
which often results if separate payment
is provided for the items. Furthermore,
packaging also encourages hospitals to
effectively negotiate with manufacturers
and suppliers to reduce the purchase
price of items and services (including
drugs) or to explore alternative group
purchasing arrangements, thereby
encouraging the most economical health
care delivery.
Comment: Commenters asserted that
the reliance on code combinations based
on cost ranking of codes would lead to
instability in the complexity
adjustments from year to year, and
overlook a large number of
comprehensive claims with three or
more ‘‘J1’’ services, which is common
for the clinical complexity of
procedures assigned to the endovascular

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revascularization family of APCs.
Commenters suggested alternative
methodologies for determining
eligibility, such as applying a
complexity adjustment to any claim that
has three or more ‘‘J1’’ services or
applying the cost and frequency criteria
to all combinations of ‘‘J1’’ services.
Response: We disagree with the
commenters that assigning complexity
adjustments based on cost ranking of
primary and secondary codes is either
insufficient or would result in
instability of the complexity
adjustments in future years. We
proposed complexity adjustments for
certain code pairs to provide a higher
payment in the next higher APC within
a clinical family for high cost procedure
pairs consisting of a primary
comprehensive procedure and a
secondary comprehensive procedure
that represent sufficiently frequent and
sufficiently costly comprehensive
procedure pairs such that they are
separated from and provided a higher
payment than all of the cases that are
accounted for in APC assignment of the
primary service. We do not believe that
providing a complexity adjustment to
any claim that has three or more ‘‘J1’’
services or to all claims reporting pairs
of ‘‘J1’’ services that meet the cost and
frequency criteria would adequately
serve the stated purpose of the policy.
The intent of the complexity adjustment
policy is to identify a limited number of
costly procedure pairs for a higher
payment at the next higher paying C–
APC within the clinical family, not to
unpackage and separately pay for all of
the high cost cases that are associated
with the primary ‘‘J1’’ procedure.
Although such a policy as the
commenters requested could be
beneficial to the procedures assigned to
the endovascular C–APC family because
of the high number of codes that can be
billed per case, we do not believe that
this approach would serve the other
clinical families that do not rely on
component coding to the same extent as
endovascular procedures. Therefore, we
are finalizing our proposal to base the
complexity adjustments on code pairs
that include the two most costly ‘‘J1’’
services reported on the C–APC service
claim.
Comment: Commenters believed that
the cost threshold is too restrictive and
would cause financial hardship for
hospitals and jeopardize beneficiary
access to care. Commenters suggested
that CMS adjust the cost threshold to
1.5, 1.75, or within 2 percent of the 2
times rule limit.
Response: In response to comments to
the CY 2014 OPPS/ASC final rule with
comment period, we significantly

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lowered the cost criterion for a
complexity adjustment from two times
the cost of the primary procedure to two
times the cost of the lowest cost
procedure in the APC to which the
primary procedure is assigned. This
change made it significantly easier for
code combinations to qualify for a
complexity adjustment based on higher
cost. We do not believe that further
lowering of the cost criterion would be
consistent with the objective of the
comprehensive APC payment policy.
We believe that lowering the cost
criterion would result in effectively
unpackaging too many cases from the
primary C–APC assignment and,
therefore, defeat the purpose of the
policy, which is to create a
comprehensive prospective payment for
major, primary device-intensive
procedures.
Comment: Commenters expressed
concern that claims assigned to the only
level or the highest level C–APC within
a clinical family are ineligible to receive
a complexity adjustment because there
is no higher paying APC in the clinical
family in which to assign these code
combinations. Commenters requested
that CMS add an additional C–APC
level to these clinical families to
provide for more granular payment
levels and accommodate potential
complexity adjustments.
Response: As we stated in the CY
2015 OPPS/ASC proposed rule, we
would not create new APCs with a
geometric mean cost that is higher than
the highest cost C–APC in a clinical
family just to accommodate potential
complexity adjustments. Therefore, the
highest payment for any code
combination for services assigned to a
C–APC would be the highest paying C–
APC in the clinical family. We only
found 7 code pairs out of the 219
procedures that are assigned to the 25
final C–APCs that would qualify for a
complexity adjustment if a higher
paying APC were available for
assignment of the code combination. We
do not believe that this small number of
code combinations from the highest
paying APCs in the final 12 clinical
families of C–APCs that satisfy the
complexity adjustment criteria
necessitates creating additional APCs,
especially if these APCs would be
populated with only a few multiple
procedure claims. In addition, in
accordance with section 1833(t)(2)(B) of
the Act, APCs are defined as ‘‘groups of
covered OPD services’’ that are
comparable clinically and with respect
to the use of resources. If we created an
additional new higher level APC within
each C–APC clinical family that did not
contain any primary comprehensive

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services and instead only contained a
very small volume of complexityadjusted code pairs, we do not believe
that such APCs would constitute
appropriate ‘‘groups of covered OPD
services.’’
Comment: One commenter urged
CMS to finalize the proposal to assign
CPT code 0308T to APC 0351 and to
convert APC 0351 into a C–APC.
Response: We appreciate the
commenter’s support. For this final rule
with comment period, we are finalizing
our proposal to assign CPT code 0308T
to APC 0351 and to convert APC 0351
into a C–APC for CY 2015.
Comment: Commenters generally
agreed with the proposed structure of
the Automatic Implantable Cardiac
Defibrillators, Pacemakers, and Related
Devices (AICDP) C–APCs. One
commenter specifically supported the
assignment of CPT code 0319T to C–
APC 108.
Response: We appreciate the
commenters’ support.
Comment: Several commenters
supported CMS’ proposed assignment of
CPT codes 77424 and 77425 to C–APC
0648. Another commenter believed that
the services assigned to C–APC 0648 are
not similar clinically or similar in
resource costs, and suggested that CMS
divide this C–APC into two levels.
Response: We appreciate the
commenters’ support for our proposal
regarding C–APC 0648. However, we
disagree with the commenter that the
services assigned to C–APC 0648 are not
similar clinically or in regard to
resource costs. All of the seven services
proposed to be assigned to C–APC 0648
involve the breast. The current clinical
application of intraoperative radiation
therapy (IORT CPT codes 77424 and
77425) is for breast cancer following
lumpectomy. In regard to resource costs
of the services assigned to C–APC 0648,
the range from the lowest cost
significant procedure to the highest cost
significant procedure is between
approximately $5,584 and $9,325,
which is well within the 2 times rule
limit. In addition, C–APC 0648 is a
small APC with only 7 services and a
total of approximately 5,000 claims
based on CY2013 claims data. To further
divide this C–APC would be less
consistent with a prospective payment
system than its proposed structure.
Therefore, we are finalizing our
proposal to assign CPT codes 77424 and
77425 to C–APC 0648.
Comment: One commenter requested
that CMS exclude C–APC 0259 from the
comprehensive APC payment policy.
The commenter believed that the change
in the procedure-to-device claim edits
policy would result in more incorrectly

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coded claims for the procedure
described by CPT code 69930 (Cochlear
device implantation, with or without
mastoidectomy), which is the only
service assigned to C–APC 0259.
Response: We do not believe that C–
APC 0259 should be excluded from the
comprehensive APC payment policy.
The discussion of the device edits
policy is in section II.A.2.d.1. of this
final rule with comment period. We
believe that hospitals will continue to
report the cost of the cochlear implant
when one of these devices is implanted
into a Medicare beneficiary because the
cost of this device is 84 percent of the
total cost of the procedure. After
consideration of this comment, we see
no reason to exempt C–APC 0259 from
the comprehensive APC payment
policy. We are finalizing our proposal to
convert APC 0259 into a C–APC for CY
2015.
Comment: Several commenters agreed
with CMS’ proposed structure of the
cardiac electrophysiology C–APCs: C–
APC 0084 (Level I Electrophysiologic
Procedures); C–APC 0085; and C–APC
0086 (Level III Electrophysiologic
Procedures). One commenter requested
that CMS reassign CPT code 93603
(Right ventricular recording) from C–
APC 0084 to C–APC 0085 because the
commenter believed that the procedure
described by CPT code 93603 is more
similar to the procedures assigned to C–
APC 0085 than the other procedures
assigned to C–APC 0084.
Response: We appreciate the
commenters’ support. However, we
disagree with the commenter that CPT
code 93603 should be reassigned from
C–APC 0084 to C–APC 0085. CPT code
93603 is a very low-volume procedure,
with a total of 12 claims for CY 2013.
The geometric mean cost for CPT code
93603 (based on these 12 claims) is
$1,807. The geometric mean cost of the
lowest cost significant service in C–APC
0085 is $4,064 (CPT code 93619).
Therefore, we believe that CPT code
93603 lacks resource similarity to the
procedures assigned to C–APC 0085. We
are finalizing the structure of the cardiac
electrophysiology C–APCs, as proposed
for CY 2015.
Comment: Several commenters agreed
with CMS’ proposed structure of the
neurostimulator APCs. Two commenters
believed that the difference in cost
between CPT code 61885 (Insertion or
replacement of cranial neurostimulator
pulse generator or receiver, direct or
inductive coupling; with connection to
a single electrode array) and CPT code
61886 (Insertion or replacement of
cranial neurostimulator pulse generator
or receiver, direct or inductive coupling;
with connection to 2 or more electrode

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arrays) is too low and that the device
costs may not be adequately captured
based on the accuracy of the claims
data. Another commenter recommended
that CMS restructure the
neurostimulator APCs to improve
clinical coherence by limiting C–APC
0318 to only certain full-system
procedures, assigning all lead placement
procedures to C–APC 0061, and
assigning the remaining neurostimulator
procedures to C–APC 0039.
Response: We appreciate the
commenters’ support. Regarding the
commenters’ concern about the
geometric mean cost of CPT codes
61885 and 61886, the geometric mean
cost of CPT code 61886 (dual channel
procedure) is higher than CPT code
61885 (single channel procedure),
which is to be expected. It is important
to remember that the C–APC payment
policy packages all procedures
performed with the primary procedure,
so the cost for the primary service in a
C–APC may be higher than the cost
associated with single claims for the
same service. We note that APC
groupings are based on two factors,
clinical similarity and resource
similarity. The OPPS requires that we
group services into APCs for payment
purposes based on these two factors.
Clinical similarity in the APC grouping
context is by definition, and by
necessity, is much broader than the
comparisons that distinguish individual
CPT codes. All of the procedures
assigned to C–APCs 0061, 0039, and
0318 include the various
neurostimulator-related procedures. The
neurostimulator family of C–APCs
groups these procedures based on the
geometric mean cost and clinical
similarity of the primary service. In
some cases, an APC includes
implantation of a complete system of
one type of neurostimulator and the
implantation of either a generator alone
or a complete system of other types.
This is a function of the CPT coding
system and the prospective nature of the
comprehensive APC payment policy.
Overall, we believe that the proposed
structure of the neurostimulator family
of C–APCs strikes the proper balance of
both factors for APC construction and
resource and clinical similarity. We are
finalizing the proposed structure of the
neurostimulator C–APCs, as proposed,
and without modification.
Comment: One commenter requested
that CMS divide C–APC 0425 into two
APCs because the range of procedure
costs in this APC is too significant.
Another commenter requested that CMS
reassign the following CPT codes from
APC 0208 to C–APC 0425 based on
more appropriate resource homogeneity

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to the other procedures assigned to C–
APC 0425: CPT codes 22551, 22554,
22612, and 22856.
Response: We disagree with the
commenters’ recommendation to divide
C–APC 0425 into two C–APCs. The cost
range for significant procedures within
C–APC 0425 (using the proposed rule
code assignments) is between
approximately $9,087 (for CPT code
69714) and $15,740 (for CPT code
24363), which is well within the 2 times
rule limit. We agree with the
commenters that CPT codes 22551 (with
a geometric mean cost of $10,052),
22554 (with a geometric mean cost of
$8,129), 22612 (with a geometric mean
cost of $8,451), and 22856 (with a
geometric mean cost of $12,958) should
be reassigned from APC 0208 (with a
geometric mean cost of $4,267) to C–
APC 0425 (with a geometric mean cost
of $10,606). We believe that assigning
these four CPT codes to C–APC 0425
supports more appropriate resource and
clinical similarity when compared to
the current assignment to APC 0208.
Otherwise, we are finalizing the
proposed structure for C–APC 0425.
With these additions to C–APC 0425,
the cost range for significant procedures
within C–APC 0425 (using the final rule
code assignments) is between
approximately $8,451 (for CPT code
22612) and $15,740 (for CPT code
24363).
Comment: One commenter believed
that the proposed C–APCs that include
drug pumps would provide inadequate
payment for its developing therapy
because the therapy uses an advanced
technology drug pump and a very costly
drug. The commenter requested that
CMS either provide complexity
adjustments for high-cost drugs or
unpackage the payment for certain highcost drugs.
Response: As we stated in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74908 through
74909), we do not believe that drugs
being supplied to the patient to fill the
reservoir of a pump at the time of pump
implantation should be excluded from
the comprehensive APC payment policy
because drugs supplied to fill the pump
during implantation of the pump are
adjunctive to the procedure. The costs
of costly adjunctive services are
included proportionally into the cost
estimation for the primary services
through our ability to use almost all
claims for a service and adoption of the
geometric mean cost upon which to
establish relative payment weights. In
addition, we do not believe that we
should make complexity adjustments
for higher cost drugs. Complexity
adjustments are for more complex

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procedure variations that differ
significantly from the primary ‘‘J1’’
procedure. Complexity adjustments are
not intended as a way to provide
separate payment for adjunctive drugs
and supplies under the guise of a
complexity adjustment. Therefore, we
are not adopting this commenter’s
suggested changes to the comprehensive
APC payment policy. We will continue
to monitor the development of this
technology and consider future
revisions to this policy as needed.
Comment: Commenters opinions
varied regarding CMS’ proposal to
include C–APCs 0202 (Level V
Gynecologic Procedures), 0385 (Level I
Urogenital Procedures), and 0386 (Level
II Urogenital Procedures) in the
urogenital procedures clinical family of
C–APCs and to allow complexity
adjustments from C–APC 0202 to C–
APC 0385 and complexity adjustments
from C–APC 0385 to C–APC 0386. Some
commenters agreed with CMS’ proposed
structure of the urogenital procedures
family of C–APCs, while other
commenters opposed the proposal to
reassign complexity adjustment code
combinations from C–APC 0202 to C–
APC 0385. The commenters believed
that the procedures assigned to C–APC
0202, which are related to female
urogenital anatomy, are not sufficiently
clinically similar to the primary
procedures assigned to C–APC 0385,
which relate to the male urogenital
anatomy.
Response: We appreciate the
commenters’ support for the proposed
structure of the urogenital procedures
C–APC clinical family and the proposed
approach for complexity adjustments.
However, we disagree with the
commenters that complexity
adjustments should not be made from
C–APC 0202 to C–APC 0385 because of
insufficient clinical similarity between
the complex procedures with a primary
code assigned to C–APC 0202 that have
been reassigned according to the
complexity adjustment policy to C–APC
0385 and the primary procedures
assigned to C–APC 0385. Although we
acknowledge that there are differences
in the male and female human
urogenital anatomy, we believe that
many of these procedures involve
relatively complex repairs of the
urogenital region involving implantable
medical devices and, therefore, it is
appropriate to assign complexity
adjusted code combinations from C–
APC 0202 to the next higher paying APC
in the urogenital procedures clinical
family, which is C–APC 0385.
Comment: Some commenters
supported the proposed structure of the
C–APCs in the endovascular clinical

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
family. Other commenters noted that
payments for some endovascular
procedure code combinations would be
negatively impacted by the proposed
structure for C–APCs 0083 (Level I
Endovascular Procedures), 0229 Level II
Endovascular Procedures), and 0319
(Level III Endovascular Procedures). The
commenters recommended reviewing
and revising these C–APCs and creating
more levels beyond the proposed three
levels of endovascular C–APCs.
Response: We appreciate the
commenters’ support for the proposed
structure of the endovascular C–APC
clinical family. We do not believe that
additional levels of endovascular C–
APCs are necessary at this time. We
believe that the restructured
endovascular C–APCs better reflect
resource homogeneity than the CY 2014
final structure of these C–APCs because
the new structure has clearer
delineations between the cost ranges of
the procedures assigned to the three
levels. In addition, in response to
comments to the CY 2014 OPPS/ASC
final rule with comment period (79 FR
40951), we proposed less stricter
complexity adjustment criteria, which
resulted in more code combinations
qualifying for higher payment than
would have qualified under the CY 2014
OPPS final rule complexity adjustment
criteria. We also proposed evaluating
certain add-on codes that are currently
assigned to device-dependent APCs for
complexity adjustments, and the
overwhelming majority of these add-on
codes are endovascular add-on codes.
We believe that these two changes to the
CY 2014 comprehensive APC payment
policy sufficiently mitigate much of any
negative payment impact for
endovascular procedures in this
transition from the current payment
methodology to the comprehensive APC

payment methodology. As we do
annually, we will reevaluate the need
for adjustments to the endovascular
family of C–APCs.
Comment: In the CY 2015 OPPS/ASC
proposed rule (79 FR 40950 through
40951) in response to a comment to the
CY 2014 OPPS/ASC final rule with
comment period, we proposed to
continue to pay for stem cell transplant
procedures as we have done for many
years through APCs 0111 (Blood
Product Exchange) and 0112 (Apheresis
and Stem Cell Procedures). We stated
that we would not create a C–APC for
stem cell transplant procedures. Some
commenters supported this approach.
Other commenters requested that CMS
create a C–APC for these procedures.
Response: Based on the rationale
discussed in the CY 2015 OPPS/ASC
proposed rule (79 FR 40950 through
40951), we will continue to pay for stem
cell transplant procedures through APCs
0111 and 0112 in CY 2015.
(4) Statement of Final Policy and List
of CY 2015 C–APCs.
As we discussed earlier, in the CY
2015 OPPS/ASC proposed rule (79 FR
40941 through 40953), we proposed to
continue to define a comprehensive
service as a classification for the
provision of a primary service and all
adjunctive services and supplies
reported on the hospital Medicare Part
B claim, with few exceptions, resulting
in a single beneficiary copayment per
claim. The comprehensive APC
payment bundle policy includes all
hospital services reported on the claim
that are covered under Medicare Part B,
except for the excluded services or
services requiring separate payment by
statute as noted above. We proposed to
continue to define a clinical family of
C–APCs as a set of clinically related C–
APCs that represent different resource
levels of clinically comparable services.

66809

After consideration of the public
comments we received, we are
finalizing our proposals, with some
minor modifications, for establishment
of C–APCs. In this final rule with
comment period, we are establishing a
total of 25 C–APCs within 12 clinical
families for CY 2015, as described below
in Table 7.
We are establishing a comprehensive
APC payment methodology that adheres
to the same basic principles as those
finalized in the CY 2014 OPPS/ASC
final rule with comment period, with
the following changes for CY 2015:
• We are reorganizing and
consolidating several of the current
device-dependent APCs and the CY
2014 C–APCs.
• We are expanding the
comprehensive APC payment policy to
include all device-dependent APCs,
except for APCs 0427, 0622, and 0652.
• We are creating two other new C–
APCs (C–APC 0067 and C–APC 0351).
• We are establishing new complexity
adjustment criteria:
D Frequency of 25 or more claims
reporting the HCPCS code combination
(the frequency threshold); and
D Violation of the ‘‘2 times’’ rule (the
cost threshold).
• We are establishing a policy to
package all add-on codes, although we
evaluate claims reporting a single
primary service code reported in
combination with an applicable add-on
code (we refer readers to Table 8 below
for the list of applicable add-on codes)
for complexity adjustments.
Addendum J to this final rule with
comment period (which is available via
the Internet on the CMS Web site)
contains all of the data related to the
comprehensive APC payment policy,
including the list of complexity
adjustments.

TABLE 7—CY 2015 C–APCS

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Clinical family *

C–APC

AICDP .............................
AICDP .............................
AICDP .............................
AICDP .............................
AICDP .............................
BREAS ............................
ENTXX ............................
EPHYS ............................
EPHYS ............................
EPHYS ............................
EYEXX ............................
EYEXX ............................
GIXXX .............................
NSTIM .............................
NSTIM .............................
NSTIM .............................
ORTHO ...........................

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0090
0089
0655
0107
0108
0648
0259
0084
0085
0086
0293
0351
0384
0061
0039
0318
0425

CY 2015
payment

APC title
Level II Pacemaker/Similar Procedures .................................................................................
Level III Pacemaker/Similar Procedures ................................................................................
Level IV Pacemaker/Similar Procedures ...............................................................................
Level I ICD and Similar Procedures ......................................................................................
Level II ICD and Similar Procedures .....................................................................................
Level IV Breast and Skin Surgery .........................................................................................
Level VII ENT Procedures .....................................................................................................
Level I Electrophysiologic Procedures ...................................................................................
Level II Electrophysiologic Procedures ..................................................................................
Level III Electrophysiologic Procedures .................................................................................
Level IV Intraocular Procedures ............................................................................................
Level V Intraocular Procedures .............................................................................................
GI Procedures with Stents .....................................................................................................
Level II Neurostim./Related Procedures ................................................................................
Level III Neurostim./Related Procedures ...............................................................................
Level IV Neurostim./Related Procedures ...............................................................................
Level V Musculoskeletal Procedures .....................................................................................

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10NOR2

$6,542.78
9,489.74
16,400.98
22,907.64
30,806.39
7,461.40
29,706.85
872.92
4,633.33
14,356.62
8,446.54
23,075.30
3,173.83
5,288.58
17,099.35
26,152.16
10,220.00

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TABLE 7—CY 2015 C–APCS—Continued

Clinical family *

C–APC

PUMPS ...........................
RADTX ............................
UROGN ...........................
UROGN ...........................
UROGN ...........................
VASCX ............................
VASCX ............................
VASCX ............................

0227
0067
0202
0385
0386
0083
0229
0319

CY 2015
payment

APC title
Implantation of Drug Infusion Device .....................................................................................
Single Session Cranial SRS ..................................................................................................
Level V Gynecologic Procedures ...........................................................................................
Level I Urogenital Procedures ...............................................................................................
Level II Urogenital Procedures ..............................................................................................
Level I Endovascular Procedures ..........................................................................................
Level II Endovascular Procedures .........................................................................................
Level III Endovascular Procedures ........................................................................................

15,566.34
9,765.40
3,977.63
6,822.35
13,967.97
4,537.45
9,624.10
14,840.64

* Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices.
BREAS = Breast Surgery.
ENTXX = ENT Procedures.
EPHYS = Cardiac Electrophysiology.
EYEXX = Ophthalmic Surgery.
GIXXX = Gastrointestinal Procedures.
NSTIM = Neurostimulators.
ORTHO = Orthopedic Surgery.
PUMPS = Implantable Drug Delivery Systems.
RADTX = Radiation Oncology.
UROGN = Urogenital Procedures.
VASCX = Vascular Procedures.

TABLE 8—CY 2015 PACKAGED CPT Combining payment for multiple,
ADD–ON CODES THAT ARE EVALU- independent services into a single OPPS
ATED FOR A COMPLEXITY ADJUST- payment in this way enables hospitals
MENT
CY 2015
CPT/
HCPCS
add-on
code

tkelley on DSK3SPTVN1PROD with RULES2

19297 .......
33225 .......
37222 .......
37223 .......
37232 .......
37233 .......
37234 .......
37235 .......
37237 .......
37239 .......
92921 .......
92925 .......
92929 .......
92934 .......
92938 .......
92944 .......
92998 .......
C9601 ......
C9603 ......
C9605 ......
C9608 ......

CY 2015 short descriptor

Place breast cath for rad.
L ventric pacing lead add-on.
Iliac revasc add-on.
Iliac revasc w/stent add-on.
Tib/per revasc add-on.
Tibper revasc w/ather add-on.
Revsc opn/prq tib/pero stent.
Tib/per revasc stnt & ather.
Open/perq place stent ea add.
Open/perq place stent ea add.
Prq cardiac angio addl art.
Prq card angio/athrect addl.
Prq card stent w/angio addl.
Prq card stent/ath/angio.
Prq revasc byp graft addl.
Prq card revasc chronic addl.
Pul art balloon repr precut.
Perc drug-el cor stent bran.
Perc d-e cor stent ather br.
Perc d-e cor revasc t cabg b.
Perc d-e cor revasc chro add.

f. Calculation of Composite APC
Criteria-Based Costs
As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66613), we believe it is important
that the OPPS enhance incentives for
hospitals to provide necessary, high
quality care as efficiently as possible.
For CY 2008, we developed composite
APCs to provide a single payment for
groups of services that are typically
performed together during a single
clinical encounter and that result in the
provision of a complete service.

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to manage their resources with
maximum flexibility by monitoring and
adjusting the volume and efficiency of
services themselves. An additional
advantage to the composite APC model
is that we can use data from correctly
coded multiple procedure claims to
calculate payment rates for the specified
combinations of services, rather than
relying upon single procedure claims
which may be low in volume and/or
incorrectly coded. Under the OPPS, we
currently have composite policies for
extended assessment and management
services, low dose rate (LDR) prostate
brachytherapy, cardiac
electrophysiologic evaluation and
ablation services, mental health
services, multiple imaging services, and
cardiac resynchronization therapy
services. We refer readers to the CY
2008 OPPS/ASC final rule with
comment period for a full discussion of
the development of the composite APC
methodology (72 FR 66611 through
66614 and 66650 through 66652) and
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74163) for more
recent background.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40953), for CY 2015, we
proposed to continue our composite
APC payment policies for LDR prostate
brachytherapy services, mental health
services, and multiple imaging services,
as discussed below. In addition, we
noted that we finalized a policy in the
CY 2014 OPPS/ASC final rule with
comment period to modify our
longstanding policy to provide payment
to hospitals in certain circumstances
when extended assessment and

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management of a patient occur (78 FR
74910 through 74912). For CY 2014, we
created one new composite APC,
entitled ‘‘Extended Assessment and
Management (EAM) Composite’’ (APC
8009), to provide payment for all
qualifying extended assessment and
management encounters rather than
recognize two levels of EAM composite
APCs (78 FR 74910 through 74912).
Under this policy, we allow any visits,
a Level 4 or 5 Type A ED visit or a Level
5 Type B ED visit furnished by a
hospital in conjunction with
observation services of substantial
duration to qualify for payment through
EAM composite APC 8009. In the CY
2015 OPPS/ASC proposed rule (79 FR
40953 to 40954), we proposed to pay for
qualifying extended assessment and
management services through composite
APC 8009.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40953), we also proposed to
discontinue our composite APC
payment policies for cardiac
electrophysiologic evaluation and
ablation services (APC 8000), and to pay
for these services through
comprehensive APC 0086 (Level III
Electrophysiologic Procedures), as
presented in a proposal included under
section II.A.2.e. of the CY 2015 OPPS/
ASC proposed rule. As such, in the CY
2015 OPPS/ASC proposed rule, we
proposed to delete APC 8000 for CY
2015 (79 FR 40953).
We note that we finalized a policy to
discontinue and supersede the cardiac
resynchronization therapy composite
APC with comprehensive APC 0108
(Level II Implantation of CardioverterDefibrillators (ICDs)), as discussed in
section II.A.2.e. of the CY 2014 OPPS/
ASC final rule with comment period (78

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tkelley on DSK3SPTVN1PROD with RULES2

FR 74902). For CY 2014, APC 0108 is
classified as a composite APC, as
discussed in the CY 2014 OPPS/ASC
final rule with comment period, because
comprehensive APCs were not made
effective until CY 2015 (78 FR 74925).
For CY 2015, with the implementation
of our new comprehensive APC policy,
in the CY 2015 OPPS/ASC proposed
rule, we proposed to effectuate the
policy finalized in the CY 2014 OPPS/
ASC final rule with comment period,
and pay for cardiac resynchronization
therapy services through comprehensive
APC 0108 (proposed to be renamed
‘‘Level II ICD and Similar Procedures’’),
which is discussed in section II.A.2.e. of
the CY 2015 proposed rule (79 FR
40953).
(1) Extended Assessment and
Management Composite APC (APC
8009)
Beginning in CY 2008, we included
composite APC 8002 (Level I Extended
Assessment and Management (EAM)
Composite) and composite APC 8003
(Level II Extended Assessment and
Management (EAM) Composite) in the
OPPS to provide payment to hospitals
in certain circumstances when extended
assessment and management of a patient
occur (an extended visit). In most of
these circumstances, observation
services are furnished in conjunction
with evaluation and management
services as an integral part of a patient’s
extended encounter of care. From CY
2008 through CY 2013, in the
circumstances when 8 or more hours of
observation care was provided in
conjunction with a high level visit,
critical care, or direct referral for
observation, was an integral part of a
patient’s extended encounter of care,
and was not furnished on the same day
as surgery or post-operatively, a single
OPPS payment was made for the
observation and evaluation and
management services through one of the
two composite APCs, as appropriate. We
refer readers to the CY 2012 OPPS/ASC
final rule with comment period (76 FR
74163 through 74165) for a full
discussion of this longstanding policy
for CY 2013 and prior years. In the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74910), we
created one new composite APC, APC
8009 (Extended Assessment and
Management (EAM) Composite), to
provide payment for all qualifying
extended assessment and management
encounters rather than recognizing two
levels of EAM composite services.
Under the CY 2014 finalized policy, we
no longer recognize composite APC
8002 or APC 8003. Beginning in CY
2014, we allowed services identified by

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the new single clinic visit HCPCS code
G0463, a Level 4 or 5 Type A ED visit
(CPT code 99284 or 99285), a Level 5
Type B ED visit (HCPCS code G0384),
or critical care (CPT code 99291)
provided by a hospital in conjunction
with observation services of substantial
duration (8 or more hours) (provided the
observation was not furnished on the
same day as surgery or post-operatively)
(78 FR 74910 through 74912) to qualify
for payment through EAM composite
APC 8009.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40953 through 40954), for
CY 2015, we proposed to continue our
CY 2014 finalized policy to provide
payment for all qualifying extended
assessment and management encounters
through composite APC 8009. As we did
for CY 2014, in the CY 2015 OPPS/ASC
proposed rule, for CY 2015, we
proposed to allow a clinic visit and
certain high level ED visits furnished by
a hospital in conjunction with
observation services of substantial
duration (8 or more hours) to qualify for
payment through the EAM composite
APC 8009 (provided the observation is
not furnished on the same day as
surgery or post-operatively).
Specifically, we proposed to continue to
allow a clinic visit, a Level 4 or Level
5 Type A ED visit, or a Level 5 Type B
ED visit furnished by a hospital or a
direct referral for observation (identified
by HCPCS code G0379) performed in
conjunction with observation services of
substantial duration to qualify for
payment through composite APC 8009
(provided the observation is not
furnished on the same day as surgery or
post-operatively). We note that, for CY
2015, we also proposed to continue our
current policy where one service code
describes all clinic visits. We refer
readers to the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74910
through 74912) for a full discussion of
the creation of composite APC 8009.
As we noted in the CY 2014 OPPS/
ASC final rule with comment period,
the historical cost data used annually to
calculate the geometric mean costs and
payment rate for composite APC 8009
would not reflect the single clinic visit
code that was new for CY 2014 (HCPCS
code G0463) until our CY 2016
rulemaking cycle. We stated in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74910 through
74912) that when hospital claims data
for the CY 2014 clinic and ED visit
codes become available, we would
calculate the geometric mean cost for
EAM composite APC 8009 using CY
2014 single and ‘‘pseudo’’ single
procedure claims that meet each of the
following criteria:

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66811

• The claims do not contain a HCPCS
code to which we have assigned status
indicator ‘‘T’’ that is reported with a
date of service 1 day earlier than the
date of service associated with HCPCS
code G0378. (By selecting these claims
from single and ‘‘pseudo’’ single claims,
we ensure that they would not contain
a code for a service with status indicator
‘‘T’’ on the same date of service.)
• The claims contain 8 or more units
of services described by HCPCS code
G0378 (Observation services, per hour.)
• The claims contain one of the
following codes: HCPCS code G0379
(Direct referral of patient for hospital
observation care) on the same date of
service as HCPCS code G0378; CPT code
99291 (Critical care, evaluation and
management of the critically ill or
critically injured patient; first 30–74
minutes); or HCPCS code G0463
(Hospital outpatient clinic visit for
assessment and management of a
patient) provided on the same date of
service or 1 day before the date of
service for HCPCS code G0378.
Because we have no available cost
data for HCPCS code G0463, for CY
2015, we proposed to calculate the
geometric mean cost for procedures
assigned to APC 8009 using CY 2013
single and ‘‘pseudo’’ single procedure
claims that met each of the following
criteria:
• The claim did not contain a HCPCS
code to which we have assigned status
indicator ‘‘T’’ that is reported with a
date of service 1 day earlier than the
date of service associated with HCPCS
code G0378. (By selecting these claims
from single and ‘‘pseudo’’ single claims,
we assured that they would not contain
a code for a service with status indicator
‘‘T’’ on the same date of service.)
• The claim contained 8 or more
units of services described by HCPCS
code G0378 (Observation services, per
hour.)
• The claim contained one of the
following codes: HCPCS code G0379
(Direct referral of patient for hospital
observation care) on the same date of
service as HCPCS code G0378; or CPT
code 99201 (Office or other outpatient
visit for the evaluation and management
of a new patient (Level 1)); CPT code
99202 (Office or other outpatient visit
for the evaluation and management of a
new patient (Level 2)); CPT code 99203
(Office or other outpatient visit for the
evaluation and management of a new
patient (Level 3)); CPT code 99204
(Office or other outpatient visit for the
evaluation and management of a new
patient (Level 4)); CPT code 99205
(Office or other outpatient visit for the
evaluation and management of a new
patient (Level 5)); CPT code 99211

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(Office or other outpatient visit for the
evaluation and management of an
established patient (Level 1)); CPT code
99212 (Office or other outpatient visit
for the evaluation and management of
an established patient (Level 2)); CPT
code 99213 (Office or other outpatient
visit for the evaluation and management
of an established patient (Level 3)); CPT
code 99214 (Office or other outpatient
visit for the evaluation and management
of an established patient (Level 4)); CPT
code 99215 (Office or other outpatient
visit for the evaluation and management
of an established patient (Level 5)); CPT
code 99284 (Emergency department
visit for the evaluation and management
of a patient (Level 4)); CPT code 99285
(Emergency department visit for the
evaluation and management of a patient
(Level 5)); HCPCS code G0384 (Type B
emergency department visit (Level 5));
or CPT code 99291 (Critical care,
evaluation and management of the
critically ill or critically injured patient;
first 30–74 minutes) provided on the
same date of service or 1 day before the
date of service for HCPCS code G0378.
The proposed CY 2015 geometric
mean cost resulting from this
methodology for EAM composite APC
8009 was approximately $1,287.
Comment: One commenter urged
CMS to consider options to minimize
the financial burden for the beneficiary
associated with self-administered drugs
while the beneficiary is receiving
observation services. The commenter
also supported efforts to count
outpatient observation toward the
Medicare skilled nursing facility (SNF)
3-day stay requirement. Another
commenter expressed concern that
paying for all qualifying EAM
encounters through a single composite
APC is likely to penalize certain
outpatient facilities, such as those that
are attached to safety-net or teaching
hospitals, which treat more complex
patients and populations. The
commenter urged CMS to monitor and
accept provider feedback concerning the
impact of this coding change to ensure
that it does not create financial pressure
or incentives to admit borderline cases,
deny treatment, or otherwise negatively
affect clinical decision making.
Response: The comments related to
beneficiary liability associated with selfadministered drugs and counting
outpatient observation toward the SNF
3-day qualifying stay are outside the
scope of the proposed regulations. We
do not believe that paying for all
qualifying EAM encounters through a
single composite APC is likely to
penalize certain outpatient facilities that
treat more complex patients and
populations. We believe that this

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proposal accurately accounts for the
cost of providing an extended
assessment and management service
and that this proposal does not have any
substantial impact on any particular
type of facility or patient type. We also
do not believe that paying for all
qualifying EAM encounters through a
single composite APC creates any
financial pressure or incentives to admit
borderline cases, deny treatment, or
otherwise negatively affect clinical
decision making. We continue to expect
hospitals to provide the appropriate
medical care to all beneficiaries.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to continue our CY 2014
finalized policy to provide payment for
all qualifying extended assessment and
management encounters through
composite APC 8009 for CY 2015. We
also are finalizing our proposal, without
modification, to continue to allow a
clinic visit and certain high level ED
visits furnished by a hospital in
conjunction with observation services of
substantial duration (8 or more hours) to
qualify for payment through EAM
composite APC 8009 (provided the
observation is not furnished on the same
day as surgery or post-operatively). The
final CY 2015 geometric mean cost
resulting from this methodology for
EAM composite APC 8009 is
approximately $1,281.
(2) Low Dose Rate (LDR) Prostate
Brachytherapy Composite APC (APC
8001)
LDR prostate brachytherapy is a
treatment for prostate cancer in which
hollow needles or catheters are inserted
into the prostate, followed by
permanent implantation of radioactive
sources into the prostate through the
needles/catheters. At least two CPT
codes are used to report the composite
treatment service because there are
separate codes that describe placement
of the needles/catheters and the
application of the brachytherapy
sources: CPT code 55875 (Transperineal
placement of needles or catheters into
prostate for interstitial radioelement
application, with or without cystoscopy)
and CPT code 77778 (Interstitial
radiation source application; complex),
which are generally present together on
claims for the same date of service in
the same operative session. In order to
base payment on claims for the most
common clinical scenario, and to
further our goal of providing payment
under the OPPS for a larger bundle of
component services provided in a single
hospital encounter, beginning in CY
2008, we began providing a single

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payment for LDR prostate brachytherapy
when the composite service, reported as
CPT codes 55875 and 77778, is
furnished in a single hospital encounter.
We base the payment for composite APC
8001 (LDR Prostate Brachytherapy
Composite) on the geometric mean cost
derived from claims for the same date of
service that contain both CPT codes
55875 and 77778 and that do not
contain other separately paid codes that
are not on the bypass list. We refer
readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66652
through 66655) for a full history of
OPPS payment for LDR prostate
brachytherapy services and a detailed
description of how we developed the
LDR prostate brachytherapy composite
APC.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40955), for CY 2015, we
proposed to continue to pay for LDR
prostate brachytherapy services using
the composite APC payment
methodology proposed and
implemented for CY 2008 through CY
2014. That is, we proposed to use CY
2013 claims reporting charges for both
CPT codes 55875 and 77778 on the
same date of service with no other
separately paid procedure codes (other
than those on the bypass list) to
calculate the proposed payment rate for
composite APC 8001. Consistent with
our CY 2008 through CY 2014 practice,
in the CY 2015 OPPS/ASC proposed
rule (79 FR 40955), we proposed not to
use the claims that meet these criteria in
the calculation of the geometric mean
costs of procedures or services assigned
to APC 0163 (Level IV
Cystourethroscopy and Other
Genitourinary Procedures) and APC
0651 (Complex Interstitial Radiation
Source Application), the APCs to which
CPT codes 55875 and 77778 are
assigned, respectively. We proposed to
continue to calculate the geometric
mean costs of procedures or services
assigned to APCs 0163 and 0651 using
single and ‘‘pseudo’’ single procedure
claims. We continue to believe that this
composite APC contributes to our goal
of creating hospital incentives for
efficiency and cost containment, while
providing hospitals with the most
flexibility to manage their resources. We
also continue to believe that data from
claims reporting both services required
for LDR prostate brachytherapy provide
the most accurate geometric mean cost
upon which to base the proposed
composite APC payment rate.
Using a partial year of CY 2013 claims
data available for the CY 2015 OPPS/
ASC proposed rule, we were able to use
379 claims that contained both CPT
codes 55875 and 77778 to calculate the

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
proposed geometric mean cost of
approximately $3,669 for these
procedures upon which the proposed
CY 2015 payment rate for composite
APC 8001 is based.
Comment: Several commenters
expressed concern that the proposed
payment rate for APC 8001 is based only
on 379 claims that reported both CPT
codes 55875 and 77778 on the same
date of service, a significant decrease
from the CY 2014 final rule claims data
used for ratesetting when 591 claims
were available. Commenters also noted
that the proposed payment rate of
$3,504.02 yields an 8.9 percent decrease
in payment compared to the CY 2014
payment rate of $3,844.64. One
commenter opined that the decrease in
payment for these services is partially
due to the number of brachytherapy
procedures provided in the hospital
outpatient setting. A few commenters
urged CMS to closely monitor the
number of claims used to set the
payment rate for this APC and to
consider other ratesetting methodologies
if the number of claims continues to
decrease. Several commenters expressed
that the low volume of claims reporting
outpatient brachytherapy services also
affected other APCs, notably APC 0312
(Radioelement Applications) and APC
0651 (Complex Interstitial Radiation
Source Application), and cited
additional decreases in the volume of
claims used for ratesetting for these
APCs.
Response: The CY 2015 final rule
claims data show that 406 claims were
available and used to set the payment
rate for APC 8001, with a geometric
mean cost of approximately $3,745,
compared to the proposed rule claims
data that showed 379 claims available
and used for ratesetting, with a
geometric mean cost of approximately
$3,669. In response to comments
regarding the decrease in the number of
claims available for CY 2015 ratesetting
and the geometric mean cost relative to
the number of claims available for CY
2014 ratesetting and the geometric mean
cost, we note that there is typically
some fluctuation in costs from year to
year. We acknowledge that the number
of claims available and used for
ratesetting for APC 8001 has decreased
over recent years. However, the
percentage of single frequency claims
compared to total claims that we were
able to use for ratesetting in this final
rule with comment period is
comparable to prior years. In addition,
evaluation of the claims data for the 4
years prior to CY 2014 indicated that the
mean or median costs used for
ratesetting for APC 8001 were lower in
those years than CY 2014 or CY 2015

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cost levels. For APC 0651, based on
final rule claims data, there are 62 single
frequency claims out of a total of 3,785
claims, with a geometric mean cost of
approximately $988. For APC 0312,
based on final rule claims data, there are
26 single frequency claims out of a total
of 378 claims, with a geometric mean
cost of approximately $411. We agree
with the commenters’ assertion that it
appears that there are an increasing
number of radiation oncological
technologies that are competing with
prostate brachytherapy, which may be
contributing to a decreased number of
claims available for ratesetting for these
APCs. As we stated in the CY 2014
OPPS/ASC final rule with comment
period, we will continue to evaluate
additional refinements and
improvements to our ratesetting
methodologies in order to maximize the
use of claims data (78 FR 74913). In
addition, we will continue to explore
means by which we can use a larger
volume of claims to establish the
payment rate for APC 0312 and APC
0651.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to continue use of
composite APC 8001 for CY 2015 and to
set the payment rate for this APC using
our established methodology. The final
geometric mean cost for composite APC
8001 for CY 2015 is approximately
$3,745.
(3) Mental Health Services Composite
APC (APC 0034)
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40955), for CY 2015, we
proposed to continue our longstanding
policy of limiting the aggregate payment
for specified less resource-intensive
mental health services furnished on the
same date to the payment for a day of
partial hospitalization services provided
by a hospital, which we consider to be
the most resource-intensive of all
outpatient mental health services. We
refer readers to the April 7, 2000 OPPS
final rule with comment period (65 FR
18452 through 18455) for the initial
discussion of this longstanding policy
and the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74168) for
more recent background.
Specifically, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40955), we
proposed that when the aggregate
payment for specified mental health
services provided by one hospital to a
single beneficiary on one date of service
based on the payment rates associated
with the APCs for the individual
services exceeds the maximum per diem
payment rate for partial hospitalization

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66813

services provided by a hospital, those
specified mental health services would
be assigned to APC 0034 (Mental Health
Services Composite). We also proposed
to continue to set the payment rate for
APC 0034 at the same payment rate that
we proposed to establish for APC 0176
(Level II Partial Hospitalization (4 or
more services) for hospital-based PHPs),
which is the maximum partial
hospitalization per diem payment rate
for a hospital, and that the hospital
continue to be paid one unit of APC
0034 (79 FR 40955). Under this policy,
the I/OCE would continue to determine
whether to pay for these specified
mental health services individually, or
to make a single payment at the same
payment rate established for APC 0176
for all of the specified mental health
services furnished by the hospital on
that single date of service. We continue
to believe that the costs associated with
administering a partial hospitalization
program at a hospital represent the most
resource-intensive of all outpatient
mental health services. Therefore, we do
not believe that we should pay more for
mental health services under the OPPS
than the highest partial hospitalization
per diem payment rate for hospitals.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our CY 2015 proposal,
without modification, to continue our
longstanding policy of limiting the
aggregate payment for specified less
resource-intensive mental health
services furnished on the same date to
a single beneficiary by a hospital to the
payment rate for APC 0176, which is the
maximum partial hospitalization per
diem payment for a hospital for CY
2015.
(4) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide
a single payment each time a hospital
bills more than one imaging procedure
within an imaging family on the same
date of service, in order to reflect and
promote the efficiencies hospitals can
achieve when performing multiple
imaging procedures during a single
session (73 FR 41448 through 41450).
We utilize three imaging families based
on imaging modality for purposes of this
methodology: (1) Ultrasound; (2)
computed tomography (CT) and
computed tomographic angiography
(CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance
angiography (MRA). The HCPCS codes
subject to the multiple imaging
composite policy and their respective
families are listed in Table 12 of the CY
2014 OPPS/ASC final rule with

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comment period (78 FR 74920 through
74924).
While there are three imaging
families, there are five multiple imaging
composite APCs due to the statutory
requirement under section 1833(t)(2)(G)
of the Act that we differentiate payment
for OPPS imaging services provided
with and without contrast. While the
ultrasound procedures included in the
policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be
provided either with or without
contrast. The five multiple imaging
composite APCs established in CY 2009
are:
• APC 8004 (Ultrasound Composite);
• APC 8005 (CT and CTA without
Contrast Composite);
• APC 8006 (CT and CTA with
Contrast Composite);
• APC 8007 (MRI and MRA without
Contrast Composite); and
• APC 8008 (MRI and MRA with
Contrast Composite).
We define the single imaging session
for the ‘‘with contrast’’ composite APCs
as having at least one or more imaging
procedures from the same family
performed with contrast on the same
date of service. For example, if the
hospital performs an MRI without
contrast during the same session as at
least one other MRI with contrast, the
hospital will receive payment for APC
8008, the ‘‘with contrast’’ composite
APC.
We make a single payment for those
imaging procedures that qualify for
composite APC payment, as well as any
packaged services furnished on the
same date of service. The standard
(noncomposite) APC assignments
continue to apply for single imaging
procedures and multiple imaging
procedures performed across families.
For a full discussion of the development
of the multiple imaging composite APC
methodology, we refer readers to the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68559 through
68569).
In the CY 2015 OPPS/ASC proposed
rule, for CY 2015, we proposed to
continue to pay for all multiple imaging
procedures within an imaging family

performed on the same date of service
using the multiple imaging composite
APC payment methodology (79 FR
40956). We continue to believe that this
policy will reflect and promote the
efficiencies hospitals can achieve when
performing multiple imaging procedures
during a single session.
The proposed CY 2015 payment rates
for the five multiple imaging composite
APCs (APC 8004, APC 8005, APC 8006,
APC 8007, and APC 8008) were based
on geometric mean costs calculated
from a partial year of CY 2013 claims
available for the proposed rule that
qualified for composite payment under
the current policy (that is, those claims
with more than one procedure within
the same family on a single date of
service). To calculate the proposed
geometric mean costs, we used the same
methodology that we used to calculate
the final CY 2013 and CY 2014
geometric mean costs for these
composite APCs, as described in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 74918). The
imaging HCPCS codes referred to as
‘‘overlap bypass codes’’ that we
removed from the bypass list for
purposes of calculating the proposed
multiple imaging composite APC
geometric mean costs, pursuant to our
established methodology as stated in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 74918), are
identified by asterisks in Addendum N
to the CY 2015 OPPS/ASC proposed
rule (which is available via the Internet
on the CMS Web site) and are discussed
in more detail in section II.A.1.b. of that
proposed rule.
For the CY 2015 OPPS/ASC proposed
rule, we were able to identify
approximately 636,000 ‘‘single session’’
claims out of an estimated 1.6 million
potential composite APC cases from our
ratesetting claims data, approximately
40 percent of all eligible claims, to
calculate the proposed CY 2015
geometric mean costs for the multiple
imaging composite APCs.
Table 8 of the proposed rule (79 FR
40956 through 40958) listed the
proposed HCPCS codes that would be
subject to the multiple imaging

composite APC policy and their
respective families and approximate
composite APC geometric mean costs
for CY 2015.
Comment: A few commenters
expressed concern that the multiple
imaging composite APCs may
undercompensate providers for imaging
procedures. These commenters
recommended that CMS provide an
analysis of the effects of reductions in
imaging payments due to the composite
APC policy on utilization. The
commenters recommended that CMS
provide separate payment for each
imaging procedure in light of reductions
to payment for imaging procedures.
Response: We continue to believe that
our multiple imaging composite policies
reflect and promote the efficiencies
hospitals can achieve when performing
multiple imaging procedures during a
single session, and some of those
efficiencies result in lower payments
due to cost savings from furnishing
multiple imaging services on the same
date. We will continue to monitor the
multiple imaging composite APC
ratesetting methodology and the cost of
providing imaging services. If
appropriate, we may report any
information to the HOP Panel, or
discuss and propose changes to the
multiple imaging composite APCs in
rulemaking in the future.
After consideration of the public
comments received, we are finalizing
our proposal to continue the use of
multiple imaging composites without
modification. We were able to identify
approximately 661,000 million ‘‘single
session’’ claims out of an estimated 1.68
million potential composite cases from
our CY 2013 ratesetting claims data,
approximately 39 percent of all eligible
claims, to calculate the final CY 2015
geometric mean costs for the multiple
imaging composite APCs.
Table 9 below lists the HCPCS codes
that will be subject to the multiple
imaging composite APC policy and their
respective families and approximate
composite APC geometric mean costs
for CY 2015.

TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS
Family 1—Ultrasound

tkelley on DSK3SPTVN1PROD with RULES2

CY 2015 APC 8004 (Ultrasound composite)
76604
76700
76705
76770
76775
76776
76831

CY 2015 Approximate APC geometric mean cost = $296

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........................................................................................
........................................................................................
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........................................................................................

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Us exam, chest.
Us exam, abdom, complete.
Echo exam of abdomen.
Us exam abdo back wall, comp.
Us exam abdo back wall, lim.
Us exam k transpl w/Doppler.
Echo exam, uterus.

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66815

TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued
76856 ........................................................................................
76870 ........................................................................................
76857 ........................................................................................

Us exam, pelvic, complete.
Us exam, scrotum.
Us exam, pelvic, limited.

Family 2—CT and CTA with and without Contrast
CY 2015 APC 8005 (CT and CTA without Contrast
Composite)*
70450
70480
70486
70490
71250
72125
72128
72131
72192
73200
73700
74150
74261
74176

........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................

CY 2015 Approximate APC Geometric Mean Cost = $325
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct

head/brain w/o dye.
orbit/ear/fossa w/o dye.
maxillofacial w/o dye.
soft tissue neck w/o dye.
thorax w/o dye.
neck spine w/o dye.
chest spine w/o dye.
lumbar spine w/o dye.
pelvis w/o dye.
upper extremity w/o dye.
lower extremity w/o dye.
abdomen w/o dye.
colonography, w/o dye.
angio abd & pelvis.

CY 2015 APC 8006 (CT and CTA with Contrast Composite)
70487
70460
70470
70481
70482
70488
70491
70492
70496
70498
71260
71270
71275
72126
72127
72129
72130
72132
72133
72191
72193
72194
73201
73202
73206
73701
73702
73706
74160
74170
74175
74262
75635
74177
74178

........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................

CY 2015 Approximate APC Geometric Mean Cost = $548
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct

maxillofacial w/dye.
head/brain w/dye.
head/brain w/o & w/dye.
orbit/ear/fossa w/dye.
orbit/ear/fossa w/o & w/dye.
maxillofacial w/o & w/dye.
soft tissue neck w/dye.
sft tsue nck w/o & w/dye.
angiography, head.
angiography, neck.
thorax w/dye.
thorax w/o & w/dye.
angiography, chest.
neck spine w/dye.
neck spine w/o & w/dye.
chest spine w/dye.
chest spine w/o & w/dye.
lumbar spine w/dye.
lumbar spine w/o & w/dye.
angiograph pelv w/o & w/dye.
pelvis w/dye.
pelvis w/o & w/dye.
upper extremity w/dye.
uppr extremity w/o & w/dye.
angio upr extrm w/o & w/dye.
lower extremity w/dye.
lwr extremity w/o & w/dye.
angio lwr extr w/o & w/dye.
abdomen w/dye.
abdomen w/o & w/dye.
angio abdom w/o & w/dye.
colonography, w/dye.
angio abdominal arteries.
angio abd & pelv w/contrast.
angio abd & pelv 1+ regns.

* If a ‘‘without contrast’’ CT or CTA procedure is performed during the same session as a ‘‘with contrast’’ CT or CTA procedure, the I/OCE
would assign APC 8006 rather than APC 8005.

tkelley on DSK3SPTVN1PROD with RULES2

Family 3—MRI and MRA with and without Contrast
CY 2015 APC 8007 (MRI and MRA without Contrast
Composite)*
70336
70540
70544
70547
70551

........................................................................................
........................................................................................
........................................................................................
........................................................................................
........................................................................................

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CY 2015 Approximate APC Geometric Mean Cost = $631
Magnetic image, jaw joint.
Mri orbit/face/neck w/o dye.
Mr angiography head w/o dye.
Mr angiography neck w/o dye.
Mri brain w/o dye.

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TABLE 9—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued

70554 ........................................................................................
71550 ........................................................................................
72141 ........................................................................................
72146 ........................................................................................
72148 ........................................................................................
72195 ........................................................................................
73218 ........................................................................................
73221 ........................................................................................
73718 ........................................................................................
73721 ........................................................................................
74181 ........................................................................................
75557 ........................................................................................
75559 ........................................................................................
C8901 .......................................................................................
C8904 .......................................................................................
C8907 .......................................................................................
C8910 .......................................................................................
C8913 .......................................................................................
C8919 .......................................................................................
C8932 .......................................................................................
C8935 .......................................................................................

Fmri brain by tech.
Mri chest w/o dye.
Mri neck spine w/o dye.
Mri chest spine w/o dye.
Mri lumbar spine w/o dye.
Mri pelvis w/o dye.
Mri upper extremity w/o dye.
Mri joint upr extrem w/o dye.
Mri lower extremity w/o dye.
Mri jnt of lwr extre w/o dye.
Mri abdomen w/o dye.
Cardiac mri for morph.
Cardiac mri w/stress img.
MRA w/o cont, abd.
MRI w/o cont, breast, uni.
MRI w/o cont, breast, bi.
MRA w/o cont, chest.
MRA w/o cont, lwr ext.
MRA w/o cont, pelvis.
MRA, w/o dye, spinal canal.
MRA, w/o dye, upper extr.

tkelley on DSK3SPTVN1PROD with RULES2

CY 2015 APC 8008 (MRI and MRA with Contrast Composite)
70549 ........................................................................................
70542 ........................................................................................
70543 ........................................................................................
70545 ........................................................................................
70546 ........................................................................................
70547 ........................................................................................
70548 ........................................................................................
70552 ........................................................................................
70553 ........................................................................................
71551 ........................................................................................
71552 ........................................................................................
72142 ........................................................................................
72147 ........................................................................................
72149 ........................................................................................
72156 ........................................................................................
72157 ........................................................................................
72158 ........................................................................................
72196 ........................................................................................
72197 ........................................................................................
73219 ........................................................................................
73220 ........................................................................................
73222 ........................................................................................
73223 ........................................................................................
73719 ........................................................................................
73720 ........................................................................................
73722 ........................................................................................
73723 ........................................................................................
74182 ........................................................................................
74183 ........................................................................................
75561 ........................................................................................
75563 ........................................................................................
C8900 .......................................................................................
C8902 .......................................................................................
C8903 .......................................................................................
C8905 .......................................................................................
C8906 .......................................................................................
C8908 .......................................................................................
C8909 .......................................................................................
C8911 .......................................................................................
C8912 .......................................................................................
C8914 .......................................................................................
C8918 .......................................................................................
C8920 .......................................................................................
C8931 .......................................................................................
C8933 .......................................................................................
C8934 .......................................................................................
C8936 .......................................................................................

CY 2015 Approximate APC Geometric Mean Cost = $945
Mr angiograph neck w/o & w/dye.
Mri orbit/face/neck w/dye.
Mri orbt/fac/nck w/o & w/dye.
Mr angiography head w/dye.
Mr angiograph head w/o & w/dye.
Mr angiography neck w/o dye.
Mr angiography neck w/dye.
Mri brain w/dye.
Mri brain w/o & w/dye.
Mri chest w/dye.
Mri chest w/o & w/dye.
Mri neck spine w/dye.
Mri chest spine w/dye.
Mri lumbar spine w/dye.
Mri neck spine w/o & w/dye.
Mri chest spine w/o & w/dye.
Mri lumbar spine w/o & w/dye.
Mri pelvis w/dye.
Mri pelvis w/o & w/dye.
Mri upper extremity w/dye.
Mri uppr extremity w/o & w/dye.
Mri joint upr extrem w/dye.
Mri joint upr extr w/o & w/dye.
Mri lower extremity w/dye.
Mri lwr extremity w/o & w/dye.
Mri joint of lwr extr w/dye.
Mri joint lwr extr w/o & w/dye.
Mri abdomen w/dye.
Mri abdomen w/o & w/dye.
Cardiac mri for morph w/dye.
Card mri w/stress img & dye.
MRA w/cont, abd.
MRA w/o fol w/cont, abd.
MRI w/cont, breast, uni.
MRI w/o fol w/cont, brst, un.
MRI w/cont, breast, bi.
MRI w/o fol w/cont, breast,.
MRA w/cont, chest.
MRA w/o fol w/cont, chest.
MRA w/cont, lwr ext.
MRA w/o fol w/cont, lwr ext.
MRA w/cont, pelvis.
MRA w/o fol w/cont, pelvis.
MRA, w/dye, spinal canal.
MRA, w/o&w/dye, spinal canal.
MRA, w/dye, upper extremity.
MRA, w/o&w/dye, upper extr.

* If a ‘‘without contrast’’ MRI or MRA procedure is performed during the same session as a ‘‘with contrast’’ MRI or MRA procedure, the I/OCE
would assign APC 8008 rather than APC 8007.

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3. Changes to Packaged Items and
Services
a. Background and Rationale for
Packaging in the OPPS
Like other prospective payment
systems, the OPPS relies on the concept
of averaging to establish a payment rate
for services. The payment may be more
or less than the estimated cost of
providing a specific service or bundle of
specific services for a particular patient.
The OPPS packages payment for
multiple interrelated items and services
into a single payment to create
incentives for hospitals to furnish
services most efficiently and to manage
their resources with maximum
flexibility. Our packaging policies
support our strategic goal of using larger
payment bundles in the OPPS to
maximize hospitals’ incentives to
provide care in the most efficient
manner. For example, where there are a
variety of devices, drugs, items, and
supplies that could be used to furnish
a service, some of which are more
expensive than others, packaging
encourages hospitals to use the most
cost-efficient item that meets the
patient’s needs, rather than to routinely
use a more expensive item, which often
results if separate payment is provided
for the items.
Packaging also encourages hospitals
to effectively negotiate with
manufacturers and suppliers to reduce
the purchase price of items and services
or to explore alternative group
purchasing arrangements, thereby
encouraging the most economical health
care delivery. Similarly, packaging
encourages hospitals to establish
protocols that ensure that necessary
services are furnished, while
scrutinizing the services ordered by
practitioners to maximize the efficient
use of hospital resources. Packaging
payments into larger payment bundles
promotes the predictability and
accuracy of payment for services over
time. Finally, packaging may reduce the
importance of refining service-specific
payment because packaged payments
include costs associated with higher
cost cases requiring many ancillary
items and services and lower cost cases
requiring fewer ancillary items and
services. Because packaging encourages
efficiency and is an essential component
of a prospective payment system,
packaging payment for items and
services that are typically integral,
ancillary, supportive, dependent, or
adjunctive to a primary service has been
a fundamental part of the OPPS since its
implementation in August 2000. Over
the last 15 years, as we have refined our
understanding of the OPPS as a

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prospective payment system, we have
packaged numerous services that we
originally paid as primary services. As
we continue to develop larger payment
groups that more broadly reflect services
provided in an encounter or episode of
care, we have expanded the OPPS
packaging policies. Most, but not
necessarily all, items and services
currently packaged in the OPPS are
listed in 42 CFR 419.2(b), including the
five packaging policies that were added
in CY 2014 (78 FR 74925). Our
overarching goal is to make OPPS
payments for all services paid under the
OPPS more consistent with those of a
prospective payment system and less
like those of a per service fee schedule,
which pays separately for each coded
item. As a part of this effort, we have
continued to examine the payment for
items and services provided in the
OPPS to determine which OPPS
services can be packaged to achieve the
objective of advancing the OPPS as a
prospective payment system.
We have examined the items and
services currently provided under the
OPPS, reviewing categories of integral,
ancillary, supportive, dependent, or
adjunctive items and services for which
we believe payment would be
appropriately packaged into payment of
the primary service they support.
Specifically, we examined the HCPCS
code definitions (including CPT code
descriptors) to determine whether there
were categories of codes for which
packaging would be appropriate
according to existing OPPS packaging
policies or a logical expansion of those
existing OPPS packaging policies. In
general, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40958 through
40961), we proposed to package the
costs of selected HCPCS codes into
payment for services reported with
other HCPCS codes where we believe
that one code reported an item or
service that was integral, ancillary,
supportive, dependent, or adjunctive to
the provision of care that was reported
by another HCPCS code. Below we
discuss categories and classes of items
and services that we proposed to
package beginning in CY 2015. For an
extensive discussion of the history and
background of the OPPS packaging
policy, we refer readers to the CY 2000
OPPS final rule (65 FR 18434), the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66580), and the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 74925).

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66817

b. Revisions of a Packaging Policy
Established in CY 2014—Procedures
Described by Add-On Codes
In the CY 2014 OPPS/ASC final rule
with comment period, we packaged
add-on codes in the OPPS, with the
exception of add-on codes describing
drug administration services (78 FR
74943; 42 CFR 419.2(b)(18)). With
regard to the packaging of add-on
procedures that use expensive medical
devices, we stated in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 74943) that the most
expensive medical devices used in
procedures to insert or implant devices
in the hospital outpatient setting are
included in procedures that are assigned
to comprehensive APCs. Comprehensive
APCs are discussed in section II.A.2.e.
of this final rule with comment period.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74864), we
discussed the comprehensive APC
policy, which we adopted, with
modification, but delayed the
implementation of, until CY 2015. We
stated that, for CY 2014, we would
continue to pay separately for only
those add-on codes (except for drug
administration add-on codes) that were
assigned to device-dependent APCs in
CY 2014, but that, after CY 2014, these
device-dependent add-on codes would
be paid under the comprehensive APC
policy. According to the proposed
changes to the comprehensive APC
policy described in section II.A.2.e. of
this final rule with comment period, we
proposed to package all of the
procedures described by add-on codes
that are currently assigned to devicedependent APCs, which will be
replaced by comprehensive APCs. The
device-dependent add-on codes that are
separately paid in CY 2014 that we
proposed to package in CY 2015 were
listed in Table 9 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40959).
Comment: A few commenters
disagreed with the proposal to package
payment for the add-on codes listed in
Table 9 of the proposed rule for the
following reasons:
• Some commenters requested that
CMS delay packaging the devicedependent add-on codes remaining for
CY 2015 while additional data analysis
is performed and refinements are
adopted to ensure accurate payment for
the full range of add-on procedures,
including those not assigned to
comprehensive APCs.
• A few commenters suggested that
add-on codes are separate and distinct
clinical procedures having unique,
independent values determined by the
American Medical Association (AMA)

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and, therefore, should not be treated as
ancillary services.
• Some commenters requested that
CMS establish exceptions to its proposal
to package add-on codes for specific
add-on procedures with high cost
supply items that commenters believed
would be underpaid under the policy
and impede patient access to care.
Response: We disagree with the
commenters that oppose packaging
these remaining add-on codes. We
received similar public comments
during the CY 2014 rulemaking cycle
and responded to those comments in the
CY 2014 OPPS/ASC final rule with
comment period. Generally, we disagree
because add-on codes describe services
that are integral, ancillary, supportive,
dependent, or adjunctive to the primary
service. In other words, add-on codes do
not represent a stand-alone procedure
and are inclusive to other procedures
performed at the same time. For a full
discussion of our response to these
public comments, we refer readers to
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74942 through
74943).
We also disagree with commenters’
assertion that add-on code services are
separate and distinct clinical procedures
and should not be treated as ancillary
services. We received a similar public
comment last year where commenters
suggested that procedures described by
add-on codes are not integral, ancillary,
supportive, dependent, or adjunctive to
the primary service. As we noted
previously (78 FR 74942 through

74943), the fundamental nature of an
add-on code procedure is that it
typically describes some form of a
related extension of or addition to the
primary procedure or service described
by the primary procedure. The
definition of an add-on code is that it is
an extension of a primary, base service.
CPT defines add-on codes as codes that
describe ‘‘procedures [that] are
commonly carried out in addition to the
primary procedure performed’’ (2014
CPT Codebook Professional Edition,
page xiv). Further, CPT states that ‘‘addon codes describe additional intraservice work associated with the
primary procedure (emphasis added)
(2014 CPT Codebook Professional
Edition, page xiv). We also disagree
with commenters that some add-on
codes are not related to the primary
procedure but represent a separate
procedure that should be paid
separately from the primary procedure.
If such procedures were in fact separate
procedures, they would not be
described by an add-on code. Thus, we
believe that add-on code procedures are
not always separate and distinct clinical
procedures, but rather are related
extensions, supportive, integral, or
adjunctive of the primary procedure
and, therefore, it is appropriate to
package the cost of the add-on codes
into the payment calculation for the
primary procedure. Finally, in response
to commenters who requested that CMS
establish exceptions to its proposal for
add-on code with high cost supply

items, we are allowing certain add-on
codes to be evaluated for a complexity
adjustment when billed with a
comprehensive APC primary procedure.
We refer readers to section II.A.2.e. of
this final rule with comment period for
further discussion of that policy. We see
no reason to grant exceptions to the addon code packaging policy to specifically
account for add-on procedures with
high cost supply items, as any
associated costs are accounted for in the
payment for the primary procedure. The
only reason we did not package the addon codes listed in Table 9 of the
proposed rule was that implementation
of the comprehensive APC policy was
delayed for 1 year (78 FR 74943).
Because the comprehensive APC policy
will be implemented in CY 2015, we are
packaging these remaining add-on
codes.
After consideration of the public
comments we received, we are
finalizing our proposal to package all of
the procedures described by add-on
codes that are currently assigned to
device-dependent APCs, which will be
replaced by comprehensive APCs, as
listed in Table 9 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40959) and
included in Table 10 below. The current
device-dependent add-on codes that are
separately paid in CY 2014 that will be
packaged in CY 2015 are included in
Table 8 under section II.A.2.e. of this
final rule with comment period, which
addresses the comprehensive APC
policy.

TABLE 10—ADD-ON CODES ASSIGNED TO DEVICE-DEPENDENT APCS FOR CY 2014 THAT ARE PACKAGED IN CY 2015

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CY 2015 add-on code

Short descriptor

19297 ..........................................................................................................................................................
33225 ..........................................................................................................................................................
37222 ..........................................................................................................................................................
37223 ..........................................................................................................................................................
37232 ..........................................................................................................................................................
37233 ..........................................................................................................................................................
37234 ..........................................................................................................................................................
37235 ..........................................................................................................................................................
37237 ..........................................................................................................................................................
37239 ..........................................................................................................................................................
49435 ..........................................................................................................................................................
92921 ..........................................................................................................................................................
92925 ..........................................................................................................................................................
92929 ..........................................................................................................................................................
92934 ..........................................................................................................................................................
92938 ..........................................................................................................................................................
92944 ..........................................................................................................................................................
92998 ..........................................................................................................................................................
C9601 .........................................................................................................................................................
C9603 .........................................................................................................................................................
C9605 .........................................................................................................................................................
C9608 .........................................................................................................................................................

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Place breast cath for rad.
L ventric pacing lead add-on.
Iliac revasc add-on.
Iliac revasc w/stent add-on.
Tib/per revasc add-on.
Tibper revasc w/ather add-on.
Revsc opn/prq tib/pero stent.
Tib/per revasc stnt & ather.
Open/perq place stent ea add.
Open/perq place stent ea add.
Insert subq exten to ip cath.
Prq cardiac angio addl art.
Prq card angio/athrect addl.
Prq card stent w/angio addl.
Prq card stent/ath/angio.
Prq revasc byp graft addl.
Prq card revasc chronic addl.
Pul art balloon repr precut.
Perc drug-el cor stent bran.
Perc d-e cor stent ather br.
Perc d-e cor revasc t cabg b.
Perc d-e cor revasc chro add.

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c. Packaging Policies for CY 2015
(1) Ancillary Services
Under the OPPS, we currently pay
separately for certain ancillary services.
Some of these ancillary services are
currently assigned to status indicator
‘‘X,’’ which is defined as ‘‘ancillary
services,’’ but some other ancillary
services are currently assigned to status
indicators other than ‘‘X.’’ This is
because the current use of status
indicator ‘‘X’’ in the OPPS is incomplete
and imprecise. Some procedures and
services that are ancillary, for example,
a chest X-ray, are assigned to an APC
with services assigned status indicator
‘‘S.’’ As discussed in the CY 2015 OPPS/
ASC proposed rule (79 FR 40959
through 40961), we reviewed all of the
covered services provided in the HOPD
and identified those that are commonly
performed when provided with other
HOPD services, and also provided as
ancillary to a primary service in the
HOPD. These ancillary services that we
identified are primarily minor
diagnostic tests and procedures that are
often performed with a primary service,
although there are instances where
hospitals provide such services alone
and without another primary service
during the same encounter.
As discussed in section II.A.3.a. of
this final rule with comment period, our
intent is that the OPPS be more of a
prospective payment system with
expanded packaging of items and
services that are typically integral,
ancillary, supportive, dependent, or
adjunctive to a primary service. Given
that the longstanding OPPS policy is to
package items and services that are
integral, ancillary, supportive,
dependent, or adjunctive to a primary

service, we stated in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 74945) that we believe that ancillary
services should be packaged when they
are performed with another service, but
should continue to be separately paid
when performed alone. We indicated
that this packaging approach is most
consistent with a prospective payment
system and the regulation at 42 CFR
419.2(b) that packages many ancillary
services into primary services while
preserving separate payment for those
instances in which one of these
ancillary services is provided alone (not
with any other service paid under the
OPPS) to a hospital outpatient. We did
not finalize the ancillary packaging
policy for CY 2014 because we believed
that further evaluation was necessary
(78 FR 74946).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40959 through 40961), we
proposed to conditionally package
certain ancillary services for CY 2015.
Specifically, we proposed to limit the
initial set of APCs that contain
conditionally packaged services to those
ancillary service APCs with a proposed
geometric mean cost of less than or
equal to $100 (prior to application of the
conditional packaging status indicator).
We limited this initial set of packaged
ancillary service APCs to those with a
proposed geometric mean cost of less
than or equal to $100 in response to
public comments on the CY 2014
ancillary service packaging proposal in
which commenters expressed concern
that certain low volume but relatively
costly ancillary services would have
been packaged into high volume but
relatively inexpensive primary services
(for example, a visit) (74 FR 74945). We
noted that the proposed $100 geometric

66819

mean cost limit for selecting this initial
group of conditionally packaged
ancillary service APCs is less than the
geometric mean cost of APC 0634,
which contains the single clinic visit
HCPCS code G0463, which is a single
payment rate for clinic visits beginning
in CY 2014, and had a CY 2015 OPPS/
ASC proposed rule geometric mean cost
of approximately $103. This proposed
$100 geometric mean cost limit is part
of the methodology of selecting the
initial set of conditionally packaged
ancillary service APCs under this
proposed packaging policy. It is not
meant to represent a threshold above
which ancillary services will not be
packaged, but as a basis for selecting
this initial set of APCs, which will
likely be updated and expanded in
future years. In future years, we may
package ancillary services assigned to
APCs with geometric mean costs higher
than $100. In addition, geometric mean
costs can change over time. An increase
in the geometric mean cost of any of the
proposed APCs to above $100 in future
years would not change the
conditionally packaged status of
services assigned to the APCs selected
in CY 2015 in a future year. We would
continue to consider these APCs to be
conditionally packaged. However, we
would review the conditionally
packaged status of ancillary services
annually.
We proposed to exclude certain
services from this packaging policy even
though they are assigned to APCs with
a geometric mean cost of less than or
equal to $100. Preventive services will
continue to be paid separately, and
include the following services listed in
Table 11 below that would otherwise be
packaged under this policy.

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TABLE 11—PREVENTIVE SERVICES EXEMPTED FROM THE ANCILLARY SERVICE PACKAGING POLICY
HCPCS Code

Short descriptor

76977 ...............................
77078 ...............................
77080 ...............................
77081 ...............................
G0117 ..............................
G0118 ..............................
G0130 ..............................
G0389 ..............................
G0404 ..............................
Q0091 ..............................

Us bone density measure .....................................................................................................................
Ct bone density axial .............................................................................................................................
Dxa bone density axial ..........................................................................................................................
Dxa bone density/peripheral .................................................................................................................
Glaucoma scrn hgh risk direc ...............................................................................................................
Glaucoma scrn hgh risk direc ...............................................................................................................
Single energy x-ray study .....................................................................................................................
Ultrasound exam aaa screen ................................................................................................................
Ekg tracing for initial prev .....................................................................................................................
Obtaining screen pap smear .................................................................................................................

In addition, we did not propose to
package certain psychiatry and
counseling-related services as we see
similarities to a visit and, at the time of
issuance of the CY 2015 OPPS/ASC
proposed rule, did not consider them to
be ancillary services. We also did not

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propose to package certain low cost
drug administration services as we are
examining various alternative payment
policies for drug administration
services, including the associated drug
administration add-on codes.

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APC
0340
0260
0261
0260
0260
0230
0230
0265
0450
0450

Finally, we proposed to delete status
indicator ‘‘X’’ (Ancillary Services)
because the majority of the services
assigned to status indicator ‘‘X’’ were
proposed to be assigned to status
indicator ‘‘Q1’’ (STV-Packaged Codes).
For the services that are currently

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assigned status indicator ‘‘X’’ that were
not proposed to be conditionally
packaged under this policy, we
proposed to assign those services status
indicator ‘‘S’’ (Procedure or Service, Not
Discounted When Multiple), indicating
separate payment and that the services
are not subject to the multiple
procedure reduction. The APCs that we
proposed for conditional packaging as
ancillary services in CY 2015 were
listed in Table 11 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40960
through 40961).
The HCPCS codes that we proposed to
conditionally package as ancillary
services for CY 2015 were displayed in
Addendum B to the CY 2015 OPPS/ASC
proposed rule (which is available via
the Internet on the CMS Web site). The
supporting documents for the proposed
rule are available at the CMS Web site
at: http://www.cms.hhs.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
We also proposed to revise the
regulations at 42 CFR 419.2(b)(7) to
replace the phrase ‘‘Incidental services
such as venipuncture’’ with ‘‘Ancillary
services’’ to more accurately reflect the
proposed packaging policy discussed
above.
Comment: A number of commenters,
which included hospital associations,
health systems, and individual
hospitals, supported conditionally
packaging ancillary services with a
geometric mean cost of $100 prior to
application of the ‘‘Q1’’ status indicator.
Response: We appreciate the
commenters’ support.
Comment: A few commenters
expressed concern that conditionally
packaging ancillary services would
disproportionately affect teaching
hospitals because of the types of
patients these hospitals serve and the
types of services that they typically
provide. One commenter submitted
results from its data analysis that
estimated major teaching hospitals will
lose approximately ¥0.4 percent on
average as a result of this packaging
proposal, compared to nonteaching
hospitals, which would gain
approximately 0.2 percent. The
commenter’s concern was that the
negative impact is a direct result of
academic medical centers’ caring for
unique and complex patient
populations, for example, trauma
patients who are seen in teaching
hospital emergency departments. The
commenter’s analysis suggested that a
large proportion of certain APCs listed
on Table 11 of the proposed rule (APCs
0012, 0099, 0260, 0261, 0340, and 0420)
are packaged into emergency
department visits and related services.

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Response: Conditional packaging of
ancillary services results in packaging of
these services when provided with other
primary services and separate payment
for the services when they are
performed alone. It is possible that, as
the commenter asserted, the case-mix at
teaching hospitals results in greater
packaging of ancillary services than at
nonteaching hospitals. This may be due
to teaching hospitals being more likely
to provide services in addition to the
ancillary service, which would result in
packaging of the ancillary service into
the other primary service or services
provided to the patient. Even if the
commenter’s observation is reflective of
a difference between teaching and
nonteaching hospitals, we do not
believe that such an observation is a
sufficient reason to not package
ancillary services in the OPPS.
Packaging is a fundamental element of
a prospective payment system. As stated
above, in the OPPS, we packaged items
and services that are typically integral,
ancillary, supportive, dependent, or
adjunctive to a primary service. We
believe that the ancillary services
proposed for conditional packaging are
ancillary when provided with other
primary services and, therefore, are
appropriately conditionally packaged in
the OPPS. As for the impact of the CY
2015 OPPS policies on teaching
hospitals, we refer the commenter to the
impact table (Table 49) in section XXI.
of this final rule with comment period,
which shows that teaching hospitals
will receive an overall 2.3 percent
payment update compared to a 2.0
percent payment update for nonteaching
hospitals. Therefore, overall teaching
hospitals stand to benefit more than
nonteaching hospitals from the policies
adopted in this final rule with comment
period, despite any relative negative
impacts from the ancillary packaging
policy.
Comment: Several commenters
requested clarification of the
methodology used to identify APCs with
a geometric mean cost less than or equal
to $100 prior to application of the ‘‘Q1’’
status indicator, given that the
geometric mean cost of some of the
APCs listed in Table 11 of the proposed
rule exceeds $100. Also, commenters
requested that the $100 threshold be
held constant for future years or
updated annually based on inflation
akin to the drug threshold methodology.
Response: As we stated in the CY
2015 OPPS/ASC proposed rule (79 FR
40960), the ancillary services APCs
proposed for conditional packaging
were those with a geometric mean cost
of less than or equal to $100 prior to
application of the ‘‘Q1’’ status indicator

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to the APC. In other words, it was
ancillary service APCs with a geometric
mean cost of $100 or less with all of the
services assigned to the APC that had
either status indicator ‘‘X’’ or ‘‘S.’’ Once
status indicator ‘‘Q1’’ was assigned,
some of the geometric mean costs of
some of the APCs increased to above
$100 due to conditional packaging
according to the ‘‘Q1’’ status indicator
logic. We remind the commenters that
the APCs listed in Table 11 of the
proposed rule (79 FR 40960 through
40961) displayed the APC geometric
mean costs after application of the ‘‘Q1’’
status indicator, which resulted in some
of the APC geometric mean costs that
were below $100 prior to application of
the ‘‘Q1’’ status indicator to exceed $100
after application of the ‘‘Q1’’ status
indicator. We also clarify that the $100
geometric mean cost initial selection
criteria for this packaging policy is not
a threshold above which ancillary
services will not be conditionally
packaged. As we stated in the CY 2015
OPPS/ASC proposed rule, ‘‘[the $100
limit] is not meant to represent a
threshold above which ancillary
services will not be packaged, but as a
basis for selecting this initial set of
APCs, which will likely be updated and
expanded in future years’’ (79 FR
40960). As we stated in the proposed
rule, in future years, we may package
additional ancillary services in APCs
with a geometric mean cost (prior to the
application of the conditional packaging
status indicator) that exceeds $100.
Comment: One commenter expressed
concern regarding the composition of
APC 0077 (Level I Pulmonary
Treatment), which was proposed to be
conditionally packaged. The commenter
believed that HCPCS code G0424
(Pulmonary rehabilitation, including
exercise (includes monitoring), one
hour, per session, up to two sessions per
day) is not clinically similar to HCPCS
code G0237 (Therapeutic procedures to
increase strength or endurance of
respiratory muscles, face to face, one on
one, each 15 minutes (includes
monitoring) and HCPCS code G0238
(Therapeutic procedures to improve
respiratory function, other than
described by G0237, one on one, face to
face, per 15 minutes (includes
monitoring), which also are assigned to
APC 0077. In addition, the commenter
stated that the assignment of HCPCS
code G0424 to APC 0077 would create
a 2 times rule violation. The commenter
recommended that CMS reassign
HCPCS code G0424 to APC 0078 (Level
II Pulmonary Treatment).
Response: We disagree with the
commenter’s assertion that the
assignment of HCPCS code G0424 to

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APC 0077 would create a 2 times rule
violation. Section 1833(t)(9) of the Act
requires that we annually review all the
items and services within an APC group
and revise the APC structures
accordingly. Included in this review is
the identification of any 2 times rule
violations as provided under section
1833(t)(2) of the Act and, to the extent
possible, rectification of these
violations. We review our claims data
and determine whether we need to
make changes to the current APC
assignment for the following year. For
HCPCS codes G0238 and G0424, we
evaluated their APC assignment for the
CY 2015 update and determined that
APC 0340 (Level II Minor Procedures) is
the more appropriate assignment for
these services based on resource
similarity to the other services assigned
to APC 0340. In addition, with the
reassignment of HCPCS codes G0424
and G0238 to APC 0340, only four
HCPCS codes (31270, 94668, 94669, and
G0237) remained in APC 0077, one
(HCPCS code 94669) of which did not
have any claims volume in CY 2013.
The commenter suggested that we
reassign HCPCS code G0424 to APC
0078. APC 0078 has a mean cost of
approximately $90, which is under the
$100 initial selection criteria for
conditionally packaged ancillary
services. With the reduced size of APC
0077 and the mean cost of APC 0078
being less than $100, we are reassigning
the procedure codes remaining in APC
0078 to APC 0077 and revising the title
of APC 0077 to read ‘‘Pulmonary
Treatment.’’ The new combined APC
0077 is assigned status indicator ‘‘Q1’’
under the conditional packaging policy.
We note that the mean cost of this
revised APC 0077 (after application of
the ‘‘Q1’’ status indicator) is
approximately $154.
Comment: One commenter requested
that CMS continue separate payment, by
assigning status indicator ‘‘S,’’ for CPT
codes 92557 (comprehensive hearing
test), 92601 through 92604 (cochlear
implant programming), and 92640
(auditory brainstem implant
programming) which are assigned to
APC 0364, an APC that is proposed for
conditional packaging. The commenter
stated that these CPT codes are primary
audiology services and are not
dependent or incident to other services
in the hospital.
Response: We do not believe that it is
necessary to change the status indicator
to ‘‘S’’ as we disagree that these CPT
codes represent primary audiology

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services. Conditional packaging
provides separate payment when the
otherwise packaged services are
provided alone without other primary
services. Therefore, these services will
continue to be separately paid when
performed without other primary
services.
Comment: Some commenters
expressed concern that packaging
payment for ancillary services could
have a negative impact on patient access
because hospitals will not have an
incentive to perform ancillary services
at the time of other therapeutic or
evaluation/management services, even
when providing such services at the
same encounter would be efficient and
offer patients the most appropriate and
complete care. Commenters cautioned
that expanded packaging policies will
impede the accuracy and stability of
future ratesetting under the OPPS.
Response: We appreciate
stakeholders’ concerns and predictions
about the effect that this conditional
packaging policy may have on patient
access to ancillary services. We will
continue to monitor service utilization
trends in the HOPD. We disagree with
commenters that packaging services
impedes the accuracy and stability of
future OPPS ratesetting. As a reminder,
hospitals include HCPCS codes and
charges for packaged services on their
claims, and the costs associated with
those packaged services are included in
the costs of the separately payable
procedure on the claim. We also
continue to emphasize that hospitals
should report all HCPCS codes for all
services, including those for packaged
services, according to correct coding
principles.
Comment: One commenter disagreed
with the proposed assignment of status
indicator ‘‘Q1’’ to CPT code 95012
(Expired nitric oxide gas determination).
The commenter requested that CMS
assign status indicator ‘‘S’’ to CPT code
95012 because the code describes an
independent, primary procedure that is
not ancillary to any other procedure.
The commenter also requested that CMS
reassign CPT code 95012 to APC 0078
(Level II Pulmonary Treatment) because
of its clinical homogeneity to other
services assigned to that APC.
Response: We disagree with the
commenter. We believe the procedure or
service described by CPT code 95012 to
be an ancillary diagnostic test and,
therefore, appropriate for conditional
packaging under the ancillary services
policy. We believe that existing

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assignment to APC 0340 (Level II Minor
Procedures) is appropriate in that CPT
code 95012 is a minor test and that its
mean cost of approximately $41 is
similar to the mean cost of APC 0340 of
approximately $53. Therefore, we are
finalizing our proposal to maintain
assignment of CPT code 95012 to APC
0340 with a ‘‘Q1’’ status indicator for
CY 2015.
Comment: A few commenters
requested that CMS make an exception
to the ancillary packaging policy for
pathology services, specifically those
services assigned to APC 0342 (Level I
Pathology) and APC 0433 (Level II
Pathology). These commenters were
concerned about inadequate payment
for pathology services.
Response: We disagree with
commenters’ concern regarding
inadequate payment for pathology
services and do not believe that an
exception to this packaging policy for
the pathology services assigned to APCs
0342 and 0433 is appropriate at this
time. We remind the commenters that
this policy only affects the facility
payment for the technical aspect of the
services and does not affect the
physician fee schedule payment to the
pathologist for the physician work in
performing pathology services. We
believe that pathology services are some
of the best examples of ancillary
services as they typically follow a
surgical or other specimen-generating
procedure for the purposes of diagnosis.
We also remind the commenters that in
the event a patient receives a pathology
test in isolation from other primary
HOPD services, the test would be
separately paid because the ancillary
services packaging policy is a
conditional packaging policy. Therefore,
we are not creating an exception to this
ancillary packaging policy for pathology
services.
After consideration of the public
comments we received, we are
finalizing our ancillary services
packaging policy as proposed, including
deletion of status indicator ‘‘X.’’ We also
are adopting as final our proposed
revision of the regulations at 42 CFR
419.2(b)(7) to replace the phrase
‘‘Incidental services such as
venipuncture’’ with ‘‘Ancillary
services’’ to more accurately reflect the
final packaging policy for CY 2015.
The APCs that we are conditionally
packaging as ancillary services in CY
2015 are listed in Table 12 below.

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TABLE 12—APCS FOR CONDITIONALLY PACKAGED ANCILLARY SERVICES FOR CY 2015

APC

0012
0060
0077
0099
0215
0230
0260
0261
0265
0340
0342
0345
0364
0365
0367
0420
0433
0450
0624
0690
0698

CY 2015 OPPS Geometric mean cost (with
application of Q1 status
indicator)

Final CY
2015
OPPS SI

$102.18
20.57
170.77
81.40
98.52
54.01
61.59
98.56
95.12
54.33
56.31
78.91
44.94
122.36
167.31
136.66
190.55
30.33
81.76
36.47
104.61

Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1

........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................

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The HCPCS codes that we are
conditionally package as ancillary
services for CY 2015 are displayed in
Addendum B to this CY 2015 OPPS/
ASC final rule with comment period
(which is available via the Internet on
the CMS Web site). The supporting
documents for this final rule with
comment period are available at the
CMS Web site at: http://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
(2) Prosthetic Supplies
We have a longstanding policy of
providing payment under the OPPS for
implantable DME, implantable
prosthetics, and medical and surgical
supplies, as provided at sections
1833(t)(1)(B)(i) and (t)(1)(B)(iii) of the
Act and 42 CFR 419.2(b)(4), (b)(10), and
(b)(11). In the CY 2014 OPPS/ASC final
rule with comment period, we clarified
that medical and surgical supplies
under § 419.2(b)(4) include (but are not
limited to) all supplies on the DMEPOS
Fee Schedule except prosthetic supplies
(78 FR 74947). Under 42 CFR 419.22(j),
prosthetic supplies are currently
excluded from payment under the OPPS
and are paid under the DMEPOS Fee
Schedule, even when provided in the
HOPD. However, as we discussed in the
CY 2015 OPPS/ASC proposed rule (79
FR 40961), under section 1833(t)(1)(B)(i)
of the Act, the Secretary has the
authority to designate prosthetic
supplies provided in the hospital
outpatient setting as covered OPD
services payable under the OPPS.

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Group title

Level I Debridement & Destruction.
Manipulation Therapy.
Level I Pulmonary Treatment.
Electrocardiograms/Cardiography.
Level I Nerve and Muscle Services.
Level I Eye Tests & Treatments.
Level I Plain Film Including Bone Density Measurement.
Level II Plain Film Including Bone Density Measurement.
Level I Diagnostic and Screening Ultrasound.
Level II Minor Procedures.
Level I Pathology.
Level I Transfusion Laboratory Procedures.
Level I Audiometry.
Level II Audiometry.
Level I Pulmonary Tests.
Level III Minor Procedures.
Level II Pathology.
Level I Minor Procedures.
Phlebotomy and Minor Vascular Access Device Procedures.
Level I Electronic Analysis of Devices.
Level II Eye Tests & Treatments.

As we stated in the CY 2015 OPPS/
ASC proposed rule (79 FR 40961) and
as mentioned above, implantable
prosthetic devices are packaged in the
OPPS under 42 CFR 419.2(b)(11). It is
common for implantable prosthetic
devices to be provided as a part of a
device system. Such device systems
include the implantable part or parts of
the overall device system and also
certain nonimplantable prosthetic
supplies that are integral to the overall
function of the medical device, part of
which is implanted and part of which
is external to the patient. These
prosthetic supplies are integral to the
implantable prosthetic because typically
shortly after the surgical procedure to
implant the implantable prosthetic
device in the hospital, the surgeon and/
or his or her colleagues will have to
attach, fit, and program certain
prosthetic supplies that are not
surgically implanted into the patient but
are a part of a system and that are
essential to the overall function of an
implanted device. Because these
supplies are integral to the overall
function of the implanted prosthetic,
and because, as mentioned above, we
package in the OPPS items and services
that are typically integral, ancillary,
supportive, dependent, or adjunctive to
a primary service, we believe that it is
most consistent with a prospective
payment system to package the payment
of prosthetic supplies (along with the
implantable prosthetic device) into the
surgical procedure that implants the
prosthetic device, as all of the
components are typically necessary for

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the performance of the system and the
hospital typically purchases the system
as a single unit. Patients requiring
replacement supplies at a time later
than the initial surgical procedure and
outside of the hospital would obtain
them as they typically do from a
DMEPOS supplier with payment for
such supplies made under the DMEPOS
Fee Schedule.
In addition to prosthetic supplies that
are components of device systems, part
of which are implanted, many other
prosthetic supplies on the DMEPOS Fee
Schedule are typical medical and
surgical supplies and of the type that are
packaged in the OPPS under
§ 419.2(b)(4). Consistent with our
change from status indicator ‘‘A’’ to ‘‘N’’
for all nonprosthetic DMEPOS supplies
in the CY 2014 OPPS final rule with
comment period (78 FR 74947), in the
CY 2015 OPPS/ASC proposed rule (79
FR 40961), we proposed to package and
change the status indicator from ‘‘A’’ to
‘‘N’’ for all DMEPOS prosthetic
supplies. With this proposed change, all
medical and surgical supplies would be
packaged in the OPPS.
Therefore, we proposed to delete
‘‘prosthetic supplies’’ from the
regulations at § 419.22(j) because we
proposed that prosthetic supplies be
packaged covered OPD services in the
OPPS for CY 2015. Prosthetic supplies
provided in the HOPD would be
included in ‘‘medical and surgical
supplies’’ (as are all other supplies
currently provided in the HOPD) under
§ 419.2(b)(4). The HCPCS codes for
prosthetic supplies that we proposed to

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
package for CY 2015 were displayed in
Addendum B to the CY 2015 OPPS/ASC
proposed rule (which is available via
the Internet on the CMS Web site). The
supporting documents for the proposed
rule, including but not limited to
Addendum B, are available at the CMS
Web site at: http://www.cms.hhs.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/
index.html.
Comment: Many commenters agreed
with CMS’ proposal to conditionally
package prosthetic supplies furnished in
the HOPD.
Response: We appreciate the
commenters’ support.
Comment: A few commenters
requested to be informed of the fund
transfer amount from the DMEPOS Fee
Schedule to the OPPS as a result of this
proposed policy.
Response: Our CY 2013 claims
analysis shows that packaging payment
for prosthetic supplies under the OPPS
would redistribute approximately $1
million.
Comment: Some commenters
recommended that CMS implement an
exception to the ‘‘unbundling’’ rule that
currently exists for the inpatient
prospective payment systems (IPPS).
(We refer readers to the Medicare
Claims Processing Manual, Pub. 100–04,
Chapter 20—Durable Medical
Equipment, Prosthetics, Orthotic
Devices, and Supplies, Section 110—
General Billing Requirements—for DME,
Prosthetics, Orthotic Devices, and
Supplies.) The commenters believed
that such an exception would allow
DME suppliers to bill Medicare directly
for prosthetic supplies furnished to
patients during an outpatient visit when
the supplies are intended primarily for
home use.
Response: We do not believe that an
additional exception to the
‘‘unbundling’’ rule is necessary for the
provision of prosthetic supplies in the
HOPD. We remind commenters that
DME, prosthetics, and orthotics can be
billed by hospitals for outpatients and
are paid according to the DMEPOS Fee
Schedule. Only prosthetic supplies are
packaged in the OPPS. Unlike inpatient
stays, hospital outpatient stays are
typically brief and the need for
replacement supplies during a hospital
outpatient stay should be minimal. If a
hospital wants to provide a patient with
some basic supplies for immediate
home use (for example, tape, a syringe,
or gauze), such supplies are packaged
into the payment for whatever service
the patient received at the hospital.
DME suppliers can furnish additional or
replacement prosthetic supplies to the

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patient’s home and receive payment
under the DMEPOS Fee Schedule.
After consideration of the public
comments we received, we are adopting
as final our proposed deletion of
‘‘prosthetic supplies’’ from the
regulations at § 419.22(j) because
prosthetic supplies are packaged
covered OPD services in the OPPS for
CY 2015. Prosthetic supplies provided
in the HOPD will be included in the
packaged category of ‘‘medical and
surgical supplies’’ (as are all other
supplies currently provided in the
HOPD) under § 419.2(b)(4). The HCPCS
codes for prosthetic supplies that we are
packaging for CY 2015 are displayed in
Addendum B to this CY 2015 OPPS/
ASC final rule with comment period
(which is available via Internet on the
CMS Web site). The supporting
documents for this final rule with
comment period, including but not
limited to Addendum B, are available at
the CMS Web site at: http://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
4. Calculation of OPPS Scaled Payment
Weights
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40961 through 40962), for
CY 2015, we proposed to calculate the
relative payment weights for each APC
shown in Addenda A and B to the
proposed rule (which are available via
the Internet on the CMS Web site) using
the APC costs discussed in sections
II.A.1. and II.A.2. of the proposed rule.
Prior to CY 2007, we standardized all
the relative payment weights to APC
0601 (Mid-Level Clinic Visit) because
mid-level clinic visits were among the
most frequently performed services in
the hospital outpatient setting. We
assigned APC 0601 a relative payment
weight of 1.00 and divided the median
cost for each APC by the median cost for
APC 0601 to derive the relative payment
weight for each APC.
Beginning with the CY 2007 OPPS (71
FR 67990), we standardized all of the
relative payment weights to APC 0606
(Level 3 Clinic Visits) because we
deleted APC 0601 as part of the
reconfiguration of the clinic visit APCs.
We selected APC 0606 as the base
because it was the mid-level clinic visit
APC (that is, Level 3 of five levels). For
the CY 2013 OPPS (77 FR 68283), we
established a policy of using geometric
mean-based APC costs rather than
median-based APC costs to calculate
relative payment weights. For CY 2015,
we proposed to continue this policy.
For the CY 2014 OPPS, we
standardized all of the relative payment
weights to clinic visit APC 0634 as

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discussed in section VII. of the CY 2015
OPPS/ASC proposed rule (79 FR 41008).
For CY 2015, we proposed to continue
this policy to maintain consistency in
calculating unscaled weights that
represent the cost of some of the most
frequently provided services. We
proposed to assign APC 0634 a relative
payment weight of 1.00 and to divide
the geometric mean cost of each APC by
the proposed geometric mean cost for
APC 0634 to derive the proposed
unscaled relative payment weight for
each APC. The choice of the APC on
which to base the proposed relative
payment weights does not affect
payments made under the OPPS
because we scale the weights for budget
neutrality.
Section 1833(t)(9)(B) of the Act
requires that APC reclassification and
recalibration changes, wage index
changes, and other adjustments be made
in a budget neutral manner. Budget
neutrality ensures that the estimated
aggregate weight under the OPPS for CY
2015 is neither greater than nor less
than the estimated aggregate weight that
would have been made without the
changes. To comply with this
requirement concerning the APC
changes, we proposed to compare the
estimated aggregate weight using the CY
2014 scaled relative payment weights to
the estimated aggregate weight using the
proposed CY 2015 unscaled relative
payment weights.
We did not receive any public
comments on our proposed policy for
the CY 2015 unscaled relative payment
weights. Therefore, we are finalizing our
proposed policy to maintain consistency
in calculating unscaled weights that
represent the cost of some of the most
frequently provided services by
assigning APC 0634 a relative payment
weight of 1.00 and dividing the
geometric mean cost of each APC by the
geometric mean cost for APC 0634 to
derive the unscaled relative payment
weight for each APC for CY 2015.
For CY 2014, we multiplied the CY
2014 scaled APC relative payment
weight applicable to a service paid
under the OPPS by the volume of that
service from CY 2013 claims to calculate
the total relative payment weight for
each service. We then added together
the total relative payment weight for
each of these services in order to
calculate an estimated aggregate weight
for the year. For CY 2015, we proposed
to apply the same process using the CY
2015 unscaled relative payment weights
rather than scaled relative payment
weights. We proposed to calculate the
weight scaler by dividing the CY 2014
estimated aggregate weight by the CY
2015 estimated aggregate weight (79 FR

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40962). The service-mix is the same in
the current and prospective years
because we use the same set of claims
for service volume in calculating the
aggregate weight for each year. We note
that the CY 2014 OPPS scaled relative
weights incorporate the estimated
payment weight from packaged
laboratory tests previously paid at CLFS
rates.
For a detailed discussion of the
weight scaler calculation, we refer
readers to the OPPS claims accounting
document available on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
Click on the CY 2015 OPPS final rule
link, then open the claims accounting
document link at the bottom of the page.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40962), we proposed to
include estimated payments to CMHCs
in our comparison of the estimated
unscaled relative payment weights in
CY 2015 to the estimated total relative
payment weights in CY 2014 using CY
2013 claims data, holding all other
components of the payment system
constant to isolate changes in total
weight. Based on this comparison, we
proposed to adjust the proposed CY
2015 unscaled relative payment weights
for purposes of budget neutrality. The
proposed CY 2015 unscaled relative
payment weights were adjusted by
multiplying them by a weight scaler of
1.3220 to ensure that the proposed CY
2015 relative payment weights are
budget neutral.
Section 1833(t)(14) of the Act
provides the payment rates for certain
SCODs. Section 1833(t)(14)(H) of the
Act states that ‘‘Additional expenditures
resulting from this paragraph shall not
be taken into account in establishing the
conversion factor, weighting, and other
adjustment factors for 2004 and 2005
under paragraph (9), but shall be taken
into account for subsequent years.’’
Therefore, the cost of those SCODs (as
discussed in section V.B.3. of this final
rule with comment period) is included
in the budget neutrality calculations for
the CY 2015 OPPS.
Comment: One commenter expressed
concern that CMS did not provide
detailed data on the weight scaling
process. The commenter noted that it
could not find the claims accounting
document to which the proposed rule
referenced.
Response: The direct link to the
proposed rule claims accounting
document is located on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/Downloads/

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CMS-1613-P-claims-accountingnarrative.pdf.
After consideration of the public
comments we received, we are
finalizing our proposed methodology for
calculating the OPPS scaled relative
payment weights without modification,
including updating of the budget
neutrality scaler for this final rule with
comment period. Under this
methodology, the final unscaled relative
payment weights were adjusted by a
weight scaler of 1.2977 for this final rule
with comment period. The CY 2015
unscaled relative payment weights
listed in Addenda A and B to this final
rule with comment period (which are
available via the Internet on the CMS
Web site) incorporate the recalibration
adjustments discussed in sections II.A.1.
and II.A.2. of this final rule with
comment period.
B. Conversion Factor Update
Section 1833(t)(3)(C)(ii) of the Act
requires the Secretary to update the
conversion factor used to determine the
payment rates under the OPPS on an
annual basis by applying the OPD fee
schedule increase factor. For purposes
of section 1833(t)(3)(C)(iv) of the Act,
subject to sections 1833(t)(17) and
1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the
hospital inpatient market basket
percentage increase applicable to
hospital discharges under section
1886(b)(3)(B)(iii) of the Act. In the FY
2015 IPPS/LTCH PPS final rule (79 FR
49994), consistent with current law,
based on IHS Global Insight, Inc.’s
second quarter 2014 forecast of the FY
2015 market basket increase, the FY
2015 IPPS market basket update is 2.9
percent. However, sections 1833(t)(3)(F)
and 1833(t)(3)(G)(iv) of the Act, as
added by section 3401(i) of the Patient
Protection and Affordable Care Act of
2010 (Pub. L. 111–148) and as amended
by section 10319(g) of that law and
further amended by section 1105(e) of
the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152), provide adjustments to the OPD
fee schedule increase factor for CY 2015.
Specifically, section 1833(t)(3)(F)(i) of
the Act requires that, for 2012 and
subsequent years, the OPD fee schedule
increase factor under subparagraph
(C)(iv) be reduced by the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines
the productivity adjustment as equal to
the 10-year moving average of changes
in annual economy-wide, private
nonfarm business multifactor
productivity (MFP) (as projected by the
Secretary for the 10-year period ending

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with the applicable fiscal year, year,
cost reporting period, or other annual
period) (the ‘‘MFP adjustment’’). In the
FY 2012 IPPS/LTCH PPS final rule (76
FR 51689 through 51692), we finalized
our methodology for calculating and
applying the MFP adjustment. In the FY
2015 IPPS/LTCH PPS final rule (79 FR
49994), we discussed the calculation of
the MFP adjustment for FY 2015, which
is 0.5 percentage point.
As we proposed, based on more
recent data that became subsequently
available after the publication of the CY
2015 OPPS/ASC proposed rule (for
example, a more recent estimate of the
market basket increase and the MFP
adjustment), we are using such updated
data, if appropriate, to determine the CY
2015 market basket update and the MFP
adjustment, components in calculating
the OPD fee schedule increase factor
under sections 1833(t)(3)(C)(iv) and
1833(t)(3)(F) of the Act, in this CY 2015
OPPS/ASC final rule with comment
period.
In addition, section 1833(t)(3)(F)(ii) of
the Act requires that, for each of years
2010 through 2019, the OPD fee
schedule increase factor under section
1833(t)(3)(C)(iv) of the Act be reduced
by the adjustment described in section
1833(t)(3)(G) of the Act. For CY 2015,
section 1833(t)(3)(G)(iv) of the Act
provides a 0.2 percentage point
reduction to the OPD fee schedule
increase factor under section
1833(t)(3)(C)(iv) of the Act. Therefore, in
accordance with sections
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of
the Act, as we proposed, we are
applying a 0.2 percentage point
reduction to the OPD fee schedule
increase factor for CY 2015.
We note that section 1833(t)(3)(F) of
the Act provides that application of this
subparagraph may result in the OPD fee
schedule increase factor under section
1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may
result in OPPS payment rates being less
than rates for the preceding year. As
described in further detail below, we are
finalizing an OPD fee schedule increase
factor of 2.2 percent for the CY 2015
OPPS (which is 2.9 percent, the estimate
of the hospital inpatient market basket
percentage increase, less the 0.5
percentage point MFP adjustment, and
less the 0.2 percentage point additional
adjustment).
Hospitals that fail to meet the
Hospital OQR Program reporting
requirements are subject to an
additional reduction of 2.0 percentage
points from the OPD fee schedule
increase factor adjustment to the
conversion factor that would be used to
calculate the OPPS payment rates for

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their services, as required by section
1833(t)(17) of the Act. For further
discussion of the Hospital OQR
Program, we refer readers to section
XIII. of this final rule with comment
period.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40963), we proposed to
amend 42 CFR 419.32(b)(1)(iv)(B) by
adding a new paragraph (6) to reflect the
requirement in section 1833(t)(3)(F)(i) of
the Act that, for CY 2015, we reduce the
OPD fee schedule increase factor by the
MFP adjustment as determined by CMS,
and to reflect the requirement in section
1833(t)(3)(G)(iv) of the Act, as required
by section 1833(t)(3)(F)(ii) of the Act,
that we reduce the OPD fee schedule
increase factor by an additional 0.2
percentage point for CY 2015.
We did not receive any public
comments on our proposed adjustments
to the OPD fee schedule increase factor
or the proposed amendment to
§ 419.32(b)(1)(iv)(B) by adding a new
paragraph (6) to reflect the requirement
in section 1833(t)(3)(F)(i) of the Act.
Therefore, for the reasons discussed
above, we are adjusting the OPD fee
schedule increase factor for CY 2015 as
proposed. We also are finalizing the
amendment to § 419.32(b)(1)(iv)(B) as
proposed.
To set the OPPS conversion factor for
CY 2015, we proposed to increase the
CY 2014 conversion factor of $72.672 by
2.1 percent. In accordance with section
1833(t)(9)(B) of the Act, we further
adjusted the conversion factor for CY
2015 to ensure that any revisions made
to the wage index and rural adjustment
were made on a budget neutral basis.
We proposed a calculated overall budget
neutrality factor of 0.9998 for wage
index changes by comparing total
estimated payments from our simulation
model using the FY 2015 IPPS wage
indexes to those payments using the FY
2014 IPPS wage indexes, as adopted on
a calendar year basis for the OPPS.
For CY 2015, we proposed to
maintain current rural adjustment
policy, as discussed in section II.E. of
this final rule with comment period.
Therefore, the budget neutrality factor
for the rural adjustment would be
1.0000.
For CY 2015, we proposed to continue
previously established policies for
implementing the cancer hospital
payment adjustment described in
section 1833(t)(18) of the Act, as
discussed in section II.F. of this final
rule with comment period. We
calculated a CY 2015 budget neutrality
adjustment factor for the cancer hospital
payment adjustment by comparing
estimated total CY 2015 payments under
section 1833(t) of the Act, including the

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CY 2015 cancer hospital payment
adjustment, to estimated CY 2015 total
payments using the CY 2014 final
cancer hospital payment adjustment as
required under section 1833(t)(18)(B) of
the Act. The CY 2015 estimated
payments applying the CY 2015 cancer
hospital payment adjustment are
identical to estimated payments
applying the CY 2014 final cancer
hospital payment adjustment. Therefore,
we applied a budget neutrality
adjustment factor of 1.0000 to the
conversion factor for the cancer hospital
payment adjustment.
For the proposed rule, we estimated
that pass-through spending for drugs,
biologicals, and devices for CY 2015
would equal approximately $15.5
million, which represented 0.03 percent
of total projected CY 2015 OPPS
spending. Therefore, the proposed
conversion factor would be adjusted by
the difference between the 0.02 percent
estimate of pass-through spending for
CY 2014 and the 0.03 percent estimate
of pass-through spending for CY 2015,
resulting in a proposed adjustment for
CY 2015 of 0.01 percent. Finally,
estimated payments for outliers would
remain at 1.0 percent of total OPPS
payments for CY 2015.
For the proposed rule, we proposed
that hospitals that fail to meet the
reporting requirements of the Hospital
OQR Program would continue to be
subject to a further reduction of 2.0
percentage points to the OPD fee
schedule increase factor. For hospitals
that fail to meet the requirements of the
Hospital OQR Program, we would make
all other adjustments discussed above,
but use a reduced OPD fee schedule
update factor of 0.2 percent (that is, the
OPD fee schedule increase factor of 2.1
percent further reduced by 2.0
percentage points). This resulted in a
proposed reduced conversion factor for
CY 2015 of $72.692 for hospitals that
fail to meet the Hospital OQR
requirements (a difference of ¥$1.484
in the conversion factor relative to
hospitals that met the requirements).
Comment: MedPAC noted that CMS is
required by law to implement the 2015
update to the conversion factor as stated
in the Affordable Care Act. In its March
2014 Report to Congress, MedPAC
recommended an update of 3.25 percent
and Congressional action to direct the
Secretary to reduce or eliminate
differences in payment rates between
HOPDs and physician offices, which is
different from the Affordable Care Act
requirement.
Response: As discussed above, section
1833(t)(3)(C)(ii) of the Act requires the
Secretary to update the conversion
factor used to determine the payment

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rates under the OPPS on an annual basis
by applying the OPD fee schedule
increase factor. Section 1833(t)(3)(C)(iv)
provides that the OPD fee schedule
increase factor, subject to sections
1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the
Act, is equal to the hospital inpatient
market basket percentage increase
applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act.
After consideration of the public
comment we received, we are finalizing
the calculation of the CY 2015 OPPS
conversion factor as proposed. We are
finalizing the proposed amendment to
§ 419.32(b)(1)(iv)(B) by adding a new
paragraph (6) to reflect the reductions to
the OPD fee schedule increase factor
that are required for CY 2015 to satisfy
the statutory requirements of sections
1833(t)(3)(F) and (t)(3)(G)(iv) of the Act.
We are using a reduced conversion
factor of $72.661 in the calculation of
payments for hospitals that fail to meet
the Hospital OQR Program requirements
(a difference of ¥$1.483 in the
conversion factor relative to hospitals
that met the requirements).
For CY 2015, we are finalizing our
proposal to continue previously
established policies for implementing
the cancer hospital payment adjustment
described in section 1833(t)(18) of the
Act, as discussed in section II.F. of this
final rule with comment period.
For this final rule with comment
period, we estimate that pass-through
spending for drugs, biologicals, and
devices for CY 2015 will equal
approximately $82.8 million, which
represents 0.15 percent of total
projected CY 2015 OPPS spending.
Therefore, the conversion factor is also
adjusted by the difference between the
0.02 percent estimate of pass-through
spending for CY 2014 and the 0.15
percent estimate of pass-through
spending for CY 2015, resulting in an
adjustment for CY 2015 of ¥0.13
percent. Finally, estimated payments for
outliers remain at 1.0 percent of total
OPPS payments for CY 2015.
As a result of these final policies, the
OPD fee schedule increase factor for the
CY 2015 OPPS is 2.2 percent (which is
2.9 percent, the estimate of the hospital
inpatient market basket percentage
increase, less the 0.5 percentage point
MFP adjustment, and less the 0.2
percentage point additional adjustment).
For CY 2015, we are using a conversion
factor of $74.144 in the calculation of
the national unadjusted payment rates
for those items and services for which
payment rates are calculated using
geometric mean costs, that is the OPD
fee schedule increase factor of 2.2
percent for CY 2015, the required wage
index budget neutrality adjustment of

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approximately 0.9996, the cancer
hospital payment adjustment of 1.0000,
and the adjustment of ¥0.13 percent of
projected OPPS spending for the
difference in the pass-through spending
result in a conversion factor for CY 2015
of $74.144.
C. Wage Index Changes
Section 1833(t)(2)(D) of the Act
requires the Secretary to ‘‘determine a
wage adjustment factor to adjust the
portion of payment and coinsurance
attributable to labor-related costs for
relative differences in labor and laborrelated costs across geographic regions
in a budget neutral manner’’ (codified at
42 CFR 419.43(a)). This portion of the
OPPS payment rate is called the OPPS
labor-related share. Budget neutrality is
discussed in section II.B. of this final
rule with comment period.
The OPPS labor-related share is 60
percent of the national OPPS payment.
This labor-related share is based on a
regression analysis that determined that,
for all hospitals, approximately 60
percent of the costs of services paid
under the OPPS were attributable to
wage costs. We confirmed that this
labor-related share for outpatient
services is appropriate during our
regression analysis for the payment
adjustment for rural hospitals in the CY
2006 OPPS final rule with comment
period (70 FR 68553). Therefore, in the
CY 2015 OPPS/ASC proposed rule (79
FR 40964), we proposed to continue this
policy for the CY 2015 OPPS. We refer
readers to section II.H. of this final rule
with comment period for a description
and example of how the wage index for
a particular hospital is used to
determine payment for the hospital.
As discussed in section II.A.2.c. of
this final rule with comment period, for
estimating APC costs, we standardize 60
percent of estimated claims costs for
geographic area wage variation using the
same FY 2015 pre-reclassified wage
index that the IPPS uses to standardize
costs. This standardization process
removes the effects of differences in area
wage levels from the determination of a
national unadjusted OPPS payment rate
and copayment amount.
Under 42 CFR 419.41(c)(1) and
419.43(c) (published in the original
OPPS April 7, 2000 final rule with
comment period (65 FR 18495 and
18545)), the OPPS adopted the final
fiscal year IPPS wage index as the
calendar year wage index for adjusting
the OPPS standard payment amounts for
labor market differences. Therefore, the
wage index that applies to a particular
acute care short-stay hospital under the
IPPS also applies to that hospital under
the OPPS. As initially explained in the

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September 8, 1998 OPPS proposed rule
(63 FR 47576), we believe that using the
IPPS wage index as the source of an
adjustment factor for the OPPS is
reasonable and logical, given the
inseparable, subordinate status of the
HOPD within the hospital overall. In
accordance with section 1886(d)(3)(E) of
the Act, the IPPS wage index is updated
annually.
The Affordable Care Act contained
several provisions affecting the wage
index. These provisions were discussed
in the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74191). As
discussed in that final rule with
comment period, section 10324 of the
Affordable Care Act added section
1886(d)(3)(E)(iii)(II) to the Act, which
defines a ‘‘frontier State,’’ and amended
section 1833(t) of the Act to add new
paragraph (19), which requires a
‘‘frontier State’’ wage index floor of 1.00
in certain cases, and states that the
frontier State floor shall not be applied
in a budget neutral manner. We codified
these requirements in § 419.43(c)(2) and
(c)(3) of our regulations. In the CY 2015
OPPS/ASC proposed rule (79 FR 40964),
we proposed to implement this
provision in the same manner as we
have since CY 2011. That is, frontier
State hospitals would receive a wage
index of 1.00 if the otherwise applicable
wage index (including reclassification,
rural and imputed floor, and rural floor
budget neutrality) is less than 1.00.
Similar to our current policy for HOPDs
that are affiliated with multicampus
hospital systems, we proposed that the
HOPD would receive a wage index
based on the geographic location of the
specific inpatient hospital with which it
is associated. Therefore, if the
associated hospital is located in a
frontier State, the wage index
adjustment applicable for the hospital
also will apply for the affiliated HOPD.
We refer readers to the following
sections in the FY 2011 through FY
2015 IPPS/LTCH PPS final rules for
discussions regarding this provision,
including our methodology for
identifying which areas meet the
definition of ‘‘frontier States’’ as
provided for in section
1886(d)(3)(E)(iii)(II) of the Act: For FY
2011, 75 FR 50160 through 50161; for
FY 2012, 76 FR 51793, 51795, and
51825; for FY 2013, 77 FR 53369
through 53370; for FY 2014, 78 FR
50590 through 50591; and for FY 2015,
79 FR 49971.
In addition to the changes required by
the Affordable Care Act, we note that
the FY 2015 IPPS wage indexes
continue to reflect a number of
adjustments implemented over the past
few years, including, but not limited to,

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reclassification of hospitals to different
geographic areas, the rural and imputed
floor provisions, an adjustment for
occupational mix, and an adjustment to
the wage index based on commuting
patterns of employees (the out-migration
adjustment). We refer readers to the FY
2015 IPPS/LTCH PPS proposed rule and
final rule (79 FR 28054 through 28084
and 79 FR 49950 through 49991,
respectively) for a detailed discussion of
all changes to the FY 2015 IPPS wage
indexes. In addition, we refer readers to
the CY 2005 OPPS final rule with
comment period (69 FR 65842 through
65844) and subsequent OPPS rules for a
detailed discussion of the history of
these wage index adjustments as
applied under the OPPS.
As discussed in the FY 2015 IPPS/
LTCH PPS proposed rule and final rule
(79 FR 28054 through 28055 and 79 FR
49951 through 49957, respectively), the
Office of Management and Budget
(OMB) issued revisions to the current
labor market area delineations on
February 28, 2013, that included a
number of significant changes such as
new Core Based Statistical Areas
(CBSAs), urban counties that become
rural, rural counties that become urban,
and existing CBSAs that are split apart
(OMB Bulletin 13–01). This bulletin can
be found at: http://
www.whitehouse.gov/sites/default/files/
omb/bulletins/2013/b13-01.pdf. As we
stated in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50586), in order to
allow for sufficient time to assess the
new revisions and their ramifications,
we intended to propose changes to the
IPPS wage index based on the newest
CBSA delineations in the FY 2015 IPPS/
LTCH PPS proposed rule. Similarly, in
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74951), we
stated that we intended to propose
changes in the OPPS, which uses the
IPPS wage index, based on the new
OMB delineations in the CY 2015
OPPS/ASC proposed rule, consistent
with any proposals in the FY 2015 IPPS/
LTCH PPS proposed rule. We refer
readers to proposed changes based on
the new OMB delineations in the FY
2015 IPPS/LTCH proposed rule at 79 FR
28054 through 28084 and the final
changes based on the new OMB
delineations in the FY 2015 IPPS/LTCH
PPS final rule at 79 FR 49950 through
49966.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40964), we proposed to use
the FY 2015 hospital IPPS wage index
for urban and rural areas as the wage
index for the OPPS hospital to
determine the wage adjustments for the
OPPS payment rate and the copayment
standardized amount for CY 2015. (We

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refer readers to the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49850) and the
final FY 2015 hospital wage index files
posted on the CMS Web site.) We note
that the final FY 2015 IPPS wage
indexes reflect a number of changes as
a result of the new OMB delineations as
well as a 1-year extension of the
imputed rural floor. We proposed that
the CY 2015 OPPS wage index (for
hospitals paid under the IPPS and
OPPS) would be the final FY 2015 IPPS
wage index. Thus, any adjustments,
including the adjustments related to the
new OMB delineations, that were
finalized for the IPPS wage index would
be reflected in the OPPS wage index. As
stated earlier in this section, we
continue to believe that using the IPPS
wage index as the source of an
adjustment factor for the OPPS is
reasonable and logical, given the
inseparable, subordinate status of the
HOPD within the hospital overall.
Therefore, we did not propose to change
our existing regulations, which require
that we use the FY 2015 IPPS wage
indexes for calculating OPPS payments
in CY 2015.
Hospitals that are paid under the
OPPS but not under the IPPS do not
have a hospital wage index under the
IPPS. Therefore, for non-IPPS hospitals
paid under the OPPS, we assign the
wage index that would be applicable if
the hospital were paid under the IPPS,
based on its geographic location and any
applicable wage index adjustments. We
proposed to adopt the final wage index
changes from the FY 2015 IPPS/LTCH
PPS final rule for these hospitals. The
following is a brief summary of the
major changes in the FY 2015 IPPS wage
indexes and any adjustments that we
proposed to apply to these hospitals
under the OPPS for CY 2015. We refer
the reader to the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49950 through
49991) for a detailed discussion of the
changes to the wage indexes.
For CY 2015, we proposed to continue
our policy of allowing non-IPPS
hospitals paid under the OPPS to
qualify for the out-migration adjustment
if they are located in a section 505 outmigration county (section 505 of the
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173)). We
stated in the proposed rule that
applying this adjustment is consistent
with our proposed policy of adopting
IPPS wage index policies for hospitals
paid under the OPPS. We note that,
because non-IPPS hospitals cannot
reclassify, they would be eligible for the
out-migration wage adjustment if they
are located in a section 505 outmigration county. This is the same out-

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migration adjustment policy that would
apply if the hospital were paid under
the IPPS. Table 4J from the FY 2015
IPPS/LTCH PPS final rule (available via
the Internet on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html)
identifies counties eligible for the outmigration adjustment and IPPS
hospitals that will receive the
adjustment for FY 2015.
As we have done in prior years, we
are including Table 4J from the FY 2015
IPPS/LTCH PPS final rule as Addendum
L to this final rule with comment period
with the addition of non-IPPS hospitals
that would receive the section 505 outmigration adjustment under the CY
2015 OPPS. Addendum L is available
via the Internet on the CMS Web site.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we proposed to adopt the
new OMB labor market area
delineations issued by OMB in OMB
Bulletin No. 13–01 on February 28,
2013, based on standards published on
June 28, 2010 (75 FR 37246 through
37252) and the 2010 Census data to
delineate labor market areas for
purposes of the IPPS wage index. In the
FY 2015 IPPS/LTCH PPS final rule, we
finalized the adoption of the new OMB
delineations. For IPPS wage index
purposes, for hospitals that are
designated as rural under the new OMB
labor market area delineations that
currently are located in urban CBSAs,
we generally assigned them the urban
wage index value of the CBSA in which
they are physically located for FY 2014
for a period of 3 fiscal years (79 FR
28060 through 28061 and 79 FR 49957
through 49960). To be consistent, we
proposed to apply the same policy to
hospitals paid under the OPPS but not
under the IPPS so that such hospitals
will maintain the wage index of the
CBSA in which they are physically
located for FY 2014 for the next 3
calendar years. As stated in the CY 2015
OPPS/ASC proposed rule (79 FR 40965),
this proposed policy would impact six
hospitals for purposes of OPPS
payment.
We believe that adopting the new
OMB labor market area delineations
creates a more accurate wage index
system, but we also recognize that
implementing the new OMB
delineations may cause some short-term
instability in hospital payments.
Therefore, similar to the policy we
adopted in the FY 2005 IPPS final rule
(69 FR 49033), in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49960
through 49962), we finalized a 1-year
blended wage index for all hospitals
that experience any decrease in their

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actual payment wage index exclusively
due to the implementation of the new
OMB delineations. Under this final IPPS
policy, a post-reclassified wage index
with the rural and imputed floors
applied is computed based on the
hospital’s FY 2014 CBSA (that is, using
all of its FY 2014 constituent county/
ies), and another post-reclassified wage
index with the rural and imputed floors
applied is computed based on the
hospital’s new FY 2015 CBSA (that is,
the FY 2015 constituent county/ies). We
then compare these two wage indexes.
If the FY 2015 wage index with FY 2015
CBSAs is lower than the FY 2015 wage
index with FY 2014 CBSAs, we
compute a blended wage index
consisting of 50 percent of each of the
two wage indexes added together. This
blended wage index will be the IPPS
hospital’s wage index for FY 2015. In
the CY 2015 OPPS/ASC proposed rule,
for purposes of the OPPS, we proposed
to apply this 50-percent transition blend
to hospitals paid under the OPPS but
not under the IPPS. We stated that we
believe a 1-year, 50/50 blended wage
index would mitigate the short-term
instability and negative payment
impacts due to the implementation of
the new OMB delineations, providing
hospitals with a transition period during
which they may adjust to their new
geographic CBSA. We believe that a
longer transition period would reduce
the accuracy of the overall labor market
area wage index system, and generally
would not be warranted for hospitals
moving from one urban geographic labor
market area to another.
In addition, for the FY 2015 IPPS, we
are continuing the extension of the
imputed floor policy (both the original
methodology and alternative
methodology) for another year, through
September 30, 2015 (79 FR 49969
through 49971). For purposes of the CY
2015 OPPS, we also proposed to apply
the imputed floor policy to hospitals
paid under the OPPS but not under the
IPPS.
For CMHCs, we proposed to continue
to calculate the wage index by using the
post-reclassification IPPS wage index
based on the CBSA where the CMHC is
located. As with OPPS hospitals and for
the same reasons, we proposed to apply
a 1-year, 50/50 blended wage index to
CMHCs that would receive a lower wage
index due to the new CBSA
delineations. In addition, as with OPPS
hospitals and for the same reasons, for
CMHCs currently located in urban
CBSAs that are designated as rural
under the new OMB labor market area
delineations, we proposed to maintain
the urban wage index value of the CBSA
in which they are physically located for

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CY 2014 for the next 3 calendar years.
Consistent with our current policy, the
wage index that applies to CMHCs
includes both the imputed floor
adjustment and the rural floor
adjustment, but does not include the
out-migration adjustment because that
adjustment only applies to hospitals.
With the exception of the outmigration wage adjustment table
(Addendum L to this final rule with
comment period, which is available via
the Internet on the CMS Web site),
which includes non-IPPS hospitals paid
under the OPPS, we are not reprinting
the FY 2015 IPPS wage indexes
referenced in this discussion of the
wage index. We refer readers to the CMS
Web site for the OPPS at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html. At
this link, readers will find a link to the
final FY 2015 IPPS wage index tables.
Comment: One commenter suggested
that the IPPS rural floor should utilize
State-specific budget neutrality rather
than national budget neutrality to
prevent it from being susceptible to
gaming by hospitals. The commenter
suggested that, under the current policy,
an urban hospital can reclassify to rural
status to improve the rural wage index
in the State, which in some cases is
used as a floor for urban hospitals.
Response: As we stated in the FY
2015 IPPS/LTCH PPS final rule (79 FR
50370), section 3141 of Public Law 111–
148 requires that a national budget
neutrality adjustment be applied in
implementing the rural floor policy
under the IPPS. Therefore, absent a
legislative change enacted by Congress,
we are unable to change the rural floor
budget neutrality adjustment from a
national adjustment to a State-specific
adjustment. In this final rule with
comment period, we are adopting the
final fiscal year IPPS wage index as the
calendar year wage index for adjusting
the OPPS standard payment amounts for
labor market differences. We refer
readers to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50370 through 50372)
for further discussion and a detailed
response to a similar comment.
After considering the public comment
we received, we are finalizing our
proposals to use the FY 2015 IPPS final
wage index as the CY 2015 wage index
for OPPS hospitals and CMHCs, as
discussed above and as set forth in the
CY 2015 OPPS/ASC proposed rule (79

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FR 40963 through 40965), without
modification.
D. Statewide Average Default CCRs
In addition to using CCRs to estimate
costs from charges on claims for
ratesetting, CMS uses overall hospitalspecific CCRs calculated from the
hospital’s most recent cost report to
determine outlier payments, payments
for pass-through devices, and monthly
interim transitional corridor payments
under the OPPS during the PPS year.
MACs cannot calculate a CCR for some
hospitals because there is no cost report
available. For these hospitals, CMS uses
the statewide average default CCRs to
determine the payments mentioned
above until a hospital’s MAC is able to
calculate the hospital’s actual CCR from
its most recently submitted Medicare
cost report. These hospitals include, but
are not limited to, hospitals that are
new, have not accepted assignment of
an existing hospital’s provider
agreement, and have not yet submitted
a cost report. CMS also uses the
statewide average default CCRs to
determine payments for hospitals that
appear to have a biased CCR (that is, the
CCR falls outside the predetermined
ceiling threshold for a valid CCR) or for
hospitals in which the most recent cost
report reflects an all-inclusive rate
status (Medicare Claims Processing
Manual (Pub. 100–04), Chapter 4,
Section 10.11). In the CY 2015 OPPS/
ASC proposed rule (79 FR 40966), we
proposed to update the default ratios for
CY 2015 using the most recent cost
report data. We discuss our policy for
using default CCRs, including setting
the ceiling threshold for a valid CCR, in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68594 through
68599) in the context of our adoption of
an outlier reconciliation policy for cost
reports beginning on or after January 1,
2009.
For CY 2015, we proposed to continue
to use our standard methodology of
calculating the statewide average default
CCRs using the same hospital overall
CCRs that we use to adjust charges to
costs on claims data for setting the CY
2015 OPPS relative payment weights.
Table 12 published in the proposed rule
(79 FR 40966 through 40968) listed the
proposed CY 2015 default urban and
rural CCRs by State and compared them
to the CY 2014 default CCRs. These
proposed CCRs represented the ratio of
total costs to total charges for those cost
centers relevant to outpatient services

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from each hospital’s most recently
submitted cost report, weighted by
Medicare Part B charges. We also
proposed to adjust ratios from submitted
cost reports to reflect the final settled
status by applying the differential
between settled to submitted overall
CCRs for the cost centers relevant to
outpatient services from the most recent
pair of final settled and submitted cost
reports. We then proposed to weight
each hospital’s CCR by the volume of
separately paid line-items on hospital
claims corresponding to the year of the
majority of cost reports used to calculate
the overall CCRs. We refer readers to the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66680 through
66682) and prior OPPS rules for a more
detailed discussion of our established
methodology for calculating the
statewide average default CCRs,
including the hospitals used in our
calculations and our trimming criteria.
We did not receive any public
comments on our CY 2015 proposal.
Therefore, we are finalizing our
proposal, without modification, to apply
our standard methodology of calculating
the statewide average default CCRs
using the same hospital overall CCRs
that we used to adjust charges to costs
on claims data for setting the CY 2015
OPPS relative payment weights. We
used this methodology to calculate the
statewide average default CCRs listed in
Table 13 below.
For Maryland, we used an overall
weighted average CCR for all hospitals
in the Nation as a substitute for
Maryland CCRs. Few hospitals in
Maryland are eligible to receive
payment under the OPPS, which limits
the data available to calculate an
accurate and representative CCR. The
weighted CCR is used for Maryland
because it takes into account each
hospital’s volume, rather than treating
each hospital equally. We refer readers
to the CY 2005 OPPS final rule with
comment period (69 FR 65822) for
further discussion and the rationale for
our longstanding policy of using the
national average CCR for Maryland. In
general, observed changes in the
statewide average default CCRs between
CY 2014 and CY 2015 are modest and
the few significant changes are
associated with areas that have a small
number of hospitals.
Table 13 below lists the statewide
average default CCRs for OPPS services
furnished on or after January 1, 2015.

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66829

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 13—CY 2015 STATEWIDE AVERAGE CCRS

State

Urban/rural

CY 2015
default CCR

ALABAMA .....................................................................
ALABAMA .....................................................................
ALASKA ........................................................................
ALASKA ........................................................................
ARIZONA ......................................................................
ARIZONA ......................................................................
ARKANSAS ..................................................................
ARKANSAS ..................................................................
CALIFORNIA ................................................................
CALIFORNIA ................................................................
COLORADO .................................................................
COLORADO .................................................................
CONNECTICUT ............................................................
CONNECTICUT ............................................................
DELAWARE ..................................................................
DISTRICT OF COLUMBIA ...........................................
FLORIDA ......................................................................
FLORIDA ......................................................................
GEORGIA .....................................................................
GEORGIA .....................................................................
HAWAII .........................................................................
HAWAII .........................................................................
IDAHO ..........................................................................
IDAHO ..........................................................................
ILLINOIS .......................................................................
ILLINOIS .......................................................................
INDIANA .......................................................................
INDIANA .......................................................................
IOWA ............................................................................
IOWA ............................................................................
KANSAS .......................................................................
KANSAS .......................................................................
KENTUCKY ..................................................................
KENTUCKY ..................................................................
LOUISIANA ...................................................................
LOUISIANA ...................................................................
MAINE ..........................................................................
MAINE ..........................................................................
MARYLAND ..................................................................
MARYLAND ..................................................................
MASSACHUSETTS ......................................................
MASSACHUSETTS ......................................................
MICHIGAN ....................................................................
MICHIGAN ....................................................................
MINNESOTA ................................................................
MINNESOTA ................................................................
MISSISSIPPI ................................................................
MISSISSIPPI ................................................................
MISSOURI ....................................................................
MISSOURI ....................................................................
MONTANA ....................................................................
MONTANA ....................................................................
NEBRASKA ..................................................................
NEBRASKA ..................................................................
NEVADA .......................................................................
NEVADA .......................................................................
NEW HAMPSHIRE .......................................................
NEW HAMPSHIRE .......................................................
NEW JERSEY ..............................................................
NEW MEXICO ..............................................................
NEW MEXICO ..............................................................
NEW YORK ..................................................................
NEW YORK ..................................................................
NORTH CAROLINA .....................................................
NORTH CAROLINA .....................................................
NORTH DAKOTA .........................................................
NORTH DAKOTA .........................................................
OHIO .............................................................................

RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
URBAN .........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................

0.235
0.186
0.439
0.294
0.228
0.181
0.262
0.239
0.178
0.196
0.410
0.219
0.339
0.273
0.314
0.299
0.180
0.156
0.256
0.211
0.337
0.307
0.353
0.463
0.252
0.217
0.334
0.262
0.321
0.269
0.300
0.231
0.231
0.212
0.272
0.209
0.430
0.432
0.296
0.244
0.326
0.333
0.371
0.320
0.485
0.347
0.247
0.181
0.267
0.274
0.501
0.386
0.290
0.255
0.241
0.149
0.362
0.280
0.202
0.296
0.294
0.333
0.340
0.280
0.246
0.660
0.395
0.317

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Previous
default CCR
(CY 2014
OPPS final
rule)
0.229
0.188
0.473
0.302
0.254
0.182
0.244
0.220
0.190
0.206
0.393
0.221
0.343
0.276
0.356
0.279
0.160
0.160
0.260
0.205
0.345
0.298
0.359
0.478
0.252
0.222
0.326
0.288
0.308
0.266
0.313
0.239
0.221
0.225
0.257
0.222
0.452
0.438
0.283
0.248
0.395
0.336
0.341
0.322
0.462
0.349
0.233
0.200
0.263
0.280
0.481
0.384
0.323
0.243
0.220
0.154
0.326
0.287
0.213
0.291
0.304
0.345
0.351
0.258
0.256
0.661
0.400
0.327

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TABLE 13—CY 2015 STATEWIDE AVERAGE CCRS—Continued

State

Urban/rural

CY 2015
default CCR

OHIO .............................................................................
OKLAHOMA .................................................................
OKLAHOMA .................................................................
OREGON ......................................................................
OREGON ......................................................................
PENNSYLVANIA ..........................................................
PENNSYLVANIA ..........................................................
PUERTO RICO .............................................................
RHODE ISLAND ...........................................................
SOUTH CAROLINA ......................................................
SOUTH CAROLINA ......................................................
SOUTH DAKOTA .........................................................
SOUTH DAKOTA .........................................................
TENNESSEE ................................................................
TENNESSEE ................................................................
TEXAS ..........................................................................
TEXAS ..........................................................................
UTAH ............................................................................
UTAH ............................................................................
VERMONT ....................................................................
VERMONT ....................................................................
VIRGINIA ......................................................................
VIRGINIA ......................................................................
WASHINGTON .............................................................
WASHINGTON .............................................................
WEST VIRGINIA ..........................................................
WEST VIRGINIA ..........................................................
WISCONSIN .................................................................
WISCONSIN .................................................................
WYOMING ....................................................................
WYOMING ....................................................................

URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
URBAN .........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................
RURAL ..........................................................................
URBAN .........................................................................

0.222
0.282
0.203
0.287
0.352
0.283
0.197
0.577
0.297
0.191
0.207
0.286
0.214
0.203
0.188
0.251
0.203
0.481
0.335
0.439
0.353
0.219
0.241
0.300
0.330
0.312
0.300
0.328
0.294
0.429
0.262

tkelley on DSK3SPTVN1PROD with RULES2

E. Adjustment for Rural SCHs and
EACHs Under Section 1833(t)(13)(B) of
the Act
In the CY 2006 OPPS final rule with
comment period (70 FR 68556), we
finalized a payment increase for rural
SCHs of 7.1 percent for all services and
procedures paid under the OPPS,
excluding drugs, biologicals,
brachytherapy sources, and devices paid
under the pass-through payment policy
in accordance with section
1833(t)(13)(B) of the Act, as added by
section 411 of the Medicare Prescription
Drug, Improvement, and Modernization
Act of 2003 (MMA) (Pub. L. 108–173).
Section 1833(t)(13) of the Act provided
the Secretary the authority to make an
adjustment to OPPS payments for rural
hospitals, effective January 1, 2006, if
justified by a study of the difference in
costs by APC between hospitals in rural
areas and hospitals in urban areas. Our
analysis showed a difference in costs for
rural SCHs. Therefore, for the CY 2006
OPPS, we finalized a payment
adjustment for rural SCHs of 7.1 percent
for all services and procedures paid
under the OPPS, excluding separately
payable drugs and biologicals,

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brachytherapy sources, and devices paid
under the pass-through payment policy,
in accordance with section
1833(t)(13)(B) of the Act.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68010 and
68227), for purposes of receiving this
rural adjustment, we revised § 419.43(g)
of the regulations to clarify that EACHs
also are eligible to receive the rural SCH
adjustment, assuming these entities
otherwise meet the rural adjustment
criteria. Currently, two hospitals are
classified as EACHs, and as of CY 1998,
under section 4201(c) of Public Law
105–33, a hospital can no longer become
newly classified as an EACH.
This adjustment for rural SCHs is
budget neutral and applied before
calculating outlier payments and
copayments. We stated in the CY 2006
OPPS final rule with comment period
(70 FR 68560) that we would not
reestablish the adjustment amount on an
annual basis, but we may review the
adjustment in the future and, if
appropriate, would revise the
adjustment. We provided the same 7.1
percent adjustment to rural SCHs,
including EACHs, again in CYs 2008
through 2014. Further, in the CY 2009

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default CCR
(CY 2014
OPPS final
rule)
0.232
0.258
0.205
0.311
0.357
0.257
0.198
0.614
0.295
0.190
0.203
0.287
0.219
0.207
0.190
0.235
0.197
0.474
0.334
0.456
0.397
0.226
0.238
0.330
0.360
0.283
0.319
0.344
0.291
0.400
0.269

OPPS/ASC final rule with comment
period (73 FR 68590), we updated the
regulations at § 419.43(g)(4) to specify,
in general terms, that items paid at
charges adjusted to costs by application
of a hospital-specific CCR are excluded
from the 7.1 percent payment
adjustment.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40968), for the CY 2015
OPPS, we proposed to continue our
policy of a 7.1 percent payment
adjustment that is done in a budget
neutral manner for rural SCHs,
including EACHs, for all services and
procedures paid under the OPPS,
excluding separately payable drugs and
biologicals, devices paid under the passthrough payment policy, and items paid
at charges reduced to costs.
Comment: Several commenters
supported the proposed continuation of
the 7.1 percent rural SCH adjustment.
Several commenters, including
MedPAC, also recommended that CMS
update the analysis in the near future to
assess if the 7.1 percent payment
adjustment remains a valid figure.
Response: We appreciate the
commenters’ support. We agree that it is
appropriate to continue the 7.1 percent

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
adjustment for rural SCHs (including
EACHs) as we proposed for CY 2015. As
we indicated in the proposed rule (79
FR 40968), we may reassess the 7.1
percent rural adjustment in the near
future by examining differences
between urban hospitals’ costs and rural
hospitals’ costs using updated claims,
cost reports, and provider information.
After consideration of the public
comments we received, we are
finalizing our CY 2015 proposal to
continue our policy of a 7.1 percent
payment adjustment that is done in a
budget neutral manner for rural SCHs,
including EACHs, for all services and
procedures paid under the OPPS,
excluding separately payable drugs and
biologicals, devices paid under the passthrough payment policy, and items paid
at charges reduced to costs.

tkelley on DSK3SPTVN1PROD with RULES2

F. OPPS Payment to Certain Cancer
Hospitals Described by Section
1886(d)(1)(B)(v) of the Act
1. Background
Since the inception of the OPPS,
which was authorized by the Balanced
Budget Act of 1997 (BBA) (Pub. L. 105–
33), Medicare has paid the 11 hospitals
that meet the criteria for cancer
hospitals identified in section
1886(d)(1)(B)(v) of the Act under the
OPPS for covered outpatient hospital
services. These cancer hospitals are
exempted from payment under the IPPS.
With the Medicare, Medicaid and
SCHIP Balanced Budget Refinement Act
of 1999 (Pub. L. 106–113), Congress
established section 1833(t)(7) of the Act,
‘‘Transitional Adjustment to Limit
Decline in Payment,’’ to determine
OPPS payments to cancer and children’s
hospitals based on their pre-BBA
payment amount (often referred to as
‘‘held harmless’’).
As required under section
1833(t)(7)(D)(ii) of the Act, a cancer
hospital receives the full amount of the
difference between payments for
covered outpatient services under the
OPPS and a ‘‘pre-BBA amount.’’ That is,
cancer hospitals are permanently held
harmless to their ‘‘pre-BBA amount,’’
and they receive transitional outpatient
payments (TOPs) or hold harmless
payments to ensure that they do not
receive a payment that is lower under
the OPPS than the payment they would
have received before implementation of
the OPPS, as set forth in section
1833(t)(7)(F) of the Act. The ‘‘pre-BBA
amount’’ is the product of the hospital’s
reasonable costs for covered outpatient
services occurring in the current year
and the base payment-to-cost ratio (PCR)
for the hospital defined in section
1833(t)(7)(F)(ii) of the Act. The ‘‘pre-

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BBA amount,’’ including the
determination of the base PCR, are
defined at 42 CFR 419.70(f). TOPs are
calculated on Worksheet E, Part B, of
the Hospital Cost Report or the Hospital
Health Care Complex Cost Report (Form
CMS–2552–96 and Form CMS–2552–10,
respectively) as applicable each year.
Section 1833(t)(7)(I) of the Act exempts
TOPs from budget neutrality
calculations.
Section 3138 of the Affordable Care
Act amended section 1833(t) of the Act
by adding a new paragraph (18), which
instructs the Secretary to conduct a
study to determine if, under the OPPS,
outpatient costs incurred by cancer
hospitals described in section
1886(d)(1)(B)(v) of the Act with respect
to APC groups exceed outpatient costs
incurred by other hospitals furnishing
services under section 1833(t) of the
Act, as determined appropriate by the
Secretary. Section 1833(t)(18)(A) of the
Act requires the Secretary to take into
consideration the cost of drugs and
biologicals incurred by cancer and other
hospitals. Section 1833(t)(18)(B) of the
Act provides that if the Secretary
determines that cancer hospitals’ costs
are greater than other hospitals’ costs,
the Secretary shall provide an
appropriate adjustment under section
1833(t)(2)(E) of the Act to reflect these
higher costs. In 2011, after conducting
the study required by section
1833(t)(18)(A) of the Act, we determined
that outpatient costs incurred by the 11
specified cancer hospitals were greater
than the costs incurred by other OPPS
hospitals. For a complete discussion
regarding the cancer hospital cost study,
we refer readers to the CY 2012 OPPS/
ASC final rule with comment period (76
FR 74200 through 74201).
Based on these findings, we finalized
a policy to provide a payment
adjustment to the 11 specified cancer
hospitals that reflects their higher
outpatient costs as discussed in the CY
2012 OPPS/ASC final rule with
comment period (76 FR 74202 through
74206). Specifically, we adopted a
policy to provide additional payments
to the cancer hospitals so that each
cancer hospital’s final PCR for services
provided in a given calendar year is
equal to the weighted average PCR
(which we refer to as the ‘‘target PCR’’)
for other hospitals paid under the OPPS.
The target PCR is set in advance of the
calendar year and is calculated using
the most recent submitted or settled cost
report data that are available at the time
of final rulemaking for the calendar
year. The amount of the payment
adjustment is made on an aggregate
basis at cost report settlement. We note
that the changes made by section

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66831

1833(t)(18) of the Act do not affect the
existing statutory provisions that
provide for TOPs for cancer hospitals.
The TOPs are assessed as usual after all
payments, including the cancer hospital
payment adjustment, have been made
for a cost reporting period. For CYs 2012
and 2013, the target PCR for purposes of
the cancer hospital payment adjustment
was 0.91. For CY 2014, the target PCR
for purposes of the cancer hospital
payment adjustment was 0.89.
2. Payment Adjustment for Certain
Cancer Hospitals for CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40968), for CY 2015, we
proposed to continue our policy to
provide additional payments to cancer
hospitals so that each cancer hospital’s
final PCR is equal to the weighted
average PCR (or ‘‘target PCR’’) for the
other OPPS hospitals using the most
recent submitted or settled cost report
data that were available at the time of
the development of the proposed rule.
To calculate the proposed CY 2015
target PCR, we used the same extract of
cost report data from HCRIS, as
discussed in section II.A. of the
proposed rule, used to estimate costs for
the CY 2015 OPPS. Using these cost
report data, we included data from
Worksheet E, Part B, for each hospital,
using data from each hospital’s most
recent cost report, whether as submitted
or settled.
We then limited the dataset to the
hospitals with CY 2013 claims data that
we used to model the impact of the
proposed CY 2015 APC relative
payment weights (3,881 hospitals)
because it is appropriate to use the same
set of hospitals that we used to calibrate
the modeled CY 2015 OPPS. The cost
report data for the hospitals in this
dataset were from cost report periods
with fiscal year ends ranging from 2012
to 2013. We then removed the cost
report data of the 47 hospitals located in
Puerto Rico from our dataset because we
do not believe that their cost structure
reflects the costs of most hospitals paid
under the OPPS and, therefore, their
inclusion may bias the calculation of
hospital-weighted statistics. We also
removed the cost report data of 27
hospitals because these hospitals had
cost report data that were not complete
(missing aggregate OPPS payments,
missing aggregate cost data, or missing
both), so that all cost reports in the
study would have both the payment and
cost data necessary to calculate a PCR
for each hospital, leading to a proposed
analytic file of 3,807 hospitals with cost
report data.
Using this smaller dataset of cost
report data, we estimated that, on

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average, the OPPS payments to other
hospitals furnishing services under the
OPPS were approximately 89 percent of
reasonable cost (weighted average PCR
of 0.89). Therefore, we proposed that the
payment amount associated with the
cancer hospital payment adjustment to
be determined at cost report settlement
would be the additional payment
needed to result in a proposed target
PCR equal to 0.89 for each cancer
hospital. Table 13 of the proposed rule
(79 FR 40969) indicated the estimated
percentage increase in OPPS payments
to each cancer hospital for CY 2015 due
to the cancer hospital payment
adjustment policy.
Comment: Several commenters noted
that cancer hospitals have significantly
higher costs than other OPPS hospitals
and agreed with CMS’ proposal to
provide the proposed payment
adjustment.
Response: We appreciate the
commenters’ support of our proposal.
As described in detail below, we
performed the same analysis as in
previous years comparing the PCR for
these cancer hospitals relative to other
OPPS hospitals. That study indicates
that there is a difference in PCRs

between these hospital types.
Accordingly, we are finalizing a cancer
hospital adjustment with a target PCR of
0.89 based on that analysis.
After consideration of the public
comments we received, we are
finalizing our proposal to establish the
target PCR equal to 0.89 for each cancer
hospital. For this final rule with
comment period, we have rerun our
calculations to determine the target PCR
using the latest available cost data and
have determined that 0.89 is still the
correct target PCR. We limited the
dataset to the hospitals with CY 2013
claims data that we used to model the
impact of the final CY 2015 APC relative
payment weights (3,808 hospitals). The
cost report data for the hospitals in this
dataset were from cost report periods
with fiscal year ends ranging from 2011
to 2013. We removed the cost report
data of the 47 hospitals located in
Puerto Rico from our dataset and also
removed the cost report data of 14
hospitals that had cost report data that
were not complete, leading to a final
analytic file of 3,747 hospitals with cost
report data.
Using this smaller dataset of cost
report data, we estimated that, on

average, the OPPS payments to other
hospitals furnishing services under the
OPPS are approximately 89 percent of
reasonable cost (weighted average PCR
of 0.89). Therefore, we are finalizing
that the payment amount associated
with the cancer hospital payment
adjustment to be determined at cost
report settlement would be the
additional payment needed to result in
a target PCR equal to 0.89 for each
cancer hospital.
Table 14 below indicates the
estimated percentage increase in OPPS
payments to each cancer hospital for CY
2015 due to the cancer hospital payment
adjustment policy. The actual amount of
the CY 2015 cancer hospital payment
adjustment for each cancer hospital will
be determined at cost report settlement
and will depend on each hospital’s CY
2015 payments and costs. We note that
the changes made by section 1833(t)(18)
of the Act do not affect the existing
statutory provisions that provide for
TOPs for cancer hospitals. The TOPs
will be assessed as usual after all
payments, including the cancer hospital
payment adjustment, have been made
for a cost reporting period.

TABLE 14—ESTIMATED CY 2015 HOSPITAL-SPECIFIC PAYMENT ADJUSTMENT FOR CANCER HOSPITALS TO BE PROVIDED
AT COST REPORT SETTLEMENT

Provider No.

050146
050660
100079
100271
220162
330154
330354
360242
390196
450076
500138

...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................

Hospital name

City of Hope Comprehensive Cancer Center .........................................................................................
USC Norris Cancer Hospital ...................................................................................................................
Sylvester Comprehensive Cancer Center ..............................................................................................
H. Lee Moffitt Cancer Center & Research Institute ................................................................................
Dana-Farber Cancer Institute .................................................................................................................
Memorial Sloan-Kettering Cancer Center ...............................................................................................
Roswell Park Cancer Institute .................................................................................................................
James Cancer Hospital & Solove Research Institute .............................................................................
Fox Chase Cancer Center ......................................................................................................................
M.D. Anderson Cancer Center ...............................................................................................................
Seattle Cancer Care Alliance ..................................................................................................................

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G. Hospital Outpatient Outlier
Payments
1. Background
The OPPS provides outlier payments
to hospitals to help mitigate the
financial risk associated with high-cost
and complex procedures, where a very
costly service could present a hospital
with significant financial loss. As
explained in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
74958 through 74960), we set our
projected target for aggregate outlier
payments at 1.0 percent of the estimated
aggregate total payments under the

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2015

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OPPS for the prospective year. Outlier
payments are provided on a service-byservice basis when the cost of a service
exceeds the APC payment amount
multiplier threshold (the APC payment
amount multiplied by a certain amount)
as well as the APC payment amount
plus a fixed-dollar amount threshold
(the APC payment plus a certain amount
of dollars). In CY 2014, the outlier
threshold was met when the hospital’s
cost of furnishing a service exceeded
1.75 times (the multiplier threshold) the
APC payment amount and exceeded the
APC payment amount plus $2,900 (the

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15.5
22.0
15.8
19.9
47.6
46.7
16.6
35.1
18.5
60.1
53.9

fixed-dollar amount threshold). If the
cost of a service exceeds both the
multiplier threshold and the fixeddollar threshold, the outlier payment is
calculated as 50 percent of the amount
by which the cost of furnishing the
service exceeds 1.75 times the APC
payment amount. Beginning with CY
2009 payments, outlier payments are
subject to a reconciliation process
similar to the IPPS outlier reconciliation
process for cost reports, as discussed in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68594 through
68599).

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It has been our policy to report the
actual amount of outlier payments as a
percent of total spending in the claims
being used to model the OPPS. Our
current estimate of total outlier
payments as a percent of total CY 2013
OPPS payment, using available CY 2013
claims and the revised OPPS
expenditure estimate for the FY 2015
President’s Budget Mid-Session Review,
is approximately 1.4 percent of the total
aggregated OPPS payments. Therefore,
for CY 2013, we estimate that we paid
0.4 percent above the CY 2013 outlier
target of 1.0 percent of total aggregated
OPPS payments.
Using CY 2013 claims data and CY
2014 payment rates, we currently
estimate that the aggregate outlier
payments for CY 2014 will be
approximately 0.8 percent of the total
CY 2014 OPPS payments. The
difference between 0.8 percent and the
1.0 percent target is reflected in the
regulatory impact analysis in section
XXII. of this final rule with comment
period. We provide estimated CY 2015
outlier payments for hospitals and
CMHCs with claims included in the
claims data that we used to model
impacts in the Hospital-Specific
Impacts—Provider-Specific Data file on
the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html.
2. Outlier Calculation
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40970), for CY 2015, we
proposed to continue our policy of
estimating outlier payments to be 1.0
percent of the estimated aggregate total
payments under the OPPS. We proposed
that a portion of that 1.0 percent, an
amount equal to 0.47 percent of outlier
payments (or 0.0047 percent of total
OPPS payments) would be allocated to
CMHCs for PHP outlier payments. This
is the amount of estimated outlier
payments that would result from the
proposed CMHC outlier threshold as a
proportion of total estimated OPPS
outlier payments. As discussed in
section VIII.D. of the proposed rule, for
CMHCs, we proposed to continue our
longstanding policy that if a CMHC’s
cost for partial hospitalization services,
paid under either APC 0172 (Level I
Partial Hospitalization (3 services) for
CMHCs) or APC 0173 (Level II Partial
Hospitalization (4 or more services) for
CMHCs), exceeds 3.40 times the
payment rate for APC 0173, the outlier
payment would be calculated as 50
percent of the amount by which the cost
exceeds 3.40 times the APC 0173
payment rate. For further discussion of
CMHC outlier payments, we refer

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readers to section VIII.D. of the
proposed rule and this final rule with
comment period.
To ensure that the estimated CY 2015
aggregate outlier payments would equal
1.0 percent of estimated aggregate total
payments under the OPPS, we proposed
that the hospital outlier threshold be set
so that outlier payments would be
triggered when a hospital’s cost of
furnishing a service exceeds 1.75 times
the APC payment amount and exceeds
the APC payment amount plus $3,100.
We calculated the proposed fixeddollar threshold of $3,100 using the
standard methodology most recently
used for CY 2014 (78 FR 74959 through
74960). For purposes of estimating
outlier payments for the proposed rule,
we used the hospital-specific overall
ancillary CCRs available in the April
2014 update to the Outpatient ProviderSpecific File (OPSF). The OPSF
contains provider-specific data, such as
the most current CCRs, which are
maintained by the MACs and used by
the OPPS Pricer to pay claims. The
claims that we use to model each OPPS
update lag by 2 years.
In order to estimate the CY 2015
hospital outlier payments for the
proposed rule, we inflated the charges
on the CY 2013 claims using the same
inflation factor of 1.1146 that we used
to estimate the IPPS fixed-dollar outlier
threshold for the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28321). We
used an inflation factor of 1.0557 to
estimate CY 2014 charges from the CY
2013 charges reported on CY 2013
claims. The methodology for
determining this charge inflation factor
is discussed in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28321) and
final rule (79 FR 50374). As we stated
in the CY 2005 OPPS final rule with
comment period (69 FR 65845), we
believe that the use of these charge
inflation factors are appropriate for the
OPPS because, with the exception of the
inpatient routine service cost centers,
hospitals use the same ancillary and
outpatient cost centers to capture costs
and charges for inpatient and outpatient
services.
As noted in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68011), we are concerned that we could
systematically overestimate the OPPS
hospital outlier threshold if we did not
apply a CCR inflation adjustment factor.
Therefore, we proposed to apply the
same CCR inflation adjustment factor
that we proposed to apply for the FY
2015 IPPS outlier calculation to the
CCRs used to simulate the proposed CY
2015 OPPS outlier payments to
determine the fixed-dollar threshold.
Specifically, for CY 2015, we proposed

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to apply an adjustment factor of 0.9813
to the CCRs that were in the April 2014
OPSF to trend them forward from CY
2014 to CY 2015. The methodology for
calculating this proposed adjustment
was discussed in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28321)
and finalized in the FY 2015 IPPS/LTCH
PS final rule (79 FR 50374).
To model hospital outlier payments
for the proposed rule, we applied the
overall CCRs from the April 2014 OPSF
file after adjustment (using the proposed
CCR inflation adjustment factor of
0.9813 to approximate CY 2015 CCRs) to
charges on CY 2013 claims that were
adjusted (using the proposed charge
inflation factor of 1.1146 to approximate
CY 2015 charges). We simulated
aggregated CY 2015 hospital outlier
payments using these costs for several
different fixed-dollar thresholds,
holding the 1.75 multiple threshold
constant and assuming that outlier
payments would continue to be made at
50 percent of the amount by which the
cost of furnishing the service would
exceed 1.75 times the APC payment
amount, until the total outlier payments
equaled 1.0 percent of aggregated
estimated total CY 2015 OPPS
payments. We estimated that a proposed
fixed-dollar threshold of $3,100,
combined with the proposed multiple
threshold of 1.75 times the APC
payment rate, would allocate 1.0
percent of aggregated total OPPS
payments to outlier payments. For
CMHCs, we proposed that, if a CMHC’s
cost for partial hospitalization services,
paid under either APC 0172 or APC
0173, exceeds 3.40 times the payment
rate for APC 0173, the outlier payment
would be calculated as 50 percent of the
amount by which the cost exceeds 3.40
times the APC 0173 payment rate.
Section 1833(t)(17)(A) of the Act,
which applies to hospitals as defined
under section 1886(d)(1)(B) of the Act,
requires that hospitals that fail to report
data required for the quality measures
selected by the Secretary, in the form
and manner required by the Secretary
under 1833(t)(17)(B) of the Act, incur a
2.0 percentage point reduction to their
OPD fee schedule increase factor, that
is, the annual payment update factor.
The application of a reduced OPD fee
schedule increase factor results in
reduced national unadjusted payment
rates that will apply to certain
outpatient items and services furnished
by hospitals that are required to report
outpatient quality data and that fail to
meet the Hospital OQR Program
requirements. For hospitals that fail to
meet the Hospital OQR Program
requirements, we proposed to continue
the policy that we implemented in CY

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2010 that the hospitals’ costs will be
compared to the reduced payments for
purposes of outlier eligibility and
payment calculation. For more
information on the Hospital OQR
Program, we refer readers to section
XIII. of this final rule with comment
period.
Comment: A few commenters
suggested that CMS not increase the
outlier payment fixed dollar threshold
from $2,900 to $3,100. One commenter
suggested that CMS maintain the CY
2014 fixed-dollar threshold of $2,900,
while another commenter suggested that
CMS lower the CY 2014 fixed-dollar
threshold because CMS’ projection of
CY 2014 outlier payments in the
proposed rule estimated that outlier
payments would be below the target of
1.0 percent of OPPS payments.
Response: We set the proposed CY
2015 outlier payment fixed-dollar
threshold at $3,100 so that projected
outlier payments would equal 1.0
percent of total OPPS payments. We
projected that CY 2014 outlier payments
would fall below the 1.0 percent target
with the $2,900 threshold. However, we
estimated that changes to recalibrate
APCs and other payment policy changes
would result in outlier payments greater
than the 1.0 percent target in CY 2015
if we did not increase the fixed-dollar
threshold. As discussed below, based on
the more recent data available for this
final rule with comment period, the CY
2015 outlier payment fixed-dollar
threshold will be $2,775. When
combined with the multiple threshold
of 1.75 times the APC payment rate, this
fixed-dollar threshold will allocate an
estimated 1.0 percent of projected total
OPPS payments to outlier payments for
CY 2015.
3. Final Outlier Calculation
Consistent with historical practice, we
used updated data for this final rule
with comment period. For CY 2015, we
are applying the overall CCRs from the
July 2014 OPSF file after adjustment
(using the CCR inflation adjustment
factor of 0.9821 to approximate CY 2015
CCRs) to charges on CY 2013 claims that
were adjusted (using the charge
inflation factor of 1.1044 to approximate
CY 2015 charges). These are the same
CCR adjustment and charge inflation
factors that were used to set the IPPS
fixed-dollar threshold for the FY 2015
IPPS/LTCH PPS final rule (79 FR 50379
through 50380). We simulated
aggregated CY 2015 hospital outlier
payments using these costs for several
different fixed-dollar thresholds,
holding the 1.75 multiple threshold
constant and assuming that outlier
payments will continue to be made at 50

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percent of the amount by which the cost
of furnishing the service would exceed
1.75 times the APC payment amount,
until the total outlier payments equaled
1.0 percent of aggregated estimated total
CY 2015 OPPS payments. We estimate
that a fixed-dollar threshold of $2,775,
combined with the multiple threshold
of 1.75 times the APC payment rate, will
allocate 1.0 percent of aggregated total
OPPS payments to outlier payments. For
CMHCs, if a CMHC’s cost for partial
hospitalization services, paid under
either APC 0172 or APC 0173, exceeds
3.40 times the payment rate for APC
0173, the outlier payment will be
calculated as 50 percent of the amount
by which the cost exceeds 3.40 times
the APC 0173 payment rate.
H. Calculation of an Adjusted Medicare
Payment From the National Unadjusted
Medicare Payment
The basic methodology for
determining prospective payment rates
for HOPD services under the OPPS is set
forth in existing regulations at 42 CFR
Part 419, Subparts C and D. For this CY
2015 OPPS/ASC final rule with
comment period, the payment rate for
most services and procedures for which
payment is made under the OPPS is the
product of the conversion factor
calculated in accordance with section
II.B. of this final rule with comment
period and the relative payment weight
determined under section II.A. of this
final rule with comment period.
Therefore, the national unadjusted
payment rate for most APCs contained
in Addendum A to this final rule with
comment period (which is available via
the Internet on the CMS Web site) and
for most HCPCS codes to which separate
payment under the OPPS has been
assigned in Addendum B to this final
rule with comment period (which is
available via the Internet on the CMS
Web site) was calculated by multiplying
the CY 2015 scaled weight for the APC
by the CY 2015 conversion factor.
We note that section 1833(t)(17) of the
Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of
the Act, requires that hospitals that fail
to submit data required to be submitted
on quality measures selected by the
Secretary, in the form and manner and
at a time specified by the Secretary,
incur a reduction of 2.0 percentage
points to their OPD fee schedule
increase factor, that is, the annual
payment update factor. The application
of a reduced OPD fee schedule increase
factor results in reduced national
unadjusted payment rates that apply to
certain outpatient items and services
provided by hospitals that are required
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that fail to meet the Hospital OQR
Program (formerly referred to as the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP))
requirements. For further discussion of
the payment reduction for hospitals that
fail to meet the requirements of the
Hospital OQR Program, we refer readers
to section XIII. of this final rule with
comment period.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40971 through 40972), we
demonstrated the steps on how to
determine the APC payments that will
be made in a calendar year under the
OPPS to a hospital that fulfills the
Hospital OQR Program requirements
and to a hospital that fails to meet the
Hospital OQR Program requirements for
a service that has any of the following
status indicator assignments: ‘‘J1,’’ ‘‘P,’’
‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’
or ‘‘V’’ (as defined in Addendum D1 to
the proposed rule), in a circumstance in
which the multiple procedure discount
does not apply, the procedure is not
bilateral, and conditionally packaged
services (status indicator of ‘‘Q1’’ and
‘‘Q2’’) qualify for separate payment. We
are finalizing the methodology as
proposed and demonstrate below how
to calculate final CY 2015 OPPS
payments using the same parameters.
We note that, although blood and
blood products with status indicator
‘‘R’’ and brachytherapy sources with
status indicator ‘‘U’’ are not subject to
wage adjustment, they are subject to
reduced payments when a hospital fails
to meet the Hospital OQR Program
requirements. We note that we are
creating new status indicator ‘‘J1’’ to
reflect the comprehensive APCs
discussed in section II.A.2.e. of this
final rule with comment period. We also
note that we are deleting status
indicator ‘‘X’’ as part of the CY 2015
packaging policy for ancillary services,
discussed in section II.A.3. of this final
rule with comment period.
We did not receive any public
comments on the proposed calculation
of an adjusted Medicare payment.
Therefore, we are finalizing the
calculation of an adjusted Medicare
payment, where appropriate, in the
manner described as follows. Individual
providers interested in calculating the
payment amount that they will receive
for a specific service from the national
unadjusted payment rates presented in
Addenda A and B to this final rule with
comment period (which are available
via the Internet on the CMS Web site)
should follow the formulas presented in
the following steps. For purposes of the
payment calculations below, we refer to
the national unadjusted payment rate
for hospitals that meet the requirements

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of the Hospital OQR Program as the
‘‘full’’ national unadjusted payment
rate. We refer to the national unadjusted
payment rate for hospitals that fail to
meet the requirements of the Hospital
OQR Program as the ‘‘reduced’’ national
unadjusted payment rate. The reduced
national unadjusted payment rate is
calculated by multiplying the reporting
ratio of 0.980 times the ‘‘full’’ national
unadjusted payment rate. The national
unadjusted payment rate used in the
calculations below is either the full
national unadjusted payment rate or the
reduced national unadjusted payment
rate, depending on whether the hospital
met its Hospital OQR Program
requirements in order to receive the full
CY 2015 OPPS fee schedule increase
factor of 2.2 percent.
Step 1. Calculate 60 percent (the
labor-related portion) of the national
unadjusted payment rate. Since the
initial implementation of the OPPS, we
have used 60 percent to represent our
estimate of that portion of costs
attributable, on average, to labor. We
refer readers to the April 7, 2000 OPPS
final rule with comment period (65 FR
18496 through 18497) for a detailed
discussion of how we derived this
percentage. During our regression
analysis for the payment adjustment for
rural hospitals in the CY 2006 OPPS
final rule with comment period (70 FR
68553), we confirmed that this laborrelated share for hospital outpatient
services is appropriate.
The formula below is a mathematical
representation of Step 1 and identifies
the labor-related portion of a specific
payment rate for a specific service.
X is the labor-related portion of the
national unadjusted payment rate.
X = .60 * (national unadjusted payment
rate).
Step 2. Determine the wage index area
in which the hospital is located and
identify the wage index level that
applies to the specific hospital. We note
that under the CY 2015 OPPS policy for
transitioning wage indexes into the new
OMB labor market area delineations, a
hold harmless policy for the wage index
may apply, as discussed in section II.C.
of this final rule with comment period.
The wage index values assigned to each
area reflect the geographic statistical
areas (which are based upon OMB
standards) to which hospitals are
assigned for FY 2015 under the IPPS,
reclassifications through the MGCRB,
section 1886(d)(8)(B) ‘‘Lugar’’ hospitals,
reclassifications under section
1886(d)(8)(E) of the Act, as defined in
§ 412.103 of the regulations, and
hospitals designated as urban under
section 601(g) of Public Law 98–21. (For

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further discussion of the changes to the
FY 2015 IPPS wage indices, as applied
to the CY 2015 OPPS, we refer readers
to section II.C. of this final rule with
comment period.) As we proposed, we
are continuing to apply a wage index
floor of 1.00 to frontier States, in
accordance with section 10324 of the
Affordable Care Act of 2010.
Step 3. Adjust the wage index of
hospitals located in certain qualifying
counties that have a relatively high
percentage of hospital employees who
reside in the county, but who work in
a different county with a higher wage
index, in accordance with section 505 of
Public Law 108–173. Addendum L to
this final rule with comment period
(which is available via the Internet on
the CMS Web site) contains the
qualifying counties and the associated
wage index increase developed for the
FY 2015 IPPS and listed as Table 4J in
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 49854) and available via the
Internet on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html. This
step is to be followed only if the
hospital is not reclassified or
redesignated under section 1886(d)(8) or
section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage
index determined under Steps 2 and 3
by the amount determined under Step 1
that represents the labor-related portion
of the national unadjusted payment rate.
The formula below is a mathematical
representation of Step 4 and adjusts the
labor-related portion of the national
unadjusted payment rate for the specific
service by the wage index.
Xa is the labor-related portion of the
national unadjusted payment rate
(wage adjusted).
Xa = .60 * (national unadjusted payment
rate) * applicable wage index.
Step 5. Calculate 40 percent (the
nonlabor-related portion) of the national
unadjusted payment rate and add that
amount to the resulting product of Step
4. The result is the wage index adjusted
payment rate for the relevant wage
index area.
The formula below is a mathematical
representation of Step 5 and calculates
the remaining portion of the national
payment rate, the amount not
attributable to labor, and the adjusted
payment for the specific service.
Y is the nonlabor-related portion of the
national unadjusted payment rate.
Y = .40 * (national unadjusted payment
rate).
Adjusted Medicare Payment = Y + Xa.
Step 6. If a provider is an SCH, as set
forth in the regulations at § 412.92, or an

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EACH, which is considered to be an
SCH under section 1886(d)(5)(D)(iii)(III)
of the Act, and located in a rural area,
as defined in § 412.64(b), or is treated as
being located in a rural area under
§ 412.103, multiply the wage index
adjusted payment rate by 1.071 to
calculate the total payment.
The formula below is a mathematical
representation of Step 6 and applies the
rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or
EACH) = Adjusted Medicare Payment *
1.071.
We are providing examples below of
the calculation of both the full and
reduced national unadjusted payment
rates that will apply to certain
outpatient items and services performed
by hospitals that meet and that fail to
meet the Hospital OQR Program
requirements, using the steps outlined
above. For purposes of this example, we
used a provider that is located in
Brooklyn, New York that is assigned to
CBSA 35614. This provider bills one
service that is assigned to APC 0019
(Level I Excision/Biopsy). The CY 2015
full national unadjusted payment rate
for APC 0019 is approximately $378.41.
The reduced national unadjusted
payment rate for APC 0019 for a
hospital that fails to meet the Hospital
OQR Program requirements is
approximately $370.84. This reduced
rate is calculated by multiplying the
reporting ratio of 0.980 by the full
unadjusted payment rate for APC 0019.
The FY 2015 wage index for a
provider located in CBSA 35614 in New
York is 1.2973. This is based on the 1year 50/50 transition blend between the
wage index under the old CBSA 35644
(1.3115) and the wage index under the
new CBSA 35614 (1.2831). The laborrelated portion of the full national
unadjusted payment is approximately
$294.55 (.60 * $378.41 * 1.2973). The
labor-related portion of the reduced
national unadjusted payment is
approximately $288.65 (.60 * $370.84 *
1.2973). The nonlabor-related portion of
the full national unadjusted payment is
approximately $151.36 (.40 * $378.41).
The nonlabor-related portion of the
reduced national unadjusted payment is
approximately $148.34 (40 * $370.84).
The sum of the labor-related and
nonlabor-related portions of the full
national adjusted payment is
approximately $445.91 ($294.55 +
$151.36). The sum of the reduced
national adjusted payment is
approximately $436.99 ($288.65 +
$148.34).

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I. Beneficiary Copayments

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1. Background
Section 1833(t)(3)(B) of the Act
requires the Secretary to set rules for
determining the unadjusted copayment
amounts to be paid by beneficiaries for
covered OPD services. Section
1833(t)(8)(C)(ii) of the Act specifies that
the Secretary must reduce the national
unadjusted copayment amount for a
covered OPD service (or group of such
services) furnished in a year in a
manner so that the effective copayment
rate (determined on a national
unadjusted basis) for that service in the
year does not exceed a specified
percentage. As specified in section
1833(t)(8)(C)(ii)(V) of the Act, the
effective copayment rate for a covered
OPD service paid under the OPPS in CY
2006, and in calendar years thereafter,
shall not exceed 40 percent of the APC
payment rate.
Section 1833(t)(3)(B)(ii) of the Act
provides that, for a covered OPD service
(or group of such services) furnished in
a year, the national unadjusted
copayment amount cannot be less than
20 percent of the OPD fee schedule
amount. However, section
1833(t)(8)(C)(i) of the Act limits the
amount of beneficiary copayment that
may be collected for a procedure
performed in a year to the amount of the
inpatient hospital deductible for that
year.
Section 4104 of the Affordable Care
Act eliminated the Part B coinsurance
for preventive services furnished on and
after January 1, 2011, that meet certain
requirements, including flexible
sigmoidoscopies and screening
colonoscopies, and waived the Part B
deductible for screening colonoscopies
that become diagnostic during the
procedure. Our discussion of the
changes made by the Affordable Care
Act with regard to copayments for
preventive services furnished on and
after January 1, 2011, may be found in
section XII.B. of the CY 2011 OPPS/ASC
final rule with comment period (75 FR
72013).
2. OPPS Copayment Policy
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40973), for CY 2015, we
proposed to determine copayment
amounts for new and revised APCs
using the same methodology that we
implemented beginning in CY 2004.
(We refer readers to the November 7,
2003 OPPS final rule with comment
period (68 FR 63458).) In addition, we
proposed to use the same standard
rounding principles that we have
historically used in instances where the
application of our standard copayment

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methodology would result in a
copayment amount that is less than 20
percent and cannot be rounded, under
standard rounding principles, to 20
percent. (We refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66687) in which
we discuss our rationale for applying
these rounding principles.) The
proposed national unadjusted
copayment amounts for services payable
under the OPPS that would be effective
January 1, 2015, were shown in
Addenda A and B to the proposed rule
(which are available via the Internet on
the CMS Web site). As discussed in
section XII.G. of the proposed rule, for
CY 2015, the Medicare beneficiary’s
minimum unadjusted copayment and
national unadjusted copayment for a
service to which a reduced national
unadjusted payment rate applies equals
the product of the reporting ratio and
the national unadjusted copayment, or
the product of the reporting ratio and
the minimum unadjusted copayment,
respectively, for the service.
We note that OPPS copayments may
increase or decrease each year based on
changes in the calculated APC payment
rates due to updated cost report and
claims data, and any changes to the
OPPS cost modeling process. However,
as described in the CY 2004 OPPS/ASC
final rule with comment period, the
development of the copayment
methodology generally moves
beneficiary copayments closer to 20
percent of OPPS APC payments (68 FR
63458 through 63459).
We did not receive any public
comments regarding the proposed
methodology for calculating copayments
for CY 2015. Therefore, for the reasons
set forth in this final rule with comment
period, we are finalizing our proposed
CY 2015 copayment methodology
without modification.
3. Calculation of an Adjusted
Copayment Amount for an APC Group
Individuals interested in calculating
the national copayment liability for a
Medicare beneficiary for a given service
provided by a hospital that met or failed
to meet its Hospital OQR Program
requirements should follow the
formulas presented in the following
steps.
Step 1. Calculate the beneficiary
payment percentage for the APC by
dividing the APC’s national unadjusted
copayment by its payment rate. For
example, using APC 0019,
approximately $75.68 is 20 percent of
the full national unadjusted payment
rate of approximately $378.41. For APCs
with only a minimum unadjusted
copayment in Addenda A and B to this

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Fmt 4701

Sfmt 4700

final rule with comment period (which
are available via the Internet on the
CMS Web site), the beneficiary payment
percentage is 20 percent.
The formula below is a mathematical
representation of Step 1 and calculates
the national copayment as a percentage
of national payment for a given service.
B is the beneficiary payment percentage.
B = National unadjusted copayment for
APC/national unadjusted payment
rate for APC.
Step 2. Calculate the appropriate
wage-adjusted payment rate for the APC
for the provider in question, as
indicated in Steps 2 through 4 under
section II.H. of this final rule with
comment period. Calculate the rural
adjustment for eligible providers as
indicated in Step 6 under section II.H.
of this final rule with comment period.
Step 3. Multiply the percentage
calculated in Step 1 by the payment rate
calculated in Step 2. The result is the
wage-adjusted copayment amount for
the APC.
The formula below is a mathematical
representation of Step 3 and applies the
beneficiary payment percentage to the
adjusted payment rate for a service
calculated under section II.H. of this
final rule with comment period, with
and without the rural adjustment, to
calculate the adjusted beneficiary
copayment for a given service.
Wage-adjusted copayment amount for
the APC = Adjusted Medicare Payment
* B.
Wage-adjusted copayment amount for
the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071) * B.
Step 4. For a hospital that failed to
meet its Hospital OQR Program
requirements, multiply the copayment
calculated in Step 3 by the reporting
ratio of 0.980.
The unadjusted copayments for
services payable under the OPPS that
will be effective January 1, 2015, are
shown in Addenda A and B to this final
rule with comment period (which are
available via the Internet on the CMS
Web site). We note that the national
unadjusted payment rates and
copayment rates shown in Addenda A
and B to this final rule with comment
period reflect the full CY 2015 OPD fee
schedule increase factor discussed in
section II.B. of this final rule with
comment period.
In addition, as noted above, section
1833(t)(8)(C)(i) of the Act limits the
amount of beneficiary copayment that
may be collected for a procedure
performed in a year to the amount of the
inpatient hospital deductible for that
year.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
III. OPPS Ambulatory Payment
Classification (APC) Group Policies
A. OPPS Treatment of New CPT and
Level II HCPCS Codes
CPT and Level II HCPCS codes are
used to report procedures, services,
items, and supplies under the hospital
OPPS. Specifically, CMS recognizes the
following codes on OPPS claims:
• Category I CPT codes, which
describe surgical procedures and
medical services;
• Category III CPT codes, which
describe new and emerging
technologies, services, and procedures;
and
• Level II HCPCS codes, which are
used primarily to identify products,
supplies, temporary procedures, and
services not described by CPT codes.
CPT codes are established by the
American Medical Association (AMA)
and the Level II HCPCS codes are
established by the CMS HCPCS
Workgroup. These codes are updated
and changed throughout the year. CPT
and HCPCS code changes that affect the
OPPS are published both through the
annual rulemaking cycle and through
the OPPS quarterly update Change
Requests (CRs). CMS releases new Level
II HCPCS codes to the public or

recognizes the release of new CPT codes
by the AMA and makes these codes
effective (that is, the codes can be
reported on Medicare claims) outside of
the formal rulemaking process via OPPS
quarterly update CRs. Based on our
review, we assign the new CPT and
Level II HCPCS codes to interim status
indicator (SI) and APC assignments.
These interim assignments are finalized
in the OPPS/ASC final rules. This
quarterly process offers hospitals access
to codes that may more accurately
describe items or services furnished
and/or provides payment or more
accurate payment for these items or
services in a timelier manner than if
CMS waited for the annual rulemaking
process. We solicit public comments on
these new codes and finalize our
proposals related to these codes through
our annual rulemaking process.
We note that, under the OPPS, the
APC assignment determines the
payment rate for an item, procedure, or
service. Items, procedures, or services
not paid separately under the hospital
OPPS are assigned to the appropriate
status indicators. Section XI. of the CY
2015 OPPS/ASC proposed rule provided
a discussion of the various status
indicators used under the OPPS.

66837

Assigning procedures to certain status
indicators would generate separate
payment for the service furnished, while
assignment to other status indicators
would not.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40974), in Table 14 (Table
15 of this final rule with comment
period), we summarized our process for
updating codes through our OPPS
quarterly update CRs, seeking public
comments, and finalizing their
treatment under the OPPS. We noted
that because the payment rates
associated with codes effective July 1
were not available to us in time for
incorporation into the Addenda to the
proposed rule, the Level II HCPCS codes
and the Category III CPT codes
implemented through the July 2014
OPPS quarterly update CR were not
included in Addendum B of the
proposed rule (which is available via
the Internet on the CMS Web site),
while those codes based upon the April
2014 OPPS quarterly update were
included in Addendum B. Nevertheless,
we requested public comments on the
codes included in the July 2014 OPPS
quarterly update and included these
codes in the preamble of the proposed
rule.

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 15—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS CODES
OPPS quarterly update CR

Type of code

Effective date

April l, 2014 .......................

Level II HCPCS Codes .....

April 1, 2014 ......................

CY 2015 OPPS/ASC proposed rule.

July 1, 2014 .......................

Level II HCPCS Codes .....

July 1, 2014 ......................

CY 2015 OPPS/ASC proposed rule.

July 1, 2014 ......................

CY 2015 OPPS/ASC proposed rule.

October 1, 2014 ................

Category I (certain vaccine
codes) and III CPT
codes.
Level II HCPCS Codes .....

October 1, 2014 ................

January 1, 2015 ................

Level II HCPCS Codes .....

January 1, 2015 ................

Category I and III CPT
Codes.

January 1, 2015 ................

CY 2015 OPPS/ASC final
rule with comment period.
CY 2015 OPPS/ASC final
rule with comment period.
CY 2015 OPPS/ASC final
rule with comment period.

This process is discussed in detail
below. We have separated our
discussion into two sections based on
whether we solicited public comments
in the CY 2015 OPPS/ASC proposed
rule or whether we will be soliciting
public comments in this CY 2015 OPPS/
ASC final rule with comment period.
We note that we will be seeking public
comments in this CY 2015 OPPS/ASC
final rule with comment period on the
interim APC and status indicator

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17:07 Nov 07, 2014

Jkt 235001

Comments sought

assignments for new CPT and Level II
HCPCS codes that will be effective
January 1, 2015. In the CY 2015 OPPS/
ASC proposed rule (79 FR 40977), we
also noted that we sought public
comments in the CY 2014 OPPS/ASC
final rule with comment period on the
interim APC and status assignments for
new Level II HCPCS codes that became
effective October 1, 2013, or January 1,
2014. These new and revised codes,
with an effective date of October 1,

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Fmt 4701

Sfmt 4700

When finalized
CY 2015 OPPS/ASC final
rule with comment period.
CY 2015 OPPS/ASC final
rule with comment period.
CY 2015 OPPS/ASC final
rule with comment period.
CY 2016 OPPS/ASC final
rule with comment period.
CY 2016 OPPS/ASC final
rule with comment period.
CY 2016 OPPS/ASC final
rule with comment period.

2013, or January 1, 2014, were flagged
with comment indicator ‘‘NI’’ (New
code, interim APC assignment;
comments will be accepted on the
interim APC assignment for the new
code) in Addendum B to the CY 2014
OPPS/ASC final rule with comment
period to indicate that we were
assigning them an interim payment
status and an APC and payment rate, if
applicable, and were subject to public
comment following publication of the

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

CY 2014 OPPS/ASC final rule with
comment period. We are responding to
public comments and finalizing our
interim OPPS treatment of these codes
in this CY 2015 OPPS/ASC final rule
with comment period.
We received public comments on
some new codes that were assigned to
comment indicator ‘‘NI’’ in Addendum
B of the CY 2014 OPPS/ASC final rule
with comment period. We respond to
those comments in sections III.C. of this
CY 2015 OPPS/ASC final rule with
comment period.
1. Treatment of New CY 2014 Level II
HCPCS and CPT Codes Effective April
1, 2014 and July 1, 2014 for Which We
Solicited Public Comments in the CY
2015 OPPS/ASC Proposed Rule
Through the April 2014 OPPS
quarterly update CR (Transmittal 2903,
Change Request 8653, dated March 11,
2014) and the July 2014 OPPS quarterly
update CR (Transmittal 2971, Change
Request 8776, dated May 23, 2014), we
recognized several new HCPCS codes
for separate payment under the OPPS.
Effective April 1, 2014, we made
effective four new Level II HCPCS codes
and also assigned them to appropriate
interim OPPS status indicators and

APCs. Through the April 2014 OPPS
quarterly update CR, we allowed
separate payment for three of the four
new Level II HCPCS codes. Specifically,
as displayed in Table 15 in the proposed
rule (79 FR 40975), we provided
separate payment for HCPCS codes
C9021, C9739, and C9740. HCPCS code
Q2052 was assigned to status indicator
‘‘N’’ to indicate the service described by
this code is packaged under the OPPS.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40974), we solicited public
comments on the proposed APC and
status indicator assignments, where
applicable, for the Level II HCPCS codes
listed in Table 15 of that proposed rule
(HCPCS codes C9021, C9739, C9740,
and Q2052). We did not receive any
public comments on the proposed APC
and status indicator assignments for
HCPCS codes C9021 and Q2052.
Because HCPCS code Q2052 will only
be billed by pharmacy suppliers, we are
modifying our CY 2015 proposal to
continue to assign HCPCS code Q2052
to status indicator ‘‘N.’’ Instead, for CY
2015, we are reassigning HCPCS code
Q2052 from OPPS status indicator ‘‘N’’
to ‘‘E’’ (Not paid by Medicare when
submitted on outpatient claims (any
outpatient bill type)). We are adopting

as final, without modification, the
proposed APC and status indicator
assignments for HCPCS code C9021 for
CY 2015. We note that we received
some public comments on HCPCS codes
C9739 and C9740, which we address in
section III.C.3.e. of this final rule with
comment period.
Effective for CY 2015, the HCPCS
Workgroup replaced HCPCS code C9021
with HCPCS code J9301. Table 16 below
shows the complete long descriptor for
HCPCS code J9301. Consistent with our
general policy of using permanent
HCPCS codes (that is, ‘‘J’’ codes) rather
than using temporary HCPCS codes
(that is, ‘‘C’’ codes and ‘‘Q’’ codes) for
the reporting of drugs under the OPPS
in order to streamline coding, we are
showing the replacement HCPCS code
for C9021, which is effective January 1,
2015, in Table 16.
In this final rule with comment
period, we are assigning the Level II
HCPCS codes listed in Table 16 below
to the specified APCs and status
indicators for CY 2015. The final
payment rates for these codes, where
applicable, can be found in Addendum
B to this final rule with comment period
(which is available via the Internet on
the CMS Web site).

TABLE 16—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS FOR THE LEVEL II HCPCS CODES THAT WERE
NEWLY IMPLEMENTED IN APRIL 2014
CY 2014
HCPCS
Code

tkelley on DSK3SPTVN1PROD with RULES2

C9021
C9739
C9740
Q2052

..........
..........
..........
..........

CY 2015
HCPCS
Code
J9301 ..........
C9739 ..........
C9740 ..........
Q2052 .........

Injection, obinutuzumab, 10mg ...............................................................................
Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants .........
Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants ..
Services, supplies and accessories used in the home under the Medicare intravenous immune globulin (IVIG) demonstration.

Effective July 1, 2014, we made
effective several new CPT and Level II
HCPCS codes and also assigned them to
appropriate interim OPPS status
indicators and APCs. Through the July
2014 OPPS quarterly update CR, we
allowed separate payment under the
OPPS for four new Level II HCPCS
codes and 17 new Category III CPT
codes effective July 1, 2014.
Specifically, as displayed in Table 16 in
the proposed rule, we allowed separate
payment for HCPCS codes C2644,
C9022, C9134, and Q9970. We note that
HCPCS code Q9970 replaced HCPCS
code C9441 (Injection, ferric
carboxymaltose, 1 mg), beginning July 1,
2014. HCPCS code C9441 was made
effective January 1, 2014, but the code
was deleted June 30, 2014, because it
was replaced with HCPCS code Q9970.
HCPCS code C9441 was granted pass-

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17:07 Nov 07, 2014

Final CY
2015 status
indicator

CY 2015 long descriptor

Jkt 235001

through payment status when the code
was implemented on January 1, 2014.
Because HCPCS code Q9970 describes
the same drug as HCPCS code C9441, in
the CY 2015 OPPS/ASC proposed rule
(79 FR 40975), we proposed to continue
the pass-through payment status for
HCPCS code Q9970, and assign the
HCPCS Q-code to the same APC and
status indicator as its predecessor
HCPCS C-code, as shown in Table 16 of
the proposed rule. Specifically, we
proposed to assign HCPCS code Q9970
to APC 9441 (Inj, Ferric
Carboxymaltose) and status indicator
‘‘G.’’
In addition, the HCPCS Workgroup
established HCPCS code Q9974,
effective July 1, 2014, to replace HCPCS
codes J2271 (Injection, morphine
sulfate, 100mg) and J2275 (Injection,
morphine sulfate (preservative-free

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Fmt 4701

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G .................
T ..................
T ..................
E ..................

Final CY 2015
APC
1476
0162
1564
N/A

sterile solution), per 10 mg). Both of
these HCPCS J-codes were assigned to
status indicator ‘‘N’’ (Packaged
Services). As a result of the
establishment of new HCPCS code
Q9974 as a replacement for HCPCS
codes J2271 and J2275, the payment
indicator for HCPCS codes J2271 and
J2275 was changed to ‘‘E’’ (Not Payable
by Medicare), effective July 1, 2014.
Also, because HCPCS code Q9974
describes the same services that were
described by HCPCS codes J2271 and
J2275, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40975), we
proposed to continue to assign HCPCS
code Q9974 to the same status indicator
as its predecessor HCPCS J-codes.
Specifically, we proposed to assign
HCPCS code Q9974 to status indicator
‘‘N,’’ effective July 1, 2014.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40975), we also proposed to
assign the Level II HCPCS codes listed
in Table 16 to the specified proposed
APCs and status indicators set forth in
Table 16 of the proposed rule. This table
included a complete list of the Level II
HCPCS codes that were made effective
July 1, 2014. The codes that were made
effective July 1, 2014, did not appear in
Addendum B to the proposed rule, and
as a result, the proposed payment rates
along with the proposed status
indicators and proposed APC
assignments, where applicable, for CY
2015 were provided in Table 16 of the
proposed rule.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40975), we solicited public
comments on the proposed status
indicators and APC assignments for the
HCPCS codes that were listed in Table
16 of the proposed rule. We did not
receive any public comments on the
proposed APC and status indicator
assignments for HCPCS codes C9022,
C9134, Q9970, and Q9974 for CY 2015.
Therefore, we are adopting as final,
without modification, the proposed APC
and status indicator assignments for
these four Level II HCPCS codes for CY
2015. We note that we received a public
comment on HCPCS code C2644, which
is addressed in section II.A.2.d.3. of this
final rule with comment period.

The HCPCS Workgroup replaced
HCPCS code C9022 with HCPCS code
J1322, effective January 1, 2015. Because
HCPCS code J1322 describes the same
drug with the same dosage descriptor as
its predecessor code, HCPCS code
C9022, this drug will continue to
receive pass-through payment status in
CY 2015. Therefore, we are assigning
HCPCS code J1322 to the same APC and
status indicator as its predecessor code,
HCPCS code C9022, as shown in Table
17 below.
In addition, the HCPCS Workgroup
replaced HCPCS code C9134 with
HCPCS code J7181, effective January 1,
2015. Because HCPCS code J7181 does
not describe the same dosage descriptor
as its predecessor code, HCPCS code
J7181 has been assigned to a new APC.
Specifically, HCPCS code C9134 had a
dosage descriptor of ‘‘10 i.u.,’’ while
HCPCS code J7181 has a dosage
descriptor of ‘‘i.u.’’ Therefore, effective
January 1, 2015, we are assigning
HCPCS code J7181 to APC 1746, which
is a different APC assignment than the
APC assignment for HCPCS code C9134,
to maintain data consistency for future
rulemakings. Because the predecessor
code, HCPCS code C9134, was granted
pass-through payment status, HCPCS
code J7181 will continue to be assigned
to status indicator ‘‘G’’ for CY 2015.
We also note that the HCPCS
Workgroup replaced HCPCS code

66839

Q9970 with HCPCS code J1439,
effective January 1, 2015. Because
HCPCS code J1439 describes the same
drug with the same dosage descriptor as
its predecessor code, HCPCS code
Q9970, this drug will continue to
receive pass-through payment status in
CY 2015. Therefore, we are assigning
HCPCS code J1439 to the same APC and
status indicator as its predecessor code,
HCPCS code Q9970, as shown in Table
17 below.
Further, the HCPCS Workgroup
replaced HCPCS code Q9974 with
HCPCS code J2274, effective January 1,
2015. Because HCPCS code J2274
describes the same drug with the same
dosage descriptor as its predecessor
code, HCPCS code Q9974, this drug will
continue its packaged status indicator.
Therefore, we are assigning HCPCS code
J2274 to the same status indicator as its
predecessor code, HCPCS code Q9974,
as also shown in Table 17 below.
Table 17 below includes a complete
list of the Level II HCPCS codes that
were made effective July 1, 2014, with
their final status indicators and APC
assignments for CY 2015. The final
payment rates for these codes, where
applicable, can be found in Addendum
B to this final rule with comment period
(which is available via the Internet on
the CMS Web site).

TABLE 17—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS FOR THE LEVEL II HCPCS CODES THAT WERE
NEWLY IMPLEMENTED IN JULY 2014
CY 2014
HCPCS
Code

tkelley on DSK3SPTVN1PROD with RULES2

C2644
C9022
C9134
Q9970
Q9974

..........
..........
..........
..........
..........

CY 2015
HCPCS
Code
C2644
J1322
J7181
J1439
J2274

..........
..........
..........
..........
..........

Brachytherapy source, cesium-131 chloride solution, per millicurie ......................
Injection, elosulfase alfa, 1mg ................................................................................
Factor XIII A-Subunit (Recombinant), Per IU .........................................................
Injection, ferric carboxymaltose, 1mg .....................................................................
Injection, morphine sulfate, preservative-free for epidural or intrathecal use, 10
mg.

In the CY 2015 OPPS/ASC proposed
rule (79 FR 40975), for CY 2015, we
proposed to continue our established
policy of recognizing Category I CPT
vaccine codes for which FDA approval
is imminent and Category III CPT codes
that the AMA releases in January of
each year for implementation in July
through the OPPS quarterly update
process. Under the OPPS, Category I
CPT vaccine codes and Category III CPT
codes that are released on the AMA Web
site in January are made effective in July
of the same year through the July
quarterly update CR, consistent with the
AMA’s implementation date for the
codes. For the July 2014 update, there

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Final CY
2015 status
indicator

CY 2015 long descriptor

Jkt 235001

were no new Category I CPT vaccine
codes.
Through the July 2014 OPPS quarterly
update CR (Transmittal 2971, Change
Request 8776, dated May 23, 2014), we
assigned interim OPPS status indicators
and APCs for 17 of the 27 new Category
III CPT codes that were made effective
July 1, 2014. Specifically, as displayed
in Table 17 in the proposed rule, we
made interim OPPS status indicators
and APC assignments for Category III
CPT codes 0347T, 0348T, 0349T, 0350T,
0355T, 0356T, 0358T, 0359T, 0360T,
0362T, 0364T, 0366T, 0368T, 0370T,
0371T, 0372T, and 0373T. Table 17 of
the proposed rule listed the Category III

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Fmt 4701

Sfmt 4700

U
G
G
G
N

.................
.................
.................
.................
.................

Final CY 2015
APC
2644
1480
1746
9441
N/A

CPT codes that were implemented on
July 1, 2014, along with the proposed
status indicators, proposed APC
assignments, and proposed payment
rates, where applicable, for CY 2015. We
did not receive any public comments on
the proposed APC and status indicator
assignments for Category III CPT codes
0347T, 0348T, 0349T, 0350T, 0356T,
0358T, 0359T, 0360T, 0362T, 0364T,
0366T, 0368T, 0370T, 0371T, 0372T,
and 0373T. Therefore, we are adopting
as final, without modification, the
proposed APC and status indicator
assignments for these 16 CPT codes for
CY 2015. We received a public comment
on CPT codes 0335T, which we address

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

in section III.C.2.6. of this final rule
with comment period. We also received
specific public comments on CPT codes
0351T, 0352T, 0353T, and 0354T, which
are addressed in section II.C.6.b. of this

final rule with comment period. Table
18 below lists the Category III CPT
codes that were implemented in July
2014, along with their final status
indicators and APC assignments for CY

2015. The final payment rates for these
codes, where applicable, can be found
in Addendum B to this final rule with
comment period (which is available via
the Internet on the CMS Web site).

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 18—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2014
CY 2014
CPT code

CY 2015
CPT code

CY 2015 long descriptor

0347T ..........
0348T ..........

0347T ..........
0348T ..........

0349T ..........

0349T ..........

0350T ..........

0350T ..........

0351T ..........

0351T ..........

0352T ..........

0352T ..........

0353T ..........
0354T ..........

0353T ..........
0354T ..........

0355T ..........

0355T ..........

0356T ..........

0356T ..........

0358T ..........

0358T ..........

0359T ..........

0359T ..........

0360T ..........

0360T ..........

0361T ..........

0361T ..........

0362T ..........

0362T ..........

0363T ..........

0363T ..........

0364T ..........

0364T ..........

0365T ..........

0365T ..........

0366T ..........

0366T ..........

0367T ..........

0367T ..........

0368T ..........

0368T ..........

0369T ..........

0369T ..........

Placement of interstitial device(s) in bone for radiostereometric analysis (RSA) ..
Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).
Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies),
(includes shoulder, elbow and wrist, when performed).
Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies),
(includes hip, proximal femur, knee and ankle, when performed).
Optical coherence tomography of breast or axillary lymph node, excised tissue,
each specimen; real time intraoperative.
Optical coherence tomography of breast or axillary lymph node, excised tissue,
each specimen; interpretation and report, real time or referred.
Optical coherence tomography of breast, surgical cavity; real time intraoperative
Optical coherence tomography of breast, surgical cavity; interpretation and report, real time or referred.
Gastrointestinal tract imaging, intraluminal (eg, capsule endoscopy), colon, with
interpretation and report.
Insertion of drug-eluting implant (including punctal dilation and implant removal
when performed) into lacrimal canaliculus, each.
Bioelectrical impedance analysis whole body composition assessment, supine
position, with interpretation and report.
Behavior identification assessment, by the physician or other qualified health
care professional, face-to-face with patient and caregiver(s), includes administration of standardized and non-standardized tests, detailed behavioral history, patient observation and caregiver interview, interpretation of test results,
discussion of findings and recommendations with the primary guardian(s)/
caregiver(s), and preparation of report.
Observational behavioral follow-up assessment, includes physician or other
qualified health care professional direction with interpretation and report, administered by one technician; first 30 minutes of technician time, face-to-face
with the patient.
Observational behavioral follow-up assessment, includes physician or other
qualified health care professional direction with interpretation and report, administered by one technician; each additional 30 minutes of technician time,
face-to-face with the patient (List separately in addition to code for primary
service).
Exposure behavioral follow-up assessment, includes physician or other qualified
health care professional direction with interpretation and report, administered
by physician or other qualified health care professional with the assistance of
one or more technicians; first 30 minutes of technician(s) time, face-to-face
with the patient.
Exposure behavioral follow-up assessment, includes physician or other qualified
health care professional direction with interpretation and report, administered
by physician or other qualified health care professional with the assistance of
one or more technicians; each additional 30 minutes of technician(s) time,
face-to-face with the patient (List separately in addition to code for primary
procedure).
Adaptive behavior treatment by protocol, administered by technician, face-toface with one patient; first 30 minutes of technician time.
Adaptive behavior treatment by protocol, administered by technician, face-toface with one patient; each additional 30 minutes of technician time (List separately in addition to code for primary procedure).
Group adaptive behavior treatment by protocol, administered by technician,
face-to-face with two or more patients; first 30 minutes of technician time.
Group adaptive behavior treatment by protocol, administered by technician,
face-to-face with two or more patients; each additional 30 minutes of technician time (List separately in addition to code for primary procedure).
Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; first 30 minutes of patient face-to-face time.
Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; each additional 30 minutes of patient face-to-face time (List separately in addition to
code for primary procedure).

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Final CY
2015 status
indicator

Final CY 2015
APC

Q1
Q1

0420
0261

Q1

0261

Q1

0261

N

N/A

B

N/A

N
B

N/A
N/A

T

0142

Q1

0698

Q1

0340

V

0632

V

0632

N

N/A

V

0632

N

N/A

S

0322

N

N/A

S

0325

N

N/A

S

0322

N

N/A

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TABLE 18—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2014—Continued
CY 2014
CPT code

CY 2015
CPT code

CY 2015 long descriptor

0370T ..........

0370T ..........

0371T ..........

0371T ..........

0372T ..........

0372T ..........

0373T ..........

0373T ..........

0374T ..........

0374T ..........

Family adaptive behavior treatment guidance, administered by physician or
other qualified health care professional (without the patient present).
Multiple-family group adaptive behavior treatment guidance, administered by
physician or other qualified health care professional (without the patient
present).
Adaptive behavior treatment social skills group, administered by physician or
other qualified health care professional face-to-face with multiple patients.
Exposure adaptive behavior treatment with protocol modification requiring two or
more technicians for severe maladaptive behavior(s); first 60 minutes of technicians’ time, face-to-face with patient.
Exposure adaptive behavior treatment with protocol modification requiring two or
more technicians for severe maladaptive behavior(s); each additional 30 minutes of technicians’ time face-to-face with patient (List separately in addition
to code for primary procedure).

Further, in the CY 2015 OPPS/ASC
proposed rule, we solicited public
comments on the proposed CY 2015
status indicators, APC assignments, and
payment rates for the Level II HCPCS
codes and the Category III CPT codes
that were made effective April 1, 2014,
and July 1, 2014. These codes were
listed in Tables 15, 16, and 17 of the
proposed rule. We also proposed to
finalize the status indicator and APC
assignments and payment rates for these
codes, if applicable, in this CY 2015
OPPS/ASC final rule with comment
period. Because the new Category III
CPT and Level II HCPCS codes that
became effective for July were not
available to us in time for incorporation
into the Addenda to the proposed rule,
our policy is to include the codes, the
proposed status indicators, proposed
APCs (where applicable), and proposed
payment rates (where applicable) in the
preamble of the proposed rule, but not
in the Addenda to the proposed rule.
These codes were listed in Tables 16
and 17, respectively, of the proposed
rule. We also proposed to incorporate
these codes into Addendum B to this CY
2015 OPPS/ASC final rule with
comment period, which is consistent
with our annual OPPS update policy.
The Level II HCPCS codes implemented
or modified through the April 2014
OPPS update CR and displayed in Table
15 were included in Addendum B to the
proposed rule (which is available via
the Internet on the CMS Web site),
where the proposed CY 2015 payment
rates for these codes were also shown.
We did not receive any additional
public comments on this process. The
final APC and status indicator
assignments and payment rates, if
applicable, for the Level II HCPCS codes
and the Category III CPT codes that were
implemented or modified through the
April 2014 or July 2014 OPPS update

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CR can be found in Tables 16, 17, and
18, or in Addendum B to this final rule
with comment period (which is
available via the Internet on the CMS
Web site).
2. Process for New Level II HCPCS
Codes That Became Effective October 1,
2014 and New CPT and Level II HCPCS
Codes That Will Become Effective
January 1, 2015 for Which We Are
Soliciting Public Comments in This CY
2015 OPPS/ASC Final Rule with
Comment Period
As has been our practice in the past,
we incorporate those new Category I
and III CPT codes and new Level II
HCPCS codes that are effective January
1 in the final rule with comment period
updating the OPPS for the following
calendar year. These codes are released
to the public via the CMS HCPCS (for
Level II HCPCS codes) and AMA Web
sites (for CPT codes), and also through
the January OPPS quarterly update CRs.
In the past, we also have released new
Level II HCPCS codes that are effective
October 1 through the October OPPS
quarterly update CRs and incorporated
these new codes in the final rule with
comment period updating the OPPS for
the following calendar year. For CY
2015, these codes are flagged with
comment indicator ‘‘NI’’ in Addendum
B to this OPPS/ASC final rule with
comment period to indicate that we are
assigning them an interim payment
status which is subject to public
comment. In addition, the CPT and
Level II HCPCS codes that will become
effective January 1, 2015, are flagged
with comment indicator ‘‘NI’’ in
Addendum B to this CY 2015 OPPS/
ASC final rule with comment period.
Specifically, the status indicator and the
APC assignment and payment rate, if
applicable, for all such codes flagged
with comment indicator ‘‘NI’’ are open

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Final CY
2015 status
indicator

Final CY 2015
APC

S

0324

S

0324

S

0325

S

0323

N

N/A

to public comment in this final rule
with comment period, and we will
respond to these public comments in
the OPPS/ASC final rule with comment
period for the next year’s OPPS/ASC
update. In the CY 2015 OPPS/ASC
proposed rule (79 FR 40977), we
proposed to continue this process for
CY 2015. Specifically, for CY 2015, we
proposed to include in Addendum B to
the CY 2015 OPPS/ASC final rule with
comment period the following new
HCPCS codes:
• New Level II HCPCS codes effective
October 1, 2014, that would be
incorporated in the October 2014 OPPS
quarterly update CR;
• New Category I and III CPT codes
effective January 1, 2015, that would be
incorporated in the January 2015 OPPS
quarterly update CR; and
• New Level II HCPCS codes effective
January 1, 2015, that would be
incorporated in the January 2015 OPPS
quarterly update CR.
As stated above, the October 1, 2014
and January 1, 2015 codes are flagged
with comment indicator ‘‘NI’’ in
Addendum B to this CY 2015 OPPS/
ASC final rule with comment period to
indicate that we have assigned the codes
an interim OPPS payment status for CY
2015. We are inviting public comments
on the interim status indicator and APC
assignments and payment rates for these
codes, if applicable, that will be
finalized in the CY 2016 OPPS/ASC
final rule with comment period.
3. Process for Soliciting Public
Comments for New and Revised CPT
Codes Released by the AMA
We generally incorporate the new
CPT codes that are effective January 1 in
the OPPS/ASC final rule with comment
period. We establish interim APC and
status indicator assignments for these
new codes for the coming year, and

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request comments on the interim
assignments in the OPPS/ASC final rule
with comment period. Similarly, we
establish interim APC and status
indicator assignments for existing CPT
codes that have substantial revision to
their code descriptors that necessitate a
change in the current APC assignments,
and request comments on the interim
assignments in the OPPS/ASC final rule
with comment period. In both cases, we
assign these new and revised codes to
OPPS comment indicator ‘‘NI’’ (New
code for the next calendar year or
existing code with substantial revision
to its code descriptor in the next
calendar year as compared to current
calendar year, interim APC assignment;
comments will be accepted on the
interim APC assignment for the new
code.) in the OPPS/ASC final rule with
comment period. We respond to
comments and finalize the APC and
status indicator assignments for these
CPT codes in the following year’s OPPS/
ASC final rule with comment period.
a. Current Process for Accepting
Comments on New and Revised CPT
Codes for a Year
As described above, under the
hospital OPPS, our current process for
both new CPT codes and existing CPT
codes with substantial revisions to the
code descriptors that are released by the
AMA for use beginning January 1 is to
flag these codes with comment indicator
‘‘NI’’ in Addendum B to the OPPS/ASC
final rule with comment period to
indicate that the codes are new for the
calendar year and have been assigned
interim APCs and status indicators, and
that we are accepting public comments
on the interim APC and status indicator
assignments. We address public
comments received and finalize the APC
and status indicator assignments for the
codes in the next year’s OPPS/ASC final
rule with comment period. For example,
the new CPT codes that were effective
January 1, 2014, were assigned to
comment indicator ‘‘NI’’ in Addendum
B to the CY 2014 OPPS/ASC final rule
with comment period. We respond to
public comments received on the CY
2014 OPPS/ASC final rule with
comment period and finalize the APC
and status indicator assignments for
these codes in this CY 2015 OPPS/ASC
final rule with comment period. We
include the final APC and status
indicator assignments for these codes in
Addendum B to this final rule with
comment period (which is available via
the Internet on the CMS Web site).
Many stakeholders have expressed
concern with the process we use to
recognize new and revised CPT codes.
They believe that CMS should publish

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proposed APC and status indicator
assignments for the new and revised
CPT codes that will be effective January
1 in the OPPS/ASC proposed rule for
that calendar year, and request public
comments prior to finalizing the
assignments. Further, the stakeholders
believe that seeking public input on the
APC and status indicator assignments
for these new and revised codes would
assist CMS in assigning the CPT codes
to appropriate APCs. Similar concerns
have been expressed regarding our
process for assigning interim payment
values for revalued, and new and
revised codes, under the Medicare
Physician Fee Schedule (MPFS). We
refer readers to the CY 2015 MPFS
proposed rule for a detailed discussion
of this issue as it relates to the MPFS (79
FR 40359 through 40364).
Like the MPFS, the OPPS and the
ASC payment system rely principally
upon the Current Procedural
Terminology (CPT®) coding system
maintained by the AMA to identify
specific services for billing and payment
purposes. CPT is the standard code set
adopted under the Health Insurance
Portability and Accountability Act of
1996 (HIPAA) for outpatient services.
The AMA CPT Editorial Panel’s coding
cycle occurs concurrently with our
calendar year rulemaking cycle for the
OPPS and the ASC payment system.
However, the OPPS/ASC proposed rules
are published prior to the publication of
the CPT codes that are made public in
the Fall with a January 1 effective date,
and we are currently unable to include
these codes in the OPPS/ASC proposed
rules. Consequently, we establish in the
final rule with comment period interim
APC and status indicator assignments
for new and revised CPT codes that
have an effective date of January 1, and
we make payment based on those
interim designations for one year, while
accepting public comments on the final
rule with comment period. We then
respond to those public comments
received and make final APC and status
indicator assignments in the next year’s
final rule with comment period.
b. Modification of Process for New and
Revised CPT Codes That Are Effective
January 1
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40977 through 40979), we
proposed to make changes in the
process we use to establish APC
assignments and status indicators for
new and revised codes. We proposed
that, for new and revised CPT codes that
we receive from the AMA’s CPT
Editorial Panel too late for inclusion in
the proposed rule for a year, we would
delay adoption of the new and revised

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codes for that year, and instead, adopt
coding policies and payment rates that
conform, to the extent possible, to the
policies and payment rates in place for
the previous year. We proposed to adopt
these conforming coding and payment
policies on an interim basis pending the
result of our specific proposals for status
indicator and APC assignments for these
new and revised codes through notice
and comment rulemaking in the OPPS/
ASC proposed rule for the following
year. Because the changes in CPT codes
are effective on January 1 of each year,
and CMS would not have established
status indicator or APC assignments for
these new or revised codes, it would not
be practicable for Medicare to use those
CPT codes. In this circumstance, we
proposed to create HCPCS G-codes to
describe the predecessor codes for any
codes that were revised or deleted as
part of the annual CPT coding changes,
but that we did not receive in time to
include proposed APC and status
indicator assignments in the proposed
rule. However, if certain CPT codes are
revised in a manner that would not
affect the cost of inputs (for example, a
minor change to CPT code descriptors),
we would use these revised codes and
continue to assign those codes to their
current APC. For example, under this
proposed process, if a single CPT code
was separated into two codes and we
did not receive those codes until May
2015, we would assign each of those
CPT codes to status indicator ‘‘B’’ in the
final rule with comment period, to
indicate that an alternate code is
recognized under the OPPS. Hospitals
could not use those two new CPT codes
to bill Medicare for outpatient services
the first year after the CPT effective date
of the codes. Instead, we would create
a HCPCS G-code with the same
description as the single predecessor
CPT code, and continue to use the same
APC and status indicator assignment for
the new G-code during the year. We
would propose APC and status indicator
assignments for the two new CPT codes
during rulemaking in CY 2016, accept
and respond to public comments on the
proposed assignments, and establish
final APC and status indicator
assignments for the codes in the final
rule for payment beginning in CY 2017.
For new codes that describe wholly
new services, as opposed to new or
revised codes that describe services for
which APC and status indicator
assignments are already established, we
would make every effort to work with
the AMA’s CPT Editorial Panel to
ensure that we received the codes in
time to propose payment rates in the
proposed rule. However, if we do not

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receive the code for a wholly new
service in time to include proposed APC
and status indicator assignments in the
proposed rule for a year, we would need
to establish interim APC and status
indicator assignments for the initial year
because there would be no predecessor
code we could use as a reference to
establish a G-code in order to continue
current payment policies for such a
service. We proposed to continue to
establish the initial APC and status
indicator assignments for these wholly
new services as interim final
assignments, and to follow our current
process to solicit and respond to public
comments and finalize the APC and
status indicator assignments in the
subsequent year.
We recognize that the use of HCPCS
G-codes may place an administrative
burden on those providers that bill for
services under the OPPS and the ASC
payment system. However, the proposed
use of G-codes would permit us to
propose and accept public comment on
the APC and status indicator
assignments for the vast majority of new
and revised codes before they take
effect. We are hopeful that the AMA’s
CPT Editorial Panel ultimately will be
able to adjust its timelines and
processes so that most, if not all, of the
annual coding changes can be addressed
in the proposed rule before the new and
revised CPT codes take effect on January
1. If the AMA’s CPT Editorial
Committee can make adjustments to its
schedule, we would not need to use Gcodes as described above for the
purpose of maintaining outdated coding
and APC and status indicator
assignments for a year until we can
include proposed APC and status
indicator assignments for the new and
revised codes in a proposed rule. We
proposed to implement the revised CMS
process for establishing APC and status
indicator assignments for new and
revised codes for CY 2016. However, we
indicated in the proposed rule that we
would consider alternative
implementation dates if that would
allow time for the AMA’s CPT Editorial
Panel to adjust its schedule in order to
avoid the necessity to use numerous
HCPCS G-codes.
In summary, in conjunction with the
proposals presented in the CY 2015
MPFS proposed rule to revise the
process used to address new, revised,
and potentially misvalued codes under
the MPFS, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40977 through
40979), we proposed to include in the
OPPS/ASC proposed rule the proposed
APC and status indicator assignments
for the vast majority of new and revised
CPT codes before they are used for

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payment purposes under the OPPS and
ASC payment system. We would
address new and revised CPT codes for
the upcoming year that are available in
time for the proposed rule by proposing
APC and status indicator assignments
for the codes. Otherwise, we will delay
adoption of the new and revised codes
for a year while using methods
(including creating G-codes that
describe the predecessor codes) to
maintain the existing APC and status
indicator assignments until the
following year when we would include
proposed assignments for the new and
revised codes in the proposed rule. We
proposed to follow this revised process
except in the case of a new CPT code
that describes a wholly new service
(such as a new technology or new
surgical procedure) that has not
previously been addressed under the
OPPS. For codes that describe wholly
new services for which we do not
receive timely information from the
AMA, we proposed to establish interim
APC and status indicator assignments in
the OPPS/ASC final rules with comment
period, as is our current process. The
proposed revised process would
eliminate our current practice of
assigning interim APC and status
indicators for the vast majority of new
and revised CPT codes that take effect
on January 1 each year. We invited
public comments on this proposal. We
indicated in the proposed rule that we
were specifically interested in receiving
public comments on the following
topics:
• Is this proposal preferable to the
present process? Are there other
alternatives?
• If we were to implement this
proposal, is it better to move forward
with the changes or is more time needed
to make the transition and, therefore,
implementation should be delayed
beyond CY 2016?
• Are there alternatives other than the
use of HCPCS G-codes that would allow
us to address the annual CPT code
changes through notice and comment
rather than interim final rulemaking?
• Is the process we have proposed for
wholly new services appropriate? How
should we define new services?
• Are there any classes of services,
other than new services, that should
remain on an interim final schedule?
Comment: The majority of the
commenters supported the proposal to
modify the current process of
recognizing new and revised CPT codes
because it would provide an
opportunity for the public to comment
on specific APC and status indicator
assignments prior to those assignments
being finalized. However, several

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66843

commenters disagreed with our
proposed implementation date of CY
2016 and requested that CMS work with
the AMA to determine an appropriate
implementation date. Other commenters
suggested that CMS finalize the
proposal but urged CMS to work with
the AMA on an appropriate timeline
that considers the AMA’s CPT and RUC
(Specialty Society Relative Value
Update Committee) meeting dates as
well as CMS’ OPPS and MPFS
regulation schedule. The AMA
supported the proposal but requested
that CMS finalize the proposal for CY
2017 rather than CY 2016 because the
CPT codes for the CY 2016 update are
almost complete.
Response: We appreciate the
commenters’ support for our proposal.
We believe that publishing our
proposed status indicator and APC
assignments for the new and revised
CPT codes in the proposed rule would
alleviate some concerns expressed by
stakeholders in the past that some of our
interim APC assignments were not
appropriate, and that the APC
assignment process could be improved
if we had the benefit of public
comments before adopting final APC
and status indicator assignments for
new and revised codes. This new
process of proposing and requesting
public comments before finalizing the
APC and status indicator assignments
for new and revised codes allows both
CMS and stakeholders the benefit of
public notice and comment prior to the
use of the new and revised codes for
payment purposes. When we receive
information on the new and revised
codes from the AMA in time to include
proposals for new and revised codes in
the proposed rule before the codes are
effective the following January 1, the
revised process allows public notice and
comment before finalizing APC and
status indicator assignments for the
codes during the calendar year before
the CPT codes become effective. In
addition, this new process eliminates
the need to make interim APC and
status indicator assignments for new
and revised CPT codes, which has been
unpopular among some providers
because the interim assignments are
used for payment for a year before we
address public comments and make any
appropriate changes to an APC or status
indicator assignment in the subsequent
year’s final rule.
Although the AMA and several
commenters requested that we modify
our proposal by finalizing this new
process for the CY 2017 OPPS update,
we disagree with this recommendation.
We believe the new process that permits
an opportunity for public comment on

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proposed APC and status indicator
assignments for the vast majority of new
and revised codes before they are
finalized and used for payment
purposes will be beneficial to CMS and
to hospitals and other stakeholders, and
we see no reason to delay
implementation of this policy change.
Therefore, beginning with the CY 2016
OPPS update, we will publish proposed
APC and status indicator assignments
for any new and revised CPT codes for
January 1, 2016 that are publicly
released by the AMA in time for us to
consider them for inclusion in the
OPPS/ASC proposed rule. After review
of the public comments received on the
proposed rule, we will finalize the
status indicator and APC assignments
for those new and revised CPT codes in
the CY 2016 OPPS/ASC final rule.
Because the APC assignments would be
final, we would no longer request
comments in the OPPS/ASC final rules
for these new and revised CPT codes
that are included in the proposed rule.
For any new and revised codes released
too late for us to consider them for
inclusion in the CY 2016 OPPS/ASC
proposed rule, we will create HCPCS Gcodes that reflect the same
description(s), and APC and status
indicator assignments, as their
predecessor codes. These HCPCS Gcodes will be used during CY 2016, and
then we will include proposals for the
corresponding new and revised codes
and APC and status indicator
assignments in the CY 2017 OPPS/ASC
proposed rule.
Comment: Most commenters opposed
the use of temporary HCPCS G-codes
and requested that CMS not implement
the HCPCS G-code process if it finalizes
the proposal to change to process for
new and revised CPT codes. The
commenters recommended not
establishing temporary HCPCS G-codes
because these codes would be extremely
burdensome for providers to use. The
commenters stated that establishing
HCPCS G-codes for services or
procedures that are already described by
existing CPT codes would be too
confusing for hospitals, physicians, and
other third party insurers to accurately
claim costs for these procedures, and
that using two different sets of codes for
the same procedure or service could
result in erroneous claims.
Response: As described above, we
plan to publish the new and revised
CPT codes that are publicly available
and provided to us in time for
evaluation in the CY 2016 OPPS/ASC
proposed rule. Specifically, in the CY
2016 OPPS/ASC proposed rule, we
expect to publish new and revised CPT
codes that would be effective January 1,

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2016, with the proposed status indicator
and APC assignments, and request
public comments on these proposed
assignments as long as we receive them
in time for inclusion in the proposed
rule. We would finalize the status
indicator and APC assignments for these
new and revised CPT codes in the CY
2016 OPPS/ASC final rule.
However, for those new and revised
CPT codes that are not publicly
available in time for the OPPS/ASC
proposed rule, we will create HCPCS Gcodes that mirror the predecessor CPT
codes and retain the current APC and
status indicator assignments for a year
until we can include proposed status
indicator and APC assignments in the
following year’s proposed rule. These
HCPCS G-codes will be assigned to
comment indicator ‘‘NI’’ to indicate that
the codes are new and open for
comment for 60 days after display of the
OPPS/ASC final rule with comment
period. This is consistent with our
current policy of seeking public
comments on new CPT and Level II
HCPCS codes with interim APC and
status indicator assignments that were
not previously published in the
proposed rule. For new and revised
codes, we recognize that there is a tradeoff between the benefit of considering
public comments on the proposed APC
and status indicator assignments before
they take effect and the potential
confusion caused by the use of HCPCS
G-codes. We anticipate that the use of
HCPCS G-codes will be largely a
temporary solution or may not be
necessary in the OPPS, and we expect
to work closely with the AMA to
minimize the need for them. We note
that, under the MPFS, we generally do
not develop values for new and revised
CPT codes until we receive
recommendations provided by the
AMA’s RUC. In contrast, under the
OPPS, we use only the publicly
available new and revised CPT codes
and their descriptors to develop APC
and status indicator assignments. As
such, we anticipate that the need to use
HCPCS G-codes under the OPPS will be
less frequent than under the MPFS.
After consideration of the public
comments we received, we are
finalizing our proposal. For the new and
revised CPT codes that we receive
timely from the AMA’s CPT Editorial
Panel, we are finalizing our proposal to
include these codes that would be
effective January 1 in the OPPS/ASC
proposed rules, along with proposed
APC and status indicator assignments
for them, and to finalize the APC and
status indicator assignments in the
OPPS/ASC final rules beginning with
the CY 2016 OPPS update. For those

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new and revised CPT codes that we
receive too late for inclusion in the
OPPS/ASC proposed rule, we are
finalizing our proposal to create and use
HCPCS G-codes that mirror the
predecessor CPT codes and retain the
current APC and status indicator
assignments for a year until we can
propose APC and status indicator
assignments in the following year’s
rulemaking cycle. We note that even if
we find that we need to create HCPCS
G-codes in place of certain CPT codes
for the MPFS proposed rule, we do not
anticipate that these HCPCS G-codes
will always be necessary for OPPS
purposes. We will make every effort to
include proposed APC and status
indicator assignments for all new and
revised CPT codes that the AMA makes
publicly available in time for us to
include them in the proposed rule, and
to avoid the resort to HCPCS G-codes
and the resulting delay in utilization of
the most current CPT codes. We also are
finalizing our proposal to make interim
APC and status indicator assignments
for CPT codes that are not available in
time for the proposed rule and that
describe wholly new services (such as
new technologies or new surgical
procedures), solicit public comments,
and finalize the specific APC and status
indicator assignments for those codes in
the following year’s final rule.
B. OPPS Changes—Variations Within
APCs
1. Background
Section 1833(t)(2)(A) of the Act
requires the Secretary to develop a
classification system for covered
hospital outpatient department services.
Section 1833(t)(2)(B) of the Act provides
that the Secretary may establish groups
of covered OPD services within this
classification system, so that services
classified within each group are
comparable clinically and with respect
to the use of resources. In accordance
with these provisions, we developed a
grouping classification system, referred
to as Ambulatory Payment
Classifications (APCs), as set forth in
§ 419.31 of the regulations. We use
Level I and Level II HCPCS codes to
identify and group the services within
each APC. The APCs are organized such
that each group is homogeneous both
clinically and in terms of resource use.
Using this classification system, we
have established distinct groups of
similar services. We also have
developed separate APC groups for
certain medical devices, drugs,
biologicals, therapeutic
radiopharmaceuticals, and
brachytherapy devices that are not

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packaged into the payment for the
procedure.
We have packaged into the payment
for each procedure or service within an
APC group the costs associated with
those items and services that are
typically ancillary and supportive to a
primary diagnostic or therapeutic
modality and, in those cases, are an
integral part of the primary service they
support. Therefore, we do not make
separate payment for these packaged
items or services. In general, packaged
items and services include, but are not
limited to the items and services listed
in § 419.2(b) of the regulations. A
further discussion of packaged services
is included in section II.A.3. of this final
rule with comment period.
In CY 2008, we implemented
composite APCs to provide a single
payment for groups of services that are
typically performed together during a
single clinical encounter and that result
in the provision of a complete service
(72 FR 66650 through 66652). For CY
2014, we provided composite APC
payments for nine categories of services:
• Mental Health Services Composite
(APC 0034)
• Cardiac Electrophysiologic Evaluation
and Ablation Composite (APC 8000)
• Low Dose Rate (LDR) Prostate
Brachytherapy Composite (APC 8001)
• Ultrasound Composite (APC 8004)
• CT and CTA without Contrast
Composite (APC 8005)
• CT and CTA with Contrast Composite
(APC 8006)
• MRI and MRA without Contrast
Composite (APC 8007)
• MRI and MRA with Contrast
Composite (APC 8008)
• Extended Assessment & Management
Composite (APC 8009)
A further discussion of composite
APCs is included in section II.A.2.f. of
this final rule with comment period. We
note that, as a consequence of the new
comprehensive APC policy, APC 8000
(Cardiac Electrophysiologic Evaluation
and Ablation Composite) is being
deleted.
Under the OPPS, we generally pay for
hospital outpatient services on a rateper-service basis, where the service may
be reported with one or more HCPCS
codes. Payment varies according to the
APC group to which the independent
service or combination of services is
assigned. Each APC relative payment
weight represents the hospital cost of
the services included in that APC,
relative to the hospital cost of the
services included in APC 0634 (Hospital
Clinic Visits). The APC relative payment
weights are scaled to APC 0634 because
it is the hospital clinic visit APC and

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clinic visits are among the most
frequently furnished services in the
hospital outpatient setting.
Section 1833(t)(9)(A) of the Act
requires the Secretary to review, no less
than annually, and revise the APC
groups, the relative payment weights,
and the wage and other adjustments to
take into account changes in medical
practice, changes in technology, the
addition of new services, new cost data,
and other relevant information and
factors. Section 1833(t)(9)(A) of the Act
also requires the Secretary to consult
with an expert outside advisory panel
composed of an appropriate selection of
representatives of providers to review
(and advise the Secretary concerning)
the clinical integrity of the APC groups
and the relative payment weights (the
Panel recommendations for specific
services for the CY 2015 OPPS and our
responses to them are discussed in the
relevant specific sections throughout
this final rule with comment period).
Finally, section 1833(t)(2) of the Act
provides that, subject to certain
exceptions, the items and services
within an APC group cannot be
considered comparable with respect to
the use of resources if the highest cost
for an item or service in the group is
more than 2 times greater than the
lowest cost for an item or service within
the same group (referred to as the ‘‘2
times rule’’). The statute authorizes the
Secretary to make exceptions to the 2
times rule in unusual cases, such as
low-volume items and services (but the
Secretary may not make such an
exception in the case of a drug or
biological that has been designated as an
orphan drug under section 526 of the
Federal Food, Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2)
of the Act and § 419.31 of the
regulations, we annually review the
items and services within an APC group
to determine, with respect to
comparability of the use of resources, if
the cost of the highest cost item or
service within an APC group is more
than 2 times greater than the cost of the
lowest cost item or service within that
same group. In making this
determination, we consider only those
HCPCS codes that are significant based
on the number of claims. We note that,
for purposes of identifying significant
procedure codes for examination under
the 2 times rule, we consider procedure
codes that have more than 1,000 single
major claims or procedure codes that
have both greater than 99 single major
claims and contribute at least 2 percent
of the single major claims used to
establish the APC cost to be significant

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(75 FR 71832). This longstanding
definition of when a procedure code is
significant for purposes of the 2 times
rule was selected because we believe
that a subset of 1,000 claims (or less
than 1,000 claims) is negligible within
the set of approximately 100 million
single procedure or single session
claims we use for establishing costs.
Similarly, a procedure code for which
there are fewer than 99 single bills and
which comprises less than 2 percent of
the single major claims within an APC
will have a negligible impact on the
APC cost. In the CY 2015 OPPS/ASC
proposed rule (79 FR 40981), for CY
2015, we proposed to make exceptions
to this limit on the variation of costs
within each APC group in unusual
cases, such as low-volume items and
services.
In the CY 2015 OPPS/ASC proposed
rule, we identified the APCs with
violations of the 2 times rule for CY
2015 (79 FR 40980). Therefore, we
proposed changes to the procedure
codes assigned to these APCs in
Addendum B to the CY 2015 OPPS/ASC
proposed rule. We noted that
Addendum B did not appear in the
printed version of the Federal Register
as part of the CY 2015 OPPS/ASC
proposed rule. Rather, it was published
and made available via the Internet on
the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html. In
these cases, to eliminate a violation of
the 2 times rule or to improve clinical
and resource homogeneity, we proposed
to reassign these procedure codes to
new APCs that contain services that are
similar with regard to both their clinical
and resource characteristics. In many
cases, the proposed procedure code
reassignments and associated APC
reconfigurations for CY 2015 included
in the proposed rule are related to
changes in costs of services that were
observed in the CY 2013 claims data
newly available for CY 2015 ratesetting.
We also proposed changes to the status
indicators for some procedure codes
that were not specifically and separately
discussed in the proposed rule. In these
cases, we proposed to change the status
indicators for these procedure codes
because we believe that another status
indicator would more accurately
describe their payment status from an
OPPS perspective based on the policies
that we proposed for CY 2015. In
addition, we proposed to rename
existing APCs or create new clinical
APCs to complement the proposed
procedure code reassignments.
Addendum B to the CY 2015 OPPS/ASC

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proposed rule identified with a
comment indicator ‘‘CH’’ those
procedure codes for which we proposed
a change to the APC assignment or
status indicator, or both, that were
initially assigned in the April 2014
Addendum B Update (available via the
Internet on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html). In
contrast, Addendum B to this final rule
with comment period (available via the
Internet on the CMS Web site) identifies
with the ‘‘CH’’ comment indicator the
final CY 2015 changes compared to the
HCPCS codes’ status as reflected in the
October 2014 Addendum B update.
3. Exceptions to the 2 Times Rule
As discussed earlier, we may make
exceptions to the 2 times rule limit on
the variation of costs within each APC
group in unusual cases such as lowvolume items and services. Taking into
account the APC changes that we
proposed for CY 2015, we reviewed all
of the APCs to determine which APCs
would not meet the requirements of the
2 times rule. We used the following
criteria to evaluate whether to propose
exceptions to the 2 times rule for
affected APCs:
• Resource homogeneity;
• Clinical homogeneity;
• Hospital outpatient setting
utilization;
• Frequency of service (volume); and
• Opportunity for upcoding and code
fragments.
Based on the CY 2013 claims data
available for the CY 2015 OPPS/ASC
proposed rule, we found 9 APCs with
violations of the 2 times rule. We
applied the criteria as described above
to identify the APCs that we proposed
to make exceptions for under the 2
times rule for CY 2015, and identified
9 APCs that met the criteria for an
exception to the 2 times rule based on
the CY 2013 claims data available for
the proposed rule. We did not include
in that determination those APCs where
a 2 times rule violation was not a
relevant concept, such as APC 0375
(Ancillary Outpatient Services when
Patient Expires), which has an APC cost
set based on multiple procedure claims.
Therefore, we only identified those
APCs, including those with criteriabased costs, such as device-dependent
APCs, with violations of the 2 times
rule. For a detailed discussion of these
criteria, we refer readers to the April 7,
2000 OPPS final rule with comment
period (65 FR 18457 and 18458).
We note that, for cases in which a
recommendation by the Panel appears
to result in or allow a violation of the

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2 times rule, we generally accept the
Panel’s recommendation because those
recommendations are based on explicit
consideration (that is, a review of the
latest OPPS claims data and group
discussion of the issue) of resource use,
clinical homogeneity, site of service,
and the quality of the claims data used
to determine the APC payment rates.
Table 18 of the proposed rule (79 FR
40981) listed the 9 APCs that we
proposed to make exceptions for under
the 2 times rule for CY 2015 based on
the criteria cited above and claims data
submitted between January 1, 2013, and
December 31, 2013, and processed on or
before December 31, 2013. For the final
rule with comment period, we stated
that we intend to use claims data for
dates of service between January 1,
2013, and December 31, 2013, that were
processed on or before June 30, 2014,
and updated CCRs, if available.
Therefore, after considering the public
comments we received on the CY 2015
OPPS/ASC proposed rule and making
changes to APC assignments based on
those comments, we analyzed the CY
2013 claims data used for this final rule
with comment period to identify the
APCs with violations of the 2 times rule.
Based on the final CY 2013 claims data,
we found 12 APCs with violations of the
2 times rule for this final rule with
comment period, which is 3 more APCs
that violated the 2 times rule compared
to those indicated in the proposed rule.
We applied the criteria as described
earlier to identify the APCs that are
exceptions to the 2 times rule for CY
2015, and identified three new APCs
that meet the criteria for exception to
the 2 times rule for this final rule with
comment period, but that did not meet
the criteria using proposed rule claims
data. Specifically, we found that the
following three new APCs violated the
2 times rule:
• APC 0095 (Cardiac Rehabilitation);
• APC 0388 (Discography); and
• APC 0420 (Level III Minor
Procedures).
After consideration of the public
comments we received and our review
of the CY 2013 costs from hospital
claims and cost report data available for
this final rule with comment period, we
are finalizing our proposals with some
modifications. Specifically, we are
finalizing our proposal to except 7 of the
9 proposed APCs from the 2 times rule
for CY 2015: APCs 0057, 0066, 0330,
0433, 0450, 0634, and 0661. In contrast,
we are not finalizing our proposal to
except 2 of the 9 proposed APCs from
the 2 times rule: APC 0012 (Level I
Debridement & Destruction) and APC
0015 (Level II Debridement &
Destruction). Our data analysis for this

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final rule with comment period revealed
that these two APCs no longer violate
the 2 times rule. Table 19 below lists 10
APCs that we are excepting from the 2
times rule for CY 2015 based on the
criteria above and a review of updated
claims data. We note that, for cases in
which a recommendation by the HOP
Panel appears to result in or allow a
violation of the 2 times rule, we
generally accept the Panel’s
recommendation because those
recommendations are based on explicit
consideration of resource use, clinical
homogeneity, site of service, and the
quality of the claims data used to
determine the APC payment rates. The
geometric mean costs for hospital
outpatient services for these and all
other APCs that were used in the
development of this final rule with
comment period can be found on the
CMS Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/
Hospital-Outpatient-Regulations-andNotices.html.

TABLE 19—FINAL APC EXCEPTIONS
TO THE 2 TIMES RULE FOR CY 2015
CY 2015
APC
0057
0066
0095
0330
0388
0420
0433
0450
0634
0661

.......
.......
.......
.......
.......
.......
.......
.......
.......
.......

CY 2015 APC Title
Bunion Procedures.
Level V Radiation Therapy.
Cardiac Rehabilitation.
Dental Procedures.
Discography.
Level III Minor Procedures.
Level II Pathology.
Level I Minor Procedures.
Hospital Clinic Visits.
Level III Pathology.

The final costs for hospital outpatient
services for these and all other APCs
that were used in the development of
this final rule with comment period can
be found on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html.
C. OPPS APC-Specific Policies
1. Cardiovascular and Vascular Services:
Cardiac Telemetry (APC 0213)
For CY 2015, we proposed to reassign
CPT code 93229 (External mobile
cardiovascular telemetry with
electrocardiographic recording,
concurrent computerized real time data
analysis and greater than 24 hours of
accessible ECG data storage (retrievable
with query) with ECG triggered and
patient selected events transmitted to a
remote attended surveillance center for
up to 30 days; technical support for
connection and patient instructions for
use, attended surveillance, analysis and

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transmission of daily and emergent data
reports as prescribed by a physician or
other qualified health care professional)
from APC 0209 (Level II Extended EEG,
Sleep, and Cardiovascular Studies),
with a proposed rule payment rate of
approximately $239 to APC 0213 (Level
I Extended EEG, Sleep, and
Cardiovascular Studies), with a
proposed payment rate of approximately
$175.
Comment: One commenter opposed
CMS’ proposal to reassign CPT code
93229 to APC 0213 and stated that the
hospital costs used to set the CY 2015
proposed payment rate is based on
faulty claims data, which include
miscoded claims reporting the service
submitted by hospitals. The commenter
indicated that based on its internal
analysis of the CY 2013 hospital claims
data, which were used as the basis for
the CY 2015 proposed APC
reassignment, several hospitals reported
costs of under $100 for the procedure
described by CPT code 93229. The
commenter stated that the service
described by CPT code 93229 involves
the use of sophisticated technology
requiring attended surveillance on a 24hour, 7 days a week basis by a
technician for up to 30 days. According
to the commenter, this particular service
requires resources that are greater than
$100. The commenter further explained
that the service described by CPT code
93229 requires up to 30 days of
electrocardiogram (ECG) monitoring
through an external device worn by the
patient at home that captures, stores,
and transmits ECG data in real-time
through wireless technology to a
receiving or monitoring center (the
hospital outpatient facility). These data
are then reviewed by certified cardiac
technicians and the ordering physician
is provided with daily reports. The
commenter added that this procedure is
performed primarily (approximately 90
percent of the time) by independent
diagnostic testing facilities (IDTFs) and
infrequently performed by hospitals,
typically under arrangements with
IDTFs. The commenter believed that the
CY 2015 proposed payment rate of
approximately $175 for APC 0213 is
significantly lower than the CY 2014
MPFS payment rate of $669. The
commenter stated that the actual cost of
providing the service is approximately
$795. Therefore, the commenter
recommended that CMS either reassign
CPT code 93229 to APC 0435 (Level III
Extended EEG, Sleep, and
Cardiovascular Studies), which has a
proposed payment rate of approximately
$853, or establish a new APC for
outpatient cardiac telemetry services

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that accurately reflects the costs
associated with providing this service.
Response: CPT code 93229 became
effective January 1, 2009. We believe
that 5 years is sufficient time to
understand what procedure CPT code
93229 describes and how to
appropriately report this service on
hospital claims. Based on our analysis
of the CY 2013 hospital outpatient
claims data used for this final rule with
comment period, we are unable to
determine whether hospitals are
miscoding the claims reporting this
service. For all APCs whose payment
rates are based upon relative payment
weights, we note that the quality and
accuracy of reported units and charges
influence the geometric mean costs that
are the basis for our payment rates,
especially the geometric mean costs for
low volume items and services. Beyond
our standard OPPS trimming
methodology (described in section
II.A.2. of this final rule with comment
period) that we apply to those claims
that have passed various types of claims
processing edits, it is not our general
policy to determine the accuracy of
hospital coding and charging practices
for the purposes of ratesetting (75 FR
71838). We rely on hospitals to
accurately report all of the services
provided to beneficiaries using the
established HCPCS and CPT codes that
appropriately describe the procedures
performed in accordance with their
code descriptors and the CPT Editorial
Panel’s and CMS’ instructions, as
applicable, and to include these charges
and costs on their Medicare hospital
cost report appropriately. In addition,
we do not specify the methodologies
that hospitals must use to set charges for
this or any other service.
We recognize that the MPFS pays
separately for CPT code 93229.
However, the MPFS and the OPPS are
very different payment systems. Each
system is established under a different
set of statutory and regulatory
principles, and the policies established
under the MPFS do not necessarily
affect the payment policies under the
OPPS. Moreover, we do not agree with
the commenter that CPT code 93229
should be reassigned to APC 0435.
Based on the claims data available for
this final rule with comment period, we
believe that APC 0213 is the most
appropriate APC to reassign CPT code
93229 based on the clinical
homogeneity and resource costs in
relation to the other procedures
assigned to this APC. Our analysis of the
latest hospital outpatient CY 2013
claims data shows a final geometric
mean cost of approximately $105 for
CPT code 93229 based on 3,505 single

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66847

claims (out of 3,579 total claims), which
is not inconsistent with the geometric
mean cost of approximately $183 for
APC 0213, which is the lowest cost APC
in the extended EEG, sleep, and
cardiovascular studies series of APCs.
In response to the commenter’s
concern regarding miscoding of hospital
claims reporting the service described
by CPT code 93229, we remind
hospitals that CPT code 93229 is not the
appropriate procedure code to use to
report Holter monitoring (CPT codes
93224 through 93227), or event
monitoring (CPT codes 93268 through
93278) procedures. CPT code 93229
should be used to report continuous
outpatient cardiovascular monitoring
that includes up to 30 consecutive days
of real-time cardiac monitoring. In
particular, the 2014 CPT Code Book
describes the procedure described by
CPT code 93229 as a mobile
cardiovascular telemetry service and
defines it as:
‘‘Mobile cardiovascular telemetry
(MCT): Continuously records the
electrocardiographic rhythm from
external electrodes placed on the
patient’s body. Segments of the ECG
data are automatically (without patient
intervention) transmitted to a remote
surveillance location by cellular or
landline telephone signal. The segments
of the rhythm, selected for transmission,
are triggered automatically (MCT device
algorithm) by rapid and slow heart rates
or by the patient during a symptomatic
episode. There is continuous real time
data analysis by preprogrammed
algorithms in the device and attended
surveillance of the transmitted rhythm
segments by a surveillance center
technician to evaluate any arrhythmias
and to determine signal quality. The
surveillance center technician reviews
the data and notifies the physician or
other qualified health care professional
depending on the prescribed criteria’’
(2014 CPT Professional Edition; page
549).
We expect that hospitals would only
report CPT code 93229 on hospital
claims for providing the mobile
telemetry service that is described
above.
In summary, after consideration of the
public comment we received, we are
finalizing our CY 2015 proposal,
without modification, to reassign CPT
code 93229 to APC 0213 for CY 2015.
Consistent with our policy of reviewing
APC assignments annually, we will
reevaluate the cost of CPT code 93229
and its APC assignment for the CY 2016
rulemaking.

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2. Gastrointestinal (GI) Services: Upper
GI Procedures (APCs 0142, 0361, 0419,
and 0422)
In the CY 2014 OPPS/ASC final rule
with comment period, we assigned CPT
codes 43211 (Esophagoscopy, flexible
transoral; with endoscopic mucosal
resection), and 43254
(Esophagogastroduodenoscopy, flexible,
transoral; with endoscopic mucosal
resection) to APC 0141 (Level I Upper
GI Procedures) on an interim basis. In
addition, we assigned CPT code 43240
(Upper gastrointestinal endoscopy
including esophagus, stomach, and
either the duodenum and/or jejunum as
appropriate; with transmural drainage of
pseudocyst) to APC 0419 (Level II
Upper GI Procedures), CPT code 91035
(Esophagus, gastroesophageal reflux
test; with mucosal attached telemetry ph
electrode placement, recording, analysis
and interpretation) to APC 0361 (Level
II Alimentary Tests), and CPT code
0355T (Gastrointestinal tract imaging,
intraluminal (eg, capsule endoscopy),
colon, with interpretation and report) to
APC 0142 (Level I Small Intestine
Endoscopy).
For CY 2015, we proposed to reassign
CPT codes 43211 and 43254 from APC
0141 to APC 0419. We also proposed to
continue to assign CPT code 43240 to
APC 0419; CPT code 91035 to APC
0361; and CPT code 0355T to APC 0142.
Comment: Several commenters
requested that CMS reassign CPT codes
43211 and 43254 from APC 0141 to APC
0419 in response to the CY 2014 OPPS/
ASC final rule with comment period.
The commenters believed that the
reassignment would be consistent with
the resource and clinical homogeneity
principles used to assign services to
appropriate classification groupings. In
response to the CY 2015 OPPS/ASC
proposed rule, the same commenters
supported CMS’ proposal to reassign
CPT codes 43211 and 43254 to APC
0419 for the CY 2015 OPPS update, and
applauded CMS for considering the
suggestions made in response to the
commenters’ concerns. One commenter
requested that CMS consider reassigning
CPT codes 43211 and 43254 from APC
0141 to APC 0422 (Level III Upper GI
Procedures) instead of from APC 0141 to
APC 0419 as proposed. Based on an
analysis of the CY 2013 OPPS claims
data performed by the commenter, the
commenter believed that the geometric
mean costs associated with endoscopic
mucosal resection (EMR) procedures are
more closely aligned with the geometric
mean cost of APC 0422 than APC 0419.
Response: EMR CPT codes 43211 and
43254 became effective January 1, 2014.
As with all new codes, our policy has

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been to assign the service to an APC
based on input from a variety of sources,
including but not limited to, a review of
the clinical similarity of the service in
comparison to existing procedures;
input from CMS medical advisors;
information from interested specialty
societies; and a review of all other
information available to us. Based on
the complexity of these procedures and
input from our medical advisors, we
believe that APC 0419 appropriately
reflects the clinical homogeneity and
resource costs associated with
performing EMR procedures. Therefore,
after consideration of the public
comments we received, we are
finalizing our CY 2015 proposal,
without modification, to reassign CPT
codes 43211 and 43254 from APC 0141
to APC 0419 for the CY 2015 OPPS
update. As we do every year, we will
review our claims data for these services
for the CY 2016 OPPS rulemaking.
Comment: Several commenters
expressed concern with CMS’ proposal
to continue to assign CPT code 43240 to
APC 0419, and requested that CMS
reassign the CPT code to APC 0384 (GI
Procedures with Stents) based on the
clinical similarity of the service to other
procedures assigned to this APC.
Response: Based on our analysis of
the latest hospital outpatient claims data
used for this final rule with comment
period, we agree with the commenters
that a more appropriate APC
reassignment is necessary for CPT code
43240. However, we believe that the
most appropriate APC reassignment is
APC 0422 (Level III Upper GI
Procedures) rather than APC 0384. Our
claims data show a geometric mean cost
of approximately $1,574 for CPT code
43240 based on 44 single claims (out of
142 total claims), which is more
comparable to the geometric mean cost
of approximately $1,987 for APC 0422
than to the geometric mean cost of
approximately $3,294 for APC 0384.
Therefore, after consideration of the
public comments we received, we are
modifying our proposal regarding the
APC reassignment of CPT code 43240.
Specifically, we are reassigning CPT
code 43240 from APC 0419 to APC 0422
for CY 2015.
Comment: Several commenters
expressed concern regarding the
inadequate payment rate for CPT code
91035 under Medicare’s ASC payment
system, and requested that CMS
reassign CPT code 91035 from APC
0361 to APC 0142 as a means to increase
the payment rate in the ASC setting. The
commenters noted that APC 0142
includes other capsule-based
procedures that are clinically similar to
the procedure described by CPT code

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91035, such as the procedure described
by CPT code 91112 (Gastrointestinal
transit and pressure measurement,
stomach through colon, wireless
capsule, with interpretation and report).
The commenters further explained that
the procedures described by CPT codes
91035 and 91112 both involve the use
of a capsule to collect pH and other data
from the patient’s gastrointestinal tract
over a period of several days.
Response: Based on our analysis of
the latest hospital outpatient claims data
used for this final rule with comment
period, we believe that CPT code 91035
is appropriately assigned to APC 0361 to
ensure adequate payment for the service
in any hospital outpatient setting. Our
claims data show a geometric mean cost
of approximately $466 for CPT code
91035 based on 1,272 single claims (out
of 5,099 total claims), while claims data
for CPT code 91112 show a geometric
mean cost of approximately $774 based
on 353 single claims (out of 412 total
claims). The geometric mean cost of
APC 0361 is approximately $341 and
the geometric mean cost of APC 0142 is
approximately $884, which is almost
twice the geometric cost of CPT code
91035. In addition, assigning CPT code
91035 to APC 0142 would create a
violation of the 2 times rule within APC
0142 because the geometric mean cost of
the highest cost significant procedure
assigned to APC 0142 (CPT code 44361,
with a geometric mean cost of
approximately $1,019) is 2.2 times the
geometric mean cost of CPT code 91035.
Therefore, APC 0142 would not be an
appropriate assignment for CPT code
91035. We are finalizing our CY 2015
proposal to continue to assign CPT code
91035 to APC 0361.
Comment: In response to the CY 2014
OPPS/ASC final rule with comment
period, several commenters requested
that CMS assign CPT code 0355T, which
became effective July 1, 2014, to APC
0142 for the CY 2015 OPPS update. The
commenters believed that the procedure
described by CPT code 0355T is similar
to the procedures described by existing
GI capsule endoscopy CPT codes 91110
(Gastrointestinal tract imaging,
intraluminal (eg, capsule endoscopy),
esophagus through ileum, with
interpretation and report), 91111
(Gastrointestinal tract imaging,
intraluminal (eg, capsule endoscopy),
esophagus with interpretation and
report), and 91112 (Gastrointestinal
transit and pressure measurement,
stomach through colon, wireless
capsule, with interpretation and report),
which are all assigned to APC 0142.
Response: As published in Table 17 of
the CY 2015 OPPS/ASC proposed rule
(79 FR 40976), we proposed to continue

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to assign this new code to APC 0142.
We agree with the commenters that GI
endoscopy CPT codes 0355T, 91110,
91111, and 91112 are clinically similar.
Therefore, we are finalizing our CY 2015
proposal, without modification, to
continue to assign CPT code 0355T to
APC 0142, As a result, all four GI
endoscopy procedures described by CPT
codes 0355T, 91110, 91111, and 91112
will be assigned to APC 0142 for the CY
2015 OPPS update.
We remind hospitals that because the
payment rates associated with new
codes that become effective July 1 are
not available to us in time for
incorporation into the Addenda to the
proposed rule, the Level II HCPCS codes
and the Category III CPT codes
implemented through the July 2014
OPPS quarterly update CR were not
included in Addendum B to the
proposed rule (which is available via
the Internet on the CMS Web site).
However, we listed the codes and their
proposed APC assignments in the
preamble of the proposed rule.
The final CY 2015 payment rate for all
of the CPT codes discussed can be
found in Addendum B to this CY 2015
OPPS/ASC final rule with comment
period (which is available via the
Internet on the CMS Web site).
3. Genitourinary Services

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a. Gynecologic Procedures (APCs 0188,
0189, 0192, 0193, and 0202)
For the CY 2014 OPPS update, we
made several changes to specific APC
assignments, which included the female
reproductive APCs; APC 0192, APC
0193, and APC 0195. These proposed
changes were listed in Addendum B to
the CY 2014 OPPS/ASC proposed rule
(which is available via the Internet on
the CMS Web site). With respect to
these three APCs, based on claims data
available for the CY 2014 OPPS/ASC
proposed rule, only APC 0193 showed
a violation of the 2 times rule. We note
that, under the OPPS, we may make
exceptions to the 2 times rule based on
the variation of costs within each APC
group in unusual cases such as lowvolume items and services. In the case
of APC 0193, we believed that it was
necessary to make an exception to the
2 times rule for the CY 2014 OPPS
update because this APC sufficiently
reflected the clinical and resource
coherence of the Level V female
reproductive procedures.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40982), we discussed our
proposal to make further changes to the
existing female reproductive APCs; APC
0188, APC 0189, APC 0191, APC 0192,
APC 0193, APC 0195, and APC 0202

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based on a presentation made at the
March 10, 2014 Panel meeting.
Specifically, one presenter expressed
concern regarding the reassignment of
the female reproductive procedures
within existing APCs 0192 (Level IV
Female Reproductive Procedures), 0193
(Level V Female Reproductive
Procedures), and 0195 (Level VI Female
Reproductive Procedures) that became
effective with the CY 2014 OPPS
update. The presenter stated that the
proposed changes would compromise
beneficiary access to pelvic floor repair
procedures, and urged the Panel to
request that CMS reconsider its
packaging policy for the procedures
assigned to APCs 0193 and 0195 and
allow stakeholders the opportunity to
work with CMS to appropriately
reassign these procedures to accurately
account for the clinical complexity
associated with providing these
services. In addition, the presenter
requested that CMS delay the
conversion of existing APC 0202 (Level
VII Female Reproductive Procedures) to
a C–APC to allow for further study of
the complexity of pelvic floor repair
procedures. After review of the
information provided by the presenter
and examination of the hospital
outpatient claims data available for the
CY 2015 OPPS/ASC proposed rule, the
Panel did not make any
recommendations regarding any of the
female reproductive APCs.
For the CY 2015 OPPS update, based
on our review of the latest hospital
outpatient claims data available for the
CY 2015 OPPS/ASC proposed rule,
there were no violations of the 2 times
rule within any of the female
reproductive APCs (79 FR 40982).
However, we proposed to restructure
the female reproductive APCs to more
appropriately reflect the resource and
clinical characteristics of the procedures
assigned to each APC. The proposed
restructuring resulted in the use of five
APCs for the CY 2015 OPPS update, as
compared to the seven APCs used for
the CY 2014 OPPS update. We believe
that the proposed five-level APC
structure will provide more accurate
payments for the female reproductive
procedures furnished to Medicare
beneficiaries.
Tables 21 and 22 of the proposed rule
(79 FR 40983) showed the current CY
2014 and proposed CY 2015 female
reproductive APCs. Specifically, Table
21 showed the female reproductive
APCs, APC titles, and their status
indicator assignments for CY 2014,
while Table 22 showed the proposed
female reproductive APCs, APC titles,
and their status indicator assignments
for CY 2015. In the proposed rule, we

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noted that one of the five levels of the
female reproductive APCs, APC 0202, is
proposed to be converted to a C–APC.
We refer readers to section II.A.2.e. of
this final rule with comment period for
further discussion of our comprehensive
APC policy.
In addition, for CY 2015, we proposed
to consolidate the two existing
hysteroscopy APCs; APC 0190 (Level I
Hysteroscopy) and APC 0387 (Level II
Hysteroscopy). Specifically, we
proposed to delete APC 0387 and to
reassign the procedures currently
assigned to this APC to APC 0190. In
conjunction with this proposed
reassignment, we proposed to rename
APC 0190 from ‘‘Level II Hysteroscopy’’
to ‘‘Hysteroscopy.’’ Based on the
hospital outpatient claims data available
for the CY 2015 OPPS/ASC proposed
rule, we believe that the two-leveled
structure of the hysteroscopy APCs is no
longer necessary because the singleleveled hysteroscopy APC sufficiently
reflects the resources and clinical
similarities of all the hysteroscopic
procedures. We note that, for CY 2014,
the payment rates for APCs 0190 and
0387 are $1,763 and $2,818,
respectively. For CY 2015, the proposed
payment rate for APC 0190 was
approximately $2,014.
Comment: Many commenters
supported CMS’ proposal to reassign
several of the female reproductive
procedures to APC 0202 and stated that
the proposed restructuring of these
APCs more appropriately reflects
clinical and resource homogeneity
among similar procedures.
Response: We appreciate the
commenters’ support.
Comment: Some commenters opposed
CMS’ proposal to reassign CPT code
57155 (Insertion of uterine tandem and/
or vaginal ovoids for clinical
brachytherapy) from APC 0193 (Level IV
Female Reproductive Procedures) to
APC 0192 (Level III Female
Reproductive Procedures) for the CY
2015 OPPS update. According to the
commenters, the proposed CY 2015
OPPS payment rate of approximately
$501 for CPT code 57155 is significantly
lower than the CY 2014 OPPS payment
rate of approximately $1,375, which
represents a 63-percent reduction in the
payment for this service. The
commenters noted that the APC
assignment for this procedure has varied
between APC 0192 and APC 0193 since
the inception of the code, and
recommended that CMS reexamine the
procedures assigned to APCs 0192,
0193, and 0202 to ensure that the
proposed structure of these APCs
provides the most appropriate payment
for the services assigned to each APC.

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Some commenters requested that CMS
continue to assign CPT code 57155 to
APC 0193 for the CY 2015 update. The
commenters also recommended that
CMS closely monitor medical practice
patterns to ensure beneficiary access to
this treatment if CMS finalizes the
proposal to reassign CPT code 57155 to
APC 0192.
Response: CPT code 57155 became
effective January 1, 2002. Since that
time, CPT code 57155 has been assigned
to either APC 0192 or APC 0193. For
CYs 2002, 2003, and 2006 through 2013,
CPT code 57155 was assigned to APC
0192. For CYs 2004, 2005, and 2014,
CPT code 57155 was assigned to APC
0193. Consistent with CMS’ statutory
requirement under section 1833(t)(9) of
the Act to review and revise APC
assignments annually and to construct
the most appropriate APC groupings as
well as, to the extent desirable, correct
any 2 times rule violations, we
evaluated the resource consumption and
clinical coherence associated with the
female reproductive APCs for the CY
2015 OPPS update. Based on an analysis
of the latest hospital outpatient claims
data for this final rule with comment
period, CPT code 57155 has a geometric
mean cost of approximately $731 based
on 858 single claims (out of 2,461 total
claims). The geometric mean costs for
the significant procedures assigned to
APC 0192 range between approximately
$398 (for CPT code 56605) and $731 (for
CPT code 57155). Therefore, we believe
that CPT code 57155 is appropriately
assigned to APC 0192 based on the
comparable resource costs associated
with the other procedures assigned to
this APC and are not making any
changes to our proposal for this final
rule with comment period. We note that
APC 0192 had a proposed payment rate
of approximately $501, which was
based on hospital outpatient claims data
submitted between January 1, 2013, and
December 31, 2013, and processed on or
before December 31, 2013. For this final
rule with comment period, the final
payment rate for APC 0192 is
approximately $487, which is based on
hospital outpatient claims data
submitted between January 1, 2013, and
December 31, 2013, and processed on or
before June 30, 2014.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to reassign CPT code
57155 from APC 0193 to APC 0192 for
CY 2015.
Comment: Several commenters
requested that CMS not finalize the
proposal to consolidate the two existing
hysteroscopy APCs. Instead, the
commenters suggested that CMS

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maintain the two-leveled structure of
the hysteroscopy APCs to differentiate
the less costly diagnostic hysteroscopic
services from the more resourceintensive hysteroscopic procedures. One
commenter stated that the
reconfiguration of these APCs for CY
2015 is premature and warrants more
discussion prior to finalizing a proposal
regarding this issue. Another
commenter believed that it is not
clinically coherent to combine the
diagnostic hysteroscopy procedure
described by CPT code 58555 with a
significant therapeutic procedure, such
as a hysteroscopic myomectomy
described by CPT code 58561. The
commenter explained that all of the
gynecology specialty societies
recommend minimally invasive
alternatives to hysterectomy when
available. In addition, the commenter
believed that the proposal to consolidate
the hysteroscopy APCs would provide
incentives for hospitals to encourage
treatment that is not the standard of
care.
Response: Based on a review of the
latest hospital outpatient claims data for
the CY 2015 OPPS update, we believe
that restructuring and consolidating the
gynecology APCs is prudent in order to
improve the comparability of resource
and clinical similarity of all the
hysteroscopy procedures assigned to a
specific APC. In addition, we disagree
with the commenter’s assertion
regarding hospitals’ incentives to
deliver substandard care for the
purposes of financial gain. We believe
that hospitals and physicians will offer
their patients the appropriate care and
treatment, which may or may not
employ an expensive medical device.
Comment: Several commenters
suggested that modifications to the
proposed APC assignments for certain
related procedures be considered if CMS
finalizes the proposal to restructure and
consolidate the female reproductive
APCs. One commenter suggested that
CMS reassign CPT codes 58561 and
58563 to APC 0202 instead of APC 0190
based on the clinical similarities in
relation to the other procedures
assigned to APC 0202.
Response: Based on input from our
medical advisors, we agree with the
commenter that APC 0202 is the most
appropriate APC assignment for CPT
codes 58561 and 58563 based on their
clinical similarity in relation to the
other procedures assigned to this APC.
We note that APC 0202 is designated as
a C–APC for the CY 2015 OPPS update.
Further information on C–APCs can be
found in section II.A.2.e. of this final
rule with comment period.

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Comment: One commenter suggested
that CMS reconsider the proposal to
consolidate the hysteroscopy APCs and
establish two separate APCs for female
reproductive procedures; one for the
more resource-intensive hysteroscopic
procedures and another for the lowercost and less complex hysteroscopic
procedures. Specifically, the commenter
recommended assigning the following
seven resource-intensive female
reproductive procedures to a higherpaying APC, with a geometric mean cost
ranging between approximately $3,010
and $4,350: CPT codes 58353, 58356,
58561, 58563, 58565, 58559, and 58560.
The commenter also suggested assigning
the following four less complex female
reproductive procedures to a lowerpaying APC, with a geometric mean cost
ranging between approximately $1,758
and $2,099: CPT codes 58555, 58558,
58562, and 58579. Another commenter
believed that the necessary resources
required to provide the service
described by CPT code 58555 are
significantly less than the resources
required to provide the service
described by CPT code 58561. The
commenter stated that the resource costs
for providing the services described by
CPT codes 58353, 58561, 58563, and
58565 are similar and recommended
that these procedures be assigned to the
same APC.
Response: We reviewed our latest
hospital outpatient claims data used for
this final rule with comment period for
all of the hysteroscopic procedures.
Based on our review and after
consideration of the public comments
we received, we are modifying our
proposal regarding the proposed APC
assignments for several of the
hysteroscopic procedures for the CY
2015 OPPS update. Specifically, we are
deleting APC 0190 and reassigning the
eight procedures that were proposed to
be assigned to this APC to APC 0188,
APC 0193, or APC 0202.
In summary, after consideration of the
public comments received, we are
finalizing our proposals with some
modifications. For the hysteroscopy
procedure APCs, we proposed to
reassign all of the procedures assigned
to APC 0387 to APC 0190, which
resulted in a one-leveled APC
containing all of the hysteroscopy
procedures. Specifically, we proposed
to delete APC 0387 (Level II
Hysteroscopy), and to rename APC 0190
‘‘Hysteroscopy.’’ However, based on our
analysis of the hospital outpatient
claims data available for this final rule
with comment period, we are modifying
our proposal. Instead, we are
reassigning all of the hysteroscopy
procedures that we proposed to assign

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to APC 0190 to one of the female
reproductive APCs. That is, we are
reassigning all of the procedures
proposed for reassignment to APC 0190
to APC 0188, APC 0193, or APC 0202.
Consequently, with no procedures
remaining in APC 0190, we deleted this
APC for CY 2015. In addition, we are
finalizing our proposal to restructure the
female reproductive APCs to more
appropriately reflect the resource and
clinical characteristics of the procedures
assigned to each APC. Specifically, we
are finalizing our proposal to assign all
of the female reproductive procedures to

APCs 0188, 0189, 0192, 0193, or 0202.
In addition, because of our revision to
the hysteroscopy procedures APCs, we
are revising the APC titles for the five
female reproductive APCs; APC 0188,
APC 0189, APC 0192, APC 0193, and
APC 0202, from ‘‘Female Reproductive
Procedures’’ to ‘‘Gynecologic
Procedures’’ to more appropriately
describe the procedures assigned to
these APCs. Table 20 below lists the
hysteroscopic procedures CPT codes,
along with their long descriptors,
proposed CY 2015 OPPS status
indicators and APC assignments, as well

66851

as their final CY 2015 OPPS status
indicators and APC assignments. Table
21 below lists the final APC titles and
status indicators for the gynecologic
procedure APCs. The final CY 2015
payment rates for the gynecologic
procedures APCs, as well as the
hysteroscopic procedures CPT codes
listed in Table 21 can be found in
Addendum B to this CY 2015 OPPS/
ASC final rule with comment period
(which is available via the Internet on
the CMS Web site).

TABLE 20—FINAL CY 2015 APC ASSIGNMENTS FOR THE HYSTEROSCOPIC PROCEDURES
Proposed
CY 2015
OPPS SI

CPT Code

Long descriptor

58353 ...........
58356 ...........

Endometrial ablation, thermal, without hysteroscopic guidance ...........
Endometrial cryoablation with ultrasonic guidance, including
endometrial curettage, when performed.
Hysteroscopy, diagnostic (separate procedure) ....................................
Hysteroscopy, surgical; with sampling (biopsy) of endometrium and/or
polypectomy, with or without d & c.
Hysteroscopy, surgical; with lysis of intrauterine adhesions (any
method).
Hysteroscopy, surgical; with division or resection of intrauterine septum (any method).
Hysteroscopy, surgical; with removal of leiomyomata ..........................
Hysteroscopy, surgical; with removal of impacted foreign body ...........
Hysteroscopy, surgical; with endometrial ablation (eg, endometrial resection, electrosurgical ablation, thermoablation).
Hysteroscopy, surgical; with bilateral fallopian tube cannulation to induce occlusion by placement of permanent implants.
Unlisted hysteroscopy procedure, uterus ..............................................

58555 ...........
58558 ...........
58559 ...........
58560 ...........
58561 ...........
58562 ...........
58563 ...........
58565 ...........
58579 ...........

Proposed
CY 2015
OPPS APC

Final
CY 2015
OPPS SI

Final
CY 2015
OPPS APC

J1
J1

0202
0202

J1
J1

0202
0202

T
T

0190
0190

T
T

0193
0193

T

0190

J1

0202

T

0190

J1

0202

T
T
T

0190
0190
0190

J1
T
J1

0202
0193
0202

J1

0202

J1

0202

T

0190

T

0188

TABLE 21—FINAL CY 2015 APC TITLES FOR GYNECOLOGIC PROCEDURES
CY 2015 APC

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0188
0189
0192
0193
0202

.............
.............
.............
.............
.............

Proposed CY 2015 APC title
Level
Level
Level
Level
Level

I Female Reproductive Procedures ......................
II Female Reproductive Procedures .....................
III Female Reproductive Procedures ....................
IV Female Reproductive Procedures ....................
V Female Reproductive Procedures .....................

b. Cystourethroscopy, Transprostatic
Implant Procedures, and Other
Genitourinary Procedures (APCs 0160,
0161, 0162, 0163, and 1564)
For the CY 2015 OPPS update, based
on our review of the latest hospital
outpatient claims data available for the
CY 2015 OPPS/ASC proposed rule, we
proposed to restructure the APCs
containing cystourethroscopy and other
genitourinary procedures to more
appropriately reflect the resource costs
and clinical characteristics of the
procedures assigned within each APC
(79 FR 40987). We note that, for the CY
2014 OPPS update, there are five levels
of APCs that contain cystourethroscopy
and genitourinary procedures. These

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Level
Level
Level
Level
Level

I Gynecologic Procedures .....................................
II Gynecologic Procedures ....................................
III Gynecologic Procedures ...................................
IV Gynecologic Procedures ...................................
V Gynecologic Procedures ....................................

APCs were listed in Table 26 of the CY
2015 OPPS/ASC proposed rule (79 FR
40986), along with their status indicator
assignments for CY 2014. The proposed
restructuring resulted in the use of four
APCs for the CY 2015 OPPS update, as
compared to the five APCs used for the
CY 2014 OPPS update. Specifically,
based on our review and evaluation of
the procedures assigned to these APCs
and the latest hospital outpatient claims
data available, in the CY 2015 OPPS/
ASC proposed rule, we proposed to
delete APC 0429 (Level V
Cystourethroscopy and Other
Genitourinary Procedures) and reassign
the procedures that were previously
assigned to this APC to either APC 0161

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Final CY
2015 status
indicator
T
T
T
T
J1

(Level I Cystourethroscopy and Other
Genitourinary Procedures) or APC 0163
(Level IV Cystourethroscopy and Other
Genitourinary Procedures). We believe
that the procedures currently assigned
to APC 0429 would be more
appropriately assigned to either APC
0161 or APC 0163 based on their
geometric mean costs for the CY 2015
OPPS update. Further, we believe that
this proposed restructuring
appropriately categorizes all of the
cystourethroscopy and other
genitourinary procedures that are
comparable clinically and with respect
to resource use within an APC group.
We also proposed to delete APC 0169
(Lithotripsy) because the one procedure,

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specifically the procedure described by
CPT code 50590 (Lithotripsy,
extracorporeal shock wave), that was
assigned to this APC was proposed for
reassignment to APC 0163 (79 FR
40987). Table 27 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40987) listed
the proposed APCs that contain
cystourethroscopy and other
genitourinary procedures, the APC
titles, and the proposed status indicator
assignments for CY 2015. The proposed
payment rates for the specific APCs
listed in Table 27 were listed in
Addendum A to the proposed rule. The
proposed payment rates for the specific
cystourethroscopy and other
genitourinary procedure codes were
listed in Addendum B to the proposed
rule. (Addenda A and B to the proposed
rule are available via the Internet on the
CMS Web site.)
Comment: Several commenters
opposed CMS’ proposal to delete APC
0169 and reassign the extracorporeal
shock wave lithotripsy (ESWL) CPT
code 50590 to APC 0163. The
commenters noted that the procedure
described by CPT code 50590 is
classified as a noninvasive therapy and
is not similar, clinically or with respect
to resource costs, to the other more
invasive surgical urological procedures
that are proposed for assignment to APC
0163. One commenter stated that the
ESWL procedure does not involve the
use of an endoscope and, therefore,
should not be assigned to APC 0163.
This commenter believed that the
payment rate for APC 0163 would be
influenced by dominating the claims
data for CPT code 50590 because ESWL
is a commonly performed procedure
resulting in a significant high volume of
single frequency claims. The commenter
requested that CMS delay finalizing this
proposal or, alternatively, reassign CPT
code 50590 to APC 0162 (Level III
Cystourethroscopy and Other
Genitourinary Procedures) because this
APC encompasses a broader and more
diverse grouping of procedures than
APC 0163.
Response: As part of our standard
annual OPPS update process, we review
each APC assignment for the clinical
similarity and resource homogeneity of
the procedures assigned to each APC.
An analysis of our latest hospital
outpatient claims data available for this
final rule with comment period revealed
a geometric mean cost of approximately
$3,094 based on 32,370 single claims
(out of 44,816 total claims) for CPT code
50590, which is comparable to the
geometric mean cost of approximately
$3,230 for APC 0163. The significant
procedures assigned to APC 0163 have
geometric mean costs ranging between

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$2,946 and $4,088. We do not agree
with the commenters that APC 0162 is
the more appropriate APC assignment
because the geometric mean cost for this
APC, approximately $2,163, is
significantly lower than the geometric
mean cost of approximately $3,094 for
CPT code 50590. In addition, the
geometric mean cost of APC 0163 (using
proposed rule data) and without CPT
code 50590 assigned to this APC was
approximately $3,058, which is close to
the final rule geometric mean cost of
CPT code 50590 of $3,094. Although the
ESWL procedure does not involve the
use of an endoscope, we note that not
every procedure proposed for
reassignment, or ultimately reassigned,
to APC 0163 uses an endoscope. In
addition, we do not agree with the
commenters that the ESWL procedure is
not clinically similar to the other
procedures assigned to APC 0163. There
are no general rules for clinical
similarity that apply to all APCs.
Instead, the evaluation of clinical
similarity depends upon the particular
characteristics of the services being
evaluated for a particular APC
assignment. The use of single procedure
APCs, like APC 0169, the APC to which
CPT code 50590 is assigned for CY
2014, generally is not considered
appropriate under the OPPS because
payment rates based on a single
procedure code’s geometric mean cost is
more consistent with a fee schedule
than a prospective payment system.
However, there are limited
circumstances in which we assign a
single procedure code to an APC; for
example, the intraocular procedures
assigned to an APC series. Specifically,
APC 0673 (Level III Intraocular
Procedures) has a geometric mean cost
of approximately $3,239. APC 0293
(Level IV Intraocular Procedures) is the
next higher level APC in the intraocular
procedures APC series, and it has a
single procedure (CPT code 65770
(Keratoprosthesis)) assigned to it, which
has a geometric mean cost of
approximately $8,766. The highest cost
procedure assigned to APC 0673 is CPT
code 67113 (Repair of complex retinal
detachment), which has a geometric
mean cost of approximately $4,065. The
geometric mean cost of CPT code 65770
is significantly higher, 2.2 times the
geometric mean cost of CPT code 67113.
Therefore, we assigned CPT code 65770
to a different APC because the resource
costs are not similar. Because the
procedure described by CPT code 65770
is an intraocular surgery and there are
no other APCs that contain clinically
similar procedures, we assigned CPT
code 65770 to APC 0293 without any

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other procedures. Continuing in this
series, we assigned CPT code 0308T
(Insertion of intraocular telescope
prosthesis including removal of
crystalline lens) to APC 0351 (Level V
Intraocular Procedures) without any
other procedures. CPT code 0308T has
a geometric mean cost of approximately
$23,947, which is 2.73 times the
geometric mean cost of the procedure
described by CPT code 65770, which is
assigned to APC 0293, which is one
level lower than APC 0351 in the
intraocular procedures APC series. CPT
code 0308T is the only procedure code
assigned to APC 0351 because there are
no other procedures that are similar in
terms of resource costs. We do not
believe that similar APC series
assignment is applicable to CPT code
50590. Therefore, we proposed to
reassign CPT code 50590 to APC 0163
and delete APC 0169 (79 FR 40986
through 40987). In summary, based on
our review of the latest hospital
outpatient claims data for this final rule
with comment period, we believe that
CPT code 50590 would be appropriately
assigned to APC 0163 based on its
clinical and resource similarity to the
other procedures assigned to APC 0163,
several of which are dedicated to kidney
stone removal. Therefore, we are
finalizing our proposal, without
modification, to assign CPT code 50590
to APC 0163 for CY 2015.
Comment: One commenter requested
that CMS not finalize the proposal to
delete APC 0429, and suggested that
CMS maintain this APC until data
become available for CPT code 52356
(Cystourethroscopy, with ureteroscopy
and/or pyeloscopy; with lithotripsy
including insertion of indwelling
ureteral stent (eg., Gibbons or double-J
type)), which became effective January
1, 2014.
Response: We believe that CPT code
52356 is appropriately categorized by
APC 0163 based on its similarity to the
other procedures assigned to this APC.
Because CPT code 52356 became
effective January 1, 2014, we expect to
have claims data for the procedure
described by this code available for the
CY 2016 OPPS rulemaking cycle. We
note that, consistent with CMS’ policy
of reviewing APC assignments annually
in accordance with the statutory
requirement, we will reevaluate the APC
assignment for CPT code 52356 for the
CY 2016 OPPS update. Therefore, after
consideration of the public comment we
received, we are finalizing our
proposals, without modification, to
delete APC 0429 and to assign CPT code
52356 to APC 0163 for CY 2015.
Comment: Some commenters
disagreed with CMS’ proposal to

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reassign CPT code 55875 (Transperineal
placement of needles or catheters into
prostate for interstitial radioelement
application, with or without cystoscopy)
from APC 0163 to APC 0162. The
commenters stated that the proposal
would result in a 28-percent reduction
in the payment for this service when the
CY 2014 payment rate of approximately
$2,905 for APC 0163 is compared to the
CY 2015 proposed payment rate of
approximately $2,091 for APC 0162.
The commenters noted that CPT code
55875 has been assigned to APC 0163
since the code’s inception in CY 2007,
and believed that the proposed payment
rate for APC 0163 more accurately
reflects the resources necessary to
provide this service. The commenters
urged CMS to maintain the APC
assignment of CPT code 55875 to APC
0163.
Response: Analysis of our latest
hospital claims data used for this final
rule with comment period revealed a
geometric mean cost of approximately
$2,501 for CPT code 55875 based on 703
single claims (out of 4,681 total claims),
which is comparable to the geometric
mean cost of approximately $2,163 for
APC 0162. We do not agree with the
commenters that APC 0163 is the more
appropriate APC because its geometric
mean cost of approximately $3,230 is
significantly higher than the geometric
mean cost of approximately $2,501 for
CPT code 55875. We believe that CPT
code 55875 is appropriately assigned to
APC 0162 based on its clinical
homogeneity and resource costs to the
procedures currently assigned to this
APC. Therefore, after consideration of
the public comments we received, we
are finalizing our proposal, without
modification, to reassign CPT code
55875 to APC 0162 for CY 2015.
Comment: One commenter opposed
CMS’ proposal to reassign CPT code
53850 (Transurethral destruction of
prostate tissue; by microwave
thermotherapy) from APC 0429 to APC
0161. The commenter stated that the CY
2015 proposed payment rate for APC
0161 is approximately $1,235, which is
significantly lower than the CY 2014
payment rate of approximately $3,304
for APC 0429. The commenter suggested
that CMS reassign CPT code 53850 to
APC 0163, the APC to which CPT code
53852 (Transurethral destruction of
prostate tissue; by radiofrequency
thermotherapy) is proposed to be
reassigned. The commenter explained
that both procedures are similar in
clinical technique because both
procedures use a thermal approach as
an alternative to open prostatectomy or
transurethral resection of the prostate

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for the treatment of benign prostatic
hyperplasia (BPH).
Response: As has been our practice
since the implementation of the OPPS
in 2000, we review, on an annual basis,
the APC assignments for the procedures
and services paid under the OPPS.
Based on the latest hospital outpatient
claims data used for this final rule with
comment period, our analysis does not
support the reassignment of CPT code
53850 to APC 0163. Our analysis of the
claims data shows a geometric mean
cost of approximately $1,542 for CPT
code 53850 based on 107 single claims
(out of 142 total claims), which is
relatively similar to the geometric mean
cost of approximately $1,273 for APC
0161. While we acknowledge that both
procedures are similar, our analysis of
the claims data shows that the resource
costs of providing the procedure
described by CPT code 53852 is
significantly higher than the resource
cost of providing the procedure
described by CPT code 53850.
Specifically, the geometric mean cost for
CPT code 53852 is approximately
$3,339 based on 98 single claims (out of
156 total claims), which is comparable
to the geometric mean cost of APC 0163
of approximately $3,230. We do not
agree with the commenters that APC
0163 is the more appropriate APC
assignment because its geometric mean
cost is significantly higher than the
geometric mean cost of CPT code 53850
of approximately $1,542. We believe
that CPT code 53850 would be
appropriately assigned to APC 0161
based on its clinical homogeneity and
resource costs to the procedures
currently assigned to this APC.
Therefore, after consideration of the
public comment we received, we are
finalizing our proposal, without
modification, to reassign CPT code
53850 from APC 0429 to APC 0161 for
CY 2015.
In addition, effective April 1, 2014,
we created HCPCS codes C9739
(Cystourethroscopy, with insertion of
transprostatic implant; 1 to 3 implants)
and C9740 (Cystourethroscopy, with
insertion of transprostatic implant; 4 or
more implants) as a result of an
application to assign the transprostatic
implant procedures (TIPs) to a New
Technology APC. We assigned HCPCS
codes C9739 and C9740 to APCs 0162
(Level III Cystourethroscopy and other
Genitourinary Procedures) and 1564
(New Technology—Level XXVII),
respectively, based on the estimated
costs of the procedures, which include
1 to 3 implants in the case of procedures
described by HCPCS code C9739, and 4
or more implants in the case of
procedures described by HCPCS code

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C9740. We based the number of
implants for HCPCS codes C9739 and
C9740 on the number of implant
utilization data per patient that the New
Technology applicant provided within
its approved application. The CY 2014
payment rates for APCs 0162 and 1564
are $2,007.32 and $4,750.00,
respectively.
The AMA’s CPT Editorial Panel
recently created two new codes for this
technology, which become effective on
January 1, 2015: CPT codes 52441
(Cystourethroscopy, with insertion of
permanent adjustable transprostatic
implant; single implant) and 52442
(Cystourethroscopy, with insertion of
permanent adjustable transprostatic
implant; each additional permanent
adjustable transprostatic implant (List
separately in addition to code for
primary procedure)).
Comment: One commenter stated that
the TIPs described by HCPCS codes
C9739 and C9740 do not receive
adequate payment under the OPPS
because of the code descriptors for these
procedure codes as they relate to the
number of implants allowed in each
respective code (1 to 3 implants for
HCPCS code C9739 and 4 or more
implants for HCPCS code C9740), when
categorized by the APCs in which these
services are assigned. The commenter
also believed that the TIPs are unable to
be performed in the ASC setting because
of the inadequate payment rate for the
specific APCs. The commenter believed
that the procedures described by HCPCS
codes C9739 and C9740 are device
dependent because a majority of the
procedures’ costs are associated with
the costs of the implants, with a mean
of 4.9 implants per procedure. The
commenter also believed that there is
considerable variation in the number of
implants used for each procedure. The
commenter believed that the ASC
payment is extremely low because the
procedures are not designated as
‘‘device intensive’’ in the ASC setting
(that is, the procedures are not assigned
to ASC payment indicator ‘‘J8’’), nor are
the procedures assigned to a C–APC
under the OPPS, which would most
likely allow for the performance of the
device-intensive treatment in the ASC
setting, similar to most of the proposed
C–APCs that are defined as deviceintensive APCs. The commenter stated
that the proposed OPPS payments for
HCPCS codes C9739 and C9740 are
inadequate to cover both the costs of the
number of implants required and the
cost of the procedure. The commenter
recommended several possible APC
assignments to improve the payments
for TIPs. The commenter recommended
using new CPT codes 52441 and 52442

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to report the TIPs under the OPPS, and
assigning the procedures to C–APC 0385
(Level I Urogenital Procedures) because
the proposed payment rate for C–APC
0385 of approximately $7,659 is
comparable to the estimated cost of
performing TIPs using 5 implants,
which is approximately $7,519. The
commenter’s second recommendation
was to continue to report the
performance of the TIPs using HCPCS
codes C9739 and C9740, and to assign
HCPCS code C9740 to APC 0385, as
described previously, and HCPCS code
C9739 to APC 0202 (Level V Female
Reproductive Procedures) and remove
‘‘Female’’ from the title of APC 0202.
According to the commenter, the
proposed payment for APC 0202 of
approximately $4,366 is equivalent to
the cost of a TIP using 2 or 3 implants.
The commenter believed that because
APC 0202 is designated as a C–APC, the
ASC payment for the procedure would
also prove to be adequate. The
commenter’s third recommendation was
to use new CPT codes 52441 and 52442
to report TIPs and to assign the
procedure codes to APC 0168 (Level II
Urethral Procedures) on an interim basis
until OPPS claims data are available for
these codes. The commenter believed
that the proposed payment rate for APC
0168 of approximately $2,533 more
appropriately equates to the cost of a
single implant procedure described by
CPT code 52441, while additional
implant procedures described by CPT
code 52442 would be paid at 50 percent,
or approximately $1,267, because APC
0168 is subject to the multiple
procedure discount (that is, the APC is
assigned to status indicator ‘‘T’’), which,
the commenter claimed, more
appropriately equates to the estimated
cost of providing the procedure
described by CPT code 52442 of
approximately $1,248. However, the
commenter noted that, because APC
0168 is not a C–APC, payment for the
procedure may not be designated as
‘‘device intensive’’ to ensure adequate
ASC payment. The commenter
recommended that CMS consider any
procedure that has device costs that are
greater than 40 percent as device
intensive.
Response: We agree with the
commenter that the cost of the implants
associated with the procedures
described by HCPCS codes C9739 and
C9740 represents the majority of the
costs of the procedures. We considered
those costs and the variation in the
number of implants per procedure when
we created HCPCS codes C9739 and
C9740 and assigned the procedure codes
to APCs 0162 and 1564, respectively.

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We believe that HCPCS codes C9739
and C9740 are preferable to the new
CPT codes 52441 and 52442 with
respect to OPPS and ASC payments
because the new codes describe
complete procedures instead of the
insertion of individual implants, which
are almost always incomplete
procedures because patients usually
receive multiple implants. We do not
believe that any of the APCs
recommended by the commenter are
appropriate for assignment of HCPCS
codes C9739 and C9740 at this time
because our usual policy with new
codes is to wait until we have OPPS
claims data available before making an
APC reassignment. In regard to the ASC
payment for the procedures, neither
APC 0162 nor APC 1564 is designated
as device intensive. Therefore, the
multiple procedure payment reduction
under OPPS applies to the entire
payment amount under the ASC
payment as well. Currently, there is no
policy regarding designating services
that are assigned to a New Technology
APC as device intensive for the ASC
setting. We may consider such a policy
in future rulemakings.
We will maintain payment for the
cystourethroscopy with insertion of
TIPs using HCPCS codes C9739 and
C9740 because we believe that the code
descriptors more appropriately reflect
complete procedures and the
distribution of implant utilization per
patient. For CY 2015, we are
maintaining our APC assignments for
HCPCS codes C9739 and C9740 to APCs
0162 and 1564, respectively. The APC
assignments for HCPCS codes C9739
and C9740 are initial APC assignments
until we obtain claims data for these
two codes for the CY 2016 OPPS update.
The final CY 2015 geometric mean costs
for APC 0162 is approximately $2,163,
and the final CY 2015 payment rate
(there are no geometric mean costs for
New Technology APCs, only payment
bands) for APC 1564 is approximately
$4,750. CPT codes 52441 and 52442 will
not be payable under the OPPS for CY
2015; we are assigning these two CPT
codes to status indicator ‘‘B’’ (Codes that
are not recognized by OPPS when
submitted on an outpatient hospital Part
B bill type (12x and 13x)).
After consideration of the public
comments we received, we also are
finalizing our proposal to restructure the
APCs containing cystourethroscopy,
transprostatic implant procedures, and
other genitourinary procedures, and to
use a four-level APC grouping to classify
the procedures based on our analysis of
the latest hospital outpatient claims data
available for this final rule with
comment period. The final payment

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rates for the cystourethroscopy,
transprostatic implant procedures, and
other genitourinary procedure codes, as
well as the specific CPT codes on which
we received public comments and that
are discussed in this section, can be
found in Addendum B to this final rule
with comment period, which is
available via the Internet on the CMS
Web site. The final payment rates for
APCs 0160, 0161, 0162, and 0163,
which are the final CY 2015
cystourethroscopy, transprostatic
implant procedures, and other
genitourinary APCs, can be found in
Addendum A to this final rule with
comment period, which is also available
via the Internet on the CMS Web site.
We remind commenters that every
year we revise, if necessary, the APC
assignments for procedure codes based
on our analysis of the latest hospital
outpatient claims data. We anticipate
that there will be further significant
revisions to the urology-related APCs in
futures years because the current overall
APC structure is suboptimal and can be
improved with respect to the clinical
similarity and resource similarity of the
groupings. In addition, we note that
section 1833(t)(9)(A) of the Act requires
the Secretary to review, on a recurring
basis occurring no less than annually,
and revise the groups, the relative
payment weights, and the wage and
other adjustments to take into account
changes in medical practice, changes in
technology, the addition of new
services, new cost data, and other
relevant information and factors.
Although we do not discuss every APC
change in the proposed and final rules
with comment period, these changes are
listed in Addendum B to the proposed
and final rules with comment period.
Specifically, procedure codes with
proposed revisions to the APC and/or
status indicator assignments are
assigned to comment indicator ‘‘CH’’
(Active HCPCS code in current year and
next calendar year, status indicator and/
or APC assignment has changed) in
Addendum B to the proposed rule.
c. Level IV Anal/Rectal Procedures (APC
0150)
We created HCPCS code C9735
(Anoscopy; with directed submucosal
injection(s), any substance) effective
April 1, 2013, and assigned the service
to APC 0150 (Level IV Anal/Rectal
Procedures) for CY 2013, which had a
payment rate of $2,365.97. We
maintained the assignment of HCPCS
code C9735 to APC 0150 for CY 2014,
with a payment rate of $2,501.31.
HCPCS code C9735 involves injection of
a bulking agent, L8605 (Injectable
bulking agent dextranomer/hyaluronic

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acid copolymer implant, anal canal, 1
ml, includes shipping and necessary
supplies). One commenter in response
to the CY 2014 OPPS/ASC proposed
rule believed that the proposed
assignment for HCPCS code C9735 to
APC 0150 was inappropriate, and
asserted that the entire HCPCS code
C9735 procedure costs far more than the
proposed payment rate for APC 0150.
The commenter recommended creating
a new Level V Anal/Rectal Procedures
APC, composed of HCPCS code C9735,
and two other procedures. CMS
responded in the CY 2014 OPPS/ASC
final rule with comment period that
HCPCS code C9735 became effective
April 1, 2013, so there were no claims
data yet on this procedure, and that our
longstanding policy is to wait until
there are claims data on a new
procedure before reassigning the service
to another clinical APC (78 FR 74981).
We did not agree with the commenters
that creating a Level V Anal/Rectal
Procedures APC was warranted for CY
2014. We believed that the suggested
Level V APC would have a low volume
of single frequency claims, and HCPCS
code C9735 had no claims volume at
that time. We stated that the low volume
of claims for such an APC would
contribute to APC cost and payment
volatility.
For CY 2015, we proposed to
maintain the assignment of HCPCS code
C9735 to APC 0150, which had a
proposed payment rate of $2,612.71.
The AMA’s CPT Editorial Panel created
new Category III CPT code 0377T
(Anoscopy with directed submucosal
injection of bulking agent for fecal
incontinence), which describes the
procedure performed by HCPCS code
C9735, to be effective January 1, 2015.
Comment: A few commenters
recommended that CMS divide APC
0150 into two APCs by creating a higher
cost Level V Anal/Rectal Procedures
APC. The commenters stated that there
are four procedure codes that have a
geometric mean cost that is more than
$500 higher than the proposed
geometric mean cost of APC 0150,
which is $2,735.52, and one procedure
code that has a geometric mean cost that
is approximately $300 higher than the
proposed geometric mean cost of APC
0150. One commenter specifically stated
that the proposed payment rate for APC
0150 is insufficient to cover the cost of
the procedure described by HCPCS code
C9735, which is one of the five
procedure codes recommended for
assignment to the suggested Level V
Anal/Rectal Procedures APC, because
the proposed payment rate for APC 0150
is lower than the total cost of the
procedure. The commenter pointed out

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that the proposed geometric mean cost
of HCPCS code C9735 is $3,241.32,
which is considerably higher that the
proposed geometric mean cost of APC
0150, which is $2,735.52. The
commenter also recommended creating
a Level V Anal/Rectal Procedures APC,
and assigning HCPCS code C9735 and
other codes to this recommended APC.
In addition, the commenter
recommended that CMS use new CPT
code 0377T for hospitals to report the
anoscopy with directed submucosal
injection of bulking agent for fecal
incontinence procedure, effective
January 1, 2015.
Response: The claims data available
for this final rule with comment period,
which are used to establish final
payment rates for the CY 2015 OPPS,
show a geometric mean cost of
approximately $2,698 for APC 0150,
while the geometric mean cost for
HCPCS code C9735 is approximately
$2,863 based on 56 single frequency
claims. We believe that the geometric
mean cost of HCPCS code C9735 is
similar to the geometric mean cost of
APC 0150. Further, the procedure
described by HCPCS code C9735 is no
longer one of the five highest cost
procedures assigned to APC 0150 based
on claims data available for this final
rule with comment period. Similarly,
there are other higher cost, lower
volume procedures with geometric
mean costs that are greater than the
geometric mean cost of APC 0150, but
do not create a violation of the 2 times
rule because of the APC assignment. For
instance, CPT code 46762
(Sphincteroplasty, anal, for
incontinence, adult; implantation
artificial sphincter) has a final rule
geometric mean cost of approximately
$11,873 based on 9 single frequency
claims. The volume of claims for this
CPT code is too low to consider this
procedure significant for purposes of
evaluating a potential violation of the 2
times rule. Therefore, we do not believe
that the range of costs for the significant
procedures assigned to APC 0150
warrants the creation of a higher level
APC. Based on claims data available for
this final rule with comment period, the
five highest cost procedures assigned to
APC 0150 have a total number of single
frequency claims that equals less than
220 claims. The suggested Level V Anal/
Rectal Procedures APC would have a
low volume of single frequency claims
and would contribute to APC cost and
payment volatility, as was the case
when based on CY 2014 claims data. As
we stated in the CY 2014 OPPS/ASC
final rule with comment period, we are
not accepting the commenter’s

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recommendation because a low volume
APC will contribute to the APC’s cost
volatility, which in turn contributes to
payment volatility for the procedures
assigned to the low volume APC (78 FR
74981).
After consideration of the public
comments we received regarding the
composition of APC 0150, we are
finalizing our proposal to continue to
assign HCPCS code C9735 to APC 0150
for CY 2015. The CY 2015 final
geometric mean cost of APC 0150 is
approximately $2,698. In addition, new
CPT code 0377T also is assigned to APC
0150 for CY 2015 because we agree with
the commenters that HCPCS code C9735
should be deleted after December 31,
2014. We are instructing hospitals to use
CPT code 0377T to report this service
beginning with the code’s effective date,
January 1, 2015.
d. Percutaneous Renal Cryoablation
(APC 0423)
For CY 2014, we assigned CPT codes
50593 (Ablation, renal tumor(s),
unilateral, percutaneous, cryotherapy)
and 0340T (Ablation, pulmonary
tumor(s), including pleura or chest wall
when involved by tumor extension,
percutaneous, cryoablation, unilateral,
includes imaging guidance) to APC 0423
(Level II Percutaneous Abdominal and
Biliary Procedures), which has a
payment rate of $4,106.19. For CY 2015,
we proposed to continue to assign these
two CPT codes to APC 0423, with a
proposed payment rate of $4,053.32.
Comment: One commenter believed
that CMS’ proposal to continue to assign
CPT codes 50593 and 0340T to APC
0423 does not accurately reflect the
costs incurred when performing these
cryoablation procedures. The
commenter noted that APC 0423
includes several other radiofrequency
ablation and endoscopy procedures,
which do not include high-cost device
systems like the cryoablation
procedures described by CPT codes
50593 and 0340T. Although the
commenter acknowledged that there is
no violation of the 2 times rule, the
commenter stated that the proposed
geometric mean cost of CPT code 50593
is significantly higher than the proposed
geometric mean cost of APC 0423. In
addition, the commenter asserted that
the cryoablation procedures described
by CPT codes 50593 and 0340T are not
clinically similar to other procedures
assigned to APC 0423. The commenter
further noted that less than half of
claims used to establish the proposed
geometric mean cost of CPT code 50593
were correctly coded, and did not
include the device HCPCS code C2618
(Probe, cryoablation). The commenter

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recommended that CMS create a new
Level III Percutaneous Abdominal and
Biliary Procedures APC, and assign CPT
codes 50593 and 0340T to this APC.
Response: We disagree with the
commenter that the proposed geometric
mean cost of CPT code 50593, which is
$4,937.12 is significantly higher than
the proposed geometric mean cost of
APC 0423, which is $4,243.84. The
claims data available for this final rule
with comment period show a geometric
mean cost of approximately $4,249 for
APC 0423, and approximately $4,985 for
CPT code 50593, which is based on 749
single frequency claims. The geometric
mean cost of CPT code 50593 is the
highest cost procedure assigned to APC
0423, but is well within a normal range
of costs associated with the other
procedures assigned to this APC, and
does not approach the 2 times limit that
would create a violation of the 2 times
rule. CPT code 0340T has no claims at
this time because the procedure code
became effective beginning in CY 2014.
Therefore, we do not believe that a new
Level III Percutaneous Abdominal and
Biliary Procedures APC is warranted
based on the geometric mean cost of
CPT code 50593 relative to the
geometric mean cost of APC 0423. We
also remind the commenter that we
typically do not investigate allegations
of hospital cost underreporting or
incorrect coding. As we stated in the CY
2011 OPPS/ASC final rule with
comment period, ‘‘Beyond our standard
OPPS trimming methodology . . . that
we apply to those claims that have
passed various types of claims
processing edits, it is not our general
policy to judge the accuracy of hospital
coding and charging for purposes of
ratesetting’’ (75 FR 71838). We believe
that the cryoablation procedures
described by CPT codes 50593 and
0340T are clinically similar to the other
procedures assigned to APC 0423. Many
of the procedures assigned to APC 0423
are ablative procedures, and all of the
procedures assigned to this APC are
abdominal or biliary. Therefore, we are
finalizing the CY 2015 proposal,
without modification, to continue to
assign CPT codes 50593 and 0340T to
APC 0423. We will specifically review
the APC assignment of CPT code 0340T
when claims data for this service
become available.
4. Nervous System Services
a. Chemodenervation (APC 0206)
For CY 2015, we proposed to continue
to assign CPT code 64616
(Chemodenervation of muscle(s); neck
muscle(s), excluding muscles of the
larynx, unilateral (eg, for cervical

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dystonia, spasmodic torticollis)) to APC
0204 (Level I Nerve Injections), with a
proposed payment rate of approximately
$218. We note that CPT code 64616
became effective January 1, 2014.
Comment: One commenter requested
that CMS reassign CPT code 64616 from
APC 0204 to APC 0206 (Level II Nerve
Injections), which had a proposed
payment rate of approximately $375.
The commenter noted that this
recommendation for APC reassignment
was also submitted in response to the
CY 2014 OPPS/ASC final rule with
comment period. The commenter stated
that APC 0206 is the APC that was
assigned to CPT code 64613
(Chemodenervation of muscle(s); neck
muscle(s) (eg, for spasmodic torticollis,
spasmodic dysphonia), which is the
predecessor code for CPT code 64616 in
effect prior to January 1, 2014. Based on
the commenter’s analysis of the CY 2013
hospital outpatient claims data that was
used for the CY 2015 OPPS/ASC
proposed rule, the commenter believed
that APC 0206 is the most appropriate
APC assignment for CPT code 64616
based on the resource costs and clinical
homogeneity of the predecessor code,
CPT code 64613, in relation to the other
procedures assigned to APC 0206.
Response: We reviewed the latest
hospital outpatient claims data
reporting the service described by
predecessor code, CPT code 64613, and
the replacement code, CPT code 64616.
We acknowledge that the procedure
described by CPT code 64616 was
previously described by CPT code
64613. Based on our analysis of the
latest hospital outpatient claims data
available for this final rule with
comment period, we agree with the
commenter’s recommendation that CPT
code 64616 should be reassigned from
APC 0204 to APC 0206 for the CY 2015
update. Specifically, we reviewed the
latest hospital outpatient claims data for
CPT code 64613 based on claims
submitted by hospitals for dates of
service between January 1, 2013, and
December 31, 2013, that were processed
on or before June 30, 2014. Our review
of the latest claims data shows a
geometric mean cost of approximately
$322 for CPT code 64613 based on
11,177 single claims (out of 13,743 total
claims), which is comparable to the
geometric mean cost of approximately
$387 for APC 0206. There are 21
procedures assigned to APC 0206 and
the geometric mean costs for the
procedures with significant claims data
range approximately between $322 (for
CPT code 64613) and $536 (for CPT
code 62270). Based on these data, we
agree with the commenter that APC
0206 is the most appropriate APC

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assignment for CPT code 64616 based
on clinical homogeneity to the other
procedures assigned to this APC and the
resource similarity of the predecessor
code, CPT code 64613, to the other
procedures assigned to APC 0206.
Therefore, after consideration of the
public comment we received, we are not
adopting our proposal to continue to
assign CPT code 64616 to APC 0204.
Instead, we are reassigning CPT code
64616 to APC 0206 for the CY 2015
OPPS update. The final CY 2015
payment rate for CPT code 64616 can be
found in Addendum B to this CY 2015
OPPS/ASC final rule with comment
period (which is available via the
Internet on the CMS Web site).
b. Epidural Lysis (APCs 0203 and 0207)
For CY 2015, we proposed to continue
to assign CPT code 62263 (Percutaneous
lysis of epidural adhesions using
solution injection (eg, hypertonic saline,
enzyme) or mechanical means (eg,
catheter) including radiologic
localization (includes contrast when
administered), multiple adhesiolysis
sessions; 2 or more days) to APC 0203
(Level IV Nerve Injections), with a
proposed payment rate of approximately
$1,524. We also proposed to continue to
assign CPT code 62264 (Percutaneous
lysis of epidural adhesions using
solution injection (eg, hypertonic saline,
enzyme) or mechanical means (eg,
catheter) including radiologic
localization (includes contrast when
administered), multiple adhesiolysis
sessions; 1 day) to APC 0207 (Level III
Nerve Injections), with a proposed
payment rate of approximately $683.
Comment: One commenter opposed
CMS’ proposals to continue to assign
CPT code 62263 to APC 0203 and CPT
code 62264 to APC 0207. The
commenter stated that CMS has
overcompensated for the cost of
providing the service described by CPT
code 62263 by assigning the procedure
to APC 0203. Alternatively, the
commenter believed that CMS has
undercompensated the cost of providing
the service described by CPT code
62264 by assigning the procedure to
APC 0207. The commenter stated that
the resources utilized during the
performance of the services described
by both CPT codes are comparable, and
each CPT code should be reassigned to
a more appropriate APC to ensure
adequate payment for the services
provided.
Response: We reviewed the latest
hospital outpatient claims data
reporting services described by CPT
codes 62263 and 62264 for dates of
service between January 1, 2013, and
December 31, 2013, that were processed

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on or before June 30, 2014. For CPT
code 62263, our analysis of the claims
data shows a geometric mean cost of
approximately $1,215 based on 70
single claims (out of 88 total claims),
which is comparable to the geometric
mean cost of approximately $1,525 for
APC 0203. For CPT code 62264, our
analysis of the claims data shows a
geometric mean cost of approximately
$798 based on 1,971 single claims (out
of 4,174 total claims), which is
comparable to the geometric mean cost
of approximately $697 for APC 0207.
Therefore, we believe that the
procedures described by CPT code
66263 and CPT code 62264 are
appropriately assigned to APCs 0203
and 0207, respectively, based on clinical
and resource similarities in relation to
the other procedures assigned to these
APCs. We remind the commenter that
the OPPS is a system of averages, in
which the costs of services, calculated
from the most recent year’s claims data,
are weighted relative to the other
services in the system, for that given
year. Furthermore, as has been our
practice since the implementation of the
OPPS, we annually review all the items
and services within an APC group to
determine, with respect to
comparability of the use of resources,
any violations of the 2 times rule. In
making this determination, we review
our claims data and determine whether
we need to make changes to the current
APC assignments for the following year.
We will reevaluate the APC assignment
for CPT codes 62263 and 62264 for the
CY 2016 OPPS rulemaking.
After consideration of the public
comment that we received, we are
finalizing our CY 2015 proposal,
without modification, to continue to
assign CPT code 62263 to APC 0203 and
CPT code 62264 to APC 0207. The final
CY 2015 payment rates for the two
procedures can be found in Addendum
B to this CY 2015 OPPS/ASC final rule
with comment period (which is
available via the Internet on the CMS
Web site).
c. Transcranial Magnetic Stimulation
(TMS) Therapy (APC 0218)
Since July 2006, CPT codes have
existed to describe Transcranial
Magnetic Stimulation (TMS) therapy.
The initial CPT codes were temporary
Category III CPT codes, specifically,
CPT codes 0160T (Therapeutic
repetitive transcranial magnetic
stimulation treatment planning) and
0161T (Therapeutic repetitive
transcranial magnetic stimulation
treatment delivery and management, per
session), that became effective July 1,
2006. For CY 2011, the CPT Editorial

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Panel deleted CPT code 0160T on
December 31, 2010, and replaced this
procedure code with CPT code 90867
(Therapeutic repetitive transcranial
magnetic stimulation (tms) treatment;
initial, including cortical mapping,
motor threshold determination, delivery
and management), effective January 1,
2011. Similarly, CPT code 0161T was
deleted on December 31, 2010, and was
replaced with CPT code 90868
(Therapeutic repetitive transcranial
magnetic stimulation (tms) treatment;
subsequent delivery and management,
per session), effective January 1, 2011.
In CY 2012, the CPT Editorial Panel
established an additional TMS therapy
code, specifically, CPT code 90869
(Therapeutic repetitive transcranial
magnetic stimulation (tms) treatment;
subsequent motor threshold redetermination with delivery and
management), that became effective
January 1, 2012.
For the CY 2014 update, CPT codes
90867 and 90868 were assigned to APC
0216 (Level II Nerve and Muscle Tests),
with a payment rate of $216.79, and
CPT code 90869 was assigned to APC
0218 (Level II Nerve and Muscle Tests),
with a payment rate of $127.75. For the
CY 2015 update, as listed in Addendum
B to the CY 2015 OPPS/ASC proposed
rule, we proposed to continue to assign
CPT code 90869 to APC 0218, with a
proposed payment rate of approximately
$160. In addition, we proposed to
reassign CPT codes 90867 and 90868
from APC 0216 to APC 0218, the same
APC assignment for CPT code 90869.
Comment: One commenter disagreed
with CMS’ proposal to reassign CPT
codes 90867 and 90868 from APC 0216
to APC 0218, and to continue to assign
CPT code 90869 to APC 0218. The
commenter stated that the proposed
addition of certain nerve conduction
study codes to APC 0218 for the CY
2015 update has negatively affected the
proposed payment rate for APC 0218.
The commenter believed that this
proposal resulted in a decreased
payment rate of approximately $160 for
APC 0218, compared to the CY 2014
payment rate of approximately $217;
thereby effectuating a potential financial
loss for the provider with each
treatment because a typical course of
TMS therapy includes a total of 25 daily
treatment sessions. In addition, the
commenter stated that assigning CPT
codes 90867, 90868, and 90869 to APC
0218 is clinically inappropriate because
these CPT codes describe therapy
services, whereas the other procedure
codes assigned to APC 0218 describe
diagnostic tests (simple nerve
conduction and electromyography
studies). To correct the perceived

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66857

clinical and resource discrepancies, the
commenter suggested that CMS
establish a new APC specifically for the
TMS therapy codes, and that CMS title
the APC ‘‘Transcranial Magnetic
Stimulation.’’
Response: We believe that APC 0218
is the most appropriate APC assignment
for the three TMS therapy CPT codes.
The CPT codes describing the
procedures assigned to APC 0218 all
describe noninvasive services that affect
the nervous system. Based on the latest
hospital outpatient claims data used for
this final rule with comment period, our
analysis revealed that the resources
associated with providing the services
described by CPT codes 90867, 90868,
and 90869 are comparable to the other
services assigned to APC 0218.
Specifically, based on CY 2013 claims
data used for this final rule with
comment period, the geometric mean
cost for CPT code 90867 is
approximately $210 based on 72 single
claims (out of 72 total claims), the
geometric mean cost for CPT code 90868
is approximately $201 based on 2,513
single claims (out of 2,516 total claims),
and the geometric mean cost for CPT
code 90869 is approximately $194 based
on 28 single claims (out of 30 total
claims). In addition, a review of the
procedures assigned to APC 0218 shows
that the range of geometric mean cost for
the services assigned to APC 0218 is
approximately between $95 (for CPT
code 95937) and $327 (for CPT code
95875), which is comparable to the
geometric mean costs for all three TMS
therapy CPT codes. Based on the
clinical and resource similarities in
relation to the other procedures
currently assigned to APC 0218, we
believe that the TMS therapy codes
would be appropriately assigned to APC
0218.
After consideration of the public
comment we received, we are finalizing
our CY 2015 proposal, without
modification, to reassign CPT codes
90867 and 90868 from APC 0216 to APC
0218, and to continue to assign CPT
code 90869 to APC 0218 for CY 2015.
5. Ocular Services: Ophthalmic
Procedures and Services
For the CY 2015 OPPS update, based
on our evaluation of the latest hospital
outpatient claims data, we proposed to
restructure all of the ophthalmic APCs
to better reflect the costs and clinical
characteristics of the procedures within
each APC. This proposed restructuring
resulted in the use of 13 APCs for the
ophthalmology-related procedures for
the CY 2015 OPPS update, as compared
to the 24 APCs used for the CY 2014
OPPS update. We believe that this major

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restructuring and consolidation of APCs
more appropriately categorizes all of the
ophthalmology-related procedures and
services within an APC group, such that
the services within each newlyconfigured APC are more comparable
clinically and with respect to resource
use. Tables 19 and 20 in the proposed
rule showed the current CY 2014 and
proposed CY 2015 ophthalmologyrelated APCs. Specifically, Table 19 of
the CY 2015 OPPS/ASC proposed rule
(79 FR 40981) showed the CY 2014
ophthalmology-related APCs and status
indicator assignments, while Table 20
showed the proposed restructured
ophthalmology-related APCs and their
status indicator assignments for CY
2015 (79 FR 40981 through 40982). The
proposed payment rates for the
ophthalmology-related APCs listed in
Table 20 were listed in Addendum B to
the proposed rule (which is available
via the Internet on the CMS Web site).
In the CY 2015 OPPS/ASC proposed
rule, we invited public comments on
this proposal.
Comment: Several commenters stated
that the proposed restructuring and
consolidation of the CY 2015
ophthalmic APC is substantial, and
requested that CMS not finalize this
proposal. The commenters also stated
that CMS has not provided information
regarding the criteria used to
differentiate the various levels of
treatments or procedures for the
restructured 13 ophthalmic APCs. The
commenters stated that the
configuration and structure of the
existing 24 APCs do not appear to be
inconsistent with the requirements for
clinical coherence or resource use. The
commenters disagreed with CMS’
proposal to establish broader categories
within these APCs, and indicated that
such a change in APC groupings has the
potential to aggregate procedures that
vary significantly in resource costs and
clinical coherence. In addition, the
commenters stated that some of the

procedures in the restructured
ophthalmic APCs appear to be
inappropriately categorized. For
example, the restructuring of the
ophthalmic APCs has resulted in the
consolidation of cornea procedures
within one of the restructured APCs,
and the procedures are no longer
assigned to a separate classification
grouping based on the previous APC
configurations. The commenters pointed
out that the major cornea transplant
codes have been reassigned to
restructured APC 0673 (Level III
Intraocular Procedures), along with
procedures that treat glaucoma and
retina conditions. The commenters
further explained that the equipment
used for these services when performed
in alternative settings and the depths of
the condition of the eye and the
appropriate treatments vastly differ, as
does the time and other resources
necessary to perform these types of
surgeries. As a result, the commenters
believed that additional APCs are
needed to appropriately categorize
ophthalmic procedures based on
clinical homogeneity and resource
consumption. The commenters also
requested the opportunity to work with
CMS to make appropriate adjustments
to the restructured ophthalmic APC
groupings to ensure clinical coherence
and to minimize payment variances for
these procedures.
Response: Consistent with CMS’
statutory requirement under section
1833(t)(9) of the Act to review and
revise APC assignments annually and to
construct the most appropriate APC
groupings, as well as, to the extent
desirable, correct any 2 times rule
violations, we evaluated the resource
consumption and clinical coherence
associated with the ophthalmic APCs
for the CY 2015 update. Based on our
analysis of the latest hospital outpatient
claims data used for this final rule with
comment period and understanding of
the clinical aspects of these procedures,

we believe that the restructured and
consolidated ophthalmic APCs more
appropriately group these
ophthalmology-related services
according to their current resource
costs, as well as their clinical
characteristics. The former ophthalmic
procedures APC structure unnecessarily
separated, from a clinical and resource
similarity prospective, ophthalmic
procedures based on disease state or
traditional subdivisions within
ophthalmic surgery. APC groupings
were never intended to precisely track
traditional ophthalmology subspecialty
divisions, such as cornea surgery, retina
surgery, or glaucoma surgery, as the
commenters suggested. We also believe
that larger APC groupings are more
consistent with a prospective payment
system than smaller groupings. We note
that we regularly accept meetings from
interested parties throughout the year,
and we encourage stakeholders to
continue a dialogue with us during the
rulemaking cycle and throughout the
year on our continuing efforts to
improve the coherence of the OPPS APC
groupings.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to restructure and
consolidate the ophthalmic APCs. Table
22 below shows the final
ophthalmology-related APCs and their
status indicator assignments for CY
2015. The final payment rates for these
APCs can be found in Addendum B to
this CY 2015 OPPS/ASC final rule with
comment period (which is available via
the Internet on the CMS Web site). We
also remind the public that we review
the OPPS and APC structures and
assignments annually and may propose
additional restructurings of the APCs
and procedure code assignments for
other clinical areas and APC groupings
in CY 2016 and future rulemakings.

TABLE 22—FINAL CY 2015 APC ASSIGNMENTS FOR THE OPHTHALMIC PROCEDURES AND SERVICES
Final CY 2015 APC title description

Final CY
2015 status
indicator

Level I Eye Tests & Treatments ................................................................................................................
Level III Eye Tests & Treatments ..............................................................................................................
Level II Intraocular Procedures ..................................................................................................................
Level I Extraocular, Repair, and Plastic Eye Procedures .........................................................................
Level II Extraocular, Repair, and Plastic Eye Procedures ........................................................................
Level III Extraocular, Repair, and Plastic Eye Procedures .......................................................................
Level IV Extraocular, Repair, and Plastic Eye Procedures .......................................................................
Laser Eye Procedures ...............................................................................................................................
Level I Intraocular Procedures ...................................................................................................................
Level IV Intraocular Procedures ................................................................................................................
Level V Intraocular Procedures .................................................................................................................
Level III Intraocular Procedures .................................................................................................................

S
S
T
T
T
T
T
T
T
J1
J1
T

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Final CY 2015 APC
0230
0231
0233
0238
0239
0240
0242
0247
0255
0293
0351
0673

................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................

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66859

TABLE 22—FINAL CY 2015 APC ASSIGNMENTS FOR THE OPHTHALMIC PROCEDURES AND SERVICES—Continued
Final CY 2015 APC

Final CY 2015 APC title description

Final CY
2015 status
indicator

0698 ................................

Level II Eye Tests & Treatments ...............................................................................................................

S

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6. Imaging
a. Echocardiography Services Without
Contrast (APCs 0269, 0270, and 0697)
We proposed to continue to use for
the CY 2015 update the three APCs that
describe echocardiography services
without contrast, APC 0697 (Level I
Echocardiogram Without Contrast), APC
0269 (Level II Echocardiogram Without
Contrast), and APC 0270 (Level III
Echocardiogram Without Contrast), and
to maintain the CY 2014 HCPCS code
assignments for these APCs.
Comment: One commenter requested
that CMS reexamine the services
assigned to the APCs for
echocardiography services without
contrast. In particular, the commenter
requested that CMS reassign CPT codes
76825 (Echocardiography, fetal,
cardiovascular system, real time with
image documentation (2D), with or
without M-mode recording); and 76826
(Echocardiography, fetal, cardiovascular
system, real time with image
documentation (2D), with or without Mmode recording; follow-up or repeat
study) from APC 0697 to APC 0269
based on the clinical and resource
similarities to the other
echocardiography procedures assigned
to APC 0269.
Response: Based on our review of the
latest hospital outpatient claims data
available for this final rule with
comment period, we agree with the
commenter that CPT codes 76825 and
76826 should be reassigned to APC
0269, which more appropriately
supports the clinical and resource
homogeneity of the APCs rather than
reassigning the procedure codes to APC
0697. The geometric mean cost of CPT
code 76825 is approximately $384, and
the geometric mean cost of CPT code
76826 is approximately $285. These
costs are sufficiently close to the
geometric mean cost of CPT code 93306
(Echocardiography, transthoracic, real
time with image documentation (2D),
includes M-mode recording, when
performed, complete, with spectral
Doppler echocardiography, and with
color flow Doppler echocardiography),
which is approximately $430. CPT code
93306 comprises 93 percent of the
service volume within APC 0269. By
reassigning CPT codes 76825 and 76826
to APC 0269, only one procedure code

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would remain in APC 0697. Therefore,
we also are reassigning CPT code 93308
(Echocardiography, transthoracic, real
time with image documentation (2D),
includes M-mode recording, when
performed, follow-up or limited study)
from APC 0697 to APC 0267 (Level III
Diagnostic and Screening Ultrasound)
for CY 2015. We are deleting APC 0697
for the CY 2015 OPPS update because
all of the procedure codes previously
assigned to APC 0697 have been
reassigned to more appropriate APCs to
ensure adequate payment for the
services provided and the clinical and
resource homogeneity of APCs.
b. Optical Coherence Tomography
(OCT) Procedures of the Breast
For the July 2014 quarterly update,
the CPT Editorial Panel established four
new Category III CPT codes to describe
optical coherence tomography (OCT)
procedures of the breast: CPT code
0351T (Optical coherence tomography
of breast or axillary lymph node,
excised tissue, each specimen; real time
intraoperative); CPT code 0352T
(Optical coherence tomography of breast
or axillary lymph node, excised tissue,
each specimen; interpretation and
report, real time or referred); CPT code
0353T (Optical coherence tomography
of breast, surgical cavity; real time
intraoperative); and CPT code 0354T
(Optical coherence tomography of
breast, surgical cavity; interpretation
and report, real time or referred). As
listed in Table 17 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40976), we
proposed to assign CPT codes 0351T
and 0353T to OPPS status indicator ‘‘N’’
(paid under OPPS; payment is packaged
into payment for other services; there is
no separate APC payment), and CPT
codes 0352T and 0354T to OPPS status
indicator ‘‘B’’ (codes that are not
recognized by OPPS when submitted on
an outpatient hospital Part B bill type
(12x and 13x)).
Comment: Some commenters
expressed concern regarding CMS’
proposal to assign CPT codes 0351T and
0353T to OPPS status indicator ‘‘N’’ and
noted that both procedures describe
independent, unique services and
should be assigned to specific APCs.
The commenters recommended
assigning CPT codes 0351T and 0353T
to any one of the following APCs: APC

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0028 (Level I Breast and Skin Surgery),
which had a proposed payment rate of
approximately $2,176; APC 0029 (Level
II Breast and Skin Surgery), which had
a proposed payment rate of
approximately $3,018; or APC 0030
(Level III Breast and Skin Surgery),
which had a proposed payment rate of
approximately $4,150.
Response: Consistent with our
packaging policy for intraoperative
procedures, we proposed to assign CPT
codes 0351T and 0353T to OPPS status
indicator ‘‘N’’ because both procedure
codes describe supportive dependent
services that are performed during
independent procedures. As clarified in
the CY 2008 OPPS final rule with
comment period (72 FR 66627), we
define ‘‘intraoperative’’ procedures as
services that are provided during and,
therefore, on the same date of service as
another procedure that is separately
payable under the OPPS. We further
define intraoperative as services that
support the performance of an
independent procedure and are
provided in the same operative session
as the independent procedure. Both of
the procedures described by CPT codes
0351T and 0353T must always be
performed in conjunction with another
procedure; specifically, the surgical
procedure is performed followed by the
breast OCT to improve the surgical
outcome. We believe that these
procedure codes clearly describe
services that conform to the definition
of ‘‘intraoperative’’ procedures. For
further information on our policy for
intraoperative services under the
hospital OPPS, we refer readers to the
CY 2008 OPPS final rule with comment
period (72 FR 66627 through 66630).
In summary, we believe that CPT
codes 0351T and 0353T are procedures
that support the performance of an
independent procedure and are
provided in the same operative session
as the independent procedure.
Specifically, we believe that both
procedures are provided during and,
therefore, on the same date of service as
another procedure that is separately
payable under the OPPS. In addition,
we believe that CPT codes 0351T and
0353T are always integral to, and
dependent upon, the independent
procedure that they support. Therefore,
payment for these services will be

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packaged because the procedures would
generally be performed on the same date
as another procedure that is separately
payable under the OPPS. After
consideration of the public comments
we received, we are finalizing our
proposals to assign CPT codes 0351T
and 0353T to OPPS status indicator ‘‘N’’
and CPT codes 0352T and 0354T to
OPPS status indicator ‘‘B’’ for CY 2015.
c. Parathyroid Planar Imaging (APCs
0263, 0317, 0406, and 0414)
For CY 2015, we proposed to assign
CPT code 78071 (Parathyroid planar
imaging (including subtraction, when
performed); with tomographic (SPECT))
to APC 0263 (Level I Miscellaneous
Radiology Procedures), for which we
proposed a CY 2015 geometric mean
cost of approximately $357. We also
proposed to assign CPT code 78072
(Parathyroid planar imaging (including
subtraction, when performed); with
tomographic (SPECT), and concurrently
acquired computed tomography (CT) for
anatomical localization) to APC 0317
(Level II Miscellaneous Radiology
Procedures), for which we proposed a
CY 2015 geometric mean cost of
approximately $577. In addition, we
proposed to change the status indicators
for CPT codes 78071 and 78072 from
‘‘X’’ to ‘‘S.’’
Comment: Commenters agreed with
CMS’ proposal to assign CPT codes
78071 and 78072 to status indicator ‘‘S,’’
but opposed the proposal to assign CPT
code 78071 to APC 0263. The
commenters believed that CPT codes
78071 and 78072 should be assigned to
the nuclear medicine APCs instead of
the radiology APCs because the nuclear
medicine APCs are more representative
of the resources utilized in the
performance of these procedures. The
commenters suggested that CMS assign
CPT codes 78071 and 78072 to either
APC 0414 (Level II Tumor/Infection
Imaging) or 0408 (Level III Tumor/
Infection Imaging).
Response: We agree with the
commenters that the resources utilized
in the performance of the procedures
described by CPT codes 78071 and
78072 are more comparable to the
procedures assigned to the nuclear
medicine APCs. However, we do not
agree with the commenters that CPT
codes 78071 and 78072 are more
appropriately assigned to either APC
0408 or APC 0414. We believe that APC
0406 (Level I Tumor/Infection Imaging)
is the most appropriate APC assignment
for CPT codes 78071 and 78072 because
the procedures currently assigned to
APC 0406 are similar to the procedures
described by CPT codes 78071 and
78072 in clinical nature and resource

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utilization. The final CY 2015 APC
geometric mean costs of approximately
$362 for CPT code 78071 and
approximately $427 for CPT code 78072
are similar to the geometric mean costs
of the significant procedures assigned to
APC 0406, which range between
approximately $307 and approximately
$427.
After consideration of the public
comments we received, we are not
finalizing our CY 2015 proposal to
assign CPT codes 78071 and 78072 to
APCs 0263 and 0317, respectively.
Instead, based on consideration of the
public comments we received, for CY
2015, we are assigning CPT codes 78071
and 78072 to APC 0406, which has a
final CY 2015 APC geometric mean cost
of approximately $391.
7. Radiology Oncology
a. Proton Beam Therapy and
Magnetoencephalography (MEG)
Services (APCs 0065, 0412, 0446, 0664,
and 0667)
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40989), we proposed several
changes to the radiation therapy APCs
for CY 2015. To correct a violation of
the 2 times rule within APC 0664 (Level
I Proton Beam Radiation Therapy), we
proposed to reassign CPT code 77520
from APC 0664 to APC 0412 (Level III
Radiation Therapy). We believe that
CPT code 77520 is both clinically
similar and comparable in geometric
mean cost to the other services assigned
to APC 0412. We also proposed to
reassign CPT code 77522 from APC
0664 to proposed newly renamed APC
0667 (Level IV Radiation Therapy)
because we believe that the procedure
described by CPT code 77522 is both
clinically similar and comparable in
geometric mean cost to the other
services assigned to APC 0667. Because
there would be no other codes assigned
to APC 0664 if these proposed
reassignments are finalized, we also
proposed to delete APC 0664 for CY
2015 (79 FR 40989). In addition, we
proposed to rename existing APC 0667
to ‘‘Level IV Radiation Therapy’’
(instead of using the existing title of
‘‘Level II Proton Beam Radiation
Therapy’’), to make the title consistent
with other APCs in the radiation
therapy series. In conjunction with this
proposed change, we proposed to
reassign the following three services to
proposed newly renamed APC 0667 for
CY 2015: CPT codes 77522, 77523, and
77525.
Comment: Commenters generally
supported CMS’ proposals regarding the
radiation therapy APCs, with one
exception. The commenters supported

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the proposal to reassign CPT code 77520
from APC 0664 to APC 0412. However,
the commenters expressed concern
regarding the proposal to reassign CPT
code 77522 from APC 0664 to proposed
newly renamed APC 0667. Commenters
disagreed with CMS’ determination that
the procedure described by CPT code
77522 is clinically similar and
comparable in geometric mean cost to
the other services assigned to APC 0667
in 2014, specifically the procedures
described by CPT codes 77523 and
77525. The commenters recommended
that CMS maintain the assignment of
CPT code 77522 to APC 0664 and not
delete the classification grouping, which
would result in CPT code 77522 being
the only service assigned to this APC.
Response: We appreciate the
commenters’ support for our proposals
regarding the radiation therapy APCs,
specifically our proposal to reassign
CPT code 77520 from APC 0664 to APC
0412. In regard to the proposed
reassignment of CPT code 77522 from
APC 0664 to APC 0667, we disagree
with the commenters for the following
reasons. The three CPT codes, 77522,
77523, and 77525, are similar clinically.
All three of these CPT codes describe
procedures that involve proton beam
therapy delivery services with a
continuum of complexity. The
procedure described by CPT code 77520
is the least complex. The procedure
described by CPT code 77522 is more
complex than the procedure described
by CPT code 77520, and the procedure
described by CPT code 77523 is more
complex than the procedure described
by CPT code 77522. The procedure
described by CPT code 77525 is the
most complex procedure of the series
proposed to be reassigned to APC 0667.
We proposed to reassign CPT code
77520 from APC 0664 to APC 0412
because of the resource comparability
with respect to the other procedures
involving proton beam therapy delivery
services assigned to APC 0412, not
based on the clinical dissimilarity with
respect to the procedures assigned to
APC 0664. In regard to the remaining
three procedures involving proton beam
therapy delivery services (the
procedures described by CPT codes
77522, 77523, and 77525), we believe
that these procedures are clinically
similar, but each has a slightly varying
level of complexity relative to the
others. The proposed configuration of
APC 0667 only contains the three
proton beam therapy delivery services
described by CPT codes 77522, 77523,
and 77525, and does not include any
other service codes. APC 0667 is the
most clinically homogeneous APC

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under the OPPS to assign these services
that would ensure adequate payment,
with the exception of single service
APCs. With regard to the resource
comparability of the procedures
described by CPT codes 77522, 77523
and 77525, the lowest geometric mean
cost among these procedures is
associated with the procedure described
by CPT code 77522, which is
approximately $1,033, and the highest
geometric mean cost is associated with
the procedure described by CPT code
77525, which is approximately $1,244.
The statutory prong that dictates when
resources become dissimilar between
two services is the 2 times rule. Based
on the limitations imposed by the 2
times rule, the highest cost significant
service assigned to an APC cannot
exceed the lowest cost by greater than
two times. In this case, the geometric
mean cost of the procedure described by
CPT code 77525 is only 1.2 times the
geometric mean cost of the procedure
described by CPT code 77522, which is
well within the 2 times limit. Therefore,
we determined that the resource
similarity among the services proposed
to be reassigned to APC 0667 is
comparable. In addition, we generally
prefer to assign procedures to the most
appropriate APC that would ensure
adequate payment, as opposed to using
single-service APCs, which the
commenters recommended for the
procedure described by CPT code
77522, unless no other reasonable
options exist, because single-service
APCs are more consistent with a fee
schedule than a prospective payment
system.
Therefore, we are finalizing the
following proposals affecting the proton
beam therapy services for CY 2015: (1)
We are reassigning CPT code 77520
from APC 0664 to APC 0412; (2) we are
reassigning CPT code 77522 from 0664
to APC 0667;(3) we are reassigning CPT
codes 77523 and 77525 to APC 0667; (4)
we are deleting APC 0664; and (5) we
are renaming APC 0667 to ‘‘Level IV
Radiation Therapy.’’
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40989), we also proposed to
delete APC 0065 (IORT, MRgFUS, and
MEG) because we proposed to reassign
the services assigned to this APC to
more appropriate APCs based on
clinical similarities and comparable
geometric mean cost. With respect to
MEG services, we proposed to reassign
the MEG CPT codes 95965 and 95966
from APC 0065 to APC 0446 (Level IV
Nerve and Muscle Services), which
would only contain MEG services.
Comment: One commenter applauded
CMS for the establishment of new APC
0446, the APC to which the MEG

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procedures are proposed to be
reassigned. The commenter believed
that the reassignment of CPT codes
95965 and 95966 would produce more
accurate data related to MEG usage.
Alternatively, one commenter expressed
concern that the current proposal does
not adequately cover the costs
associated with providing MEG services,
and urged CMS to work with hospitals
and other stakeholders to ensure that
HOPDs submit claims correctly to
capture the full costs of providing these
services.
Response: Based on our analysis of
the latest hospital outpatient claims data
used for this final rule with comment
period, we believe that the
establishment of APC 0446 is necessary
to ensure clinical and resource
homogeneity and adequate payment for
MEG services. Therefore, after
consideration of the public comments
we received, we are finalizing our CY
2015 proposal without modification. As
we do every year, we will review our
claims data for these services for the CY
2016 OPPS rulemaking.
b. Stereotactic Radiosurgery Services
(SRS) and Magnetic Resonance Image
Guided Focused Ultrasound (MRgFUS)
(APC 0066)
For CY 2015, for SRS, we proposed to
continue to assign CPT code 77373
(Stereotactic body radiation therapy,
treatment delivery, per fraction to 1 or
more lesions, including image guidance,
entire course not to exceed 5 fractions)
to APC 0066, with a proposed payment
rate of approximately $1,893. We also
proposed to rename APC 0066 from
‘‘Level I Stereotactic Radiosurgery’’ to
‘‘Level V Radiation Therapy’’ (79 FR
40989).
In addition, we proposed to continue
to assign CPT codes 77371 (Radiation
treatment delivery, stereotactic
radiosurgery (SRS), complete course of
treatment of cranial lesion(s) consisting
of 1 session; multi-source cobalt 60
based) and 77372 (Radiation treatment
delivery, stereotactic radiosurgery
(SRS), complete course of treatment of
cranial lesion(s) consisting of 1 session;
linear accelerator based) to APC 0067
(Single Session Cranial Stereotactic
Radiosurgery), with a proposed payment
rate of approximately $9,768. We also
proposed to rename APC 0067 from
‘‘Level II Stereotactic Radiosurgery’’ to
‘‘Single Session Cranial Stereotactic
Radiosurgery,’’ which we proposed as a
C–APC. For further discussion regarding
C–APCs and SRS CPT codes 77371 and
77372 assigned to C–APC 0067, we refer
readers to section II.A.2.e. of this final
rule with comment period.
Comment: Several commenters
requested that CMS reinstate the use of

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SRS G-codes because the SRS CPT
codes do not accurately describe current
clinical practices or adequately cover
the cost of providing fractionated linacbased SRS.
Response: For the CY 2014 update, we
finalized our proposal to adopt the full
range of SRS CPT codes and to
discontinue the use of the remaining
SRS G-codes under the OPPS. HOPDs
must use and report SRS CPT codes
77371, 77372, and 77371 to describe the
delivery of stereotactic radiosurgery
treatment services under the OPPS. For
a full discussion of this issue, we refer
readers to the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74989
through 749995). In addition, for the CY
2015 update, HCPCS code G0173
(Linear accelerator based stereotactic
radiosurgery, complete course of
therapy in one session), and HCPCS
code G0251 ((Linear accelerator based
stereotactic radiosurgery, delivery
including collimator changes and
custom plugging, fractionated treatment,
all lesions, per session, maximum five
sessions per course of treatment)) will
be deleted, effective December 31, 2014,
because these codes will no longer be
used under the MPFS. However, HCPCS
code G0339 (Image-guided robotic linear
accelerator-based stereotactic
radiosurgery, complete course of
therapy in one session or first session of
fractionated treatment) and HCPCS code
G0340 (Image-guided robotic linear
accelerator-based stereotactic
radiosurgery, delivery including
collimator changes and custom
plugging, fractionated treatment, all
lesions, per session, second through
fifth sessions, maximum five sessions
per course of treatment) will continue to
be used under the MPFS and, therefore,
will continue to be active codes for the
CY 2015 MPFS update. However,
HCPCS codes G0339 and G0340 will not
be active codes for the CY 2015 OPPS
update. Instead, HOPDs must use and
report SRS CPT codes 77371, 77372,
and 77373 to describe the delivery of
stereotactic radiosurgery treatment
services under the OPPS.
Comment: Many commenters
requested that CMS reassign HCPCS
code G0251 to a different APC to resolve
a violation of the 2 times rule within
APC 0066. Several commenters
recommended excluding the claims data
for HCPCS code G0251 prior to
determining the final payment rate for
APC 0066. The commenters indicated
that HCPCS code G0251 is used most
often for fractionated cranial SRS, not
for stereotactic body radiation therapy
(SBRT), as described by CPT code
77373.

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Response: Both HCPCS code G0251
and CPT code 77373 describe
fractionated cranial stereotactic
radiosurgery services that involve
between 2 and 5 fractions of treatment.
Single-session cranial SRS are reported
using either CPT code 77371 or 77372.
Based on the code descriptor, we
believe that the service described by
HCPCS code G0251 is appropriately
crosswalked to the service described by
CPT code 77373. We explained the code
crosswalk in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
74991).
We note that, under the OPPS, we
may make exceptions to the 2 times rule
in unusual cases, such as low-volume
items or services. For the CY 2015
update (taking into consideration the
APC changes that we proposed for CY
2015), we reviewed all of the APCs to
determine which APCs would not
satisfy the requirement of the 2 times
rule. In the case of APC 0066, we
believe that it is necessary to make an
exception to the 2 times rule for this
APC because the three G-codes that
caused the violation of the 2 times rule
to occur have been crosswalked to CPT
code 77373. We expect to have claims
data for only CPT code 77373 available
for the CY 2016 rulemaking. At that
time, we will reevaluate the APC
assignments for all of the SRS CPT
codes.
In addition to our proposal to
continue to assign SRS CPT code 77373
to APC 0066, we proposed to assign all
four of the MRgFUS procedures to APC
0066 because in the past MRgFUS
services were assigned to the same APC
as some of the former SRS G-codes for
fractionated linac-based SRS.
Specifically, for CY 2015, we proposed
to reassign HCPCS codes 0071T
(Focused ultrasound ablation of uterine
leiomyomata, including mr guidance;
total leiomyomata volume less than 200
cc of tissue), 0072T (Focused ultrasound
ablation of uterine leiomyomata,
including mr guidance; total
leiomyomata volume greater or equal to
200 cc of tissue), C9734 (Focused
ultrasound ablation/therapeutic
intervention, other than uterine
leiomyomata, with magnetic resonance
(mr) guidance), and 0301T (Destruction/
reduction of malignant breast tumor
with externally applied focused
microwave, including interstitial
placement of disposable catheter with
combined temperature monitoring probe
and microwave focusing sensocatheter
under ultrasound thermotherapy
guidance) from APC 0065 (IORT,
MRgFUS, and MEG) to APC 0066. We
proposed to delete APC 0065 for CY
2015.

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Comment: Several commenters stated
that the proposed payment rate for APC
0066 of approximately $1,893 does not
adequately reflect the level of resources
required to perform MRgFUS
procedures. Instead, the commenters
believed that the MRgFUS procedures
are similar to the stereotactic
radiosurgery procedures that are
assigned to C–APC 0067 in terms of
treatment set-up, delivery of radiation,
and post-procedure recovery. The
commenters further believed that the
MRgFUS procedures would be more
appropriately assigned to a C–APC from
a clinical and resource perspective. The
commenters explained that certain
procedures are commonly reported in
conjunction with MRgFUS procedures,
similar to stereotactic radiosurgery
procedures. Therefore, the commenters
recommended that CMS reassign the
MRgFUS procedures to C–APC 0067.
Response: CPT codes 0071T and
0072T became effective January 1, 2005.
CPT code 0301T became effective
January 1, 2012. HCPCS code C9734
became effective April 1, 2013.
Currently, we do not have any single
claims reporting any of the four
MRgFUS procedures. However, because
we are deleting APC 0065, we believe
that reassigning these procedures to
APC 0066 for the CY 2015 update is
more appropriate because, in the past,
MRgFUS services were assigned to the
same APC as some of the former
fractionated linac-based SRS G-codes.
We also believe that the MRgFUS
procedures are clinically dissimilar to
single-session cranial SRS because
MRgFUS procedures may involve more
than one treatment session. However,
we will review and consider the
comments related to C–APC 0067 in a
future annual update.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification. Specifically, for SRS CPT
code 77373, we are finalizing our
proposal to continue to assign this code
to APC 0066 for the CY 2015 update. In
addition, we are finalizing our proposal
to reassign MRgFUS HCPCS codes
0071T, 0072T, 0301T, and C9734 from
APC 0065 to APC 0066 for CY 2015. We
are deleting APC 0065 for CY 2015.
Because we are deleting APC 0065, we
are renaming APC 0066 from ‘‘Level I
Stereotactic Radiosurgery’’ to ‘‘Level V
Radiation Therapy.’’ The final payment
rates for SRS CPT code 77373 and
MRgFUS HCPCS codes 0071T, 0072T,
0301T, and C9734 can be found in
Addendum B to this final rule with
comment period, which is available via
the Internet on the CMS Web site.

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8. Respiratory Services: Level II
Endoscopy Lower Airway (APC 0415)
In the CY 2015 OPPS/ASC proposed
rule, we proposed to continue the APC
assignment of the procedure codes that
have been historically assigned to APC
0415 (Level II Endoscopy Lower
Airway). Commenters responding to the
CY 2014 OPPS/ASC proposed rule had
recommended that CMS split the
procedure codes assigned to APC 0415
into two levels of lower airway
endoscopy APCs. We did not split APC
0415 into two levels for CY 2014, as the
commenters suggested, because the
geometric mean costs would have been
based on a relatively low volume of
single frequency claims and would have
potentially effectuated APC and cost
volatility (78 FR 74996). In the CY 2015
OPPS/ASC proposed rule, we did not
propose any changes to the composition
of APC 0415. There were not any
violations of the 2 times rule for the
services assigned to APC 0415 based on
claims data available for the proposed
rule. The proposed geometric mean cost
of APC 0415 was approximately $2,368.
Comment: Several commenters
recommended that CMS create a Level
III Lower Airway Endoscopy APC and
assign the procedure codes currently
assigned and proposed for continued
assignment to APC 0415 to this newly
created APC based on geometric mean
costs, procedure complexity, and
clinical similarity. Specifically, one
commenter recommended that CMS
assign CPT code 31647 (Bronchoscopy,
rigid or flexible, including fluoroscopic
guidance, when performed; with
balloon occlusion, when performed,
assessment of air leak, airway sizing,
and insertion of bronchial valve(s),
initial lobe) to the recommended Level
III APC. Another commenter
recommended that CMS assign CPT
code 31626 (Bronchoscopy, rigid or
flexible, including fluoroscopic
guidance, when performed; with
placement of fiducial markers, single or
multiple) to the recommended Level III
APC. One commenter recommended
that seven specific procedure codes be
assigned to the newly created Level III
APC, namely: CPT codes 31634
(Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with balloon occlusion, with
assessment of air leak, with
administration of occlusive substance
(eg, fibrin glue), if performed), 31638
(Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with revision of tracheal or
bronchial stent inserted at previous
session (includes tracheal/bronchial
dilation as required)), 31626, 31631

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(Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with placement of tracheal
stent(s) (includes tracheal/bronchial
dilation as required)), 31636
(Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with placement of bronchial
stent(s) (includes tracheal/bronchial
dilation as required), initial bronchus),
31660 (Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with bronchial
thermoplasty, 1 lobe), and 31661
(Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when
performed; with bronchial
thermoplasty, 2 or more lobes). The
commenters believed that a new Level
III Lower Airway Endoscopy APC
would more accurately reflect the costs
of expensive lower airway procedures
that utilize new technologies.
Response: We believe that there is
considerable clinical similarity in regard
to the procedures assigned to APC 0415.
All of the procedures are lower airway
bronchoscopy procedures and are
generally clinically more complex than
the lower airway endoscopy procedures
assigned to APC 0076 (Level I
Endoscopy Lower Airway). We do not
believe that the range of costs for the
significant procedures assigned to APC
0415 warrants the creation of a Level III
lower airway endoscopy APC. The final
rule geometric mean cost for APC 0415
is approximately $2,341. Several of the
procedures that the commenters
recommended for assignment to the
recommended Level III APC have final
rule geometric mean costs comparable
to the geometric mean cost of APC 0415.
For CY 2015, CPT code 31634 has a
final geometric mean cost of
approximately $1,539; CPT code 31638
has a final geometric mean cost of
approximately $2,320; and CPT code
31626 has a final geometric mean cost
of approximately $2,897. The other CPT
codes recommended by the commenters
have somewhat higher approximate
geometric mean costs, namely: CPT
code 31631 (which has a geometric
mean cost of approximately $3,488),
CPT code 31661 (which has a geometric
mean cost of approximately $3,789),
CPT code 31660 (which has a geometric
mean cost of approximately $3,840), and
CPT code 31636 (which has a geometric
mean cost of approximately $4,090).
Assigning any of these procedures to
APC 0415 does not create a violation of
the 2 times rule when compared to the
geometric mean cost of the lowest
significant procedure assigned to this
APC, CPT code 31629 (Bronchoscopy,
rigid or flexible, including fluoroscopic

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guidance, when performed; with
transbronchial needle aspiration
biopsy(s), trachea, main stem and/or
lobar bronchus(i)), which is
approximately $2,186. Among the
procedures discussed above, CPT codes
31626 and 31660 describe the only
significant procedures assigned to this
APC and are the procedures that we
would normally apply the 2 times rule
provisions. There are not any violations
of the 2 times rule in regard to these
procedures’ costs. Although CPT code
31647 has a considerably higher
geometric mean cost of approximately
$5,373 based on 11 single frequency
claims, it is not a significant procedure.
We would not reassign this procedure to
another APC based on a violation of the
2 times rule. Moreover, considering the
final rule claims data for the five highest
cost procedures assigned to APC 0415,
the total number of single frequency
claims is 649. The possible composition
of a Level III lower airway endoscopy
APC would still be based on a low
volume of claims, similar to the low
volume of claims in regard to the Level
III lower airway endoscopy APC
recommended by the commenters in CY
2014. As we stated in the CY 2014
OPPS/ASC final rule with comment
period, a low-volume APC would
contribute to the APC’s cost volatility,
which in turn contributes to payment
volatility for the procedures assigned to
the low-volume APC (78 FR 74996).
After consideration of the public
comments we received regarding the
composition of APC 0415, we are
finalizing our proposal to continue the
assignment of the procedure codes that
have been historically assigned to APC
0415 for CY 2015. However, for CY
2016, we will explore possible changes
to the lower airway endoscopy APCs as
a part of our broader efforts to
thoroughly review, revise, and
consolidate APCs to improve both
clinical and resource homogeneity. The
CY 2015 final geometric mean cost of
APC 0415 is approximately $2,341.
9. Other Services
a. Epidermal Autograft (APC 0327)
In the CY 2014 OPPS/ASC final rule
with comment period, we assigned CPT
code 15110 to APC 0329 (Level IV Skin
Repair), with a payment rate of
approximately $2,260. The payment rate
for CPT code 15110 was derived from
the latest hospital outpatient claims data
used for the CY 2014 ratesetting, which
showed a geometric mean cost of
approximately $2,174 based on 10
single claims (out of 29 total claims).
As stated in section III.B. of this final
rule with comment period, we review,
on an annual basis, the APC

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assignments for all services and items
paid under the OPPS. Analysis of the
latest hospital outpatient claims data
available for the CY 2015 OPPS/ASC
proposed rule showed a geometric mean
cost for CPT code 15110 of
approximately $774 based on 90 single
claims (out of 122 total claims).
Therefore, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40987), we
proposed to reassign CPT code 15110
from APC 0329 to APC 0327 (Level II
Skin Procedures), which has a geometric
mean cost of approximately $451. We
believe that APC 0327 is the most
appropriate APC assignment for CPT
code 15110 when considering the
similarities in relation to the other
procedures assigned to this APC.
In addition, we proposed to revise the
APC titles for the four skin repair APCs
(79 FR 40987). Specifically, we
proposed to rename APC 0326 from
‘‘Level I Skin Repair’’ to ‘‘Level I Skin
Procedures,’’ APC 0327 from ‘‘Level II
Skin Repair’’ to ‘‘Level II Skin
Procedures,’’ APC 0328 from ‘‘Level III
Skin Repair’’ to ‘‘Level III Skin
Procedures,’’ and APC 0329 from ‘‘Level
IV Skin Repair’’ to ‘‘Level IV Skin
Procedures.’’
Table 28 of the proposed rule (79 FR
40987) showed the long descriptor, as
well as the proposed CY 2015 APC and
status indicator assignment for CPT
code 15110. The proposed CY 2015
payment rate for CPT code 15110 can be
found in Addendum B to the proposed
rule (which is available via the Internet
on the CMS Web site).
Comment: Several commenters
requested that CMS reevaluate the
claims data for CPT code 15110, and
recommended that CMS not finalize the
proposal to reassign the procedure code
to APC 0327. The commenters stated
that the procedure described by CPT
code 15110 allows patients with chronic
or non-healing wounds to recover much
sooner and without the use of expensive
surgical interventions, which has
resulted in cost savings for hospitals,
patients, and payers. Other commenters
suggested that CMS reassign CPT code
15110 to APC 0328 (Level III Skin
Procedures), which has a proposed CY
2015 payment rate of approximately
$1,408. The commenters believed that
APC 0328 has clinically similar
procedures and is more comparable to
the geometric mean costs of CPT code
15110. Another commenter believed
that the low volume of claims data for
CPT code 15110 is attributable to
providers and hospitals miscoding the
performance of the service by not
including the cost of the device.
Response: We reviewed the historical
claims data for CPT code 15110, dating

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back to CY 2008, which is the first year
that claims data for this code became
available. As listed in Table 23 below,
for CY 2008 through CY 2013, the
payment rate for CPT code 15110 has
ranged between $288.30 and $393.38
based on a range of single claims
between 3 and 8. In addition, for the CY
2014 update, which was based on
hospital outpatient claims data that
were submitted between January 1,
2012, and December 31, 2012, and
processed on or before June 30, 2013,
the payment rate for CPT code 15110
was significantly higher (approximately
$2,260.46) based on 10 single claims.
However, as has been our practice since
the implementation of the OPPS in

2000, we review, on an annual basis, the
APC assignments for the procedures and
services paid under the OPPS. Based on
the latest hospital outpatient claims data
used for this final rule with comment
period, our analysis does not support
the continued assignment of CPT code
15110 to APC 0329, which is the APC
to which the procedure was assigned
during CY 2014, or the suggested APC
0328. We examined the latest hospital
outpatient claims data for CPT code
15110 for dates of service between
January 1, 2013, and December 31, 2013,
that were processed on or before June
30, 2014. Our analysis of the claims data
shows a geometric mean cost for CPT
code 15110 of approximately $748

based on 127 single claims (out of 165
total claims). We do not believe that
APC 0328 is the most appropriate APC
assignment because the geometric mean
cost for this APC is approximately
$1,460, which is significantly higher
than the geometric mean cost for CPT
code 15110, which is approximately
$748. Assigning CPT code 15110 to APC
0328 would result in an overpayment
for the service provided. We believe that
APC 0327 is the most appropriate APC
assignment for CPT code 15110 based
on clinical homogeneity to the other
skin-related procedures assigned to this
APC.

TABLE 23—HISTORICAL AND CURRENT OPPS CLAIMS AND PAYMENT INFORMATION FOR CPT CODE 15110
Calendar year
(CY)

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2008
2009
2010
2011
2012
2013
2014
2015

OPPS payment rate

.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................

Further, based on our analysis of the
CY 2013 hospital outpatient claims data
used for this final rule with comment
period, we are unable to determine
whether hospitals are miscoding claims
reporting this service. For all APCs
whose payment rates are based upon
relative payment weights, we note that
the quality and accuracy of reported
units and charges influence the
geometric mean costs that are the basis
for our payment rates, especially for
low-volume items and services. Beyond
our standard OPPS trimming
methodology (described in section
II.A.2. of this final rule with comment
period) that we apply to those claims
that have passed various types of claims
processing edits, it is not our general
policy to determine the accuracy of
hospital coding and charging practices
for purposes of ratesetting (75 FR
71838). We rely on hospitals to bill all
HCPCS codes accurately in accordance
with their code descriptors and CPT and
CMS instructions, as applicable, and to
report charges on claims and charges
and costs on their Medicare hospital
cost report appropriately. In addition,
we do not specify the methodologies
that hospitals must use to set charges for
this or any other service.
After consideration of the public
comments we received, we are
finalizing our proposal, without

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modification, to reassign CPT code
15110 to APC 0327 for CY 2015. The
final payment rate for CPT code 15110
can be found in Addendum B to this
final rule with comment period, which
is available via the Internet on the CMS
Web site.
b. Image-Guided Breast Biopsy
Procedures and Image-Guided Abscess
Drainage Procedures (APCs 0005 and
0007)
For the CY 2014 OPPS update, the
AMA’s CPT Editorial Panel deleted the
image-guided breast biopsy CPT codes
19102 and 19103 and replaced these
procedure codes with six new CPT
codes that ‘‘bundled’’ payment for
associated imaging services, effective
January 1, 2014. As shown in Table 23
of the proposed rule (79 FR 40983), CPT
codes 19102 and 19103 described
percutaneous image-guided breast
biopsies using specific devices.
Specifically, CPT code 19102 described
a breast biopsy performed using a core
needle, and CPT code 19103 described
a breast biopsy performed using either
a vacuum-assisted or rotating device.
In CY 2013, to appropriately report
the performance of an image-guided
breast biopsy using a core needle, an
automated vacuum-assisted device, or a
rotating biopsy device, multiple
procedure codes were required to
identify the specific service performed.

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$288.30
292.68
299.19
319.74
344.98
393.38
2,260.46
429.95

Single claims
3
3
8
5
4
4
10
127

Total claims
16
15
22
16
19
30
29
165

That is, a procedure code describing the
device-related breast biopsy procedure
was required to be reported in
combination with the procedure code
describing the localization device used
during the procedures, as well as the
specific image-guidance procedure
codes describing the imaging service.
Table 23 of the proposed rule showed
how image-guided breast biopsy
procedures were reported prior to CY
2014. Table 23 of the proposed rule also
showed the CY 2013 OPPS status
indicators, APC assignments, and
payment rates for the breast biopsy
procedure codes, the localization
devices used during the procedures, and
the specific image-guidance procedure
codes describing the imaging service.
For the CY 2014 OPPS update, the
AMA’s CPT Editorial Panel grouped the
multiple procedures that describe these
imaging services into single
comprehensive service codes;
specifically, CPT codes 19081, 19082,
19083, 19084, 19085, and 19086. Table
24 of the proposed rule showed the six
new CPT codes that replaced obsolete
CPT codes 19102 and 19103. These
comprehensive breast biopsy procedure
codes are differentiated based on the use
of specific imaging-guidance devices—
specifically imaging services performed
using stereotactic guidance, ultrasound

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guidance, or magnetic-resonance
guidance.
As has been our practice since the
implementation of the OPPS in 2000,
we review all new procedure codes
before assigning the codes to an APC.
Consistent with our longstanding policy
for the treatment of new codes, we
assigned these new replacement CPT
codes to interim APCs for CY 2014.
Based on our understanding of the
resources required to furnish the service
as defined in the code descriptor, as
well as input from our medical advisors,
we assigned replacement CPT codes
19081, 19083, and 19085 to APC 0005
(Level II Needle Biopsy/Aspiration
Except Bone Marrow) for the CY 2014
OPPS update. In addition, we assigned
new CPT codes 19081, 19083, and
19085 to comment indicator ‘‘NI’’ in
Addendum B to the CY 2014 OPPS/ASC
final rule with comment period (which
is available via the CMS Web site) to
indicate that the codes were new with
an interim APC assignment that was
subject to public comment. We note
that, for the CY 2014 OPPS update, we
finalized our policy to package all addon codes (except those for drug
administration), effective January 1,
2014. Consequently, payment for
replacement CPT codes 19082, 19084,
and 19086, which describe add-on
procedures, was packaged for CY 2014.
At the Panel’s March 10, 2014
meeting, one presenter requested that
CMS reassign comprehensive CPT codes
19081, 19083, and 19085 from APC
0005 (Level II Needle Biopsy/Aspiration
Except Bone Marrow), which has a CY
2014 OPPS payment rate of $702.08, to
APC 0037 (Level IV Needle Biopsy/
Aspiration Except Bone Marrow), which
has a CY 2014 OPPS payment rate of
$1,223.25. The presenter indicated that
it is inappropriate to combine all of the
new replacement CPT codes into one
APC without regard for the imaging
modality or device used to perform the
procedure. The presenter also requested
that CMS maintain the historic
assignment of the predecessor CPT
codes cost data until claims data
become available for the new
comprehensive CPT codes. The Panel
agreed with the presenter and
recommended that CMS reassign the
new replacement comprehensive CPT
codes, as the presenter suggested.
In light of the public presentation, the
Panel’s recommendation, and our
longstanding policy of reviewing, on an
annual basis, the APC assignments for
all services and items paid under the
OPPS, we evaluated the geometric mean
costs associated with all of the
procedures assigned to the existing four
needle biopsy APCs, specifically, APCs

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0004 (Level I Needle Biopsy/Aspiration
Except Bone Marrow), 0005, 0685 (Level
III Needle Biopsy/Aspiration Except
Bone Marrow), and 0037. In the CY
2015 OPPS/ASC proposed rule (79 FR
40984), based on our review of the latest
hospital outpatient claims data available
for the proposed rule, we proposed to
reassign all of the procedures assigned
to APCs 0685 and 0037 to either APC
0004 or APC 0005 based on clinical and
resource homogeneity. If CMS finalizes
this proposed revision, there would be
no procedures assigned to APCs 0685 or
0037. Therefore, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40984), we
proposed to delete APCs 0685 and 0037
for CY 2015.
Consequently, for the CY 2015 OPPS
update, we proposed to only use two
needle biopsy APCs, specifically, APCs
0004 and 0005. The proposed
reassignment of all of the procedures
assigned to APCs 0685 and 0037 results
in increased payment rates for both
APCs 0004 and 0005. For CY 2015, the
proposed payment rate for APC 0004 is
approximately $494, which is 20
percent higher than the CY 2014 OPPS
payment rate of approximately $411.
Similarly, the proposed payment rate for
APC 0005 is approximately $1,062,
which is 51 percent higher than the CY
2014 OPPS payment rate of
approximately $702. Therefore, we
proposed to continue to assign CPT
codes 19081, 19083, and 19085 to APC
0005 for the CY 2015 OPPS update (79
FR 40985). In addition, we proposed to
continue to package payment for add-on
CPT codes 19082, 19084, and 19086
under the OPPS for CY 2015, consistent
with our packaging policy for add-on
codes that was implemented on January
1, 2014. Because we proposed to delete
APC 0037 we believe that the proposed
increased payment rate for APC 0005 is
consistent with the Panel’s
recommendation to reassign CPT codes
19081, 19083, and 19085 to an
appropriate APC based on resource
utilization and clinical coherence.
Comment: Commenters supported
CMS’ proposal to continue to assign
CPT codes 19081, 19083, and 19085 to
APC 0005. The commenters stated that
the assignment of these CPT codes to
APC 0005 is clinically coherent and
more accurately captures the resource
cost associated with providing these
services when compared to the CY 2014
APC assignment.
Response: We appreciate the
commenters’ support.
Comment: Some commenters
expressed concern regarding the
inadequate payment for ancillary
services associated with multiple
biopsies that may be performed on the

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same date of service. The commenters
indicated that patients sometimes
present with multiple lesions, which
requires a biopsy of each lesion.
According to the commenters, prior to
the establishment of the comprehensive
CY 2014 breast biopsy CPT codes,
hospitals would report each biopsy,
imaging guidance, and marker or
localization placements separately. The
commenters requested that CMS
provide guidance on how to report
multiple biopsies performed on the
same date of service.
Response: We expect hospitals to
report the performance of breast
biopsies using the comprehensive breast
biopsy CPT codes, consistent with the
latest CPT coding guidelines. As stated
in the CY 2014 CPT code book, imageguided breast biopsies, including the
placement of localization devices when
performed, are reported using the
comprehensive breast biopsy CPT codes
19081 through 19086. Image-guided
placement of localization devices
without the performance of a biopsy are
required to be reported using CPT codes
19281 through 19288. In addition, when
more than one biopsy is performed
using the same imaging modality,
hospitals are required to report each
biopsy using an add-on code. However,
if more than one biopsy is performed
using different imaging modalities,
hospitals are required to report a
separate primary code for each
additional imaging modality.
We note that it is extremely important
that hospitals use all of the required
HCPCS codes to report the performance
of all services they furnish, consistent
with the code descriptors, CPT and/or
CMS instructions, and correct coding
principles, whether payment for the
services is made separately or packaged.
The accuracy of the OPPS payment rates
depends on the quality and
completeness of the claims data that
hospitals submit for the services they
furnish to Medicare beneficiaries.
After consideration of the public
comments we received, we are
finalizing our proposal to continue to
assign CPT codes 19081, 19083, and
19085 to APC 0005 for CY 2015. In
addition, we are finalizing our proposal
to continue to package payment for addon CPT codes 19082, 19084, and 19086
under the OPPS for CY 2015, consistent
with our packaging policy for add-on
codes that was implemented on January
1, 2014. Furthermore, we are finalizing
our proposal to delete APC 0037
because we believe that the proposed
increased payment rate for APC 0005 is
consistent with the Panel’s
recommendation to reassign CPT codes
19081, 19083, and 19085 to an

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appropriate APC based on resource
utilization and clinical coherence. Table
24 below shows the final status

indicators, APC assignments, and
payment rates for the image-guided

breast biopsy CPT codes 19081 through
19086.

TABLE 24—FINAL CY 2015 APCS TO WHICH IMAGE-GUIDED BREAST BIOPSY PROCEDURE CODES ARE ASSIGNED
CY 2014
Payment

Final CY
2015 SI

Final CY
2015 APC

Final CY
2015 payment

Long descriptor

CY 2014 SI

19081 ...........

Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; first
lesion, including stereotactic guidance.
Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; each
additional
lesion,
including
stereotactic guidance (List separately
in addition to code for primary procedure).
Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; first
lesion, including ultrasound guidance.
Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; each
additional lesion, including ultrasound
guidance (List separately in addition
to code for primary procedure).
Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; first
lesion, including magnetic resonance
guidance.
Biopsy, breast, with placement of
breast localization device(s) (eg, clip,
metallic pellet), when performed, and
imaging of the biopsy specimen,
when performed, percutaneous; each
additional lesion, including magnetic
resonance guidance (List separately
in addition to code for primary procedure).

T

0005

702.08

T

0005

$1,052.22

N

N/A

N/A

N

N/A

N/A

T

0005

$702.08

T

0005

1,052.22

N

N/A

N/A

N

N/A

N/A

T

0005

$702.08

T

0005

1,052.22

N

N/A

N/A

N

N/A

N/A

19082 ...........

19083 ...........

19084 ...........

19085 ...........

19086 ...........

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CY 2014
APC

CPT Code

In addition to the proposal to
maintain the APC assignment of the
breast biopsy comprehensive CPT codes
to APC 0005, we also discussed in the
CY 2015 OPPS/ASC proposed rule our
proposal to reassign CPT code 10030
from APC 0006 (Level I Incision &
Drainage) to APC 0007 (Level II Incision
and Drainage). We note that, for the CY
2014 OPPS update, the AMA’s CPT
Editorial Panel established CPT code
10030 to report the bundled service of
image-guided fluid collection drainage
by catheter for percutaneous soft tissue,
and CPT code 49407 to report the

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bundled service of image-guided fluid
collection drainage by catheter for
peritoneal, retroperitoneal, transvaginal
or transrectal collections, effective
January 1, 2014. As shown in Table 25
of the CY 2015 OPPS/ASC proposed
rule, which showed the long descriptors
for CPT codes 10030 and 49407, and as
listed in Addendum B to the CY 2014
OPPS/ASC final rule with comment
period, we assigned CPT code 10030 to
APC 0006, with a payment rate of
$159.66 and CPT code 49407 to APC
0685, with a payment rate of $757.76.
As listed in Addendum B to the CY

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2014 OPPS/ASC final rule with
comment period, both procedure codes
were assigned to comment indicator
‘‘NI’’ to indicate that the codes were
new codes and assigned interim APC
and status indicator assignments that
were subject to public comment.
At the Panel’s March 10, 2014
meeting, one presenter requested that
CMS reassign CPT codes 10030 and
49407 from APC 0006 and APC 0685,
respectively, to APC 0037 (Level IV
Needle Biopsy/Aspiration Except Bone
Marrow), which has a CY 2014 OPPS
payment rate of $1,223.25. The

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commenter noted that similar
procedures also are assigned to APC
0037. Specifically, the presenter
indicated that all the image-guided fluid
collection drainage procedures should
be treated as one clinically cohesive
group and assigned to APC 0037. The
Panel agreed with the presenter and
recommended that CMS reassign CPT
code 49407 to APC 0037. However, the
Panel did not agree with the presenter
that CPT code 10030 would be more
appropriately assigned to APC 0037.
Rather, the Panel believed that the most
appropriate APC assignment for CPT
code 10030 would be APC 0007. We
agreed with the Panel’s
recommendation that CPT code 10030
should be assigned to APC 0007.
Therefore, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40986), we
proposed to reassign CPT code 10030
from APC 0006 to APC 0007 for the CY
2015 OPPS update. In light of the
Panel’s recommendation to reassign
CPT code 49407 and the image-guided
breast biopsy procedures to APC 0037
and APC 0007, respectively, and our
longstanding policy of reviewing, on an
annual basis, the APC assignments for
all services and items paid under the
OPPS, we evaluated the geometric mean
costs associated with the procedures
assigned to the existing four needle
biopsy APCs, as previously stated, and
proposed to reassign the procedures
assigned to APCs 0685 and 0037 to
either APC 0004 or APC 0005 based on
clinical and resource homogeneity and
to delete APCs 0685 and 0037 for CY
2015. Specifically, we proposed to
reassign CPT code 49407 from APC
0685 to APC 0005 for CY 2015, and to
delete APCs 0037 and 0685. Table 25 of
the proposed rule also showed the long
descriptors for CPT codes 10030 and
49407, and their proposed status
indicator and APC assignments for the
CY 2015 OPPS update. The proposed
CY 2015 payment rate for CPT codes
10030 and 49407 can be found in
Addendum B to this CY 2015 OPPS/
ASC proposed rule (which is available
via the Internet on the CMS Web site).
Comment: Some commenters
recommended that CMS reassign CPT
code 10030 from APC 0006 to APC
0005. The commenters stated that,
according to an internal analysis, CPT
code 10030 is comparable with respect
to clinical and resource characteristics
and costs to the other abscess drainage
procedures assigned to APC 0005.
Response: In light of the Panel’s
recommendation to reassign the
procedure to APC 0007 and because
CPT code 10030 is a new code for CY
2014, we are not accepting the
commenters’ suggestion to assign this

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procedure to APC 0005. Rather, we are
reassigning CPT code 10030 from APC
0006 to APC 0007 for the CY 2015 OPPS
update, as recommended by the Panel.
We note that we will have CY 2014
hospital claims data available for CPT
codes 10030 and 49407 in preparation
for the CY 2016 OPPS rulemaking. At
that time, we will reevaluate the APC
assignments for all the abscess drainage
CPT codes.
Therefore, after consideration of the
public comments we received, we are
finalizing our proposal, without
modification, to reassign CPT code
10030 from APC 0006 to APC 0007. In
addition, we are finalizing our proposal
to reassign the procedures assigned to
APCs 0685 and 0037 to either APC 0004
or APC 0005 based on clinical and
resource homogeneity. Because there
would be no other procedures assigned
to APCs 0685 and 0037 as a result of
this reassignment, we are finalizing our
proposal to delete APCs 0685 and 0037
for CY 2015. The final CY 2015 payment
rate for CPT codes 10030 and 49407 can
be found in Addendum B to this CY
2015 OPPS/ASC final rule (which is
available via the Internet on the CMS
Web site).
c. Negative Pressure Wound Therapy
(NPWT) (APCs 0012, 0013, 0015 and
0016)
For CY 2015, we proposed to assign
all of the NPWT services to APC 0015
(Level II Debridement & Destruction),
with a proposed payment rate of
$141.66. We proposed to continue to
assign CPT code 97606 (Negative
pressure wound therapy (eg, vacuum
assisted drainage collection), including
topical application(s), wound
assessment, and instruction(s) for
ongoing care, per session; total
wound(s) surface area greater than 50
square centimeters) to APC 0015. In
addition, for the CY 2015 OPPS update,
we proposed to reassign CPT code
97605 (Negative pressure wound
therapy (eg, vacuum assisted drainage
collection), including topical
application(s), wound assessment, and
instruction(s) for ongoing care, per
session; total wound(s) surface area less
than or equal to 50 square centimeters)
from APC 0013 (Level II Debridement &
Destruction), the APC to which the
procedure is assigned for CY 2014, to
APC 0015. As listed in Table 29 of the
CY 2015 OPPS/ASC proposed rule (79
FR 40916), we also proposed to reassign
HCPCS codes G0456 (Negative pressure
wound therapy (e.g. vacuum assisted
drainage collection) using a
mechanically-powered device, not
durable medical equipment, including
provision of cartridge and dressing(s),

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topical application(s), wound
assessment, and instructions for ongoing
care, per session; total wounds(s)
surface area less than or equal to 50
square centimeters) and G0457
(Negative pressure wound therapy (e.g.
vacuum assisted drainage collection)
using a mechanically-powered device,
not durable medical equipment,
including provision of cartridge and
dressing(s), topical application(s),
wound assessment, and instructions for
ongoing care, per session; total
wounds(s) surface area greater than 50
square centimeters) from APC 0016
(Level III Debridement & Destruction) to
APC 0015.
We note that CPT codes 97605 and
97606 became effective on January 1,
2005, and describe the type of NPWT
services that employ durable medical
equipment (DME). Alternatively, HCPCS
codes G0456 and G0457, which are
relatively new codes that became
effective on January 1, 2013, were
established by CMS to provide a
payment mechanism for NPWT services
furnished using disposable supplies
instead of DME. We proposed to
maintain the assignment of status
indicator ‘‘T’’ to these two codes.
For the CY 2013 OPPS update, we
assigned CPT code 97605 to APC 0013
(Level II Debridement & Destruction),
with a payment rate of $71.54 and CPT
code 97606 to APC 0015 (Level III
Debridement & Destruction), with a
payment rate of $106.96. In addition, we
assigned HCPCS codes G0456 and
G0457 to APC 0016 (Level IV
Debridement & Destruction), with a
payment rate of $209.65.
For the CY 2014 OPPS update, we
continued to assign CPT code 97605 to
APC 0013 and CPT code 97606 to APC
0015. We also continued to assign
HCPCS codes G0456 and G0457 to APC
0016, with a payment rate of $274.81.
We note that we stated in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75001) that some
commenters requested the reassignment
of HCPCS codes G0456 and G0457 to a
higher paying APC, with a payment rate
specifically ranging between $450 and
$500. The commenters believed that a
higher paying APC would be more
reflective of the cost of providing NPWT
services using disposable supplies. We
further stated that because HCPCS codes
G0456 and G0457 were new codes for
the CY 2013 OPPS update, we expected
to have claims data available for these
codes during the CY 2015 rulemaking
cycle and, at that time, we would
reevaluate the APC assignments for
these services in preparation for the CY
2015 OPPS update.

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For the CY 2015 OPPS update, we
analyzed the latest hospital outpatient
claims data available for the CY 2015
OPPS/ASC proposed rule, which was
based on claims submitted between
January 1, 2013 and December 31, 2013,
and processed on or before December
31, 2013. The data indicated that the
geometric mean cost of APC 0013 was
comparable to the geometric mean cost
of APC 0015. Therefore, in the CY 2015
OPPS/ASC proposed rule (79 FR 40988),
we proposed to combine these APCs by
reassigning all of the procedures from
APC 0013 to APC 0015; delete APC
0013, and retain APC 0015 for the CY
2015 OPPS update. In addition, we
proposed to rename the Debridement
and Destruction APC series (excluding
APC 0012) as follows: APC 0015 (Level
II Debridement and Destruction); APC
0016 (Level III Debridement and
Destruction); and APC 0017 (Level IV
Debridement and Destruction).
Furthermore, the CY 2013 claims data
available for the proposed rule also
indicated that the geometric mean cost
for HCPCS code G0456 was
approximately $152 based on 4,509
single claims (out of 5,772 total claims),
and approximately $193 for HCPCS
code G0457 based on 386 single claims
(out of 591 total claims). The claims
data also showed that the geometric
mean cost for CPT code 97605 was
approximately $101 based on 58,901
single claims (out of 75,378 total
claims), and approximately $140 for
CPT code 97606 based on 6,722 single
claims (out of 9,063 total claims). The
proposed geometric mean costs of
HCPCS codes G0456 and G0457, and
CPT codes 97605 and 97606 were all
comparable to the proposed geometric
mean cost for APC 0015 of
approximately $148. Based on analysis
of the most recent claims data available
for the proposed rule, we stated that we
believed that the most appropriate
assignment for all of the NPWT services
was APC 0015 based on the clinical and
resource homogeneity of the services
assigned to this APC. The next higher
cost APC in the series, APC 0016, had
a proposed geometric mean cost of
approximately $284, which was
significantly higher than the proposed
geometric mean cost of any of the
NPWT services. Therefore, in the CY
2015 OPPS/ASC proposed rule, we
proposed to continue to assign CPT
code 97606 to APC 0015, reassign CPT
code 97605 from APC 0013 to APC
0015, and reassign HCPCS codes G0456
and G0457 from APC 0016 to APC 0015
for the CY 2015 OPPS update.
Comment: Most commenters
requested that CMS continue to assign
the disposable NPWT HCPCS codes

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G0456 and G0457 to APC 0016 for the
CY 2015 OPPS update, which is the
same APC to which these services are
assigned for CY 2014. The commenters
believed that hospitals may have
miscoded claims reporting these
services and, consequently, the CY 2015
proposed payment rate of approximately
$142 for HCPCS codes G0456 and
G0457 is insufficient because the CY
2013 OPPS claims data do not
accurately capture the cost of the
disposable supplies that is included in
providing the service. One commenter
stated that the cost of the disposable
NPWT supplies range between $200 and
$700 per case. The commenter provided
copies of individual invoices that were
forwarded to various hospitals from the
manufacturer that showed a cost of
approximately $220 for one disposable
NPWT system. In addition, based on its
analysis of charges reported by
hospitals, the commenter believed that
hospitals failed to understand the
differences between the type of NPWT
services that employ DME, which are
described by CPT codes 97605 and
97606, and the type of disposable
NPWT services described by HCPCS
G-codes. The commenter stated that,
according to its data analysis, there was
no difference in hospital charges for the
two types of NPWT services reported on
claims. The commenter believed that
hospitals miscoded these claims
because they may have believed that the
services described by the CPT codes for
the type of NPWT services that use DME
are similar to the services described by
the disposable NPWT HCPCS G-codes.
Several commenters explained that the
cost of the type of NPWT services that
use DME does not include the cost of
the devices and supplies that are used
to provide the services described by the
HCPCS G-codes. The commenter
speculated that, although it appeared
that hospitals did not include the cost
of the disposable devices when
reporting their charges for the services
described by the disposable NPWT
HCPCS G-codes, hospitals should have
included such costs. Therefore, the
commenters urged CMS to continue to
assign HCPCS codes G0456 and G0457
to APC 0016 for the CY 2015 OPPS
update.
Response: Based on the significant
number of claims that are available for
this final rule with comment period, we
believe that APC 0015 best reflects the
clinical characteristics and resource
costs of HCPCS codes G0456 and G0457.
In addition, we do not believe that
continuing to assign HCPCS codes
G0456 and G0457 to APC 0016 would
be appropriate for CY 2015. Our

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analysis of the latest hospital outpatient
claims data available for this CY 2015
OPPS/ASC final rule with comment
period, which is based on claims
submitted between January 1, 2013 and
December 31, 2013, and processed on or
before June 30, 2014, indicates that the
geometric mean costs for both HCPCS
codes (G0456 and G0457) are very
similar to the geometric mean cost of
APC 0015. Specifically, our latest
hospital outpatient claims data for this
final rule with comment period show a
geometric mean cost of approximately
$158 for HCPCS code G0456 based on
5,198 single claims (out of 6,645 total
claims), which is close to the geometric
mean cost of APC 0015, which is
approximately $152. Similarly, our
claims data show a geometric mean cost
of approximately $202 for HCPCS code
G0457 based on 476 single claims (out
of 676 total claims), which is also closer
to the geometric mean cost of APC 0015,
which is approximately $152 than the
geometric mean cost of APC 0016,
which is approximately $294.
In addition, we are not convinced that
hospitals are reporting the same charges
for the two types of NPWT services
(DME-based and disposable) because a
review of the latest claims data shows
that the geometric mean costs for the
most highly utilized procedures
described by HCPCS code G0456
(geometric mean cost of approximately
$158) and CPT code 97605 (geometric
mean cost of approximately $101) are
significantly different. This difference in
costs captured in the claims data
demonstrates that hospitals are not
reporting identical charges for the
different types of NPWT services, DME
and disposable-based. Furthermore, we
note that for all APCs whose payment
rates are based upon relative payment
weights, the quality and accuracy of
reported units and charges influence the
geometric mean costs that are the basis
for our payment rates, especially for low
volume items and services. However,
beyond our standard OPPS trimming
methodology (described in section
II.A.2. of this final rule with comment
period) that we apply to those claims
that have passed various types of claims
processing edits, it is not our general
policy to judge the accuracy of hospital
coding and charging for purposes of
ratesetting (75 FR 71838). We rely on
hospitals to bill all HCPCS codes
accurately in accordance with their code
descriptors and CPT and CMS
instructions, as applicable, and to report
charges on claims and charges and costs
on their Medicare hospital cost reports
appropriately. In addition, we do not
specify the methodologies that hospitals

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must use to set charges for this or any
other service. Therefore, based on the
latest hospital outpatient claims data
available for this final rule with
comment period, we believe that APC
0015 best reflects the clinical
characteristics and resource costs of
HCPCS codes G0456 and G0457.
Comment: One commenter
recommended that CMS make certain
changes to APCs 0015 and 0016.
Specifically, the commenter
recommended that CMS lower the
geometric mean cost for APC 0016 to
$190, which would result in reassigning
certain codes that were in APC 0015
whose geometric mean cost met or
exceeded this amount to APC 0016. This
commenter stated that such
reassignment would retain HCPCS
codes G0456 and G0457 in APC 0016.
Response: We believe that the
proposed structures of APCs 0015 and
0016 (aside from the few code
reassignments that are being made for
the purpose of resolving a violation of
the 2 times rule in APC 0015 that are
discussed below) are optimal in terms of
clinical and resource homogeneity. The
geometric mean cost range for
significant procedures assigned to APC
0015 is between approximately $110
(for CPT code 17250) and approximately
$201 (for CPT code 11100). The
geometric mean cost range for
significant procedures assigned to APC
0016 is between approximately $230
(for CPT code 17282) and approximately
$368 (for CPT code 11043). Reassigning
HCPCS code G0456 from APC 0015 to
APC 0016 would either violate the 2
times rule in APC 0016 or necessitate
dividing APC 0016 into two APCs,
which we do not believe is appropriate
or necessary. Both of these options are
undesirable, especially given that the
geometric mean cost of HCPCS code

G0456 (approximately $158) is
comparable to the geometric mean cost
of APC 0015 (approximately $152).
In summary, based on the latest
claims data used for this final rule with
comment period, we believe that HCPCS
codes G0456 and G0457 are
appropriately assigned in APC 0015 for
the CY 2015 update based on the
clinical and resource similarity to the
other procedures in APC 0015. As has
been our practice since the
implementation of the OPPS in 2000,
we review, on an annual basis, the APC
assignments for the procedures and
services paid under the OPPS. We will
again review the APC assignments for
all the NPWT services in light of the CY
2014 claims data and the proposed APC
structures for clinically relevant APCs
and determine whether an APC
reassignment for any of the NPWT codes
would be appropriate in the CY 2016
rulemaking.
In addition, in the CY 2015 OPPS/
ASC proposed rule, there were
violations of the 2 times rule noted for
both APCs 0012 and 0015 (79 FR
40981). Every year we make every effort
to minimize the number of APCs that
are listed as exceptions to the 2 times
rule. To resolve the violations of the 2
times rule in APCs 0012 and 0015, we
are making the following code
reassignments:
• CPT codes 11719, 11720, 11721,
11740, and 17340, and HCPCS code
G0127 from APC 0012 to APC 0340.
• CPT codes 11901, 12014, 96920,
and 97605 from APC 0015 to APC 0012.
These code reassignments eliminated
the 2 times rule violations that existed
in APCs 0012 and 0015 in the CY 2015
OPPS/ASC proposed rule. We note that
APC 0012 is one of the APCs included
in the ancillary services packaging
policy that is discussed in section
II.A.3.c.(1) of this final rule with

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comment period. Because CPT code
97605 is assigned to APC 0012, the code
will be conditionally packaged and
assigned to status indicator ‘‘Q1’’ for CY
2015.
After consideration of the public
comments we received, we are
finalizing our CY 2015 proposal, with
modification. Specifically, we are
finalizing our proposal to assign CPT
code 97606 and HCPCS codes G0456
and G0457 to APC 0015. However, we
are reassigning CPT code 97605 from
our proposed APC 0015 to APC 0012 for
the CY 2015 update to eliminate the
violation of the 2 times rule that existed
in APC 0015 based on claims data
available for the proposed rule.
In addition, for the CY 2015 update,
the CPT Editorial Panel established two
new CPT codes to describe disposable
NPWT services and revised the long
descriptors for existing CPT codes
97605 and 97606, effective January 1,
2015. Consistent with our general policy
of using permanent codes rather than
using temporary HCPCS G-codes in
order to streamline coding, we are
deleting HCPCS codes G0456 and G0457
because they are replaced with two new
CPT codes effective January 1, 2015.
Table 25 below shows the replacement
CPT codes for HCPCS codes G0456 and
G0457 as well as the revised long
descriptors for existing CPT codes
97605 and 97606. The final CY 2015
payment rate for the NPWT services
codes can be found in Addendum B to
this final rule with comment period
(which is available via the Internet on
the CMS Web site). Like all new codes
effective January 1, 2015, the APC
assignments for the new disposable
NPWT CPT codes are open for comment
for 60 days after display of this CY 2015
OPPS/ASC final rule with comment
period.

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TABLE 25—FINAL APC ASSIGNMENTS FOR THE NPWT SERVICES FOR CY 2015
Proposed
CY 2015
OPPS SI

CY 2014 CPT/
HCPCS Code

CY 2015 CPT
Code

CY 2015 Long descriptor

97605 ................

97605 ...............

97606 ................

97606 ...............

Negative pressure wound therapy (eg, vacuum
assisted drainage collection), utilizing durable medical equipment (DME), including topical application(s), wound assessment, and
instruction(s) for ongoing care, per session;
total wound(s) surface area less than or
equal to 50 square centimeters.
Negative pressure wound therapy (eg, vacuum
assisted drainage collection), utilizing durable medical equipment (DME), including topical application(s), wound assessment, and
instruction(s) for ongoing care, per session;
total wound(s) surface area greater than 50
square centimeters.

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Proposed
CY 2015
OPPS APC

Final CY
2015 OPPS
SI

Final CY
2015 OPPS
APC

T

0015

Q1

0012

T

0015

T

0015

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tkelley on DSK3SPTVN1PROD with RULES2

TABLE 25—FINAL APC ASSIGNMENTS FOR THE NPWT SERVICES FOR CY 2015—Continued
Proposed
CY 2015
OPPS SI

CY 2014 CPT/
HCPCS Code

CY 2015 CPT
Code

CY 2015 Long descriptor

G0456 ...............

97607 ...............

G0457 ...............

97608 ...............

Negative pressure wound therapy, (eg, vacuum
assisted drainage collection), utilizing disposable, non-durable medical equipment including provision of exudate management collection system, topical application(s), wound assessment, and instructions for ongoing care,
per session; total wound(s) surface area less
than or equal to 50 square centimeters.
Negative pressure wound therapy, (eg, vacuum
assisted drainage collection), utilizing disposable, non-durable medical equipment including provision of exudate management collection system, topical application(s), wound assessment, and instructions for ongoing care,
per session; total wound(s) surface area
greater than 50 square centimeters.

d. Platelet Rich Plasma (PRP) (APC
0327)
For CY 2015, we proposed to continue
to assign HCPCS code G0460
(Autologous platelet rich plasma for
chronic wounds/ulcers, including
phlebotomy, centrifugation, and all
other preparatory procedures,
administration and dressings, per
treatment) to APC 0327 (Level II
Debridement & Destruction), with a
proposed payment rate of approximately
$431. We note that HCPCS code G0460,
which became effective July 1, 2013,
describes both the procedure and
product components associated with the
autologous platelet rich plasma service.
Comment: One commenter requested
that CMS exempt HCPCS code G0460
from the geographic wage index
variations to enable hospitals to more
willingly participate in the AutoloGel
Coverage with Evidence Development
(CED) protocols. According to the
commenter, HOPDs are reluctant to
enroll in the CED protocols because they
are concerned that the proposed APC
payment rate will not cover the cost of
the product, the procedure, the
overhead, and the additional
administrative effort associated with
CED data collection requirements. In
addition, the commenter requested that
CMS establish a final payment rate for
APC 0327 based on the geometric mean
cost of $496.99 to help achieve some
stability regarding the payment for the
procedures assigned to this APC.
Response: We note that comments
related to CED protocols or data
collection are outside the scope of the
proposed rule. With regard to the
geographic wage index exemption
requested by the commenter, we have
never made such an exception. Under
the hospital OPPS, all procedures and

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Final CY
2015 OPPS
SI

Final CY
2015 OPPS
APC

T

0015

T

0015

T

0015

T

0015

services that include devices are wage
adjusted. Moreover, the payment rates
for procedures and APCs are not based
on a specific projected amount. The
final payment rate for APC 0327 is
based on the geometric mean cost of all
the procedures described by the HCPCS
codes assigned to this APC. We believe
that the procedure described by HCPCS
code G0460 is appropriately assigned to
APC 0327 for the CY 2015 OPPS update
based on the clinical and resource
similarities in relation to the other
procedures assigned to APC 0327. We
note that, for this final rule with
comment period, which is based on
hospital outpatient claims submitted
between January 1, 2013, and December
31, 2013, that were processed on or
before June 30, 2014, our latest hospital
outpatient claims data show no claims
reporting the service described by
HCPCS code G0460. As has been our
practice since the implementation of the
OPPS in 2000, we review, on an annual
basis, the APC assignments for the
procedures and services paid under the
OPPS. We will review the APC
assignment for HCPCS code G0460
when sufficient claims data become
available to determine whether a
reassignment to a more appropriate APC
is necessary for the CY 2016 update.
After consideration of the public
comment we received, we are finalizing
our proposal, without modification, to
continue to assign HCPCS code G0460
to APC 0327 for CY 2015. The final CY
2015 payment rate for HCPCS code
G0460 can be found in Addendum B to
this CY 2015 OPPS/ASC final rule
(which is available via the Internet on
the CMS Web site).

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Proposed
CY 2015
OPPS APC

IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional PassThrough Payments for Certain Devices
a. Background
Section 1833(t)(6)(B)(iii) of the Act
sets forth the period for which a device
category eligible for transitional passthrough payments under the OPPS may
be in effect. The implementing
regulation at 42 CFR 419.66(g) provides
that this pass-through payment
eligibility period begins on the date
CMS establishes a particular transitional
pass-through category of devices. We
may establish a new device category for
pass-through payment in any quarter,
and under our established policy, we
base the pass-through status expiration
date for a device category on the date on
which pass-through payment is effective
for the category; that is, the date CMS
establishes a particular category of
devices eligible for transitional passthrough payments. We propose and
finalize the dates for expiration of passthrough status for device categories as
part of the OPPS annual update.
We also have an established policy to
package the costs of the devices that are
no longer eligible for pass-through
payments into the costs of the
procedures with which the devices are
reported in the claims data used to set
the payment rates (67 FR 66763).
Brachytherapy sources, which are now
separately paid in accordance with
section 1833(t)(2)(H) of the Act, are an
exception to this established policy.
b. CY 2015 Policy
There currently is one device category
eligible for pass-through payment,
which we established effective October
1, 2013: HCPCS code C1841 (Retinal

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
prosthesis, includes all internal and
external components). Recognizing that
this device category has been eligible for
at least 2 years, but not more than 3
years, of pass-through status by the end
of CY 2015, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40989), we
proposed the expiration of pass-through
payment for HCPCS code C1841 devices
on December 31, 2015. Therefore, in
accordance with our established policy,
beginning with CY 2016, we proposed
to package the costs of the HCPCS code
C1841 devices into the costs related to
the procedures with which the device is
reported in the hospital claims data (79
FR 40989 through 40990).
Comment: A few commenters
requested that CMS extend the passthrough payment period for the device
described by HCPCS code C1841 due to
delay of the first date of sale of the
device until January 2014. The
commenters asserted that the delay was
due to various regulatory delays,
including the Food and Drug
Administration’s (FDA’s) Humanitarian
Device Exemption (HDE) approval
process and Federal Communications
Commission (FCC) regulations regarding
utilization of a radiofrequency (RF)
band approval. The commenters
therefore requested that CMS use the
date of the first sale or the date of the
first HCPCS code C1841 device implant
(January 16, 2014) to ‘‘reset’’ the start
date for pass-through payment
eligibility, which would result in
another year of pass-through payment
status.
Response: According to 42 CFR
419.66(g), ‘‘CMS limits the eligibility for
a pass-through payment established
under this section to a period of at least
2 years, but not more than 3 years,
beginning on the date that CMS
establishes a category of devices’’
(emphasis added). We cannot extend the
pass-through payment status of HCPCS
code C1841 beyond CY 2015 because
such an extension would make the passthrough payment status effective longer
than the maximum 3-year period
permitted under 42 CFR 419.66(g).
Moreover, the HCPCS code C1841
device category was made effective in
the OPPS on October 1, 2013. The
HCPCS code C1841 device category will
have had more than 2 years of passthrough payment status as of December
31, 2015. Extending pass-through
payment status through December 31,
2016, as requested by the commenter,
would afford the HCPCS code C1841
device category longer than the 3-year
maximum pass-through payment
period. Therefore, after consideration of
the public comments we received, we
are finalizing our proposal to expire

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HCPCS code C1841 device category
from pass-through payment status after
December 31, 2015. We are finalizing
our proposal to package the costs for
devices described by HCPCS code
C1841 into the costs of the procedure
with which the device is reported in the
hospital claims data used in the
development of the OPPS relative
payment weights that will be used to
establish the ASC payment rates for CY
2016.
With the expiration of HCPCS code
C1841 device category from passthrough payment status at the end of CY
2015, there are no other currently active
categories for which we would expire
pass-through status in CY 2015. If we
create new device categories for passthrough payment status during the
remainder of CY 2014 or during CY
2015, we will propose future expiration
dates in accordance with 42 CFR
419.66(g).
2. Provisions for Reducing Transitional
Pass-Through Payments To Offset Costs
Packaged Into APC Groups
a. Background
Section 1833(t)(6)(D)(ii) of the Act sets
the amount of additional pass-through
payment for an eligible device as the
amount by which the hospital’s charges
for a device, adjusted to cost (the cost
of the device) exceeds the portion of the
otherwise applicable Medicare
outpatient department fee schedule
amount (the APC payment amount)
associated with the device. We have an
established policy to estimate the
portion of each APC payment rate that
could reasonably be attributed to the
cost of the associated devices that are
eligible for pass-through payments (66
FR 59904) for purposes of estimating the
portion of the otherwise applicable APC
payment amount associated with passthrough devices. For eligible device
categories, we deduct an amount that
reflects the portion of the APC payment
amount that we determine is associated
with the cost of the device, defined as
the device APC offset amount, from the
charges adjusted to cost for the device,
as provided by section 1833(t)(6)(D)(ii)
of the Act, to determine the passthrough payment amount for the eligible
device. We have consistently used an
established methodology to estimate the
portion of each APC payment rate that
could reasonably be attributed to the
cost of an associated device eligible for
pass-through payment, using claims
data from the period used for the most
recent recalibration of the APC rates (72
FR 66751 through 66752). We establish
and update the applicable device APC
offset amounts for eligible pass-through

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device categories through the
transmittals that implement the
quarterly OPPS updates.
We published a list of all procedural
APCs with the CY 2014 portions (both
percentages and dollar amounts) of the
APC payment amounts that we
determined are associated with the cost
of devices on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html. The
dollar amounts are used as the device
APC offset amounts. In addition, in
accordance with our established
practice, the device APC offset amounts
in a related APC are used in order to
evaluate whether the cost of a device in
an application for a new device category
for pass-through payment is not
insignificant in relation to the APC
payment amount for the service related
to the category of devices, as specified
in our regulations at § 419.66(d).
Beginning in CY 2010, we include
packaged costs related to implantable
biologicals in the device offset
calculations in accordance with our
policy that the pass-through evaluation
process and payment methodology for
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) and that are newly approved for
pass-through status beginning on or
after January 1, 2010, be the device passthrough process and payment
methodology only (74 FR 60476).
b. CY 2015 Policy
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40990), we proposed to
continue, for CY 2015, our established
methodology to estimate the portion of
each APC payment rate that could
reasonably be attributed to (that is,
reflect) the cost of an associated device
eligible for pass-through payment, using
claims data from the period used for the
most recent recalibration of the APC
payment rates. We proposed to continue
our policy, for CY 2015, that the passthrough evaluation process and passthrough payment methodology for
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) and that are newly approved for
pass-through status, be the device passthrough process and payment
methodology only. The rationale for this
policy is provided in the CY 2010
OPPS/ASC final rule with comment
period (74 FR 60471 through 60477). We
also proposed to continue our
established policies for calculating and
setting the device APC offset amounts
for each device category eligible for
pass-through payment. In addition, we

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proposed to continue to review each
new device category on a case-by-case
basis to determine whether device costs
associated with the new category are
already packaged into the existing APC
structure. If device costs packaged into
the existing APC structure are
associated with the new category, we
proposed to deduct the device APC
offset amount from the pass-through
payment for the device category. As
stated earlier, these device APC offset
amounts also would be used in order to
evaluate whether the cost of a device in
an application for a new device category
for pass-through payment is not
insignificant in relation to the APC
payment amount for the service related
to the category of devices (§ 419.66(d)).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40990), for CY 2015, we also
proposed to continue our policy
established in CY 2010 to include
implantable biologicals in our
calculation of the device APC offset
amounts. In addition, we proposed to
continue to calculate and set any device
APC offset amount for any new device
pass-through category that includes a
newly eligible implantable biological
beginning in CY 2015, using the same
methodology we have historically used
to calculate and set device APC offset
amounts for device categories eligible
for pass-through payment, and to
include the costs of implantable
biologicals in the calculation of the
device APC offset amounts (79 FR
40990).
In addition, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40900), we
proposed to update the list of all
procedural APCs with the final CY 2015
portions of the APC payment amounts
that we determine are associated with
the cost of devices on the CMS Web site
at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html so
that this information is available for use
by the public in developing potential
CY 2015 device pass-through payment
applications and by CMS in reviewing
those applications.
Comment: One commenter objected to
CMS’ proposal to continue its policy of
evaluating implantable biological passthrough applications through the device
evaluation process. The commenter
believed that all biologicals should be
evaluated through the drug and
biological pass-through process, which
is intended for the evaluation of drugs
and biologicals.
Response: We have discussed our
rationale for this policy in the CY 2010
OPPS/ASC final rule (74 FR 60463).
Implantable biologicals function as
implantable medical devices and are

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used in the HOPD in surgical
procedures in a manner similar to
implantable medical devices. Therefore,
since CY 2010, we have treated them as
medical devices for pass-through
payment purposes. In addition, like
implantable medical devices,
implantable biologicals are treated as
packaged surgical supplies in the OPPS
under 42 CFR 419.2(b)(16). For these
reasons, we will continue to treat
implantable biologicals as devices for
pass-through payment purposes in CY
2015.
After consideration of the public
comment we received, we are finalizing,
without modification, the
aforementioned proposed policies for
calculation of the device APC offset
amounts for CY 2015. In addition, we
are updating, on the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html, the
list of all procedural APCs with the final
CY 2015 portions of the APC payment
amounts that we determine are
associated with the cost of devices so
that this information is available for use
by the public in developing potential
CY 2015 device pass-through payment
applications and by CMS in reviewing
those applications.
B. Adjustment to OPPS Payment for No
Cost/Full Credit and Partial Credit
Devices
1. Background
To ensure equitable OPPS payment
when a hospital receives a device
without cost or with full credit, in CY
2007, we implemented a policy to
reduce the payment for specified
device-dependent APCs by the
estimated portion of the APC payment
attributable to device costs (that is, the
device offset) when the hospital receives
a specified device at no cost or with full
credit (71 FR 68071 through 68077).
Hospitals are instructed to report no
cost/full credit cases on the claim using
the ‘‘FB’’ modifier on the line with the
procedure code in which the no cost/
full credit device is used. In cases in
which the device is furnished without
cost or with full credit, the hospital is
instructed to report a token device
charge of less than $1.01. In cases in
which the device being inserted is an
upgrade (either of the same type of
device or to a different type of device)
with a full credit for the device being
replaced, the hospital is instructed to
report as the device charge the
difference between its usual charge for
the device being implanted and its usual
charge for the device for which it
received full credit. In CY 2008, we

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expanded this payment adjustment
policy to include cases in which
hospitals receive partial credit of 50
percent or more of the cost of a specified
device. Hospitals are instructed to
append the ‘‘FC’’ modifier to the
procedure code that reports the service
provided to furnish the device when
they receive a partial credit of 50
percent or more of the cost of the new
device. We refer readers to the CY 2008
OPPS/ASC final rule with comment
period for more background information
on the ‘‘FB’’ and ‘‘FC’’ payment
adjustment policies (72 FR 66743
through 66749).
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75005
through 75007), beginning in CY 2014,
we modified our policy of reducing
OPPS payment for specified APCs when
a hospital furnishes a specified device
without cost or with a full or partial
credit. For CY 2013 and prior years, our
policy had been to reduce OPPS
payment by 100 percent of the device
offset amount when a hospital furnishes
a specified device without cost or with
a full credit and by 50 percent of the
device offset amount when the hospital
receives partial credit in the amount of
50 percent or more of the cost for the
specified device. For CY 2014, we
reduced OPPS payment, for the
applicable APCs, by the full or partial
credit a hospital receives for a replaced
device. Specifically, under this
modified policy, hospitals are required
to report on the claim the amount of the
credit in the amount portion for value
code ‘‘FD’’ (Credit Received from the
Manufacturer for a Replaced Medical
Device) when the hospital receives a
credit for a replaced device that is 50
percent or greater than the cost of the
device. For CY 2014, we also limited the
OPPS payment deduction for the
applicable APCs to the total amount of
the device offset when the ‘‘FD’’ value
code appears on a claim.
2. Policy for CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40990 through 40992), for
CY 2015, we proposed to continue our
existing policy of reducing OPPS
payment for specified APCs when a
hospital furnishes a specified device
without cost or with a full or partial
credit. Specifically, for CY 2015, we
proposed to continue to reduce the
OPPS payment, for the applicable APCs
listed in Table 31 of the proposed rule,
by the full or partial credit a provider
receives for a replaced device. Under
this proposed policy, hospitals would
continue to be required to report on the
claim the amount of the credit in the
amount portion for ‘‘FD’’ when the

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
hospital receives a credit for a replaced
device listed in Table 32 of the
proposed rule that is 50 percent or
greater than the cost of the device.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40990 through 40992), for
CY 2015, we also proposed to continue
using the three criteria established in
the CY 2007 OPPS/ASC final rule with
comment period for determining the
APCs to which our proposed CY 2015
policy would apply (71 FR 68072
through 68077). Specifically: (1) All
procedures assigned to the selected
APCs must involve implantable devices
that would be reported if device
insertion procedures were performed;
(2) the required devices must be
surgically inserted or implanted devices
that remain in the patient’s body after
the conclusion of the procedure (at least
temporarily); and (3) the device offset
amount must be significant, which, for
purposes of this policy, is defined as
exceeding 40 percent of the APC cost.
We also proposed to continue to restrict
the devices to which the APC payment
adjustment would apply to a specific set
of costly devices to ensure that the
adjustment would not be triggered by
the implantation of an inexpensive
device whose cost would not constitute
a significant proportion of the total
payment rate for an APC. We stated that
we continue to believe these criteria are
appropriate because no cost devices and
device credits are likely to be associated
with particular cases only when the
device must be reported on the claim
and is of a type that is implanted and
remains in the body when the
beneficiary leaves the hospital. We
believe that the reduction in payment is
appropriate only when the cost of the
device is a significant part of the total
cost of the APC into which the device
cost is packaged, and that the 40-percent
threshold is a reasonable definition of a
significant cost.
Comment: One commenter urged
CMS to discontinue its current policy of
reducing OPPS payment for specified
APCs when a hospital furnishes a
specified device without cost or with a
full or partial credit. The commenter
stated that procedures which involve
the replacement of a device are of
greater complexity than the original
insertion of the device. The commenter
recommended that, because the
replacement procedures are not paid at
a higher rate, CMS not further penalize
the hospital by reducing the OPPS
payment when the device is furnished
without cost or with a full or partial
credit to the hospital.
Response: We do not agree with the
commenter and believe that it is
appropriate to reduce the OPPS

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payment for specified APCs when a
hospital furnishes a specified device
without cost or with a full or partial
credit.
After consideration of the public
comments we received, we are
finalizing our proposals to continue our
existing policy of reducing OPPS
payment for specified APCs when a
hospital furnishes a specified device
without cost or with a full or partial
credit, and to continue using the three
criteria established in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68072 through 68077) for
determining the APCs to which our CY
2015 policy will apply.
We examined the offset amounts
calculated from the CY 2015 final rule
with comment period data and the
clinical characteristics of the final CY
2015 APCs to determine which APCs
meet the criteria for CY 2015. Table 26
below lists the APCs to which the
payment adjustment policy for no cost/
full credit and partial credit devices will
apply in CY 2015. Table 27 below lists
the devices to which the payment
adjustment policy for no cost/full credit
and partial credit devices will apply in
CY 2015.
Based on the final CY 2013 claims
data available for this CY 2015 OPPS/
ASC final rule with comment period, we
have updated the lists of APCs and
devices to which the no cost/full credit
and partial credit device adjustment
policy will apply for CY 2015,
consistent with the three criteria
discussed earlier in this section.

TABLE 26—APCS TO WHICH THE NO
COST/FULL CREDIT AND PARTIAL
CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY
2015
CY 2015
APC

CY 2015 APC title

0039 .........

Level III Neurostimulator & Related Procedures.
Level II Neurostimulator & Related Procedures.
Level III Treatment Fracture/Dislocation.
Level III Pacemaker and Similar
Procedures.
Level II Pacemaker and Similar
Procedures.
Level I ICD and Similar Procedures.
Level II ICD and Similar Procedures.
Implantation of Drug Infusion
Device.
Level II Endovascular Procedures.
Level VII ENT Procedures.
Level IV Intraocular Procedures.

0061 .........
0064 .........
0089 .........
0090 .........
0107 .........
0108 .........
0227 .........
0229 .........
0259 .........
0293 .........

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66873

TABLE 26—APCS TO WHICH THE NO
COST/FULL CREDIT AND PARTIAL
CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY
2015—Continued
CY 2015
APC

CY 2015 APC title

0318 .........

Level IV Neurostimulator & Related Procedures.
Level III Endovascular Procedures.
Level V Intraocular Procedures.
Level I Urogenital Procedures.
Level II Urogenital Procedures.
Level V Musculoskeletal Procedures Except Hand and Foot.
Level IV Pacemaker and Similar
Procedures.

0319 .........
0351
0385
0386
0425

.........
.........
.........
.........

0655 .........

TABLE 27—DEVICES TO WHICH THE
NO COST/FULL CREDIT AND PARTIAL
CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY
2015
CY 2015
Device
HCPCS
code
C1721
C1722
C1728
C1764
C1767
C1771
C1772
C1776
C1777
C1778
C1779
C1785
C1786
C1789
C1813
C1815
C1818
C1820
C1840
C1881
C1882
C1891
C1895
C1896
C1897
C1898
C1899
C1900
C2619
C2620
C2621
C2622
C2626
C2631

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......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......

CY 2015 Short descriptor

AICD, dual chamber.
AICD, single chamber.
Cath, brachytx seed adm.
Event recorder, cardiac.
Generator, neurostim, imp.
Rep dev, urinary, w/sling.
Infusion pump, programmable.
Joint device (implantable).
Lead, AICD, endo single coil.
Lead, neurostimulator.
Lead, pmkr, transvenous VDD.
Pmkr, dual, rate-resp.
Pmkr, single, rate-resp.
Prosthesis, breast, imp.
Prosthesis, penile, inflatab.
Pros, urinary sph, imp.
Integrated keratoprosthesis.
Generator, neuro rechg bat sys.
Lens, intraocular (telescopic).
Dialysis access system.
AICD, other than sing/dual.
Infusion pump, non-prog, perm.
Lead, AICD, endo dual coil.
Lead, AICD, non sing/dual.
Lead, neurostim, test kit.
Lead, pmkr, other than trans.
Lead, pmkr/AICD combination.
Lead coronary venous.
Pmkr, dual, non rate-resp.
Pmkr, single, non rate-resp.
Pmkr, other than sing/dual.
Prosthesis, penile, non-inf.
Infusion pump, non-prog, temp.
Rep dev, urinary, w/o sling.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

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

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A. OPPS Transitional Pass-Through
Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals
1. Background
Section 1833(t)(6) of the Act provides
for temporary additional payments or
‘‘transitional pass-through payments’’
for certain drugs and biologicals.
Throughout this final rule with
comment period, the term ‘‘biological’’
is used because this is the term that
appears in section 1861(t) of the Act.
‘‘Biological’’ as used in this final rule
with comment period includes
‘‘biological product’’ or ‘‘biologic’’ as
defined in the Public Health Service
Act. As enacted by the Medicare,
Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA) (Pub. L.
106–113), this provision requires the
Secretary to make additional payments
to hospitals for: current orphan drugs, as
designated under section 526 of the
Federal Food, Drug, and Cosmetic Act;
current drugs and biologicals and
brachytherapy sources used in cancer
therapy; and current
radiopharmaceutical drugs and
biologicals. ‘‘Current’’ refers to drugs or
biologicals that are outpatient hospital
services under Medicare Part B for
which payment was made on the first
date the hospital OPPS was
implemented.
Transitional pass-through payments
also are provided for certain ‘‘new’’
drugs and biologicals that were not
being paid for as an HOPD service as of
December 31, 1996 and whose cost is
‘‘not insignificant’’ in relation to the
OPPS payments for the procedures or
services associated with the new drug or
biological. For pass-through payment
purposes, radiopharmaceuticals are
included as ‘‘drugs.’’ As required by
statute, transitional pass-through
payments for a drug or biological
described in section 1833(t)(6)(C)(i)(II)
of the Act can be made for a period of
at least 2 years, but not more than 3
years, after the payment was first made
for the product as a hospital outpatient
service under Medicare Part B. CY 2015
pass-through drugs and biologicals and
their designated APCs are assigned
status indicator ‘‘G’’ in Addenda A and
B to this final rule with comment
period, which are available via the
Internet on the CMS Web site.
Section 1833(t)(6)(D)(i) of the Act
specifies that the pass-through payment
amount, in the case of a drug or
biological, is the amount by which the
amount determined under section
1842(o) of the Act for the drug or

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biological exceeds the portion of the
otherwise applicable Medicare OPD fee
schedule that the Secretary determines
is associated with the drug or biological.
If the drug or biological is covered
under a competitive acquisition contract
under section 1847B of the Act, the
pass-through payment amount is
determined by the Secretary to be equal
to the average price for the drug or
biological for all competitive acquisition
areas and the year established under
such section as calculated and adjusted
by the Secretary. However, we note that
the Part B drug competitive acquisition
program (CAP) has been postponed
since CY 2009, and such a program has
not been reinstated for CY 2015.
This methodology for determining the
pass-through payment amount is set
forth in regulations at 42 CFR 419.64.
These regulations specify that the passthrough payment equals the amount
determined under section 1842(o) of the
Act minus the portion of the APC
payment that CMS determines is
associated with the drug or biological.
Section 1847A of the Act establishes the
average sales price (ASP) methodology,
which is used for payment for drugs and
biologicals described in section
1842(o)(1)(C) of the Act furnished on or
after January 1, 2005. The ASP
methodology, as applied under the
OPPS, uses several sources of data as a
basis for payment, including the ASP,
the wholesale acquisition cost (WAC),
and the average wholesale price (AWP).
In this final rule with comment period,
the term ‘‘ASP methodology’’ and ‘‘ASPbased’’ are inclusive of all data sources
and methodologies described therein.
Additional information on the ASP
methodology can be found on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-Service-PartB-Drugs/McrPartBDrugAvgSalesPrice/
index.html.
The pass-through application and
review process for drugs and biologicals
is explained on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/passthrough_
payment.html.
2. Drugs and Biologicals With Expiring
Pass-Through Payment Status in CY
2014
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40992), we proposed that
the pass-through status of 9 drugs and
biologicals would expire on December
31, 2014, as listed in Table 33 of the
proposed rule (79 FR 40993). All of
these drugs and biologicals will have
received OPPS pass-through payment
for at least 2 years and no more than 3
years by December 31, 2014. These

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drugs and biologicals were approved for
pass-through status on or before January
1, 2013. With the exception of those
groups of drugs and biologicals that are
always packaged when they do not have
pass-through status (specifically,
diagnostic radiopharmaceuticals;
contrast agents; anesthesia drugs; drugs,
biologicals, and radiopharmaceuticals
that function as supplies when used in
a diagnostic test or procedure; and drugs
and biologicals that function as supplies
when used in a surgical procedure), our
standard methodology for providing
payment for drugs and biologicals with
expiring pass-through status in an
upcoming calendar year is to determine
the product’s estimated per day cost and
compare it with the OPPS drug
packaging threshold for that calendar
year (which is $95 for CY 2015), as
discussed further in section V.B.2. of
this final rule with comment period. If
the estimated per day cost for the drug
or biological is less than or equal to the
applicable OPPS drug packaging
threshold, we would package payment
for the drug or biological into the
payment for the associated procedure in
the upcoming calendar year. If the
estimated per day cost of the drug or
biological is greater than the OPPS drug
packaging threshold, we would provide
separate payment at the applicable
relative ASP-based payment amount
(which is ASP+6 percent for CY 2015,
as discussed further in section V.B.3. of
this final rule with comment period).
Comment: Commenters, including
several hospitals, physicians, and a
manufacturer, requested that CMS
continue to pay separately for Exparel®
(bupivacaine liposome injectable
suspension) described by HCPCS code
C9290 (Injection, bupivicaine liposome,
1 mg) once pass-through payment status
expires on December 31, 2014.
Commenters disagreed with CMS’
proposal to package Exparel® as a
surgical supply and stated that the drug
is used to control postoperative pain
and is not used in the actual surgical
procedure. In addition, commenters
noted that the product cost of Exparel®
exceeds the proposed CY 2015
packaging threshold of $90 and is not
FDA-approved as a local anesthetic.
Response: We disagree with the
commenters’ characterization of
Exparel® as not functioning as a surgical
supply because it is indicated for the
alleviation of postoperative pain. The
indications and usage of Exparel® as
listed in the FDA-approved label are as
follows: ‘‘Exparel® is a liposome
injection of bupivacaine, an amide-type
local anesthetic, indicated for
administration into the surgical site to
produce postsurgical analgesia.’’

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
Exparel® is injected immediately after
the surgical procedure while the patient
is still on the operating room table at the
surgical wound site to control
postoperative pain, which is an
important part of the surgical care of the
patient affecting the surgical outcome.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74925
through 74939), we finalized our policy
at 42 CFR 419.2(b)(16) to
unconditionally package all drugs and
biologicals that function as supplies in
a surgical procedure. According to
OPPS policy, drugs, biologicals,
radiopharmaceuticals, implantable
medical devices, and other items and
products that are not equipment can be
supplies in the OPPS (78 FR 43571 and
43575). While the commenter stated that
the cost of Exparel® exceeds the drug
packaging threshold, we emphasize that
cost consideration is not a factor in
determining whether an item is a
surgical supply. We consider all items
related to the surgical outcome and
provided during the hospital stay in
which the surgery is performed,
including postsurgical pain
management drugs, to be part of the
surgery for purposes of our drug and
biological surgical supply packaging
policy. Therefore, for CY 2015, we are
finalizing our proposal to package
Exparel® described by HCPCS code
C9290 and to assign status indicator
‘‘N’’ to the code for CY 2015.
Comment: A few commenters
recommended that CMS continue pass-

through payment status for new drugs,
specifically diagnostic
radiopharmaceuticals and contrast
agents, for a full 3 years. The
commenters asserted that providing
pass-through payment status for 3 years
would help provide a more current and
accurate data set on which to base
payment amounts of the procedure
when the diagnostic
radiopharmaceutical or contrast agent is
subsequently packaged. The
commenters further recommended that
CMS expire pass-through payment
status for drugs and biologicals on a
quarterly as opposed to an annual basis.
Response: As we stated in the CY
2012 OPPS/ASC final rule with
comment period (76 FR 74287), the CY
2013 OPPS/ASC final rule with
comment period (77 FR 68363), and the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75010), and as
described in section V.A. of this final
rule with comment period, section
1833(t)(6)(c)(i)(II) of the Act permits
CMS to make pass-through payments for
a period of at least 2 years, but not more
than 3 years, after the product’s first
payment as a hospital outpatient service
under Medicare Part B OPPS. We
continue to believe that this period of
payment appropriately facilitates
dissemination of these new products
into clinical practice and facilitates the
collection of sufficient hospital claims
data reflective of their costs for future
OPPS ratesetting. Our longstanding
practice has been to provide pass-

66875

through payment for a period of 2 to 3
years, with expiration of pass-through
payment status proposed and finalized
through the annual rulemaking process.
Each year, when proposing to expire the
pass-through payment status of certain
drugs and biologicals, we examine our
claims data for these products. We
observe that hospitals typically have
incorporated these products into their
chargemasters based on the utilization
and costs observed in our claims data.
Under the existing pass-through
payment policy, we begin pass-through
payment on a quarterly basis, depending
on when applications are submitted to
us for consideration. We are confident
that the period of time for which drugs,
biologicals, contrast agents, and
radiopharmaceuticals receive passthrough payment status, which is at
least 2 but no more than 3 years, is
appropriate for CMS to collect the
sufficient amount of data to make a
packaging determination.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to expire the pass-through
payment status of the nine drugs and
biologicals listed in Table 28 below.
Table 28 lists the drugs and biologicals
for which pass-through payment status
will expire on December 31, 2014, the
status indicators, and the assigned APCs
for CY 2015.

TABLE 28—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH PAYMENT STATUS EXPIRES DECEMBER 31, 2014
CY 2015
HCPCS Code

CY 2015 Long descriptor

Final CY 2015
SI

C9290 ...............
C9293 ...............
J0178 ................
J0716 ................
J9019 ................
J9306 ................
Q4131 ...............
Q4132 ...............
Q4133 ...............

Injection, bupivicaine liposome, 1 mg ......................................................................................
Injection, glucarpidase, 10 units ...............................................................................................
Injection, aflibercept, 1 mg vial .................................................................................................
Injection, centruroides (scorpion) immune f(ab)2, up to 120 milligrams ..................................
Injection, asparaginase (erwinaze), 1,000 iu ............................................................................
Injection, pertuzumab, 1 mg .....................................................................................................
EpiFix, per square centimeter ..................................................................................................
Grafix core, per square centimeter ...........................................................................................
Grafix prime, per square centimeter .........................................................................................

N
K
K
K
K
K
N
N
N

tkelley on DSK3SPTVN1PROD with RULES2

3. Drugs, Biologicals, and
Radiopharmaceuticals With New or
Continuing Pass-Through Payment
Status in CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40993), we proposed to
continue pass-through payment status
in CY 2015 for 22 drugs and biologicals.
None of these drugs and biologicals will
have received OPPS pass-through
payment for at least 2 years and no more
than 3 years by December 31, 2014.
These drugs and biologicals, which

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were approved for pass-through status
between January 1, 2013 and July 1,
2014, were listed in Table 34 of the
proposed rule (79 FR 40994). The APCs
and HCPCS codes for these drugs and
biologicals approved for pass-through
status through July 1, 2014 were
assigned status indicator ‘‘G’’ in
Addenda A and B to the proposed rule.
Addenda A and B to the proposed rule
are available via the Internet on the
CMS Web site.
Section 1833(t)(6)(D)(i) of the Act sets
the amount of pass-through payment for

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Final CY 2015
APC
N/A
9293
1420
1431
9289
1471
N/A
N/A
N/A

pass-through drugs and biologicals (the
pass-through payment amount) as the
difference between the amount
authorized under section 1842(o) of the
Act and the portion of the otherwise
applicable OPD fee schedule that the
Secretary determines is associated with
the drug or biological. Payment for
drugs and biologicals with pass-through
status under the OPPS is currently made
at the physician’s office payment rate of
ASP+6 percent. We stated in the
proposed rule that we believe it is

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

consistent with the statute to propose to
continue to provide payment for drugs
and biologicals with pass-through status
at a rate of ASP+6 percent in CY 2015,
which is the amount that drugs and
biologicals receive under section
1842(o) of the Act.
Therefore, for CY 2015, we proposed
to pay for pass-through drugs and
biologicals at ASP+6 percent, equivalent
to the rate these drugs and biologicals
would receive in the physician’s office
setting in CY 2015. We proposed that a
$0.00 pass-through payment amount
would be paid for most pass-through
drugs and biologicals under the CY 2015
OPPS because the difference between
the amount authorized under section
1842(o) of the Act, which is ASP+6
percent, and the portion of the
otherwise applicable OPD fee schedule
that the Secretary determines is
appropriate, proposed at ASP+6
percent, is $0.
In the case of policy-packaged drugs
(which include the following: Contrast
agents; diagnostic radiopharmaceuticals;
anesthesia drugs; drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure and drugs; and biologicals
that function as supplies when used in
a surgical procedure), we proposed that
their pass-through payment amount
would be equal to ASP+6 percent for CY
2015 because, if not on pass-through
status, payment for these products
would be packaged into the associated
procedure.
In addition, we proposed to continue
to update pass-through payment rates
on a quarterly basis on the CMS Web
site during CY 2015 if later quarter ASP
submissions (or more recent WAC or
AWP information, as applicable)
indicate that adjustments to the
payment rates for these pass-through
drugs or biologicals are necessary. For a
full description of this policy, we refer
readers to the CY 2006 OPPS/ASC final
rule with comment period (70 FR 68632
through 68635).
In CY 2015, as is consistent with our
CY 2014 policy for diagnostic and
therapeutic radiopharmaceuticals, we
proposed to provide payment for both
diagnostic and therapeutic
radiopharmaceuticals that are granted
pass-through payment status based on
the ASP methodology. As stated above,
for purposes of pass-through payment,
we consider radiopharmaceuticals to be
drugs under the OPPS. Therefore, if a
diagnostic or therapeutic
radiopharmaceutical receives passthrough payment status during CY 2015,
we proposed to follow the standard ASP
methodology to determine the passthrough payment rate that drugs receive

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under section 1842(o) of the Act, which
is ASP+6 percent. If ASP data are not
available for a radiopharmaceutical, we
proposed to provide pass-through
payment at WAC+6 percent, the
equivalent payment provided to passthrough drugs and biologicals without
ASP information. If WAC information
also is not available, we proposed to
provide payment for the pass-through
radiopharmaceutical at 95 percent of its
most recent AWP.
Comment: Several commenters
supported CMS’ proposal to provide
payment at ASP+6 percent for drugs,
biologicals, contrast agents, and
radiopharmaceuticals that are granted
pass-through payment status. A few
commenters requested that CMS
provide an additional payment for
radiopharmaceuticals that are granted
pass-through payment status.
Response: As discussed above, the
statute provides that mandated passthrough payment for pass-through drugs
and biologicals for CY 2015 equals the
amount determined under section
1842(o) of the Act minus the portion of
the otherwise applicable APC payment
that CMS determines is associated with
the drug or biological. Therefore, the
pass-through payment is determined by
subtracting the otherwise applicable
payment amount under the OPPS
(ASP+6 percent for CY 2015) from the
amount determined under section
1842(o) of the Act (ASP+6 percent).
Regarding the commenters’ request
that CMS provide an additional
payment for radiopharmaceuticals that
are granted pass-through payment
status, we note that, for CY 2015,
consistent with our CY 2014 payment
policy for diagnostic and therapeutic
radiopharmaceuticals, we proposed to
provide payment for both diagnostic
and therapeutic radiopharmaceuticals
with pass-through payment status based
on the ASP methodology. As stated
above, the ASP methodology, as applied
under the OPPS, uses several sources of
data as a basis for payment, including
the ASP, the WAC if the ASP is
unavailable, and 95 percent of the
radiopharmaceutical’s most recent AWP
if the ASP and WAC are unavailable.
For purposes of pass-through payment,
we consider radiopharmaceuticals to be
drugs under the OPPS. Therefore, if a
diagnostic or therapeutic
radiopharmaceutical receives passthrough payment status during CY 2015,
we proposed to follow the standard ASP
methodology to determine its passthrough payment rate under the OPPS to
account for the acquisition and
pharmacy overhead costs, including
compounding costs. We continue to
believe that a single payment is

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appropriate for diagnostic
radiopharmaceuticals with pass-through
payment status in CY 2015, and that the
payment rate of ASP+6 percent (or
payment based on the ASP
methodology) is appropriate to provide
payment for both the
radiopharmaceutical’s acquisition cost
and any associated nuclear medicine
handling and compounding costs. We
refer readers to section V.B.3. of this
final rule with comment period for
further discussion of payment for
therapeutic radiopharmaceuticals based
on ASP information submitted by
manufacturers, and readers also may
refer to the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html.
After consideration of the public
comments we received, we are
finalizing our proposal to provide
payment for drugs, biologicals,
diagnostic and therapeutic
radiopharmaceuticals, and contrast
agents that are granted pass-through
payment status based on the ASP
methodology. If a diagnostic or
therapeutic radiopharmaceutical
receives pass- through status during CY
2015, we will follow the standard ASP
methodology to determine the passthrough payment rate that drugs receive
under section 1842(o) of the Act, which
is ASP+6 percent. If ASP data are not
available for a radiopharmaceutical, we
will provide pass-through payment at
WAC+6 percent, the equivalent
payment provided to pass-through drugs
and biologicals without ASP
information. If WAC information also is
not available, we will provide payment
for the pass-through
radiopharmaceutical at 95 percent of its
most recent AWP.
As discussed in more detail in section
II.A.3. of this final rule with comment
period, we implemented a policy
whereby payment for the following
nonpass-through items is packaged into
payment for the associated procedure:
diagnostic radiopharmaceuticals;
contrast agents; anesthesia drugs; drugs,
biologicals, and radiopharmaceuticals
that function as supplies when used in
a diagnostic test or procedure; and drugs
and biologicals that function as supplies
when used in a surgical procedure. As
stated earlier, pass-through payment is
the difference between the amount
authorized under section 1842(o) of the
Act and the portion of the otherwise
applicable OPD fee schedule that the
Secretary determines is associated with
the drug or biological. Because payment
for a drug that is policy-packaged would
otherwise be packaged if the product
did not have pass-through payment

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
status, we believe the otherwise
applicable OPPS payment amount
would be equal to the policy-packaged
drug APC offset amount for the
associated clinical APC in which the
drug or biological is utilized. The
calculation of the policy-packaged drug
APC offset amounts is described in more
detail in section V.A.4. of this final rule
with comment period. It follows that the
copayment for the nonpass-through
payment portion (the otherwise
applicable fee schedule amount that we
would also offset from payment for the
drug or biological if a payment offset
applies) of the total OPPS payment for
those drugs and biologicals, therefore,
would be accounted for in the
copayment for the associated clinical
APC in which the drug or biological is
used.
According to section 1833(t)(8)(E) of
the Act, the amount of copayment
associated with pass-through items is
equal to the amount of copayment that
would be applicable if the pass-through
adjustment was not applied. Therefore,
as we did in CY 2014, in the CY 2015
OPPS/ASC proposed rule, we proposed
to continue to set the associated
copayment amount to zero for CY 2015
for pass-through drugs and biologicals
that would otherwise be packaged if the
item did not have pass-through payment
status. The 22 drugs and biologicals that

we proposed would continue to have
pass-through payment status for CY
2015 or have been granted pass-through
payment status as of January 2015 were
shown in Table 34 of the proposed rule
(79 FR 40994).
Comment: Commenters supported the
CY 2015 proposal to continue to set the
associated copayment amounts for passthrough diagnostic
radiopharmaceuticals and contrast
agents that would otherwise be
packaged if the product did not have
pass-through payment status to zero.
The commenters noted that this policy
is consistent with statutory
requirements and provides cost-saving
benefits to Medicare beneficiaries.
Response: We appreciate the
commenters’ support of our proposal.
As discussed in the CY 2015 OPPS/ASC
proposed rule (79 FR 40993 through
40994), we believe that for drugs and
biologicals that are ‘‘policy-packaged,’’
the copayment for the nonpass-through
payment portion of the total OPPS
payment for this subset of drugs and
biologicals is accounted for in the
copayment of the associated clinical
APC in which the drug or biological is
used. According to section 1833(t)(8)(E)
of the Act, the amount of copayment
associated with pass-through items is
equal to the amount of copayment that
would be applicable if the pass-through

66877

adjustment was not applied. Therefore,
we believe that the copayment amount
should be zero for drugs and biologicals
that are ‘‘policy-packaged,’’ including
diagnostic radiopharmaceuticals and
contrast agents. We also believe that the
copayment amount should be zero for
anesthesia drugs that would otherwise
be packaged if the item did not have
pass-through payment status.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to continue to set the
associated copayment amount for passthrough diagnostic
radiopharmaceuticals, contrast agents,
and anesthesia drugs that would
otherwise be packaged if the item did
not have pass-through payment status to
zero for CY 2015.
The 35 drugs and biologicals that will
continue to have pass-through payment
status for CY 2015 or have been granted
pass-through payment status as of
January 1, 2015 are shown in Table 29
below. As is our standard methodology,
we annually review new permanent
HCPCS codes and delete temporary
HCPCS C-codes if an alternate
permanent HCPCS code is available for
purposes of OPPS billing and payment.
Table 29 below includes those coding
changes.

TABLE 29—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2015

tkelley on DSK3SPTVN1PROD with RULES2

CY 2014
HCPCS
code
A9520 ......
N/A ...........
C9021 ......
C9022 ......
C9023 ......
C9025 ......
C9026 ......
N/A ...........
C9132 ......
C9133 ......
C9134 ......
C9135 ......
N/A ...........
C9441 ......
N/A ...........
N/A ...........
N/A ...........
N/A ...........
N/A ...........
N/A ...........
C9497 ......
J1446 .......
J1556 .......
J3060 .......
J7315 .......
J7316 .......
J7508 .......
J9047 .......
J9262 .......
J9354 .......
J9371 .......

VerDate Sep<11>2014

CY 2015
HCPCS
code
A9520
A9586
J9301
J1322
J3145
C9025
C9026
C9027
C9132
J7200
J7181
J7201
C9136
J1439
C9349
C9442
C9443
C9444
C9446
C9447
C9497
J1446
J1556
J3060
J7315
J7316
J7508
J9047
J9262
J9354
J9371

..........
..........
..........
..........
..........
..........
..........
.........
..........
..........
..........
..........
.........
..........
.........
.........
.........
.........
.........
.........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........

CY 2015 Long descriptor

Final
CY 2015
SI

Final
CY 2015
APC

Technetium Tc 99m tilmanocept, diagnostic, up to 0.5 millicuries ..................................
Florbetapir f18, diagnostic, per study dose, up to 10 millicuries .....................................
Injection, obinutuzumab, 10 mg .......................................................................................
Injection, elosulfase alfa, 1mg .........................................................................................
Injection, testosterone undecanoate, 1 mg ......................................................................
Injection, ramucirumab, 5 mg ..........................................................................................
Injection, vedolizumab, 1 mg ...........................................................................................
Injection, pembrolizumab, 1 mg .......................................................................................
Prothrombin complex concentrate (human), Kcentra, per i.u. of Factor IX activity ........
Factor ix (antihemophilic factor, recombinant), Rixubus, per i.u .....................................
Injection, Factor XIII A-subunit, (recombinant), per i.u ....................................................
Injection, factor ix, fc fusion protein (recombinant), per i.u .............................................
Injection, factor viii, fc fusion protein, (recombinant), per i.u ...........................................
Injection, ferric carboxymaltose, 1 mg .............................................................................
FortaDerm, and FortaDerm Antimicrobial, any type, per square centimeter ..................
Injection, belinostat, 10 mg ..............................................................................................
Injection, dalbavancin, 10 mg ..........................................................................................
Injection, oritavancin, 10 mg ............................................................................................
Injection, tedizolid phosphate, 1 mg ................................................................................
Injection, phenylephrine and ketorolac, 4 ml vial ............................................................
Loxapine, inhalation powder, 10 mg ................................................................................
Injection, tbo-filgrastim, 5 micrograms .............................................................................
Injection, immune globulin (Bivigam), 500 mg .................................................................
Injection, taliglucerase alfa, 10 units ................................................................................
Mitomycin, ophthalmic, 0.2 mg ........................................................................................
Injection, Ocriplasmin, 0.125 mg .....................................................................................
Tacrolimus, Extended Release, Oral, 0.1 mg ..................................................................
Injection, carfilzomib, 1 mg ..............................................................................................
Injection, omacetaxine mepesuccinate, 0.01 mg .............................................................
Injection, ado-trastuzumab emtansine, 1 mg ...................................................................
Injection, Vincristine Sulfate Liposome, 1 mg ..................................................................

G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G

1463
1664
1476
1480
1487
1488
1489
1490
9132
1467
1746
1486
1656
9441
1657
1658
1659
1660
1662
1663
9497
1477
9130
9294
1448
9298
1465
9295
9297
9131
1466

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66878

Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
TABLE 29—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2015—Continued

CY 2014
HCPCS
code

CY 2015
HCPCS
code

CY 2015 Long descriptor

Final
CY 2015
SI

Final
CY 2015
APC

J9400 .......
Q4121 ......
Q4122 ......
Q4127 ......

J9400 ..........
Q4121 .........
Q4122 .........
Q4127 .........

Injection, Ziv-Aflibercept, 1 mg ........................................................................................
Theraskin, per square centimeter ....................................................................................
Dermacell, per square centimeter ....................................................................................
Talymed, per square centimeter ......................................................................................

G
G
G
G

9296
1479
1419
1449

4. Provisions for Reducing Transitional
Pass-Through Payments for PolicyPackaged Drugs and Biologicals To
Offset Costs Packaged Into APC Groups
a. Background
Prior to CY 2008, diagnostic
radiopharmaceuticals and contrast
agents were paid separately under the
OPPS if their mean per day costs were
greater than the applicable year’s drug
packaging threshold. In CY 2008 (72 FR
66768), we began a policy of packaging
payment for all nonpass-through
diagnostic radiopharmaceuticals and
contrast agents as ancillary and
supportive items and services into their
associated nuclear medicine procedures.
Therefore, beginning in CY 2008,
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents were not subject to the annual
OPPS drug packaging threshold to
determine their packaged or separately
payable payment status, and instead all
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents were packaged as a matter of
policy.
For CY 2014, in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 74925), we continued to package
payment for all nonpass-through
diagnostic radiopharmaceuticals,
contrast agents, and anesthesia drugs,
and we began packaging all nonpassthrough drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure and drugs and biologicals
that function as supplies when used in
a surgical procedure. These packaging
policies are codified at 42 CFR 419.2(b).

tkelley on DSK3SPTVN1PROD with RULES2

b. Payment Offset Policy for Diagnostic
Radiopharmaceuticals
As previously noted,
radiopharmaceuticals are considered to
be drugs for OPPS pass-through
payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act
specifies that the transitional passthrough payment amount for passthrough drugs and biologicals is the
difference between the amount paid
under section 1842(o) of the Act and the
otherwise applicable OPD fee schedule

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amount. Because a payment offset is
necessary in order to provide an
appropriate transitional pass-through
payment, we deduct from the passthrough payment for diagnostic
radiopharmaceuticals an amount
reflecting the portion of the APC
payment associated with predecessor
radiopharmaceuticals in order to ensure
no duplicate radiopharmaceutical
payment is made.
In CY 2009, we established a policy
to estimate the portion of each APC
payment rate that could reasonably be
attributed to the cost of predecessor
diagnostic radiopharmaceuticals when
considering a new diagnostic
radiopharmaceutical for pass-through
payment (73 FR 68638 through 68641).
Specifically, we use the policy-packaged
drug offset fraction for APCs containing
nuclear medicine procedures, calculated
as 1 minus the following: The cost from
single procedure claims in the APC after
removing the cost for policy-packaged
drugs divided by the cost from single
procedure claims in the APC. To
determine the actual APC offset amount
for pass-through diagnostic
radiopharmaceuticals that takes into
consideration the otherwise applicable
OPPS payment amount, we multiply the
policy-packaged drug offset fraction by
the APC payment amount for the
nuclear medicine procedure with which
the pass-through diagnostic
radiopharmaceutical is used and,
accordingly, reduce the separate OPPS
payment for the pass-through diagnostic
radiopharmaceutical by this amount.
For CY 2015, as we did in CY 2014, we
proposed to continue to apply the
diagnostic radiopharmaceutical offset
policy to payment for pass-through
diagnostic radiopharmaceuticals.
There is currently one diagnostic
radiopharmaceutical with pass-through
status under the OPPS. HCPCS code
A9520 (Technetium Tc 99m
tilmanocept, diagnostic, up to 0.5
millicuries) was granted pass-through
payment status beginning October 1,
2013. We currently apply the
established radiopharmaceutical
payment offset policy to pass-through
payment for this product.

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Table 35 of the CY 2015 OPPS/ASC
proposed rule (79 FR 40995) displayed
the proposed APCs to which nuclear
medicine procedures would be assigned
in CY 2015 and for which we expect
that an APC offset could be applicable
in the case of diagnostic
radiopharmaceuticals with pass-through
status.
Comment: A few commenters
requested that CMS reinstate the ‘‘FB’’
modifier to specified nuclear medicine
procedures in cases in which the
diagnostic radiopharmaceutical is
received at no cost or full credit. The
commenters requested that the policy be
maintained for CY 2015 and beyond.
Response: As we discussed in the
CY2014 OPPS/ASC final rule with
comment period (78 FR 75016), our
review of claims data showed that
hospitals rarely received diagnostic
radiopharmaceuticals at no cost or full
credit. Therefore, we do not believe that
the ‘‘FB’’ modifier policy is warranted
for diagnostic radiopharmaceuticals.
Comment: A few commenters agreed
that pass-through payment status for
HCPCS code A9520 should be extended
for CY 2015.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to continue to apply the
diagnostic radiopharmaceutical offset
policy to payment for pass-through
diagnostic radiopharmaceuticals, as
described in the CY 2015 OPPS/ASC
proposed rule (79 FR 40994 through
40995). We will continue to reduce the
payment amount for procedures in the
APCs listed in Table 30 in this final rule
with comment period by the full policypackaged offset amount appropriate for
diagnostic radiopharmaceuticals.
Table 30 below displays the APCs to
which nuclear medicine procedures will
be assigned in CY 2015 and for which
we expect that an APC offset could be
applicable in the case of diagnostic
radiopharmaceuticals with pass-through
payment status.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
(79 FR 40995), we proposed to multiply
the policy packaged drug offset fraction
by the APC payment amount for the
procedure with which the pass-through
contrast agent is used and, accordingly,
reduce the separate OPPS payment for
CY 2015
CY
2015
APC
title
APC
the pass-through contrast agent by this
amount. For CY 2015, as we did in CY
0308 ....... Positron Emission Tomography
2014, we proposed to continue to apply
(PET) Imaging.
our standard contrast agents offset
0377 ....... Level II Cardiac Imaging.
policy to payment for pass-through
0378 ....... Level II Pulmonary Imaging.
0389 ....... Level I Non-imaging Nuclear contrast agents (we refer readers to the
Medicine.
CY 2014 OPPS/ASC final rule with
0390 ....... Level I Endocrine Imaging.
comment period (78 FR 75017) for the
0391 ....... Level II Endocrine Imaging.
final CY 2014 policy and the CY 2015
0392 ....... Level II Non-imaging Nuclear
OPPS/ASC proposed rule (79 FR 40995
Medicine.
0393 ....... Hematologic Processing & Stud- through 40996) for the proposed CY
2015 policy).
ies.
0394 ....... Hepatobiliary Imaging.
Although there are currently no
0395 ....... GI Tract Imaging.
contrast
agents with pass-through
0396 ....... Bone Imaging.
payment status under the OPPS, we
0398 ....... Level I Cardiac Imaging.
believe that a payment offset is
0400 ....... Hematopoietic Imaging.
0401 ....... Level I Pulmonary Imaging.
necessary in the event that a new
0402 ....... Level II Nervous System Imaging. contrast agent is approved for pass0403 ....... Level I Nervous System Imaging.
through status during CY 2015 in order
0404 ....... Renal and Genitourinary Studies.
to provide an appropriate transitional
0406 ....... Level I Tumor/Infection Imaging.
0408 ....... Level III Tumor/Infection Imaging. pass-through payment for new contrast
agents. We proposed to identify
0414 ....... Level II Tumor/Infection Imaging.
procedural APCs for which we expect a
c. Payment Offset Policy for Contrast
contrast offset could be applicable in the
Agents
case of a pass-through contrast agent as
any procedural APC with a policySection 1833(t)(6)(D)(i) of the Act
packaged drug amount greater than $20
specifies that the transitional passthat is not a nuclear medicine APC
through payment amount for passidentified in Table 35 of the proposed
through drugs and biologicals is the
rule, and these APCs were displayed in
difference between the amount paid
under section 1842(o) of the Act and the Table 36 of the proposed rule. The
methodology used to determine a
otherwise applicable OPD fee schedule
proposed threshold cost for application
amount. Because a payment offset is
of a contrast agent offset policy is
necessary in order to provide an
appropriate transitional pass-through
described in detail in the CY 2010
payment, we deduct from the passOPPS/ASC final rule with comment
through payment for contrast agents an
period (74 FR 60483 through 60484).
amount reflecting the portion of the
For CY 2015, we proposed to continue
APC payment associated with
to recognize that when a contrast agent
predecessor contrast agents in order to
with pass-through status is billed with
ensure no duplicate contrast agent
any procedural APC listed in Table 36
payment is made.
of the proposed rule (79 FR 40995
In CY 2010, we established a policy
through 40996), a specific offset based
to estimate the portion of each APC
on the procedural APC would be
payment rate that could reasonably be
applied to payment for the contrast
attributed to the cost of predecessor
agent to ensure that duplicate payment
contrast agents when considering new
is not made for the contrast agent.
contrast agents for pass-through
We did not receive any public
payment (74 FR 60482 through 60484).
Specifically, we use the policy-packaged comments on this proposal. Therefore,
drug offset fraction for procedural APCs, we are finalizing our proposal for CY
calculated as 1 minus the following: The 2015 without modification. We will
cost from single procedure claims in the continue to recognize that when a
contrast agent with pass-through
APC after removing the cost for policy
packaged drugs divided by the cost from payment status is billed with any
procedural APC listed in Table 31
single procedure claims in the APC. To
determine the actual APC offset amount below, a specific offset based on the
procedural APC will be applied to the
for pass-through contrast agents that
payment for the contrast agent to ensure
takes into consideration the otherwise
that duplicate payment is not made for
applicable OPPS payment amount, in
the CY 2015 OPPS/ASC proposed rule
the contrast agent.

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 30—APCS TO WHICH A DIAGNOSTIC
RADIOPHARMACEUTICAL
OFFSET MAY BE APPLICABLE IN CY
2015

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66879

TABLE 31—APCS TO WHICH A CONTRAST AGENT OFFSET MAY BE APPLICABLE FOR CY 2015
CY 2015
APC

CY 2015 APC title

0080 .......

Diagnostic Cardiac Catheterization.
Coronary
Angioplasty,
Valvuloplasty, and Level I
Endovascular
Revascularization.
Vascular
Reconstruction/Fistula
Repair.
Level I Percutaneous Abdominal
and Biliary Procedures.
Level I Echocardiogram With
Contrast.
Level II Echocardiogram With
Contrast.
Level
II
Endovascular
Revascularization of the Lower
Extremity.
Diagnostic Urography.
Level
II
Angiography
and
Venography.
Level
III
Angiography
and
Venography.
Computed Tomography with Contrast.
Magnetic Resonance Imaging
and
Magnetic
Resonance
Angiography with Contrast.
Computed Tomography without
Contrast followed by Contrast.
Combined Abdomen and Pelvis
CT with Contrast.
Magnetic Resonance Imaging
and
Magnetic
Resonance
Angiography without Contrast
followed by Contrast.
Ancillary
Outpatient
Services
When Patient Expires.
Cardiac Computed Tomographic
Imaging.
Discography.
Dosimetric Drug Administration.
CT Angiography.
Level
I
Angiography
and
Venography.
CT and CTA with Contrast Composite.
MRI and MRA with Contrast
Composite.

0083 .......

0093 .......
0152 .......
0177 .......
0178 .......
0229 .......
0278 .......
0279 .......
0280 .......
0283 .......
0284 .......
0333 .......
0334 .......
0337 .......

0375 .......
0383 .......
0388
0442
0662
0668

.......
.......
.......
.......

8006 .......
8008 .......

d. Payment Offset Policy for Drugs,
Biologicals, and Radiopharmaceuticals
That Function as Supplies When Used
in a Diagnostic Test or Procedure and
Drugs and Biologicals That Function as
Supplies When Used in a Surgical
Procedure
Section 1833(t)(6)(D)(i) of the Act
specifies that the transitional passthrough payment amount for passthrough drugs and biologicals is the
difference between the amount paid
under section 1842(o) of the Act and the
otherwise applicable OPD fee schedule
amount. In the CY 2014 OPPS/ASC final
rule with comment period (78 FR
74925), we finalized our policy to

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66880

Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

package drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure and drugs and biologicals
that function as supplies when used in
a surgical procedure. As a part of this
policy, we specifically finalized that
skin substitutes and stress agents used
in myocardial perfusion imaging (MPI)
be policy packaged in CY 2014, in
addition to diagnostic
radiopharmaceuticals, contrast agents,
and anesthesia drugs (78 FR 75019).
Because a payment offset is necessary in
order to provide an appropriate
transitional pass-through payment, we
finalized a policy for CY 2014 to deduct
from the pass-through payment for skin
substitutes and stress agents an amount
reflecting the portion of the APC
payment associated with predecessor
skin substitutes and stress agents in
order to ensure no duplicate skin
substitute or stress agent payment is
made (78 FR 75019).
In CY 2014, we established a policy
to estimate the portion of each APC
payment rate that could reasonably be
attributed to the cost of predecessor skin
substitutes or stress agents when
considering a new skin substitute or
stress agent for pass-through payment
(78 FR 75019). Specifically, in the case
of pass-through skin substitutes, we use
the policy-packaged drug offset fraction
for skin substitute procedural APCs,
calculated as 1 minus the following: The
cost from single procedure claims in the
APC after removing the cost for policypackaged drugs divided by the cost from
single procedure claims in the APC.
Because policy packaged
radiopharmaceuticals also would be
included in the drug offset fraction for
the APC to which MPI procedures are
assigned, in the case of pass-through
stress agents, we use the policypackaged drug offset fraction for the
procedural APC, calculated as 1 minus
the following: The cost from single
procedure claims in the APC after
removing the cost for policy-packaged
drugs excluding policy-packaged
diagnostic radiopharmaceuticals
divided by the cost from single
procedure claims in the APC. To
determine the actual APC offset amount
for pass-through skin substitutes and
pass-through stress agents that takes
into consideration the otherwise
applicable OPPS payment amount, we
multiply the policy-packaged drug offset
fraction by the APC payment amount for
the procedure with which the passthrough skin substitute or pass-through
stress agent is used and, accordingly,
reduce the separate OPPS payment for
the pass-through skin substitute or pass-

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through stress agent by this amount (78
FR 75019). In the CY 2015 OPPS/ASC
proposed rule (79 FR 40996), for CY
2015, as we did in CY 2014, we
proposed to continue to apply the skin
substitute and stress agent offset policy
to payment for pass-through skin
substitutes and stress agents.
There are currently six skin
substitutes (HCPCS codes Q4121,
Q4122, Q4127, Q4131, Q4132, and
Q4133) with pass-through payment
status under the OPPS. We currently
apply the established skin substitute
payment offset policy to pass-through
payment for these products. Table 37 of
the CY 2015 OPPS/ASC proposed rule
(79 FR 40996) displayed the proposed
APCs to which skin substitute
procedures would be assigned in CY
2015 and for which we expect that an
APC offset could be applicable in the
case of skin substitutes with passthrough status.
Although there are currently no stress
agents with pass-through status under
the OPPS, we believe that a payment
offset is necessary in the event that a
new stress agent is approved for passthrough status during CY 2015 in order
to provide an appropriate transitional
pass through payment for new stress
agents. Table 38 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40996)
displayed the proposed APCs to which
MPI procedures would be assigned in
CY 2015 and for which we expect that
an APC offset could be applicable in the
case of a stress agent with pass-through
status.
We did not receive any public
comments on these proposals.
Therefore, we are finalizing our
proposal, without modification, to
recognize that when a skin substitute
with pass-through payment status is
billed with any procedural APC listed in
Table 32 below, a specific offset based
on the procedural APC will be applied
to the payment for the skin substitute to
ensure that duplicate payment is not
made for the skin substitute. In
addition, when a stress agent with passthrough payment status is billed with
any procedural APC listed in Table 33
below, a specific offset based on the
procedural APC will be applied to the
payment for the stress agent to ensure
that duplicate payment is not made for
the stress agent. Table 32 below displays
the APCs to which skin substitute
procedures will be assigned in CY 2015
and for which we expect that an APC
offset could be applicable in the case of
skin substitutes with pass-through
payment status. Table 33 below displays
the APCs to which MPI procedures will
be assigned in CY 2015 and for which
we expect that an APC offset could be

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applicable in the case of a stress agent
with pass-through payment status.

TABLE 32—APCS TO WHICH A SKIN
SUBSTITUTE OFFSET MAY BE APPLICABLE FOR CY 2015
CY 2015
APC
0328 .......
0329 .......

CY 2015 APC title
Level III Skin Repair.
Level IV Skin Repair.

TABLE 33—APCS TO WHICH A
STRESS AGENT OFFSET MAY BE
APPLICABLE FOR CY 2015
CY 2015
APC
0100 .......
0377 .......

CY 2015 APC title
Cardiac Stress Tests.
Level II Cardiac Imaging.

As we proposed, we will continue to
post annually on the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/index.html a
file that contains the APC offset
amounts that will be used for that year
for purposes of both evaluating cost
significance for candidate pass-through
device categories and drugs and
biologicals and establishing any
appropriate APC offset amounts.
Specifically, the file will continue to
provide the amounts and percentages of
APC payment associated with packaged
implantable devices, policy-packaged
drugs, and threshold packaged drugs
and biologicals for every OPPS clinical
APC.
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals Without
Pass-Through Payment Status
1. Background
Under the CY 2013 OPPS, we
currently pay for drugs, biologicals, and
radiopharmaceuticals that do not have
pass-through payment status in one of
two ways: as a packaged payment
included in the payment for the
associated service, or as a separate
payment (individual APCs). We
explained in the April 7, 2000 OPPS
final rule with comment period (65 FR
18450) that we generally package the
cost of drugs and radiopharmaceuticals
into the APC payment rate for the
procedure or treatment with which the
products are usually furnished.
Hospitals do not receive separate
payment for packaged items and
supplies, and hospitals may not bill
beneficiaries separately for any
packaged items and supplies whose
costs are recognized and paid within the

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national OPPS payment rate for the
associated procedure or service.
Packaging costs into a single aggregate
payment for a service, procedure, or
episode-of-care is a fundamental
principle that distinguishes a
prospective payment system from a fee
schedule. In general, packaging the costs
of items and services into the payment
for the primary procedure or service
with which they are associated
encourages hospital efficiencies and
also enables hospitals to manage their
resources with maximum flexibility.
2. Criteria for Packaging Payment for
Drugs, Biologicals, and
Radiopharmaceuticals

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a. Background
As indicated in section V.B.1. of this
final rule with comment period, in
accordance with section 1833(t)(16)(B)
of the Act, the threshold for establishing
separate APCs for payment of drugs and
biologicals was set to $50 per
administration during CYs 2005 and
2006. In CY 2007, we used the four
quarter moving average Producer Price
Index (PPI) levels for Pharmaceutical
Preparations (Prescription) to trend the
$50 threshold forward from the third
quarter of CY 2005 (when the Pub. L.
108–173 mandated threshold became
effective) to the third quarter of CY
2007. We then rounded the resulting
dollar amount to the nearest $5
increment in order to determine the CY
2007 threshold amount of $55. Using
the same methodology as that used in
CY 2007 (which is discussed in more
detail in the CY 2007 OPPS/ASC final
rule with comment period (71 FR 68085
through 68086)), we set the packaging
threshold for establishing separate APCs
for drugs and biologicals at $90 for CY
2014.
Following the CY 2007 methodology,
for the CY 2015 OPPS/ASC proposed
rule (79 FR 40997), we used the most
recently available four quarter moving
average PPI levels to trend the $50
threshold forward from the third quarter
of CY 2005 to the third quarter of CY
2015 and rounded the resulting dollar
amount ($91.46) to the nearest $5
increment, which yielded a figure of
$90. In performing this calculation, we
used the most recent forecast of the
quarterly index levels for the PPI for
Pharmaceuticals for Human Use
(Prescription) (Bureau of Labor Statistics
(BLS) series code WPUSI07003) from
CMS’ Office of the Actuary (OACT). We
refer below to this series generally as the
PPI for Prescription Drugs.
Based on the calculations described
above, we proposed a packaging
threshold for CY 2015 of $90. (For a

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more detailed discussion of the OPPS
drug packaging threshold and the use of
the PPI for Prescription Drugs, we refer
readers to the CY 2007 OPPS/ASC final
rule with comment period (71 FR 68085
through 68086).)
Following the CY 2007 methodology,
for this CY 2015 OPPS/ASC final rule
with comment period, we used the most
recently available four quarter moving
average PPI levels to trend the $50
threshold forward from the third quarter
of CY 2005 to the third quarter of CY
2015 and rounded the resulting dollar
amount ($93.48) to the nearest $5
increment, which yielded a figure of
$95. In performing this calculation, we
used the most recent forecast of the
quarterly index levels for the PPI for
Pharmaceuticals for Human Use
(Prescription) (Bureau of Labor Statistics
(BLS) series code WPUSI07003) from
CMS’ Office of the Actuary (OACT).
Therefore, for this CY 2015 OPPS/ASC
final rule with comment period, using
the CY 2007 OPPS methodology, we are
establishing a packaging threshold for
CY 2015 of $95.
b. Cost Threshold for Packaging of
Payment for HCPCS Codes That
Describe Certain Drugs, Certain
Biologicals, and Therapeutic
Radiopharmaceuticals (‘‘ThresholdPackaged Drugs’’)
In the CY 2015 OPPS/ASC proposed
rule (79 FR 40997), to determine the
proposed CY 2015 packaging status for
all nonpass-through drugs and
biologicals that are not policy packaged,
we calculated, on a HCPCS codespecific basis, the per day cost of all
drugs, biologicals, and therapeutic
radiopharmaceuticals (collectively
called ‘‘threshold-packaged’’ drugs) that
had a HCPCS code in CY 2013 and were
paid (via packaged or separate payment)
under the OPPS. We used data from CY
2013 claims processed before January 1,
2014 for this calculation. However, we
did not perform this calculation for
those drugs and biologicals with
multiple HCPCS codes that include
different dosages, as described in
section V.B.2.c. of the proposed rule, or
for the following policy-packaged items
that we proposed to continue to package
in CY 2015: diagnostic
radiopharmaceuticals; contrast agents;
anesthesia drugs; drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure; and drugs and biologicals
that function as supplies when used in
a surgical procedure.
In order to calculate the per day costs
for drugs, biologicals, and therapeutic
radiopharmaceuticals to determine their
proposed packaging status in CY 2015,

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66881

we used the methodology that was
described in detail in the CY 2006 OPPS
proposed rule (70 FR 42723 through
42724) and finalized in the CY 2006
OPPS final rule with comment period
(70 FR 68636 through 68638). For each
drug and biological HCPCS code, we
used an estimated payment rate of
ASP+6 percent (which is the payment
rate we proposed for separately payable
drugs and biologicals for CY 2015, as
discussed in more detail in section
V.B.3.b. of the proposed rule) to
calculate the CY 2015 proposed rule per
day costs. We used the manufacturer
submitted ASP data from the fourth
quarter of CY 2013 (data that were used
for payment purposes in the physician’s
office setting, effective April 1, 2014) to
determine the proposed rule per day
cost.
As is our standard methodology, for
CY 2015, we proposed to use payment
rates based on the ASP data from the
fourth quarter of CY 2013 for budget
neutrality estimates, packaging
determinations, impact analyses, and
completion of Addenda A and B to the
proposed rule (which are available via
the Internet on the CMS Web site)
because these were the most recent data
available for use at the time of
development of the proposed rule.
These data also were the basis for drug
payments in the physician’s office
setting, effective April 1, 2014. For
items that did not have an ASP-based
payment rate, such as some therapeutic
radiopharmaceuticals, we used their
mean unit cost derived from the CY
2013 hospital claims data to determine
their per day cost.
We proposed to package items with a
per day cost less than or equal to $90,
and identify items with a per day cost
greater than $90 as separately payable.
Consistent with our past practice, we
crosswalked historical OPPS claims data
from the CY 2013 HCPCS codes that
were reported to the CY 2014 HCPCS
codes that we displayed in Addendum
B to the proposed rule (which is
available via the Internet on the CMS
Web site) for payment in CY 2015.
Comment: The majority of the
commenters opposed the continuation
of the OPPS packaging threshold of $90
for CY 2015. The commenters believed
that, over the past 5 years, CMS has
rapidly increased the packaging
threshold, which contradicts
Congressional intent. As such, the
commenters recommended that CMS
eliminate the packaging threshold and
provide separate payment for all drugs
with HCPCS codes or freeze the
packaging threshold at the current level
($90).

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Response: As stated in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68086), we believe that
packaging certain items is a
fundamental component of a
prospective payment system, that
updating the packaging threshold of $50
for the CY 2005 OPPS is consistent with
industry and government practices, and
that the PPI for Prescription Drugs is an
appropriate mechanism to gauge Part B
drug inflation. Therefore, because of our
continued belief that packaging is a
fundamental component of a
prospective payment system that
continues to provide important
flexibility and efficiency in the delivery
of high quality hospital outpatient
services, we are not adopting
commenters’ recommendations to pay
separately for all drugs, biologicals, and
radiopharmaceuticals for CY 2015 or to
eliminate the packaging threshold or to
freeze the packaging threshold at $90.
Since publication of the CY 2015
OPPS/ASC proposed rule, consistent
with our policy of updating the
packaging threshold with more recently
available data for this final rule with
comment period, we have again
followed the CY 2007 methodology for
CY 2015 and used updated four quarter
moving average PPI index levels
provided by the CMS Office of the
Actuary to trend the $50 threshold
forward from the third quarter of CY
2005 to the third quarter of CY 2015. We
then rounded the resulting updated
dollar amount ($93.48) to the nearest $5
increment, which yielded a figure of
$95. Therefore, after consideration of
the public comments we received, and
consistent with our methodology for
establishing the packaging threshold
using the most recent PPI forecast data,
we are adopting a CY 2015 packaging
threshold of $95.
Our policy during previous cycles of
the OPPS has been to use updated ASP
and claims data to make final
determinations of the packaging status
of HCPCS codes for drugs, biologicals,
and therapeutic radiopharmaceuticals
for the OPPS/ASC final rule with
comment period. We note that it is also
our policy to make an annual packaging
determination for a HCPCS code only
when we develop the OPPS/ASC final
rule with comment period for the
update year. Only HCPCS codes that are
identified as separately payable in the
final rule with comment period are
subject to quarterly updates. For our
calculation of per day costs of HCPCS
codes for drugs and biologicals in this
CY 2015 OPPS/ASC final rule with
comment period, we used ASP data
from the first quarter of CY 2014, which
is the basis for calculating payment rates

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for drugs and biologicals in the
physician’s office setting using the ASP
methodology, effective July 1, 2014,
along with updated hospital claims data
from CY 2013. We note that we also
used these data for budget neutrality
estimates and impact analyses for this
CY 2015 OPPS/ASC final rule with
comment period.
Payment rates for HCPCS codes for
separately payable drugs and biologicals
included in Addenda A and B to this
final rule with comment period are
based on ASP data from the second
quarter of CY 2014. These data are the
basis for calculating payment rates for
drugs and biologicals in the physician’s
office setting using the ASP
methodology, effective October 1, 2014.
These payment rates will then be
updated in the January 2015 OPPS
update, based on the most recent ASP
data to be used for physician’s office
and OPPS payment as of January 1,
2015. For items that do not currently
have an ASP-based payment rate, we
recalculated their mean unit cost from
all of the CY 2013 claims data and
updated cost report information
available for this CY 2015 final rule
with comment period to determine their
final per day cost.
Consequently, the packaging status of
some HCPCS codes for drugs,
biologicals, and therapeutic
radiopharmaceuticals in the CY 2015
OPPS/ASC proposed rule may be
different from the same drug HCPCS
code’s packaging status determined
based on the data used for this CY 2015
OPPS/ASC final rule with comment
period. Under such circumstances, we
proposed to continue to follow the
established policies initially adopted for
the CY 2005 OPPS (69 FR 65780) in
order to more equitably pay for those
drugs whose cost fluctuates relative to
the proposed CY 2015 OPPS drug
packaging threshold and the drug’s
payment status (packaged or separately
payable) in CY 2014. Specifically, for
CY 2015, consistent with our historical
practice, we proposed to apply the
following policies to these HCPCS codes
for drugs, biologicals, and therapeutic
radiopharmaceuticals whose
relationship to the drug packaging
threshold changes based on the updated
drug packaging threshold and on the
final updated data:
• HCPCS codes for drugs and
biologicals that were paid separately in
CY 2014 and that were proposed for
separate payment in CY 2015, and that
then have per day costs equal to or less
than the CY 2015 final rule drug
packaging threshold, based on the
updated ASPs and hospital claims data
used for the CY 2015 final rule, would

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continue to receive separate payment in
CY 2015.
• HCPCS codes for drugs and
biologicals that were packaged in CY
2014 and that were proposed for
separate payment in CY 2015, and that
then have per day costs equal to or less
than the CY 2015 final rule drug
packaging threshold, based on the
updated ASPs and hospital claims data
used for the CY 2015 final rule, would
remain packaged in CY 2015.
• HCPCS codes for drugs and
biologicals for which we proposed
packaged payment in CY 2015 but then
have per day costs greater than the CY
2015 final rule drug packaging
threshold, based on the updated ASPs
and hospital claims data used for the CY
2015 final rule, would receive separate
payment in CY 2015.
We did not receive any public
comments on our proposal to apply the
established policies initially adopted for
the CY 2005 OPPS (69 FR 65780) in
order to more equitably pay for those
drugs whose cost fluctuates relative to
the CY 2015 OPPS drug packaging
threshold and the drug’s payment status
(packaged or separately payable) in CY
2013. Therefore, we are finalizing our
proposal, without modification, for CY
2015.
c. High Cost/Low Cost Threshold for
Packaged Skin Substitutes
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74938), we
unconditionally packaged skin
substitute products into their associated
surgical procedures as part of a broader
policy to package all drugs and
biologicals that function as supplies
when used in a surgical procedure. The
adoption of this policy, to package all
drugs and biologicals that function as
supplies when used in a surgical
procedure, followed these packaging
policies: (1) Packaging of medical and
surgical supplies into the related
procedure under 42 CFR 419.2(b)(4) (68
FR 18543); (2) packaging of implantable
devices (68 FR 18444); and (3)
packaging of implantable biologicals (73
FR 68634). As noted in the CY 2014
OPPS/ASC final rule with comment
period, we believe these policies
represented an example of a broader
category of drugs and biologicals that
should be packaged in the OPPS, that is,
drugs and biologicals that function as
supplies in a surgical procedure (78 FR
74930). As part of the policy to finalize
the packaging of skin substitutes, we
also finalized a methodology that
divides the skin substitutes into a high
cost group and a low cost group, in
order to ensure adequate resource
homogeneity among APC assignments

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
for the skin substitute application
procedures (78 FR 74933). For the CY
2014 update, assignment to the high
cost or low cost skin substitute group
depended upon a comparison of the July
2013 ASP+6 percent payment amount
for each skin substitute to the weighted
average payment per unit for all skin
substitutes. The weighted average was
calculated using the skin substitute
utilization from the CY 2012 claims data
and the July 2013 ASP+6 percent
payment amounts. The high cost/low
cost skin substitute threshold for CY
2014 is $32 per cm2. Skin substitutes
that had a July 2013 ASP+6 percent
amount above $32 per cm2 were
classified in the high cost group, and
skin substitutes that had a July 2013
ASP+6 percent amount at or below $32
per cm2 were classified in the low cost
group. Any new skin substitutes
without pricing information are
assigned to the low cost category until
pricing information is available to
compare to the $32 per cm2 threshold
for CY 2014. Skin substitutes with passthrough payment status are assigned to
the high cost category, with an offset
applied as described in section V.A.4.d.
of the CY 2015 OPPS/ASC proposed
rule (79 FR 40996).
As discussed in the CY 2015 OPPS/
ASC proposed rule (79 FR 40998
through 40999), after the effective date
of the CY 2014 packaging policy, some
skin substitute manufacturers brought
the following issues to our attention
regarding the CY 2014 methodology for
determining the high cost/low cost
threshold:
• Using ASP to determine a product’s
placement in the high or low cost
category may unfairly disadvantage the
limited number of skin substitute
products that are sold in large sizes (that
is, above 150 cm2). Large size skin
substitute products are primarily used
for burns that are treated on an inpatient
basis. These manufacturers contend that
nonlinear pricing for skin substitute
products sold in both large and small
sizes results in lower per cm2 prices for
large sizes. Therefore, the use of ASP
data to categorize products into high
and low cost categories can result in
placement of products that have
significant inpatient use of the large,
lower-priced (per cm2) sizes into the
low cost category, even though these
large size products are not often used in
the hospital outpatient department.
• Using a weighted average ASP to
establish the high/low cost categories,
combined with the drug pass-through
policy, will lead to unstable high/low
cost skin substitute categories in the
future. According to one manufacturer,
under our CY 2014 policy,

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manufacturers with products on passthrough payment status have an
incentive to set a very high price
because hospitals are price-insensitive
to products paid with pass-through
payments. As these new high priced
pass-through skin substitutes capture
more market share, the weighted
average ASP high cost/low cost
threshold could escalate rapidly,
resulting in a shift in the assignment of
many skin substitutes from the high cost
category to the low cost category.
As stated in the CY 2015 OPPS/ASC
proposed rule (79 FR 40998), we agree
with stakeholder concerns regarding the
potential instability of the high/low cost
categories associated with the drug passthrough policy, as well as stakeholder
concerns about the inclusion of largesized products that are primarily used
for inpatients in the ASP calculation,
when ASP is used to establish the high
cost/low cost categories. As an
alternative to using ASP data, we
believe that establishing the high cost/
low cost threshold using an alternative
methodology (that is, the weighted
average mean unit cost (MUC) for all
skin substitute products from claims
data) may provide more stable high/low
cost categories and will resolve the issue
associated with large sized products
because the MUC will be derived from
hospital outpatient claims only. The
threshold would be based on costs from
hospital outpatient claims data instead
of manufacturer reported sales prices
that would not include larger sizes
primarily used for inpatient burn cases.
Therefore, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40999), we
proposed to maintain the high cost/low
cost APC structure for skin substitute
procedures in CY 2015. However, we
proposed to revise the current
methodology used to establish the high
cost/low cost threshold, and to establish
the high cost/low cost threshold based
on the weighted average MUC for all
skin substitutes using CY 2013 claims
(which was proposed to be $27 per
cm2). Skin substitutes with an MUC
above $27 per cm2 using CY 2013
claims were proposed to be classified in
the high cost group and those with an
MUC at or below $27 per cm2 were
proposed to be classified in the low cost
group. Table 39 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40999)
showed the CY 2014 high cost/low cost
status for each skin substitute product
and the proposed CY 2015 high cost/
low cost status based on the weighted
average MUC threshold of $27. We
proposed to continue the CY 2014
policy that skin substitutes with passthrough payment status would be
assigned to the high cost category for CY

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66883

2015. Skin substitutes with pricing
information but without claims data to
calculate an MUC would be assigned to
either the high or low cost category
based on the product’s ASP+6 percent
payment rate. If ASP is not available we
would use WAC+6 percent or 95
percent of AWP to assign a product to
either the high cost or low cost category.
We also proposed that any new skin
substitute without pricing information
be assigned to the low cost category
until pricing information is available to
compare to the CY 2015 threshold.
Comment: Several commenters
supported CMS’ proposal to revise the
methodology used to establish the high
cost/low cost threshold from an ASPbased methodology to a methodology
based on the weighted average MUC for
all skin substitutes using CY 2013
claims data. The commenters agreed
that the MUC methodology would
promote stability of assignments to the
high and low cost categories and not
disadvantage certain skin substitutes
that are sold in especially large sizes.
Response: We appreciate the
commenters’ support.
Comment: Other commenters
requested that CMS retain the ASPbased methodology for calculating the
high cost/low cost threshold because, in
their opinion, the ASP is a better metric
for skin substitute costs than hospital
outpatient claims data.
Response: We disagree with the
assertion that ASP better represents the
hospital costs for skin substitutes than
hospital claims data. ASP is a blend of
sales prices from a variety of purchasers,
including various nonhospital entities.
ASP also excludes a significant number
of hospital sales, for example sales to
340B hospitals. Hospital claims data are
specific to hospitals, and are used in
assessing the costs of almost all other
items and services in the OPPS,
including other similar surgical
supplies, such as implantable devices
and implantable biologicals, which we
package for payment purposes in the
OPPS. Furthermore, as stated in the CY
2015 OPPS/ASC proposed rule (79 FR
40998), we believe that using MUC will
better promote stability versus ASP for
high and low cost category assignments
for skin substitutes, because ASP can be
set very high by skin substitute
manufacturers and disproportionally
impact the threshold calculation.
Comment: Two commenters
recommended an alternative high cost/
low cost threshold calculation
methodology. Instead of basing the
threshold on the unit cost the
commenters urged CMS to calculate the
high cost/low cost threshold based on
the total skin substitute costs per

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patient, per day, which is currently the
mechanism used to set the general OPPS
drug, biological, and
radiopharmaceutical packaging
threshold, which was proposed as $90
for CY 2015. These commenters
believed that calculating the threshold
cost per cm2 does not accurately reflect
the true cost of products as they are
used clinically, and could result in
displacing larger single-size skin
substitutes approved through a
Premarket Approval (PMA) into the
low-cost skin substitute group beginning
in CY 2016. They believed that this is
partly a consequence of CMS’ broad
categorization of products as skin
substitutes that, according to the
commenters, includes 510(k)-cleared
wound dressings and human cell,
tissue, and cellular and tissue-based
products (HCT/Ps) under section 361 of
the Public Health Service Act (PHSA)
(for example, cadaver skin or placental
tissue). According to these commenters,
manufacturers of products regulated
through these processes can market
different sizes of their skin substitutes
with greater ease than can
manufacturers of skin substitutes
approved through a PMA, who must
reapply for an updated label through the
FDA to change or add a different
product size. The commenters are
concerned that a unit cost threshold
may result in large products with lower
per cm2 costs, but with higher total costs
per case, being assigned to the low cost
category in the future. One of these
commenters, although generally
supportive of the change from an ASPbased methodology to an MUC-based
methodology, also submitted a
hypothetical predictive model
comparing per unit high cost/low cost
calculations with per day threshold
calculations for the various skin
substitutes and requested that CMS
adopt a per day high cost/low cost
calculation methodology beginning in
CY 2016 to prevent their skin
substitutes from moving from the high
cost to the low cost group in CY 2016.
Response: As we explained in the CY
2014 OPPS/ASC final rule with

comment period, the FDA treatment of
the various skin substitutes does not
affect how skin substitutes are treated
under our policy of packaging drugs and
biologicals that function as supplies in
a surgical procedure (78 FR 74932
through 74933). The 61 skin substitutes
listed in Table 34 below are available in
many different sizes. Product sizing,
product packaging, quantity per
package, and other such individual
product attributes are manufacturer
business decisions that do not concern
the agency. We also believe that the
commenters’ analogy between the
general drug, biological, and
radiopharmaceutical packaging
threshold and the high cost/low cost
skin substitute threshold is imperfect.
Per day costs are used for the general
drug, biological, and
radiopharmaceutical packaging
threshold because this threshold applies
to the entire spectrum of drugs,
biologicals, and radiopharmaceuticals,
which have a wide variety of dosing
units and dose descriptors, among
others, such that per unit comparisons
are not possible and therefore a total per
day dollar amount is calculated. On the
contrary, skin substitutes divided into
the high and low cost categories are all
dosed per cm2, which is also the
standard measurement for sizing
wounds. Therefore, notwithstanding the
various sizes of the 61 skin substitutes
listed in Table 34, meaningful unit cost
comparisons can be made for skin
substitutes. As discussed earlier, we
believe that the MUC methodology will
help mitigate or eliminate the effect of
high skin substitute ASPs on the high
cost/low cost threshold. However, using
a per day cost methodology as suggested
by the commenters could adversely
affect the majority of products that are
tailored to the wound size. We will
evaluate the per day cost methodology
and compare it to the MUC
methodology next year once CY 2014
claims data are available.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
high cost/low cost APC structure for

skin substitute procedures in CY 2015,
and our proposal to revise the current
methodology used to establish the high/
low cost threshold with the alternative
MUC methodology. We also are
finalizing for CY 2015 the policy that
skin substitutes with pass-through
payment status would be assigned to the
high cost category. Skin substitutes with
pricing information but without claims
data to calculate an MUC will be
assigned to either the high cost or low
cost category based on the product’s
ASP+6 percent payment rate. If ASP is
not available, we will use WAC+6
percent or 95 percent of AWP to assign
a product to either the high cost or low
cost category. We also are finalizing our
proposal that any new skin substitutes
without pricing information will be
assigned to the low cost category until
pricing information is available to
compare to the CY 2015 threshold. New
skin substitute manufacturers must
submit pricing information to CMS no
later than the 15th of the third month
prior to the effective date of the next
OPPS quarterly update. For example, for
a new skin substitute with new pricing
information to be included in the July
1 OPPS update and designated as
included in the high cost group,
verifiable pricing information must be
provided to CMS no later than April 15.
Table 34 below shows the CY 2014 high
cost/low cost status for each skin
substitute product and the final CY 2015
high cost/low cost status based on the
weighted average MUC threshold of $25,
which decreased slightly from the
proposed $27 threshold due to updated
final rule claims data. Skin substitutes
with an MUC above $25 are assigned to
the high cost group for CY 2015. For
2014 there are 16 high cost skin
substitutes and 27 low cost skin
substitutes. For CY 2015, there are 62
skin substitute codes, which represent
the following products: 30 high cost
skin substitutes; 24 low cost skin
substitutes; 7 powdered, liquid, or
micronized skin substitutes; and 1
miscellaneous skin substitute code.

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TABLE 34—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS

CY 2015 HCPCS Code

CY 2015 Short descriptor

HCPCS
Code
dosage

C9358 ..........................................
C9360 ..........................................
C9363 ..........................................
Q4100 .........................................
Q4101 .........................................

SurgiMend, fetal ...............................................................................
SurgiMend, neonatal ........................................................................
Integra Meshed Bil Wound Mat .......................................................
Skin substitute, NOS ........................................................................
Apligraf .............................................................................................

0.5 cm2
0.5 cm2
1 cm2 ..
N/A .....
1 cm2 ..

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10NOR2

CY
2015
SI

CY 2014
High/low
status
based on
weighted
ASP

CY 2015
High/low
status
based on
weighted
MUC

N
N
N
N
N

Low ........
Low ........
Low ........
Low ........
High .......

Low.
Low.
High.
Low.
High.

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TABLE 34—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS—Continued

CY 2015 HCPCS Code

CY 2015 Short descriptor

HCPCS
Code
dosage

Q4102 .........................................
Q4103 .........................................
Q4104 .........................................
Q4105 .........................................
Q4106 .........................................
Q4107 .........................................
Q4108 .........................................
Q4110 .........................................
Q4111 .........................................
Q4112 .........................................
Q4113 .........................................
Q4114 .........................................
Q4115 .........................................
Q4116 .........................................
Q4117 .........................................
Q4118 .........................................
Q4119 .........................................
Q4120 .........................................
Q4121 .........................................
Q4122 .........................................
Q4123 .........................................
Q4124 .........................................
Q4125 .........................................
Q4126 .........................................
Q4127 .........................................
Q4128 .........................................
Q4129 .........................................
Q4131 .........................................
Q4132 .........................................
Q4133 .........................................
Q4134 .........................................
Q4135 .........................................
Q4136 .........................................
Q4137 .........................................
Q4138 .........................................
Q4139 .........................................
Q4140 .........................................
Q4141 .........................................
Q4142 .........................................
Q4143 .........................................
Q4145 .........................................
Q4146 .........................................
Q4147 .........................................
Q4148 .........................................
Q4149 .........................................
Q4150 .........................................
Q4151 .........................................
Q4152 .........................................
Q4153 .........................................
Q4154 .........................................
Q4155 .........................................
Q4156 .........................................
Q4157 .........................................
Q4158 .........................................
Q4159 .........................................
Q4160 .........................................
C9349 ..........................................

Oasis wound matrix ..........................................................................
Oasis burn matrix .............................................................................
Integra BMWD ..................................................................................
Integra DRT ......................................................................................
Dermagraft ........................................................................................
Graftjacket ........................................................................................
Integra Matrix ...................................................................................
Primatrix ...........................................................................................
Gammagraft ......................................................................................
Cymetra injectable ............................................................................
GraftJacket Xpress ...........................................................................
Integra Flowable Wound Matrix .......................................................
Alloskin .............................................................................................
Alloderm ...........................................................................................
Hyalomatrix .......................................................................................
Matristem Micromatrix ......................................................................
Matristem Wound Matrix ..................................................................
Matristem Burn Matrix ......................................................................
Theraskin ..........................................................................................
Dermacell .........................................................................................
Alloskin .............................................................................................
Oasis Tri-layer Wound Matrix ..........................................................
Arthroflex ..........................................................................................
Memoderm/derma/tranz/integup ......................................................
Talymed ............................................................................................
Flexhd/Allopatchhd/matrixhd ............................................................
Unite Biomatrix .................................................................................
Epifix .................................................................................................
Grafix core ........................................................................................
Grafix prime ......................................................................................
HMatrix .............................................................................................
Mediskin ...........................................................................................
EZderm .............................................................................................
Amnioexcel or Biodexcel, 1cm .........................................................
BioDfence DryFlex, 1cm ..................................................................
Amniomatrix or Biodmatrix, 1cc .......................................................
Biodfence 1cm ..................................................................................
Alloskin ac, 1 cm ..............................................................................
Xcm biologic tiss matrix 1cm ...........................................................
Repriza, 1cm ....................................................................................
Epifix, 1mg ........................................................................................
Tensix, 1cm ......................................................................................
Architect ecm px fx 1 sq cm ............................................................
Neox 1k, 1cm ...................................................................................
Excellagen, 0.1 cc ............................................................................
Allowrap DS or Dry 1 sq cm ............................................................
AmnioBand, Guardian 1 sq cm ........................................................
Dermapure 1 square cm ..................................................................
Dermavest 1 square cm ...................................................................
Biovance 1 square cm .....................................................................
NeoxFlo or ClarixFlo 1 mg ...............................................................
Neox 100 1 square cm .....................................................................
Revitalon 1 square cm .....................................................................
MariGen 1 square cm ......................................................................
Affinity 1 square cm .........................................................................
NuShield 1 square cm ......................................................................
Fortaderm, fortaderm antimic ...........................................................

1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cc ....
1 cc ....
1 cc ....
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 mg ...
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cc ....
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 mg ...
1 cm2 ..
1 cm2 ..
1 cm2 ..
0.1 cc
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 mg ...
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..
1 cm2 ..

d. Pass-Through Evaluation Process for
Skin Substitutes
At the beginning of the OPPS, skin
substitutes were originally evaluated for
pass-through status using the medical
device pass-through process (65 FR

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67839). Since mid-2001, skin substitutes
have been evaluated for pass-through
payment status through the drug,
biological, and radiopharmaceutical
pass-through payment process. In 2001,
there were two distinct HCPCS codes

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CY
2015
SI

CY 2014
High/low
status
based on
weighted
ASP

CY 2015
High/low
status
based on
weighted
MUC

N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
G
G
N
N
N
N
G
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
G

Low ........
Low ........
Low ........
Low ........
High .......
High .......
Low ........
High .......
Low ........
N/A .........
N/A .........
N/A .........
Low ........
High .......
Low ........
N/A .........
Low ........
Low ........
High .......
High .......
Low ........
Low ........
High .......
High .......
High .......
Low ........
Low ........
High .......
High .......
High .......
High .......
Low ........
Low ........
Low ........
Low ........
N/A .........
Low ........
Low ........
Low ........
Low ........
N/A .........
Low ........
High .......
High .......
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........
N/A .........

Low.
Low.
High.
High.
High.
High.
High.
High.
Low.
N/A.
N/A.
N/A.
Low.
High.
Low.
N/A.
Low.
Low.
High.
High.
High.
Low.
High.
High.
High.
High.
High.
High.
High.
High.
High.
Low.
Low.
High.
High.
N/A.
High.
Low.
Low.
Low.
N/A.
Low.
High.
High.
N/A.
Low.
Low.
Low.
Low.
High.
N/A.
High.
Low.
Low.
Low.
High.
High.

describing skin substitutes. For the CY
2015 update, there are 61 distinct
HCPCS codes describing skin
substitutes (not including the not
otherwise classified HCPCS code,
Q4100), and of these 61 products, 18

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

products that are listed in Table 35

below have had, currently have, or will
have pass-through payment status.

TABLE 35—SKIN SUBSTITUTES THAT HAVE HAD, CURRENTLY HAVE, OR WILL HAVE PASS-THROUGH PAYMENT STATUS
CY 2015
HCPCS code

tkelley on DSK3SPTVN1PROD with RULES2

C9358
C9360
C9363
C9349
Q4101
Q4104
Q4105
Q4106
Q4107
Q4108
Q4110
Q4121
Q4122
Q4124
Q4127
Q4131
Q4132
Q4133

............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............

CY 2015 short descriptor

Pass-through
expiration date

SurgiMend, fetal ......................................................................................................................................................
SurgiMend, neonatal ...............................................................................................................................................
Integra Meshed Bil Wound Mat ..............................................................................................................................
FortaDerm, FortaDerm Antimic ...............................................................................................................................
Apligraf ....................................................................................................................................................................
Integra BMWD .........................................................................................................................................................
Integra DRT .............................................................................................................................................................
Dermagraft ...............................................................................................................................................................
Graftjacket ...............................................................................................................................................................
Integra matrix ..........................................................................................................................................................
Primatrix ..................................................................................................................................................................
Theraskin .................................................................................................................................................................
Dermacell ................................................................................................................................................................
Oasis tri-layer wound matrix ...................................................................................................................................
Talymed ...................................................................................................................................................................
Epifix ........................................................................................................................................................................
Grafix core ...............................................................................................................................................................
Grafix prime .............................................................................................................................................................

12/31/2010
12/31/2011
12/31/2011
12/31/2017
12/31/2002
12/31/2006
12/31/2006
03/31/2005
12/31/2006
12/31/2010
12/31/2008
12/31/2016
12/31/2015
12/31/2013
12/31/2015
12/31/2014
12/31/2014
12/31/2014

As discussed earlier, and as we stated
in the CY 2015 OPPS/ASC proposed
rule (79 FR 40999 through 41001) and
in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74938), we
packaged all skin substitutes not on
pass-through payment status under the
policy that packages all drugs and
biologicals that function as supplies
when used in a surgical procedure (78
FR 74938), because we consider skin
substitutes to be a type of surgical
supply in the HOPD. The adoption of
the policy to package all drugs and
biologicals that function as supplies
when used in a surgical procedure,
followed the packaging policies for
implantable biologicals, implantable
devices, and more broadly, the policy to
package medical and surgical supplies
into the related procedure under 42 CFR
419.2(b)(4). Further, as noted in the CY
2014 OPPS/ASC final rule with
comment period, we believe these
policies represented an example of a
broader category of drugs and
biologicals that should be packaged in
the OPPS, that is, drugs and biologicals
that function as supplies in a surgical
procedure (78 FR 74930).
Separately, in the CY 2010 OPPS/ASC
final rule with comment period, we
finalized a policy to evaluate
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) for pass-through payment
through the medical device passthrough evaluation process, because
implantable biologicals function as
implantable devices (74 FR 60473),
which have historically been considered

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supplies in the OPPS (65 FR 18443), and
have been evaluated for pass-through
payment through the medical device
pass-through evaluation process since
CY 2010. As noted earlier, the finalized
packaging policy in the CY 2014 OPPS/
ASC final rule with comment period to
package all drugs and biologicals that
function as supplies when used in a
surgical procedure included skin
substitutes as a type of surgical supply,
and, notably, the similarities between
implantable biologicals and skin
substitutes were a key factor in
packaging (like we did beginning in
2009 with implantable biologicals) skin
substitutes into the associated surgical
procedure (78 FR 74932). We also note
that many skin substitutes are FDAapproved or cleared as devices, even
though skin substitutes have
traditionally been treated as biologicals
under the OPPS. The similarities
between these classes of products
(implantable devices, implantable
biologicals, and skin substitutes)
informed our proposal to similarly treat
applications for pass-through payment
for skin substitutes using the OPPS
device pass-through process, described
below.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41000), we proposed that
applications for pass-through payment
for skin substitutes be evaluated using
the medical device pass-through process
and payment methodology. As a result
of this proposal, we proposed that the
last skin substitute pass-through
applications evaluated using the drug
and biological pass-through payment
evaluation process would be those with

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an application deadline of the first
business date in September 2014, and
an effective date of January 1, 2015. In
light of this proposal, we would change
the December 1, 2014 pass-through
payment application deadline (for an
effective date of April 1, 2015) for both
drugs and biologicals and devices to
January 15, 2015, in order to provide
sufficient time for applicants to adjust to
the new policies and procedures in
effect as of January 1, 2015. Any
applications submitted after the first
business date in September 2014,
through January 15, 2015, would be
evaluated for the April 1, 2015 cycle.
We believe that requiring skin
substitutes seeking pass-through
payment to use the OPPS device passthrough evaluation process is more
appropriate because, although skin
substitutes have characteristics of both
surgical supplies and biologicals, we
believe skin substitutes are best
characterized as surgical supplies or
devices because of their required
surgical application and because they
share significant clinical similarity with
other surgical devices and supplies,
including implantable biologicals.
Therefore, we stated in the proposed
rule that if this proposal is finalized,
beginning with applications seeking
pass-through payment effective April 1,
2014, new skin substitutes would no
longer be eligible to submit biological
pass-through applications; rather, such
applications for pass-through payment
would be evaluated using the medical
device pass-through payment evaluation
process, for which payment is based on
charges reduced to cost from claims. We

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
refer readers to the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/ to view the
device pass-through payment
application requirements and review
criteria that would apply to the
evaluation of all skin substitute product
applications for pass-through payment
status beginning on or after January 1,
2015. Those skin substitutes that are
approved for pass-through payment
status as biologicals effective on or
before January 1, 2015, would continue
to be paid as pass-through biologicals
for the duration of their period of passthrough payment.
We also proposed to revise our
regulations at §§ 419.64 and 419.66 to
reflect this proposed new policy.
Specifically, we proposed to revise
§ 419.64 by deleting the existing
paragraph (a)(4)(iv) text because it is
currently outdated and adding new text
at paragraph (a)(4)(iv) to exclude skin
substitutes from consideration for drug
and biological pass-through payment.
We proposed to modify the regulation at
§ 419.66(b)(3) to add that a pass-through
device may be applied in or on a wound
or other skin lesion, and we proposed to
simplify the language that ‘‘whether or
not it remains with the patient when the
patient is released from the hospital’’ to
read ‘‘either permanently or
temporarily.’’ We also proposed to
delete the current example in
§ 419.66(b)(4)(iii) of the regulations
regarding the exclusion of materials, for
example, biological or synthetic
materials, that may be used to replace
human skin from device pass-through
payment eligibility. We invited public
comment on these proposals.
Comment: Several commenters
supported CMS’ proposal to evaluate
skin substitute pass-through
applications through the medical device
pass-through process and pay for passthrough skin substitutes according to
the medical device pass-through
payment methodology beginning
January 1, 2015. The commenters
believed that this policy change will
limit instability in the high cost/low
cost groups from pass-through skin
substitutes with very high ASPs. The
commenter stated that instability could
occur because manufacturers set ASP
and hospitals are relatively insensitive
to price for separately paid pass-through
skin substitutes. Therefore, the
commenter added, a new high priced
pass-through skin substitute could gain
significant sales and move the high cost/
low cost threshold significantly higher
from year to year.

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Response: We agree with the
commenters and appreciate their
support.
Comment: Several commenters
opposed CMS’ proposal to evaluate skin
substitute pass-through applications
through the medical device passthrough process. Some of these
commenters argued that CMS lacks the
authority to change the process for
evaluating skin substitute pass-through
applications. The commenters also
believed that biologicals approved by
the FDA under section 351 of the PHSA
(those approved by the FDA under
biologics license applications (BLAs))
cannot be treated as devices for passthrough payment evaluation purposes
according to the Social Security Act and
Congressional intent. The commenters
also claimed that changing the passthrough payment process for skin
substitutes will stifle innovation of new
wound care products.
Response: We disagree with the
commenters’ assertion that the agency
lacks the authority to change the process
for evaluating skin substitutes for passthrough and that biologicals approved
by the FDA under section 351 of the
PHSA (BLA process) cannot be treated
as devices for pass-through payment
evaluation purposes according to the
Social Security Act and Congressional
intent. As we stated in the 2010 OPPS
final rule in response to a similar
comment on the proposal to change the
pass-through evaluation process for
implantable biologicals: ‘‘We do not
agree with the commenters who asserted
that Congress intended biologicals
approved under BLAs to be paid under
the specific OPPS statutory provisions
that apply to SCODs, including the passthrough provisions’’ (74 FR 60476).
Similarly, Congress did not specify that
we must pay for skin substitutes as
separately payable biologicals rather
than devices or supplies, if they also
meet our criteria for payment as a
device. We believe that skin substitutes
can satisfy the definitions applied under
the OPPS of a device or supply and a
biological and that, for OPPS payment
purposes, it is appropriate for us to
consider skin substitutes as devices or
supplies under both pass-through and
nonpass-through payment policies, and
not as separately payable biologicals.
For example, beginning in CY 2014, we
package the costs of skin substitutes into
the costs of the surgical procedures in
which they are used, as we do for
implantable biologicals and other
implantable devices. Therefore, we do
not believe that we must pay for skin
substitutes under our OPPS payment
methodologies for separately payable

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66887

biologicals, rather than our device
payment methodologies.
In addition, for the skin substitute
packaging policy, in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 74933), we stated the following: ‘‘We
do not believe that the FDA approval
process should exempt products from
this packaging proposal or factor into
the level of Medicare payment.’’
Similarly, regarding our proposal to
change the pass-through payment
evaluation process and payment
methodology for skin substitutes from
the drug and biological process to the
device process, we also believe that any
particular FDA approval process should
not exempt such products that
appropriately fall under the category of
skin substitutes under the OPPS from
the application of this pass-through
payment proposal or direct which passthrough payment evaluation process
must be used.
Notably, none of the current 61 skin
substitute products described by
distinct HCPCS codes and listed in
Table 35 above have been approved by
FDA under section 351 of the PHSA.
This fact is somewhat counterintuitive,
as biologics or biologicals or biological
products are most commonly
understood to be products approved by
the FDA under section 351 of the PHSA.
Current skin substitute products’ FDA
classifications include a variety of Class
III medical devices, Class II medical
devices, and HCT/Ps under section 361
of the PHSA, which are tissue bank
materials not subject to FDA approval
requirements. We also note that whether
a future wound healing product is
described by the OPPS packaged
category of products described in 42
CFR 419.2(b)(16) as ‘‘skin substitutes
and similar products that aid wound
healing’’ will depend upon the
particular characteristics of the future
product. We do not intend for the
category of products described as ‘‘skin
substitutes and similar products that aid
wound healing’’ to necessarily include
all products with a wound healing
indication. However, if a new wound
healing product, regardless of FDA
approval or clearance type, fits with the
‘‘skin substitutes and similar products
that aid wound healing’’ category of
products, all of the applicable OPPS
policies that apply to ‘‘skin substitutes
and similar products that aid wound
healing’’ would also apply to the new
wound healing product.
Finally, we do not believe that this
policy will stifle innovation of new skin
substitutes, as new skin substitutes that
can demonstrate a substantial clinical
improvement over current wound
treatments could receive pass-through

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status as a device. In addition, there are
currently 61 distinct HCPCS codes for
various skin substitutes. Of these 61
products, only 18 (30 percent) have had,
currently have, or will have passthrough payment status granted through
the drug and biological pass-through
payment process. Therefore, passthrough payment does not appear to be
necessary for the commercialization of
these products, which have (in terms of
distinct HCPCS codes describing them)
expanded significantly from 2 skin
substitutes in CY 2001 to 61 skin
substitutes in CY 2015. Furthermore, we
have not restricted access to the high
cost skin substitute group, and we have
only required manufacturers of new
skin substitutes to submit pricing
information for assignment to the high
cost group of skin substitutes. For these
reasons, we do not believe that any CMS
OPPS payment policies will stifle
innovation or impede the development
of new skin substitutes.
Comment: One commenter was
concerned that the substantial clinical
improvement criterion for medical
device pass-through places an unduly
high burden on new skin substitute
products. The commenter believed that
this requirement is ‘‘incompatible with
skin substitute products, which are not
required to submit efficacy data to the
Food and Drug Administration.’’ This
commenter also disagreed with CMS’
proposal to not accept any skin
substitute applications though the drug
and biological pass-through payment
process after September 1, 2014, and to
move the final pass-through payment
deadline for drug and biologicals and
devices from December 1, 2014, to
January 15, 2015. The commenter
requested that additional guidance on
substantial clinical improvement be
provided specifically for application to
skin substitute products, beyond that
described in the November 2, 2001,
interim final rule with comment period
entitled ‘‘Medicare Program—
Prospective Payment System for
Hospital Outpatient Services: Criteria
for Establishing Additional PassThrough Categories for Medical
Devices’’ (66 FR 55850).
Response: The comment that FDA
does not require submission of efficacy
data for skin substitute products is
overly simplified. The different skin
substitute products that have been
identified in Table 35 above are subject
to different FDA regulatory
requirements (that is, based on review
by CBER versus CDRH, regulatory
classification and claims).
FDA/CDRH draws a distinction
between wound dressing devices
intended only to serve as a wound

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covering versus products intended to
promote wound healing. Those devices
that are intended to promote wound
healing are subject to Premarket
Approval (PMA) and require clinical
data to support safety and effectiveness
of the device. Those devices that are
intended to serve as a wound covering
are subject to Premarket Notification
(510(k)) and require demonstration of
substantial equivalence (that is, the
device demonstrates that it is as safe
and effective as a legally marketed
predicate device). Generally, substantial
equivalence in safety and effectiveness
is demonstrated through comparative
bench and animal studies and leveraged
with historical clinical effectiveness
data for similar devices. The weakness
of the evidence for many skin substitute
products has been documented in two
recent technology assessments by the
Agency for Healthcare Research and
Quality. However, different pre-market
data requirements for skin substitute
products regulated by FDA should not
excuse these products from the
substantial clinical improvement passthrough criterion for device passthrough payment. Pass-through payment
status is not intended to be granted to
every new product, but only to those
that satisfy the pass-through payment
requirements. As stated in the CY 2001
OPPS interim final rule: ‘‘We believe it
is important for hospitals to receive
pass-through payments for devices that
offer substantial clinical improvement
in the treatment of Medicare
beneficiaries to facilitate access by
beneficiaries to the advantages of the
new technology. Conversely, the need
for additional payments for devices that
offer little or no clinical improvement
over a previously existing device is less
apparent’’ (66 FR 55852).
Regarding the requirements for
satisfying the substantial clinical
improvement criterion, we believe that
the list on page 55852 of the CY 2001
OPPS interim final rule suffices. For
example, among the items listed is:
‘‘More rapid beneficial resolution of the
disease process treated because of the
use of the device.’’ If a new skin
substitute demonstrated improved
wound healing compared to existing
wound treatments, it could potentially
qualify for pass-through as a medical
device, assuming that the skin substitute
is not described by an expired passthrough payment device category.
Finally, we believe that sufficient
notice was provided of this policy
change in the CY 2015 OPPS/ASC
proposed rule, and that accepting drug
and biological applications through the
first business date of September 2014
deadline for a January 1, 2015 pass-

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through payment effective date is a fair
application of a policy that takes effect
on January 1, 2015. The regular
December 1, 2014 application deadline,
which is being extended to January 15,
2015 for this cycle, was for pass-through
payment applications with an earliest
effective date of April 1, 2015, which is
well past the effective date of this new
policy.
After consideration of the public
comments we received, we are
finalizing our proposal for applications
seeking pass-through payment for skin
substitute and similar wound healing
products effective beginning April 1,
2015, to apply using the medical device
pass-through evaluation process.
e. Packaging Determination for HCPCS
Codes That Describe the Same Drug or
Biological but Different Dosages
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66776), we
began recognizing, for OPPS payment
purposes, multiple HCPCS codes
reporting different dosages for the same
covered Part B drugs or biologicals in
order to reduce hospitals’ administrative
burden by permitting them to report all
HCPCS codes for drugs and biologicals.
In general, prior to CY 2008, the OPPS
recognized for payment only the HCPCS
code that described the lowest dosage of
a drug or biological. During CYs 2008
and 2009, we applied a policy that
assigned the status indicator of the
previously recognized HCPCS code to
the associated newly recognized code(s),
reflecting the packaged or separately
payable status of the new code(s).
In the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60490
through 60491), we finalized a policy to
make a single packaging determination
for a drug, rather than an individual
HCPCS code, when a drug has multiple
HCPCS codes describing different
dosages because we believed that
adopting the standard HCPCS codespecific packaging determinations for
these codes could lead to inappropriate
payment incentives for hospitals to
report certain HCPCS codes instead of
others. We continue to believe that
making packaging determinations on a
drug-specific basis eliminates payment
incentives for hospitals to report certain
HCPCS codes for drugs and allows
hospitals flexibility in choosing to
report all HCPCS codes for different
dosages of the same drug or only the
lowest dosage HCPCS code. Therefore,
in the CY 2015 OPPS/ASC proposed
rule (79 FR 41001), we proposed to
continue our policy to make packaging
determinations on a drug-specific basis,
rather than a HCPCS code-specific basis,
for those HCPCS codes that describe the

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same drug or biological but different
dosages in CY 2015.
For CY 2015, in order to propose a
packaging determination that is
consistent across all HCPCS codes that
describe different dosages of the same
drug or biological, we aggregated both
our CY 2013 claims data and our pricing
information at ASP+6 percent across all
of the HCPCS codes that describe each
distinct drug or biological in order to
determine the mean units per day of the
drug or biological in terms of the HCPCS
code with the lowest dosage descriptor.
The following drugs did not have
pricing information available for the
ASP methodology for this CY 2015
OPPS/ASC final rule with comment
period and, as is our current policy for
determining the packaging status of
other drugs, we used the mean unit cost
available from the fourth quarter CY

2013 claims data to make the packaging
determinations for these drugs: HCPCS
code J3471 (Injection, hyaluronidase,
ovine, preservative free, per 1 usp unit
(up to 999 usp units)) and HCPCS code
J3472 (Injection, hyaluronidase, ovine,
preservative free, per 1000 usp units).
For all other drugs and biologicals
that have HCPCS codes describing
different doses, we then multiplied the
weighted average ASP+6 percent per
unit payment amount across all dosage
levels of a specific drug or biological by
the estimated units per day for all
HCPCS codes that describe each drug or
biological from our claims data to
determine the estimated per day cost of
each drug or biological at less than or
equal to $95 (so that all HCPCS codes
for the same drug or biological would be
packaged) or greater than $95 (so that all

66889

HCPCS codes for the same drug or
biological would be separately payable).
The proposed packaging status of
each drug and biological HCPCS code to
which this methodology would apply
was displayed in Table 41 of the CY
2015 OPPS/ASC proposed rule (79 FR
41001 through 41002).
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our CY 2015 proposal,
without modification, to continue to
make packaging determinations on a
drug-specific basis, rather than a HCPCS
code-specific basis, for those HCPCS
codes that describe the same drug or
biological but different dosages. Table
36 below displays the packaging status
of each drug and biological HCPCS code
to which the methodology applies for
CY 2015.

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TABLE 36—HCPCS CODES TO WHICH THE CY 2015 DRUG–SPECIFIC PACKAGING DETERMINATION METHODOLOGY
APPLIES
CY 2015
HCPCS code

CY 2015 long descriptor

CY 2015 SI

C9257 ............
J9035 .............
J1020 .............
J1030 .............
J1040 .............
J1070 .............
J1080 .............
J1440 .............
J1441 .............
J1460 .............
J1560 .............
J1642 .............
J1644 .............
J1850 .............
J1840 .............
J2270 .............
J2271 .............
J2788 .............
J2790 .............
J2920 .............
J2930 .............
J3120 .............
J3130 .............
J3471 .............
J3472 .............
J7050 .............
J7040 .............
J7030 .............
J7515 .............
J7502 .............
J8520 .............
J8521 .............
J9250 .............
J9260 .............

Injection, bevacizumab, 0.25 mg ............................................................................................................................
Injection, bevacizumab, 10 mg ...............................................................................................................................
Injection, methylprednisolone acetate, 20 mg ........................................................................................................
Injection, methylprednisolone acetate, 40 mg ........................................................................................................
Injection, methylprednisolone acetate, 80 mg ........................................................................................................
Injection, testosterone cypionate, up to 100 mg .....................................................................................................
Injection, testosterone cypionate, 1 cc, 200 mg .....................................................................................................
Injection, filgrastim (g-csf), 300 mcg .......................................................................................................................
Injection, filgrastim (g-csf), 480 mcg .......................................................................................................................
Injection, gamma globulin, intramuscular, 1 cc .......................................................................................................
Injection, gamma globulin, intramuscular over 10 cc .............................................................................................
Injection, heparin sodium, (heparin lock flush), per 10 units ..................................................................................
Injection, heparin sodium, per 1000 units ...............................................................................................................
Injection, kanamycin sulfate, up to 75 mg ..............................................................................................................
Injection, kanamycin sulfate, up to 500 mg ............................................................................................................
Injection, morphine sulfate, up to 10 mg ................................................................................................................
Injection, morphine sulfate, 100mg .........................................................................................................................
Injection, rho d immune globulin, human, minidose, 50 micrograms (250 i.u.) .....................................................
Injection, rho d immune globulin, human, full dose, 300 micrograms (1500 i.u.) ..................................................
Injection, methylprednisolone sodium succinate, up to 40 mg ...............................................................................
Injection, methylprednisolone sodium succinate, up to 125 mg .............................................................................
Injection, testosterone enanthate, up to 100 mg ....................................................................................................
Injection, testosterone enanthate, up to 200 mg ....................................................................................................
Injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up to 999 usp units) .......................................
Injection, hyaluronidase, ovine, preservative free, per 1000 usp units ..................................................................
Infusion, normal saline solution , 250 cc ................................................................................................................
Infusion, normal saline solution, sterile (500 ml = 1 unit) .......................................................................................
Infusion, normal saline solution, 1000 cc ................................................................................................................
Cyclosporine, oral, 25 mg .......................................................................................................................................
Cyclosporine, oral, 100 mg .....................................................................................................................................
Capecitabine, oral, 150 mg .....................................................................................................................................
Capecitabine, oral, 500 mg .....................................................................................................................................
Methotrexate sodium, 5 mg ....................................................................................................................................
Methotrexate sodium, 50 mg ..................................................................................................................................

K
K
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
K
K
N
N

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3. Payment for Drugs and Biologicals
Without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs
and Biologicals
Section 1833(t)(14) of the Act defines
certain separately payable
radiopharmaceuticals, drugs, and
biologicals and mandates specific
payments for these items. Under section
1833(t)(14)(B)(i) of the Act, a ‘‘specified
covered outpatient drug’’ (known as a
SCOD) is defined as a covered
outpatient drug, as defined in section
1927(k)(2) of the Act, for which a
separate APC has been established and
that either is a radiopharmaceutical
agent or is a drug or biological for which
payment was made on a pass-through
basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the
Act, certain drugs and biologicals are
designated as exceptions and are not
included in the definition of SCODs.
These exceptions are—
• A drug or biological for which
payment is first made on or after
January 1, 2003, under the transitional
pass-through payment provision in
section 1833(t)(6) of the Act.
• A drug or biological for which a
temporary HCPCS code has not been
assigned.
• During CYs 2004 and 2005, an
orphan drug (as designated by the
Secretary).
Section 1833(t)(14)(A)(iii) of the Act
requires that payment for SCODs in CY
2006 and subsequent years be equal to
the average acquisition cost for the drug
for that year as determined by the
Secretary, subject to any adjustment for
overhead costs and taking into account
the hospital acquisition cost survey data
collected by the Government
Accountability Office (GAO) in CYs
2004 and 2005, and later periodic
surveys conducted by the Secretary as
set forth in the statute. If hospital
acquisition cost data are not available,
the law requires that payment be equal
to payment rates established under the
methodology described in section
1842(o), section 1847A, or section
1847B of the Act, as calculated and
adjusted by the Secretary as necessary.
Most physician Part B drugs are paid at
ASP+6 percent pursuant to section
1842(o) and section 1847A of the Act.
Section 1833(t)(14)(E)(ii) of the Act
provides for an adjustment in OPPS
payment rates for SCODs to take into
account overhead and related expenses,
such as pharmacy services and handling
costs. Section 1833(t)(14)(E)(i) of the Act
required MedPAC to study pharmacy

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overhead and related expenses and to
make recommendations to the Secretary
regarding whether, and if so how, a
payment adjustment should be made to
compensate hospitals for overhead and
related expenses. Section
1833(t)(14)(E)(ii) of the Act authorizes
the Secretary to adjust the weights for
ambulatory procedure classifications for
SCODs to take into account the findings
of the MedPAC study.
It has been our longstanding policy to
apply the same treatment to all
separately payable drugs and
biologicals, which include SCODs, and
drugs and biologicals that are not
SCODs. Therefore, we apply the
payment methodology in section
1833(t)(14)(A)(iii) of the Act to SCODs,
as required by statute, but we also apply
it to separately payable drugs and
biologicals that are not SCODs, which is
a policy determination rather than a
statutory requirement. In the CY 2015
OPPS/ASC proposed rule (79 FR 41002),
we proposed to apply section
1833(t)(14)(A)(iii)(II) of the Act to all
separately payable drugs and
biologicals, including SCODs. Although
we do not distinguish SCODs in this
discussion, we note that we are required
to apply section 1833(t)(14)(A)(iii)(II) of
the Act to SCODs, but we also are
applying this provision to other
separately payable drugs and
biologicals, consistent with our history
of using the same payment methodology
for all separately payable drugs and
biologicals.
Since CY 2006, we have attempted to
establish a drug payment methodology
that reflects hospitals’ acquisition costs
for drugs and biologicals while taking
into account relevant pharmacy
overhead and related handling
expenses. We have attempted to collect
more data on hospital overhead charges
for drugs and biologicals by making
several proposals that would require
hospitals to change the way they report
the cost and charges for drugs. None of
these proposals were adopted due to
significant stakeholder concern,
including that hospitals stated that it
would be administratively burdensome
to report hospital overhead charges. We
established a payment policy for
separately payable drugs and
biologicals, authorized by section
1833(t)(14)(A)(iii)(I) of the Act, based on
an ASP+X amount that is calculated by
comparing the estimated aggregate cost
of separately payable drugs and
biologicals in our claims data to the
estimated aggregate ASP dollars for
separately payable drugs and
biologicals, using the ASP as a proxy for
average acquisition cost (70 FR 68642
through 68643). We referred to this

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methodology as our standard drug
payment methodology. Taking into
consideration comments made by the
pharmacy stakeholders and
acknowledging the limitations of the
reported data due to charge compression
and hospitals’ reporting practices, we
added an ‘‘overhead adjustment’’ in CY
2010 (an internal adjustment of the data)
by redistributing cost from coded and
uncoded packaged drugs and biologicals
to separately payable drugs in order to
provide more appropriate payments for
drugs and biologicals in the HOPD. We
continued this methodology, and we
further refined it in CY 2012 by
finalizing a policy to update the
redistribution amount for inflation and
to keep the redistribution ratio constant
between the proposed rule and the final
rule. For a detailed discussion of our
OPPS drug payment policies from CY
2006 to CY 2012, we refer readers to the
CY 2013 OPPS/ASC final rule with
comment period (77 FR 68383 through
68385).
Because of continuing uncertainty
about the full cost of pharmacy
overhead and acquisition cost, based in
large part on the limitations of the
submitted hospital charge and claims
data for drugs, in the CY 2013 OPPS/
ASC final rule with comment period (77
FR 68386), we indicated our concern
that the continued use of the standard
drug payment methodology (including
the overhead adjustment) still may not
appropriately account for average
acquisition and pharmacy overhead cost
and, therefore, may result in payment
rates that are not as predictable,
accurate, or appropriate as they could
be. Section 1833(t)(14)(A)(iii)(II) of the
Act requires an alternative methodology
for determining payment rates for
SCODS wherein, if hospital acquisition
cost data are not available, payment
shall be equal (subject to any adjustment
for overhead costs) to payment rates
established under the methodology
described in section 1842(o), 1847A, or
1847B of the Act. We refer to this
alternative methodology as the
‘‘statutory default.’’ In the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68386), we noted that
section 1833(t)(14)(A)(iii)(II) of the Act
authorizes the Secretary to calculate and
adjust, as necessary, the average price
for a drug in the year established under
section 1842(o), 1847A, or 1847B of the
Act, as the case may be, in determining
payment for SCODs. Pursuant to
sections 1842(o) and 1847A of the Act,
Part B drugs are paid at ASP+6 percent
when furnished in physicians’ offices.
We indicated that we believe that
establishing the payment rates based on

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the statutory default of ASP+6 percent
is appropriate as it yields increased
predictability in payment for separately
payable drugs and biologicals under the
OPPS and, therefore, we finalized our
proposal for CY 2013 to pay for
separately payable drugs and biologicals
at ASP+6 percent based on section
1833(t)(14)(A)(iii)(II) of the Act (the
statutory default). We also finalized our
proposal that the ASP+6 percent
payment amount for separately payable
drugs and biologicals requires no further
adjustment and represents the combined
acquisition and pharmacy overhead
payment for drugs and biologicals, that
payments for separately payable drugs
and biologicals are included in the
budget neutrality adjustments under the
requirements in section 1833(t)(9)(B) of
the Act, and that the budget neutral
weight scaler is not applied in
determining payments for these
separately paid drugs and biologicals for
CY 2013 (77 FR 68389).
b. CY 2015 Payment Policy
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41003), we proposed to
continue our CY 2014 policy and pay
for separately payable drugs and
biologicals at ASP+6 percent pursuant
to section 1833(t)(14)(A)(iii)(II) of the
Act (the statutory default). We proposed
that the ASP+6 percent payment
amount for separately payable drugs and
biologicals requires no further
adjustment and represents the combined
acquisition and pharmacy overhead
payment for drugs and biologicals. We
also proposed that payments for
separately payable drugs and biologicals
are included in the budget neutrality
adjustments, under the requirements in
section 1833(t)(9)(B) of the Act, and that
the budget neutral weight scaler is not
applied in determining payments for
these separately paid drugs and
biologicals.
Comment: Commenters supported
CMS’ proposal to pay for separately
payable drugs and biologicals based on
the statutory default rate of ASP+6
percent. A few commenters supported
CMS’ proposal, but recommended that
CMS examine ways to compensate
hospitals for the unique, higher
overhead and handling costs associated
with therapeutic radiopharmaceuticals.
Response: We appreciate the
commenters’ support of our proposal.
We continue to believe that ASP+6
percent based on the statutory default is
appropriate for hospitals for CY 2015
and that this percentage amount
includes payment for acquisition and
overhead cost. We see no evidence that
an additional overhead adjustment is
required for separately payable drugs,

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biologicals, and therapeutic
radiopharmaceuticals for CY 2015.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to pay for separately
payable drugs and biologicals at ASP+6
percent based on section
1833(t)(14)(A)(iii)(II) of the Act (the
statutory default). The ASP+6 percent
payment amount for separately payable
drugs and biologicals requires no further
adjustment and represents the combined
acquisition and pharmacy overhead
payment for drugs and biologicals for
CY 2015. In addition, we are finalizing
our proposal which states that payment
for separately payable drugs and
biologicals be included in the budget
neutrality adjustments, under the
requirements of section 1833(t)(9)(B) of
the Act, and that the budget neutral
weight scaler is not applied in
determining payment of these separately
paid drugs and biologicals. We note that
separately payable drug and biological
payment rates listed in Addenda A and
B to this final rule with comment period
(available via the Internet on the CMS
Web site), which illustrate the final CY
2015 payment of ASP+6 percent for
separately payable nonpass-through
drugs and biologicals and ASP+6
percent for pass-through drugs and
biologicals, reflect either ASP
information that is the basis for
calculating payment rates for drugs and
biologicals in the physician’s office
setting effective October 1, 2014, or
WAC, AWP, or mean unit cost from CY
2013 claims data and updated cost
report information available for this
final rule with comment period. In
general, these published payment rates
are not reflective of actual January 2015
payment rates. This is because payment
rates for drugs and biologicals with ASP
information for January 2015 will be
determined through the standard
quarterly process where ASP data
submitted by manufacturers for the
third quarter of 2014 (July 1, 2014
through September 30, 2014) are used to
set the payment rates that are released
for the quarter beginning in January
2015 near the end of December 2014. In
addition, payment rates for drugs and
biologicals in Addenda A and B to this
final rule with comment period for
which there was no ASP information
available for October 2014 are based on
mean unit cost in the available CY 2013
claims data. If ASP information becomes
available for payment for the quarter
beginning in January 2015, we will price
payment for these drugs and biologicals
based on their newly available ASP
information. Finally, there may be drugs

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66891

and biologicals that have ASP
information available for this final rule
with comment period (reflecting
October 2014 ASP data) that do not have
ASP information available for the
quarter beginning in January 2015.
These drugs and biologicals will then be
paid based on mean unit cost data
derived from CY 2013 hospital claims.
Therefore, the payment rates listed in
Addenda A and B to this final rule with
comment period are not for January
2015 payment purposes and are only
illustrative of the CY 2015 OPPS
payment methodology using the most
recently available information at the
time of issuance of this final rule with
comment period.
4. Payment Policy for Therapeutic
Radiopharmaceuticals
Beginning in CY 2010 and continuing
for CY 2014, we established a policy to
pay for separately paid therapeutic
radiopharmaceuticals under the ASP
methodology adopted for separately
payable drugs and biologicals. If ASP
information is unavailable for a
therapeutic radiopharmaceutical, we
base therapeutic radiopharmaceutical
payment on mean unit cost data derived
from hospital claims. We believe that
the rationale outlined in the CY 2010
OPPS/ASC final rule with comment
period (74 FR 60524 through 60525) for
applying the principles of separately
payable drug pricing to therapeutic
radiopharmaceuticals continues to be
appropriate for nonpass-through
separately payable therapeutic
radiopharmaceuticals in CY 2015.
Therefore, in the CY 2015 OPPS/ASC
proposed rule (79 FR 41003), we
proposed for CY 2015 to pay all
nonpass-through, separately payable
therapeutic radiopharmaceuticals at
ASP+6 percent, based on the statutory
default described in section
1833(t)(14)(A)(iii)(II) of the Act. For a
full discussion of ASP-based payment
for therapeutic radiopharmaceuticals,
we refer readers to the CY 2010 OPPS/
ASC final rule with comment period (74
FR 60520 through 60521). We also
proposed to rely on CY 2013 mean unit
cost data derived from hospital claims
data for payment rates for therapeutic
radiopharmaceuticals for which ASP
data are unavailable and to update the
payment rates for separately payable
therapeutic radiopharmaceuticals
according to our usual process for
updating the payment rates for
separately payable drugs and
biologicals, on a quarterly basis if
updated ASP information is available.
For a complete history of the OPPS
payment policy for therapeutic
radiopharmaceuticals, we refer readers

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to the CY 2005 OPPS final rule with
comment period (69 FR 65811), the CY
2006 OPPS final rule with comment
period (70 FR 68655), and the CY 2010
OPPS/ASC final rule with comment
period (74 FR 60524).
The proposed CY 2015 payment rates
for nonpass-through separately payable
therapeutic radiopharmaceuticals were
included in Addenda A and B to the
proposed rule (which are available via
the Internet on the CMS Web site).
Comment: Several commenters
supported CMS’ proposal to pay for
separately payable therapeutic
radiopharmaceuticals under the
statutory default payment rate of ASP+6
percent, if ASP data are submitted to
CMS.
Response: We appreciate the
commenters’ support. We continue to
believe that providing payment for
therapeutic radiopharmaceuticals based
on ASP or mean unit cost if ASP
information is not available would
provide appropriate payment for these
products. When ASP data are not
available, we believe that paying for
therapeutic radiopharmaceuticals using
mean unit cost will appropriately pay
for the average hospital acquisition and
associated handling costs of nonpassthrough separately payable therapeutic
radiopharmaceuticals. As we stated in
the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60523),
although using mean unit cost for
payment for therapeutic
radiopharmaceuticals when ASP data
are not available is not the usual OPPS
process (the usual process relies on
alternative data sources such as WAC or
AWP when ASP information is
temporarily unavailable, prior to
defaulting to the mean unit cost from
hospital claims data), we continue to
believe that WAC or AWP is not an
appropriate proxy to provide OPPS
payment for average therapeutic
radiopharmaceutical acquisition cost
and associated handling costs when
manufacturers are not required to
submit ASP data. Payment based on
WAC or AWP under the established
OPPS methodology for payment of
separately payable drugs and biologicals
is usually temporary for a calendar
quarter until a manufacturer is able to
submit the required ASP data in
accordance with the quarterly ASP
submission timeframes for reporting
under section 1847A of the Act. Because
ASP reporting for OPPS payment of
separately payable therapeutic
radiopharmaceuticals is not required, a
manufacturer’s choice to not submit
ASP could result in payment for a
separately payable therapeutic
radiopharmaceutical based on WAC or

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AWP for a full year, a result that we
believe would be inappropriate.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to continue to pay all
nonpass-through, separately payable
therapeutic radiopharmaceuticals at
ASP+6 percent. We also are finalizing
our proposal to continue to rely on CY
2013 mean unit cost data derived from
hospital claims data for payment rates
for therapeutic radiopharmaceuticals for
which ASP data are unavailable. The CY
2015 final rule payment rates for
nonpass-through separately payable
therapeutic radiopharmaceuticals are
included in Addenda A and B to this
final rule with comment period (which
are available via the Internet on the
CMS Web site).
5. Payment Adjustment Policy for
Radioisotopes Derived From NonHighly Enriched Uranium Sources
Radioisotopes are widely used in
modern medical imaging, particularly
for cardiac imaging and predominantly
for the Medicare population.
Technetium-99 (Tc-99m), the
radioisotope used in the majority of
such diagnostic imaging services, is
currently produced in legacy reactors
outside of the United States using
highly enriched uranium (HEU).
The United States would like to
eliminate domestic reliance on these
reactors, and is promoting the
conversion of all medical radioisotope
production to non-HEU sources.
Alternative methods for producing Tc99m without HEU are technologically
and economically viable, and
conversion to such production has
begun and is expected to be completed
within a 3-year time period. We expect
this change in the supply source for the
radioisotope used for modern medical
imaging will introduce new costs into
the payment system that are not
accounted for in the historical claims
data.
Therefore, for CY 2013, we finalized
a policy to provide an additional
payment of $10 for the marginal cost for
radioisotopes produced by non-HEU
sources (77 FR 68323). Under this
policy, hospitals report HCPCS code
Q9969 (Tc-99m from non-highly
enriched uranium source, full cost
recovery add-on per study dose) once
per dose along with any diagnostic scan
or scans furnished using Tc-99m as long
as the Tc-99m doses used can be
certified by the hospital to be at least 95
percent derived from non-HEU sources.
The time period for this additional
payment was not to exceed 5 years from
January 1, 2013 (77 FR 68321).

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Comment: A few commenters
requested that CMS extend payment for
HCPCS code Q9969 an additional 3 to
5 years to ensure adequate data are
collected and provide a longer ramp up
period for more widespread use of nonHEU materials since they are not yet
widely available. One commenter
believed that the $10 payment is not
sufficient and requested that CMS
increase the payment rate. This
commenter also requested that CMS
eliminate the copayment.
Response: We stated in our CY 2013
OPPS/ASC final rule with comment
period (77 FR 68316) that our
expectation was that the transition to
non-HEU sourced Mo-99 would be
completed within 4 to 5 years and that
there might be a need to make
differential payments for a period of 4
to 5 years. We further stated that we
would reassess, and propose if
necessary, on an annual basis whether
such an adjustment continued to be
necessary and whether any changes to
the adjustment were warranted. We
have reassessed this payment for CY
2015 and have not identified any new
information that would cause us to
modify payment at this time. We do not
agree with the commenter’s suggestion
to eliminate the beneficiary’s copayment
because section 1833(t)(8) of the Act and
§§ 419.41 through 419.45 of the
regulations require a beneficiary
copayment. We are continuing the
policy of providing an additional $10
payment for radioisotopes produced by
non-HEU sources for CY 2015. Although
we will reassess this policy annually,
consistent with the original policy in
the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68321), we do
not anticipate that this additional
payment would extend beyond CY
2017.
6. Payment for Blood Clotting Factors
For CY 2014, we provided payment
for blood clotting factors under the same
methodology as other nonpass-through
separately payable drugs and biologicals
under the OPPS and continued paying
an updated furnishing fee. That is, for
CY 2014, we provided payment for
blood clotting factors under the OPPS at
ASP+6 percent, plus an additional
payment for the furnishing fee. We note
that when blood clotting factors are
provided in physicians’ offices under
Medicare Part B and in other Medicare
settings, a furnishing fee is also applied
to the payment. The CY 2014 updated
furnishing fee was $0.192 per unit.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41003), for CY 2015, we
proposed to pay for blood clotting
factors at ASP+6 percent, consistent

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with our proposed payment policy for
other nonpass-through separately
payable drugs and biologicals, and to
continue our policy for payment of the
furnishing fee using an updated amount.
Our policy to pay for a furnishing fee for
blood clotting factors under the OPPS is
consistent with the methodology
applied in the physician office and
inpatient hospital setting, and first
articulated in the CY 2006 OPPS final
rule with comment period (70 FR
68661) and later discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66765). The
proposed furnishing fee update was
based on the percentage increase in the
Consumer Price Index (CPI) for medical
care for the 12-month period ending in
June of the previous year. Because the
Bureau of Labor Statistics releases the
applicable CPI data after the MPFS and
OPPS/ASC proposed rules are
published, we were not able to include
the actual updated furnishing fee in the
proposed rules. Therefore, in
accordance with our policy, as finalized
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66765), we
proposed to announce the actual figure
for the percent change in the applicable
CPI and the updated furnishing fee
calculated based on that figure through
applicable program instructions and
posting on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Part-B-Drugs/
McrPartBDrugAvgSalesPrice/
index.html.
Comment: Commenters supported
CMS’ proposal to continue to apply the
furnishing fee for blood clotting factors
provided in the OPD. The commenters
also supported CMS’ proposal to pay for
separately payable drugs at ASP+6
percent based on the statutory default
for CY 2015.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to provide payment for
blood clotting factors under the same
methodology as other separately payable
drugs and biologicals under the OPPS
and to continue payment of an updated
furnishing fee. We will announce the
actual figure of the percent change in
the applicable CPI and the updated
furnishing fee calculation based on that
figure through the applicable program
instructions and posting on the CMS
Web site.

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7. Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals
With HCPCS Codes but Without OPPS
Hospital Claims Data
The Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (Pub. L. 108–173) did not address
the OPPS payment in CY 2005 and
subsequent years for drugs, biologicals,
and radiopharmaceuticals that have
assigned HCPCS codes, but that do not
have a reference AWP or approval for
payment as pass-through drugs or
biologicals. Because there was no
statutory provision that dictated
payment for such drugs, biologicals, and
radiopharmaceuticals in CY 2005, and
because we had no hospital claims data
to use in establishing a payment rate for
them, we investigated several payment
options for CY 2005 and discussed them
in detail in the CY 2005 OPPS final rule
with comment period (69 FR 65797
through 65799).
For CYs 2005 to 2007, we
implemented a policy to provide
separate payment for new drugs,
biologicals, and radiopharmaceuticals
with HCPCS codes (specifically those
new drug, biological, and
radiopharmaceutical HCPCS codes in
each of those calendar years that did not
crosswalk to predecessor HCPCS codes)
but which did not have pass-through
status, at a rate that was equivalent to
the payment they received in the
physician’s office setting, established in
accordance with the ASP methodology
for drugs and biologicals, and based on
charges adjusted to cost for
radiopharmaceuticals. Beginning in CY
2008 and continuing through CY 2014,
we implemented a policy to provide
payment for new drugs and biologicals
with HCPCS codes (except those that are
policy-packaged), but which did not
have pass-through status and were
without OPPS hospital claims data, at
an amount consistent with the final
OPPS payment methodology for other
separately payable nonpass-through
drugs and biologicals for the given year.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41004), for CY 2015, we
proposed to continue this policy and
provide payment for new drugs,
biologicals, and therapeutic
radiopharmaceuticals that do not have
pass-through status at ASP+6 percent,
consistent with the proposed CY 2015
payment methodology for other
separately payable nonpass-through
drugs, biologicals, and therapeutic
radiopharmaceuticals, which was
proposed to be ASP+6 percent. We
believe this proposed policy would
ensure that new nonpass-through drugs,
biologicals, and therapeutic

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66893

radiopharmaceuticals would be treated
like other drugs, biologicals, and
therapeutic radiopharmaceuticals under
the OPPS.
For CY 2015, we are also continuing
to package payment for all new
nonpass-through policy-packaged
products (diagnostic
radiopharmaceuticals, contrast agents,
anesthesia drugs, drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure, and drugs and biologicals
that function as supplies when used in
a surgical procedure) with HCPCS codes
but without claims data (those new CY
2015 HCPCS codes that do not
crosswalk to predecessor HCPCS codes).
This is consistent with the CY 2014
finalized policy packaging proposal of
all existing nonpass-through diagnostic
radiopharmaceuticals, contrast agents,
anesthesia drugs, drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure, and drugs and biologicals
that function as supplies when used in
a surgical procedure, as discussed in
more detail in section II.A.3. of this final
rule with comment period.
In accordance with the OPPS ASP
methodology, in the absence of ASP
data, for CY 2015, we proposed to
continue our policy of using the WAC
for the product to establish the initial
payment rate for new nonpass-through
drugs and biologicals with HCPCS
codes, but which are without OPPS
claims data. However, we note that if
the WAC is also unavailable, we would
make payment at 95 percent of the
product’s most recent AWP. We also
proposed to assign status indicator ‘‘K’’
(Separately paid nonpass-through drugs
and biologicals, including therapeutic
radiopharmaceuticals) to HCPCS codes
for new drugs and biologicals without
OPPS claims data and for which we
have not granted pass-through status.
With respect to new nonpass-through
drugs and biologicals for which we do
not have ASP data, we proposed that
once their ASP data become available in
later quarterly submissions, their
payment rates under the OPPS would be
adjusted so that the rates would be
based on the ASP methodology and set
to the proposed ASP-based amount
(proposed for CY 2015 at ASP+6
percent) for items that have not been
granted pass-through status. This
proposed policy, which utilizes the ASP
methodology for new nonpass-through
drugs and biologicals with an ASP, is
consistent with prior years’ policies for
these items and would ensure that new
nonpass-through drugs and biologicals
would be treated like other drugs and

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biologicals under the OPPS, unless they
are granted pass-through status.
Similarly, we proposed to continue to
base the initial payment for new
therapeutic radiopharmaceuticals with
HCPCS codes, but which do not have
pass-through status and are without
claims data, on the WACs for these
products if ASP data for these
therapeutic radiopharmaceuticals are
not available. If the WACs also are
unavailable, we proposed to make
payment for new therapeutic
radiopharmaceuticals at 95 percent of
the products’ most recent AWP because
we would not have mean costs from
hospital claims data upon which to base
payment. As we proposed with new
drugs and biologicals, we proposed to
continue our policy of assigning status
indicator ‘‘K’’ to HCPCS codes for new
therapeutic radiopharmaceuticals
without OPPS claims data for which we
have not granted pass-through status.
Consistent with other ASP-based
payment, for CY 2015, we proposed to
announce any changes to the payment
amounts for new drugs and biologicals
in this CY 2015 OPPS/ASC final rule
with comment period and also on a
quarterly basis on the CMS Web site
during CY 2015 if later quarter ASP
submissions (or more recent WACs or
AWPs) indicate that changes to the
payment rates for these drugs and
biologicals are necessary. The payment
rates for new therapeutic
radiopharmaceuticals also would be
changed accordingly based on later
quarter ASP submissions. We note that
the new CY 2015 HCPCS codes for
drugs, biologicals, and therapeutic
radiopharmaceuticals were not available
at the time of development of the
proposed rule. However, these agents
are included in Addendum B to this CY
2015 OPPS/ASC final rule with
comment period (which is available via
the Internet on the CMS Web site),
where they are assigned comment
indicator ‘‘NI.’’ This comment indicator
reflects that their interim final OPPS
treatment is open to public comment in
this CY 2015 OPPS/ASC final rule with
comment period.
There are several nonpass-through
drugs and biologicals that were payable
in CY 2013 and/or CY 2014 for which
we did not have CY 2013 hospital
claims data available for the proposed
rule and for which there are no other
HCPCS codes that describe different
doses of the same drug, but which have
pricing information available for the
ASP methodology. In order to determine
the packaging status of these products
for CY 2015, we proposed to continue

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our policy to calculate an estimate of the
per day cost of each of these items by
multiplying the payment rate of each
product based on ASP+6 percent,
similar to other nonpass-through drugs
and biologicals paid separately under
the OPPS, by an estimated average
number of units of each product that
would typically be furnished to a
patient during one day in the hospital
outpatient setting. This rationale was
first adopted in the CY 2006 OPPS/ASC
final rule with comment period (70 FR
68666 through 68667).
We proposed to package items for
which we estimated the per day
administration cost to be less than or
equal to $90 (although, as mentioned in
section V.B.2. of this final rule with
comment period, we are finalizing a
packaging threshold of $95 for CY 2015)
and to pay separately for items for
which we estimated the per day
administration cost to be greater than
$90 (with the exception of diagnostic
radiopharmaceuticals, contrast agents,
anesthesia drugs, drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure, and drugs and biologicals
that function as supplies when used in
a surgical procedure, which we
proposed to continue to package
regardless of cost) in CY 2015. We also
proposed that the CY 2015 payment for
separately payable items without CY
2013 claims data would be ASP+6
percent, similar to payment for other
separately payable nonpass-through
drugs and biologicals under the OPPS.
In accordance with the ASP
methodology paid in the physician’s
office setting, in the absence of ASP
data, we proposed to use the WAC for
the product to establish the initial
payment rate and, if the WAC is also
unavailable, we would make payment at
95 percent of the most recent AWP
available. The proposed estimated units
per day and status indicators for these
items were displayed in Table 42 of the
proposed rule (79 FR 41005).
Finally, there were 35 drugs and
biologicals, shown in Table 43 of the
proposed rule (79 FR 41005 through
41006), that were payable in CY 2013
but for which we lacked CY 2013 claims
data and any other pricing information
for the ASP methodology for the CY
2015 OPPS/ASC proposed rule. For CY
2010, we finalized a policy to assign
status indicator ‘‘E’’ (Not paid by
Medicare when submitted on outpatient
claims [any outpatient bill type])
whenever we lacked claims data and
pricing information and were unable to
determine the per day cost of a drug or

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biological. In addition, we noted that we
would provide separate payment for
these drugs and biologicals if pricing
information reflecting recent sales
became available mid-year for the ASP
methodology.
For CY 2015, as we finalized in CY
2014 (78 FR 75031), we proposed to
continue to assign status indicator ‘‘E’’
to drugs and biologicals that lack CY
2013 claims data and pricing
information for the ASP methodology.
All drugs and biologicals without CY
2013 hospital claims data or data based
on the ASP methodology that were
assigned status indicator ‘‘E’’ on this
basis at the time of the proposed rule for
CY 2015 were displayed in Table 43 of
the proposed rule (79 FR 41005 through
41006). We also proposed to continue
our policy to assign the products status
indicator ‘‘K’’ and pay for them
separately for the remainder of CY 2015
if pricing information becomes
available.
We did not receive any specific public
comments regarding our proposed
payment for nonpass-through drugs,
biologicals, and radiopharmaceuticals
with HCPCS codes, but without OPPS
hospital claims data. Many commenters
supported our proposal to pay for
separately payable drugs at ASP+6
percent under the statutory default.
However, these comments were not
specific to new drugs and biologicals
with HCPCS codes but without OPPS
claims data.
After consideration of the public
comments we received, we are
finalizing our CY 2015 proposal without
modification, including our proposal to
assign drug or biological products status
indicator ‘‘K’’ and pay for them
separately for the remainder of CY 2015
if pricing information becomes
available. The final estimated units per
day and status indicators for drugs and
biologicals without CY 2013 claims data
are displayed in Table 37 below.
We did not receive any public
comments on our proposal to continue
to assign status indicator ‘‘E’’ to drugs
and biologicals that lack CY 2013 claims
data and pricing information for the
ASP methodology and, therefore, we are
finalizing this proposal without
modification. All drugs and biologicals
without CY 2013 hospital claims data
and without pricing information for the
ASP methodology that are assigned
status indicator ‘‘E’’ on this basis at the
time of this final rule with comment
period for CY 2015 are displayed in
Table 38 below.

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66895

TABLE 37—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA
CY 2015
HCPCS code
90581
J0215
J0365
J0630
J2670
J3355
J7196
J7505
J7513
J8650
J9151
J9215
J9300

...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........

Estimated average number
of units per
day

CY 2015 long descriptor

Anthrax vaccine, for subcutaneous or intramuscular use .................................
Injection, alefacept, 0.5 mg ...............................................................................
Injection, aprotonin, 10,000 kiu .........................................................................
Injection, calcitonin salmon, up to 400 units .....................................................
Injection, tolazoline hcl, up to 25 mg ................................................................
Injection, urofollitropin, 75 iu .............................................................................
Injection, antithrombin recombinant, 50 IU .......................................................
Muromonab-cd3, parenteral, 5 mg ....................................................................
Daclizumab, parenteral, 25 mg .........................................................................
Nabilone, oral, 1 mg ..........................................................................................
Injection, daunorubicin citrate, liposomal formulation, 10 mg ...........................
Injection, interferon, alfa-n3, (human leukocyte derived), 250,000 iu ..............
Injection, gemtuzumab ozogamicin, 5 mg ........................................................

1
29
1
2
1
2
268
1
1
4
10
1
1

CY 2015 SI

CY 2015 APC

K
K
N
K
N
K
K
N
N
K
K
N
K

1422
1633
1439
1433
1457
1741
1332
7038
1612
1424
0821
1473
9004

TABLE 38—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE
ASP METHODOLOGY
CY 2015
HCPCS code
90296
90393
90477
90644

.............
.............
.............
.............

90681 .............
90727 .............
J0190 .............
J0205 .............
J0350 .............
J0364 .............
J0395 .............
J0710 .............
J1180 .............
J1435 .............
J1562 .............
J1620 .............
J1655 .............
J1730 .............
J1835 .............
J2460 .............
J2513 .............
J2725 .............
J2670 .............
J2725 .............
J2940 .............
J3305 .............
J3365 .............
J3400 .............
J8562 .............
J9165 .............
J9212 .............
J9219 .............
Q0174 ............

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Q0515 ............

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CY 2015 SI

Diphtheria antitoxin, equine, any route ...................................................................................................................
Vaccina immune globulin, human, for intramuscular use .......................................................................................
Adenovirus vaccine, type 7, live, for oral use .........................................................................................................
Meningococcal conjugate vaccine, serogroups c & y and hemophilus influenza b vaccine (hib-mency), 4 dose
schedule, when administered to children 2–15 months of age, for intramuscular use.
Rotavirus vaccine, human, attenuated, 2 dose schedule, live, for oral use ...........................................................
Plague vaccine, for intramuscular use ....................................................................................................................
Injection, biperiden lactate, per 5 mg ......................................................................................................................
Injection, alglucerase, per 10 units .........................................................................................................................
Injection, anistreplase, per 30 units ........................................................................................................................
Injection, apomorphine hydrochloride, 1 mg ...........................................................................................................
Injection, arbutamine hcl, 1 mg ...............................................................................................................................
Injection, cephapirin sodium, up to 1 gm ................................................................................................................
Injection, dyphylline, up to 500 mg .........................................................................................................................
Injection estrone per 1 mg ......................................................................................................................................
Injection, immune globulin (vivaglobin), 100 mg .....................................................................................................
Injection, gonadorelin hydrochloride, per 100 mcg .................................................................................................
Injection, tinzaparin sodium, 1000 iu ......................................................................................................................
Injection, diazoxide, up to 300 mg ..........................................................................................................................
Injection, itraconazole, 50 mg .................................................................................................................................
Injection, oxytetracycline hcl, up to 50 mg ..............................................................................................................
Injection, pentastarch, 10% solution, 100 ml ..........................................................................................................
Injection, protirelin, per 250 mcg .............................................................................................................................
Injection, tolazoline hcl, up to 25 mg ......................................................................................................................
Injection, protirelin, per 250 mcg .............................................................................................................................
Injection, somatrem, 1 mg .......................................................................................................................................
Injection, trimetrexate glucuronate, per 25 mg .......................................................................................................
Injection, iv, urokinase, 250,000 i.u. vial .................................................................................................................
Injection, triflupromazine hcl, up to 20 mg ..............................................................................................................
Fludarabine phosphate, oral, 10 mg .......................................................................................................................
Injection, diethylstilbestrol diphosphate, 250 mg ....................................................................................................
Injection, interferon alfacon-1, recombinant, 1 microgram .....................................................................................
Leuprolide acetate implant, 65 mg ..........................................................................................................................
Thiethylperazine maleate, 10 mg, oral, fda approved prescription anti-emetic, for use as a complete therapeutic substitute for an iv anti-emetic at the time of chemotherapy treatment, not to exceed a 48 hour dosage regimen.
Injection, sermorelin acetate, 1 microgram .............................................................................................................

E
E
E
E

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E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
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VI. Estimate of OPPS Transitional PassThrough Spending for Drugs,
Biologicals, Radiopharmaceuticals, and
Devices
A. Background
Section 1833(t)(6)(E) of the Act limits
the total projected amount of
transitional pass-through payments for
drugs, biologicals,
radiopharmaceuticals, and categories of
devices for a given year to an
‘‘applicable percentage,’’ currently not
to exceed 2.0 percent of total program
payments estimated to be made for all
covered services under the OPPS
furnished for that year. If we estimate
before the beginning of the calendar
year that the total amount of passthrough payments in that year would
exceed the applicable percentage,
section 1833(t)(6)(E)(iii) of the Act
requires a uniform prospective
reduction in the amount of each of the
transitional pass-through payments
made in that year to ensure that the
limit is not exceeded. We estimate the
pass-through spending to determine
whether payments exceed the
applicable percentage and the
appropriate prorata reduction to the
conversion factor for the projected level
of pass-through spending in the
following year to ensure that total
estimated pass-through spending for the
prospective payment year is budget
neutral, as required by section
1833(t)(6)(E) of the Act.
For devices, developing an estimate of
pass-through spending in CY 2015
entails estimating spending for two
groups of items. The first group of items
consists of device categories that are
currently eligible for pass-through
payment and that will continue to be
eligible for pass-through payment in CY
2015. The CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778)
describes the methodology we have
used in previous years to develop the
pass-through spending estimate for
known device categories continuing into
the applicable update year. The second
group of items consists of items that we
know are newly eligible, or project may
be newly eligible, for device passthrough payment beginning in CY 2015.
The sum of the CY 2015 pass-through
estimates for these two groups of device
categories equals the total CY 2015 passthrough spending estimate for device
categories with pass-through status. We
base the device pass-through estimated
payments for each device category on
the amount of payment as established in
section 1833(t)(6)(D)(ii) of the Act, and
as outlined in previous rules, including
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75034 through

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75036). We note that, beginning in CY
2010, the pass-through evaluation
process and pass-through payment for
implantable biologicals newly approved
for pass-through payment beginning on
or after January 1, 2010 that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) is the device pass-through
process and payment methodology (74
FR 60476). As has been our past practice
(76 FR 74335), in the CY 2015 OPPS/
ASC proposed rule (79 FR 41007), for
CY 2015, we proposed to include an
estimate of any implantable biologicals
eligible for pass-through payment in our
estimate of pass-through spending for
devices. We also proposed that,
beginning in CY 2015, applications for
pass-through payment for skin
substitutes and similar products be
evaluated using the medical device
pass-through process and payment
methodology. We proposed that the last
skin substitute pass-through
applications evaluated using the drugs
and biologicals pass-through evaluation
process would be those with an
application deadline of September 1,
2014, and an earliest effective date of
January 1, 2015. Therefore, in light of
this proposal, we proposed to change
the December 1, 2014 pass-through
application deadline (for an earliest
effective date of April 1, 2015) for both
drugs and biologicals and devices to
January 15, 2015, in order to provide
sufficient time for applicants to adjust to
the new policies and procedures that
will be in effect as of January 1, 2015.
We discuss our proposal to change the
pass-through evaluation process for skin
substitutes and address comments to
this proposal and the proposal to change
the April 1, 2015 pass-through effective
date application deadline in section
V.B.2.d. of this final rule with comment
period, where we explain that we are
finalizing this proposal. Therefore,
beginning in CY 2015, we will include
an estimate of any skin substitutes
eligible for pass-through payment in our
estimate of pass-through spending for
devices.
We did not receive any public
comments on our proposed
methodology or proposed estimate for
pass-through spending for devices.
Therefore, we are finalizing our
proposal to base the pass-through
estimate for devices on our established
methodology, as described above.
Moreover, we are finalizing our
proposal, beginning in CY 2015 and in
future years, to include an estimate of
any skin substitutes eligible for passthrough payment in our estimate of
pass-through spending for devices.

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For drugs and biologicals eligible for
pass-through payment, section
1833(t)(6)(D)(i) of the Act establishes the
pass-through payment amount as the
amount by which the amount
authorized under section 1842(o) of the
Act (or, if the drug or biological is
covered under a competitive acquisition
contract under section 1847B of the Act,
an amount determined by the Secretary
equal to the average price for the drug
or biological for all competitive
acquisition areas and year established
under such section as calculated and
adjusted by the Secretary) exceeds the
portion of the otherwise applicable fee
schedule amount that the Secretary
determines is associated with the drug
or biological. We note that the Part B
drug CAP program has been postponed
since CY 2009, and such a program has
not been reinstated for CY 2015.
Because, as we proposed, we will pay
for most nonpass-through separately
payable drugs and biologicals under the
CY 2015 OPPS at ASP+6 percent, as we
discuss in section V.B.3. of the proposed
rule and this final rule with comment
period, which represents the otherwise
applicable fee schedule amount
associated with most pass-through drugs
and biologicals, and because, as we
proposed, we will pay for CY 2015 passthrough drugs and biologicals at ASP+6
percent, as we discuss in section V.A. of
the proposed rule and this final rule
with comment period, our estimate of
drug and biological pass-through
payment for CY 2015 for this group of
items is $0, as discussed below.
Furthermore, payment for certain
drugs, specifically diagnostic
radiopharmaceuticals and contrast
agents, without pass-through status will
always be packaged into payment for
the associated procedures and these
products will not be separately paid. In
addition, we policy-package all
nonpass-through drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure and drugs and biologicals
that function as supplies when used in
a surgical procedure, as discussed in
section II.A.3. of this final rule with
comment period. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41007), we
proposed that all of these policypackaged drugs and biologicals with
pass-through status would be paid at
ASP+6 percent, like other pass-through
drugs and biologicals, for CY 2015.
Therefore, our estimate of pass-through
payment for policy-packaged drugs and
biologicals with pass-through status
approved prior to CY 2015 is not $0. In
section V.A.4. of this final rule with
comment period, we discuss our

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proposed and finalized policy to
determine if the costs of certain policypackaged drugs or biologicals are
already packaged into the existing APC
structure. If we determine that a policypackaged drug or biological approved
for pass-through payment resembles
predecessor drugs or biologicals already
included in the costs of the APCs that
are associated with the drug receiving
pass-through payment, we proposed to
offset the amount of pass-through
payment for the policy-packaged drug or
biological. For these drugs or
biologicals, the APC offset amount is the
portion of the APC payment for the
specific procedure performed with the
pass-through drug or biological, which
we refer to as the policy-packaged drug
APC offset amount. If we determine that
an offset is appropriate for a specific
policy-packaged drug or biological
receiving pass-through payment, we
reduce our estimate of pass-through
payments for these drugs or biologicals
by this amount.
Similar to pass-through estimates for
devices, the first group of drugs and
biologicals requiring a pass-through
payment estimate consists of those
products that were recently made
eligible for pass-through payment and
that will continue to be eligible for passthrough payment in CY 2015. The
second group contains drugs and
biologicals that we know are newly
eligible, or project will be newly
eligible, beginning in CY 2015. The sum
of the CY 2015 pass-through estimates
for these two groups of drugs and
biologicals equals the total CY 2015
pass-through spending estimate for
drugs and biologicals with pass-through
status.
B. Estimate of Pass-Through Spending
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41007), we proposed to set
the applicable pass-through payment
percentage limit at 2.0 percent of the
total projected OPPS payments for CY
2015, consistent with section
1833(t)(6)(E)(ii)(II) of the Act, and our
OPPS policy from CY 2004 through CY
2014 (78 FR 75034 through 75036).
For the first group of devices for passthrough payment estimation purposes,
there is one device category, HCPCS
code C1841 (Retinal prosthesis, includes
all internal and external components),
eligible for pass-through payment as of
October 1, 2013, continuing to be
eligible for CY 2014, and that will
continue to be eligible for pass-through
payment for CY 2015. Based on the one
device category, HCPCS code C1841, we
are finalizing our proposed rule estimate
for the first group of devices of $0.5
million.

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In estimating our CY 2015 passthrough spending for device categories
in the second group, we include: Device
categories that we knew at the time of
the development of the final rule will be
newly eligible for pass-through payment
in CY 2015; additional device categories
that we estimate could be approved for
pass-through status subsequent to the
development of the final rule and before
January 1, 2015; and contingent
projections for new device categories
established in the second through fourth
quarters of CY 2015. We proposed to use
the general methodology described in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66778), while
also taking into account recent OPPS
experience in approving new passthrough device categories. For the
proposed rule, the estimate of CY 2015
pass-through spending for this second
group of device categories was $10.0
million. We did not receive any public
comments regarding our proposed passthrough estimate for devices. We are
establishing one new device category
subsequent to the publication of the
proposed rule, HCPCS code C2624
(Implantable wireless pulmonary artery
pressure sensor with delivery catheter,
including all system components), that
will be effective January 1, 2015. We
estimate that HCPCS code C2624 will
cost $50.5 million in pass-through
expenditures in CY 2015. Therefore, for
this CY 2015 OPPS/ASC final rule with
comment period, the estimate of CY
2015 pass-through spending for this
second group of device categories is
$60.5 million.
To estimate CY 2015 pass-through
spending for drugs and biologicals in
the first group, specifically those drugs
and biologicals recently made eligible
for pass-through payment and
continuing on pass-through payment
status for CY 2015, we proposed to
utilize the most recent Medicare
physician claims data regarding their
utilization, information provided in the
respective pass-through applications,
historical hospital claims data,
pharmaceutical industry information,
and clinical information regarding those
drugs or biologicals to project the CY
2015 OPPS utilization of the products.
For the known drugs and biologicals
(excluding policy-packaged diagnostic
radiopharmaceuticals, contrast agents,
drugs, biologicals, and
radiopharmaceuticals that function as
supplies when used in a diagnostic test
or procedure, and drugs and biologicals
that function as supplies when used in
a surgical procedure) that will be
continuing on pass-through payment
status in CY 2015, we estimate the passthrough payment amount as the

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difference between ASP+6 percent and
the payment rate for nonpass-through
drugs and biologicals that will be
separately paid at ASP+6 percent,
which is zero for this group of drugs.
Because payment for policy-packaged
drugs and biologicals is packaged if the
product was not paid separately due to
its pass-through status, we proposed to
include in the CY 2015 pass-through
estimate the difference between
payment for the policy-packaged drug or
biological at ASP+6 percent (or WAC+6
percent, or 95 percent of AWP, if ASP
or WAC information is not available)
and the policy-packaged drug APC
offset amount, if we determine that the
policy-packaged drug or biological
approved for pass-through payment
resembles a predecessor drug or
biological already included in the costs
of the APCs that are associated with the
drug receiving pass-through payment.
For the proposed rule, using the
methodology described above, we
calculated a CY 2015 proposed
spending estimate for this first group of
drugs and biologicals of approximately
$2.8 million.
We did not receive any public
comments on our proposed
methodology for calculating for
calculating the spending estimate for the
first group of drugs and biologicals.
For this final rule with comment
period, using the methodology
described above, we calculated a final
CY 2015 spending estimate for this first
group of drugs and biologicals of
approximately $11.7 million.
To estimate proposed CY 2015 passthrough spending for drugs and
biologicals in the second group (that is,
drugs and biologicals that we know are
newly eligible, or project will be newly
eligible, beginning in CY 2015), in the
CY 2015 OPPS/ASC proposed rule (79
FR 41008), we proposed to use
utilization estimates from pass-through
applicants, pharmaceutical industry
data, clinical information, recent trends
in the per unit ASPs of hospital
outpatient drugs, and projected annual
changes in service volume and intensity
as our basis for making the CY 2015
pass-through payment estimate. We also
proposed to consider the most recent
OPPS experience in approving new
pass-through drugs and biologicals.
Using our proposed methodology for
estimating CY 2015 pass-through
payments for this second group of
drugs, we calculated a proposed
spending estimate for this second group
of drugs and biologicals of
approximately $2.2 million.
We did not receive any public
comments on our proposed
methodology for calculating for

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calculating the spending estimate for the
second group of drugs and
nonimplantable biologicals.
For this final rule with comment
period, using our finalized methodology
for estimating CY 2015 pass-through
payments for this second group of
drugs, we calculated a spending
estimate for this second group of drugs
and biologicals of approximately $10.1
million. Our CY 2015 estimate for total
pass-through spending for drugs and
biologicals (spending for the first group
of drugs and biologicals ($11.7 million)
plus spending for the second group of
drugs and biologicals ($10.1 million))
equals $21.8 million.
In summary, in accordance with the
methodology described above in this
section, for this final rule with comment
period, we estimate that total passthrough spending for the device
categories and the drugs and biologicals
that are continuing to receive passthrough payment in CY 2015 and those
device categories, drugs, and biologicals
that first become eligible for passthrough payment during CY 2015 will
be approximately $82.8 million
(approximately $61.0 million for device
categories and approximately $21.8
million for drugs and biologicals),
which represents 0.15 percent of total
projected OPPS payments for CY 2015.
Therefore, we estimate that passthrough spending in CY 2015 will not
amount to 2.0 percent of total projected
OPPS CY 2015 program spending.

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VII. OPPS Payment for Hospital
Outpatient Visits
A. Payment for Hospital Outpatient
Clinic and Emergency Department Visits
Since April 7, 2000, we have
instructed hospitals to report facility
resources for clinic and ED hospital
outpatient visits using the CPT E/M
codes and to develop internal hospital
guidelines for reporting the appropriate
visit level (65 FR 18451). Because a
national set of hospital-specific codes
and guidelines do not currently exist,
we have advised hospitals that each
hospital’s internal guidelines that
determine the levels of clinic and ED
visits to be reported should follow the
intent of the CPT code descriptors, in
that the guidelines should be designed
to reasonably relate the intensity of
hospital resources to the different levels
of effort represented by the codes.
While many hospitals have advocated
for hospital-specific national guidelines
for visit billing since the OPPS started
in 2000, and we have signaled in past
rulemaking our intent to develop
guidelines, this complex undertaking
has proven challenging. Our work with

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interested stakeholders, such as hospital
associations, along with a contractor,
has confirmed that no single approach
could consistently and accurately
capture hospitals’ relative costs. Public
comments received on this issue, as
well as our own knowledge of how
clinics operate, have led us to conclude
that it is not feasible to adopt a set of
national guidelines for reporting
hospital clinic visits that can
accommodate the enormous variety of
patient populations and service-mix
provided by hospitals of all types and
sizes throughout the country. Moreover,
no single approach has been broadly
endorsed by the stakeholder
community.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75036
through 75045), we finalized a new
policy which created an alphanumeric
HCPCS code, G0463 (Hospital
outpatient clinic visit for assessment
and management of a patient), for
hospital use only representing any and
all clinic visits under the OPPS and
assigned HCPCS code G0463 to new
APC 0634. We also finalized a policy to
use CY 2012 claims data to develop the
CY 2014 OPPS payment rates for HCPCS
code G0463 based on the total geometric
mean cost of the levels one through five
CPT E/M codes for clinic visits
previously recognized under the OPPS
(CPT codes 99201 through 99205 and
99211 through 99215). In addition, we
finalized a policy to no longer recognize
a distinction between new and
established patient clinic visits.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75036
through 75043), we also stated our
policy that we would continue to use
our existing methodology to recognize
the existing CPT codes for Type A ED
visits as well as the five HCPCS codes
that apply to Type B ED visits, and to
establish the OPPS payment under our
established standard process. We refer
readers to the CY 2014 OPPS/ASC final
rule with comment period for a detailed
discussion of the public comments and
our rationale for the CY 2014 policies.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41008 through 41009), for
CY 2015, we proposed to continue the
current policy, adopted in CY 2014, for
clinic and ED visits. HCPCS code G0463
(for hospital use only) will represent
any and all clinic visits under the OPPS.
We proposed to continue to assign
HCPCS code G0463 to APC 0634. We
proposed to use CY 2013 claims data to
develop the CY 2015 OPPS payment
rates for HCPCS code G0463 based on
the total geometric mean cost of the
levels one through five CPT E/M codes
for clinic visits currently recognized

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under the OPPS (CPT codes 99201
through 99205 and 99211 through
99215). Finally, as we established in the
CY 2014 OPPS/ASC final rule with
comment period, there is no longer a
policy to recognize a distinction
between new and established patient
clinic visits.
Comment: Commenters requested that
CMS discontinue the single HCPCS Gcode for reporting clinic visits and
return to a reporting structure that
recognizes differences in clinical acuity
and resource utilization. The
commenters expressed concern that
CMS’ clinic visit coding proposal
creates a payment bias that unfairly
penalizes certain providers, such as
trauma centers, cancer hospitals, and
major teaching hospitals, which provide
care for more severely ill Medicare
beneficiaries. One commenter urged
CMS to carefully review its ratesetting
process for HCPCS code G0463 to
ensure that claims containing packaged
services that are intended to be part of
the hospital clinic rates are not being
excluded from the payment
computations, thereby creating
artificially low rates. Another
commenter recommended that CMS
work with the American Medical
Association (AMA) to develop facilityspecific CPT codes for E/M clinic visits
(with no distinction between new and
established patients) and seek input
from industry stakeholders to develop
descriptions for these new codes that
allow for their consistent application by
hospital outpatient clinics/facilities.
Response: We believe that the
spectrum of hospital resources provided
during an outpatient hospital clinic visit
is appropriately captured and reflected
in the single level payment for clinic
visits. We also believe that the single
visit code is consistent with a
prospective payment system, where
payment is based on an average
estimated relative cost for the service,
although the cost of individual cases
may be more or less costly than the
average. We believe the proposed
payment rate for APC 0634 represents
an appropriate payment for clinic visits,
as it is based on the geometric mean
costs of all visits. Although the cost for
any given clinic visit may be higher or
lower than the geometric mean cost of
APC 0634, the payment remains
appropriate to the hospital delivering a
variety of clinic visits. The high volume
of claims from every level of clinic CPT
code that we used for ratesetting for
HCPCS code G0463 allows us to have
accurate data upon which to develop
appropriate payment rates.
With regard to specific concerns for
hospitals that treat patients with a more

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complex case-mix, we note that the
relatively low estimated cost of clinic
visits overall would result in much less
underpayment or overpayment for
hospitals that may serve a population
with a more complex case-mix. As we
stated in the CY 2015 OPPS/ASC
proposed rule (79 FR 41008), we
proposed to use CY 2013 claims data to
develop the CY 2015 OPPS payment
rates for HCPCS code G0463 based on
the total geometric mean cost of the
levels one through five CPT E/M codes
for clinic visits currently recognized
under the OPPS (CPT codes 99201
through 99205 and 99211 through
99215). We note that claims containing
packaged services that are intended to
be part of the hospital clinic rates are
not excluded from payment
computations for HCPCS code G0463,
consistent with our application of our
line-item trim as described in section
II.A.2.a. of this final rule with comment
period. The line-item trim described in
section II.A.2.a. of this final rule with
comment period requires the lines to be
eligible for payment in both the claims
year and the prospective years.
Therefore, the lines that would be
packaged when modeling clinic visits
would not be subject to this trim. For a
more detailed discussion of the OPPS
data process, we refer readers to section
II.A. of this final rule with comment
period.
With regard to the potential for
facility-specific CPT codes, as we have
stated in the past (76 FR 74346), if the
AMA were to create facility-specific
CPT codes for reporting visits provided
in HOPDs (based on internally
developed guidelines), we would
consider such codes for OPPS use.
After consideration of the public
comments we received, we are
finalizing our CY 2015 proposal,
without modification, to continue to use
HCPCS code G0463 (for hospital use
only) to represent any and all clinic
visits under the OPPS for CY 2015. In
addition, for CY 2015 we are finalizing
our proposals, without modification, to
continue to assign HCPCS code G0463
to APC 0634 and to use CY 2013 claims
data to develop the CY 2015 OPPS
payment rates for HCPCS code G0463
based on the total geometric mean cost
of the levels one through five CPT E/M
codes for clinic visits currently
recognized under the OPPS (CPT codes
99201 through 99205 and 99211 through
99215).
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75040), we
stated that additional study was needed
to fully assess the most suitable
payment structure for ED visits,
including the particular number of visit

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levels that would not underrepresent
resources required to treat the most
complex patients, such as trauma
patients and that we believed it was best
to delay any change in ED visit coding
while we reevaluate the most
appropriate payment structure for Type
A and Type B ED visits. At this time, we
continue to believe that additional study
is needed to assess the most suitable
payment structure for ED visits. In the
CY 2015 OPPS/ASC proposed rule, we
did not propose any change in ED visit
coding. Rather, for CY 2015, we
proposed to continue to use our existing
methodology to recognize the existing
CPT codes for Type A ED visits as well
as the five HCPCS codes that apply to
Type B ED visits, and to establish the
CY 2015 proposed OPPS payment rates
using our established standard process.
We stated that we intend to further
explore the issues described above
related to ED visits, including concerns
about excessively costly patients, such
as trauma patients. We also stated that
we may propose changes to the coding
and APC assignments for ED visits in
future rulemaking.
Comment: Commenters supported
CMS’ proposal to continue its current
methodology to recognize the existing
five CPT codes for Type A ED visits, as
well as the five HCPCS codes for Type
B ED visits, and to establish the
associated CY 2015 OPPS payment rates
using its standard process. Commenters
commended CMS for proceeding with
caution and agreed that additional study
is needed on the appropriate payment
structure for ED visits. Commenters also
expressed their desire to work with
CMS on a future policy proposal to
create an appropriate payment structure
for ED visits. Some commenters stated
that one level of hospital ED payment is
not appropriate for the various levels of
resources required in ED visits,
especially at major teaching hospitals,
and expressed concern that a single
level of ED visit payment would create
a payment bias that would unfairly
penalize certain providers, such as
trauma centers and major teaching
hospitals, which provide care for more
severely ill Medicare beneficiaries. One
commenter requested that CMS
continue with its current ED visit
payment policy for the foreseeable
future and no longer attempt to make
future changes to the policy in the
coming years. Another commenter
recommended that CMS work with the
AMA to develop facility-specific CPT
codes for Type A ED visits and Type B
ED visits and seek input from industry
stakeholders to develop descriptions for
these new codes that allow for their

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consistent application by hospital
outpatient clinics/facilities.
Response: We appreciate the
commenters’ support of our proposal to
continue the current coding structure
for ED visits while we continue to study
the most appropriate payment structure
for Type A and Type B ED visits. As
discussed above, we received multiple
comments that a single payment for an
ED visit might underrepresent resources
required to treat the most complex
patients, such as trauma patients. As we
have stated before (78 FR 75040),
considering this issue requires
additional study. As we continue to give
additional study to this issue, we
continue to welcome stakeholder input
on the particular number of visit levels
that would not underrepresent resources
required to treat the most complex
patients, such as trauma patients.
With regard to the potential for
facility-specific CPT codes, as we have
also stated in the past (76 FR 74346), if
the AMA were to create facility-specific
CPT codes for reporting visits provided
in HOPDs (based on internally
developed guidelines), we would
consider such codes for OPPS use.
Comment: One commenter
recommended, on a short-term basis,
that CMS develop a set of three
trauma-specific HCPCS codes for all
trauma patients, for whom a trauma
team is activated.
Response: We appreciate the
alternative presented by the commenter.
We will take this recommendation into
consideration as we continue to study
and fully consider the most appropriate
payment structure for Type A and Type
B ED visits.
After consideration of the public
comments we received, we are
finalizing our proposals, without
modification, to continue to use our
existing methodology to recognize the
existing CPT codes for Type A ED visits
as well as the five HCPCS codes that
apply to Type B ED visits, and to
establish the CY 2015 OPPS payment
rates using our established standard
process. We intend to further explore
the issues described above related to ED
visits, including concerns about
excessively costly patients, such as
trauma patients. We note that we may
propose changes to the coding and APC
assignments for ED visits in the future
rulemaking.
B. Payment for Critical Care Services
For the history of the payment policy
for critical care services, we refer
readers to the CY 2014 OPPS/ASC final
rule with comment period (78 FR
75043). In the CY 2014 OPPS/ASC final
rule with comment period, we

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continued to use the methodology
established in the CY 2011 OPPS/ASC
final rule with comment period for
calculating a payment rate for critical
care services that includes packaged
payment of ancillary services, for
example electrocardiograms, chest Xrays, and pulse oximetry. Critical care
services are described by CPT codes
99291 (Critical care, evaluation and
management of the critically ill or
critically injured patient; first 30–74
minutes) and 99292 (Critical care,
evaluation and management of the
critically ill or critically injured patient;
each additional 30 minutes (List
separately in addition to code for
primary service)).
As we discussed in the CY 2015
OPPS/ASC proposed rule (79 FR 41009),
compared to the CY 2012 hospital
claims data used for the CY 2014 OPPS
ratesetting, the CY 2013 hospital claims
data used for the CY 2015 OPPS
ratesetting again show increases in the
geometric mean line item costs as well
as the geometric mean line item charges
for CPT code 99291, which continue to
suggest that hospitals’ billing practices
for CPT code 99291 have remained the
same. Because the CY 2013 claims data
do not support any significant change in
hospital billing practices for critical care
services, we stated in the proposed rule
that we continue to believe that it would
be inappropriate to pay separately for
the ancillary services that hospitals
typically report in addition to CPT
codes for critical care services.
Therefore, for CY 2015, we proposed to
continue our policy (that has been in
place since CY 2011) to recognize the
existing CPT codes for critical care
services and establish a payment rate
based on historical claims data. We also
proposed to continue to implement
claims processing edits that
conditionally package payment for the
ancillary services that are reported on
the same date of service as critical care
services in order to avoid overpayment.
We stated that we will continue to
monitor the hospital claims data for CPT
code 99291 in order to determine
whether revisions to this policy are
warranted based on changes in
hospitals’ billing practices.
We did not receive any public
comments on this issue. Accordingly,
we are finalizing our proposals, without
modification, to continue our policy to
recognize the existing CPT codes for
critical care services and establish a
payment rate based on historical claims
data, and to continue to implement
claims processing edits that
conditionally package payment for the
ancillary services that are reported on

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the same date of service as critical care
services in order to avoid overpayment.
VIII. Payment for Partial
Hospitalization Services
A. Background
Partial hospitalization is an intensive
outpatient program of psychiatric
services provided to patients as an
alternative to inpatient psychiatric care
for individuals who have an acute
mental illness. Section 1861(ff)(1) of the
Act defines partial hospitalization
services as ‘‘the items and services
described in paragraph (2) prescribed by
a physician and provided under a
program described in paragraph (3)
under the supervision of a physician
pursuant to an individualized, written
plan of treatment established and
periodically reviewed by a physician (in
consultation with appropriate staff
participating in such program), which
sets forth the physician’s diagnosis, the
type, amount, frequency, and duration
of the items and services provided
under the plan, and the goals for
treatment under the plan.’’ Section
1861(ff)(2) of the Act describes the items
and services included in partial
hospitalization services. Section
1861(ff)(3)(A) of the Act specifies that a
partial hospitalization program (PHP) is
a program furnished by a hospital to its
outpatients or by a community mental
health center (CMHC) (as defined in
subparagraph (B)), and ‘‘which is a
distinct and organized intensive
ambulatory treatment service offering
less than 24-hour-daily care other than
in an individual’s home or in an
inpatient or residential setting.’’ Section
1861(ff)(3)(B) of the Act defines a
community mental health center for
purposes of this benefit.
Section 1833(t)(1)(B)(i) of the Act
provides the Secretary with the
authority to designate the OPD services
to be covered under the OPPS. The
Medicare regulations that implement
this provision specify, under 42 CFR
419.21, that payments under the OPPS
will be made for partial hospitalization
services furnished by CMHCs as well as
Medicare Part B services furnished to
hospital outpatients designated by the
Secretary, which include partial
hospitalization services (65 FR 18444
through 18445).
Section 1833(t)(2)(C) of the Act, in
pertinent part, requires the Secretary to
‘‘establish relative payment weights for
covered OPD services (and any groups
of such services described in
subparagraph (B)) based on median (or,
at the election of the Secretary, mean)
hospital costs’’ using data on claims
from 1996 and data from the most recent

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available cost reports. In pertinent part,
subparagraph (B) provides that the
Secretary may establish groups of
covered OPD services, within a
classification system developed by the
Secretary for covered OPD services, so
that services classified within each
group are comparable clinically and
with respect to the use of resources. In
accordance with these provisions, we
have developed the PHP APCs. Section
1833(t)(9)(A) of the Act requires the
Secretary to ‘‘review not less often than
annually and revise the groups, the
relative payment weights, and the wage
and other adjustments described in
paragraph (2) to take into account
changes in medical practice, changes in
technology, the addition of new
services, new cost data, and other
relevant information and factors.’’
Because a day of care is the unit that
defines the structure and scheduling of
partial hospitalization services, we
established a per diem payment
methodology for the PHP APCs,
effective for services furnished on or
after July 1, 2000 (65 FR 18452 through
18455). Under this methodology, the
median per diem costs have been used
to calculate the relative payment
weights for PHP APCs.
From CY 2003 through CY 2006, the
median per diem costs for CMHCs
fluctuated significantly from year to
year, while the median per diem costs
for hospital-based PHPs remained
relatively constant. We were concerned
that CMHCs may have increased and
decreased their charges in response to
Medicare payment policies. Therefore,
we began efforts to strengthen the PHP
benefit through extensive data analysis
and policy and payment changes
finalized in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66670 through 66676). We made two
refinements to the methodology for
computing the PHP median: The first
remapped 10 revenue codes that are
common among hospital-based PHP
claims to the most appropriate cost
centers; and the second refined our
methodology for computing the PHP
median per diem cost by computing a
separate per diem cost for each day
rather than for each bill. We refer
readers to a complete discussion of
these refinements in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66670 through 66676).
In CY 2009, we implemented several
regulatory, policy, and payment
changes, including a two-tiered
payment approach for PHP services
under which we paid one amount for
days with 3 services (APC 0172 Level I
Partial Hospitalization) and a higher
amount for days with 4 or more services

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(APC 0173 Level II Partial
Hospitalization). We refer readers to
section X.B. of the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68688 through 68693) for a full
discussion of the two-tiered payment
system. In addition, for CY 2009, we
finalized our policy to deny payment for
any PHP claims submitted for days
when fewer than 3 units of therapeutic
services are provided (73 FR 68694).
Furthermore, for CY 2009, we revised
the regulations at 42 CFR 410.43 to
codify existing basic PHP patient
eligibility criteria and to add a reference
to current physician certification
requirements under 42 CFR 424.24 to
conform our regulations to our
longstanding policy (73 FR 68694
through 68695). These changes have
helped to strengthen the PHP benefit.
We also revised the partial
hospitalization benefit to include
several coding updates. We refer readers
to section X.C.3. of the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68695 through 68697) for a full
discussion of these requirements.
For CY 2010, we retained the twotiered payment approach for PHP
services and used only hospital-based
PHP data in computing the APC per
diem payment rates. We used only
hospital-based PHP data because we
were concerned about further reducing
both PHP APC per diem payment rates
without knowing the impact of the
policy and payment changes we made
in CY 2009. Because of the 2-year lag
between data collection and rulemaking,
the changes we made in CY 2009 were
reflected for the first time in the claims
data that we used to determine payment
rates for the CY 2011 rulemaking (74 FR
60556 through 60559).
In CY 2011, in accordance with
section 1301(b) of the Health Care and
Education Reconciliation Act of 2010
(HCERA 2010), we amended the
description of a PHP in our regulations
to specify that a PHP must be a distinct
and organized intensive ambulatory
treatment program offering less than 24hour daily care ‘‘other than in an
individual’s home or in an inpatient or
residential setting.’’ In addition, in
accordance with section 1301(a) of
HCERA 2010, we revised the definition
of a CMHC in the regulations to conform
to the revised definition now set forth
under section 1861(ff)(3)(B) of the Act.
We discussed our finalized policies for
these two provisions of HCERA 2010 in
section X.C. of the CY 2011 OPPS/ASC
final rule with comment period (75 FR
71990).
In the CY 2011 OPPS/ASC final rule
with comment period (75 FR 71994), we
also established four separate PHP APC

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per diem payment rates, two for CMHCs
(for Level I and Level II services) and
two for hospital-based PHPs (for Level
I and Level II services), based on each
provider’s own unique data. As stated in
the CY 2011 OPPS/ASC proposed rule
(75 FR 46300) and the final rule with
comment period (75 FR 71991), for CY
2011, using CY 2009 claims data, CMHC
costs had significantly decreased again.
We attributed the decrease to the lower
cost structure of CMHCs compared to
hospital-based PHP providers, and not
the impact of the CY 2009 policies.
CMHCs have a lower cost structure than
hospital-based PHP providers, in part,
because the data showed that CMHCs
generally provide fewer PHP services in
a day and use less costly staff than
hospital-based PHPs. Therefore, it was
inappropriate to continue to treat
CMHCs and hospital-based providers in
the same manner regarding payment,
particularly in light of such disparate
differences in costs. We also were
concerned that paying hospital-based
PHPs at a lower rate than their cost
structure reflects could lead to hospitalbased PHP closures and possible access
problems for Medicare beneficiaries
because hospital-based PHPs are located
throughout the country and, therefore,
offer the widest access to PHP services.
Creating the four payment rates (two for
CMHCs and two for hospital-based
PHPs) based on each provider’s data
supported continued access to the PHP
benefit, while also providing
appropriate payment based on the
unique cost structures of CMHCs and
hospital-based PHPs. In addition,
separation of data by provider type was
supported by several hospital-based
PHP commenters who responded to the
CY 2011 OPPS/ASC proposed rule (75
FR 71992).
For CY 2011, we instituted a 2-year
transition period for CMHCs to the
CMHC APC per diem payment rates
based solely on CMHC data. For CY
2011, under the transition methodology,
CMHC PHP APCs Level I and Level II
per diem costs were calculated by taking
50 percent of the difference between the
CY 2010 final hospital-based PHP
median costs and the CY 2011 final
CMHC median costs and then adding
that number to the CY 2011 final CMHC
median costs. A 2-year transition under
this methodology moved us in the
direction of our goal, which is to pay
appropriately for PHP services based on
each provider type’s data, while at the
same time allowing providers time to
adjust their business operations and
protect access to care for beneficiaries.
We also stated that we would review
and analyze the data during the CY 2012

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rulemaking cycle and, based on these
analyses, we might further refine the
payment mechanism. We refer readers
to section X.B. of the CY 2011 OPPS/
ASC final rule with comment period (75
FR 71991 through 71994) for a full
discussion.
After publication of the CY 2011
OPPS/ASC final rule with comment
period, a CMHC and one of its patients
filed an application for a preliminary
injunction, challenging the OPPS
payment rates for PHP services provided
by CMHCs in CY 2011 as adopted in the
CY 2011 OPPS/ASC final rule with
comment period (75 FR 71995). We refer
readers to the court case, Paladin Cmty.
Mental Health Ctr. v. Sebelius, 2011 WL
3102049 (W.D.Tex. 2011), aff’d, 684
F.3d 527 (5th Cir. 2012) (Paladin). The
plaintiffs in the Paladin case challenged
the agency’s use of cost data derived
from both hospitals and CMHCs in
determining the relative payment
weights for the OPPS payment rates for
PHP services furnished by CMHCs,
alleging that section 1833(t)(2)(C) of the
Act requires that such relative payment
weights be based on cost data derived
solely from hospitals. As discussed
above, section 1833(t)(2)(C) of the Act
requires CMS to ‘‘establish relative
payment weights for covered OPD
services (and any groups of such
services . . .) . . . based on . . . hospital
costs.’’ Numerous courts have held that
‘‘based on’’ does not mean ‘‘based
exclusively on.’’ On July 25, 2011, the
District Court dismissed the plaintiffs’
complaint and application for a
preliminary injunction for lack of
subject-matter jurisdiction, which the
plaintiffs appealed to the United States
Court of Appeals for the Fifth Circuit.
On June 15, 2012, the Court of Appeals
affirmed the District Court’s dismissal
for lack of subject-matter jurisdiction
and found that the Secretary’s payment
rate determinations for PHP services are
not a facial violation of a clear statutory
mandate (Paladin, 684 F.3d at 533).
For CY 2012, as discussed in the CY
2012 OPPS/ASC final rule with
comment period (76 FR 74348 through
74352), we determined the relative
payment weights for PHP services
provided by CMHCs based on data
derived solely from CMHCs and the
relative payment weights for hospitalbased PHP services based exclusively on
hospital data. The statute is reasonably
interpreted to allow the relative
payment weights for the OPPS payment
rates for PHP services provided by
CMHCs to be based solely on CMHC
data and relative payment weights for
hospital-based PHP services to be based
exclusively on hospital data. Section
1833(t)(2)(C) of the Act requires the

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Secretary to ‘‘establish relative payment
weights for covered OPD services (and
any groups of such services described in
subparagraph (B)) based on . . .
hospital costs.’’ In pertinent part,
subparagraph (B) provides that ‘‘the
Secretary may establish groups of
covered OPD services . . . so that
services classified within each group are
comparable clinically and with respect
to the use of resources.’’ In accordance
with subparagraph (B), we developed
the PHP APCs, as set forth in § 419.31
of the regulations (65 FR 18446 and
18447; 63 FR 47559 through 47562 and
47567 through 47569). As discussed
above, PHP services are grouped into
APCs.
Based on section 1833(t)(2)(C) of the
Act, we believe that the word
‘‘establish’’ can be interpreted as
applying to APCs at the inception of the
OPPS in 2000 or whenever a new APC
is added to the OPPS. In creating the
original APC for PHP services (APC
0033), we did ‘‘establish’’ the initial
relative payment weight for PHP
services, provided in both hospitalbased and CMHC-based settings, only
on the basis of hospital data.
Subsequently, from CY 2003 through CY
2008, the relative payment weights for
PHP services were based on a
combination of hospital and CMHC
data. For CY 2009, we established new
APCs for PHP services based exclusively
on hospital data. Specifically, we
adopted a two-tiered APC methodology
(in lieu of the original APC 0033) under
which CMS paid one rate for days with
3 services (APC 0172) and a different
payment rate for days with 4 or more
services (APC 0173). These two new
APCs were established using only
hospital data. For CY 2011, we added
two new APCs (APCs 0175 and 0176)
for PHP services provided by hospitals
and based the relative payment weights
for these APCs solely on hospital data.
APCs 0172 and 0173 were designated
for PHP services provided by CMHCs
and were based on a mixture of hospital
and CMHC data. As the Secretary
argued in the Paladin case, the courts
have consistently held that the phrase
‘‘based on’’ does not mean ‘‘based
exclusively on.’’ Thus, the relative
payment weights for the two APCs for
PHP services provided by CMHCs in CY
2011 were ‘‘based on’’ hospital data, no
less than the relative payment weights
for the two APCs for hospital-based PHP
services.
Although we used hospital data to
establish the relative payment weights
for APCs 0033, 0172, 0173, 0175, and
0176 for PHP services, we believe that
we have the authority to discontinue the
use of hospital data in determining the

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OPPS relative payment weights for PHP
services provided by CMHCs. Other
parts of section 1833(t)(2)(C) of the Act
make plain that the data source for the
relative payment weights is subject to
change from one period to another.
Section 1833(t)(2)(C) of the Act provides
that, in establishing the relative
payment weights, ‘‘the Secretary shall
. . . us[e] data on claims from 1996 and
us[e] data from the most recent available
cost reports.’’ We used 1996 data (in
addition to 1997 data) in determining
only the original relative payment
weights for 2000. In the ensuing
calendar year updates, we continually
used more recent cost report data.
Moreover, section 1833(t)(9)(A) of the
Act requires the Secretary to ‘‘review
not less often than annually and revise
the groups, the relative payment
weights, and the wage and other
adjustments described in paragraph (2)
to take into account changes in medical
practice, changes in technology, the
addition of new services, new cost data,
and other relevant information and
factors.’’ For purposes of the CY 2012
update, we exercised our authority
under section 1833(t)(9)(A) of the Act to
change the data source for the relative
payment weights for PHP services
provided by CMHCs based on ‘‘new cost
data, and other relevant information and
factors.’’
In the CY 2014 OPPS/ASC final rule
with comment period, we finalized our
proposal to base the relative payment
weights that underpin the OPPS APCs,
including the four PHP APCs, on
geometric mean costs rather than on the
median costs. For CY 2014, we
established the four PHP APC per diem
payment rates based on geometric mean
cost levels calculated using the most
recent claims and cost data for each
provider type. We refer readers to the
CY 2014 OPPS/ASC final rule with
comment period for a more detailed
discussion (78 FR 75047 through
75050).
B. PHP APC Update for CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41009 through 41012), for
CY 2015, we proposed to continue to
apply our established policies to
calculate the four PHP APC per diem
payment rates based on geometric mean
per diem costs using the most recent
claims and cost data for each provider
type. We computed proposed CMHC
PHP APC geometric mean per diem
costs for Level I (3 services per day) and
Level II (4 or more services per day)
PHP services using only CY 2013 CMHC
claims data and the most recent cost
data, and proposed hospital-based PHP
APC geometric mean per diem costs for

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Level I and Level II PHP services using
only CY 2013 hospital-based PHP
claims data and the most recent cost
report data. These proposed geometric
mean per diem costs were shown in
Table 44 of the CY 2015 OPPS/ASC
proposed rule (79 FR 41011). To prevent
confusion, we will refer to the per diem
information listed in Table 44 of the
proposed rule and Tables 39 and 40 of
this final rule with comment period as
the PHP APC per diem costs or the PHP
APC geometric mean per diem costs,
and the per diem information listed in
Addendum A as the PHP APC per diem
payment rates or the PHP APC
geometric mean per diem rates. The
PHP APC per diem costs are the
provider-specific costs derived from the
most recent claims and cost data. The
PHP APC per diem payment rates are
the national unadjusted payment rates
calculated after applying the OPPS
budget neutrality adjustments described
in sections II.A.4. and II.B of this final
rule with comment period.
For CY 2015, the proposed geometric
mean per diem costs for days with 3
services (Level I) were approximately
$97 for CMHCs and approximately $177
for hospital-based PHPs. The proposed
geometric mean per diem costs for days
with 4 or more services (Level II) were
approximately $115 for CMHCs and
approximately $190 for hospital-based
PHPs.
The CY 2015 proposed geometric
mean per diem costs for CMHCs
calculated under the proposed CY 2015
methodology using CY 2013 claims data
and the most recent cost data remained
relatively constant when compared to
the CY 2014 final geometric mean per
diem costs for CMHCs established in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75050), with
geometric mean per diem costs for Level
I CMHC PHP services decreasing from
approximately $99 to approximately $97
for CY 2015, and geometric mean per
diem costs for Level II CMHC PHP
services increasing from approximately
$112 to approximately $115 for CY
2015.
The CY 2015 proposed geometric
mean per diem costs for hospital-based
PHPs calculated under the proposed CY
2015 methodology using CY 2013
claims data and the most recent cost
report data showed more variation when
compared to the CY 2014 final
geometric mean per diem costs for
hospital-based PHPs, with geometric
mean per diem costs for Level I
hospital-based PHP services decreasing
from approximately $191 to
approximately $177 for CY 2015, and
geometric mean per diem costs for Level
II hospital-based PHP services

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decreasing from approximately $214 to
approximately $190 for CY 2015.
We understand that having little
variation in the PHP per diem payment
rates from one year to the next allows
providers to more easily plan their fiscal
needs. However, we believe that it is
important to base the PHP payment
rates on the claims and cost reports
submitted by each provider type so
these rates accurately reflect the cost
information for these providers. We
recognize that several factors may cause
a fluctuation in the per diem payment
rates, including direct changes to the
PHP APC per diem costs (for example,
establishing separate APCs and
associated per diem payment rates for
CMHCs and hospital-based providers
based on the provider type’s costs),
changes to the OPPS (for example,
basing the relative payment weights on
geometric mean costs), and providerdriven changes (for example, a
provider’s decision to change its mix of
services or to change its charges and
clinical practice for some services). We
refer readers to a more complete
discussion of this issue in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75049). We invited public
comments on what causes PHP costs to
fluctuate from year to year and on these
proposals.
The proposed CY 2015 geometric
mean per diem costs for the CMHC and
hospital-based PHP APCs were shown
in Table 44 of the proposed rule. We
invited public comments on these
proposals.
Comment: Several commenters
opposed the proposed CY 2015 PHP
APC per diem payment rates and raised
concerns about a continued decline in
payments for these services.
Commenters stated that the proposed
per diem payment rates were inadequate
to pay providers for furnishing these
services, and were below most program
costs for providing PHP services. Other
commenters suggested that CMS
continue to use the CY 2014 payment
rates for CY 2015. A few commenters
expressed concerns that the 15-percent
reduction in payment rates for Level II
services in hospitals dropped the
payment rates too far below providers’
costs. Another commenter asked that
CMS provide documentation to support
the proposed payment rates for PHP
services.
Response: We acknowledge the
concerns raised by the commenters who
believe that reduced payment rates for
CY 2015 will not adequately pay their
costs to provide PHP services. However,
the per diem payment rates reflect the
cost of what each provider type expends
to maintain such programs. Therefore,

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we do not believe that the final payment
rates would be inadequate to cover the
costs of providing these services.
Based on the final geometric mean per
diem costs derived from CY 2013 claims
data and the most recent cost data,
CMHCs’ geometric mean per diem costs
increased from CY 2014 to CY 2015 for
APC 0172 Level I (3 services per day)
from approximately $99 to
approximately $100, and for APC 0173
Level II (4 or more services per day)
from approximately $112 to
approximately $119. These per diem
cost increases for CMHC APCs 0172 and
0173 are 0.76 percent and 5.7 percent,
respectively. Final hospital-based PHP
per diem costs decreased by
significantly smaller amounts than the
per diem costs that were proposed, but
still declined when compared to CY
2014 geometric mean per diem costs.
The PHP APC geometric mean per diem
costs decreased for hospital-based PHPs
from CY 2014 to CY 2015 for APC 0175
Level I (3 services per day) from
approximately $191 to approximately
$186, and for APC 0176 Level II (4 or
more service per day) from
approximately $214 to approximately
$203. These final hospital-based PHP
APC geometric mean per diem cost
decreases are 2.6 percent for APC 0175
(instead of the proposed decrease of 7.1
percent) and 5.3 percent for APC 0176
(instead of the proposed decrease of
11.3 percent). We believe that the PHP
APC per diem payment rates for both
providers accurately reflect the claims
and cost data of each provider type.
Again, the resulting PHP APC per diem
payment rates and the APC payment
structures reflect the cost of what
providers expend to maintain such
programs. At this time, we cannot
establish payment rates that do not
accurately reflect the current claims and
cost data. For these reasons, we are not
suspending implementation of the CY
2015 PHP APC per diem payment rates
for CMHCs and hospital-based PHPs.
The PHP APC per diem payment rates
are directly related to the accuracy of
the claims and cost data submitted by
providers. Therefore, it is imperative
that providers submit accurate claims
and cost data in order for the payment
rates to accurately reflect the providers’
costs.
Regarding the documentation
supporting the proposed PHP per diem
payment rates, for each calendar year
update, we explain how the PHP APC
per diem payment rates are calculated
in a proposed rule and a final rule. The
industry is welcome to comment during
the rulemaking process. We also make
available to the public the OPPS PHP
limited data set (LDS) and the OPPS

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66903

LDS, which we discussed in the CY
2015 OPPS/ASC proposed rule (79 FR
40931). The OPPS PHP LDS can be used
to recreate the PHP cost estimates and,
when used in conjunction with the
OPPS LDS, can be used to recreate the
PHP APC payment rates. Both of these
files are available twice a year, once for
the proposed rule and again for the final
rule. The LDSs are available for
purchase under a CMS data use
agreement through the CMS Web sites
at: http://www.cms.gov/researchstatistics-data-and-systems/files-fororder/limiteddatasets/
HospitalOPPSPHPLDS.html and http://
www.cms.gov/research-statistics-dataand-systems/files-for-order/
limiteddatasets/HospitalOPPS.html.
Comment: A number of commenters
noted the difficulty in planning and
budgeting when payment rates for these
services fluctuate and asked that CMS
establish consistent and stable
payments. Several commenters stated
that they are committed to working with
CMS to better understand and stabilize
the payment rates for the PHP benefit,
and to determine the factors driving the
fluctuation in rates. One commenter
asserted that the wide variability in PHP
APC payment rates from year-to-year
does not allow quality providers to plan
for and to maintain services in a
predictable way. Another commenter
believed that the erratic payment rate
structure could diminish access to care
because providers may be unable to
forecast statistical and financial
parameters based on the proposed PHP
APC payment rates.
In response to our solicitation for
public comments in the proposed rule
on what the industry believed was
causing the fluctuation in payment
rates, a few commenters stated that
other types of hospitals (rehabilitation,
long-term acute care, and inpatient
psychiatric facilities) are now providing
PHP-like services, and questioned
whether the cost structure of these
facilities could be distorting PHP APC
payment rates. Another commenter
stated that as providers move away from
PHPs and toward other mental health
care options, the sample size used in
calculating payment rates is smaller.
The commenter further stated that
volumes of services in a few areas could
take on greater influence in the
calculations and affect costs, creating
instability in the PHP APC payment
rates and difficulty in planning.
A few commenters mentioned that
their PHPs had not experienced
significant operational or clinical
protocol changes, and no changes in the
personnel delivering the mix of services
that would support a reduction in the

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geometric mean per diem costs. Several
commenters stated that almost one-third
of the proposed PHP APC payment rate
reduction could be explained by the
budget neutrality adjustment, which
disproportionately affects PHPs, and
which, for CY 2015, may have led to
payment rates that are less than the
geometric mean per diem costs.
A few commenters cited a study that
they had a contractor conduct to
investigate the fluctuations. The
commenters stated that the study results
did not suggest that the tiered payments,
the use of a geometric mean versus a
median methodology, the different
payments by site of service, or providerdriver factors, such as service-mix or
patient-mix, were the source of the
problem. The commenters noted that
the study found a dramatic decrease in
the total volume of PHP services
provided, but an increase in hospitalbased PHP days, particularly for Level II
services. The commenters believed that
this shift to providing more hospitalbased PHP services has partially offset
the decline in CMHC PHP days and may
have caused PHP costs to fluctuate. The
commenters suggested several areas for
potential future study, including the
shift of services from CMHCs to
hospital-based PHPs, a different of mix
of providers within the hospital
category, other types of hospitals newly
offering PHP services, volume, and the
size of hospitals and of PHPs.
Response: We acknowledge the
difficulties in planning and budgeting
that can occur when payments fluctuate,
or when payment rates decline.
However, we are continuing to pay for
PHP services based on provider data.
We also believe that changes in payment
rates from one year to the next are
appropriate in a payment system that is
annually updated to more accurately
estimate the cost of a service upon
which the relative payment weights are
based. We continue to believe that
payment rates for PHP services have
fluctuated from year to year based on a
variety of factors, including direct
changes to the PHP APC per diem
payment rate, and changes to the OPPS.
Over the past several years, we have
made changes to the OPPS methodology
for calculating PHP APC per diem
payment rates to more accurately align
the payments with costs. The changes
have included establishing two PHP
APC payment tiers, establishing
separate APCs and associated per diem
payment rates for CMHCs and hospitalbased providers based on each
provider’s costs, and basing payments
on the geometric mean costs rather than
on median costs.

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In addition, the OPPS is a budget
neutral payment system and, as a result,
changes in the relative payment weights
associated with certain services may
affect those of other services in the
payment system. Furthermore, providerdriven changes, such as a provider’s
decision to change its mix of services or
to change its charges and clinical
practice for some services, may cause
fluctuations in the per diem payment
rates. We provided a detailed discussion
of possible reasons for the fluctuation in
the rates in the CY 2015 OPPS/ASC
proposed rule (79 FR 41012) and in
section VIII.B. of this final rule with
comment period.
We appreciate the commenters’
providing possible reasons for
fluctuations or declines in the payment
rates. While several providers noted that
their operations have not changed to
support a decline in payments, we
reiterate that our payment rates are
based upon claims and cost data
submitted to us by providers and,
therefore, reflect the cost of what
providers expend to maintain such
programs. We also acknowledge the
variables raised by the commenters that
could cause the payment rate
fluctuations and the study that several
commenters had commissioned to look
into PHP payments. We are unable to
comment directly on the study results
because we are not certain of the
detailed methods used for this study.
However, we appreciate the areas of
potential future study suggested by
commenters, and will take them into
consideration in future analyses.
Comment: Many commenters stated
that the methodology for calculating
payment rates was ‘‘flawed and
illogical’’ and asked CMS to reexamine
the methodology to determine why
payment rates are declining. The
commenters suggested that CMS
consider other methods for paying for
PHP services, such as removing PHP
services from APC group assignments
and creating PHPs under an
independent payment status, such as is
done under the home health benefit.
The commenters suggested that CMS
establish a base payment rate for PHP
services at a higher level than the
current mean cost, and annually adjust
the base rate by an inflation factor.
A few commenters supported the twotiered payment methodology. However,
the commenters suggested using only
hospital-based data, which was
implemented in CY 2009. Some
commenters disagreed with CMS paying
PHPs differently by site of service. One
commenter disputed CMS’ assertion
that CMHCs generally provide fewer
PHP services in a day. The commenter

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stated that claims information indicates
that CMHCs submit a greater percentage
of their claims for 4 or more services per
day. The commenter added that CMS
does not collect wage data on CMHCs in
its costs reports. Several commenters
did not support continued use of the CY
2014 policy, which uses the geometric
mean per diem costs to calculate PHP
payment rates.
Many commenters suggested other
alternatives to the current payment
system, such as developing oversight
strategies for poorly performing CMHCs
if their performance suggests a high risk
of fraud, and allowing top performing
CMHCs to admit patients into intensive
outpatient programs similarly structured
as PHPs. One commenter noted that
some hospital-based providers are
moving away from PHPs and providing
programs that are structured similarly to
a PHP, but are not Medicare-certified
PHPs (that is, providing several
individual mental health services in a
day that would be similar to a PHP, but
providers are not enrolled as a PHP).
The commenter stated that the programs
similar to PHPs would require fewer
services and be subject to fewer
regulatory requirements (for example,
no certification or recertification, no
physical examination requirement, and
no minimum attendance mandate), and
yet have similar payment rates as those
established for PHPs. The commenter
suggested that CMS require that these
programs bill for furnishing these
services under the mental health
services composite APC under the
OPPS, with payment aligned with how
commercial insurers pay for these
services. The commenter also suggested
that CMS consider policy levers to ease
regulatory requirements for
administering PHPs.
Response: The OPPS successfully
pays for outpatient services provided,
such as and including partial
hospitalization services, and we
disagree that the system is flawed and
illogical. This system bases payment on
the geometric mean costs of providing
the service or services using provider
data from claims and cost reports. As
discussed above, we believe this system
provides appropriate payment for
partial hospitalization services based on
provider costs.
Sections 1833(t)(2) and 1833(t)(9) of
the Act set forth the requirements for
establishing and adjusting the OPPS
payment rates, including the PHP
payment rates. As such, we are directed
to pay for these services under the OPPS
(which uses APCs) and may not remove
these PHP services from the OPPS and
pay for them separately (such as by
establishing a base rate and annually

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adjusting it for inflation). The estimated
costs of the PHP APCs are based on the
most updated cost and claims data. The
OPPS conversion factor used to
calculate payments for those PHP APCs
is updated by a market basket each year.
While we continuously examine ways
in which the data process could be
improved, we also welcome and
appreciate public comment with regard
to potential improvements. Similarly,
we appreciate the meaningful comments
that stakeholders provided regarding
ways that the cost modeling process
could be more accurate or methods to
extract more appropriate data from the
claims available for OPPS cost
modeling. For a more detailed
discussion of the OPPS ratesetting
process, including PHP payments, we
refer readers to the CY 2015 OPPS Final
Rule Claims Accounting document,
available on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html.
Click on the link for ‘‘Hospital
Outpatient Regulations and Notices’’,
then on the link to the CY 2015 OPPS
final rule, and then on the CY2015
OPPS Claims Accounting document.
With respect to the commenters’
request to return to the two-tiered
payment methodology calculated using
only hospital-based data that was
implemented in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68688 through 68693), we refer
commenters to the CY 2011 OPPS/ASC
final rule with comment period (75 FR
71991 through 71994). Because the cost
of providing PHP services differs
significantly by site of service, in CY
2011, we implemented differing PHP
payment rates for hospital-based PHPs
and CMHCs. We added two new APCs
(APCs 0175 and 0176) for PHP services
provided by hospitals, and based the
relative payment weights for these APCs
solely on hospital data. APCs 0172 and
0173 were designated for PHP services
provided by CMHCs and were based on
a blend of CMHC and hospital data. We
calculate the PHP APC per diem
payment rates based on the data
provided for each type of provider in
order to pay for services. The resulting
PHP APC per diem payment rates reflect
the cost of what providers expend to
maintain such programs based on data
provided by these types of providers,
which we believe is an improvement
over the two-tiered payment
methodology calculated using only
hospital-based data.
In regard to the commenters’ concerns
regarding the use of geometric mean
rather than the median, in the CY 2013
OPPS/ASC final rule with comment

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period, we established the geometric
mean rather than the median as the
measure upon which to base the relative
payment weights that underpin the
OPPS APCs, including the four PHP
APCs (77 FR 68406 to 68412). The CY
2015 PHP APC per diem payment rates
are based on geometric mean costs.
While a few commenters disagreed with
our use of geometric mean costs, we
believe that the use of geometric mean
costs rather than median costs
represents an improvement to our cost
estimation process. As we stated in the
CY 2013 OPPS/ASC final rule with
comment period (77 FR 68409), we
believe that including outlier
observations in developing the relative
payment weights and capturing the full
range of service costs lead to more
accurate relative payment weights. In
addition to better incorporating those
cost values that surround the median
and, therefore, describing a broader
range of cost patterns, basing the
relative payment weight on geometric
mean costs also may promote better
stability in the payment system by
making OPPS payments more reflective
of the range of costs associated with
providing services. Further, applying
the geometric mean to the PHP APCs
helps ensure that the relativity of the
OPPS payment weights is properly
aligned. We do not believe that paying
for some services based on median
costs, while using geometric mean costs
for other services is appropriate or
equitable.
We believe that paying providers
using the four PHP APC per diem
payment rates based on the
methodologies described above supports
continued access to the PHP benefit,
while also providing appropriate
payment based on the unique cost
structures of CMHCs and hospital-based
PHPs. We also believe that each of these
policies enables us to continue our
responsible stewardship of the Medicare
Trust Fund by more accurately
matching payments with costs. For a
full discussion of each of these policies
implemented in prior rulemaking,
including details on the rationales, we
refer readers to the above-mentioned
final rules with comment period, which
are available on the CMS OPPS Web site
at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalOutpatientPPS/HospitalOutpatient-Regulations-andNotices.html.
In response to the commenters’
concerns regarding CMS’ statement that
CMHCs provide fewer services in a day,
as stated in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75047 through 75050), we are

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calculating the payment rates for PHP
services based on the claims and cost
data submitted by providers. The
updated data used for calculating
payments for this CY 2015 OPPS/ASC
final rule with comment period indicate
that CMHCs do indeed have a greater
percentage of PHP days with 4 or more
services, compared to hospital-based
PHPs (94.6 percent of days compared to
88.3 percent of days, respectively).
However, in spite of their providing a
greater percentage of days with 4 or
more services, our updated cost data
continue to show that CMHC costs per
day are lower than those of hospitalbased PHPs.
In response to the question about
wage data, CMHCs are required to
include wage data for their staff on their
cost reports, with certain exceptions.
We direct readers to Medicare’s cost
reporting instructions for CMHCs that
are available online in the Provider
Reimbursement Manual, Part 2, Chapter
18 on the CMS Web site at: http://
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/PaperBased-Manuals-Items/CMS0
21935.html?DLPage=1&DLSort=0&DL
SortDir=ascending.
With respect to the suggestion that
CMS develop oversight strategies for
poor performing CMHCs with conduct
that suggests potential fraud, we already
have oversight strategies in place for
providers that operate in a questionable
manner. For example, MACs perform
medical reviews of certain PHP claims,
and PHP providers with claims that
present ongoing concerns may have
their claims placed on prepayment
review. In some cases, CMHC and
hospital-based PHP payments may be
suspended or a CMHC’s or hospital’s
billing privileges may be revoked. Our
Office of Financial Management (OFM)
has Recovery Audit Contractors (RACs),
which regularly identify and collect
overpayments from Medicare providers.
Additionally, the Center for Program
Integrity (CPI) and Zone Program
Integrity Contractors (ZPICs) investigate
potential fraud, waste, and abuse across
the Medicare program, including
potential concerns within CMHCs.
Finally, the Office of Inspector General
(OIG) and other law enforcement
agencies continue in their efforts to
address fraud and abuse throughout the
Medicare program, including
questionable billing for partial
hospitalization services.
With respect to the commenters’
request to allow top performing CMHCs
to admit beneficiaries who require
partial hospitalization services into
outpatient programs that are structured
similarly to PHPs, Medicare covers and

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pays for reasonable and necessary PHP
services provided by hospitals and
CMHCs under the OPPS. While some
private insurers and some State
Medicaid programs recognize other
types of intensive outpatient mental
health programs as a distinct benefit like
PHP services, the Medicare program
does not. However, hospitals may
provide and bill for individual services
that make up various other mental
health programs.
Because all Medicare outpatient
mental health services are capped at the
hospital-based Level II PHP per diem
payment rate, from a payment
standpoint, it does not matter how many
of these individual services are billed to
Medicare because payment will never
exceed the hospital-based Level II PHP
per diem payment rate. However,
CMHCs may only be paid for partial
hospitalization services under the
OPPS.
We are constantly monitoring the
OPPS in search of potential refinements
that would improve the accuracy and
stability of the payment system. We are
unclear about the policy changes that
the commenters suggested that we make
regarding easing the regulatory
requirements for administering PHPs.
Some of the PHP requirements are set
forth in the statute. For example,
physician certification and
recertification requirements for PHP
services are set forth in section
1835(a)(2)(F) of the Act and would
require Congressional legislation to
change. However, if providers have
suggestions for specific policy changes
to improve PHP operations while
safeguarding access to PHP services and
paying accurately for these services, we
welcome those suggestions during
rulemaking or through other dialogue
with the industry.
Comment: Many commenters
described the key role that PHPs play in
the continuum of care for patients with
mental health issues. A number of
commenters stated that if CMS moved
forward with the proposed payment
rates, much-needed PHP programs
would struggle to remain financially
viable. Multiple commenters believed
that additional reductions in payments
for CY 2015 would limit the ability of
hospitals and CMHCs to provide these
vital psychiatric services, reducing
capacity or leading to closures,
especially in rural areas, and thereby
reducing access to care for Medicare
patients. Several commenters noted
that, as access to PHP services
decreases, the decreases could lead to
patients not receiving any services or to
patients receiving services that are not
appropriate for their needs; to use of

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more expensive inpatient psychiatric
services; or to use of already stressed
emergency departments. One
commenter believed that CMS was
concerned about the potential for
hospital-based PHP closures, but not
about CMHC closures.
Response: In response to commenters’
concern about reduced PHP payment
rates leading to decreased capacity and
PHP closures, thereby reducing access
to care and further eroding the viability
of the safety net system, we emphasize
again that the resulting PHP APC per
diem payment rates for CY 2015 reflect
the costs of what providers expend to
maintain PHP programs. Therefore, it
continues to be unclear to us why
reduced PHP payment rates would lead
to reduced capacity or program or
business closures. As noted previously,
the final CY 2015 per diem costs
increased for CMHCs compared to CY
2014, and decreased less than proposed
for hospital-based PHPs. As we stated in
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74350), the
closure of PHPs may be due to any
number of reasons, such as poor
business management or marketing
decisions, competition, oversaturation
of certain geographic areas, and Federal
and State fraud and abuse efforts, among
others. It does not directly follow that
closure could be due to reduced per
diem payment rates alone, especially
when these per diem payment rates
reflect the costs of PHP providers as
stated in claims and cost data.
In response to the commenters’
concerns that further reduction in the
CMHC and hospital-based PHP APC per
diem payment amounts could further
erode the viability of the safety net
system and make it more difficult for
patients to receive needed mental health
services, we take such concerns
seriously for both CMHCs and hospitalbased PHPs. We will continue to
monitor facility closings and openings
for both rural and urban areas to make
sure that access issues do not exist. We
also remain steadfast in our concern
regarding access to care for all
beneficiaries, while also providing
appropriate payments for such care.
A PHP is not the only program in
which a Medicare beneficiary is able to
receive needed mental health care.
Access to other forms of mental health
services is also available. Although not
equivalent to a PHP, Medicare provides
payment for outpatient mental health
services in addition to PHP services.
Many beneficiaries in need of mental
health treatment receive other
outpatient services generally from
hospital programs that are available
nationwide.

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Comment: Many commenters
suggested that future payment rates be
tied to quality criteria. One commenter
recommended a payment system that
rewards individual providers for
outstanding quality and outcomes while
keeping costs under control, and
suggested that CMS use value-based
purchasing rather than ‘‘antiquated cost
reimbursement-based purchasing.’’ One
commenter suggested that CMS conduct
an analysis to determine what quality
PHP care entails in terms of costs and
staffing, rather than basing payment
rates on reported costs.
Response: We responded to a similar
public comment in the CY 2013 OPPS/
ASC final rule with comment period (77
FR 68410 through 68411) and refer
readers to a summary of that comment
and our response. Sections 1833(t)(2)
and 1833(t)(9) of the Act set forth the
requirements for establishing and
adjusting OPPS rates, which include
PHP rates. Section 1833(t)(17) of the Act
authorizes the Hospital OQR Program,
which applies a payment reduction to
subsection (d) hospitals that fail to meet
program requirements. In the CY 2015
OPPS/ASC proposed rule (79 FR 41040),
we considered future inclusion of, and
requested comments on, the following
quality measures addressing PHP issues
that would apply in the hospital
outpatient setting: (1) 30-Day
Readmissions; (2) Group Therapy; and
(3) No Individual Therapy. We refer
readers to section XIII. of this final rule
with comment period for a more
detailed discussion of PHP measures
considered for inclusion in the Hospital
OQR Program in future years. The
Hospital OQR Program does not apply
to CMHCs. Further, currently, there is
no statutory language explicitly
authorizing a value-based purchasing
program for PHPs. With respect to the
suggestion of conducting an analysis to
determine what quality PHP care entails
in terms of costs and staffing, we will
take the suggestion into consideration in
future analyses.
We do not consider the OPPS, the
system under which PHPs are paid, to
be ‘‘antiquated.’’ Rather, we find the
OPPS to be a robust system, which
aligns payments with provider costs. As
noted previously, we regularly monitor
the OPPS and, in recent years, have
made changes to further improve the
system’s ability to pay accurately for
services provided.
Comment: Many commenters noted
that they provide services to Medicare
beneficiaries which they cannot bill for
on their claims. The services cited by
the commenters included, for example:
Assisting patients in finding appropriate
housing; accessing other health care

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services; obtaining medications;
working through issues with family
members; accessing transportation to
medical and other appointments;
assisting with information and
appointments with Social Security;
answering Medicare questions;
accessing food banks and food stamps;
obtaining eye and dental services; and
integrating highly volatile and anxious
patients into the milieu without
upsetting the environment. Commenters
stated that, currently, there is no way to
show through the billing process that
these events take place because there are
no billing codes that capture these
activities.
Response: Section 1861(ff) of the Act
and 42 CFR 410.43 describe the items
and services included in partial
hospitalization services. As set forth in
these sections, partial hospitalization
services generally consist of a variety of
group, individual, and family
psychotherapy sessions, supplemented
with occupational therapy, the services
of social workers, trained psychiatric
nurses, and other staff trained to work
with psychiatric patients, drugs and
biologicals furnished for therapeutic
purposes that cannot be selfadministered, diagnostic services,
education and training, and certain
activity therapies designed to stabilize
an acute episode of mental illness.
Section 1861(ff)(2)(I) of the Act
explicitly excludes meals and
transportation from the items and
services included in partial
hospitalization services. The PHP APC
per diem payment rate is the bundled
payment for partial hospitalization
services. Only the items and services
specifically identified in the statute and
regulations are considered partial
hospitalization services. All other items
and services are not paid as part of
partial hospitalization services.
Comment: A number of commenters
asked that CMS have a dialogue with
the PHP industry, and that the public
comments on the proposed rule be
directly addressed by CMS in an open
forum where ideas could be
cooperatively shared.
Response: We maintain positive
working relationships with various
industry leaders representing both
CMHCs and hospital-based PHP
providers with whom we have
consistently met over the years to
discuss industry concerns and ideas.
These relationships have provided
significant and valuable input regarding
PHP ratesetting. We also hold Hospital
Outpatient Open Door Forum calls
monthly, in which all individuals are
welcome to participate and/or submit
questions regarding specific issues,

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including questions related to PHPs.
Furthermore, we initiate rulemaking
annually, through which we receive
public comments on proposals set forth
in a proposed rule, and we respond to
those comments in a final rule. All
individuals are provided an opportunity
to comment, and we give consideration
to each comment that we receive. Given
the relationships that we have
established with various industry
leaders and the various means for us to
receive comments and
recommendations, we believe that we
receive adequate input regarding PHP
ratesetting and take that input into
consideration when establishing the
PHP per diem payment amounts. We
continue to welcome any input and
information that the industry is willing
to provide.
Comment: Several commenters
requested a better understanding of the
Program for Evaluating Payment
Patterns Electronic Report (PEPPER), the
areas of risk it has identified, how the
PEPPER fits into fraud and abuse efforts,
and how the PEPPER fits into the
benefit in general, and indicated that
this information might be helpful to
providers. The commenters expressed
concern regarding various areas of risk
cited by the PEPPER, including ‘‘No
individual therapy.’’ The commenter
stated that although most providers
furnish individual therapy, it is often
not documented or billed as it is not
included in the local coverage
determinations (LCDs).
Response: The PEPPER is a data
report that contains statistics for each
PHP area identified nationally to be at
risk for improper payment (referred to
in the report as ‘‘target areas’’). Each
PEPPER contains a single PHP
provider’s claims data statistics,
obtained from claims submitted to the
MAC for these target areas. PEPPER
does not identify the presence of
improper payments, but it can be used
by the provider as a guide for auditing
and monitoring efforts. A provider can
use the PEPPER to compare its claims
data over time to identify areas of
potential concern and to identify
changes in billing practices. When a
provider is sent a PEPPER, the report
includes a user’s guide, which describes
the PEPPER and the target areas, among
other things, and provides contact
information for additional questions or
information. Additional information on
the PEPPER, including training and
resources, is available at the PEPPER
Web site at: http://pepper
resources.org/.
Regarding ‘‘individual therapy,’’
which is one area of risk that the
PEPPER is assessing, individual therapy

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is a partial hospitalization service. For
a review of the partial hospitalization
services, we refer readers to section
1861(ff)(2)(A) of the Act and our
regulations at 42 CFR 410.43(a)(4)(i). We
expect that providers would furnish
individual therapy services as one of the
services provided within a PHP.
Comment: One commenter noted that
new Medicare conditions of
participation (CoPs) are about to become
effective for CMHCs, and stated that
most CMHCs are unaware of them. One
commenter noted that complying with
the new CoPs would increase its costs.
The commenter also stated that, under
a provision of the Affordable Care Act
that became effective October 1, 2014,
providers need to be aware that a CMHC
must provide at least 40 percent of its
items and services to individuals who
are not eligible for benefits under
Medicare.
Response: The Conditions of
Participation for Community Mental
Health Centers final rule (78 FR 64604,
October 29, 2013) established, for the
first time, CoPs that CMHCs must meet
in order to participate in the Medicare
program. The CMHC CoPs are codified
in 42 CFR Part 485, Subpart J, and
became effective on October 29, 2014.
Prior to the issuance of this final rule,
on June 17, 2011, CMS issued a
proposed rule (76 FR 35684) outlining
the CoPs for Medicare-certified CMHCs.
The proposed rule was open to public
comment until August 16, 2011. Also,
CMS issued press releases and fact
sheets on the CoPs. CMS also has been
working with trade organizations and
the States to inform providers about the
CoPs and the implementation date.
Therefore, we believe that all CMHCs
should be aware of these new
requirements. More information on the
CoPs for CMHCs can be found at 42 CFR
Part 485, and through the link to the
final rule at: http://www.gpo.gov/fdsys/
pkg/FR-2013-10-29/pdf/2013-24056.pdf.
The proposed rule can be accessed
through the following link on the Web
site found at: http://www.gpo.gov/fdsys/
pkg/FR-2011-06-17/pdf/2011-14673.pdf.
The final rule fact sheets can be
accessed through the following link to
the Web site found at: https://
www.cms.gov/Newsroom/
MediaReleaseDatabase/Fact-sheets/
2013-Fact-sheets-items/2013-1028.html. The proposed rule press release
can be accessed through the following
link to the Web site found at: http://
www.cms.gov/Newsroom/
MediaReleaseDatabase/Press-releases/
2011-Press-releases-items/2011-0616.html. We believe that the cost
associated with the CoPs is a reasonable
and necessary business expense to

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ensure the health and safety of all
CMHC clients. In addition, effective
October 29, 2014, under 42 CFR
485.918(b)(1)(v), pursuant to section
1861(ff)(3)(B) of the Act, a CMHC must
provide at least 40 percent of its items
and services to individuals who are not
eligible for benefits under title XVIII of
the Social Security Act, as measured by
the total number of CMHC clients
treated by the CMHC for whom services
are not paid by Medicare, divided by the
total number of clients treated by the
CMHC in the applicable timeframe.
Under this requirement, a newly
enrolling or revalidating CMHC must
submit to CMS a certification statement
provided by an independent entity
(such as an accounting technician). The
document must indicate that (1) the
entity has reviewed the CMHC’s client
care data, and (2) the CMHC meets the
applicable 40 percent requirement. (We
refer readers to 78 FR 64620). CMS has
issued a change request that instructs
MACs on the processing of such CMHC
certifications. This requirement
implements the provision of the
Affordable Care Act noted by the
commenter. For more detailed
information, we refer readers to the
Conditions of Participation for
Community Mental Health Centers final
rule (78 FR 64604).
Comment: A number of commenters
noted the complexities of abiding by the
LCDs on PHPs and believed that such
LCDs are making it difficult for hospitalbased PHP providers to continue to
provide PHP services. Some
commenters questioned whether the
LCDs should be clarified or updated.
Response: LCDs issued by MACs
specify under what clinical
circumstances an item or service is
considered to be reasonable and
necessary. They are administrative and
educational tools to assist providers in
submitting correct claims for payment.

The MACs publish LCDs to provide
guidance to the public and medical
community within their jurisdictions.
The MACs develop LCDs by considering
medical literature, the advice of local
medical societies and medical
consultants, public comments, and
comments from the provider
community. LCDs must be consistent
with the statutory requirements for the
Medicare program and with Medicare
regulations and guidance. More
information about LCDs can be found in
the CMS Program Integrity Manual
(Internet only manual) 100–08, Chapter
13, available at: http://www.cms.gov/
Regulations-and-Guidance/Guidance/
Manuals/Downloads/pim83c13.pdf.
Providers with questions about LCDs
should contact their MAC for
clarification or assistance. Inquiries of a
clinical nature, such as the rationale
behind coverage or noncoverage of
certain items or services, are handled
within the Medical Review (MR)
department under the MAC responsible
for the development of the LCD.
Comment: One commenter
recommended that the annual payment
update for PHP APCs reflect the market
basket update that is applied to all other
OPPS APCs.
Response: The PHP APC payment
rates are based on the OPPS conversion
factor, to which the market basket
update is applied. Therefore, the market
basket update is applied to the PHP APC
payment rates. The OPPS conversion
factor is discussed in further detail in
section II.B. of this final rule with
comment period.
Comment: One commenter stated that
physicians are billing inpatient codes
rather than PHP codes. The commenter
believed that the change in physician
reporting may have altered what
facilities reported, which would have
reduced the number of facility fees
reported, and skewed the APC data

downward. The commenter
recommended that CMS conduct an
analysis of the frequency and type of
CPT codes that have been submitted for
PHP over the last 3 years.
Response: As stated in section
1861(ff) of the Act and 42 CFR 410.43,
payment for partial hospitalization
services generally represents the
provider’s overhead costs, support staff,
some drugs and the services of some
nurses, clinical social workers, and
occupational therapists, whose
professional services are considered to
be partial hospitalization services for
which payment is made to the provider.
Physician services that meet the
requirements of 42 CFR 415.102(a) are
separately covered and not paid as part
of partial hospitalization services.
Therefore, we do not use physician
claims in developing the PHP APC
geometric mean per diem costs and it is
unclear to us how physician billing
would impact PHP APC payment rates.
Regarding the recommendation that
CMS conduct an analysis of the
frequency and type of CPT codes that
have been submitted for PHP services
over the last 3 years, we will take the
suggestion under consideration for
future rulemaking, as we strengthen the
PHP payment structure.
In summary, after consideration of the
public comments we received, we are
finalizing our CY 2015 proposal,
without modification, to update the four
PHP APC per diem costs based on
geometric mean cost levels calculated
using the most recent claims and cost
data for each provider type. The
updated PHP APCs geometric mean per
diem costs for PHP services that we are
finalizing for CY 2015 are shown in
Table 39 and 40 below. As noted earlier
in this section, we refer readers to
Addendum A to this final rule with
comment for the final PHP APC
payment rates.

TABLE 39—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR CMHC PHP SERVICES
Geometric
mean per
diem costs

APC

Group title

0172 ..................
0173 ..................

Level I Partial Hospitalization (3 services) for CMHCs ........................................................................................
Level II Partial Hospitalization (4 or more services) for CMHCs .........................................................................

$100.15
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TABLE 40—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR HOSPITAL-BASED PHP SERVICES
Geometric
mean per
diem costs

APC

Group title

0175 ..................
0176 ..................

Level I Partial Hospitalization (3 services) for hospital-based PHPs ...................................................................
Level II Partial Hospitalization (4 or more services) for hospital-based PHPs ....................................................

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C. Separate Threshold for Outlier
Payments to CMHCs
As discussed in the CY 2004 OPPS
final rule with comment period (68 FR
63469 through 63470), after examining
the costs, charges, and outlier payments
for CMHCs, we believed that
establishing a separate OPPS outlier
policy for CMHCs would be appropriate.
A CMHC-specific outlier policy would
direct OPPS outlier payments towards
genuine cost of outlier cases, and
address situations where charges were
being artificially increased to enhance
outlier payments. We created a separate
outlier policy that would be specific to
the estimated costs and OPPS payments
provided to CMHCs. We note that, in
the CY 2009 OPPS/ASC final rule with
comment period, we established an
outlier reconciliation policy to
comprehensively address charging
aberrations related to OPPS outlier
payments (73 FR 68594 through 68599).
Therefore, beginning in CY 2004, we
designated a portion of the estimated
OPPS outlier target amount specifically
for CMHCs, consistent with the
percentage of projected payments to
CMHCs under the OPPS each year,
excluding outlier payments, and
established a separate outlier threshold
for CMHCs.
The separate outlier threshold for
CMHCs resulted in $1.8 million in
outlier payments to CMHCs in CY 2004,
and $0.5 million in outlier payments to
CMHCs in CY 2005. In contrast, in CY
2003, more than $30 million was paid
to CMHCs in outlier payments. We
believe that this difference in outlier
payments indicates that the separate
outlier threshold for CMHCs has been
successful in keeping outlier payments
to CMHCs in line with the percentage of
OPPS payments made to CMHCs.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41012), we proposed to
continue designating a portion of the
estimated 1.0 percent outlier target
amount specifically for CMHCs,
consistent with the percentage of
projected payments to CMHCs under the
OPPS in CY 2015, excluding outlier
payments. CMHCs are projected to
receive 0.03 percent of total OPPS
payments in CY 2015, excluding outlier
payments. Therefore, we proposed to
designate 0.47 percent of the estimated
1.0 percent outlier target amount for
CMHCs, and establish a threshold to
achieve that level of outlier payments.
Based on our simulations of CMHC
payments for CY 2015, in the CY 2015
OPPS/ASC proposed rule, we proposed
to continue to set the threshold for CY
2015 at 3.40 times the highest CMHC
PHP APC payment rate (that is, APC

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0173 (Level II Partial Hospitalization))
(79 FR 41012). We stated that we
continue to believe that this approach
would neutralize the impact of inflated
CMHC charges on outlier payments and
better target outlier payments to those
truly exceptionally high-cost cases that
might otherwise limit beneficiary
access. In addition, we proposed to
continue to apply the same outlier
payment percentage that applies to
hospitals. Therefore, for CY 2015, we
proposed to continue to pay 50 percent
of CMHC per diem costs over the
threshold. In section II.G. of the CY
2015 OPPS/ASC proposed rule (79 FR
41012), for the hospital outpatient
outlier payment policy, we proposed to
set a dollar threshold in addition to an
APC multiplier threshold. Because the
PHP APCs are the only APCs for which
CMHCs may receive payment under the
OPPS, we would not expect to redirect
outlier payments by imposing a dollar
threshold. Therefore, we did not
propose to set a dollar threshold for
CMHC outlier payments.
In summary, in the CY 2015 OPPS/
ASC proposed rule, we proposed to
establish that if a CMHC’s cost for
partial hospitalization services, paid
under either APC 0172 or APC 0173,
exceeds 3.40 times the payment rate for
APC 0173, the outlier payment would
be calculated as 50 percent of the
amount by which the cost exceeds 3.40
times the APC 0173 payment rate. We
invited public comments on these
proposals.
We did not receive any public
comments regarding our proposed
outlier policy. Therefore, we are
finalizing our CY 2015 proposal to set
a separate outlier threshold for CMHCs.
As discussed in section II.G. of this final
rule with comment period, using more
recent data for this final rule with
comment period, we set the target for
hospital outpatient outlier payments at
1.00 percent of total estimated OPPS
payments. We allocated a portion of the
1.00 percent, an amount equal to 0.65
percent of outlier payments, or 0.0065
percent of total estimated OPPS
payments, to CMHCs for PHP outlier
payments. For CY 2015, as proposed, we
are setting the CMHC outlier threshold
at 3.40 multiplied by the APC 0173
payment rate and the CY 2015 outlier
percentage applicable to costs in excess
of the threshold at 50 percent. In other
words, if a CMHC’s cost for partial
hospitalization services paid under
either APC 0172 or APC 0173 exceeds
3.40 times the payment rate for APC
0173, the outlier payment will be
calculated as 50 percent of the amount
by which the cost exceeds 3.40 times
the APC 0173 payment rate.

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66909

IX. Procedures That Will Be Paid Only
as Inpatient Procedures
A. Background
We refer readers to the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74352 through 74353) for
a full historical discussion of our
longstanding policies on how we
identify procedures that are typically
provided only in an inpatient setting
(referred to as the inpatient list) and,
therefore, will not be paid by Medicare
under the OPPS; and on the criteria that
we use to review the inpatient list each
year to determine whether or not any
procedures should be removed from the
list.
B. Changes to the Inpatient List
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41012 through 41013), for
the CY 2015 OPPS, we proposed to use
the same methodology (described in the
November 15, 2004 final rule with
comment period (69 FR 65835)) of
reviewing the current list of procedures
on the inpatient list to identify any
procedures that may be removed from
the list. The established criteria upon
which we make such a determination
are as follows:
1. Most outpatient departments are
equipped to provide the services to the
Medicare population.
2. The simplest procedure described
by the code may be performed in most
outpatient departments.
3. The procedure is related to codes
that we have already removed from the
inpatient-only list.
4. A determination is made that the
procedure is being performed in
numerous hospitals on an outpatient
basis.
5. A determination is made that the
procedure can be appropriately and
safely performed in an ASC, and is on
the list of approved ASC procedures or
has been proposed by us for addition to
the ASC list.
Using this methodology, we did not
identify any procedures that potentially
could be removed from the inpatient list
for CY 2015. Therefore, we proposed to
not remove any procedures from the
inpatient list for CY 2015.
After our annual review of APCs and
code assignments as required by section
1833(t)(9) of the Act and further clinical
review performed by CMS medical
officers, we proposed to add CPT code
22222 (Osteotomy of spine, including
discectomy, anterior approach, single
vertebral segment; thoracic) to the CY
2015 inpatient list.
The complete list of codes that we
proposed to be paid by Medicare in CY
2015 only as inpatient procedures was

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included as Addendum E to the
proposed rule (which is available via
the Internet on the CMS Web site).
Comment: Several commenters
supported CMS’ proposal to add CPT
code 22222 to the inpatient list.
Response: We appreciate the
commenters’ support.
Comment: Several commenters
requested that CMS remove CPT codes
0312T (Vagus nerve blocking therapy
(morbid obesity); laparoscopic
implantation of neurostimulator
electrode array, anterior and posterior
vagal trunks adjacent to esophagogastric
junction (EGJ), with implantation of
pulse generator, includes programming);
43771 (Laparoscopy, surgical, gastric
restrictive procedure; revision of
adjustable gastric restrictive device
component only); 43772 (Laparoscopy,
surgical, gastric restrictive procedure;
removal of adjustable gastric restrictive
device component only); 43773
(Laparoscopy, surgical, gastric
restrictive procedure; removal and
revision of adjustable gastric restrictive
device component only); 43774
(Laparoscopy, surgical, gastric
restrictive procedure; removal of
adjustable gastric restrictive device and
subcutaneous port components); 54411
(Removal and replacement of a multicomponent inflatable penile prosthesis
through an infected field at the same
operative session); and 54417 (Removal
and replacement of a non-inflatable
(semi-rigid) or inflatable (self-contained)
penile prosthesis through an infected
field at the same operative session) from
the CY 2015 inpatient list based on their
own experience, specialty society
recommendation, or designation of a
procedure as safe in the outpatient
setting under one of the many clinical
guidelines available.
Response: We reevaluated data on
CPT codes 0312T, 43771, 43772, 43773,
43774, 54411, and 54417 using recent
utilization data and further clinical
review performed by CMS’ medical
advisors. As a result of the reevaluation,
we have determined that these
procedures can be safely performed only
in the inpatient setting. We are not
removing them from the inpatient list
for CY 2015.
Comment: Some commenters
requested that CPT code 63044
(Laminotomy (hemilaminectomy), with
decompression of nerve root(s),
including partial facetectomy,
foraminotomy and/or excision of
herniated intervertebral disc,
reexploration, single interspace; each
additional lumbar interspace) be
removed from the inpatient list.
Response: We reevaluated data on
CPT code 63044 using recent utilization

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data and further clinical review
performed by CMS medical advisors. As
a result of the reevaluation, we agree
with the commenters that this
procedure can be safely performed in
the outpatient setting. In addition, as a
result of our reevaluation, we believe
that CPT code 63043 (Laminotomy
(hemilaminectomy), with
decompression of nerve root(s),
including partial facetectomy,
foraminotomy and/or excision of
herniated intervertebral disc,
reexploration, single interspace; each
additional cervical interspace) can be
safely performed in the outpatient
setting. Therefore, we are removing CPT
codes 63043 and 63044 from the
inpatient list. Because CPT codes 63043
and 63044 are add-on codes, they are
being assigned status indicator ‘‘N’’ for
CY 2015.
Comment: Other commenters urged
CMS to continue reviewing its inpatient
only policy in light of ongoing changes
in delivery systems and procedural
safety and technological advances.
Response: We agree with the
commenters and will continue to review
the inpatient only policy.
After consideration of the public
comments we received, we are
finalizing our proposals for the inpatient
only list, with modifications. We are
removing CPT codes 63043 and 63044
from the inpatient list and adding CPT
code 22222 (Osteotomy of spine,
including discectomy, anterior
approach, single vertebral segment;
thoracic) to the CY 2015 inpatient list.
The complete list of codes that will be
paid by Medicare in CY 2015 only as
inpatient procedures is included as
Addendum E to this final rule with
comment period (which is available via
the Internet on the CMS Web site.
X. Nonrecurring Policy Changes:
Collecting Data on Services Furnished
in Off-Campus Provider-Based
Departments of Hospitals
As we discussed in the CY 2014
OPPS/ASC proposed rule and final rule
with comment period (78 FR 43626 and
78 FR 75061) and in the CY 2014
Medicare Physician Fee Schedule
(MPFS) proposed rule and final rule
with comment period (78 FR 43301 and
78 FR 74427), in recent years, the
research literature and popular press
have documented the increased trend
toward hospital acquisition of physician
practices, integration of those practices
as a department of the hospital, and the
resultant increase in the delivery of
physicians’ services in a hospital
setting. When a Medicare beneficiary
receives outpatient services in a
hospital, the total payment amount for

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outpatient services made by Medicare is
generally higher than the total payment
amount made by Medicare when a
physician furnishes those same services
in a freestanding clinic or in a
physicians’ office.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41013), we stated that we
continue to seek a better understanding
of how the growing trend toward
hospital acquisition of physicians’
offices and subsequent treatment of
those locations as off-campus providerbased departments (PBDs) of hospitals
affects payments under the MPFS and
the OPPS, as well as beneficiary costsharing obligations. We also noted that
MedPAC continues to question the
appropriateness of increased Medicare
payment and beneficiary cost-sharing
when physicians’ offices become
hospital outpatient departments and to
recommend that Medicare pay selected
hospital outpatient services at MPFS
rates (MedPAC March 2012 and June
2013 Report to Congress). In order to
understand how this trend is affecting
Medicare, we need information on the
extent to which this shift is occurring.
To that end, during the CY 2014 OPPS/
ASC rulemaking cycle, we sought public
comment regarding the best method for
collecting information and data that
would allow us to analyze the
frequency, type, and payment for
physicians’ and outpatient hospital
services furnished in off-campus PBDs
of hospitals (78 FR 75061 through 75062
and 78 FR 74427 through 74428). In
response to our solicitation, we received
many detailed public comments.
However, the commenters did not
present a consensus opinion regarding
whether this data collection was
advisable or which data collection
method would be preferable. Based on
our analysis of the public comments we
received, we proposed for the CY 2015
OPPS/ASC proposed rule that the most
efficient and equitable means of
gathering this important information
across two different payment systems
would be to create a HCPCS modifier to
be reported with every code for
physicians’ services and outpatient
hospital services furnished in an offcampus PBD of a hospital on both the
CMS–1500 claim form for physicians’
services and the UB–04 form (CMS
Form 1450) for hospital outpatient
services. We noted that a main provider
may treat an off-campus facility as
provider-based if certain requirements
in 42 CFR 413.65 are satisfied, and we
define a ‘‘campus’’ at 42 CFR
413.65(a)(2) to be the physical area
immediately adjacent to the provider’s
main buildings, other areas and

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
structures that are not strictly
contiguous to the main buildings but are
located within 250 yards of the main
buildings, and any other areas
determined on an individual case basis,
by the CMS regional office, to be part of
the provider’s campus.
Section 220(a)(1) of the Protecting
Access to Medicare Act of 2014 (Pub. L.
113–93) added a new subparagraph (M)
under section 1848(c)(2) of the Act that
granted CMS the authority to engage in
data collection to support valuation of
services paid under the MPFS. In the CY
2015 OPPS/ASC proposed rule, we
indicated that we are seeking more
information on the frequency and type
of services furnished in PBDs under this
authority to improve the accuracy of
MPFS practice expense payments for
services furnished in off-campus PBDs.
We discussed this issue in more detail
in the CY 2015 MPFS proposed rule (79
FR 40333). In that discussion, we noted
our concerns that our current MPFS
practice expense methodology primarily
distinguishes between the resources
involved in furnishing services in two
sites of service: the nonfacility setting
and the facility setting. As more
physician practices become hospitalbased and are treated as off-campus
PBDs, we believe it is important to
develop an understanding of which
practice expense costs typically are
incurred by the physicians and
practitioners in the setting, which are
incurred by the hospital, and whether
the facility and nonfacility site-ofservice differentials adequately account
for the typical resource costs, given
these new ownership arrangements.
To understand how this trend is
affecting Medicare, including the
accuracy of payments made through the
MPFS, we stated in the proposed rule
that we need to develop data to assess
the extent to which this shift toward
hospital-based physician practices is
occurring. Therefore, in the CY 2015
OPPS/ASC proposed rule (79 FR 41013),
we proposed to collect information on
the type and frequency of physicians’
services and outpatient hospital services
furnished in off-campus PBDs beginning
January 1, 2015, in accordance with our
authority under section 1848(c)(2)(M) of
the Act (as added by section 220(a) of
Pub. L. 113–93). As noted above, we
proposed to create a HCPCS modifier
that is to be reported with every code for
physicians’ services and outpatient
hospital services furnished in an offcampus PBD of a hospital. Under the
proposal, the modifier would be
reported on both the CMS–1500 claim
form for physicians’ services and the
UB–04 form (CMS Form 1450) for
hospital outpatient services. In the

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proposed rule (79 FR 41013), we sought
additional public comments on whether
or not the use of a modifier code is the
best mechanism for collecting this
service-level data in the hospital
outpatient department.
Comment: Many commenters agreed
on the need to collect information on
the frequency, type, and payment of
services furnished in off-campus PBDs
of hospitals. However, several
commenters expressed concern that the
HCPCS modifier would create
additional administrative burden for
providers. Many of these commenters
stated that the new modifier would
require significant changes to hospitals’
billing systems, including a separate
chargemaster for outpatient off-campus
PBDs and training for staff on how to
use the new modifier. Many of these
commenters suggested that CMS should
re-propose a detailed data collection
methodology, test it with providers,
make adjustments, and allow additional
time for implementation. One
commenter suggested that CMS
withdraw the current proposal and ask
the Advisory Panel on Hospital
Outpatient Payment (HOP Panel) to
develop a proposal for data collection.
Response: While we understand the
commenters’ concerns about the
additional administrative burden of
reporting a new HCPCS modifier, we
have weighed the burden of reporting
the modifier for each service against the
benefit of having data that will allow us
to obtain and assess accurate
information on the type and frequency
of physicians’ services and outpatient
hospital services furnished in offcampus PBDs. We do not believe that
the modifier is excessively burdensome
for providers to report. This is
especially the case because, under
current rules, when billing for services,
providers must know where services are
performed in order to accurately
complete value code 78 of an outpatient
claim or the service location portion of
a professional claim. However, as
discussed later in this section, we agree
that a place of service (POS) code on the
professional claim allows for the same
type of data collection as a modifier on
the hospital claim and would be less
burdensome than the modifier for
practitioner billing. We discuss the
timeframe for implementation later in
this section. With respect to bringing
this proposal to the HOP Panel, we note
that such a proposal is outside the scope
of the HOP Panel, which is generally
charged with advising Medicare on the
clinical integrity of APCs and their
associate relative payment weights. The
proposed modifier is for collecting data
and, as structured, does not affect APCs

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66911

and their associated relative payment
weights. Therefore, it would not be
appropriate to solicit HOP Panel
discussion or recommendations on this
proposal on data collection.
Comment: Some commenters who
were concerned about the
administrative burden of the new
HCPCS modifier suggested several
alternative methods for CMS to collect
data on services furnished in off-campus
PBDs. Several of these commenters
recommended that CMS consider the
establishment of a new POS code for
professional claims, or for both
professional claims and hospital claims,
because they believed this approach
would be less administratively
burdensome than attaching a modifier to
each service reported on the claim that
was furnished in an off-campus PBD.
Some commenters preferred identifying
services furnished in off-campus PBDs
on the Medicare cost report (CMS–
2552–10). Some commenters suggested
using provider numbers and addresses
to identify off-campus PBDs, or
changing the provider enrollment
process to be able to track these data.
Other commenters suggested creating a
new bill type to track outpatient
hospital services furnished in offcampus PBDs.
Commenters generally recommended
that CMS choose the least
administratively burdensome approach
that would ensure accurate data
collection, but did not necessarily agree
on what approach would optimally
achieve that result. Some commenters
believed that a HCPCS modifier would
more clearly identify specific services
furnished at off-campus PBDs, and
would provide better information about
the type and level of care furnished.
Some commenters believed that a
HCPCS modifier would be the least
administratively burdensome approach
because hospitals and physicians
already report a number of claims-based
modifiers. Other commenters argued
that additional modifiers would
increase administrative burden because
this approach would increase the
modifiers that would need to be
considered when billing.
Response: With respect to creating a
new POS code to obtain data on services
furnished in off-campus PBDs of a
hospital, we note that POS codes are
only reported on professional claims
and are not included on hospital claims.
Therefore, a POS code could not be
easily implemented for hospital claims.
However, POS codes are already
required to be reported on every
professional claim and POS 22 is
currently used to report when
physicians’ services are furnished in an

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outpatient hospital department. (More
information on existing POS codes is
available on the CMS Web site at:
http://www.cms.gov/Medicare/Coding/
place-of-service-codes/Place_of_
Service_Code_Set.html.)
Although we considered proposing a
new POS code for professional claims to
collect data on services furnished in the
off-campus PBD setting, we ultimately
did not do so, in part because we were
aware that previous Government
Accountability Office and Office of the
Inspector General reports (October 2004,
A–05–04–0025; January 2005, A–06–04–
00046; July 2010, A–01–09–00503;
September 2011, A–01–10–00516) have
noted frequent inaccuracies in the
reporting of POS codes. In addition, at
the time the proposed rule was
developed, we had concerns that using
a POS code to report this information
might not give us the reliable data we
are looking to collect, especially if such
data were to be crosswalked with
hospital claims for the same service,
because the hospital claim would have
a modifier, not a POS code. However,
we have been persuaded by public
comments suggesting that use of a POS
code would be less administratively
burdensome on professional claims than
use of a modifier. Specifically, because
a POS code is already required on every
professional claim, we believe that
creating a new POS code to distinguish
outpatient hospital services that are
furnished on-campus versus off-campus
would require less staff training and
education than would use of a modifier
on the professional claim. In addition,
professional claims only have space for
four modifiers. While a very small
percentage of professional claims have
four modifiers, required use of an
additional modifier for every
professional claim could lead to more
occurrences where there would not be
space for all applicable modifiers.
Unlike hospital claims, we note that a
new professional claim is required
whenever the place of service changes.
That is, even if the same practitioner
treats the same patient on the same day
in the office and hospital, the services
furnished in the office setting must be
submitted on one claim with the POS 11
(Office) code, while those furnished in
the outpatient hospital department
would be submitted on a separate claim
with the POS 22 (Outpatient Hospital)
code (we note that the POS 22 code will
be changing under the final policy).
Likewise, if a new POS code were to be
created for an off-campus PBD setting, a
separate claim for services furnished in
that setting would be required relative
to a claim for services furnished on the

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main campus by the same practitioner
to the same patient on the same day.
Based on public comments and after
further consultation with Medicare
billing experts, we believe that the use
of the POS code on professional claims
would be no less accurate than the use
of a modifier on professional claims in
identifying services furnished in offcampus PBDs. In addition, we believe
that the POS code would be less
administratively burdensome for
practitioners billing using the
professional claim because a POS code
is already required for every
professional claim.
With respect to adding new fields to
existing claim forms or creating a new
bill type, we do not believe that this
data collection warrants these measures.
We believe that those changes would
create greater administrative burden
than a HCPCS modifier or POS code,
especially because providers are already
accustomed to using modifiers and POS
codes. Revisions to the claim form to
add new fields or an additional bill type
would create significant administrative
burden to revise claims processing
systems and educate providers, which
we believe is not necessary, given the
availability of a modifier and POS
codes. Although providers may not be
familiar with this new modifier or any
new POS code; because these types of
codes already exist generally for
hospital and professional claims,
providers and suppliers should already
have an understanding of these types of
codes and how to apply them. Finally,
we do not believe that expansions to the
claim form or use of a new bill type
would provide us with detailed
information on exactly which services
were furnished in an off-campus PBD
versus those furnished on the main
campus when those services are
furnished on the same day.
We also do not believe that we could
accurately determine which services are
furnished at off-campus PBDs using
currently available national provider
identifier (NPI) and facility address
data. Hospitals are required to report the
9-digit zip code indicating where a
service was furnished for purposes of
paying properly for physician and
anesthesia services paid under the
MPFS when that zip code differs from
the master address for the hospital on
file in CMS claims systems (Pub. 100–
04, Transmittal 1681, February 13,
2009). However, the billing zip code for
the hospital main campus could be
broad enough to incorporate on and offcampus PBDs. Further, a zip code
reported in value code 78 does not
allow CMS to distinguish between
services furnished in different locations

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on the same date. Therefore, we do not
believe that a comparison of the zip
code captured in value code 78 and the
main campus zip code is sufficiently
precise.
Finally, while we considered the
suggestion that CMS use currently
reported Medicare hospital cost report
(CMS–2552–10) data to identify services
furnished at off-campus PBDs, we note
that although aggregate data on services
furnished in different settings must be
reported through the appropriate cost
center, we would not be able to obtain
the service-specific level of detail that
we would be able to obtain from claims
data.
We will take under consideration the
suggestion that CMS create a way for
hospitals to report their acquisition of
off-campus PBDs through the
enrollment process, although this
information, as currently reported, like
many of the suggestions above, would
not allow us to know exactly which
services are furnished in off-campus
PBDs and which services are furnished
on the hospital’s main campus when a
hospital provides both on the same day.
Comment: Commenters noted that the
proposed modifier would not allow
CMS to know the precise location of the
off-campus PBDs for billed services or
when services are furnished at different
off-campus PBD locations in the same
day.
Response: We agree that neither the
proposed modifier nor a POS code
provides precise information on the
specific location of each off-campus
PBD for each furnished service.
However, we believe having information
on the type and frequency of services
furnished at all off-campus locations
will assist CMS in better understanding
the distribution of services between oncampus locations and off-campus
locations.
Comment: MedPAC believed there
may be some value in collecting data on
services furnished in off-campus PBDs
to validate the accuracy of site-ofservice reporting when the physician’s
office is off-campus but bills as an
outpatient department. MedPAC
indicated that any data collection effort
should not prevent the development of
policies to align payment rates across
settings. MedPAC encouraged CMS to
seek legislative authority to set equal
payment rates across settings for
evaluation and management office visits
and other select services.
Response: We thank MedPAC for its
support of our data collection efforts to
better inform the frequency and types of
services that are being furnished in offcampus PBDs.

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Comment: Many commenters
suggested that providers would not be
able to accurately apply the new
modifier by the January 1, 2015
implementation timeline and
recommended a 1-year delay before
providers would be required to apply
the modifier to services furnished at offcampus PBDs. Some commenters
requested only a 6-month delay in
implementation. Commenters indicated
that significant revisions to internal
billing processes would require
additional time to implement.
Response: Although we believe that
the customary January 1st effective date
that applies to most policies adopted in
the final rules with comment period for
both the MPFS and the OPPS would
provide sufficient lead time, we
understand the commenters’ concerns
with the proposed timeline for
implementation, given that the new
reporting requirements may require
changes to billing systems as well as
education and training for staff.
Accordingly, although we are finalizing
our proposal to create a HCPCS modifier
for hospital services furnished in an offcampus PBD setting, we are adopting a
voluntary reporting period of the new
HCPCS modifier for 1 year. That is,
reporting the new HCPCS modifier for
services furnished at an off-campus PBD
will not be mandatory until January 1,
2016, in order to allow providers time
to make systems changes, test these
changes, and train staff on use of the
new modifier before reporting is
required. We welcome early reporting of
the modifier and believe a full year of
preparation should provide hospitals
with sufficient time to modify their
systems for accurate reporting. With
respect to the POS code for professional
claims, we will request two new POS
codes to replace POS code 22 (Hospital
Outpatient) through the POS Workgroup
and expect that it will take some time
for these new codes to be established.
Once the new POS codes are ready and
integrated into CMS claims systems,
practitioners would be required to use
them, as applicable. More information
on the availability of the new POS codes
will be forthcoming in subregulatory
guidance. However, we do not expect
the new POS codes to be available prior
to July 1, 2015. There will be no
voluntary reporting period of the POS
codes for applicable professional claims
because each professional claim
requires a POS code in order to be
accepted by Medicare. However, we do
not view this to be problematic because
we intend to give prior notice on the
POS coding changes and, as many of the
commenters noted, because

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practitioners are already accustomed to
using a POS code on every claim they
submit.
Comment: Many commenters
expressed concern that this data
collection would eventually lead to
equalizing payment for similar services
furnished in the nonfacility setting and
the off-campus PBD setting. Several
commenters noted that the trend of
hospitals acquiring physician practices
is due to efforts to better integrate care
delivery and suggested that CMS weigh
the benefits of care integration when
deciding payment changes. Some
commenters suggested that CMS use
these data to equalize payment for
similar services between these two
settings. These commenters suggested
that there is little difference in costs and
care between the two settings that
would warrant the difference in
payment. Several of these commenters
highlighted beneficiary cost-sharing as
one reason for site-neutral payment,
noting that the total payment amount for
outpatient services is generally higher
than the total payment amount for those
same services when furnished in a
physician’s office.
Response: We appreciate these
comments. At this time, we are only
finalizing a data collection in this final
rule with comment period. We did not
propose and, therefore, are not
finalizing any adjustment to payments
furnished in the off-campus PBD setting.
Comment: One commenter noted that
the CMS proposal would not provide
additional information on how a
physician practice billed prior to
becoming an off-campus PBD, which
would be important for analyzing the
impact of this trend.
Response: We agree that
understanding physician billing
patterns prior to becoming an offcampus PBD is important in analyzing
the impact of this trend, and we will
continue to evaluate ways to analyze
claims data to gather this information.
We believe that collecting data using the
additional modifier and POS code
finalized in this final rule with
comment period will be an important
tool in furthering this analysis.
Comment: Some commenters
suggested that the term ‘‘off-campus’’ be
better defined. Commenters asked how
billing would occur for hospitals with
multiple campuses because the CMS
definition of campus references main
buildings and does not include remote
locations. The commenters maintained
that remote locations are not the same
as off-campus departments and that
remote campuses furnish both inpatient
and outpatient hospital services, in
contrast to individual hospital

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departments. The commenters argued
that these types of locations are not ones
that were formerly a physician office
practice, and furnish completely
different types of services than a
physician office. One commenter also
asked whether the modifier is intended
to cover services furnished in
freestanding emergency departments.
Response: For purposes of the
modifier and the POS codes we are
finalizing in this final rule with
comment period, we define ‘‘campus’’
using the definition at 42 CFR
413.65(a)(2) to be the physical area
immediately adjacent to the provider’s
main buildings, other areas and
structures that are not strictly
contiguous to the main buildings but are
located within 250 yards of the main
buildings, and any other areas
determined on an individual case basis,
by the CMS regional office, to be part of
the provider’s campus. Our intent is to
capture outpatient services furnished off
of the hospital’s main campus and off of
any other hospital campuses. The term
‘‘remote location of a hospital’’ is
defined at 42 CFR 413.65(a)(2). Under
these regulations, a ‘‘remote location’’
includes a hospital campus other than
the main hospital campus. Specifically,
a remote location is ‘‘a facility or an
organization that is either created by, or
acquired by, a hospital that is a main
provider for the purpose of furnishing
inpatient hospital services under the
name, ownership, and financial and
administrative control of the main
provider. . . .’’ Therefore, we agree
with the commenter that remote
locations of the hospital should not be
required to report the modifier nor
should practitioners be required to
report the off-campus POS code in these
settings. This term ‘‘remote location’’
does not include ‘‘satellite’’ locations of
a hospital, but because a satellite facility
is one that provides inpatient services in
a building also used by another hospital,
or in one or more entire buildings
located on the same campus as
buildings used by another hospital, we
also are not requiring satellite facilities
to report the modifier or the POS codes.
Satellite facilities are described in the
regulations at 42 CFR 412.22(h).
Accordingly, reporting of the modifier
and POS codes would be required for
outpatient services furnished in PBDs
beyond 250 yards from the main
campus of the hospital, excluding
services furnished in a remote location
or satellite facility of the hospital.
We also appreciate the comment on
emergency departments. We do not
intend for hospitals to report the new
modifier for services furnished in an
emergency department that is provider-

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based to a hospital. We note that there
is already a POS code for the emergency
department, POS 23 (emergency roomhospital), and this code would continue
to be used for emergency department
services. That is, the new off-campus
PBD code that will be created for
purposes of this data collection would
not apply to hospital emergency
department services. Hospitals that have
questions about which departments are
considered to be ‘‘off-campus PBDs’’
should review additional guidance that
CMS releases on this policy and work
with the appropriate CMS regional
office if individual, specific questions
remain.
Comment: Several commenters asked
for clarification on when to report the
modifier for services furnished both oncampus and off-campus on the same
day. The commenters provided several
scenarios of visits and diagnostic
services furnished on the same day.
Response: The location where the
service is actually furnished would
dictate the use of the modifier,
regardless of where the order for
services initiated. We expect the
modifier and the POS code for offcampus PBDs to be reported in locations
in which the hospital expends resources
to furnish the service in an off-campus
PBD setting. For example, hospitals
would not report the modifier for a
diagnostic test that is ordered by a
practitioner who is located in an offcampus PBD when the service is
actually furnished on the main campus
of the hospital. This issue does not
impact use of the POS codes because
practitioners submit a different claim for
each POS where they furnish services
for a specific beneficiary.
Comment: A few commenters asked
for clarification on whether their entity
constitutes a PBD.
Response: PBDs are departments of
the hospital that meet the criteria
specified in regulations at 42 CFR
413.65. Questions about PBDs may be
directed to the appropriate CMS
regional office.
Comment: One commenter
recommended that CMS publish the
data it acquires through adoption of this
modifier.
Response: Data collected through the
new HCPCS modifier would be part of
the Medicare Limited Data Set and
would be available to the public for
purchase along with the remainder of
the Limited Data Set. Similarly,
professional claims data with revised
POS coding would be available as a
standard analytic file for purchase.
In summary, after consideration of the
public comments received, we are
finalizing our proposal with

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modifications. For hospital claims, we
are creating a HCPCS modifier that is to
be reported with every code for
outpatient hospital services furnished in
an off-campus PBD of a hospital. This
code will not be required to be reported
for remote locations of a hospital
defined at 42 CFR 412.65, satellite
facilities of a hospital defined at 42 CFR
412.22(h), or for services furnished in an
emergency department. This 2-digit
modifier will be added to the HCPCS
annual file as of January 1, 2015, with
the label ‘‘PO,’’ the short descriptor
‘‘Serv/proc off-campus pbd,’’ and the
long descriptor ‘‘Services, procedures
and/or surgeries furnished at off-campus
provider-based outpatient
departments.’’ Reporting of this new
modifier will be voluntary for 1 year
(CY 2015), with reporting required
beginning on January 1, 2016.
Additional instruction and provider
education will be forthcoming in
subregulatory guidance.
For professional claims, instead of
finalizing a HCPCS modifier, in
response to public comments, we will
be deleting current POS code 22
(outpatient hospital department) and
establishing two new POS codes—one
to identify outpatient services furnished
in on-campus, remote, or satellite
locations of a hospital, and one to
identify services furnished in an offcampus PBD hospital setting. We will
maintain the separate POS code 23
(Emergency room-hospital) to identify
services furnished in an emergency
department of the hospital. These new
POS codes will be required to be
reported as soon as they become
available. However, advanced notice of
the availability of these codes will be
shared publicly as soon as practicable.
XI. CY 2015 OPPS Payment Status and
Comment Indicators
A. CY 2015 OPPS Payment Status
Indicator Definitions
Payment status indicators (SIs) that
we assign to HCPCS codes and APCs
serve an important role in determining
payment for services under the OPPS.
They indicate whether a service
represented by a HCPCS code is payable
under the OPPS or another payment
system and also whether particular
OPPS policies apply to the code. The
complete list of the CY 2015 payment
status indicators and their definitions is
displayed in Addendum D1 to this final
rule with comment period, which is
available on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html. The
CY 2015 payment status indicator

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assignments for APCs and HCPCS codes
are shown in Addendum A and
Addendum B, respectively, to this final
rule with comment period, which are
available on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html. The
changes to CY 2015 payment status
indicators and their definitions are
discussed in detail below.
We note that, in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 74869 through 74888), for CY 2014,
we created a new status indicator ‘‘J1’’
to identify HCPCS codes that are paid
under a comprehensive APC. However,
because we delayed implementation of
the new comprehensive APC policy
until CY 2015, we also delayed the
effective date of payment status
indicator ‘‘J1’’ to CY 2015. A claim with
payment status indicator ‘‘J1’’ will
trigger a comprehensive APC payment
for the claim. We refer readers to section
II.A.2.e. of this final rule with comment
period for a discussion of
implementation of the new
comprehensive APC policy.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41014), for CY 2015, we
proposed to delete payment status
indicator ‘‘X’’ and to assign ancillary
services that are currently assigned
payment status indicator ‘‘X’’ to either
payment status indicator ‘‘Q1’’ or ‘‘S.’’
We also proposed to revise the
definition of payment status indicator
‘‘Q1’’ by removing payment status
indicator ‘‘X’’ from the packaging
criteria, so that codes assigned payment
status indicator ‘‘Q1’’ would be
designated as STV-packaged, rather than
STVX-packaged, because payment
status indicator ‘‘X’’ was proposed for
deletion. These proposed changes, the
public comments we received and our
responses, and our finalized policies are
discussed in section II.A.3.c.(1) of this
final rule with comment period. Section
II.A.3.c.(1) of this final rule with
comment period discusses the ancillary
services packaging policy. The ancillary
services packaging policy is the policy
that makes maintaining status indicator
‘‘X’’ no longer necessary. After
consideration of the public comments
that we received and that are discussed
in section II.A.3.c.(1) of this final rule
with comment period, we are finalizing,
without modification, our CY 2015
proposal to delete payment status
indicator ‘‘X’’ and to assign ancillary
services that are currently assigned
payment status indicator ‘‘X’’ to either
payment status indicator ‘‘Q1’’ or ‘‘S.’’
In addition, for CY 2015, we proposed
to clarify the definition of payment
status indicator ‘‘E’’ to state that

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payment status indicator ‘‘E’’ applies to
items, codes, and services in any of the
following cases:
• For which pricing is not available;
• Not covered by any Medicare
outpatient benefit category;
• Statutorily excluded by Medicare;
or
• Not reasonable and necessary.
Regarding items ‘‘for which pricing is
not available,’’ this applies to drugs and
biologicals assigned a HCPCS code but
with no available pricing information
(for example, WAC).
In reviewing the OPPS status
indicators and Addendum D1 for CY
2015, we noticed that there are a few
drugs or biologicals that are currently
assigned payment status indicator ‘‘A,’’
indicating payment under a non-OPPS
fee schedule. These drugs or biologicals
are administered infrequently in
conjunction with emergency dialysis for
patients with ESRD, but when
administered in the HOPD, they are
paid under the standard OPPS drug
payment methodology for drugs and
biologicals, that is, at ASP+6 percent
unless they are packaged. (We refer
readers to section V. of this final rule
with comment period for additional
discussion of these drugs and their
status indicators.) We proposed to
change the status indicators for these
drugs or biologicals for CY 2015 by
removing the phrase ‘‘EPO for ESRD
Patients’’ from the list of examples for
status indicator ‘‘A.’’ In addition, we
proposed to clarify the definition of
payment status indicator ‘‘A’’ by adding
the phrase ‘‘separately payable’’ to
nonimplantable prosthetic and orthotic
devices.
We did not receive any public
comments regarding our proposed
change and clarifications of the
definitions of payment status indicators
‘‘E’’ and ‘‘A.’’ Therefore, we are
finalizing our clarification and proposed
policies, without modifications, for CY
2015.
B. CY 2015 Comment Indicator
Definitions
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41014), for the CY 2015
OPPS, we proposed to use the same two
comment indicators that are in effect for
the CY 2014 OPPS.
• ‘‘CH’’—Active HCPCS code in
current and next calendar year; status
indicator and/or APC assignment have
changed or active HCPCS code that will
be discontinued at the end of the
current calendar year.
• ‘‘NI’’—New code for the next
calendar year or existing code with
substantial revision to its code
descriptor in the next calendar year as

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compared to current calendar year,
interim APC assignment; comments will
be accepted on the interim APC
assignment for the new code.
We proposed to use the ‘‘CH’’
comment indicator in the CY 2015
OPPS/ASC proposed rule (79 FR 41014)
to indicate HCPCS codes for which the
status indicator or APC assignment, or
both, are proposed for change in CY
2015 compared to their assignment as of
June 30, 2014. We believed that using
the ‘‘CH’’ indicator in the proposed rule
would facilitate the public’s review of
the changes that we proposed for CY
2015. We proposed to use the ‘‘CH’’
comment indicator in the CY 2015
OPPS/ASC final rule with comment
period to indicate HCPCS codes for
which the status indicator or APC
assignment, or both, would change in
CY 2015 compared to their assignment
as of December 31, 2014. Use of the
comment indicator ‘‘CH’’ in association
with a composite APC indicates that the
configuration of the composite APC
would be changed in the CY 2015
OPPS/ASC final rule with comment
period.
In addition, we proposed that any
existing HCPCS codes with substantial
revisions to the code descriptors for CY
2015 compared to the CY 2014
descriptors would be labeled with
comment indicator ‘‘NI’’ in Addendum
B to the CY 2015 OPPS/ASC final rule
with comment period. However, in
order to receive the comment indicator
‘‘NI,’’ the CY 2015 revision to the code
descriptor (compared to the CY 2014
descriptor) must be significant such that
the new code descriptor describes a new
service or procedure for which the
OPPS treatment may change. We use
comment indicator ‘‘NI’’ to indicate that
these HCPCS codes will be open for
comment as part of the CY 2015 OPPS/
ASC final rule with comment period. In
the CY 2015 OPPS/ASC proposed rule,
we stated that, like all codes labeled
with comment indicator ‘‘NI,’’ we
would respond to public comments and
finalize their OPPS treatment in the CY
2016 OPPS/ASC final rule with
comment period.
In accordance with our usual practice,
we proposed that CPT and Level II
HCPCS codes that are new for CY 2015
also would be labeled with comment
indicator ‘‘NI’’ in Addendum B to the
CY 2015 OPPS/ASC final rule with
comment period.
We did not receive any public
comments on the proposed use of
comment indicators for CY 2015.
We believe that the CY 2014
definitions of the OPPS comment
indicators continue to be appropriate for
CY 2015. Therefore, we are continuing

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to use those definitions without
modification for CY 2015. Only HCPCS
codes with comment indicator ‘‘NI’’ in
this CY 2015 OPPS/ASC final rule with
comment period are subject to
comment. HCPCS codes that do not
appear with comment indicator ‘‘NI’’ in
this CY 2015 OPPS/ASC final rule with
comment period will not be open to
public comment, unless we specifically
request additional comments elsewhere
in this final rule with comment period.
The definitions of the OPPS comment
indicators for CY 2015 are listed in
Addendum D2 to this final rule with
comment period, which is available on
the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html.
XII. Updates to the Ambulatory
Surgical Center (ASC) Payment System
A. Background
1. Legislative History, Statutory
Authority, and Prior Rulemaking for the
ASC Payment System
For a detailed discussion of the
legislative history and statutory
authority related to payments to ASCs
under Medicare, we refer readers to the
CY 2012 OPPS/ASC final rule with
comment period (76 FR 74377 through
74378) and the June 12, 1998 proposed
rule (63 FR 32291 through 32292). For
a discussion of prior rulemaking on the
ASC payment system, we refer readers
to the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74378
through 74379), the CY 2013 OPPS/ASC
final rule with comment period (77 FR
68434 through 68467), and the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75064 through 75090).
2. Policies Governing Changes to the
Lists of Codes and Payment Rates for
ASC Covered Surgical Procedures and
Covered Ancillary Services
Under 42 CFR 416.2 and 416.166 of
the Medicare regulations, subject to
certain exclusions, covered surgical
procedures in an ASC are surgical
procedures that are separately paid
under the OPPS, that would not be
expected to pose a significant risk to
beneficiary safety when performed in an
ASC, and for which standard medical
practice dictates that the beneficiary
would not typically be expected to
require active medical monitoring and
care at midnight following the
procedure (‘‘overnight stay’’). We
adopted this standard for defining
which surgical procedures are covered
under the ASC payment system as an
indicator of the complexity of the
procedure and its appropriateness for

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Medicare payment in ASCs. We use this
standard only for purposes of evaluating
procedures to determine whether or not
they are appropriate to be furnished to
Medicare beneficiaries in ASCs. We
define surgical procedures as those
described by Category I CPT codes in
the surgical range from 10000 through
69999, as well as those Category III CPT
codes and Level II HCPCS codes that
directly crosswalk or are clinically
similar to ASC covered surgical
procedures (72 FR 42478).
In the August 2, 2007 final rule, we
also established our policy to make
separate ASC payments for the
following ancillary items and services
when they are provided integral to ASC
covered surgical procedures: (1)
Brachytherapy sources; (2) certain
implantable items that have passthrough payment status under the
OPPS; (3) certain items and services that
we designate as contractor-priced,
including, but not limited to,
procurement of corneal tissue; (4)
certain drugs and biologicals for which
separate payment is allowed under the
OPPS; and (5) certain radiology services
for which separate payment is allowed
under the OPPS. These covered
ancillary services are specified in
§ 416.164(b) and, as stated previously,
are eligible for separate ASC payment
(72 FR 42495). Payment for ancillary
items and services that are not paid
separately under the ASC payment
system is packaged into the ASC
payment for the covered surgical
procedure.
We update the lists of, and payment
rates for, covered surgical procedures
and covered ancillary services in ASCs
in conjunction with the annual
proposed and final rulemaking process
to update the OPPS and the ASC
payment system (§ 416.173; 72 FR
42535). In addition, as discussed in
detail in section XII.B. of this final rule
with comment period, because we base
ASC payment policies for covered
surgical procedures, drugs, biologicals,
and certain other covered ancillary
services on the OPPS payment policies,
and we use quarterly change requests to
update services covered under the
OPPS, we also provide quarterly update
change requests (CRs) for ASC covered
surgical procedures and covered
ancillary services throughout the year
(January, April, July, and October). CMS
releases new Level II codes to the public
or recognizes the release of new CPT
codes by the AMA and makes these
codes effective (that is, the codes are
recognized on Medicare claims) via
these ASC quarterly update CRs. Thus,
these quarterly updates are to
implement newly created Level II

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HCPCS and Category III CPT codes for
ASC payment and to update the
payment rates for separately paid drugs
and biologicals based on the most
recently submitted ASP data. New
Category I CPT codes, except vaccine
codes, are released only once a year and,
therefore, are implemented only through
the January quarterly update. New
Category I CPT vaccine codes are
released twice a year and are
implemented through the January and
July quarterly updates. We refer readers
to Table 41 in the CY 2012 OPPS/ASC
proposed rule for the process used to
update the HCPCS and CPT codes (76
FR 42291).
In our annual updates to the ASC list
of, and payment rates for, covered
surgical procedures and covered
ancillary services, we undertake a
review of excluded surgical procedures
(including all procedures newly
proposed for removal from the OPPS
inpatient list), new procedures, and
procedures for which there is revised
coding, to identify any that we believe
meet the criteria for designation as ASC
covered surgical procedures or covered
ancillary services. Updating the lists of
ASC covered surgical procedures and
covered ancillary services, as well as
their payment rates, in association with
the annual OPPS rulemaking cycle is
particularly important because the
OPPS relative payment weights and, in
some cases, payment rates, are used as
the basis for the payment of covered
surgical procedures and covered
ancillary services under the revised ASC
payment system. This joint update
process ensures that the ASC updates
occur in a regular, predictable, and
timely manner.
B. Treatment of New Codes
1. Process for Recognizing New Category
I and Category III CPT Codes and Level
II HCPCS Codes
Category I CPT, Category III CPT, and
Level II HCPCS codes are used to report
procedures, services, items, and
supplies under the ASC payment
system. Specifically, we recognize the
following codes on ASC claims: (1)
Category I CPT codes, which describe
surgical procedures and vaccine codes;
(2) Category III CPT codes, which
describe new and emerging
technologies, services, and procedures;
and (3) Level II HCPCS codes, which are
used primarily to identify products,
supplies, temporary procedures, and
services not described by CPT codes.
We finalized a policy in the August 2,
2007 final rule to evaluate each year all
new Category I and Category III CPT
codes and Level II HCPCS codes that

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describe surgical procedures, and to
make preliminary determinations
during the annual OPPS/ASC
rulemaking process regarding whether
or not they meet the criteria for payment
in the ASC setting as covered surgical
procedures and, if so, whether or not
they are office-based procedures (72 FR
42533 through 42535). In addition, we
identify new codes as ASC covered
ancillary services based upon the final
payment policies of the revised ASC
payment system.
We have separated our discussion
below into two sections based on
whether we proposed to solicit public
comments in the CY 2015 OPPS/ASC
proposed rule (and respond to those
comments in this CY 2015 OPPS/ASC
final rule with comment period) or
whether we are soliciting public
comments in this CY 2015 OPPS/ASC
final rule with comment period (and
responding to those comments in the CY
2016 OPPS/ASC final rule with
comment period).
We note that we sought public
comment in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75067) on the new Category I and
Category III CPT and Level II HCPCS
codes that were effective January 1,
2014. We also sought public comment
in the CY 2014 OPPS/ASC final rule
with comment period on the new Level
II HCPCS codes effective October 1,
2013. These new codes, with an
effective date of October 1, 2013, or
January 1, 2014, were flagged with
comment indicator ‘‘NI’’ in Addenda
AA and BB to the CY 2014 OPPS/ASC
final rule with comment period to
indicate that we were assigning them an
interim payment status and payment
rate, if applicable, which were subject to
public comment following publication
of the CY 2014 OPPS/ASC final rule
with comment period. In the proposed
rule, we stated that we will respond to
public comments and finalize the
treatment of these codes under the ASC
payment system in this CY 2015 OPPS/
ASC final rule with comment period.
2. Treatment of New Level II HCPCS
Codes and Category III CPT Codes
Implemented in April 2014 and July
2014 for Which We Solicited Public
Comments in the CY 2015 OPPS/ASC
Proposed Rule
In the April 2014 and July 2014 CRs,
we made effective for April 1, 2014 and
July 1, 2014, respectively, a total of
seven new Level II HCPCS codes and
four new Category III CPT codes that
describe ASC covered surgical
procedures and covered ancillary
services that were not addressed in the

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CY 2014 OPPS/ASC final rule with
comment period.
In the April 2014 ASC quarterly
update (Transmittal 2927, CR 8675,
dated April 10, 2014), we added two
new surgical Level II HCPCS codes and
one new drug and biological Level II
HCPCS code to the list of covered
surgical procedures and covered
ancillary services, respectively. Table 45
of the CY 2015 OPPS/ASC proposed
rule (79 FR 41016) listed the new Level
II HCPCS codes that were implemented
April 1, 2014, along with their proposed
payment indicators for CY 2015.
In the July 2014 quarterly update
(Transmittal 2970, CR 8786, dated May
23, 2014), we added one new
brachytherapy Level II HCPCS code and
three new drug and biological Level II
HCPCS codes to the list of covered
ancillary services. Table 46 of the CY
2015 OPPS/ASC proposed rule (79 FR
41016 through 41017) listed the new
Level II HCPCS codes that were
implemented July 1, 2014 along with
their proposed payment indicators and
proposed ASC payment rates for CY
2015.
Through the July 2014 quarterly
update CR, we also implemented ASC
payment for four new Category III CPT
codes as one ASC covered surgical
procedure and three covered ancillary
services, effective July 1, 2014. These
codes were listed in Table 47 of the CY
2015 OPPS/ASC proposed rule (79 FR
41017), along with their proposed
payment indicators and proposed
payment rates for CY 2015.
The HCPCS codes listed in Table 45
of the CY 2015 OPPS/ASC proposed
rule (79 FR 41016) were included in
Addenda AA or BB to the proposed rule
(which are available via the Internet on
the CMS Web site). Because the
payment rates associated with the new
Level II HCPCS codes and Category III
CPT codes that became effective July 1,
2014 (listed in Table 46 and Table 47 of
the proposed rule (79 FR 41016 through

41017)) were not available to us in time
for incorporation into the Addenda to
the OPPS/ASC proposed rule, our
policy is to include these HCPCS codes
and their proposed payment indicators
and payment rates in the preamble to
the proposed rule but not in the
Addenda to the proposed rule. These
codes and their final payment indicators
and rates are included in the
appropriate Addendum to this CY 2015
OPPS/ASC final rule with comment
period. Therefore, the codes
implemented by the July 2014 ASC
quarterly update CR and their proposed
CY 2015 payment indicators and rates
that were displayed in Table 46 and
Table 47 of the proposed rule were not
included in Addenda AA or BB to the
proposed rule (which are available via
the Internet on the CMS Web site). The
final list of ASC covered surgical
procedures and covered ancillary
services and the associated payment
weights and payment indicators are
included in Addenda AA or BB to this
CY 2015 OPPS/ASC final rule with
comment period, consistent with our
annual update policy.
We invited public comment on these
proposed payment indicators and the
proposed payment rates for the new
Category III CPT code and Level II
HCPCS codes that were newly
recognized as ASC covered surgical
procedures or covered ancillary services
in April 2014 and July 2014 through the
quarterly update CRs, as listed in Tables
45, 46, and 47 of the CY 2015 OPPS/
ASC proposed rule (79 FR 41016
through 41017). We proposed to finalize
their payment indicators and their
payment rates in this CY 2015 OPPS/
ASC final rule with comment period.
We did not receive any public
comments regarding these proposed
ASC payment indicators. Therefore, we
are adopting as final for CY 2015 the
ASC payment indicators for the ASC
covered surgical procedures and

covered ancillary services described by
the new Level II HCPCS codes
implemented in April 2014 and July
2014 through the quarterly update CRs
as shown below, in Tables 41 and 42,
respectively.
For the new Category III CPT codes
implemented in July 2014 through the
quarterly update CR, as shown below in
Table 43, we are not finalizing the ‘‘Z2’’
payment indicator that we proposed for
CPT codes 0348T, 0349T, and 0350T.
For CY 2015, these codes will be
conditionally packaged under the OPPS
when provided with a significant
procedure (status indicator ‘‘Q1’’). With
the exception of device removal
procedures (as discussed in section
XII.D.1.b. of this final rule with
comment period), HCPCS codes that are
conditionally packaged under the OPPS
are always packaged (payment indicator
‘‘N1’’) under the ASC payment system.
Therefore, we are changing the final CY
2015 ASC payment indicator for CPT
codes 0348T, 0349T, and 350T from
‘‘Z2’’ to ‘‘N1.’’ We are adopting as final
the payment indicator proposed for CPT
code 0356T.
These new HCPCS and CPT codes
also are displayed in Addenda AA and
BB to this final rule with comment
period (which are available via the
Internet on the CMS Web site). We note
that after publication of the CY 2015
OPPS/ASC proposed rule, the CMS
HCPCS Workgroup created permanent
HCPCS J-codes for CY 2015 to replace
certain temporary HCPCS C-codes and
Q-codes made effective for CY 2014.
These permanent CY 2015 HCPCS Jcodes are listed alongside the temporary
CY 2014 HCPCS C-codes and Q-codes in
Tables 41 and 42 below. We also note
that the CMS HCPCS Workgroup created
a long descriptor for J1781 that is
slightly different from the long
descriptor listed for HCPCS code C9134
in the CY 2015 OPPS/ASC proposed
rule.

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TABLE 41—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL PROCEDURES OR COVERED ANCILLARY SERVICES
IMPLEMENTED IN APRIL 2014
CY 2014 HCPCS
code

CY 2015
HCPCS code

CY 2015 long descriptor

Final CY 2015
payment
indicator

C9739 ................
C9740 ................
C9021 ................

C9739 ...............
C9740 ...............
J9301 ................

Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants .......................
Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants .................
Injection, obinutuzumab, 10 mg ............................................................................................

G2
G2
K2

G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate.

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TABLE 42—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN JULY 2014
CY 2014 HCPCS
code

CY 2015
HCPCS code

CY 2015 long descriptor

Final CY 2015
payment
indicator

C2644 ................
C9022 ................
C9134 ................
Q9970 * .............

C2644 ...............
J1322 ................
J7181 ................
J1439 ................

Brachytherapy source, cesium-131 chloride solution, per millicurie ....................................
Injection, elosulfase alfa, 1mg ..............................................................................................
Injection, Factor XIII A-subunit, (recombinant), per iu ..........................................................
Injection, ferric carboxymaltose, 1 mg ..................................................................................

H2
K2
K2
K2

* HCPCS code Q9970 replaced HCPCS code C9441 effective July 1, 2014.
H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate.

TABLE 43—NEW CATEGORY III CPT CODES FOR COVERED SURGICAL PROCEDURES OR COVERED ANCILLARY SERVICES
IMPLEMENTED IN JULY 2014
Final CY 2015
payment
indicator

CY 2014 CPT
code

CY 2015 CPT
code

CY 2015 long descriptor

0348T ................

...........................

0349T ................

...........................

0350T ................

...........................

0356T ................

...........................

Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).
Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies), (includes
shoulder, elbow and wrist, when performed).
Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies), (includes
hip, proximal femur, knee and ankle, when performed).
Insertion of drug-eluting implant (including punctal dilation and implant removal when
performed) into lacrimal canaliculus, each.

N1
N1
N1
R2

N1 = Packaged service/item; no separate payment made.
R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight.

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3. Process for New Level II HCPCS
Codes and Category I and Category III
CPT Codes for Which We Are Soliciting
Public Comments in This CY 2015
OPPS/ASC Final Rule With Comment
Period
As has been our practice in the past,
we incorporate those new Category I
and Category III CPT codes and new
Level II HCPCS codes that are effective
January 1 in the final rule with
comment period updating the ASC
payment system for the following
calendar year. These codes are released
to the public via the CMS HCPCS (for
Level II HCPCS codes) and AMA Web
sites (for CPT codes), and also through
the January ASC quarterly update CRs.
In the past, we also have released new
Level II HCPCS codes that are effective
October 1 through the October ASC
quarterly update CRs and incorporated
these new codes in the final rule with
comment period updating the ASC
payment system for the following
calendar year. All of these codes are
flagged with comment indicator ‘‘NI’’ in
Addenda AA and BB to the OPPS/ASC
final rule with comment period to
indicate that we are assigning them an
interim payment status which is subject
to public comment. The payment
indicator and payment rate, if
applicable, for all such codes flagged
with comment indicator ‘‘NI’’ are open
to public comment in the OPPS/ASC

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final rule with comment period, and we
respond to these comments in the final
rule with comment period for the next
calendar year’s OPPS/ASC update.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41017), we proposed to
continue this process for CY 2015.
Specifically, for CY 2015, we proposed
to include in Addenda AA and BB to
the CY 2015 OPPS/ASC final rule with
comment period any new Category I and
III CPT codes effective January 1, 2015,
that would be incorporated in the
January 2015 ASC quarterly update CR
and any new Level II HCPCS codes,
effective October 1, 2014 or January 1,
2015, that would be released by CMS in
its October 2014 and January 2015 ASC
quarterly update CRs. We stated that
these codes would be flagged with
comment indicator ‘‘NI’’ in Addenda
AA and BB to this CY 2015 OPPS/ASC
final rule with comment period to
indicate that we have assigned them an
interim payment status. We also stated
that their payment indicators and
payment rates, if applicable, would be
open to public comment in this CY 2015
OPPS/ASC final rule with comment
period and would be finalized in the CY
2016 OPPS/ASC final rule with
comment period.
We did not receive any public
comments regarding this proposed
process. Therefore, for CY 2015, we are
finalizing our proposal, without
modification, to continue our

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established process for recognizing and
soliciting public comments on new
Level II HCPCS codes and Category I
and III CPT codes that become effective
on October 1, 2014, or January 1, 2015,
as described above.
C. Update to the Lists of ASC Covered
Surgical Procedures and Covered
Ancillary Services
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered
Surgical Procedures
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41017 through 41018), we
proposed to update the list of ASC
covered surgical procedures by adding
10 procedures to the list for CY 2015.
These 10 procedures were among those
excluded from the ASC list for CY 2014
because we believed they did not meet
the definition of a covered surgical
procedure based on our expectation that
they would be expected to pose a
significant risk to beneficiary safety
when performed in an ASC, or would be
expected to require active medical
monitoring and care of the beneficiary at
midnight following the procedure. We
conducted a review of all HCPCS codes
that currently are paid under the OPPS,
but not included on the ASC list of
covered surgical procedures, to
determine if changes in technology and/
or medical practice affected the clinical
appropriateness of these procedures for

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the ASC setting. We determined that
these 10 procedures would not be
expected to pose a significant risk to
beneficiary safety when performed in an
ASC, and would not be expected to
require active medical monitoring and
care of the beneficiary at midnight
following the procedure and, therefore,
we proposed to include them on the list
of ASC covered surgical procedures for
CY 2015.
The 10 procedures that we proposed
to add to the ASC list of covered
surgical procedures, including their
HCPCS code long descriptors and
proposed CY 2015 payment indicators,
were displayed in Table 48 of the CY
2015 OPPS/ASC proposed rule (79 FR
41018).
Comment: Several commenters
supported adding the 10 procedures to
the CY 2015 covered surgical
procedures list for ASCs.
Response: We thank the commenters
for their support. As indicated later in
this section, we are finalizing our
proposal to add these procedure codes
to the ASC list, in addition to two other
procedure codes recommended by
commenters.
Comment: Some commenters stated
that the APC relative weight for APC
0208 is too low for the cervical and
lumbar fusion procedures (as described
by HCPCS codes 22551, 22554, and
22612) proposed to be added to the list
of ASC covered surgical procedures, and
they urged CMS to reassign these three
procedures codes to another APC with
a higher relative weight.
Response: As discussed in detail in
section II.A.2.e. of this final rule with
comment period, we agree with the
commenters, and we are reassigning
CPT codes 22551, 22554, and 22612 to
APC 0425 for CY 2015 because the
geometric mean costs of these codes are
more similar to the geometric mean cost
of APC 0425, which has a higher
geometric mean cost than APC 0208.
Comment: Some commenters stated
that, in order to perform the procedures
proposed to be added to the ASC list of
covered surgical procedures, additional
procedure codes needed to be added to
the list because some of the proposed
additions to the list could not be
furnished without procedures described
by additional codes. Other codes were
requested to be added because they
represent procedures that are commonly
furnished in conjunction with
procedures described by the codes that
were proposed to be added.
Commenters stated that without adding
the additional codes for procedures that
must be performed in conjunction with
or are often performed along with the
proposed added procedures, these types

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of cases will continue to not be
furnished in the ASC setting.
Commenters stated that some of the
procedures described by these codes
were covered by other carriers and
could be safely performed in the ASC
setting for Medicare patients. Some
commenters believed that, because
Medicare makes facility payments for
unlisted CPT codes under the OPPS,
CMS should provide ASCs with the
same flexibility to use unlisted CPT
codes to report procedures. The list of
codes that commenters requested to be
added in addition to those that were
proposed to be added is shown in Table
44 below.

TABLE 44—PROCEDURES REQUESTED
FOR ADDITION TO THE CY 2015 LIST
OF ASC COVERED SURGICAL PROCEDURES
CY 2015
CPT/
HCPCS
codes
19307 .......
20930*** ..
20931*** ..
20936* .....
20937* .....
20938* .....
22526 .......
22527 .......
22532* .....
22533* .....
22534* .....
22552* .....
22558* .....
22585* .....
22610* .....
22633* .....
22830* .....
22840* .....
22842* .....
22845* .....
22846* .....
22849* .....
22850* .....
22851 .......
22855* .....
22856 .......
23470 .......
28805 .......
31600 .......
32551 .......
33244 .......
35471 .......
35903 .......
37191 .......
37193 .......
39400 .......
43280 .......
43281 .......
43770 .......
44180 .......
44970 .......
54332 .......
54336 .......
54535 .......
54650 .......
57120 .......

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CY 2015 short descriptor

Mast mod rad.
Sp bone algrft morsel add-on.
Sp bone algrft struct add-on.
Sp bone agrft local add-on.
Sp bone agrft morsel add-on.
Sp bone agrft struct add-on.
Idet single level.
Idet 1 or more levels.
Lat thorax spine fusion.
Lat lumbar spine fusion.
Lat thor/lumb addl seg.
Addl neck spine fusion.
Lumbar spine fusion.
Additional spinal fusion.
Thorax spine fusion.
Lumbar spine fusion combined.
Exploration of spinal fusion.
Insert spine fixation device.
Insert spine fixation device.
Insert spine fixation device.
Insert spine fixation device.
Reinsert spinal fixation.
Remove spine fixation device.
Apply spine prosth device.
Remove spine fixation device.
Cerv artific diskectomy.
Reconstruct shoulder joint.
Amputation thru metatarsal.
Incision of windpipe.
Insertion of chest tube.
Remove eltrd transven.
Repair arterial blockage.
Excision graft extremity.
Ins endovas vena cava filtr.
Rem endovas vena cava filter.
Mediastinoscopy incl biopsy.
Laparoscopy fundoplasty.
Lap paraesophag hern repair.
Lap place gastr adj device.
Lap enterolysis.
Laparoscopy appendectomy.
Revise penis/urethra.
Revise penis/urethra.
Extensive testis surgery.
Orchiopexy (fowler-stephens).
Closure of vagina.

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66919

TABLE 44—PROCEDURES REQUESTED
FOR ADDITION TO THE CY 2015 LIST
OF ASC COVERED SURGICAL PROCEDURES—Continued
CY 2015
CPT/
HCPCS
codes
57282 .......
57283 .......
57310 .......
57425 .......
58260 .......
58262 .......
58543 .......
58544 .......
58553 .......
58554 .......
58573 .......
60252 .......
60260 .......
60271 .......
63011 .......
63012 .......
63015 .......
63016 .......
63017 .......
63035 .......
63040 .......
63046 .......
63048 .......
63057 .......
63064 .......
63075 .......
63076 .......
77002****
L-codes**

CY 2015 short descriptor

Colpopexy extraperitoneal.
Colpopexy intraperitoneal.
Repair urethrovaginal lesion.
Laparoscopy surg colpopexy.
Vaginal hysterectomy.
Vag hyst including t/o.
Lsh uterus above 250 g.
Lsh w/t/o uterus above 250 g.
Laparo-vag hyst complex.
Laparo-vag hyst w/t/o compl.
Tlh w/t/o uterus over 250 g.
Removal of thyroid.
Repeat thyroid surgery.
Removal of thyroid.
Remove spine lamina 1/2 scrl.
Remove lamina/facets lumbar.
Remove spine lamina >2 crvcl.
Remove spine lamina >2 thrc.
Remove spine lamina >2 lmbr.
Spinal disk surgery add-on.
Laminotomy single cervical.
Remove spine lamina 1 thrc.
Remove spinal lamina add-on.
Decompress spine cord add-on.
Decompress spinal cord thrc.
Neck spine disk surgery.
Neck spine disk surgery.
Needle localization by xray.
(L codes for implants—plates
and screws, peek or bone,
putty—HCPCS not specified).

* CPT codes on the OPPS inpatient list for
CY 2015.
** HCPCS codes for prosthetics or prosthetic
supplies.
*** CPT codes already on the ASC list of
covered surgical procedures.
**** CPT code already on the ASC list of
covered ancillary services.

Response: We examined all of the
codes that commenters requested for
addition to the ASC list of covered
surgical procedures. Of the 75 codes
requested for addition to the ASC list,
we did not review the 19 procedures
that are reported by CPT codes that are
on the OPPS inpatient list (identified
with one asterisk in Table 44), or the
unspecified non-surgical HCPCS Lcodes (identified with two asterisks in
Table 44) because these codes are not
eligible for addition to the ASC list of
covered surgical procedures, consistent
with our final policy which is discussed
in detail in the August 2, 2007 final rule
(72 FR 42476 through 42486; 42 CFR
416.166). In addition, we did not review
the 2 procedures reported by CPT codes
that are already on the ASC list of
covered surgical procedures (identified
with three asterisks in Table 44), or the
1 procedure reported by a CPT code that
is on the ASC list of covered ancillary

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services (identified with four asterisks
in Table 44).
With respect to the remaining
procedures described by the 52 codes in
Table 44 that commenters requested be
added to the list of ASC covered
surgical procedures, we do not agree
that any of the procedures described by
these codes should be added to the list
because they do not meet our criteria for
inclusion on this list. Under 42 CFR
416.2 and 416.166, subject to certain
exclusions, covered surgical procedures
in an ASC are surgical procedures that
are separately paid under the OPPS, that
would not be expected to pose a
significant risk to beneficiary safety
when performed in an ASC, and would
not be expected to require active
medical monitoring and care of the
beneficiary at midnight following the
procedure. The criteria used under the
revised ASC payment system to identify
procedures that would be expected to
pose a significant safety risk when
performed in an ASC include, but are
not limited to, those procedures that:
Generally result in extensive blood loss;
require major or prolonged invasion of
body cavities; directly involve major
blood vessels; are generally emergent or
life threatening in nature; commonly
require systemic thrombolytic therapy;
are designated as requiring inpatient
care under § 419.22(n); can only be
reported using a CPT unlisted surgical
procedure code; or are otherwise
excluded under § 411.15 (we refer
readers to § 416.166). Procedures that do
not meet the criteria set forth in 42 CFR

416.166 would not be added to the list
of ASC covered surgical procedures.
Although the commenters asserted
that some of the procedures they were
requesting for addition to the list are as
safe as procedures already on the list,
based on our review of the procedures
listed in Table 44, we found that all of
the remaining procedures described by
the 52 codes either would be expected
to pose a threat to beneficiary safety or
would require active medical
monitoring and care of the beneficiary at
midnight following the procedure.
Specifically, we found that prevailing
medical practice called for inpatient
hospital stays for beneficiaries
undergoing many of the procedures and
that some of the procedures directly
involve major blood vessels and/or may
result in extensive blood loss. Therefore,
we are not including any of the
procedures suggested by commenters on
the list of ASC covered surgical
procedures for CY 2015.
Regarding the comment about
unlisted codes being noncovered in the
ASC, we have a longstanding ASC
policy that all unlisted codes are
noncovered in the ASC because we are
unable to determine (due to the
nondescript nature of unlisted codes) if
a procedure that would be reported with
an unlisted code would not be expected
to pose a significant risk to beneficiary
safety when performed in an ASC, and
would not be expected to require active
medical monitoring and care of the
beneficiary at midnight following the
procedure. We continue to believe it
would not be appropriate to provide

ASC payment for unlisted CPT codes in
the surgical range, even if payment may
be provided under the OPPS. ASCs do
not possess the breadth and intensity of
services that hospitals must maintain to
care for patients of higher acuity, and
we would have no way of knowing what
specific procedures reported by unlisted
CPT codes were provided to patients in
order to ensure that they are safe for
ASC performance.
After consideration of the public
comments we received, we are
finalizing the addition of the 10 HCPCS
codes that we proposed to the list of
ASC covered surgical procedures for CY
2015. As addressed in section XII.C.1.e.
of this final rule with comment period,
we also are adding CPT code 63044
(Laminotomy (hemilaminectomy), with
decompression of nerve root(s),
including partial facetectomy,
foraminotomy and/or excision of
herniated intervertebral disc,
reexploration, single interspace; each
additional lumbar interspace) to the
ASC list of covered surgical procedures
for CY 2015. This code was removed
from the OPPS inpatient-only list in
response to comments and, after review
of the procedure described by this code,
we believe that the procedure could be
safely performed in an ASC and would
not require active medical monitoring
and care of the beneficiary at midnight
following the procedure. The procedure
codes, descriptors, and payment
indicators for these 11 new covered
surgical procedures for CY 2015 are
displayed in Table 45 below.

TABLE 45—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015
CY 2015 long descriptor

22551 ................

Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below c2.
Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for
decompression); cervical below c2.
Arthrodesis, posterior or posterolateral technique, single level; lumbar (with lateral transverse technique,
when performed).
Arthrodesis, posterior or posterolateral technique, single level; each additional vertebral segment (list separately in addition to code for primary procedure).
Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy,
foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, cervical.
Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy,
foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, lumbar.
Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy,
foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; lumbar.
Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy,
foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; each additional lumbar interspace (list separately in addition to code for primary procedure).
Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord,
cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; cervical.
Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord,
cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; lumbar.

22554 ................
22612 ................
22614 ................
63020 ................
63030 ................
63042 ................
63044 ................
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Final CY 2015
ASC payment
indicator

CY 2015
HCPCS code

63045 ................

63047 ................

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TABLE 45—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015—Continued

Final CY 2015
ASC payment
indicator

CY 2015
HCPCS code

CY 2015 long descriptor

63056 ................

Transpedicular approach with decompression of spinal cord, equina and/or nerve root(s) (eg, herniated
intervertebral disc), single segment; lumbar (including transfacet, or lateral extraforaminal approach) (eg,
far lateral herniated intervertebral disc).

b. Covered Surgical Procedures
Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule,
we finalized our policy to designate as
‘‘office-based’’ those procedures that are
added to the ASC list of covered
surgical procedures in CY 2008 or later
years that we determine are performed
predominantly (more than 50 percent of
the time) in physicians’ offices based on
consideration of the most recent
available volume and utilization data for
each individual procedure code and/or,
if appropriate, the clinical
characteristics, utilization, and volume
of related codes. In that rule, we also
finalized our policy to exempt all
procedures on the CY 2007 ASC list
from application of the office-based
classification (72 FR 42512). The
procedures that were added to the ASC
list of covered surgical procedures
beginning in CY 2008 that we
determined were office-based were
identified in Addendum AA to that rule
by payment indicator ‘‘P2’’ (Officebased surgical procedure added to ASC
list in CY 2008 or later with MPFS
nonfacility PE RVUs; payment based on
OPPS relative payment weight); ‘‘P3’’
(Office-based surgical procedures added
to ASC list in CY 2008 or later with
MPFS nonfacility PE RVUs; payment
based on MPFS nonfacility PE RVUs); or
‘‘R2’’ (Office-based surgical procedure
added to ASC list in CY 2008 or later
without MPFS nonfacility PE RVUs;
payment based on OPPS relative
payment weight), depending on whether
we estimated the procedure would be
paid according to the standard ASC
payment methodology based on its
OPPS relative payment weight or at the
MPFS nonfacility PE RVU-based
amount.

Consistent with our final policy to
annually review and update the list of
surgical procedures eligible for payment
in ASCs, each year we identify surgical
procedures as either temporarily officebased (these are new procedure codes
with little or no utilization data that our
medical advisors have determined are
clinically similar to other procedures
that are permanently office-based),
permanently office-based, or nonofficebased, after taking into account updated
volume and utilization data.
(2) Changes for CY 2015 to Covered
Surgical Procedures Designated as
Office-Based
In developing the CY 2015 OPPS/ASC
proposed rule, we followed our policy
to annually review and update the
surgical procedures for which ASC
payment is made and to identify new
procedures that may be appropriate for
ASC payment, including their potential
designation as office-based. We
reviewed CY 2013 volume and
utilization data and the clinical
characteristics for all surgical
procedures that are assigned payment
indicator ‘‘G2’’ (Non-office-based
surgical procedure added in CY 2008 or
later; payment based on OPPS relative
payment weight) in CY 2014, as well as
for those procedures assigned one of the
temporary office-based payment
indicators, specifically ‘‘P2,’’ ‘‘P3,’’ or
‘‘R2’’ in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75071
through 75075).
Our review of the CY 2013 volume
and utilization data resulted in our
identification of two covered surgical
procedures, CPT codes 10022 and 19296
that we believe meet the criteria for
designation as office-based. The data
indicate these procedures are performed
more than 50 percent of the time in

G2

physicians’ offices and our medical
advisors believe the services are of a
level of complexity consistent with
other procedures performed routinely in
physicians’ offices. The two CPT codes
we proposed to permanently designate
as office-based were listed in Table 49
of the CY 2015 OPPS/ASC proposed
rule (79 FR 41019).
We invited public comment on this
proposal.
Comment: One commenter stated that
CPT code 10022 was performed only 51
percent of the time in the office setting
and recommended that it temporarily be
designated as office-based rather than
permanently.
Response: As stated in the proposed
rule and above, we designate new
procedure codes as temporarily officebased in situations where we have little
to no utilization data on these
procedures and our Medical Officers
have determined these procedures are
clinically similar to other procedures
that are permanently office-based. For
CPT code 10022, we have enough
volume and utilization data from CY
2013 to indicate that CPT code 10022 is
performed more than 50 percent of the
time in physicians’ offices and our
medical advisors believe this service is
of a level of complexity consistent with
other procedures performed routinely in
physicians’ offices. Therefore, we
believe that this code should be
designated as permanently office-based.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to designate the
procedures described by CPT codes
10022 and 19296 as permanently officebased for CY 2015, as set forth in Table
46 below.

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TABLE 46—ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 2015
CY 2015 CPT
code

CY 2015 long descriptor

CY 2014 ASC
payment
indicator

Proposed CY
2015 ASC
payment
indicator*

Final CY 2015
ASC payment
indicator*

10022 ............

Fine needle aspiration; with imaging guidance ................................................

G2

P3

P3

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TABLE 46—ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY
2015—Continued
CY 2015 CPT
code

CY 2015 Long descriptor

19296 ............

Placement of radiotherapy afterloading expandable catheter (single or multichannel) into the breast for interstitial radioelement application following
partial mastectomy, includes imaging guidance; on date separate from
partial mastectomy.

CY 2014 ASC
payment
indicator

Proposed CY
2015 ASC
payment
indicator*

Final CY 2015
ASC payment
indicator*

G2

P2

P2

* Final payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS
final rates effective January 1, 2015. We note that these payment indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April l, 2015 will be included in
the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer readers to the CY 2015
MPFS final rule with comment period.

We also reviewed CY 2013 volume
and utilization data and other
information for the 8 procedures
finalized for temporary office-based
status in Tables 52 and 53 in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 75074 through
75075). Among these eight procedures,
there were very few claims data or no
claims data for six procedures: CPT
code 0099T (Implantation of
intrastromal corneal ring segments);
CPT code 0299T (Extracorporeal shock
wave for integumentary wound healing,
high energy, including topical
application and dressing care; initial
wound); CPT code C9800 (Dermal
injection procedure(s) for facial
lipodystrophy syndrome (LDS) and
provision of Radiesse or Sculptra
dermal filler, including all items and
supplies); CPT code 10030 (Imageguided fluid collection drainage by
catheter (eg, abscess, hematoma, seroma,
lymphocele, cyst), soft tissue (eg,
extremity, abdominal wall, neck),
percutaneous); CPT code 64617
(Chemodenervation of muscle(s); larynx,
unilateral, percutaneous (eg, for
spasmodic dysphonia), includes
guidance by needle electromyography,
when performed); and CPT code 67229
(Treatment of extensive or progressive
retinopathy, one or more sessions;
preterm infant (less than 37 weeks
gestation at birth), performed from birth
up to 1 year of age (eg, retinopathy of
prematurity), photocoagulation or
cryotherapy). Consequently, we
proposed to maintain their temporary
office-based designations for CY 2015.

We proposed that one procedure that
has a temporary office-based
designation for CY 2014, CPT code
0226T (Anoscopy, high resolution
(HRA) (with magnification and chemical
agent enhancement); diagnostic,
including collection of specimen(s) by
brushing or washing when performed),
be packaged under the OPPS for CY
2015. Our policy is to package covered
surgical procedures under the ASC
payment system if these procedures are
packaged under the OPPS.
Consequently, we proposed to package,
and assign payment indicator ‘‘N1’’ to,
this covered surgical procedure code in
CY 2015.
HCPCS code 0124T (Conjunctival
incision with posterior extrascleral
placement of pharmacological agent
(does not include supply of
medication)) was finalized for
temporary office-based status in the CY
2014 OPPS/ASC final rule with
comment period. However, this code
was deleted effective December 31,
2013.
The proposed CY 2015 payment
indicator designations for the 7
remaining procedures that were
temporarily designated as office-based
in CY 2014 were displayed in Table 50
of the CY 2015 OPPS/ASC proposed
rule (79 FR 41019). The procedures for
which the proposed office-based
designations for CY 2015 are temporary
also were indicated by asterisks in
Addendum AA to the proposed rule
(which is available via the Internet on
the CMS Web site).

We invited public comment on these
proposals.
Comment: One commenter stated that
because CPT code 10030 is new for CY
2014, it should not be designated as
temporarily office-based at this time.
Response: As stated in the 2014
OPPS/ASC final rule with comment
period (78 FR 75074 through 75075),
after reviewing the clinical
characteristics, utilization, and volume
of related codes, we determined that the
procedures described by CPT code
10030 would be predominantly
performed in physicians’ offices.
However, because we had no utilization
data for CPT code 10030, we made the
office-based designation temporary
rather than permanent for CY 2014. As
discussed above, we continue to have
no claims data for this procedure so we
are continuing to designate the
procedures described by CPT code
10030 as temporarily office-based. We
will reevaluate CPT code 10030 in next
year’s rulemaking.
After consideration of the public
comment we received, for CY 2015 we
are finalizing our proposal without
modification to designate six procedures
listed in Table 47 below as temporarily
office-based. HCPCS code 0226T
(Anoscopy, high resolution (HRA) (with
magnification and chemical agent
enhancement); diagnostic, including
collection of specimen(s) by brushing or
washing when performed) was included
in our proposal for CY 2015. However,
this code will be deleted effective
December 31, 2014.

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 47—CY 2015 PAYMENT INDICATORS FOR ASC COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY
OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT PERIOD
CY 2015 CPT
code

CY 2015 long descriptor

0099T ...............
0226T ...............

Implantation of intrastromal corneal ring segments .................................................................
Anoscopy, high resolution (HRA) (with magnification and chemical agent enhancement); diagnostic, including collection of specimen(s) by brushing or washing when performed.

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CY 2014 ASC
payment
indicator

CY 2015 ASC
payment
indicator **

R2*
R2*

R2*
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TABLE 47—CY 2015 PAYMENT INDICATORS FOR ASC COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY
OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT PERIOD—Continued
CY 2015 CPT
code

CY 2015 long descriptor

0299T ...............

Extracorporeal shock wave for integumentary wound healing, high energy, including topical
application and dressing care; initial wound.
Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) and provision of
Radiesse or Sculptra dermal filler, including all items and supplies.
Image-guided fluid collection drainage by catheter (eg, abscess, hematoma, seroma,
lymphocele, cyst), soft tissue (eg, extremity abdominal wall, neck), percutaneous.
Chemodenervation of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic
dysphonia), includes guidance by needle electromyography, when performed.
Treatment of extensive or progressive retinopathy, one or more sessions; preterm infant
(less than 37 weeks gestation at birth), performed from birth up to 1 year of age (eg, retinopathy of prematurity), photocoagulation or cryotherapy.

C9800 ...............
10030 ................
64617 ................
67229 ................

CY 2014 ASC
payment
indicator

CY 2015 ASC
payment
indicator **

R2*

R2*

R2*

R2*

P2*

P2*

P3*

P3*

R2*

R2*

* If designation is temporary.
** Final payment indicators are based on a comparison of the final rates according to the ASC standard ratesetting methodology and the MPFS
final rates effective January 1, 2015. We note that these payment indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April 1, 2015 will be included in
the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer readers to the CY 2015
MPFS final rule with comment period.

c. ASC Covered Surgical Procedures To
Be Designated as Device-Intensive

tkelley on DSK3SPTVN1PROD with RULES2

(1) Background
As discussed in the August 2, 2007
final rule (72 FR 42503 through 42508),
we adopted a modified payment
methodology for calculating the ASC
payment rates for covered surgical
procedures that are assigned to the
subset of OPPS device-dependent APCs
with a device offset percentage greater
than 50 percent of the APC cost under
the OPPS, in order to ensure that
payment for the procedure is adequate
to provide packaged payment for the
high-cost implantable devices used in
those procedures.
(2) Changes to List of ASC Covered
Surgical Procedures Designated as
Device-Intensive for CY 2015
As we discuss in section II.A.2.e of
the CY 2015 OPPS/ASC proposed rule
(79 FR 40940 through 40953), for CY
2015, we proposed to implement 28
comprehensive APCs created to replace
the current device-dependent APCs and
a few nondevice-dependent APCs under
the OPPS, which would eliminate all
device-dependent APCs for CY 2015.
We proposed to define a comprehensive
APC as a classification for the provision
of a primary service and all adjunctive
services provided to support the
delivery of the primary service. Because
a comprehensive APC would treat all
individually reported codes as
representing components of the
comprehensive service, our OPPS
proposal is to make a single prospective
payment based on the cost of all
individually reported codes that
represent the provision of a primary
service and all adjunctive services

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provided to support the delivery of the
primary service.
Unlike the OPPS claims processing
system that can be configured to make
a single payment for the encounterbased comprehensive service whenever
a HCPCS code that is assigned to a
comprehensive APC appears on the
claim, the ASC claims processing
system does not allow for this type of
conditional packaging. Therefore, we
proposed that all separately paid
covered ancillary services that are
provided integral to covered surgical
procedures that would map to
comprehensive APCs would continue to
be separately paid under the ASC
payment system instead of being
packaged into the payment for the
comprehensive APC as under the OPPS.
The OPPS relative payment weights for
the comprehensive APCs would include
costs for ancillary services; therefore, we
could duplicate payment if we based the
ASC payment rate on the OPPS relative
payment weights for the comprehensive
APCs. Therefore, to avoid this issue, we
proposed that the ASC payment rates for
these comprehensive APCs would be
based on the CY 2015 OPPS relative
payments weights that have been
calculated using the standard APC
ratesetting methodology for the primary
service instead of the relative payment
weights that are based on the
comprehensive bundled service. For the
same reason, under the ASC payment
system, we also proposed to use the
standard OPPS APC ratesetting
methodology instead of the
comprehensive methodology to
calculate the device offset percentage for
comprehensive APCs for purposes of
identifying device-intensive procedures
and to calculate payment rates for

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device-intensive procedures assigned to
comprehensive APCs.
Payment rates for ASC deviceintensive procedures are based on a
modified payment methodology to
ensure that payment for the procedure
is adequate to provide packaged
payment for the high-cost implantable
devices used in those procedures.
Device-intensive procedures are
currently defined as those procedures
that are assigned to device-dependent
APCs with a device offset percentage
greater than 50 percent of the APC cost
under the OPPS. Because we proposed
to implement the comprehensive APC
policy and, therefore, eliminate devicedependent APCs under the OPPS in CY
2015, we need to define ASC deviceintensive procedures for CY 2015. We
proposed to define ASC deviceintensive procedures as those
procedures that are assigned to any APC
(not only an APC formerly designated
device-dependent) with a device offset
percentage greater than 40 percent based
on the standard OPPS APC ratesetting
methodology. We believe that our
proposal to lower the offset threshold
from greater than 50 percent to greater
than 40 percent better aligns with the
OPPS device credit policy finalized for
CY 2014 (78 FR 75006 and 75007) that
applies to procedures with a significant
device offset amount, which is defined
as exceeding 40 percent of the APC cost.
Because the ASC device-intensive
methodology is applied to procedures
with significant device costs, we believe
that the definition of ‘‘significant’’ with
regard to device-intensive procedures
should match that used under the OPPS
to determine ‘‘significant’’ device costs
for the device credit policy. We

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proposed changes to § 416.171(b)(2) to
reflect this proposal.
We also proposed to update the ASC
list of covered surgical procedures that
are eligible for payment according to our
device-intensive procedure payment
methodology, consistent with our
proposed modified definition of deviceintensive procedures, reflecting the
proposed APC assignments of
procedures and APC device offset
percentages based on the CY 2013 OPPS
claims and cost report data available for
the final rule with comment period.
The ASC covered surgical procedures
that we proposed to designate as deviceintensive and that would be subject to
the device-intensive procedure payment
methodology for CY 2015 were listed in
Table 51 of the proposed rule (79 FR
41021 through 41023). The CPT code,
the CPT code short descriptor, the
proposed CY 2015 ASC payment
indicator (PI), the proposed CY 2015
OPPS APC assignment, the proposed CY
2015 OPPS APC device offset
percentage, and an indication if the full
credit/partial credit (FB/FC) device
adjustment policy would apply also
were listed in Table 51. All of these
procedures were included in
Addendum AA to the proposed rule
(which is available via the Internet on
the CMS Web site).
We invited public comment on these
proposals.
Comment: Some commenters
supported the proposal to change the
device offset threshold from 50 percent
to 40 percent, citing that the proposal
allowed for greater flexibility in
allowing clinical considerations to
determine site-of-care decisions and
would likely lead to a migration of
services from HOPDs to ASCs. However,
some commenters urged CMS to
monitor volume and to explore the
implications of the expansion of this
policy. Other commenters requested
that CMS adopt additional changes to
the device-intensive policy to encourage
migration of services to ASCs from other
settings. Some commenters
recommended that the device offset
percentage be lowered to 30 percent.
Some commenters expressed the same
views as CMS received in prior
rulemaking—that the ASC device offset
percentages should be based on a
percentage of the total unadjusted ASC
cost for a service rather than a
percentage of the HOPD, or that the
device offset be applied to all
procedures for which CMS can establish
a device cost regardless of the
percentage of the total cost that the
device represents. These commenters
suggested that these alternatives would
result in savings to the Medicare

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program. Some commenters also
expressed the same views as CMS
received in prior rulemakings—that
CMS should not adjust the device
portion of the ASC payment for deviceintensive procedures by the wage index.
Response: In the August 2, 2007 final
rule (72 FR 42503 through 42508), we
established a modified payment
methodology for calculating ASC
payment rates for device-intensive
procedures under the ASC payment
system. We defined device-intensive
procedures as those procedures that are
assigned to device-dependent APCs
under the OPPS with device costs of
greater than 50 percent of the APC cost
under the OPPS (that is, the device
offset percentage is greater than 50
percent). In the CY 2015 OPPS/ASC
proposed rule (79 FR 41020), we
proposed to define ASC deviceintensive procedures as those
procedures that are assigned to any APC
with a device offset percentage greater
than 40 percent based on the standard
OPPS APC ratesetting methodology. In
that proposed rule, we stated that we
believe that lowering the offset
threshold from greater than 50 percent
to greater than 40 percent better aligns
with the OPPS device credit policy
finalized for CY 2014 (78 FR 75006
through 75007) that applies to
procedures with a significant device
offset amount, which is defined as
exceeding 40 percent of the APC cost.
Because the ASC device-intensive
methodology is applied to procedures
with significant device costs, we believe
that the definition of ‘‘significant’’ with
regard to device-intensive procedures
should match that used under the OPPS
to determine ‘‘significant’’ device costs
for the device credit policy. We do not
believe that it should be lowered to 30
percent, because the intent of the policy
change is to align significant device cost
percentage in the OPPS with the deviceintensive procedures in the ASC
payment system.
We do not agree with the commenters
that the device-intensive methodology
should be applied to all procedures
where a device offset could be
established. Nor do we agree with the
commenters who suggested using a
threshold to determine device-intensive
procedures that is based on the ASC
payment rate instead of the OPPS
payment rate. Under 42 CFR 416.167
and 416.171, most ASC payment rates
are based on the OPPS relative payment
weights, and our ASC policy is to be
consistent with the OPPS. ‘‘Device
intensive’’ identifies those procedures
assigned to APCs with significant device
costs and applies to services that are
performed both in the HOPD and ASC.

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Procedures are not device intensive in
one setting and not in another—they
either have significant associated device
costs or they do not, based on the
purpose of the surgical procedure.
Accordingly, we believe that the deviceintensive methodology for ASCs should
align with the device-intensive policies
for OPPS.
We also continue to believe it would
not be appropriate to vary the portion of
the national payment that is wageadjusted for different services, such as
applying the wage index only to the
service portion of the ASC payment for
device-intensive procedures, as the
commenters requested. As indicated
above, our ASC policy is to be
consistent with the OPPS because ASC
payment rates are based on the OPPS
relative payment weights. Therefore, we
apply the ASC geographic wage
adjustment to the entire ASC payment
rate for device-intensive procedures. We
also refer readers to our responses to
similar comments in the CY 2009, CY
2010, CY 2011, CY 2012, CY 2013, and
CY 2014 OPPS/ASC final rules with
comment period (73 FR 68735; 74 FR
60608 through 60609; 75 FR 72039; 76
FR 74409; 77 FR 68449; and 78 FR
75076, respectively). We respond to the
commenters’ request to monitor volume
and to explore the implications of this
policy in the next response.
Comment: Some commenters
supported the lowering of the device
offset percentage to 40 percent, but
stated that this policy, if finalized,
would make device-intensive
procedures more attractive to ASCs.
Commenters suggested that CMS
monitor its data to determine whether
the policy results in significant
increases in volume of these services
and that CMS explore the implications
of further expanding the list of deviceintensive procedures.
Response: We will continue to
monitor our data to ensure that our
payment policies do not have the
unintended consequence of
inappropriately encouraging shifts in
site of service.
Comment: One commenter expressed
appreciation that CMS designated
HCPCS code 0334T (Sacroiliac joint
stabilization for arthrodesis,
percutaneous or minimally invasive
(indirect visualization), includes
obtaining and applying autograft or
allograft (structural or morselized),
when performed, includes image
guidance when performed (eg, CT or
fluoroscopic)) as device-intensive, but
expressed concern that the device offset
percentage was too low, thereby
resulting in an undervalued ASC
payment. The commenter stated that

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
Medicare patients otherwise eligible for
this treatment in the ASC would be
denied access due to the low ASC
payment. The commenter suggested that
CMS consider HCPCS-specific device
offsets rather than at the APC level.
Alternatively, the commenter suggested
that CMS add ‘‘device offset similarity’’
(that is, identifying and grouping
procedure codes based on the similarity
of their respective device offsets) as an
additional criterion (in addition to
clinical and cost similarity) in APC
assignment. Another commenter stated
that ASC payment for transprostatic
implant procedures (as described by
HCPCS codes C9739 and C9740) was too
low because these procedures were not
designated as device-intensive in the
ASC setting, and it is unlikely that any
transprostatic implant procedures
would be conducted in the ASC setting
for a Medicare patient.
Response: In the August 2, 2007 ASC
final rule (72 FR 42504), we finalized
our policy to apply the OPPS device
offset percentage to the OPPS national
unadjusted payment to acquire the
device cost included in the OPPS
payment rate for a device-intensive ASC
covered surgical procedure, which we
then set as equal to the device portion
of the national unadjusted ASC payment
rate for the procedure. The device offset
percentage represents a weighted
average for all of the procedures
assigned to the APC. It is not
uncommon that, within an APC, there
will be a range of device costs
associated with the various procedures
assigned to the APC. The device offset
for the APC represents a weighted
average for all of the procedures
assigned to the APC, and the device
offset percentage is our best estimate of
the amount of device cost included in
an APC payment under the OPPS.
We did not propose calculating offsets
at the HCPCS level or introducing a new
criterion for APC code assignments.
These would be significant changes to
our longstanding policy of calculating
offsets at the APC level, discussed
above, and we believe our current
policy allows for appropriate payment.
Moreover, under 42 CFR 416.167 and
416.171, ASC covered surgical
procedures are classified using OPPS
APC groups described in 42 CFR 419.31.
Under our policy, we cannot assign a
CPT code to a different APC for the ASC
setting.
We believe that APC 0425 is an
appropriate APC assignment for CPT
code 0334T based on clinical and
resource similarity to other procedures
assigned to APC 0425 and have
calculated the device offset for this
procedure according to our longstanding

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policy discussed above. We believe that
payment for this code is appropriate.
With respect to the comment about
ASC payment for transprostatic implant
procedures being too low because the
procedures do not currently qualify for
a device-intensive offset adjustment, as
addressed in section III.C.3.e. of this
final rule with comment period, for CY
2015, we are maintaining our APC
assignments for HCPCS codes C9739
and C9740 to APCs 0162 and 1564,
respectively. As discussed in section
III.C.3.e. of this final rule with comment
period, the APC assignments for HCPCS
codes C9739 and C9740 are initial APC
assignments until we obtain claims data
for these two codes for the CY 2016
OPPS update. We will reevaluate
whether these codes qualify for a
device-intensive adjustment based on
their APC assignments for CY 2016 in
next year’s rulemaking cycle.
As indicated in section II.A.2.e. of this
final rule with comment period, after
consideration of the public comments
we received regarding the proposed
OPPS comprehensive APC policy, we
are finalizing our proposal to implement
the comprehensive APC policy for CY
2015, with some minor modifications.
With respect to modifications to the
comprehensive APC policy that affect
the ASC payment policy, we note that
the finalized comprehensive APC policy
includes all device-dependent APCs,
except for APCs 0427, 0622, and 0652,
which will become standard APCs
because we are discontinuing the
device-dependent APC policy. This
modification does not affect any of our
proposals with respect to the finalized
comprehensive APCs or the definition
of device-intensive.
Given the final OPPS comprehensive
APC policy and after consideration of
the public comments we received, we
are finalizing our proposal that all
separately paid covered ancillary
services that are provided integral to
covered surgical procedures that would
map to comprehensive APCs will
continue to be separately paid under the
ASC payment system instead of being
packaged into the payment for the
comprehensive APC as under the OPPS.
Further, the ASC payment rates for
these comprehensive APCs will be
based on the CY 2015 OPPS relative
payments weights that have been
calculated using the standard APC
ratesetting methodology for the primary
service (instead of the relative payment
weights that are based on the
comprehensive bundled service) and
use the standard OPPS APC ratesetting
methodology instead of the
comprehensive methodology to
calculate the device offset percentage for

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66925

comprehensive APCs for purposes of
identifying device-intensive procedures
and to calculate payment rates for
device-intensive procedures assigned to
comprehensive APCs. We also will
define ASC device-intensive procedures
as those procedures that are assigned to
any APC with a device offset percentage
greater than 40 percent based on the
standard OPPS APC ratesetting
methodology and codify this policy in
the regulations at 42 CFR 416.171(b)(2).
Finally, we will update the ASC list of
covered surgical procedures that are
eligible for payment according to our
device-intensive procedure payment
methodology, consistent with our final
modified definition of device-intensive
procedures, reflecting the final APC
assignments of procedures and APC
device offset percentages based on the
CY 2013 OPPS claims and cost report
data available for this final rule with
comment period.
We are designating the ASC covered
surgical procedures displayed in Table
48 below as device-intensive and
subject to the device-intensive
procedure payment methodology for CY
2015. The CPT code, the CPT code short
descriptor, the final CY 2015 ASC
payment indicator (PI), the final CY
2014 OPPS APC assignment, the final
CY 2015 OPPS APC device offset
percentage, and an indication if the full
credit/partial credit (FB/FC) device
adjustment policy will apply, also are
listed in Table 48 below. All of these
procedures are included in Addendum
AA to this final rule with comment
period (which is available via the
Internet on the CMS Web site).
d. Adjustment to ASC Payments for No
Cost/Full Credit and Partial Credit
Devices
Our ASC policy with regard to
payment for costly devices implanted in
ASCs at no cost/full credit or partial
credit as set forth in § 416.179 is
consistent with the OPPS policy that
was in effect until CY 2014. The
established ASC policy reduces
payment to ASCs when a specified
device is furnished without cost or with
full credit or partial credit for the cost
of the device for those ASC covered
surgical procedures that are assigned to
APCs under the OPPS to which this
policy applies. We refer readers to the
CY 2009 OPPS/ASC final rule with
comment period for a full discussion of
the ASC payment adjustment policy for
no cost/full credit and partial credit
devices (73 FR 68742 through 68744).
As discussed in section IV.B. of the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75005 through
75006), we finalized our proposal to

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modify our former policy of reducing
OPPS payment for specified APCs when
a hospital furnishes a specified device
without cost or with a full or partial
credit. Formerly, under the OPPS, our
policy was to reduce OPPS payment by
100 percent of the device offset amount
when a hospital furnishes a specified
device without cost or with a full credit
and by 50 percent of the device offset
amount when the hospital receives
partial credit in the amount of 50
percent or more (but less than 100
percent) of the cost for the specified
device. For CY 2014, we finalized our
proposal to reduce OPPS payment for
applicable APCs by the full or partial
credit a provider receives for a replaced
device, capped at the device offset
amount.
Although we finalized our proposal to
modify the policy of reducing payments
when a hospital furnishes a specified
device without cost or with full or
partial credit under the OPPS, in that
final rule with comment period (78 FR
75076 through 75080), we finalized our
proposal for CY 2014 to maintain our
ASC policy for reducing payments to
ASCs for specified device-intensive
procedures when the ASC furnishes a
device without cost or with full or
partial credit. Unlike the OPPS, there is
currently no mechanism within the ASC
claims processing system for ASCs to
submit to CMS the actual amount
received when furnishing a specified
device at full or partial credit.
Therefore, under the ASC payment
system, we finalized our proposal for
CY 2014 to continue to reduce ASC
payments by 100 percent or 50 percent
of the device offset amount when an
ASC furnishes a device without cost or
with full or partial credit, respectively.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41021 through 41023), we
proposed to update the list of ASC
covered device-intensive procedures,
based on the revised device-intensive
definition proposed above, that would
be subject to the no cost/full credit and
partial credit device adjustment policy
for CY 2015. Table 51 of the proposed
rule (79 FR 41021 through 41023)
displays the ASC covered deviceintensive procedures that we proposed
would be subject to the no cost/full
credit or partial credit device
adjustment policy for CY 2015.

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Specifically, when a procedure that is
listed in Table 51 is subject to the no
cost/full credit or partial credit device
adjustment policy and is performed to
implant a device that is furnished at no
cost or with full credit from the
manufacturer, the ASC would append
the HCPCS ‘‘FB’’ modifier on the line
with the procedure to implant the
device. The contractor would reduce
payment to the ASC by the device offset
amount that we estimate represents the
cost of the device when the necessary
device is furnished without cost to the
ASC or with full credit. We continue to
believe that the reduction of ASC
payment in these circumstances is
necessary to pay appropriately for the
covered surgical procedure being
furnished by the ASC.
For partial credit, we proposed to
reduce the payment for implantation
procedures listed in Table 51 of the CY
2015 OPPS/ASC proposed rule (79 FR
41021 through 41023) that are subject to
the no cost/full credit or partial credit
device adjustment policy by one-half of
the device offset amount that would be
applied if a device was provided at no
cost or with full credit, if the credit to
the ASC is 50 percent or more (but less
than 100 percent) of the cost of the new
device. The ASC would append the
HCPCS ‘‘FC’’ modifier to the HCPCS
code for a surgical procedure listed in
Table 51 that is subject to the no cost/
full credit or partial credit device
adjustment policy, when the facility
receives a partial credit of 50 percent or
more (but less than 100 percent) of the
cost of a device. In order to report that
they received a partial credit of 50
percent or more (but less than 100
percent) of the cost of a new device,
ASCs would have the option of either:
(1) Submitting the claim for the device
replacement procedure to their
Medicare contractor after the
procedure’s performance but prior to
manufacturer acknowledgment of credit
for the device, and subsequently
contacting the contractor regarding a
claim adjustment once the credit
determination is made; or (2) holding
the claim for the device implantation
procedure until a determination is made
by the manufacturer on the partial credit
and submitting the claim with the ‘‘FC’’
modifier appended to the implantation
procedure HCPCS code if the partial

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credit is 50 percent or more (but less
than 100 percent) of the cost of the
replacement device. Beneficiary
coinsurance would continue to be based
on the reduced payment amount.
We currently apply the ‘‘FB/FC’’
modifier policy to device-intensive
procedures that involve devices that
would be amenable to removal and
replacement in a device recall or
warranty situation. We proposed to
apply the ‘‘FB/FC’’ modifier policy to all
device-intensive procedures beginning
in CY 2015 because, in addition to
receiving devices at no cost/full credit
or partial credit due to a device recall
or warranty situation, ASCs also may
receive devices at no cost/full credit or
partial credit due to being part of an
investigational device trial. In order to
ensure that our policy covers any
situation involving a device-intensive
procedure where an ASC may receive a
device at no cost/full credit or partial
credit, we proposed to apply our FB/FC
policy to all device-intensive
procedures.
We invited public comment on these
proposals.
We did not receive any comments on
this proposal. Therefore, we are
finalizing our proposals without
modification. Specifically, we will
apply our FB/FC policy to all deviceintensive procedures beginning in CY
2015. The device-intensive procedures
for CY 2015 are listed in Table 48
below. For CY 2015, we will reduce the
payment for the procedures listed in
Table 48 below by the full device offset
amount if a device is furnished without
cost or with full credit. ASCs must
append the HCPCS modifier ‘‘FB’’ to the
HCPCS code for a surgical procedure
listed in Table 48 below when the
device is furnished without cost or with
full credit. In addition, for CY 2015, we
will reduce the payment for the
procedures listed in Table 48 below by
one-half of the device offset amount if
a device is provided with partial credit,
if the credit to the ASC is 50 percent or
more (but less than 100 percent) of the
device cost. The ASC must append the
HCPCS ‘‘FC’’ modifier to the HCPCS
code for a surgical procedure listed in
Table 48 below when the facility
receives a partial credit of 50 percent or
more (but less than 100 percent) of the
cost of a device.

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TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC
COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY
Short descriptor

Final CY 2015
ASC PI

Place breast rad tube/caths ................................................
Enlarge breast with implant .................................................
Delayed breast prosthesis ...................................................
Breast reconstruction ..........................................................
Neck spine fuse&remov bel c2 ...........................................
Neck spine fusion ................................................................
Lumbar spine fusion ............................................................
Treat clavicle fracture ..........................................................
Treat scapula fracture .........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat dislocation/fracture .....................................................
Reconstruct elbow joint .......................................................
Replace elbow joint .............................................................
Reconstruct head of radius .................................................
Reconstruct head of radius .................................................
Revise reconst elbow joint ..................................................
Revise reconst elbow joint ..................................................
Repair humerus with graft ...................................................
Reinforce humerus ..............................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat humerus fracture ........................................................
Treat elbow fracture ............................................................
Treat elbow fracture ............................................................
Treat elbow dislocation .......................................................
Treat elbow fracture ............................................................
Treat radius fracture ............................................................
Reconstruct wrist joint .........................................................
Reconstruct wrist joint .........................................................
Reconstruct wrist joint .........................................................
Wrist replacement ...............................................................
Treat fracture radius & ulna ................................................
Treat fracture radius/ulna ....................................................
Treat fx rad extra-articul ......................................................
Treat fx rad intra-articul .......................................................
Treat fx radial 3+ frag .........................................................
Treat hand dislocation .........................................................
Arthrodesis sacroiliac joint ..................................................
Osteochondral knee allograft ..............................................
Reconstruction knee ............................................................
Revise kneecap with implant ..............................................
Revision of knee joint ..........................................................
Revision of knee joint ..........................................................
Revision of knee joint ..........................................................
Revision of knee joint ..........................................................
Reinforce tibia .....................................................................
Treatment of tibia fracture ...................................................
Treatment of ankle fracture .................................................
Treat lower leg fracture .......................................................
Treat lower leg fracture .......................................................
Treat heel fracture ...............................................................
Fusion of foot bones ...........................................................
Insert heart pm atrial ...........................................................
Insert heart pm ventricular ..................................................
Insrt heart pm atrial & vent .................................................
Insert electrd/pm cath sngl ..................................................
Insert card electrodes dual ..................................................
Insert pulse gen sngl lead ...................................................
Insert pulse gen dual leads .................................................
Upgrade of pacemaker system ...........................................
Insert 1 electrode pm-defib .................................................
Insert 2 electrode pm-defib .................................................
Insert pulse gen mult leads .................................................

J8
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J8
J8
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J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
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J8
J8
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J8
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tkelley on DSK3SPTVN1PROD with RULES2

HCPCS code
19298
19325
19342
19357
22551
22554
22612
23515
23585
23615
23616
23630
23670
24361
24363
24365
24366
24370
24371
24435
24498
24515
24516
24545
24546
24575
24579
24586
24587
24615
24635
24666
25441
25442
25444
25446
25574
25575
25607
25608
25609
26686
27279
27415
27428
27438
27440
27442
27443
27446
27745
27759
27823
27827
27828
28415
28715
33206
33207
33208
33210
33211
33212
33213
33214
33216
33217
33221

................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
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................
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................

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Final CY 2015
OPPS APC

Final CY 2015
device offset
percentage

0648
0648
0648
0648
0425
0425
0425
0064
0064
0064
0064
0064
0064
0425
0425
0425
0425
0425
0425
0425
0425
0064
0064
0064
0064
0064
0064
0064
0064
0064
0064
0064
0425
0425
0425
0425
0064
0064
0064
0064
0064
0064
0425
0425
0425
0425
0425
0425
0425
0425
0425
0064
0064
0064
0064
0064
0425
0089
0089
0089
0090
0090
0090
0089
0089
0090
0090
0655

0.4408
0.4408
0.4408
0.4408
0.5565
0.5565
0.5565
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.5565
0.5565
0.5565
0.5565
0.4319
0.4319
0.4319
0.4319
0.4319
0.4319
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.5565
0.4319
0.4319
0.4319
0.4319
0.4319
0.5565
0.6972
0.6972
0.6972
0.6858
0.6858
0.6858
0.6972
0.6972
0.6858
0.6858
0.7495

E:\FR\FM\10NOR2.SGM

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Final FB/FC
policy will
apply
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.

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TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC
COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY—Continued
HCPCS code

Short descriptor

Final CY 2015
ASC PI

33224 ................
33227 ................
33228 ................
33229 ................
33230 ................
33231 ................
33233 ................
33240 ................
33249 ................
33262 ................
33263 ................
33264 ................
33270 ................
33271 ................
33282 ................
37221 ................
37225 ................
37226 ................
37227 ................
37228 ................
37229 ................
37230 ................
37231 ................
37236 ................
37238 ................
53440 ................
53444 ................
53445 ................
53447 ................
54400 ................
54401 ................
54405 ................
54410 ................
54416 ................
55873 ................
61885 ................
61886 ................
61888 ................
62361 ................
62362 ................
63650 ................
63655 ................
63663 ................
63664 ................
63685 ................
64553 ................
64555 ................
64561 ................
64565 ................
64568 ................
64569 ................
64575 ................
64580 ................
64581 ................
64590 ................
65770 ................
69714 ................
69715 ................
69718 ................
69930 ................
0238T ...............
0282T ...............
0283T ...............
0302T ...............
0303T ...............
0304T ...............
0308T ...............
0316T ...............

Insert pacing lead & connect ..............................................
Remove&replace pm gen singl ...........................................
Remv&replc pm gen dual lead ............................................
Remv&replc pm gen mult leads ..........................................
Insrt pulse gen w/dual leads ...............................................
Insrt pulse gen w/mult leads ...............................................
Removal of pm generator ...................................................
Insrt pulse gen w/singl lead ................................................
Nsert pace-defib w/lead ......................................................
Remv&replc cvd gen sing lead ...........................................
Remv&replc cvd gen dual lead ...........................................
Remv&replc cvd gen mult lead ...........................................
Ins/rep subq defibrillator ......................................................
Insj subq impltbl dfb elctrd ..................................................
Implant pat-active ht record ................................................
Iliac revasc w/stent ..............................................................
Fem/popl revas w/ather ......................................................
Fem/popl revasc w/stent .....................................................
Fem/popl revasc stnt & ather ..............................................
Tib/per revasc w/tla .............................................................
Tib/per revasc w/ather ........................................................
Tib/per revasc w/stent .........................................................
Tib/per revasc stent & ather ................................................
Open/perq place stent 1st ...................................................
Open/perq place stent same ...............................................
Male sling procedure ...........................................................
Insert tandem cuff ...............................................................
Insert uro/ves nck sphincter ................................................
Remove/replace ur sphincter ..............................................
Insert semi-rigid prosthesis .................................................
Insert self-contd prosthesis .................................................
Insert multi-comp penis pros ...............................................
Remove/replace penis prosth .............................................
Remv/repl penis contain pros .............................................
Cryoablate prostate .............................................................
Insrt/redo neurostim 1 array ................................................
Implant neurostim arrays .....................................................
Revise/remove neuroreceiver .............................................
Implant spine infusion pump ...............................................
Implant spine infusion pump ...............................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Revise spine eltrd perq aray ...............................................
Revise spine eltrd plate .......................................................
Insrt/redo spine n generator ................................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Inc for vagus n elect impl ....................................................
Revise/repl vagus n eltrd ....................................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Implant neuroelectrodes ......................................................
Insrt/redo pn/gastr stimul ....................................................
Revise cornea with implant .................................................
Implant temple bone w/stimul .............................................
Temple bne implnt w/stimulat .............................................
Revise temple bone implant ................................................
Implant cochlear device ......................................................
Trluml perip athrc iliac art ...................................................
Periph field stimul trial .........................................................
Periph field stimul perm ......................................................
Icar ischm mntrng sys compl ..............................................
Icar ischm mntrng sys eltrd .................................................
Icar ischm mntrng sys device .............................................
Insj ocular telescope prosth ................................................
Replc vagus nerve pls gen .................................................

J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8
J8

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Final CY 2015
OPPS APC

Final CY 2015
device offset
percentage

0089
0090
0089
0655
0107
0108
0090
0107
0108
0107
0107
0108
0108
0090
0090
0229
0229
0229
0319
0229
0319
0319
0319
0229
0229
0385
0385
0386
0386
0385
0386
0386
0386
0386
0385
0039
0318
0061
0227
0227
0061
0039
0061
0061
0318
0061
0061
0061
0061
0318
0061
0061
0039
0061
0039
0293
0425
0425
0425
0259
0319
0061
0318
0089
0090
0090
0351
0039

0.6972
0.6858
0.6972
0.7495
0.7851
0.8114
0.6858
0.7851
0.8114
0.7851
0.7851
0.8114
0.8114
0.6858
0.6858
0.5036
0.5036
0.5036
0.5911
0.5036
0.5911
0.5911
0.5911
0.5036
0.5036
0.5902
0.5902
0.6988
0.6988
0.5902
0.6988
0.6988
0.6988
0.6988
0.5902
0.8616
0.8688
0.5625
0.8062
0.8062
0.5625
0.8616
0.5625
0.5625
0.8688
0.5625
0.5625
0.5625
0.5625
0.8688
0.5625
0.5625
0.8616
0.5625
0.8616
0.6611
0.5565
0.5565
0.5565
0.8283
0.5911
0.5625
0.8688
0.6972
0.6858
0.6858
0.9066
0.8616

E:\FR\FM\10NOR2.SGM

10NOR2

Final FB/FC
policy will
apply
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.

66929

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TABLE 48—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC
COVERED SURGICAL PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY—Continued
HCPCS code

Short descriptor

Final CY 2015
ASC PI

0387T ...............

Leadless c pm ins/rpl ventr .................................................

J8

tkelley on DSK3SPTVN1PROD with RULES2

e. ASC Treatment of Surgical
Procedures Removed From the OPPS
Inpatient List for CY 2015
As we discussed in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68724), we adopted a
policy to include in our annual
evaluation of the ASC list of covered
surgical procedures, a review of the
procedures that are being proposed for
removal from the OPPS inpatient list for
possible inclusion on the ASC list of
covered surgical procedures. In the CY
2015 OPPS/ASC proposed rule (79 FR
41023), we stated there are no
procedures proposed for removal from
the OPPS inpatient list for CY 2015, so
we did not propose any procedures for
possible inclusion on the ASC list of
covered surgical procedures.
Comment: Some commenters
recommended that, if a surgical
procedure was removed from the
inpatient list, it be made eligible for
payment in the ASC setting.
Response: As discussed in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68724), we
adopted a policy to include in our
annual evaluation of the ASC list of
covered surgical procedures a review of
the procedures that are being proposed
for removal from the OPPS inpatientonly list for possible inclusion on the
ASC list of covered surgical procedures.
We review these procedures and
include them on the ASC list of covered
surgical procedures only if the surgical
procedure would not be expected to
pose a significant risk to beneficiary
safety when performed in an ASC, and
would not be expected to require active
medical monitoring and care of the
beneficiary at midnight following the
procedure.
Although there were no procedures
proposed for removal from the OPPS
inpatient list for CY 2015, we are
removing CPT code 63043 (Laminotomy
(hemilaminectomy), with
decompression of nerve root(s),
including partial facetectomy,
foraminotomy and/or excision of
herniated intervertebral disc,
reexploration, single interspace; each
additional cervical interspace) and CPT
code 63044 (Laminotomy

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(hemilaminectomy), with
decompression of nerve root(s),
including partial facetectomy,
foraminotomy and/or excision of
herniated intervertebral disc,
reexploration, single interspace; each
additional lumbar interspace) from the
inpatient-only list in response to a
public comment. We refer readers to
section IX.B. of this final rule with
comment period for our discussion of
the CY 2015 inpatient-only list. As
discussed previously, because these
procedures were removed from the
OPPS inpatient-only list, we review
them to determine whether they should
be included on the list of ASC covered
surgical procedures. We believe that the
procedure described by CPT code 63044
would not be expected to pose a
significant risk to beneficiary safety
when performed in an ASC, and would
not be expected to require active
medical monitoring and care of the
beneficiary at midnight following the
procedure. Therefore, we are including
the procedure described by CPT code
63044 on the list of ASC covered
surgical procedures and list the
procedure code, descriptor, and
payment indicator for this new covered
surgical procedure in Table 45 of
section XII.C.1.a. of this final rule with
comment period. However, we do not
believe that the procedure described by
CPT code 63043 should be added to the
ASC list because we believe that the
beneficiary would generally require
active medical monitoring and care at
midnight following the procedure, so
we are not adding it to the list of ASC
covered surgical procedures.
2. Covered Ancillary Services
Consistent with the established ASC
payment system policy, we proposed to
update the ASC list of covered ancillary
services to reflect the proposed payment
status for the services under the CY
2015 OPPS. Maintaining consistency
with the OPPS may result in proposed
changes to ASC payment indicators for
some covered ancillary services because
of changes that are being proposed
under the OPPS for CY 2015. For
example, a covered ancillary service
that was separately paid under the
revised ASC payment system in CY

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Final CY 2015
OPPS APC

Final CY 2015
device offset
percentage

0319

0.5911

Final FB/FC
policy will
apply
Yes.

2014 may be proposed for packaged
status under the CY 2015 OPPS and,
therefore, also under the ASC payment
system for CY 2015.
To maintain consistency with the
OPPS, we proposed that these services
also would be packaged under the ASC
payment system for CY 2015. Comment
indicator ‘‘CH,’’ discussed in section
XII.F. of the CY 2015 OPPS/ASC
proposed rule (79 FR 41028), is used in
Addendum BB to the proposed rule
(which is available via the Internet on
the CMS Web site) to indicate covered
ancillary services for which we
proposed a change in the ASC payment
indicator to reflect a proposed change in
the OPPS treatment of the service for CY
2015.
Except for the Level II HCPCS codes
and Level III CPT codes listed in Table
46 and Table 47 of the proposed rule (79
FR 41016 through 41017), all ASC
covered ancillary services and their
proposed payment indicators for CY
2015 were included in Addendum BB to
the proposed rule (which is available
via the Internet on the CMS Web site).
We invited public comment on this
proposal.
Comment: Commenters were
concerned that, because ASC payment
rates are already substantially lower
than HOPD rates, packaging these
ancillary services codes would not
provide adequate payment for all of the
procedures being performed, and would
result in cases shifting from the ASC to
the more expensive HOPD setting. The
commenters noted that this was
particularly problematic because there
are 244 ancillary and surgical codes that
are separately payable as procedures in
CY 2014 under the OPPS but are
proposed to be packaged and no longer
separately payable in CY 2015 under the
OPPS. The commenters noted that
Medicare currently pay ASCs
approximately 55 percent of the hospital
rate for the same service and expressed
concern that packaging the payment for
the secondary services will lower the
ASC payment even further and
discourage the movement of volume to
ASCs. Commenters recommended that
CMS work to ensure that any packaging
policies are not structured to

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

disproportionately impact the already
lower cost provider.
Response: We discuss the OPPS
ancillary services packaging policy for
CY 2015 in section II.A.3.c.(1) of this
final rule with comment period. Of the
21 APCs proposed for conditional
packaging under this policy, 17 of the
21 contain services that are not ASC
services. Therefore, for the most part,
this packaging policy does not apply to
the ASC. The four remaining APCs
contain primarily minor imaging
services, such as a chest X-ray. Most of
these diagnostic tests are not typically
performed in the ASC; instead, they are
performed pre-operatively before the
patient has surgery at the ASC.
Therefore, we do not believe that ASCs
will be adversely impacted by the OPPS
ancillary services packaging policy in
CY 2015. In addition, to the extent that
any of the packaged covered ancillary
services are performed with covered
surgical procedures, the relative weights
of the surgical procedures will reflect
the additional cost of the packaged
ancillary service. We typically consider
the potential effect of OPPS payment
policy changes, including new
packaging policies, on ASC payments,
and we will continue to do so in the
future.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal to update the ASC list of
covered ancillary services to reflect the
payment status for the services under
the OPPS. All CY 2015 ASC covered
ancillary services and their final
payment indicators are included in
Addendum BB to this final rule with
comment period (which is available via
the Internet on the CMS Web site).
D. ASC Payment for Covered Surgical
Procedures and Covered Ancillary
Services

tkelley on DSK3SPTVN1PROD with RULES2

1. ASC Payment for Covered Surgical
Procedures
a. Background
Our ASC payment policies for
covered surgical procedures under the
revised ASC payment system are fully
described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66828 through 66831). Under our
established policy for the revised ASC
payment system, the ASC standard
ratesetting methodology of multiplying
the ASC relative payment weight for the
procedure by the ASC conversion factor
for that same year is used to calculate
the national unadjusted payment rates
for procedures with payment indicators
‘‘G2’’ and ‘‘A2.’’ Payment indicator
‘‘A2’’ was developed to identify

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procedures that were included on the
list of ASC covered surgical procedures
in CY 2007 and, therefore, were subject
to transitional payment prior to CY
2011. Although the 4-year transitional
period has ended and payment indicator
‘‘A2’’ is no longer required to identify
surgical procedures subject to
transitional payment, we retained
payment indicator ‘‘A2’’ because it is
used to identify procedures that are
exempted from application of the officebased designation.
The rate calculation established for
device-intensive procedures (payment
indicator ‘‘J8’’) is structured so that the
packaged device payment amount is the
same as under the OPPS, and only the
service portion of the rate is subject to
the ASC standard ratesetting
methodology. In the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75064 through 75090), we updated
the CY 2013 ASC payment rates for ASC
covered surgical procedures with
payment indicators of ‘‘A2,’’ ‘‘G2,’’ and
‘‘J8’’ using CY 2012 data, consistent
with the CY 2014 OPPS update. We also
updated payment rates for deviceintensive procedures to incorporate the
CY 2014 OPPS device offset
percentages.
Payment rates for office-based
procedures (payment indicators ‘‘P2,’’
‘‘P3,’’ and ‘‘R2’’) are the lower of the
MPFS nonfacility PE RVU-based
amount (we refer readers to the CY 2015
MPFS proposed rule) or the amount
calculated using the ASC standard
ratesetting methodology for the
procedure. In the CY 2014 OPPS/ASC
final rule with comment period, we
updated the payment amounts for
office-based procedures (payment
indicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) using
the most recent available MPFS and
OPPS data. We compared the estimated
CY 2014 rate for each of the office-based
procedures, calculated according to the
ASC standard ratesetting methodology,
to the MPFS nonfacility PE RVU-based
amount to determine which was lower
and, therefore, would be the CY 2014
payment rate for the procedure
according to the final policy of the
revised ASC payment system
(§ 416.171(d)).
b. Update to ASC Covered Surgical
Procedure Payment Rates for CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41024), we proposed to
update ASC payment rates for CY 2015
using the established rate calculation
methodologies under § 416.171 and
using our proposed modified definition
of device-intensive procedures, as
discussed above. Because the proposed
OPPS relative payment weights were

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based on geometric mean costs for CY
2015, the ASC system used geometric
means to determine proposed relative
payment weights under the ASC
standard methodology. We proposed to
continue to use the amount calculated
under the ASC standard ratesetting
methodology for procedures assigned
payment indicators ‘‘A2’’ and ‘‘G2.’’
We proposed that payment rates for
office-based procedures (payment
indicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) and
device-intensive procedures (payment
indicator ‘‘J8’’) be calculated according
to our established policies and, for
device-intensive procedures, using our
proposed modified definition of deviceintensive procedures, as discussed
above. Therefore, we proposed to
update the payment amount for the
service portion of the device-intensive
procedures using the ASC standard
ratesetting methodology and the
payment amount for the device portion
based on the proposed CY 2015 OPPS
device offset percentages that have been
calculated using the standard OPPS
APC ratesetting methodology. Payment
for office-based procedures is at the
lesser of the proposed CY 2015 MPFS
nonfacility PE RVU-based amount or the
proposed CY 2015 ASC payment
amount calculated according to the ASC
standard ratesetting methodology.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75081), we
finalized our proposal to calculate the
CY 2014 payment rates for ASC covered
surgical procedures according to our
established methodologies, with the
exception of device removal procedures.
For CY 2014, we finalized a policy to
conditionally package device removal
codes under the OPPS. Under the OPPS,
a conditionally packaged code (status
indicators ‘‘Q1’’ and ‘‘Q2’’) describes a
HCPCS code where the payment is
packaged when it is provided with a
significant procedure but is separately
paid when the service appears on the
claim without a significant procedure.
Because ASC services always include a
covered surgical procedure, HCPCS
codes that are conditionally packaged
under the OPPS are always packaged
(payment indicator ‘‘N1’’) under the
ASC payment system. Therefore, no
Medicare payment would be made
when a device removal procedure is
performed in an ASC without another
surgical procedure included on the
claim; therefore, no Medicare payment
would be made if a device was removed
but not replaced. To address this
concern, for the device removal
procedures that are conditionally
packaged in the OPPS (status indicator
‘‘Q2’’), we assigned the current ASC
payment indicators associated with

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tkelley on DSK3SPTVN1PROD with RULES2

these procedures and continued to
provide separate payment in CY 2014.
For CY 2015, we proposed to continue
this policy for the device removal
procedures for these same reasons.
We invited public comment on these
proposals. We did not receive any
public comments on these proposals.
Therefore, we are finalizing our
proposed policies without modification
to calculate the CY 2015 payment rates
for ASC covered surgical procedures
according to our established
methodologies using the modified
definition of device-intensive
procedures. For those covered surgical
procedures where the payment rate is
the lower of the final rates under the
ASC standard ratesetting methodology
and the MPFS final rates, the final
payment indicators and rates set forth in
this rule are based on a comparison
using the MPFS rates effective January
1, 2015. These payment rates and
indicators do not include the effect of
the negative update to the MPFS
payment rates effective April 1, 2015
under current law. Updates to these
rates and payment indicators effective
April l, 2015 will be included in the
April 2015 quarterly ASC addenda
posted on the CMS Web site. For a
discussion of the MPFS rates, we refer
readers to the CY 2015 MPFS final rule
with comment period.
c. Waiver of Coinsurance and
Deductible for Certain Preventive
Services
Section 1833(a)(1) and section
1833(b)(1) of the Act waive the
coinsurance and the Part B deductible
for those preventive services under
section 1861(ddd)(3)(A) of the Act as
described in section 1861(ww)(2) of the
Act (excluding electrocardiograms) that
are recommended by the United States
Preventive Services Task Force
(USPSTF) with a grade of A or B for any
indication or population and that are
appropriate for the individual. Section
1833(b) of the Act also waives the Part
B deductible for colorectal cancer
screening tests that become diagnostic.
In the CY 2011 OPPS/ASC final rule
with comment period, we finalized our
policies with respect to these provisions
and identified categories of services and
the ASC covered surgical procedures
and covered ancillary services that are
preventive services that are
recommended by the USPSTF with a
grade of A or B for which the
coinsurance and the deductible are
waived. For a complete discussion of
our policies and categories of services,
we refer readers to the CY 2011 OPPS/
ASC final rule with comment period (75
FR 72047 through 72049). We did not

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propose any changes to our policies or
the categories of services for CY 2015.
We identify the specific services with a
double asterisk in Addenda AA and BB
to this final rule with comment period
(which are available via the Internet on
the CMS Web site).
d. Payment for Cardiac
Resynchronization Therapy Services
Cardiac resynchronization therapy
(CRT) uses electronic devices to
sequentially pace both sides of the heart
to improve its output. CRT utilizes a
pacing electrode implanted in
combination with either a pacemaker or
an implantable cardioverter defibrillator
(ICD). CRT performed by the
implantation of an ICD along with a
pacing electrode is referred to as ‘‘CRT–
D.’’ In the CY 2012 OPPS/ASC final rule
with comment period, we finalized our
proposal to establish the CY 2012 ASC
payment rate for CRT–D services based
on the OPPS payment rate applicable to
APC 0108 when procedures described
by CPT codes 33225 (Insertion of pacing
electrode, cardiac venous system, for
left ventricular pacing, at time of
insertion of pacing cardioverterdefibrillator or pacemaker pulse
generator (eg., for upgrade to dual
chamber system) (list separately in
addition to code for primary procedure))
and 33249 (Insertion or replacement of
permanent pacing cardioverterdefibrillator system with transvenous
lead(s), single or dual chamber) are
performed on the same date of service
in an ASC. ASCs use the corresponding
HCPCS Level II G-code (G0448) for
proper reporting when the procedures
described by CPT codes 33225 and
33249 are performed on the same date
of service. When not performed on the
same day as the service described by
CPT code 33225, ASC payment for the
service described by CPT code 33249 is
based on APC 0108 using the deviceintensive methodology. When not
performed on the same day as the
service described by CPT code 33249,
ASC payment for the service described
by CPT code 33225 is based on APC
0655 using the device-intensive
methodology. For a complete discussion
of our policy regarding payment for
CRT–D services in ASCs, we refer
readers to the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74427
through 74428).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41025), for CY 2015, we
proposed that CPT code 33249, the
primary code for CRT–D services,
continue to be assigned to APC 0108,
and that payment for CPT code 33225 be
packaged under the OPPS.
Consequently, we also proposed that

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66931

CPT code 33249 would continue to be
assigned to APC 0108 and payment for
CPT code 33225 would be packaged into
the payment for the primary covered
surgical procedure (for example, CPT
code 33249) under the ASC payment
system for CY 2015. Because we
proposed to package CPT code 33225
packaged under the ASC payment
system and, therefore, it would not
receive separate payment, it would no
longer be necessary that ASCs use the
HCPCS Level II G-code (G0448) for
proper reporting when the procedures
described by CPT codes 33225 and
33249 are performed on the same date
of service.
We invited public comment on these
proposals.
We did not receive any public
comments on these proposals. Further,
we are finalizing our proposals under
the OPPS that CPT code 33249, the
primary code for CRT–D services,
continue to be assigned to APC 0108,
and that payment for CPT code 33225 be
packaged under the OPPS. Therefore,
we are finalizing our proposals under
the ASC payment system without
modification. Specifically, CPT code
33249, the primary code for CRT–D
services, will continue to be assigned to
APC 0108, and payment for CPT code
33225 will be packaged into the
payment for the primary covered
surgical procedure (for example, CPT
code 33249).
e. Payment for Low Dose Rate (LDR)
Prostate Brachytherapy Composite
LDR prostate brachytherapy is a
treatment for prostate cancer in which
hollow needles or catheters are inserted
into the prostate, followed by
permanent implantation of radioactive
sources into the prostate through the
needles/catheters. At least two CPT
codes are used to report the treatment
service because there are separate codes
that describe placement of the needles/
catheters and the application of the
brachytherapy sources: CPT code 55875
(Transperineal placement of needles or
catheters into prostate for interstitial
radioelement application, with or
without cystoscopy); and CPT code
77778 (Interstitial radiation source
application; complex). Generally, the
component services represented by both
codes are provided in the same
operative session on the same date of
service to the Medicare beneficiary
being treated with LDR brachytherapy
for prostate cancer.
In the CY 2013 OPPS/ASC final rule
with comment period, we finalized our
proposal to establish the CY 2013 ASC
payment rate for LDR prostate
brachytherapy services based on the

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OPPS relative payment weight
applicable to APC 8001 when CPT
codes 55875 and 77778 are performed
on the same date of service in an ASC.
ASCs use the corresponding HCPCS
Level II G-code (G0458) for proper
reporting when the procedures
described by CPT codes 55875 and
77778 are performed on the same date
of service, and therefore receive the
appropriate LDR prostate brachytherapy
composite payment. When not
performed on the same day as the
service described by CPT code 55875,
the service described by CPT code
77778 will be assigned to APC 0651.
When not performed on the same day as
the service described by CPT code
77778, the service described by CPT
code 55875 will be assigned to APC
0162. For a complete discussion of our
policy regarding payment for LDR
prostate brachytherapy services in
ASCs, we refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68457). In the CY 2015
OPPS/ASC proposed rule (79 FR 41025),
we did not propose any changes to our
current policy regarding ASC payment
for LDR prostate brachytherapy services
for CY 2015.

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2. Payment for Covered Ancillary
Services
a. Background
Our final payment policies under the
revised ASC payment system for
covered ancillary services vary
according to the particular type of
service and its payment policy under
the OPPS. Our overall policy provides
separate ASC payment for certain
ancillary items and services integrally
related to the provision of ASC covered
surgical procedures that are paid
separately under the OPPS and provides
packaged ASC payment for other
ancillary items and services that are
packaged or conditionally packaged
(status indicators ‘‘N,’’ ‘‘Q1,’’ and ‘‘Q2’’)
under the OPPS. In the CY 2013 OPPS/
ASC rulemaking (77 FR 45169; 77 FR
68457 through 68458), we further
clarified our policy regarding the
payment indicator assignment of codes
that are conditionally packaged in the
OPPS (status indicators ‘‘Q1’’ and
‘‘Q2’’). Under the OPPS, a conditionally
packaged code describes a HCPCS code
where the payment is packaged when it
is provided with a significant procedure
but is separately paid when the service
appears on the claim without a
significant procedure. Because ASC
services always include a surgical
procedure, HCPCS codes that are
conditionally packaged under the OPPS
are always packaged (payment indictor

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‘‘N1’’) under the ASC payment system.
Thus, our final policy generally aligns
ASC payment bundles with those under
the OPPS (72 FR 42495). In all cases, in
order for those ancillary services also to
be paid, ancillary items and services
must be provided integral to the
performance of ASC covered surgical
procedures for which the ASC bills
Medicare.
Our ASC payment policies provide
separate payment for drugs and
biologicals that are separately paid
under the OPPS at the OPPS rates. We
generally pay for separately payable
radiology services at the lower of the
MPFS nonfacility PE RVU-based (or
technical component) amount or the
rate calculated according to the ASC
standard ratesetting methodology (72 FR
42497). However, as finalized in the CY
2011 OPPS/ASC final rule with
comment period (75 FR 72050),
payment indicators for all nuclear
medicine procedures (defined as CPT
codes in the range of 78000 through
78999) that are designated as radiology
services that are paid separately when
provided integral to a surgical
procedure on the ASC list are set to
‘‘Z2’’ so that payment is made based on
the ASC standard ratesetting
methodology rather than the MPFS
nonfacility PE RVU amount, regardless
of which is lower. This modification to
the ASC payment methodology for
ancillary services was finalized in
response to a comment on the CY 2011
OPPS/ASC proposed rule that suggested
it is inappropriate to use the MPFSbased payment methodology for nuclear
medicine procedures because the
associated diagnostic
radiopharmaceutical, although packaged
under the ASC payment system, is
separately paid under the MPFS (42
CFR 416.171(d)(1)). We set the payment
indicator to ‘‘Z2’’ for these nuclear
medicine procedures in the ASC setting
so that payment for these procedures
would be based on the OPPS relative
payment weight rather than the MPFS
nonfacility PE RVU-based amount to
ensure that the ASC will be
compensated for the cost associated
with the diagnostic
radiopharmaceuticals.
In addition, because the same issue
exists for radiology procedures that use
contrast agents (the contrast agent is
packaged under the ASC payment
system but is separately paid under the
MPFS), we finalized in the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74429 through 74430) to
set the payment indicator to ‘‘Z2’’ for
radiology services that use contrast
agents so that payment for these
procedures will be based on the OPPS

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relative payment weight and, therefore,
will include the cost for the contrast
agent (42 CFR 416.171(d)(2)).
ASC payment policy for
brachytherapy sources mirrors the
payment policy under the OPPS. ASCs
are paid for brachytherapy sources
provided integral to ASC covered
surgical procedures at prospective rates
adopted under the OPPS or, if OPPS
rates are unavailable, at contractorpriced rates (72 FR 42499). Since
December 31, 2009, ASCs have been
paid for brachytherapy sources provided
integral to ASC covered surgical
procedures at prospective rates adopted
under the OPPS.
Our ASC policies also provide
separate payment for: (1) Certain items
and services that CMS designates as
contractor-priced, including, but not
limited to, the procurement of corneal
tissue; and (2) certain implantable items
that have pass-through payment status
under the OPPS. These categories do not
have prospectively established ASC
payment rates according to the final
policies for the revised ASC payment
system (72 FR 42502 and 42508 through
42509; 42 CFR 416.164(b)). Under the
revised ASC payment system, we have
designated corneal tissue acquisition
and hepatitis B vaccines as contractorpriced. Corneal tissue acquisition is
contractor-priced based on the invoiced
costs for acquiring the corneal tissue for
transplantation. Hepatitis B vaccines are
contractor-priced based on invoiced
costs for the vaccine.
Devices that are eligible for passthrough payment under the OPPS are
separately paid under the ASC payment
system and are contractor-priced.
Currently, the one device that is eligible
for pass-through payment in the OPPS
is described by HCPCS code C1841
(Retinal prosthesis, includes all internal
and external components). The payment
amount for HCPCS code C1841 under
the ASC payment system is contractorpriced. Under the revised ASC payment
system (72 FR 42502), payment for the
surgical procedure associated with the
pass-through device is made according
to our standard methodology for the
ASC payment system, based on only the
service (nondevice) portion of the
procedure’s OPPS relative payment
weight if the APC weight for the
procedure includes other packaged
device costs. (We note that the cost for
the new pass-through device would not
be included in the APC weight because
historical claims are used to establish
the OPPS relative weights). We also
refer to this methodology as applying a
‘‘device offset’’ to the ASC payment for
the associated surgical procedure. This
ensures that duplicate payment is not

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provided for any portion of an
implanted device with OPPS passthrough payment status. There are no
other device costs included in the APC
for the surgical procedure associated
with HCPCS code C1841. Therefore,
payment for the associated surgical
procedure is made according to the
standard methodology and no device
offset is applied. HCPCS code C1841
was approved for pass-through payment
effective October 1, 2013, and will
continue to be eligible for pass-through
payment in CY 2015.
b. Payment for Covered Ancillary
Services for CY 2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41026 through 41027), for
CY 2015, we proposed to update the
ASC payment rates and to make changes
to ASC payment indicators as necessary
to maintain consistency between the
OPPS and ASC payment system
regarding the packaged or separately
payable status of services and the
proposed CY 2015 OPPS and ASC
payment rates. We also proposed to
continue to set the CY 2015 ASC
payment rates for brachytherapy sources
and separately payable drugs and
biologicals equal to the proposed OPPS
payment rates for CY 2015.
Consistent with established ASC
payment policy (72 FR 42497), we
proposed that the proposed CY 2015
payment for separately payable covered
radiology services be based on a
comparison of the proposed CY 2015
MPFS nonfacility PE RVU-based
amounts (we refer readers to the CY
2015 MPFS proposed rule) and the
proposed CY 2015 ASC payment rates
calculated according to the ASC
standard ratesetting methodology and
then set at the lower of the two amounts
(except as discussed below for nuclear
medicine procedures and radiology
services that use contrast agents). We
proposed that payment for a radiology
service would be packaged into the
payment for the ASC covered surgical
procedure if the radiology service is
packaged or conditionally packaged
under the OPPS. The payment
indicators in Addendum BB to the
proposed rule indicate whether the
proposed payment rates for radiology
services are based on the MPFS
nonfacility PE RVU-based amount or the
ASC standard ratesetting methodology,
or whether payment for a radiology
service is packaged into the payment for
the covered surgical procedure
(payment indicator ‘‘N1’’). Radiology
services that we proposed to pay based
on the ASC standard ratesetting
methodology are assigned payment
indicator ‘‘Z2’’ (proposed revised

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definition, as discussed below:
Radiology or diagnostic service paid
separately when provided integral to a
surgical procedure on ASC list; payment
based on OPPS relative payment
weight), and those for which the
proposed payment is based on the
MPFS nonfacility PE RVU-based
amount be assigned payment indicator
‘‘Z3’’ (proposed revised definition, as
discussed below: Radiology or
diagnostic service paid separately when
provided integral to a surgical
procedure on ASC list; payment based
on MPFS nonfacility PE RVUs).
As finalized in the CY 2011 OPPS/
ASC final rule with comment period (75
FR 72050), payment indicators for all
nuclear medicine procedures (defined
as CPT codes in the range of 78000
through 78999) that are designated as
radiology services that are paid
separately when provided integral to a
surgical procedure on the ASC list are
set to ‘‘Z2’’ so that payment for these
procedures will be based on the OPPS
relative payment weight (rather than the
MPFS nonfacility PE RVU-based
amount, regardless of which is lower)
and, therefore, will include the cost for
the diagnostic radiopharmaceutical. We
proposed to continue this modification
to the payment methodology in CY 2015
and, therefore, set the payment indicator
to ‘‘Z2’’ for nuclear medicine
procedures.
As finalized in the CY 2012 OPPS/
ASC final rule with comment period (76
FR 74429 through 74430), payment
indicators for radiology services that use
contrast agents are set to ‘‘Z2’’ so that
payment for these procedures will be
based on the OPPS relative payment
weight and, therefore, will include the
cost for the contrast agent. We proposed
to continue this modification to the
payment methodology in CY 2015 and,
therefore, proposed to assign the
payment indicator ‘‘Z2’’ to radiology
services that use contrast agents.
Covered ancillary services are items
and services that are integral to a
covered surgical procedure performed
in an ASC for which separate payment
may be made under the ASC payment
system (42 CFR 416.2). Covered
ancillary services include, among other
categories of items and services, certain
radiology services, including diagnostic
imaging services, for which separate
payment is allowed under the OPPS
when these services are necessary for
the successful completion of a surgical
procedure and are performed in the ASC
immediately preceding, during, or
immediately following the covered
surgical procedure, as evidenced by the
service being provided on the same day
as a covered surgical procedure (42 CFR

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66933

416.164(b)(5)). Currently, there are
certain nonimaging diagnostic tests for
which payment is not made under
Medicare Part B when provided in an
ASC setting although these tests are
paid under the OPPS. Therefore, we
believe that certain nonimaging
diagnostic tests for which separate
payment is allowed under the OPPS
should be considered covered ancillary
services and separately paid when these
tests are required for the successful
performance of the surgery and are
performed in the ASC on the same day
as a covered surgical procedure.
Therefore, we proposed that,
beginning in CY 2015, certain diagnostic
tests within the medicine range of CPT
codes for which separate payment is
allowed under the OPPS be covered
ancillary services when they are integral
to an ASC covered surgical procedure.
We believe that adopting such a
payment policy is reasonable and
appropriate to ensure access to these
tests in ASCs and is consistent with the
OPPS. We proposed that diagnostic tests
within the medicine range of CPT codes
include all Category I CPT codes in the
medicine range established by CPT,
from 90000 to 99999, and Category III
CPT codes and Level II HCPCS codes
that describe diagnostic tests that
crosswalk or are clinically similar to
procedures in the medicine range
established by CPT.
We proposed to pay for these tests at
the lower of the MPFS nonfacility PE
RVU-based (or technical component)
amount or the rate calculated according
to the ASC standard ratesetting
methodology because this would ensure
appropriate and equitable payment for
these diagnostic tests provided integral
to covered surgical procedures and not
provide a payment incentive for
migration of the tests from physician
offices to ASCs. Further, we believe
these diagnostic tests are similar to the
covered ancillary services that are
radiology services, and this is the
payment methodology we use for those
services. We proposed that the
diagnostic tests for which the proposed
payment is based on the ASC standard
ratesetting methodology be assigned to
payment indicator ‘‘Z2’’ (proposed
revised definition: Radiology or
diagnostic service paid separately when
provided integral to a surgical
procedure on ASC list; payment based
on OPPS relative payment weight), and
those for which the proposed payment
is based on the MPFS nonfacility PE
RVU-based amount be assigned
payment indicator ‘‘Z3’’ (proposed
revised definition: Radiology or
diagnostic service paid separately when
provided integral to a surgical

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procedure on ASC list; payment based
on MPFS nonfacility PE RVUs). We
proposed changes to the definitions for
payment indicators ‘‘Z2’’ and ‘‘Z3,’’ as
detailed in section XII.F.2. of this final
rule with comment period, and
proposed changes to § 416.164(a)(11)
and (b)(5) as well as § 416.171(b)(1) to
reflect these proposals.
We have identified one diagnostic test
that is within the medicine range of CPT
codes and for which separate payment
is allowed under the OPPS: CPT code
91035 (Esophagus, gastroesophageal
reflux test; with mucosal attached
telemetry pH electrode placement,
recording, analysis and interpretation).
We proposed to add this code to the list
of ASC covered ancillary services and
proposed separate ASC payment as a
covered ancillary service for this code
beginning in CY 2015 when the test is
integral to an ASC covered surgical
procedure. We would expect the
procedure described by CPT code 91035
to be integral to the endoscopic
attachment of the electrode to the
esophageal mucosa.
Most covered ancillary services and
their proposed payment indicators were
listed in Addendum BB to the proposed
rule (which is available via the Internet
on the CMS Web site).
We invited public comment on these
proposals.
Comment: Several commenters
supported CMS’ proposals to expand
the scope of ASC covered ancillary
services to include certain diagnostic
tests and to add CPT code 91035 to the
list of ASC covered ancillary services
and allow separate payment for this
code when the test is integral to an ASC
covered surgical procedure. However,
these commenters expressed concern
regarding the proposed ASC payment
for CPT code 91035 and requested that
CMS reassign the code to a higherpaying APC.
Response: We thank the commenters
for their support for our proposal.
Payment for CPT 91035 is addressed in
section III.C.2. of this final rule with
comment period. Briefly, the ASC
payment is dependent upon the APC
assignment for this service. Based on
our analysis of the latest hospital
outpatient claims data used for this final
rule with comment period, we believe
that CPT code 91035 is appropriately
assigned to APC 0361. Our claims data
show a geometric mean cost of
approximately $466 for CPT code 91035
based on 1,272 single claims (out of
5,099 total claims), and a geometric
mean cost of approximately $341 for
APC 0361. Further, the geometric mean
cost of APC 0142 is approximately $884,
which is almost twice the geometric

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mean cost of CPT code 91035. Also,
assignment of 91035 to APC 0142 would
create a 2 times violation in APC 0142,
because the geometric mean cost of the
highest cost significant procedure in
APC 0142 (CPT code 44361, with a
geometric mean cost of $1,019) is 2.2
times the geometric mean cost of 91035.
Therefore, APC 0142 would not be
appropriate for 91035 and we are
finalizing our CY 2015 proposal to
continue to assign CPT code 91035 to
APC 0361.
After consideration of the public
comments we received, we are
finalizing these proposals without
modification: to expand the scope of
ASC-covered ancillary services to
include certain diagnostic tests for
which separate payment is allowed
under the OPPS when provided integral
to covered ASC surgical procedures; to
pay for these diagnostic tests at the
lower of the MPFS nonfacility PE RVU
based (or technical component) amount
or the rate calculated according to the
ASC standard ratesetting methodology;
and to revise §§ 416.164(a)(11) and
(b)(5) as well as § 416.171(b)(1) to reflect
these finalized policies. We also are
revising the regulation text at
§ 416.171(d) to reflect that payment for
these tests will be at the lower of the
MPFS nonfacility PE RVU-based
amount or the rate calculated according
to the ASC standard ratesetting
methodology, as discussed above and in
the CY 2015 OPPS/ASC proposed rule
(79 FR 41027). For those covered
ancillary services where the payment
rate is the lower of the final rates under
the ASC standard ratesetting
methodology and the MPFS final rates,
the final payment indicators and rates
set forth in this rule are based on a
comparison using the MPFS rates
effective January 1, 2015. These
payment rates and indicators do not
include the effect of the negative update
to the MPFS payment rates effective
April 1, 2015 under current law.
Updates to these rates and payment
indicators effective April l, 2015 will be
included in the April 2015 quarterly
ASC addenda posted on the CMS Web
site. For a discussion of the MPFS rates,
we refer readers to the CY 2015 MPFS
final rule with comment period.
E. New Technology Intraocular Lenses
(NTIOLs)
1. NTIOL Application Cycle
Our process for reviewing
applications to establish new classes of
new technology intraocular lenses
(NTIOLs) is as follows:
• Applicants submit their NTIOL
requests for review to CMS by the

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annual deadline. For a request to be
considered complete, we require
submission of the information that is
found in the guidance document
entitled ‘‘Application Process and
Information Requirements for Requests
for a New Class of New Technology
Intraocular Lenses (NTIOLs) or
Inclusion of an IOL in an existing
NTIOL Class’’ posted on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
ASCPayment/NTIOLs.html.
• We announce annually in the
proposed rule updating the ASC and
OPPS payment rates for the following
calendar year, a list of all requests to
establish new NTIOL classes accepted
for review during the calendar year in
which the proposal is published. In
accordance with section 141(b)(3) of
Public Law 103–432 and our regulations
at § 416.185(b), the deadline for receipt
of public comments is 30 days following
publication of the list of requests in the
proposed rule.
• In the final rule updating the ASC
and OPPS payment rates for the
following calendar year, we—
Æ Provide a list of determinations
made as a result of our review of all new
NTIOL class requests and public
comments;
Æ When a new NTIOL class is created,
we identify the predominant
characteristic of NTIOLs in that class
that sets them apart from other IOLs
(including those previously approved as
members of other expired or active
NTIOL classes) and that is associated
with an improved clinical outcome.
Æ The date of implementation of a
payment adjustment in the case of
approval of an IOL as a member of a
new NTIOL class would be set
prospectively as of 30 days after
publication of the ASC payment update
final rule, consistent with the statutory
requirement.
Æ Announce the deadline for
submitting requests for review of an
application for a new NTIOL class for
the following calendar year.
2. Requests To Establish New NTIOL
Classes for CY 2015
We did not receive any requests for
review to establish a new NTIOL class
for CY 2015 by March 3, 2014, the due
date published in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75085).
3. Payment Adjustment
The current payment adjustment for a
5-year period from the implementation
date of a new NTIOL class is $50 per
lens. Since implementation of the
process for adjustment of payment

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amounts for NTIOLs in 1999, we have
not revised the payment adjustment
amount, and we did not propose to
revise the payment adjustment amount
for CY 2015.
4. Announcement of CY 2015 Deadline
for Submitting Requests for CMS
Review of Applications for a New Class
of NTIOLs
In accordance with 42 CFR 416.185(a)
of our regulations, CMS announces that
in order to be considered for payment
effective beginning in CY 2016, requests
for review of applications for a new
class of new technology IOLs must be
received at CMS by 5 p.m. EST, on
March 2, 2015. Send requests to ASC/
NTIOL, Division of Outpatient Care,
Mailstop C4–05–17, Centers for
Medicare and Medicaid Services, 7500
Security Boulevard, Baltimore, MD
21244–1850. To be considered, requests
for NTIOL reviews must include the
information requested on the CMS Web
site at: http://www.cms.gov/ASC
Payment/downloads/NTIOLprocess.pdf.
F. ASC Payment and Comment
Indicators

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1. Background
In addition to the payment indicators
that we introduced in the August 2,
2007 final rule, we also created final
comment indicators for the ASC
payment system in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66855). We created Addendum DD1
to define ASC payment indicators that
we use in Addenda AA and BB to
provide payment information regarding
covered surgical procedures and
covered ancillary services, respectively,
under the revised ASC payment system.
The ASC payment indicators in
Addendum DD1 are intended to capture
policy relevant characteristics of HCPCS
codes that may receive packaged or
separate payment in ASCs, such as
whether they were on the ASC list of
covered services prior to CY 2008;
payment designation, such as deviceintensive or office-based, and the
corresponding ASC payment
methodology; and their classification as
separately payable ancillary services
including radiology services,
brachytherapy sources, OPPS passthrough devices, corneal tissue
acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that
lists the ASC comment indicators. The
ASC comment indicators used in
Addenda AA and BB to the proposed
rules and final rules with comment
period serve to identify, for the revised
ASC payment system, the status of a

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specific HCPCS code and its payment
indicator with respect to the timeframe
when comments will be accepted. The
comment indicator ‘‘NI’’ is used in the
OPPS/ASC final rule with comment
period to indicate new codes for the
next calendar year for which the interim
payment indicator assigned is subject to
comment. The comment indicator ‘‘NI’’
also is assigned to existing codes with
substantial revisions to their descriptors
such that we consider them to be
describing new services, as discussed in
the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60622). We
indicated that in the CY 2015 OPPS/
ASC final rule with comment period, we
will respond to public comments and
finalize the ASC treatment of all codes
that are labeled with comment indicator
‘‘NI’’ in Addenda AA and BB to the CY
2014 OPPS/ASC final rule with
comment period.
The ‘‘CH’’ comment indicator was
used in Addenda AA and BB to the
proposed rule (which are available via
the Internet on the CMS Web site) to
indicate that the payment indicator
assignment has changed for an active
HCPCS code in the current year and
next calendar year; an active HCPCS
code is newly recognized as payable in
ASCs; or an active HCPCS code is
discontinued at the end of the current
calendar year. The ‘‘CH’’ comment
indicators that are published in the final
rule with comment period are provided
to alert readers that a change has been
made from one calendar year to the
next, but do not indicate that the change
is subject to comment.
2. ASC Payment and Comment
Indicators
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41028), we did not propose
any changes to the definitions of the
ASC comment indicators for CY 2015.
In order to incorporate changes
associated with our proposal for CY
2015, as detailed in section XII.D.2.b. of
the proposed rule, that certain
diagnostic tests qualify as covered
ancillary services when provided
integral to an ASC covered surgical
procedure, we proposed to revise the
definitions for payment indicators ‘‘Z2’’
and ‘‘Z3’’ to add the words ‘‘or
diagnostic’’ after ‘‘Radiology’’ so that the
proposed definition for payment
indicator ‘‘Z2’’ would be ‘‘Radiology or
diagnostic service paid separately when
provided integral to a surgical
procedure on ASC list; payment based
on OPPS relative payment weight,’’ and
the proposed definition for payment
indicator ‘‘Z3’’ would be ‘‘Radiology or
diagnostic service paid separately when
provided integral to a surgical

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66935

procedure on ASC list; payment based
on MPFS nonfacility PE RVUs.’’ We
refer readers to Addenda DD1 and DD2
to the proposed rule (which are
available via the Internet on the CMS
Web site) for the complete list of ASC
payment and comment indicators for
the CY 2015 update.
We did not receive any public
comments regarding our proposals to
change the definitions of ‘‘Z2’’ and
‘‘Z3’’. Therefore, we are finalizing our
proposal to revise the definitions for
payment indicators ‘‘Z2’’ and ‘‘Z3’’ to
add the words ‘‘or diagnostic’’ after
‘‘Radiology’’ so that the revised
definition for payment indicator ‘‘Z2’’
will be ‘‘Radiology or diagnostic service
paid separately when provided integral
to a surgical procedure on ASC list;
payment based on OPPS relative
payment weight,’’ and the revised
definition for payment indicator ‘‘Z3’’
will be ‘‘Radiology or diagnostic service
paid separately when provided integral
to a surgical procedure on ASC list;
payment based on MPFS nonfacility PE
RVUs.’’
G. Calculation of the ASC Conversion
Factor and the ASC Payment Rates
1. Background
In the August 2, 2007 final rule (72 FR
42493), we established our policy to
base ASC relative payment weights and
payment rates under the revised ASC
payment system on APC groups and the
OPPS relative payment weights.
Consistent with that policy and the
requirement at section 1833(i)(2)(D)(ii)
of the Act that the revised payment
system be implemented so that it would
be budget neutral, the initial ASC
conversion factor (CY 2008) was
calculated so that estimated total
Medicare payments under the revised
ASC payment system in the first year
would be budget neutral to estimated
total Medicare payments under the prior
(CY 2007) ASC payment system (the
ASC conversion factor is multiplied by
the relative payment weights calculated
for many ASC services in order to
establish payment rates). That is,
application of the ASC conversion factor
was designed to result in aggregate
Medicare expenditures under the
revised ASC payment system in CY
2008 being equal to aggregate Medicare
expenditures that would have occurred
in CY 2008 in the absence of the revised
system, taking into consideration the
cap on ASC payments in CY 2007 as
required under section 1833(i)(2)(E) of
the Act (72 FR 42522). We adopted a
policy to make the system budget
neutral in subsequent calendar years (72

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FR 42532 through 42533; 42 CFR
416.171(e)).
We note that we consider the term
‘‘expenditures’’ in the context of the
budget neutrality requirement under
section 1833(i)(2)(D)(ii) of the Act to
mean expenditures from the Medicare
Part B Trust Fund. We do not consider
expenditures to include beneficiary
coinsurance and copayments. This
distinction was important for the CY
2008 ASC budget neutrality model that
considered payments across the OPPS,
ASC, and MPFS payment systems.
However, because coinsurance is almost
always 20 percent for ASC services, this
interpretation of expenditures has
minimal impact for subsequent budget
neutrality adjustments calculated within
the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66857
through 66858), we set out a step-bystep illustration of the final budget
neutrality adjustment calculation based
on the methodology finalized in the
August 2, 2007 final rule (72 FR 42521
through 42531) and as applied to
updated data available for the CY 2008
OPPS/ASC final rule with comment
period. The application of that
methodology to the data available for
the CY 2008 OPPS/ASC final rule with
comment period resulted in a budget
neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS
relative payment weights as the ASC
relative payment weights for most
services and, consistent with the final
policy, we calculated the CY 2008 ASC
payment rates by multiplying the ASC
relative payment weights by the final
CY 2008 ASC conversion factor of
$41.401. For covered office-based
surgical procedures and covered
ancillary radiology services (excluding
covered ancillary radiology services
involving certain nuclear medicine
procedures or involving the use of
contrast agents, as discussed in section
XII.D.2.b. of the proposed rule), the
established policy is to set the payment
rate at the lower of the MPFS
unadjusted nonfacility PE RVU-based
amount or the amount calculated using
the ASC standard ratesetting
methodology. Further, as discussed in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66841 through
66843), we also adopted alternative
ratesetting methodologies for specific
types of services (for example, deviceintensive procedures).
As discussed in the August 2, 2007
final rule (72 FR 42517 through 42518)
and as codified at § 416.172(c) of the
regulations, the revised ASC payment
system accounts for geographic wage
variation when calculating individual

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ASC payments by applying the pre-floor
and pre-reclassified IPPS hospital wage
indexes to the labor-related share,
which is 50 percent of the ASC payment
amount based on a GAO report of ASC
costs using 2004 survey data. Beginning
in CY 2008, CMS accounted for
geographic wage variation in labor cost
when calculating individual ASC
payments by applying the pre-floor and
pre-reclassified hospital wage index
values that CMS calculates for payment
under the IPPS, using updated Core
Based Statistical Areas (CBSAs) issued
by OMB in June 2003. In other words,
the wage index for an ASC is the prefloor and pre-reclassified hospital wage
index under the IPPS of the CBSA that
maps to the CBSA where the ASC is
located.
The reclassification provision in
section 1886(d)(10) of the Act is specific
to hospitals. We believe that using the
most recently available pre-floor and
pre-reclassified IPPS hospital wage
indexes results in the most appropriate
adjustment to the labor portion of ASC
costs. We continue to believe that the
unadjusted hospital wage indexes,
which are updated yearly and are used
by many other Medicare payment
systems, appropriately account for
geographic variation in labor costs for
ASCs.
On February 28, 2013, OMB issued
OMB Bulletin No. 13–01, which
provides the delineations of all
Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan
Statistical Areas, Combined Statistical
Areas, and New England City and Town
Areas in the United States and Puerto
Rico based on the standards published
on June 28, 2010 in the Federal Register
(75 FR 37246 through 37252) and 2010
Census Bureau data. (A copy of this
bulletin may be obtained at: http://
www.whitehouse.gov/sites/default/files/
omb/bulletins/2013/b-13-01.pdf.) The
pre-floor and pre-reclassified IPPS
hospital wage indexes for FY 2014 do
not reflect OMB’s new area delineations
and, because the ASC wage indexes are
the pre-floor and pre-reclassified IPPS
hospital wage indexes, the CY 2014 ASC
wage indexes do not reflect the OMB
changes. As discussed in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28054 through 28068), we proposed to
use the new CBSAs delineations issued
by OMB in OMB Bulletin 13–01 for the
IPPS hospital wage index beginning in
FY 2015. Therefore, because the ASC
wage indexes are the pre-floor and prereclassified IPPS hospital wage indexes,
the proposed CY 2015 ASC wage
indexes reflected the new OMB
delineations. In the FY 2015 IPPS/LTCH
PPS final rule (79 FR 49950 through

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49957), we finalized our proposal to use
these new OMB delineations for the
IPPS hospital wage index. Therefore, the
final ASC wage indexes, which are the
pre-floor and pre-reclassified IPPS
hospital wage indexes, will reflect the
new OMB delineations. As discussed in
section XII.G.2.b. of the CY 2015 OPPS/
ASC proposed rule (79 FR 41030), we
proposed a transition to these new OMB
delineations for ASCs in certain
situations for CY 2015.
We note that, in certain instances,
there might be urban or rural areas for
which there is no IPPS hospital whose
wage index data would be used to set
the wage index for that area. For these
areas, our policy has been to use the
average of the wage indexes for CBSAs
(or metropolitan divisions as applicable)
that are contiguous to the area that has
no wage index (where ‘‘contiguous’’ is
defined as sharing a border). For
example, for CY 2014, we applied a
proxy wage index based on this
methodology to ASCs located in CBSA
25980 (Hinesville-Fort Stewart, GA) and
CBSA 08 (Rural Delaware).
When all of the areas contiguous to
the urban CBSA of interest are rural and
there is no IPPS hospital that has wage
index data that could be used to set the
wage index for that area, we determine
the ASC wage index by calculating the
average of all wage indexes for urban
areas in the State (75 FR 72058 through
72059). In other situations, where there
are no IPPS hospitals located in a
relevant labor market area, we will
continue our current policy of
calculating an urban or rural area’s wage
index by calculating the average of the
wage indexes for CBSAs (or
metropolitan divisions where
applicable) that are contiguous to the
area with no wage index.
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment
Weights for CY 2015 and Future Years
We update the ASC relative payment
weights each year using the national
OPPS relative payment weights (and
MPFS nonfacility PE RVU-based
amounts, as applicable) for that same
calendar year and uniformly scale the
ASC relative payment weights for each
update year to make them budget
neutral (72 FR 42533). In the CY 2015
OPPS/ASC proposed rule (79 FR 41029
through 41030), consistent with our
established policy, we proposed to scale
the CY 2015 relative payment weights
for ASCs according to the following
method. Holding ASC utilization and
the mix of services constant from CY
2013, we proposed to compare the total
payment using the CY 2014 ASC

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relative payment weights with the total
payment using the CY 2015 relative
payment weights to take into account
the changes in the OPPS relative
payment weights between CY 2014 and
CY 2015. We proposed to use the ratio
of CY 2014 to CY 2015 total payment
(the weight scaler) to scale the ASC
relative payment weights for CY 2015.
The proposed CY 2015 ASC scaler was
0.9142 and scaling would apply to the
ASC relative payment weights of the
covered surgical procedures and
covered ancillary radiology services for
which the ASC payment rates are based
on OPPS relative payment weights.
Scaling would not apply in the case
of ASC payment for separately payable
covered ancillary services that have a
predetermined national payment
amount (that is, their national ASC
payment amounts are not based on
OPPS relative payment weights), such
as drugs and biologicals that are
separately paid or services that are
contractor-priced or paid at reasonable
cost in ASCs. Any service with a
predetermined national payment
amount would be included in the ASC
budget neutrality comparison, but
scaling of the ASC relative payment
weights would not apply to those
services. The ASC payment weights for
those services without predetermined
national payment amounts (that is,
those services with national payment
amounts that would be based on OPPS
relative payment weights) would be
scaled to eliminate any difference in the
total payment between the current year
and the update year.
For any given year’s ratesetting, we
typically use the most recent full
calendar year of claims data to model
budget neutrality adjustments. For this
final rule with comment period, we
used CY 2013 ASC claims data.
To create an analytic file to support
calculation of the weight scaler and
budget neutrality adjustment for the
wage index (discussed below), we
summarized available CY 2013 ASC
claims by ASC and by HCPCS code. We
used the National Provider Identifier for
the purpose of identifying unique ASCs
within the CY 2013 claims data. We
used the supplier zip code reported on
the claim to associate State, county, and
CBSA with each ASC. This file,
available to the public as a supporting
data file for the proposed rule, is posted
on the CMS Web site at: http://
www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/
LimitedDataSets/
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b. Transition Period to New OMB
Delineations for ASC Wage Index
As discussed in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28054
through 28055), we proposed to use the
new CBSA delineations issued by OMB
in OMB Bulletin 13–01 dated February
28, 2013 for the IPPS hospital wage
index. Therefore, because the ASC wage
indexes are the pre-floor and prereclassified IPPS hospital wage indexes,
the proposed CY 2015 ASC wage
indexes reflected the new OMB
delineations. While we believe that
instituting the latest OMB labor market
area delineations would create a more
accurate and up-to-date wage index
system, we also recognize that
implementing the new OMB
delineations may cause some short-term
instability in ASC payments. Therefore,
we proposed a transition to the new
OMB delineations similar to what we
proposed for the IPPS for FY 2015 (79
FR 28062) and the OPPS as described in
section II.C of the proposed rule.
Specifically, for ASCs, we proposed a 1year blended wage index for all ASCs
that would experience any decrease in
their actual wage index exclusively due
to the implementation of the new OMB
delineations. For ASCs where the CY
2015 ASC wage index with the CY 2015
CBSAs would be lower than with the
CY 2014 CBSAs, we proposed that the
CY 2015 ASC wage index would be 50
percent of the ASC wage index based on
the CY 2014 CBSA and 50 percent of the
ASC wage index based on the new CY
2015 CBSA. We believe a 1-year 50/50
blended wage index would mitigate the
short-term instability and negative
payment impacts due to the proposed
implementation of the new OMB
delineations, providing ASCs that
would be negatively impacted by the
new OMB delineations with a transition
period during which they may adjust to
their new geographic CBSA. We believe
that a longer transition period would
reduce the accuracy of the overall labor
market area wage index system.
Comment: Some commenters objected
to CMS continuing to use the pre-floor
and pre-reclassified IPPS hospital wage
indexes for the labor portion of ASC
costs. These commenters stated that
ASCs and hospitals compete in the same
local markets and provide many of the
same services and require similar staff.
Commenters stated that the different
wage index for hospitals than for ASCs
increases the gap between the OPPS and
ASC payment rates.
Response: As discussed in the August
2, 2007 final rule (72 FR 42517 through
42518) and as codified at § 416.172(c) of
the regulations, the revised ASC

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payment system accounts for geographic
wage variation when calculating
individual ASC payments by applying
the pre-floor and pre-reclassified IPPS
hospital wage indexes to the laborrelated share, which is 50 percent of the
ASC payment amount. We have
responded to similar comments in the
past and believe our prior rationale for
using unadjusted wage indexes is still a
sound one. We continue to believe that
the unadjusted hospital wage indexes,
which are updated yearly and are used
by many other Medicare payment
systems, appropriately account for
geographic variation in labor costs for
ASCs. We did not propose to change our
use of the pre-floor, pre-reclassified
IPPS wage indexes for the ASC wage
index. Therefore, in addition to the
reasons stated above, we will continue
to apply the pre-floor, pre-reclassified
IPPS hospital wage indexes for the labor
portion of ASC costs. We refer readers
to our responses to similar comments in
the CY 2010, CY 2011, CY 2012, CY
2013, and CY 2014 OPPS/ASC final
rules with comment period (74 FR
60625; 75 FR 72059; 76 FR 74446; 77 FR
68463; and 78 FR 75086, respectively).
Comment: Commenters supported
CMS’ proposal to phase in reductions to
the ASC wage indexes that occur as a
result of the new OMB labor market
delineations.
Response: We appreciate the
commenters’ support and, as stated
below, we are finalizing this policy as
proposed.
After consideration of the public
comments we received, we are
finalizing our proposal to apply a 1-year
blended wage index for all ASCs that
would experience any decrease in their
actual wage index exclusively due to the
implementation of the new OMB
delineations. Specifically, for ASCs
where the CY 2015 ASC wage index
with the CY 2015 CBSAs is lower than
with the CY 2014 CBSAs, we will
calculate the CY 2015 ASC wage index
such that it will be 50 percent of the
ASC wage index based on the CY 2014
CBSA and 50 percent of the ASC wage
index based on the new CY 2015 CBSA.
c. Updating the ASC Conversion Factor
Under the OPPS, we typically apply
a budget neutrality adjustment for
provider level changes, most notably a
change in the wage index values for the
upcoming year, to the conversion factor.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41030 through 41031),
consistent with our final ASC payment
policy, for the CY 2015 ASC payment
system, we proposed to calculate and
apply a budget neutrality adjustment to
the ASC conversion factor for supplier

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level changes in wage index values for
the upcoming year, just as the OPPS
wage index budget neutrality
adjustment is calculated and applied to
the OPPS conversion factor. For CY
2015, we calculated this proposed
adjustment for the ASC payment system
by using the most recent CY 2013 claims
data available and estimating the
difference in total payment that would
be created by introducing the proposed
CY 2015 ASC wage indexes.
Specifically, holding CY 2013 ASC
utilization and service-mix and the
proposed CY 2015 national payment
rates after application of the weight
scaler constant, we calculated the total
adjusted payment using the CY 2014
ASC wage indexes and the total
adjusted payment using the proposed
CY 2015 ASC wage indexes (which
reflect the new OMB delineations and
would include any applicable transition
period). We used the 50-percent laborrelated share for both total adjusted
payment calculations. We then
compared the total adjusted payment
calculated with the CY 2014 ASC wage
indexes to the total adjusted payment
calculated with the proposed CY 2015
ASC wage indexes and applied the
resulting ratio of 0.9983 (the proposed
CY 2015 ASC wage index budget
neutrality adjustment) to the CY 2014
ASC conversion factor to calculate the
proposed CY 2015 ASC conversion
factor.
Section 1833(i)(2)(C)(i) of the Act
requires that, ‘‘if the Secretary has not
updated amounts established’’ under
the revised ASC payment system in a
calendar year, the payment amounts
‘‘shall be increased by the percentage
increase in the Consumer Price Index
for all urban consumers (U.S. city
average) as estimated by the Secretary
for the 12-month period ending with the
midpoint of the year involved.’’ The
statute, therefore, does not mandate the
adoption of any particular update
mechanism, but it requires the payment
amounts to be increased by the CPI–U
in the absence of any update. Because
the Secretary updates the ASC payment
amounts annually, we adopted a policy,
which we codified at 42 CFR
416.171(a)(2)(ii), to update the ASC
conversion factor using the CPI–U for
CY 2010 and subsequent calendar years.
Therefore, the annual update to the ASC
payment system is the CPI–U (referred
to as the CPI–U update factor).
Section 3401(k) of the Affordable Care
Act amended section 1833(i)(2)(D) of the
Act by adding a new clause (v) which
requires that ‘‘any annual update under
[the ASC payment] system for the year,
after application of clause (iv), shall be
reduced by the productivity adjustment

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described in section
1886(b)(3)(B)(xi)(II)’’ of the Act effective
with the calendar year beginning
January 1, 2011. The statute defines the
productivity adjustment to be equal to
the 10-year moving average of changes
in annual economy-wide private
nonfarm business multifactor
productivity (MFP) (as projected by the
Secretary for the 10-year period ending
with the applicable fiscal year, year,
cost reporting period, or other annual
period) (the ‘‘MFP adjustment’’). Clause
(iv) of section 1833(i)(2)(D) of the Act
authorizes the Secretary to provide for
a reduction in any annual update for
failure to report on quality measures.
Clause (v) of section 1833(i)(2)(D) of the
Act states that application of the MFP
adjustment to the ASC payment system
may result in the update to the ASC
payment system being less than zero for
a year and may result in payment rates
under the ASC payment system for a
year being less than such payment rates
for the preceding year.
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74516), we
finalized a policy that ASCs begin
submitting data on quality measures for
services beginning on October 1, 2012
for the CY 2014 payment determination
under the ASCQR Program. In the CY
2013 OPPS/ASC final rule with
comment period (77 FR 68499 through
68500), we finalized a methodology to
calculate reduced national unadjusted
payment rates using the ASCQR
Program reduced update conversion
factor that would apply to ASCs that fail
to meet their quality reporting
requirements for the CY 2014 payment
determination and subsequent years.
The application of the 2.0 percentage
point reduction to the annual update
factor, which currently is the CPI–U,
may result in the update to the ASC
payment system being less than zero for
a year for ASCs that fail to meet the
ASCQR Program requirements. We
amended §§ 416.160(a)(1) and 416.171
to reflect these policies.
In accordance with section
1833(i)(2)(C)(i) of the Act, before
applying the MFP adjustment, the
Secretary first determines the
‘‘percentage increase’’ in the CPI–U,
which we interpret cannot be a negative
percentage. Thus, in the instance where
the percentage change in the CPI–U for
a year is negative, we would hold the
CPI–U update factor for the ASC
payment system to zero. For the CY
2014 payment determination and
subsequent years, under section
1833(i)(2)(D)(iv) of the Act, we would
reduce the annual update by 2.0
percentage points for an ASC that fails
to submit quality information under the

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rules established by the Secretary in
accordance with section 1833(i)(7) of
the Act. Section 1833(i)(2)(D)(v) of the
Act, as added by section 3401(k) of the
Affordable Care Act, requires that the
Secretary reduce the annual update
factor, after application of any quality
reporting reduction, by the MFP
adjustment, and states that application
of the MFP adjustment to the annual
update factor after application of any
quality reporting reduction may result
in the update being less than zero for a
year. If the application of the MFP
adjustment to the annual update factor
after application of any quality reporting
reduction would result in an MFPadjusted update factor that is less than
zero, the resulting update to the ASC
payment rates would be negative and
payments would decrease relative to the
prior year. We refer readers to the CY
2011 OPPS/ASC final rule with
comment period (75 FR 72062 through
72064) for illustrative examples of how
the MFP adjustment is applied to the
ASC payment system.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41031), based on IHS Global
Insight’s (IGI’s) 2014 first quarter
forecast with historical data through
2013 fourth quarter, for the 12-month
period ending with the midpoint of CY
2015, the CPI–U update was projected to
be 1.7 percent. Also, based on IGI’s 2014
first quarter forecast, the MFP
adjustment for the period ending with
the midpoint of CY 2015 was projected
to be 0.5 percent. IGI is a nationally
recognized economic and financial
forecasting firm that contracts with CMS
to forecast the components of CMS’
market baskets as well as the CPI–U and
MFP. We finalized the methodology for
calculating the MFP adjustment in the
CY 2011 MPFS final rule with comment
period (75 FR 73394 through 73396) as
revised in the CY 2012 MPFS final rule
with comment period (76 FR 73300
through 73301). The ASCQR Program
affected payment rates beginning in CY
2014 and, under this program, there is
a 2.0 percentage point reduction to the
CPI–U for ASCs that fail to meet the
ASCQR Program requirements.
We proposed to reduce the CPI–U
update of 1.7 percent by the MFP
adjustment of 0.5 percentage point,
resulting in an MFP-adjusted CPI–U
update factor of 1.2 percent for ASCs
meeting the quality reporting
requirements. Therefore, we proposed to
apply a 1.2 percent MFP-adjusted CPI–
U update factor to the CY 2014 ASC
conversion factor for ASCs meeting the
quality reporting requirements. We
proposed to reduce the CPI–U update of
1.7 percent by 2.0 percentage points for
ASCs that do not meet the quality

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reporting requirements and then apply
the 0.5 percentage point MFP reduction.
Therefore, we proposed to apply a ¥0.8
percent quality reporting/MFP-adjusted
CPI–U update factor to the CY 2014 ASC
conversion factor for ASCs not meeting
the quality reporting requirements. We
also proposed that if more recent data
are subsequently available (for example,
a more recent estimate of the CY 2015
CPI–U update and MFP adjustment), we
would use such data, if appropriate, to
determine the CY 2015 ASC update for
the final rule with comment period.
For CY 2015, we also proposed to
adjust the CY 2014 ASC conversion
factor ($43.471) by the proposed wage
index budget neutrality factor of 0.9983
in addition to the MFP-adjusted update
factor of 1.2 percent discussed above,
which results in a proposed CY 2015
ASC conversion factor of $43.918 for
ASCs meeting the quality reporting
requirements. For ASCs not meeting the
quality reporting requirements, we
proposed to adjust the CY 2014 ASC
conversion factor ($43.471) by the
proposed wage index budget neutrality
factor of 0.9983 in addition to the
quality reporting/MFP-adjusted update
factor of ¥0.8 percent discussed above,
which results in a proposed CY 2015
ASC conversion factor of $43.050.
We invited public comment on these
proposals.
Comment: Some commenters stated
that CMS should replace the CPI–U as
the update mechanism for ASC
payments with the hospital market
basket. Commenters stated that the CPI–
U measures inflation in a basket of
consumer goods atypical of what ASCs
purchase. In addition, the commenters
stated that the Affordable Care Act
requires CMS to reduce the update by a
measure of productivity gains, which
inappropriately subjects ASCs to two
productivity adjustments:
improvements reflected in the price of
consumer purchased goods and the
additional statutorily required
reduction. While the commenters
maintained that the hospital market
basket would be the most appropriate
update for ASCs, they suggested that
there are various alternatives within the
CPI–U that CMS could explore that
more accurately reflect the economic
climate in the ASC environment. For
instance, CMS could use subsets of the
CPI–U (medical care, medical care
services, and outpatient services) that
are consistent with the services being
provided in the ASC setting.
MedPAC commented that, in the CY
2013 rulemaking, CMS requested public
comment on the feasibility of ASC cost
information to determine whether CPI–
U or another type of update factor

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would be more appropriate, but that
CMS did not propose to begin collecting
ASC cost data. MedPAC acknowledged
that there may be a burden associated
with requiring ASCs to submit cost
reports, but recommended that CMS
collect some sort of ASC cost data, such
as through surveys.
Response: As we have stated in
response to similar comments in the
past (for example, 77 FR 68465; 78 FR
75088 through 75089), we continue to
believe that, while commenters argue
that the items included in the CPI–U
index may not adequately measure
inflation for the goods and services
provided by ASCs, the hospital market
basket does not align with the cost
structures of ASCs. Hospitals provide a
much wider range of services, such as
room and board and emergency
services, and the costs associated with
providing these services are not part of
the ASC cost structure. Therefore, at this
time, we do not believe that it is
appropriate to use the hospital market
basket for the ASC annual update.
We recognize that the CPI–U is an
output price index that accounts for
productivity. However, section
1833(i)(2)(D)(v) of the Act requires the
agency to reduce the annual update
factor by the MFP adjustment. For the
reasons stated above, we do not believe
that the hospital market basket
appropriately reflects the cost structures
of ASCs, and because we do not have
cost data on ASCs, we are continuing to
use the CPI–U which we believe
provides a reasonable approximation of
the price increases facing ASCs. We will
continue to explore the feasibility of
collecting ASC cost data. However,
based on our past experience, we do not
believe that collecting such data through
surveys would be productive. We
appreciate the commenter’s suggestion
to adjust the CPI–U, such as by using
subsets of services within the CPI–U, for
productivity and will take this
suggestion into consideration if we
propose changes to the ASC update
factor in the future.
After consideration of the public
comments we received, we are applying
our established methodology for
determining the final CY 2015 ASC
conversion factor. Using more complete
CY 2013 data for this final rule with
comment period than were available for
the proposed rule, we calculated a wage
index budget neutrality adjustment of
0.9998. Based on IGI’s 2014 third
quarter forecast, the CPI–U for the 12month period ending with the midpoint
of CY 2015 is now projected to be 1.9
percent, while the MFP adjustment (as
discussed and finalized in the CY 2012
MPFS final rule with comment period

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(76 FR 73300 through 73301)) is 0.5
percent, resulting in an MFP-adjusted
CPI–U update factor of 1.4 percent for
ASCs that meet the quality reporting
requirements. The final ASC conversion
factor of $44.071, for ASCs that meet the
quality reporting requirements, is the
product of the CY 2014 conversion
factor of $43.471 multiplied by the wage
index budget neutrality adjustment of
0.9998 and the MFP-adjusted CPI–U
payment update of 1.4 percent. For
ASCs that do not meet the quality
reporting requirements, we are reducing
the CPI–U update of 1.9 percent by 2.0
percentage points and then we are
applying the 0.5 percentage point MFP
reduction, resulting in a -0.6 percent
quality reporting/MFP-adjusted CPI–U
update factor. The final ASC conversion
factor of $43.202 for ASCs that do not
meet the quality reporting requirements
is the product of the CY 2014
conversion factor of $43.471 multiplied
by the wage index budget neutrality
adjustment of 0.9998 and the quality
reporting/MFP-adjusted CPI–U payment
update of ¥0.6 percent.
3. Display of CY 2015 ASC Payment
Rates
Addenda AA and BB to this CY 2015
OPPS/ASC final rule with comment
period (which are available via the
Internet on the CMS Web site) display
the final updated ASC payment rates for
CY 2015 for covered surgical procedures
and covered ancillary services,
respectively. For those covered surgical
procedures and covered ancillary
services where the payment rate is the
lower of the final rates under the ASC
standard ratesetting methodology and
the MPFS final rates, the final payment
indicators and rates set forth in this rule
are based on a comparison using the
MPFS rates effective January 1, 2015.
These payment rates and indicators do
not include the effect of the negative
update to the MPFS payment rates
effective April 1, 2015 under current
law. Updates to these rates and payment
indicators effective April l, 2015 will be
included in the April 2015 quarterly
ASC addenda posted on the CMS Web
site. For a discussion of the MPFS rates,
we refer readers to the CY 2015 MPFS
final rule with comment period. The
payment rates included in these
addenda reflect the full ASC payment
update and not the reduced payment
update used to calculate payment rates
for ASCs not meeting the quality
reporting requirements under the
ASCQR Program. These addenda
contain several types of information
related to the CY 2015 payment rates.
Specifically, in Addendum AA, a ‘‘Y’’ in
the column titled ‘‘Subject to Multiple

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Procedure Discounting’’ indicates that
the surgical procedure will be subject to
the multiple procedure payment
reduction policy. As discussed in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66829 through
66830), most covered surgical
procedures are subject to a 50-percent
reduction in the ASC payment for the
lower-paying procedure when more
than one procedure is performed in a
single operative session. Display of the
comment indicator ‘‘CH’’ in the column
titled ‘‘Comment Indicator’’ indicates a
change in payment policy for the item
or service, including identifying
discontinued HCPCS codes, designating
items or services newly payable under
the ASC payment system, and
identifying items or services with
changes in the ASC payment indicator
for CY 2015. Display of the comment
indicator ‘‘NI’’ in the column titled
‘‘Comment Indicator’’ indicates that the
code is new (or substantially revised)
and that the payment indicator
assignment is an interim assignment
that is open to comment in the final rule
with comment period.
The values displayed in the column
titled ‘‘CY 2015 Payment Weight’’ are
the relative payment weights for each of
the listed services for CY 2015. The
payment weights for all covered surgical
procedures and covered ancillary
services whose ASC payment rates are
based on OPPS relative payment
weights were scaled for budget
neutrality. Therefore, scaling was not
applied to the device portion of the
device-intensive procedures, services
that are paid at the MPFS nonfacility PE
RVU-based amount, separately payable
covered ancillary services that have a
predetermined national payment
amount, such as drugs and biologicals
and brachytherapy sources that are
separately paid under the OPPS, or
services that are contractor-priced or
paid at reasonable cost in ASCs.
To derive the CY 2015 payment rate
displayed in the ‘‘CY 2015 Payment
Rate’’ column, each ASC payment
weight in the ‘‘CY 2015 Payment
Weight’’ column was multiplied by the
CY 2015 conversion factor of $44.071.
The conversion factor includes a budget
neutrality adjustment for changes in the
wage index values and the annual
update factor as reduced by the
productivity adjustment (as discussed in
section XII.H.2.b. of this final rule with
comment period).
In Addendum BB, there are no
relative payment weights displayed in
the ‘‘CY 2015 Payment Weight’’ column
for items and services with
predetermined national payment
amounts, such as separately payable

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drugs and biologicals. The ‘‘CY 2015
Payment’’ column displays the CY 2015
national unadjusted ASC payment rates
for all items and services. The CY 2015
ASC payment rates listed in Addendum
BB for separately payable drugs and
biologicals are based on ASP data used
for payment in physicians’ offices in
October 2014.
Addendum E provides the HCPCS
codes and short descriptors for surgical
procedures that are to be excluded from
payment in ASCs for FY 2015.
We did not receive any public
comments regarding the continuation of
our policy to provide CY 2015 ASC
payment information as detailed in
Addenda AA and BB. Therefore,
Addenda AA and BB to this final rule
with comment period (which are
available via the Internet on the CMS
Web site) display the updated ASC
payment rates for CY 2015 for covered
surgical procedures and covered
ancillary services, respectively, and
provide additional information related
to the CY 2015 rates.
XIII. Hospital Outpatient Quality
Reporting Program Updates
A. Background
1. Overview
CMS seeks to promote higher quality
and more efficient health care for
Medicare beneficiaries. In pursuit of
these goals, CMS has implemented
quality reporting programs for multiple
care settings including the quality
reporting program for hospital
outpatient care, known as the Hospital
Outpatient Quality Reporting (OQR)
Program, formerly known as the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP). The
Hospital OQR Program has generally
been modeled after the quality reporting
program for hospital inpatient services
known as the Hospital Inpatient Quality
Reporting (IQR) Program (formerly
known as the Reporting Hospital
Quality Data for Annual Payment
Update (RHQDAPU) Program).
In addition to the Hospital IQR and
Hospital OQR Programs, CMS has
implemented quality reporting programs
for other care settings that provide
financial incentives for the reporting of
quality data to CMS. These additional
programs include reporting for care
furnished by:
• Physicians and other eligible
professionals, under the Physician
Quality Reporting System (PQRS,
formerly referred to as the Physician
Quality Reporting Program Initiative
(PQRI));
• Inpatient rehabilitation facilities,
under the Inpatient Rehabilitation

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Facility Quality Reporting Program (IRF
QRP);
• Long-term care hospitals, under the
Long-Term Care Hospital Quality
Reporting (LTCHQR) Program;
• PPS-exempt cancer hospitals, under
the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program;
• Ambulatory surgical centers, under
the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program;
• Inpatient psychiatric facilities,
under the Inpatient Psychiatric Facility
Quality Reporting (IPFQR) Program;
• Home health agencies, under the
Home Health Quality Reporting Program
(HH QRP); and
• Hospices, under the Hospice
Quality Reporting Program.
In addition, CMS has implemented
two value-based purchasing programs,
the Hospital Value-Based Purchasing
(Hospital VBP) Program and the EndStage Renal Disease (ESRD) Quality
Incentive Program (QIP), that link
payment to performance.
In implementing the Hospital OQR
Program and other quality reporting
programs, we have focused on measures
that have high impact and support
national priorities for improved quality
and efficiency of care for Medicare
beneficiaries as reflected in the National
Quality Strategy (NQS) and CMS
Quality Strategy, as well as conditions
for which wide cost and treatment
variations have been reported, despite
established clinical guidelines. To the
extent possible under various
authorizing statutes, our ultimate goal is
to align the clinical quality measure
requirements of our various quality
reporting programs. As appropriate, we
will consider the adoption of measures
with electronic specifications to enable
the collection of this information as part
of care delivery.
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68467 through 68469) for
a discussion on the principles
underlying consideration for future
measures that we intend to use in
implementing this and other quality
reporting programs.
2. Statutory History of the Hospital OQR
Program
We refer readers to the CY 2011
OPPS/ASC final rule with comment
period (75 FR 72064 through 72065) for
a detailed discussion of the statutory
history of the Hospital OQR Program.

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3. Measure Updates and Data
Publication
a. Maintenance of Technical
Specifications for Quality Measures
CMS maintains technical
specifications for previously adopted
Hospital OQR Program measures. These
specifications are updated as we
continue to develop the Hospital OQR
Program. The manuals that contain
specifications for the previously
adopted measures can be found on the
QualityNet Web site at: https://
www.qualitynet.org/dcs/Content
Server?c=Page&pagename
=QnetPublic%2FPage%2FQnetTier2
&cid=1196289981244.
Many of the quality measures used in
Medicare and Medicaid reporting
programs are endorsed by the National
Quality Forum (NQF). We note that not
all of the measures adopted by the
Hospital OQR Program are NQFendorsed, nor is NQF endorsement a
program requirement (section
1833(t)(17)(C)(i) of the Act). As part of
its regular maintenance process for
endorsed performance measures, the
NQF requires measure stewards
(owners/developers) to submit annual
measure maintenance updates and
undergo maintenance of endorsement
review every 3 years. In the measure
maintenance process, the measure
steward is responsible for updating and
maintaining the currency and relevance
of the measure and will confirm existing
or minor specification changes with the
NQF on an annual basis. The NQF
solicits information from measure
stewards for annual reviews, and it
reviews measures for continued
endorsement in a specific 3-year cycle.
We note that the NQF’s annual or
triennial maintenance processes for
endorsed measures may result in the
NQF requiring updates to measures in
order to maintain endorsement status.
Other non-NQF measures may undergo
maintenance changes as well. We
believe that it is important to have in
place a subregulatory process to
incorporate nonsubstantive updates into
the measure specifications for measures
that we have adopted for the Hospital
OQR Program so that these measure
specifications remain current. We also
recognize that some changes to
measures are substantive in nature and
might not be appropriate for adoption
using a subregulatory process.
Therefore, in the CY 2013 OPPS/ASC
final rule with comment period (77 FR
68469 through 68470), we finalized our
proposal to follow the same process for
updating Hospital OQR Program
measures that we adopted for the
Hospital IQR Program measures,

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including the subregulatory process for
making updates to the adopted
measures (77 FR 53504 through 53505).
This process expanded upon the
subregulatory process for updating
measures that we finalized in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68766 through
68767).
b. Public Display of Quality Measures
We refer readers to the CY 2014
OPPS/ASC proposed rule (78 FR 43645)
for a discussion of our policy for the
publication of Hospital OQR Program
data on the Hospital Compare Web site
and noninteractive CMS Web sites.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41033), we did not propose
any changes to our policies on the
public display of quality measures.
Comment: One commenter urged
CMS to continue to keep stakeholders
such as physicians, hospitals, measure
developers, and patient groups engaged
in public reporting to ensure that
accurate and beneficial reporting is
performed. This commenter encouraged
CMS to establish streamlined policies
and procedures for partnering with
nongovernmental entities that have an
interest in posting data through ongoing
communication with these stakeholders,
including the rulemaking process.
Response: We interpret the
commenter’s suggestion to ‘‘. . .
establish streamlined policies and
procedures for partnering with
nongovernmental entities that have an
interest in posting data . . .’’ to mean
that we should establish streamlined
policies and procedures to partner with
physicians, hospitals, measure
developers, and patient groups that
wish to be involved in our quality data
reporting efforts. To the extent feasible
and practical, we work with as many
stakeholders as possible to ensure data
are accurately reported and displayed
on Hospital Compare and other CMS
Web sites. In the future, we will
continue working with stakeholders to
consolidate and streamline reporting.
B. Process for Retention of Hospital
OQR Program Measures Adopted in
Previous Payment Determinations
In the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68471), we
finalized a policy that once a quality
measure is adopted for the Hospital
OQR Program, it is retained for use in
subsequent years unless otherwise
specified.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41033), we did not propose
any changes to the process for retaining
measures previously adopted.

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C. Removal of Quality Measures From
the Hospital OQR Program Measure Set
1. Considerations in Removing Quality
Measures From the Hospital OQR
Program
In the FY 2010 IPPS/LTCH PPS final
rule, we finalized a process for
immediate retirement, which we later
termed ‘‘removal’’ (74 FR 43863), of
Hospital IQR Program measures based
on evidence that the continued use of
the measure as specified raised patient
safety concerns. We adopted the same
immediate measure retirement policy
for the Hospital OQR Program in the CY
2010 OPPS/ASC final rule with
comment period (74 FR 60634 through
60635). We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68472 through 68473) for
a discussion of our reasons for changing
the term ‘‘retirement’’ to ‘‘removal’’ in
the Hospital OQR Program.
In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50185), we finalized a set of
criteria for determining whether to
remove measures from the Hospital IQR
Program. These criteria are: (1) Measure
performance among hospitals is so high
and unvarying that meaningful
distinctions and improvements in
performance can no longer be made
(‘‘topped-out’’ measures); (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) 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; and (7) collection or
public reporting of a measure leads to
negative unintended consequences such
as patient harm. These criteria were
suggested through public comment on
proposals for the Hospital IQR Program,
and we determined that these criteria
are also applicable in evaluating the
Hospital OQR Program quality measures
for removal.
In the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68472
through 68473), we finalized our
proposal to apply these measure
removal criteria in the Hospital OQR
Program as well. In addition to the
Hospital IQR Program’s criteria, we
consider eliminating measure
redundancy and incorporating the views
of the Measure Applications Partnership
(MAP) when evaluating measures for
removal.

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2. Criteria for Removal of ‘‘Topped-Out’’
Measures
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41033 through 41034), we
proposed to refine the criteria for
determining when a measure is
‘‘topped-out.’’ We had previously
finalized that a measure is ‘‘topped-out’’
when measure performance among
hospitals is so high and unvarying that
meaningful distinctions and
improvements in performance can no
longer be made (‘‘topped-out’’ measures)
(77 FR 68472). We do not believe that
measuring hospital performance on
‘‘topped-out’’ measures provides
meaningful information on the quality
of care provided by hospitals. We
further believe that quality measures,
once ‘‘topped-out,’’ represent care
standards that have been widely
adopted by hospitals. We believe such
measures should be considered for
removal from the Hospital OQR Program
because their associated reporting
burden may outweigh the value of the
quality information they provide.
In order to determine ‘‘topped-out’’
status, we proposed to apply the
following two criteria, the first of which
was previously adopted by the Hospital
VBP Program for certain measures in the
Hospital Inpatient VBP Program final
rule (76 FR 26510). The second criterion
is a modified version of what was
previously adopted by the Hospital VBP
Program in the above mentioned final
rule (76 FR 26510), with the change
from the ‘‘less than’’ operator (<) to the
‘‘less than or equal to’’ operator (≤).
Specifically, we proposed that a
measure under the Hospital OQR
Program is ‘‘topped-out’’ when it meets
both of the following criteria:
• Statistically indistinguishable
performance at the 75th and 90th
percentiles; and
• A truncated coefficient of variation
less than or equal to 0.10.
To identify if a measure has
statistically indistinguishable
performance at the 75th and 90th
percentiles, we would determine
whether the difference between the 75th
and 90th percentiles for a measure is
within two times the standard error of
the full dataset. The coefficient of
variation (CV) is a descriptive statistic
that expresses the standard deviation as
a percentage of the sample mean; this
provides a statistic that is independent
of the units of observation. Applied to
this analysis, a large CV would indicate
a broad distribution of individual
hospital scores, with large and
presumably meaningful differences
between hospitals in relative
performance. A small CV would

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indicate that the distribution of
individual hospital scores is clustered
tightly around the mean value,
suggesting that it is not useful to draw
distinctions among individual hospitals’
measure performance. The truncated CV
excludes observations with rates below
the 5th percentile and above the 95th
percentile. We adopted the second of
these ‘‘topped-out’’ criteria for the
Hospital VBP Program (79 FR 50055).
Both criteria were adopted for the
Hospital IQR Program (79 FR 50204)
and are being adopted for the ASCQR
Program (section XIV.A.3. of this final
rule with comment period).
We invited public comment on this
proposal.
Comment: Many commenters
supported CMS’ proposed criteria for
identifying ‘‘topped-out’’ measures.
Some commenters recommended that
CMS proceed cautiously, expressing
concern that removal of measures could
disrupt hospitals’ quality improvement
efforts. Some commenters believed there
is value in collecting data on some
topped-out measures, regardless of
national performance scores. Other
commenters urged CMS to assess the
topped-out measures individually and
in a broader context before removing
them.
Response: We agree that, in some
cases, measures that are quantitatively
‘‘topped-out’’ may still be appropriate if,
for example, the specified care topic is
important to providers and/or
beneficiaries or if some classes or some
hospitals may still have room for
improvement with the measure. We
recognize that some measures may not
be appropriate for the topped-out
analysis, including measures of
outcomes for which small numbers are
desired (for example, hospital-acquired
infection and patient safety oriented
measures). We note that ‘‘topped-out’’
status is only one of many factors we
consider in removing measures. We
consider the removal of each topped-out
measure on a case-by-case basis, as
appropriate, and determine whether a
clinical or other quality improvement
need for the measure justifies the
retention of a topped-out measure that
otherwise meets our criteria. We refer
readers to III.C.1. of this final rule with
comment period, ‘‘Considerations in
Removing Quality Measures from the
Hospital OQR Program,’’ for a
discussion of the different factors we
consider in removing measures.
Comment: Many commenters urged
CMS to continue monitoring
performance on ‘‘topped-out’’ measures
to ensure that high performance
continues and that quality gains are
sustained.

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Response: We expect hospitals to
always follow appropriate standards-ofcare and clinical guidelines regardless
of whether a quality measure exists. We
believe that HOPDs are committed to
providing quality care to patients and
we do not have any indication that
HOPDs will stop doing so when
measures are removed. We currently
monitor the performance of removed
measures to ensure that performance
does not decline significantly and will
continue to do so. However, we must
balance the costs of continued
monitoring of a successful measure with
high levels of performance with the
adoption of other measures where there
are opportunities for improvement in
clinical quality.
At this time, we believe the two
finalized topped-out criteria will ensure
the detection of potential topped-out
measures that have high performance
with little variability. However, we will
consider the need for refinement and, if
we determine changes may be
necessary, we will propose such
changes in future rulemaking.
After consideration of the public
comments we received, we are
finalizing the ‘‘topped-out’’ criteria as
proposed. Specifically, we are finalizing
a policy that a measure under the
Hospital OQR Program is ‘‘topped-out’’
when it meets both of the following
criteria: (1) Statistically
indistinguishable performance at the
75th and 90th percentiles; and (2) a
truncated coefficient of variation less
than or equal to 0.10. To identify if a
measure has statistically
indistinguishable performance at the
75th and 90th percentiles, we will
determine whether the difference
between the 75th and 90th percentiles
for a measure is within two times the
standard error of the full dataset.
However, consistent with our
discussion above at XIII.C.1. of this final
rule with comment period,
‘‘Considerations in Removing Quality
Measures from the Hospital OQR
Program,’’ we evaluate different factors
in considering the removal of measures.
We will assess the benefits of retaining
a measure on a case-by-case basis before
proposing to remove a measure from the
Hospital OQR Program.
3. Removal of Measures From the
Hospital OQR Program for the CY 2017
Payment Determination and Subsequent
Years
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41034), we proposed to
remove three measures for the CY 2017
payment determination and subsequent
years: OP–4, OP–6, and OP–7. Based on
our analysis of Hospital OQR Program

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chart-abstracted measure data for
January 1, 2013–June 30, 2013 (Q1–Q2)
encounters, the following measures met
both: (1) The previously finalized
criteria for being ‘‘topped-out’’; that is,
measure performance among hospitals
is so high and unvarying that
meaningful distinctions and
improvements in performance can no
longer be made (77 FR 68472); and (2)
the two criteria we finalized in section
XIII.C.2. of this final rule with comment
period for determining ‘‘topped-out’’
status. These measures are:
• OP–4: Aspirin at Arrival (NQF
# 0286);
• OP–6: Timing of Antibiotic
Prophylaxis; and
• OP–7: Prophylactic Antibiotic
Selection for Surgical Patients (NQF
# 0528).
Therefore, we proposed to remove
these three measures from the Hospital
OQR Program beginning with the CY
2017 payment determination.
We believed that removal was
appropriate as there appeared little
room for improvement for these
measures, all of which address
standards of clinical care. In addition,
by removing these measures, we hoped
to alleviate the maintenance costs and
administrative burden to hospitals
associated with retaining them. Should
we determine that hospital adherence to
these practices has unacceptably
declined, we stated that we would repropose these measures in future
rulemaking. In addition, we would
comply with any requirements imposed
by the Paperwork Reduction Act before
reinstituting these measures. We noted
that we removed three measures under
the Hospital IQR Program similar to
these measures; the similar measures
were AMI–1, SCIP–Inf–1, and SCIP–Inf–
2, respectively. We note that we
retained SCIP–Inf–1 and SCIP–Inf–2 as
voluntarily reported electronic clinical
quality measures in the Hospital IQR
Program (79 FR 50208).
We invited public comment on these
proposals.
Comment: Many commenters
supported the proposal to remove OP–
4, OP–6, and OP–7, noting that the
removal would reduce administrative
burden on hospitals. Some commenters
specifically supported the removal of
these measures to align with the
Hospital IQR Program. One commenter
recommended the removal of the three
proposed topped-out measures effective
January 2015, to reduce administrative
burden for hospitals.
Response: We thank the commenters
for their support. We continue to look
for ways to minimize burden as we
pursue the quality objectives of the

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Hospital OQR Program. We agree that
quality of care measures should be
aligned across our quality reporting and
value-based purchasing programs to the
extent possible. The patient encounter
period for the CY 2017 payment
determination is January 1, 2015
through December 31, 2015. Thus, for
patient encounters beginning January 1,
2015, hospitals would not be required to
submit data on any measures that we are
finalizing for removal as discussed
below.
Comment: Some commenters inquired
about the criteria for resuming data
collection for measures that are removed
from the Hospital OQR Program. One
commenter recommended that CMS
establish a process, similar to the one
used by NQF, to place a measure in
‘‘reserve status’’ for some time after the
measure is determined to be ‘‘toppedout’’ to ensure no ‘‘backsliding’’ has
occurred. Another commenter suggested
that CMS consider sampling hospitals
on their performance on these removed
measures to ensure continued high
performance on these measures.
Response: We thank the commenters
for their suggestions to monitor toppedout measures for continued high
performance and we understand their
concerns of backsliding. Should we
determine that hospital adherence to
these practices has unacceptably
declined; we would propose to reinstate
the measure in future rulemaking to
resume data collection. We expect
hospitals to always follow appropriate
standards-of-care and clinical guidelines
in exercising positive interventions,
regardless of whether a measure is
removed.
Comment: Some commenters urged
CMS to retain OP–4 for voluntary
reporting. Some commenters opposed
the removal of OP–4, noting that this
measure provides incentives for better
care and improves patient outcomes,
and the data help Medicare beneficiaries
make informed choices about their
health care options. One commenter
recommended that CMS not remove
OP–4 until there are at least 2 years of
continued high performance data.
Response: We agree with the
commenters that OP–4 should be
retained. Upon further analysis, we have
found that, although technically
‘‘topped-out,’’ the rate distributions for
OP–4 indicate that hospitals with a
small number of cases have lower rates.
Because performance for OP–4 is still
low in some hospitals, and there is
substantial evidence indicating that
aspirin at arrival is associated with
better patient outcomes, we are not
finalizing our proposal to remove OP–4.

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Comment: Some commenters opposed
the removal of OP–6 and OP–7, noting
that the removal of these measures may
cause unnecessary harm to surgical
patients. One commenter recommended
that CMS not remove OP–6 and OP–7
until there are at least 2 years of
continued high performance data.
Response: We thank the commenters
for expressing their concerns. Our
proposed criteria for topped-out
measures did not include a timeframe
for sustained statistical performance;
however, we will take this suggestion
into consideration for future
rulemaking. Based on our topped-out
analysis, both OP–6 and OP–7 are
‘‘topped-out’’ across hospitals, and we
do not believe that removal of these two
measures would cause unnecessary
harm to surgical patients because our
data show that hospital performance on
OP–6 and OP–7 is high and unvarying,
indicating that HOPDs have been in
compliance with OP–6 in exercising the
correct timing as well as with OP–7 in
administering the appropriate antibiotic
for surgical patients. In addition, unlike
OP–4, we did not see indications in the
measure distributions for OP–6 and OP–
7 that imply outlier hospitals with a
small number of cases have statistically
significantly lower rates. Therefore, this
leads us to believe that removal of these
two measures would not cause
unnecessary harm to surgical patients.
Because our data indicate that hospital
performance on OP–6 and OP–7 is high
and unvarying, we believe the costs
associated with the maintenance of our
administrative systems and the costs to
hospitals to continue reporting
outweigh the benefits of retaining of
these measures in the Hospital OQR
Program. We expect hospitals to follow
appropriate standards-of-care and
clinical guidelines in exercising positive
interventions, regardless of whether a
measure is removed. Therefore, as noted
below, we are finalizing our proposal to
remove the OP–6 and OP–7 measures
and will continue to monitor clinical
trends and repropose these measures if
we see the performance gap widening.
Comment: One commenter noted that,
beginning with CY 2015 reporting,
hospitals will be required to report a
new element (Rectal Culture-Guided
Antibiotic) for OP–7. The commenter
requested clarification because CMS
proposed to remove this measure.
Response: We clarify that, as stated
above, we are removing OP–7 from the
Hospital OQR Program beginning with
the CY 2017 payment determination.
The patient encounter period for the CY
2017 payment determination is January
1, 2015 through December 31, 2015.
Therefore, beginning with CY 2015

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patient encounters, hospitals are not
required to submit Rectal CultureGuided Antibiotic data or other data for
OP–7.
After consideration of the public
comments we received and for the
reasons we discussed above, we are
finalizing our proposal to remove OP–6
and OP–7 from the Hospital OQR

Program as proposed. However, we are
not finalizing our proposal to remove
OP–4 and are retaining that measure in
the Hospital OQR Program for reasons
discussed above. Hospitals are to report
data on OP–4 as previously required.
We refer readers to the CY 2008 OPPS/
ASC final rule with comment period (FR
72 66865), the CY 2013 OPPS/ASC final

rule with comment period (77 FR
68482), and the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75111 through 75112) for more
information about OP–4 and the data
submission requirements. Set out in the
table below are the measures we are
removing for the CY 2017 payment
determination and subsequent years.

HOSPITAL OQR PROGRAM MEASURES REMOVED FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
NQF #
N/A ..............
0528 ............

Measure
OP–6: Timing of Prophylactic Antibiotics
OP–7: Prophylactic Antibiotic Selection for Surgical Patients

D. Quality Measures Previously Adopted
for the CY 2016 Payment Determination
and Subsequent Years
As previously discussed, in the CY
2013 OPPS/ASC final rule with
comment period (77 FR 68471), we

finalized a policy that, beginning CY
2013, when we adopt measures for the
Hospital OQR Program, these measures
are automatically adopted for all
subsequent years’ payment
determinations, unless we propose to

remove, suspend, or replace the
measures. The table below lists 27
measures that we adopted for the CY
2016 payment determination and
subsequent years under the Hospital
OQR Program.

HOSPITAL OQR PROGRAM MEASURE SET PREVIOUSLY ADOPTED FOR THE CY 2016 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS
NQF #

Measure name

N/A ..............
0288 ............
0290 ............
0286 ............
0289 ............
N/A ..............
528 ..............
0514 ............
N/A ..............
N/A ..............
0513 ............
N/A ..............

OP–1: Median Time to Fibrinolysis
OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival ****
OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention
OP–4: Aspirin at Arrival
OP–5: Median Time to ECG
OP–6: Timing of Prophylactic Antibiotics **
OP–7: Prophylactic Antibiotic Selection for Surgical Patients **
OP–8: MRI Lumbar Spine for Low Back Pain
OP–9: Mammography Follow-up Rates
OP–10: Abdomen CT—Use of Contrast Material
OP–11: Thorax CT—Use of Contrast Material
OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System
as Discrete Searchable Data
OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery
OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT)
OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache
OP–17: Tracking Clinical Results between Visits
OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients
OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional
OP–21: Median Time to Pain Management for Long Bone Fracture
OP–22: ED—Left Without Being Seen ****
OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI
Scan Interpretation Within 45 minutes of Arrival
OP–25: Safe Surgery Checklist Use
OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures *
OP–27: Influenza Vaccination Coverage among Healthcare Personnel
OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients
OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of
Inappropriate Use
OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery ***

0669 ............
N/A ..............
N/A ..............
N/A ..............
0496 ............
N/A ..............
0662 ............
N/A ..............
0661 ............
N/A ..............
N/A ..............
0431 ............
0658 ............
0659 ............

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1536 ............

* OP–26:
Procedure
categories
and
corresponding
HCPCS
codes
are
located
at:
http://qualitynet.org/dcs/
BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measures removed beginning with the CY 2017 payment determination, as set forth in section XIII.D.3.b. of this final rule with comment period.
*** Measure collected voluntarily, as set forth in section XIII.D.3.b. of this final rule with comment period.
**** Name has been updated to correspond with NQF-endorsed name.

Comment: Some commenters
expressed views on previously adopted
Hospital OQR Program measures. Some

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commenters were supportive of
previously adopted measures, and some
commenters recommended changing

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measure specifications for some
measures. Several commenters asked
CMS to consider removing previously

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adopted measures from the Hospital
OQR Program, specifically, OP–9, OP–
10, OP–14, OP–15, OP–20, OP–22, and
OP–25, because these measures are no
longer NQF-endorsed, are not
recommended by the MAP, or are
deemed unsuitable for public reporting.
Response: Because we did not
propose to remove OP–9, OP–10, OP–
14, OP–15, OP–20, OP–22, or OP–25
from the Hospital OQR Program, change
their measure specifications, or discuss
the related MAP recommendations in
the CY 2015 OPPS/ASC proposed rule,
these comments are beyond the scope of
the proposed rule. Therefore, we are not
changing the status of any of the
measures referred to by commenters.
However, we will take into
consideration commenters’ concerns
regarding these measures for future
rulemaking.
Regarding removal of measures from
the Hospital OQR Program based upon
NQF endorsement, we focus on
measures appropriate to the specific
provider category that reflect the level of
care and the most important areas of
service and measures for that provider
category. Section 1833(t)(17)(C)(i) of the
Act requires the Secretary to ‘‘develop
measures that the Secretary determines
to be appropriate for the measurement
of the quality of care (including
medication errors) furnished by
hospitals in outpatient settings and that
reflect consensus among affected parties
and, to the extent feasible and
practicable, shall include measures set
forth by one or more national consensus
building entities.’’ This provision does
not require that the measures we adopt
for the Hospital OQR Program be
endorsed by any particular entity, and
we believe that consensus among
affected parties can be achieved by
means other than endorsement by a
national consensus building entity,
including through the measure
development process, through broad
acceptance and use of the measure(s),
and through public comment.
At this time, we continue to believe
there is value in collecting and reporting
these measures, but we can consider
removal in future rulemaking. We thank
the commenters for the measure
suggestions and will share them with
measure stewards.
1. Data Submission Requirements for
OP–27: Influenza Vaccination Coverage
Among Healthcare Personnel (NQF #
0431) Reported via NHSN for the CY
2017 Payment Determination and
Subsequent Years
The Influenza Vaccination Coverage
among Healthcare Personnel (HCP)
(NQF # 0431) was finalized for the

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Hospital OQR Program in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75097 through 75099). We
refer readers to the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75116 through 75117) for a discussion
of the previously finalized data
submission requirements for this
measure. This measure was previously
finalized for the Hospital IQR Program
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51631). In the CY 2015
OPPS/ASC proposed rule (79 FR 41035),
we made two clarifications: (1)
correcting the previously stated
submission deadline; and (2) clarifying
that hospitals should report the
Influenza Vaccination Coverage among
HCP (NQF # 0431) measure by CMS
Certification Number (CCN) rather than
separately reporting for both the
inpatient and outpatient setting.
a. Clarification of Submission Deadline
and Data Submitted
We noted that there was a
typographical error in our discussion in
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75116 through
75117), and we proposed to remedy that
error in the proposed rule. Specifically,
we stated that the deadline for hospitals
to submit NHSN hospital-acquired
infection (HAI) measure collection data
would be ‘‘May 15, 2015, with respect
to the October 1, 2015 through March
31, 2015 encounter period’’ (78 FR
75117). In the CY 2015 OPPS/ASC
proposed rule, we clarified that the
beginning of the encounter period
should be ‘‘October 1, 2014’’ instead of
‘‘October 1, 2015.’’ In addition, we
clarified that the data to be submitted
are more specifically referred to as
‘‘Healthcare Personnel (HCP) Influenza
Vaccination summary reporting data’’
instead of ‘‘HAI measure collection
data.’’
Comment: Commenters supported the
CMS clarification of the reporting
deadline for OP–27 because this
deadline will align the reporting for
both inpatient and outpatient settings.
Response: We thank commenters for
their support. We agree that measures
should be aligned across our quality
reporting and value-based purchasing
programs to the extent possible.
As stated above, we are clarifying that
the beginning of the encounter period is
October 1, 2014, and that the data to be
submitted are ‘‘Healthcare Personnel
Influenza Vaccination summary
reporting data’’ instead of ‘‘HAI measure
collection data.’’

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b. Clarification on Reporting by CMS
Certification Number (CCN)
We received public comment about
the burden of separately collecting HCP
influenza vaccination status for both the
hospital inpatient and outpatient
settings (78 FR 75098). We believe that
reporting a single vaccination count for
each health care facility enrolled in
NHSN will be less burdensome to
facilities. Therefore, in response to these
concerns, we collaborated with CDC and
clarified in an Operational Guidance
document that, beginning with the
2014–2015 influenza season (CY 2014
reporting period and CY 2016 payment
determination), facilities will report
data to NHSN by enrolled facility (also
known as OrgID). CDC will then
translate and submit the data to CMS on
behalf of the facilities by CCN.1 The
CDC also has produced an Operational
Guidance document regarding reporting
for this measure, which can be found at:
http://www.cdc.gov/nhsn/PDFs/HCP/
Operational-Guidance-ACH–HCPFlu.pdf.
Reporting data in this way will allow
health care facilities with multiple care
settings to simplify data collection and
submit a single count applicable across
the inpatient and outpatient settings.
We will then publicly report the
percentage of HCP who received an
influenza vaccination per CCN. This
single count per CCN will inform the
public of the percentage of vaccinated
HCP at a particular healthcare facility,
which would still provide meaningful
data and help to improve the quality of
care. Specific details on data submission
for this measure can be found at: http://
www.cdc.gov/nhsn/acute-care-hospital/
hcp-vaccination/ and at: http://
www.cdc.gov/nhsn/acute-care-hospital/
index.html. This clarification was also
noted in the FY 2015 IPPS/LTCH PPS
final rule for the Hospital IQR Program
(79 FR 50217).
Comment: Many commenters
supported CMS’ guidance allowing
hospitals to report OP–27 for both the
inpatient and outpatient settings using
one single count because it provides a
clearer picture of vaccination rates,
reduces provider burden, and aligns the
inpatient and outpatient settings. Some
commenters, however, requested further
clarification on this guidance because
the Hospital IQR Program clarified in
the FY 2015 IPPS/LTCH PPS final rule
that hospitals ‘‘should report a single
count per enrolled facility, and not
CCN’’ and that facilities should ‘‘collect
1 We erroneously referred to ‘‘CNN’’ in the CY
2015 OPPS/ASC proposed rule (79 FR 41035). We
have corrected that reference in this final rule with
comment period to ‘‘CCN.’’

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and submit a single vaccination count
for each health care facility enrolled in
NHSN by facility OrgID.’’
Response: We thank commenters for
their support of the guidance issued.
Consistent with the Hospital IQR
Program in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50217), for OP–27,
hospitals should report a single count
per enrolled facility (by OrgID), and not
per CCN. We require facilities to collect
and submit a single vaccination count
for each health care facility enrolled in
NHSN by facility OrgID.
Comment: One commenter was
concerned that viewers of Hospital
Compare will not understand that the
measure entails data in both hospital
inpatient and outpatient settings. The
commenter believed this would create
confusion among consumers and
misinform their decision-making.
Response: We thank the commenter
for its concern. However, we do not
agree that reporting a single vaccination
count for each enrolled health care
facility will cause confusion. We believe
that it will be easier for consumers to
understand the influenza vaccination
rate of a hospital as a whole when we
combine data for both the inpatient and
outpatient settings, and we believe the
measure is important enough for it to be
implemented in both the inpatient and
outpatient settings.
As stated above, we clarify that,
consistent with the Hospital IQR
Program and CDC Operational
Guidance, hospitals should report to
NHSN a single count per enrolled
facility by the facility OrgID.

tkelley on DSK3SPTVN1PROD with RULES2

2. Delayed Data Collection for OP–29
and OP–30
In the CY 2014 OPPS/ASC final rule
with comment period, we adopted OP–
29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk
Patients (NQF # 0558) (78 FR 75102)
and OP–30: Endoscopy/Polyp
Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous
Polyps—Avoidance of Inappropriate
Use (NQF # 0659) (78 FR 75102), both
chart-abstracted measures, and
proposed that aggregate data would be
collected via an online Web-based tool
(the QualityNet Web site) beginning
with the CY 2016 payment
determination. We finalized that, for the
CY 2016 payment determination,
hospitals would be required to submit
aggregate-level encounter data between
July 1, 2015 and November 1, 2015 for
data collected during January 1, 2014
through December 31, 2014 (78 FR
75114).

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On December 31, 2013, we issued
guidance stating that we would delay
the implementation of OP–29 and OP–
30 for 3 months for the CY 2016
payment determination, changing the
encounter period from January 1, 2014
through December 31, 2014 to April 1,
2014 through December 31, 2014
(https://www.qualitynet.org/dcs/Content
Server?c=Page&pagename=QnetPublic
%2FPage%2FQnetTier3&cid=
1228772854917). The data submission
window for data collected from April 1,
2014 through December 31, 2014 is still
July 1, 2015 through November 1, 2015.
The data submission windows and the
encounter periods for subsequent years
remain as previously finalized (78 FR
75114); hospitals are to submit Webbased data between July 1 and
November 1 of the year prior to a
payment determination with respect to
the encounter period of January 1 to
December 31 of 2 years prior to a
payment determination year.
Comment: Several commenters noted
their support for efforts to limit the
overuse of colonoscopies, but expressed
concern that OP–29 and OP–30 are
burdensome because they are chartabstracted measures, have not been
specified or tested at the facility level,
and are measures of physician quality
rather than facility quality. Another
commenter stated that these measures
are not yet meaningful due to low
sample sizes and the lack of
specifications detailed with algorithms
for the measures.
Response: We have previously
responded to the commenters’ concerns
that the measure is not specified or
tested at the facility level and is a
measure of physician quality rather than
facility quality. We refer readers to our
responses in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75099 through75103) where we
finalized these measures. We continue
to believe the measures are suitable for
HOPDs based on the reasons we
discussed in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75100 through 75102). In addition, we
understand the commenters’ concerns
regarding the administrative effort
associated with chart-abstraction. We
will continue to examine options for
less burdensome reporting mechanisms
for these and other program measures in
the future.
Comment: Many commenters
supported CMS’ delayed collection of
OP–29 and OP–30, but requested
specific rationale for the delay.
Response: Based on feedback from
stakeholders, we believed it would be
too burdensome to require hospitals to
implement OP–29 and OP–30 by

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January 1, 2014 since these measures
could require coordination with other
physicians (78 FR 75113).
Consequently, we delayed the data
collection period until April 1, 2014.
We believe that this 3-month period was
sufficient to allow hospitals to put the
necessary mechanisms in place to
collect these data.
3. OP–31: Cataracts—Improvement in
Patient’s Visual Function within 90
Days Following Cataract Surgery
In the CY 2014 OPPS/ASC final rule
with comment period, we adopted OP–
31 Cataracts—Improvement in Patient’s
Visual Function within 90 Days
Following Cataract Surgery (NQF #
1536) for the CY 2016 payment
determination and subsequent years (78
FR 75103). This measure assesses the
rate of patients 18 years and older (with
a diagnosis of uncomplicated cataract)
in a sample who had improvement in
visual function achieved within 90 days
following cataract surgery based on
completing both a pre-operative and
post-operative visual function survey.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41036), we: (1) Corrected
our response to public comments, (2)
noted our decision to delay data
collection for the CY 2016 payment
determination, and (3) proposed
voluntary data collection for the CY
2017 payment determination and
subsequent years for OP–31: Cataracts:
Improvement in Patient’s Visual
Function within 90 Days Following
Cataract Surgery (NQF # 1536).
a. Correction of Response to Public
Comments
In the CY 2014 OPPS/ASC final rule
with comment period, we stated, in
response to commenters concerned that
the proposed chart-abstracted measures
had not been field-tested, that ‘‘all three
measures that we are finalizing . . . were
field-tested in the HOPD facility setting
by the measure stewards. These three
measures are: (1) Endoscopy/Polyp
Surveillance: Appropriate Follow-Up
Interval for Normal Colonoscopy in
Average Risk Patients (NQF # 0658); (2)
Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps—
Avoidance of Inappropriate Use (NQF #
0659); and (3) [OP–31] Cataracts:
Improvement in Patient’s Visual
Function within 90 Days Following
Cataract Surgery (NQF # 1536)’’ (78 FR
75099 through 75100).
We inadvertently misstated that the
OP–31: Cataracts: Improvement in
Patient’s Visual Function within 90
Days Following Cataract Surgery (NQF #
1536) had been field-tested in the HOPD

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setting, and we are clarifying here that
this measure has not been field-tested in
that setting. However, we note that, in
considering and selecting this measure,
we took into account other principles or
factors, including: NQS goals, type of
measure, HHS Strategic Plan and
Initiatives, NQF endorsement, MAP
support, stakeholder input, alignment
with quality goals and settings,
relevance, utility, and burden. More
information about these principles can
be found in the CY 2014 OPPS/ASC
proposed rule and final rule with
comment period (78 FR 43643 through
43644) and in the CY 2013 OPPS/ASC
final rule with comment period (77 FR
68467 through 68468).

tkelley on DSK3SPTVN1PROD with RULES2

b. Delayed Data Collection for OP–31
and Exclusion From the CY 2016
Payment Determination Measure Set
Since our adoption of this measure,
we have come to believe that it can be
operationally difficult for hospitals to
collect and report this measure.
Specifically, we are concerned that the
results of the survey used to assess the
pre-operative and post-operative visual
function of the patient may not be
shared across clinicians, making it
difficult for hospitals to have knowledge
of the visual function of the patient
before and after surgery.
We also are concerned about the use
of inconsistent surveys to assess visual
function; the measure specifications
allow for the use of any validated survey
and results may be inconsistent should
clinicians use different surveys.
Therefore, on December 31, 2013, we
issued guidance stating that we would
delay the implementation of OP–31 by
3 months from January 1, 2014 to April
1, 2014 for the CY 2016 payment
determination (https://www.qualitynet.
org/dcs/ContentServer?c=Page&
pagename=QnetPublic%2FPage%2F
QnetTier3&cid=1228772854917).
Because of continuing concerns, on
April 2, 2014, we issued additional
guidance stating that we would further
delay the implementation of the
measure from April 1, 2014 to January
1, 2015 for the CY 2016 payment
determination (https://www.qualitynet.
org/dcs/ContentServer?c=Page&
pagename=QnetPublic%2FPage%2F
QnetTier2&cid=1228721506778). In the
CY 2015 OPPS/ASC proposed rule (79
FR 41036), we proposed to exclude OP–
31 Cataracts: Improvement in Patient’s
Visual Function within 90 Days
Following Cataract Surgery (NQF #
1536) from the CY 2016 payment
determination measure set. We
proposed not to subject hospitals to a
payment reduction with respect to this

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measure for the CY 2016 payment
determination.
We invited comment on this proposal.
Comment: Many commenters
commended CMS’ recognition of the
associated operational issues and the
proposal to exclude OP–31 from the CY
2016 payment measure determination
set. Other commenters disagreed; they
stated that complications following
cataract surgery are not acceptable, and
they strongly believed that OP–31 tracks
patient-centered clinical outcomes and
improves care coordination among
providers.
Response: We agree that
complications following cataract surgery
are not acceptable. While OP–31 does
not address complications following
cataract surgery, it does address
improvement in visual function
following cataract surgery and tracks an
important patient-centered clinical
outcome. Based on stakeholder
feedback, we believe this measure
should be excluded from the CY 2016
payment determination because there
are a low number of hospitals ready to
operationalize this measure for the CY
2016 payment determination. As noted
below, we believe that by the CY 2017
payment determination, many more
hospitals will be operationally able to
collect the data necessary for this
measure and may choose to do so.
After consideration of the public
comments we received, we are
finalizing our proposal to exclude OP–
31 from the CY 2016 payment
determination measure set as proposed.
Therefore, we will not subject hospitals
to a payment reduction with respect to
OP–31 for the CY 2016 payment
determination.
c. Voluntary Collection of Data for OP–
31 for the CY 2017 Payment
Determination and Subsequent Years
We continue to believe that OP–31
promotes accountability for Medicare
beneficiaries, improve coordination of
services, reduce fragmented care,
encouraged redesigned care processes
for high quality and efficient service
delivery, and incentivize higher value
care (78 FR 75099). Furthermore, we
believe that HOPDs should be partners
in care with physicians and other
clinicians, and this measure provides an
opportunity to do so. Therefore, we are
continuing to include this measure in
the Hospital OQR Program measure set.
However, in the CY 2015 OPPS/ASC
proposed rule (79 FR 41036), we
proposed that hospitals have the option
to voluntarily collect and submit OP–31
data for the CY 2015 encounter period/
CY 2017 payment determination and
subsequent years. In addition, we

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proposed to not subject hospitals to a
payment reduction with respect to this
measure during the period of voluntary
reporting. For hospitals that choose to
submit data voluntarily, we would
request that they submit such data using
the means and timelines finalized in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75112 through
75113). Data submitted voluntarily will
be publicly reported as discussed in the
CY 2014 OPPS/ASC proposed rule (78
FR 43645) and final rule with comment
period (78 FR 75092).
We invited public comment on this
proposal.
Comment: Many commenters
requested that CMS remove the measure
from the program entirely, rather than
delaying implementation and allowing
voluntary reporting. The commenters
repeated similar concerns expressed in
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75099 through
75103), where this measure was
finalized, regarding associated burden,
suitability for the Hospital OQR
Program versus the PQRS, program
alignment of this measure, nonstandardization of collected
information, NQF endorsement, MAP
recommendations, and coordination
challenges faced by facilities.
Response: We do not agree that we
should remove the measure entirely,
because we believe OP–31 addresses an
area of care that is not adequately
addressed in our current measure set
and is an important area of care
coordination between performing
physicians, practitioners that assess
visual function, and HOPDs where
procedures are performed. We
previously addressed the above
concerns in our responses the CY 2014
OPPS/ASC final rule with comment
period where we finalized this measure
and refer readers to that final rule with
comment period (78 FR 75099 through
75103) for a discussion of these issues.
Comment: Commenters opposed to
voluntary reporting of OP–31 were
concerned that incomplete display of
data is confusing and not meaningful to
consumers and is hard to validate.
Furthermore, commenters feared that
the display of data from some hospitals
but not others would lead some patients
to conclude that some hospitals are
more committed to improving cataract
surgery.
Response: We appreciate the
commenters’ concerns, but we do not
agree that voluntary data reporting will
result in data that are confusing, are not
meaningful, or cause patients to
conclude that some hospitals are more
committed to improving cataract
surgery. There are many situations

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where hospitals do not submit
information to the Hospital OQR
Program due to lack of cases or low case
volume. Where quality information is
submitted, we make this information
publicly available as statutorily
required, and we state when it is not
available. Furthermore, reporting of
measure data by some hospitals and not
others under voluntary reporting would
not affect the validity of data reported
for this Web-based measure any more so
than a required measure where not all
hospitals had cases. We note that at this
time, we do not validate aggregate data
submitted to CMS using an online tool,
so difficulty to validate this information
is not a program issue. We refer readers
to section XIII.H.3 of this final rule with
comment period where we discuss our
validation procedures.
We understand some facilities are
capable of reporting data for this
measure at this time, and we believe
those facilities should report if they are
operationally able to do so. We believe
voluntary reporting is beneficial for
HOPDs because all HOPDs, both
participating and not participating in
voluntary reporting, can use the
reported data to gauge their own
performance and identify improvement
efforts. By retaining the measure but
allowing voluntary reporting, we can
continue to monitor the data submitted
to assess further enhancement of the
measure as necessary.
Comment: Commenters expressed
support for patient-reported outcome
measures like OP–31 and recommended
additional outcome measures for
cataract procedures, such as
Complications within 30 Days
Following Cataract Surgery Requiring
Additional Procedures (NQF #0564) and
Better Visual Acuity Within 90 Days
Following Cataract Surgery (NQF
#0565).
Response: We thank the commenters
for the support and their input regarding
patient-reported outcome measures. We
may consider these suggestions for
future measure selection.
Comment: One commenter suggested
that CMS allow voluntary reporting for
all newly adopted measures, given the
inconvenience and burden associated
with preparing to report a measure that
later may become suspended or for
which we delay implementation.
Response: We thank the commenter
for the suggestion. We understand that
hospitals may have been
inconvenienced by this measure, but
disagree that all newly adopted
measures should be voluntarily
reported. We have retained the vast
majority of measures adopted for the
Hospital OQR Program.

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After consideration of the public
comments we received, we are
finalizing our proposal that hospitals
have the option to voluntarily collect
and submit OP–31 data for the CY 2015
encounter period/CY 2017 payment
determination and subsequent years as
proposed. For hospitals that choose to
submit data, we request that they submit
such data using the means and timelines
finalized in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75113 through 75115). We will not
subject hospitals to a payment reduction
with respect to this measure during the
period of voluntary reporting. However,
data submitted voluntarily will be
publicly reported.
E. New Quality Measure for the CY 2018
Payment Determination and Subsequent
Years
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41036 through 41039), we
proposed to adopt one new claimsbased measure into the Hospital OQR
Program for the CY 2017 payment
determination and subsequent years:
OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy. Colonoscopy
is one of the most frequently performed
procedures in the outpatient setting in
the United States.2 The most recent data
available indicate that, in 2002 alone,
physicians performed an estimated 14
million colonoscopies in the United
States.3 Colonoscopies are associated
with a range of well-described and
potentially preventable adverse events
that can lead to hospital visits, repeat
procedures, or surgical intervention for
treatment, including colonic
perforation, gastrointestinal (GI)
bleeding, and cardiopulmonary events
such as hypoxia, aspiration pneumonia,
and cardiac arrhythmias. While hospital
visits are generally unexpected after
outpatient colonoscopy, the literature
suggests that the majority of these visits
occur within the first 7 days.4 5 6
2 Russo

A, Elixhauser A, Steiner C, Wier L.
Hospital-Based Ambulatory Surgery, 2007:
Statistical Brief #86. Healthcare Cost and
Utilization Project (HCUP) Statistical Briefs.
Rockville (MD) 2006.
3 Seeff LC, Richards TB, Shapiro JA, et al. How
many endoscopies are performed for colorectal
cancer screening? Results from CDC’s survey of
endoscopic capacity. Gastroenterology. Dec 2004;
127(6):1670–1677.
4 Rathgaber SW., Wick TM. Colonoscopy
completion and complication rates in a community
gastroenterology practice. Gastrointest Endosc.
2006; 64:556–62.
5 Rabeneck L, Saskin R, Paszat LF. Onset and
clinical course of bleeding and perforation after
outpatient colonoscopy: A population-based study.
Gastrointest Endosc. 2011; 73:520–3.
6 Ko CW, Riffle S, Michael L, et al. Serious
complications within 30 days of screening and

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Reported hospital visit rates after
outpatient colonoscopy range from 0.8
to 1.0 percent at 7 to 14 days post
procedure, and from 2.4 to 3.8 percent
at 30 days post procedure.7 8 9 Some
adverse events such as bleeding occur
after the 7th day, but based on input
from clinical experts, public comment,
and empirical analyses, we concluded
that unplanned hospital visits within 7
days is the optimal outcome to ensure
capture of procedure-related adverse
events and to minimize capture of
hospital visits unrelated to the
procedure. This measure provides the
opportunity for providers to improve
quality of care and to lower the rates of
adverse events leading to hospital visits
after outpatient colonoscopy; this
measure will encourage providers to
achieve the outcome rates of the best
performers.
We believe it is important to reduce
adverse patient outcomes associated
with preparation for colonoscopy, the
procedure itself, and follow-up care.
Therefore, we proposed to include OP–
32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy, which is based on paid
Medicare FFS claims, in the Hospital
OQR Program for the CY 2017 payment
determination and subsequent years. We
expect that the measure would promote
improvement in patient care over time
because transparency in publicly
reporting measure scores will make
patient unplanned hospital visits
(emergency department visits,
observation stays, and inpatient
admissions) following colonoscopies
more visible to providers and patients
and encourage providers to incorporate
quality improvement activities in order
to reduce these visits. Providers are
often unaware of complications
following colonoscopy for which
patients visit the hospital.10 This riskstandardized quality measure will
address this information gap and
surveillance colonoscopy are uncommon. Clin
Gastroenterol Hepatol. 2010; 8:166–73.
7 Ko CW, Riffle S, Shapiro JA, et al. Incidence of
minor complications and time lost from normal
activities after screening or surveillance
colonoscopy. Gastrointest Endosc. Apr 2007;
65(4):648–656.
8 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010; 170(19):1752–1757.
9 Chukmaitov AS, Menachemi N, Brown SL,
Saunders C, Tang A, Brooks R. Is there a
relationship between physician and facility
volumes of ambulatory procedures and patient
outcomes? J Ambul Care Manage. Oct–Dec 2008;
31(4):354–369.
10 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010; 170(19):1752–1757.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
promote quality improvement by
providing feedback to facilities and
physicians, as well as transparency for
patients on the rates and variation
across facilities in unplanned hospital
visits after colonoscopy.
The outcome measured in the OP–32
measure is all-cause, unplanned
hospital visits (admissions, observation
stays, and emergency department visits)
within 7 days of an outpatient
colonoscopy procedure. The measure
score, also referred to as the facilitylevel risk-standardized hospital visit
rate, is derived from the calculation of
the ratio of the numerator to the
denominator multiplied by the crude
rate. The numerator is the number of
predicted (meaning adjusted actual)
hospital visits, which is the number of
unplanned hospital visits within 7 days
of colonoscopy that the facility is
predicted to have based on its case-mix.
The denominator is the number of
expected hospital visits, which is the
number of unplanned hospital visits the
facility is expected to have based on the
nation’s performance with the facility’s
case-mix. The crude rate is the national
unadjusted number of patients who had
a hospital visit post-colonoscopy among
all patients who had a colonoscopy.
Based on discussions with clinical
and technical panel experts, the
measure excludes colonoscopies for
patients undergoing concomitant highrisk upper GI endoscopy because these
patients are at a higher risk for hospital
visits than patients undergoing a typical
colonoscopy, and patients with a history
of inflammatory bowel disease (IBD) or
diverticulitis in the year preceding the
colonoscopy because we likely could
not fully characterize and adjust for
their pre-procedure risk of needing a
post-procedure hospital visit or identify
whether these admissions are planned
or unplanned. The measure also
excludes procedures for patients who
lack continuous enrollment in Medicare
FFS Parts A and B in the 1 month after
the procedure to ensure all patients
have complete data available for
outcome assessment. The statistical risk
adjustment model includes 15 clinically
relevant risk-adjustment variables that
are strongly associated with risk of
hospital visits within 7 days following
colonoscopy. Additional methodology
details and information obtained from
public comments for measure
development are available at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html under
‘‘Hospital Outpatient Colonoscopy.’’
Section 1890A(a)(2) of the Act
outlines the pre-rulemaking process

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established under section 1890A of the
Act, which requires the Secretary to
make available to the public by
December 1 of each year a list of quality
and efficiency measures that the
Secretary is considering. This measure
was included on a publicly available
document titled ‘‘MAP Pre-Rulemaking
Report: 2014 Recommendations on
Measures for More than 20 Federal
Programs’’ on the NQF Web site at:
http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Report_2014
_Recommendations_on_Measures
_for_More_than_20_Federal
_Programs.aspx (formerly referred to as
the ‘‘List of Measures Under
Consideration’’) in compliance with
section 1890A(a)(2) of the Act. (We note
that at the time the measure was listed
on the ‘‘MAP Pre-Rulemaking Report:
2014 Recommendations on Measures for
More than 20 Federal Programs,’’ it was
named ‘‘High-Acuity Care Visits after
Outpatient Colonoscopy Procedure.’’)
The MAP, which represents
stakeholder groups, conditionally
supported the measure, ‘‘noting the
need to provide outcome information to
inform consumer decisions and drive
quality improvement.’’ The MAP further
stated that ‘‘[t]his measure addresses an
important quality and safety issue with
incidence of these events ranging from
10 to 22 per 1,000 after risk
adjustment.’’ However, the MAP also
‘‘recognized the need for the measure to
be further developed and gain NQF
endorsement. The MAP expects the
endorsement process to resolve
questions of the reliability and validity
of the measure as well as with the
accuracy of the algorithm for attributing
claims data in light of possible effects of
the Medicare 3-day payment window
policy.’’ As required under section
1890A(a)(4) of the Act, we considered
the input and recommendations
provided by the MAP in selecting
measures to propose for the Hospital
OQR Program.
We believe we have addressed the
concerns raised by the MAP to the
extent possible. The measure is welldefined and precisely specified for
consistent implementation within and
between organizations that will allow
for comparability. Reliability testing
demonstrated the measure data
elements produced were repeatable; that
is, the same results were produced a
high proportion of the time when
assessed in the same population in the
same time period. Validity testing
demonstrated that the measure data
elements produce measure scores that
correctly reflect the quality of care
provided and that adequately identify

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differences in quality. In order to ensure
the accuracy of the algorithm for
attributing claims data and the
comprehensive capture of HOPD
colonoscopies potentially affected by
the policy, we identified physician
claims for colonoscopy in the HOPD
setting from the Medicare Part B
Standard Analytical Files (SAF) with an
inpatient admission within 3 days and
lacking a corresponding HOPD facility
claim. We then attribute the
colonoscopies identified as affected by
this policy to the appropriate HOPD
facility using the facility provider ID
from the inpatient claim.
Section 1833(t)(17)(C)(i) of the Act
states that, ‘‘The Secretary shall develop
measures . . . that reflect consensus
among affected parties and, to the extent
feasible and practicable, shall include
measures set forth by one or more
national consensus building entities.’’
We believe that this proposed measure
reflects consensus among the affected
parties, because the MAP, which
represents stakeholder groups,
reviewed, conditionally supported the
measure, and stated that it ‘‘would
provide valuable outcome information
to inform consumer decision and drive
quality improvement.’’ Further, the
measure was subject to public comment
during the MAP and measure
development processes, with some
public commenters agreeing with the
MAP’s conclusions on the measure
(MAP Report, January 2014, p. 184
http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Report_
2014_Recommendations_on_Measures
_for_More_than_20_Federal_
Programs.aspx). We also note that the
measure was submitted to NQF for
endorsement on February 21, 2014.
Currently, there are no publicly
available quality of care reports for
providers or facilities that conduct
outpatient colonoscopies. Thus,
adoption of this measure provides an
opportunity to enhance the information
available to patients choosing among
providers who offer this elective
procedure. We believe this measure
would reduce adverse patient outcomes
associated with preparation for
colonoscopy, the procedure itself, and
follow-up care by capturing and making
more visible to providers and patients
all unplanned hospital visits following
the procedure. Further, providing
outcome rates to providers will make
visible to clinicians meaningful quality
differences and encourage
improvement. Although this measure is
not NQF-endorsed, it is currently
undergoing the endorsement process, as
noted above. Therefore, we believe the

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statutory requirement for included
measures to have, to the extent feasible
and practicable, been set forth by a
national consensus-building entity has
been met.
We invited public comment on the
proposal to include OP–32 in the
Hospital OQR Program for the CY 2017
payment determination and subsequent
years.
Comment: Several commenters
supported the adoption of OP–32,
stating that it will provide patients with
important information about the quality
of colonoscopy care furnished in
outpatient settings. Some commenters
noted that CMS has appropriately
considered the MAP’s input in adopting
this measure and that the measure’s
adoption is a good first step in the
continued evolution of the Hospital
OQR Program.
Response: We thank commenters for
their support and acknowledgement that
the measure is appropriate for the
Hospital OQR Program. We agree that
measuring quality of care associated
with colonoscopy procedures is an
important clinical care area to assess for
HOPDs.
Comment: Many commenters urged
CMS not to adopt OP–32 until it is NQFendorsed. Several of these commenters
also noted that the MAP supported this
measure on condition of NQFendorsement, and stated that the NQF
process would resolve a number of
questions about the reliability, validity
and feasibility of this measure. The
commenters requested that, in general,
CMS only include measures in the
Hospital OQR Program that have been
NQF-endorsed in order to avoid
subsequent suspension or removal of
these measures.
Response: We note that not all of the
measures adopted by the Hospital OQR
Program are NQF-endorsed, and as we
stated in our earlier discussion in this
final rule with comment period, NQF
endorsement is not a program
requirement, as consensus among
affected parties can be reached through
means other than NQF endorsement.
Under section 1833(t)(17)(C)(i) of the
Act, the Secretary must develop
measures that reflect consensus among
affected parties and, to the extent
feasible and practicable, must include
measures set forth by one or more
national consensus building entities.
Whenever possible, we strive to adopt
NQF-endorsed measures because these
measures will meet these requirements.
However, we believe the requirements
that measures reflect consensus among
affected parties can be achieved in other
ways, including through the measure
development process, through broad

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acceptance and use of the measure, and
through public comments. Further, it
may not be feasible or practicable to
adopt an NQF-endorsed measure, such
as when an NQF-endorsed measure does
not exist. Section 1833(t)(17)(C)(i) of the
Act does not require that each measure
we adopt for the OQR Program be
endorsed by a national consensus
building entity, or by the NQF
specifically. As discussed below, we
believe the measure as developed
exhibits sufficient levels of reliability,
validity, and feasibility to be adopted
for the Hospital OQR Program. We have
also submitted this measure to the NQF
for endorsement.
Comment: A few commenters noted
that the measure is currently being
reviewed by the NQF All-Cause
Admissions and Readmissions Standing
Committee. Commenters were
disappointed that the Committee’s
minutes indicated there were no
discussions of consideration of key
elements of the measure’s construction
and testing.
Response: We thank the commenters
for sharing their concerns. We believe
the NQF process is rigorous and
transparent. We understand the NQF
All-Cause Admissions and
Readmissions Standing Committee
applies the four NQF criteria for
measure endorsement 11 and votes on
each criterion. In addition, our
understanding is that the measure was
discussed in detail by NQF working
groups prior to the measure discussion
at the All-Cause Admissions and
Readmissions Standing Committee
(http://www.qualityforum.org/Project
Materials.aspx?projectID=73619).
NQF also seeks public comments on
measures before endorsement. http://
www.qualityforum.org/comments_By_
Project.aspx?projectID=110&ActivityID=
762#p=3. (This link requires users to log
in to the NQF Web site.) For questions
related to NQF internal procedures, we
suggest contacting the NQF directly at
http://www.qualityforum.org/About_
NQF/Contact_NQF.aspx.
Comment: Many commenters did not
support CMS’ proposal to finalize OP–
32, stating that complications from
colonoscopies are rare and hospitals
already take steps to ensure
colonoscopies are conducted in such a
way so as to eliminate preventable
complications. Some commenters
specifically noted that the literature
indicates the measured incidence rate is
less than 2 percent, and does not rise to
the level of importance needed for a
national quality measurement program.
11 Available at: http://www.qualityforum.org/
docs/measure_evaluation_criteria.aspx.

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Response: Given the widespread use
of colonoscopy for colorectal cancer
screening in the outpatient setting, we
consider measuring the quality of this
high volume procedure to be a priority.
We agree that the incidence of
colonoscopy complications is relatively
low. However, serious adverse events,
such as perforation of the bowel and
bleeding, may occur following
colonoscopies. We view OP–32 as a
critical outcome measure for which the
goal is to drive toward and sustain zero
harm. In addition, some literature
suggests that many facilities performing
colonoscopies are unaware of patients
accessing hospital-based care with
adverse events because patients return
to different facilities, including other
hospitals and emergency departments,
and would not return to the same
outpatient facility. For example, one
study showed that physicians were
unaware of nearly 75 percent of hospital
admissions for adverse events following
colonoscopy.12 While most
colonoscopies are performed without
subsequent complication, we note that,
among Medicare patients aged 65 and
older, 1.6 percent of outpatient
colonoscopies resulted in an unplanned
hospital visit within 7 days.13 This is
based on a 20-percent sample of
nationwide Medicare FFS patients. If we
were to use full national data (that is, a
100 percent sample), we estimate 1.7
million colonoscopies would have been
performed among Medicare FFS
patients and nearly 27,000 unplanned
hospitals visits would have occurred
within 7 days of colonoscopy. These
findings suggest that adverse events are
not as rare or inconsequential as many
believed and that quality measurement
for colonoscopy procedures in the
hospital outpatient setting is important.
Comment: Many commenters
expressed concern that OP–32 includes
hospital visits unrelated to colonoscopy
(counted in the numerator). Some
commenters questioned why the
measure uses an all-cause categorization
versus only admissions attributable to
colonoscopies. One commenter
suggested that all high-risk
colonoscopies (such as patients with
multiple biopsies, patients with
12 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010; 170(19): 1752–1757.
13 2010 Medicare 20 percent fee-for-service
sample. Based on an analysis of 20 percent sample
of Medicare FFS data from 2010 during measure
development. The 20 percent sample included
332,391 outpatient colonoscopies meeting the
measure inclusion and exclusion criteria, and 1.6
percent of these colonoscopies were followed by an
unplanned hospital visit. This equates to 5,331
unplanned hospital visits in the 20 percent sample.

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inflammatory bowel disease, and
diverticulitis) should be excluded from
the measure. Commenters
recommended that OP–32 should be
limited to low-risk surveillance and
screening colonoscopies as well as
nontherapeutic colonoscopies for
Medicare patients. One commenter
appreciated that OP–32 includes a
mechanism for excluding hospital visits
for certain ‘‘planned’’ procedures, but
encouraged CMS to expand that list to
also include bone fractures and
behavioral health disorders.
Response: We clarify that this
measure is purposely designed to use a
broad outcome of hospital visits
following surgery rather than a narrow
set of easily identifiable complications.
From a patient and health care system
perspective, the goal of this measure is
to encourage and inform provider efforts
to minimize all potential acute
complications, not just those narrowly
related to procedural technique. This is
important as the literature 14 15 16 17 18
suggests that hospital visits following
colonoscopy occur due to a range of
adverse events relating to the bowel
preparation, anesthesia, the
colonoscopy procedure itself, and
follow-up care. These adverse events
include a range of symptoms and signs
such as abdominal pain, bloating,
dizziness and collapse, electrolyte
disturbances, and cardiorespiratory
symptoms (from sedation use) in
addition to other complications, such as
bleeding and bowel perforation, that are
directly related to procedural
techniques. The broad outcome of
unplanned hospital visits captures all of
these potential acute complications of
colonoscopy.
As to the suggestion of expanding the
list to include bone fractures and
behavioral health disorders, we note
that inpatient admissions for bone
fracture and behavioral health disorders
(such as depression and anxiety) are
typically acute and are not generally
considered as ‘‘planned’’ admissions.
We do not expect planned admissions
14 Day LW, Kwon A, Inadomi JM, et al. Adverse
events in older patients undergoing colonoscopy: a
systematic review and meta-analysis. 2011; 74:885–
96.
15 Ko CW, Dominitz JA. Complications of
colonoscopy: Magnitude and management.
Gastrointest Endosc Clin N Am 2010;20:659–71.
16 ASGE Standards of Practice Committee, Fisher
DA, Maple JT, et al. Complications of colonoscopy.
Gastrointest Endosc 2011;74:745–52.
17 Baudet JS, Diaz-Bethencourt D, Aviles J, et al.
Minor adverse events of colonoscopy on ambulatory
patients: The impact of moderate sedation. Eur J
Gastroenterol Hepatol 2009; 21:656–61.
18 Ko CW, Riffle S, Shapiro JA, et al. Incidence
of minor complications and time lost from normal
activities after screening or surveillance
colonoscopy. 2007; 65:648–56.

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for these conditions within the first 7days following colonoscopy.
Furthermore, we have adapted the
planned readmission algorithms
developed by CMS independent of OP–
32. This algorithm has been validated
against medical record (chart-extracted)
data to ensure it only removes planned
admissions.
Our goal for including the measure is
to encourage providers to be mindful of
reducing post-colonoscopy admission
caused by prior colonoscopy procedures
performed at a HOPD. For example,
patients may be at higher risk of falls
post-colonoscopy secondary to
dehydration following the bowel
preparation for the procedure, and there
may be opportunities for providers to
minimize this risk. Furthermore, we
removed planned admissions from the
measure outcome by adapting CMS’
Planned Readmission Algorithm version
3.0.19 20 This algorithm removes
nonacute admissions for scheduled
procedures (for example, total hip
replacement) and other types of care
always considered planned (for
example, rehabilitation or maintenance
chemotherapy) from the outcome
because these admissions do not reflect
differences in colonoscopy quality of
care.
Comment: One commenter noted that
CMS stated that the statistical risk
adjustment model includes 15 clinically
relevant risk- adjustment variables (such
as number of polyps removed) that are
strongly associated with risk of hospital
visits within seven days following
colonoscopy and certain patients
receiving colonoscopies that would be
more likely to have a subsequent visit
were excluded. The commenter stated
that CMS did not report the variation
between hospitals in the application for
NQF-endorsement. The commenter
raised the possibility of no statistically
significant difference between a
hospital’s risk-adjusted visit rate and the
national average. The commenter
believed this scenario would make it
impossible to identify poor performers
and good performers for this measure.
Without this type of differentiation, the
commenter did not understand how this
measure will be actionable for care
improvement. The commenter suggested
that CMS conduct a root cause analysis
19 Horwitz L, Grady J, Dorsey K, Zhang W, Keenan
M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu
C, Lin Z, Bhat K, Krumholz H, Bernheim S. 2014
Measures Updates and Specifications Report:
Hospital-Wide All-Cause Unplanned
Readmission—Version 3.0. 2014: Centers for
Medicare & Medicaid Services, 2014.
20 Available at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.

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for specific related readmission after
colonoscopy or test of the variation of
the measure between hospital providers.
The commenter also suggested that The
Joint Commission’s guidelines and
relevant Conditions of Participation
standards would enhance care
improvement efforts.
Response: We thank the commenter
for their suggestions to enhance
improvement efforts for colonoscopy.
We clarify that, in the application for
NQF endorsement, we noted that the
measure, following risk-adjustment, is
able to detect statistically significant
variation (good and poor performers)
between outpatient facilities by
demonstrating measure score variation
using the 2010 Healthcare Cost and
Utilization Project (HCUP) data from
four States (California, New York,
Nebraska, and Florida). Using a very
conservative bootstrapping (sampling
with replacement) statistical technique,
we constructed 95 percent interval
estimates (similar to confidence
intervals) around the facility measure
score and used the estimates to place
facilities into three performance
categories: worse than expected; no
different than expected; and better than
expected. Based on this analysis, we
identified 5 outlier facilities among a
total of 992 ASCs and HOPDs. This
analysis included only about one-tenth
of all outpatient facilities in the United
States, and typically we see greater
variation between facilities when 100
percent of nationwide facilities are
included for actual measure
implementation and reporting due to
increased precision related to greater
sample size.
We disagree with the notion that there
is a possibility of no statistically
significant difference between a
hospital’s risk-adjusted visit rate and the
national average. Our analysis shows
statistically significant facility variation.
Some facilities have a hospital visit rate
that is higher than the expected national
average rate and this is statistically
significant. Also, we only tested
provider variation using data from 4
States. We expect greater variation and
more outliers using nationwide data.
We are committed to filling the
performance gaps in colonoscopy
performed in the outpatient setting.
Therefore, we believe this measure is
appropriate for the outpatient setting.
However, in response to comments, to
allow sufficient time to conduct further
analysis of this measure, we are
finalizing this measure beginning with
the CY 2018 payment determination,
rather than the CY 2017 payment
determination as proposed. We plan to
perform a dry run of the measure in

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2015. From our perspective, a dry run
is a preliminary analysis of data in
which HOPDs may review their measure
results, and ask questions about and
become familiar with the measure
methodology. Dry runs will include 3 to
4 years of paid Medicare FFS claims.
We will use the most recent complete
claims samples (usually 6 to 9 months
prior to the start date) for dry runs. For
example, if the dry run begins in March
2015, the most recent data available may
be July 2011 to June 2014 (assuming we
use 3 years of data). Because we use
paid Medicare FFS claims, HOPDs will
not need to submit any additional data
for the dry run. General information
about dry run as well as confidential
reports will be made available for
hospitals to review on their accounts at
https://www.qualitynet.org. The dry run
will generate confidential reports at the
patient level, indicating whether the
patient had a hospital visit, the type of
visit (admission, emergency department
visit, or observational stay), the
admitting facility, and the principal
discharge diagnosis. Further, the dry
run will enable HOPDs to see the
measure score reports and have the
opportunity to receive individual
patient data and information contained
within individual patient records. In
addition, we will continue to generate
these reports for HOPDs after we
implement the measure beginning with
the CY 2018 payment determination.
HOPDs can use the information to
identify performance gaps and develop
quality improvement strategies.
Dry run results are not linked to
public reporting, payment
determinations, or reliability testing. We
expect the dry run to take
approximately one month to conduct,
during which facilities will be provided
the confidential report and the
opportunity to review their performance
and provide feedback to us. The
measure will have no payment impact
until the CY 2018 payment
determination and subsequent years.
Public display of data will occur on or
after December 1, 2017, but there will be
no public display of the dry run data.
We agree that adhering to The Joint
Commission’s guidelines and relevant
Conditions of Participation standards
could enhance care improvement efforts
and hospitals’ rates on this measure,
and we encourage hospitals to follow
these guidelines and standards. We also
believe that issuing reports to hospitals,
such as those that we will provide
during the dry-run, would help
hospitals to identify the root cause
(practices and conditions) that could
cause hospital visits after colonoscopy.

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Comment: Many commenters
expressed concern that OP–32 is not
sufficiently reliable to be included in
the Hospital OQR Program; specifically,
the measure developer has indicated
that the measure is only ‘‘fairly’’
reliable, with an interclass correlation
coefficient (ICC) of 0.335. These
commenters contended that ‘‘fair’’
reliability is not sufficient for publicly
reported quality metrics since such
information could misinform the public,
and urged CMS to conduct an analysis
on the measure’s reliability to
understand the amount of data required
to achieve ‘‘good’’ reliability. Several
commenters argued that ‘‘good’’
reliability should result in an ICC of at
least 0.60. Other commenters believed
that reliability will improve with several
years’ worth of data. Another
commenter requested that data from this
measure be withheld from public
reporting until concerns about its
reliability and validity can be
thoroughly assessed.
Response: We disagree with
commenters and believe that OP–32 is
sufficiently reliable to be included in
the Hospital OQR Program. The ICC
value submitted in the initial NQF
application (0.335) was calculated using
a split sample of data from 2 years. We
randomly split the patient cohort at
each hospital into two equal halves,
calculated the measure using each half,
and then calculated the agreement
between these two (the ‘test’ and the
‘retest’). After submitting the measure to
NQF for endorsement review, we
conducted additional calculations of the
reliability testing score, this time using
the Spearman-Brown prophecy formula.
The Spearman-Brown prophecy formula
is an accepted statistical method which
estimates the ICC if the sample were
increased. Therefore, it allows us to
estimate what the reliability score
would be if all observations were used
for public reporting rather than using a
split sample. Our Spearman-Brown
prophecy formula calculations resulted
in a higher ICC of 0.43.
The NQF considers the ICC values
ranging from 0.21 to 0.40 as ‘‘fair’’
reliability and values ranging from 0.41
to 0.60 as ‘‘moderate’’ reliability.
Therefore, the ICC values of 0.335 and
0.43 are interpreted as ‘‘fair’’ and
‘‘moderate’’ reliability, respectively.
These ICC values are also in line with
other NQF-endorsed outcome measures
used in other CMS programs. For
example, in the Hospital Readmissions
Reduction Program, the Inpatient Acute
Myocardial Infarction (AMI) 30-day Risk
Standardized Readmission measure
(NQF #0505) (76 FR 51667) has an ICC
of 0.369, and the Pneumonia (PN) 30-

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day Risk Standardized Readmission
measure (NQF #0506), also in the
Hospital Readmissions Reduction
Program (76 FR 51667), has an ICC of
0.406. Both measures are NQFendorsed.
Regarding the concerns that the
public may be misinformed and that we
should withhold public reporting until
the measure’s reliability and validity is
addressed, as stated above, we believe
the reliability of the measure is
sufficiently reliable for inclusion in the
Hospital OQR Program and do not agree
that the public may be misinformed or
that we should withhold public
reporting. In addition to our
calculations above, reliability testing
previously conducted by the measure
steward demonstrated the measure data
elements produced were repeatable; that
is, the same results were produced a
high proportion of the time when
assessed in the same population in the
same time period. Also, validity testing
by the measure steward demonstrated
that the measure data elements produce
measure scores that correctly reflect the
quality of care provided and that
adequately identify differences in
quality.
As the commenters suggested, the
measure reliability may be further
improved by using several years’ worth
of data; however, we must balance the
reliability of the measure with the
timeliness of the measure. As discussed,
at this time, we believe that 1 year of
data appropriately balances these
competing interests for payment
determination purposes, but we will
continue to assess this belief during the
dry run. Also, we will consider
conducting additional reliability
assessments of the measure using an
extended data period.
Moreover, we believe it is important
to include this measure in the program
because colonoscopy is a high volume,
common procedure performed at
outpatient facilities and is frequently
performed on relatively healthy patients
to screen for colorectal cancer (CRC).
Given the widespread use of
colonoscopy, understanding and
minimizing procedure-related adverse
events is a high priority. These adverse
events, such as abdominal pain,
bleeding, and intestinal perforation, can
result in unanticipated hospital visits
post procedure. Physicians performing
colonoscopies are often unaware that
patients seek acute care at hospitals
following the procedure and the
associated adverse events are potentially
preventable. We strongly believe that
the measure would promote
improvement in patient care over time
because transparency in publicly

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reporting measure scores would make
patient unplanned hospital visits
(emergency department visits,
observation stays, and inpatient
admissions) following colonoscopies
more visible to HOPDs and patients and
incentivize HOPDs to incorporate
quality improvement activities in order
to reduce these visits.
Finally, we believe this measure
should be included in the program
because currently, this risk-standardized
colonoscopy quality measure is the only
measure available that would address
this information gap and promote
quality improvement by providing
feedback to facilities and physicians, as
well as transparency for patients on the
rates and variation across facilities in
unplanned hospital visits after
colonoscopy. There are no publicly
available quality of care reports for
HOPDs that conduct outpatient
colonoscopies. Therefore, adoption of
this measure provides an opportunity to
enhance the information available to
patients choosing among HOPDs that
offer this elective procedure. We believe
this measure would reduce adverse
patient outcomes associated with
preparation for colonoscopy, the
procedure itself, and follow-up care by
capturing and making more visible to
HOPDs and patients all unplanned
hospital visits following the procedure.
In addition, providing outcome rates to
HOPDs would make visible to clinicians
meaningful quality differences and
incentivize improvement.
In response to comments, however, to
allow sufficient time to conduct further
analysis of this measure, we are
finalizing this measure beginning with
the CY 2018 payment determination,
rather than the CY 2017 payment
determination as proposed. We plan to
perform a dry run (a preliminary
analysis) of the measure in 2015. We
refer readers to our discussion of the dry
run above, in response to a previous
comment.
With national implementation of a
dry run of this measure, we will also
review the appropriate cutoff volume for
facilities, if necessary, in reporting the
measure score. We require a minimum
volume (cutoff volume) of
colonoscopies per facility to be able to
calculate a reliable measure score for the
facility. We have yet to determine the
minimum volume per facility (that is,
the cutoff colonoscopy volume).
Because we used a Medicare 20 percent
sample to develop the measure, we
could not estimate this cutoff during
measure development. However, testing
during the measure dry-run with 100
percent of the sample per facility will
help us to determine the appropriate

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cutoff volume of colonoscopies per
facility. HOPDs will be notified via the
QualityNet Web site of the cutoff
volume of colonscopies per facility.
While some HOPDs perform too few
colonoscopies for us to calculate a
measure score, and we would not
publicly report their data, these
facilities would remain in the measure
cohort. Typically, for public reporting of
hospital measures on the Hospital
Compare Web site, the measure score is
reported as ‘‘Number of cases too small’’
for hospitals with fewer cases than the
cutoff. We will use the same protocol
when the measure is publicly reported
for the Hospital OQR Program, and will
report a measure score as ‘‘Number of
cases too small’’ for HOPDs with fewer
cases than the cutoff on the QualityNet
Web site.
Comment: Many commenters were
concerned that HOPDs may not have
actionable information generated from
OP–32. Specifically, commenters were
concerned that claims would not
accurately capture the data of patients
who had initial colonoscopy at a facility
but had a subsequent hospital visit at a
different facility. Several of these
commenters questioned whether this
measure will benefit facilities or
patients if each facility only receives a
report with an aggregate number of
claims based on historical data.
Commenters requested that CMS clarify
its plan to report detailed patient-level
data confidentially to facilities that
indicate whether the patient had a
hospital visit, the type of visit
(admission, emergency department visit,
and observational stay), the admitting
facility, and the principal discharge
diagnosis. These reports would enable
facilities to understand their
performance and take steps where
remediation is needed. One commenter
also recommended that CMS allow at
least a two-quarter black-out period so
that hospitals have ample time to review
and request corrections to their data.
Response: We do not believe that
claims data will be difficult to capture
at a facility different from where the
colonoscopy was performed. Hospitals
are responsible for accurately
populating claims, regardless of where
the patient had the procedure done.
In addition, due to commenters’
concerns, we intend to conduct a dry
run (discussed in detail above) and
provide detailed facility specific
information containing confidential
patient-level data to all HOPDs. The dry
run will generate confidential reports at
the patient level, indicating whether the
patient had a hospital visit, the type of
visit (admission, emergency department
visit, or observational stay), the

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66953

admitting facility, and the principal
discharge diagnosis. Further, it will
enable HOPDs to see the measure score
reports and have the opportunity to
receive individual patient data and
information contained within
individual patient records. In addition,
we will continue to generate these
reports for HOPDs after we implement
the measure beginning with the CY 2018
payment determination. HOPDs can use
the information to identify performance
gaps and develop quality improvement
strategies. As we previously stated, dry
runs have no payment impact and are
not linked to public reporting. The main
purpose of the dry run is to provide
opportunities for hospitals to review
their measure results and ask questions
about measure methodology.
Comment: A few commenters stated
that the measure methodology should
include risk adjustment for
socioeconomic factors so the results are
accurate and reflect differences in
socioeconomic burden and racial
composition of patients across hospitals.
Commenters were concerned that
without proper risk adjustment, a
hospital that serves a disproportionate
share of low-income patients with
confounding socioeconomic factors may
have more unplanned visits following
outpatient procedures. Commenters
stated that the measure score can be
skewed by factors such as race,
homelessness, cultural and linguistic
barriers, and low literacy. Commenters
also stated that the readmissions of lowincome patients with confounding
socioeconomic factors are caused by
factors beyond the control of the
hospital and, therefore, do not reflect
the quality of care being provided.
Several commenters recommended that,
after the NQF has reviewed OP–32, CMS
consider submitting this measure as part
of the socioeconomic status (SES) trial
period created by the NQF Board of
Directors.
Response: We do not believe that the
measure is biased for low-income
patients with confounding
socioeconomic factors. When
developing the measure, we tested how
the measure score varied among
outpatient facilities with varying
proportion of low SES patients. Using
patient dual eligibility status as an
indicator of low SES, we noted that the
median measure score, and the measure
score distribution, was similar among
facilities with many low SES patients
compared to facilities with a few low
SES patients. Based on our testing as
well as input from the measure
developer and the national technical
expert panel, we concluded that
facilities with a high proportion of low

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SES patients were not biased by this
measure and that the measure score was
unaffected by SES status. These findings
were presented to the NQF All-Cause
Admissions and Readmissions Measures
Standing Committee on May 6, 2014.21
Also, we thank the commenters for
the suggestions to submit the measure as
part of the SES trial period, which is a
trial for a defined period that would
assess the impact and implications of
risk adjusting relevant quality measures
for sociodemographic factors and was a
recommendation of the Consensus
Standards Approval Committee
following its review of the NQF Expert
Panel’s report Risk Adjustment for
Socioeconomic Status and Other
Sociodemographic Factors. (http://
www.qualityforum.org/Press_Releases/
2014/NQF_Board_Approves_Trial_Risk_
Adjustment.aspx). We will take this
suggestion into consideration in future
years.
Comment: One commenter requested
clarification of how the measure
numerator and denominator for OP–32
are calculated.
Response: The measure score is the
ratio of predicted hospital visits
(numerator) over the expected hospital
visits (denominator) multiplied by the
crude national rate. The measure score
numerator is the predicted rate, which
is the number of unplanned hospital
visits the facility is predicted to have
within 7 days of colonoscopy, and it
accounts for the observed unplanned
hospital visit rate, the number of
colonoscopies performed at the facility,
and the facility’s case mix. This is
sometimes referred to as the ‘‘adjusted
actual rate.’’
The measure score denominator is the
expected rate, which is the number of
unplanned hospital visits the facility is
expected to have based on the nation’s
performance with that facility’s case and
mix. It is the sum of all patients’
expected probabilities of a hospital visit,
given their risk factors and the risk of
readmission at an average facility. The
contribution of each risk factor (for
example, age) to the patient’s risk of a
hospital admission is calculated based
on all of the patients in the measure
cohort. The crude national rate is the
average rate of hospital visits following
colonoscopy observed in the entire
measure cohort. We also refer readers to
the measure discussion above and
measure specifications (http://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&Item
ID=75057) for a more detailed
21 Available

at: http://www.qualityforum.org/AllCause_Admissions_and_Readmissions_
Measures.aspx.

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discussion of how the numerator and
denominator are calculated.
Comment: Commenters believed that
the Medicare 3-day window payment
policy for hospitals does not allow
HOPDs to generate a claim when there
is an inpatient admission during the 3day window payment policy, that is,
during the 3 days subsequent to the
colonoscopy. Commenters stated that
HOPDs may be advantaged with
systematic undercounting of hospital
visits while ASCs get a full count of all
hospital visits within 7 days subsequent
to outpatient colonoscopy. Commenters
did not believe the methodological
solution proposed by the measure
developer, using physician claims with
an HOPD Place of Service (POS) code,
is adequate due to the high error rates
in POS coding on physician claims.
Commenters were concerned that these
challenges would make comparisons of
HOPD and ASC data impossible, and
significantly reduce the validity of the
measure in the HOPD setting.
Response: We agree that the ability to
detect meaningful variation is an
important indication of the value of a
measure. We have shown facility
variation in unplanned hospital visits
following colonoscopy in both
nationwide Medicare data from HOPDs
and also in the 2010 Healthcare Cost
and Utilization Project (HCUP) data. We
have also shown facility variation in
unplanned hospital visits among ASCs
alone using HCUP data from California.
ASCs are unaffected by the 3-day
payment window policy.22 We are
confident that the variation shown is a
reflection of facility variation in quality
and not as a result of any issues to do
with the 3-day window payment policy.
We are aware of the impact of the 3-day
window payment policy and will ensure
HOPD colonoscopies affected by the 3day window payment policy are
included in the measure cohort and
outcome to the fullest extent possible.
Based on our internal testing with
claims data, we believe our current
algorithm is appropriate and accurate.
However, since we always strive for
improvement, we will evaluate the
colonoscopy measure dry run data and
work with HOPDs and ASCs to further
review and refine the algorithm if
necessary.
We clarify that HOPD colonoscopy
claims for calculation of the measure are
identified using both the physician and
the facility claims. We did not intend to
imply that colonoscopies performed in
22 Center for Medicare and Medicaid Services,
‘‘Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy,’’ National
Quality Form Measure Submission Form, 20.

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HOPDs are solely identified from
physician claims. For both ASCs and
HOPDs, the measure first identifies
colonoscopy claims using both the
physician claim and the corresponding
facility claim to ensure that each
colonoscopy claim is attributed to the
appropriate facility. As a second step,
the measure matches (1) physician
claims that contain HOPD as the POS
that do not have a matching facility
claim with (2) inpatient claims to
identify potential HOPD colonoscopies
that have a subsequent inpatient
admission within the measure’s
timeframe of interest. This second step
identifies HOPD colonoscopy claims
affected by the 3-day window payment
policy.
An OIG review (http://oig.hhs.gov/
oas/reports/region10/11000516.pdf),
concluded that, based on a sample of
2009 claims, inaccuracies in physician
POS coding often occur where a
procedure occurs at a HOPD or ASC and
a facility claim exists, yet the physician
claimed a nonfacility POS. By matching
both facility and physician colonoscopy
claims for any given patient, we ensure
that we accurately identify colonoscopy
claims to the fullest extent possible and
attribute the colonoscopy to the
appropriate provider including HOPD
colonoscopies affected by the 3-day
window payment policy.
We also have taken steps to educate
providers about the appropriate POS
coding and actively audit providers to
improve the accuracy of POS coding.
Beginning in 2012, we also introduced
the ‘‘PD’’ modifier to indicate physician
claims affected by the 3-day window
payment policy.
Regarding the comment concerning
challenges in comparing HOPD and
ASC data, the measure includes
colonoscopies from all outpatient
settings to ensure that the expected
hospital visit rate for any facility is
estimated using the full national
experience of colonoscopy patients. We
appreciate the concern that there are
structural differences in claims across
HOPD and ASC settings. However, the
measure links claims across multiple
settings to identify outpatient
colonoscopy claims, comorbidities for
risk-adjustment, and patient outcomes.
Linking patient claims across multiple
settings largely mitigates the impact of
potential difference in coding practice
among settings and allows comparisons
of colonoscopy quality across settings.
Comment: One commenter was
concerned that the low occurrence rate
may make the measure unreportable.
Response: On Hospital Compare, we
report measure rates, but may refrain
from publishing numerator and/or

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denominator data if either are less than
11. Consistent with the CMS Policy for
Privacy Act Implementation & Breach
Notification, 2007, CMS statistical,
aggregate or summarized information
created as a result of analysis conducted
using identifiable CMS data obtained
under CMS-approved projects/studies
may only be disclosed if the data are not
individual-specific and the data are
aggregated to a level where no data cells
contain 10 or fewer individuals https://
www.cms.gov/Research-Statistics-Dataand-Systems/CMS-InformationTechnology/SystemLifecycleFramework/
downloads/privacypolicy.pdf.
Comment: Many commenters
expressed concern that, if finalized, the
OP–32 measure’s data collection period
would begin July 1, 2014, several
months before adoption of the measure
is finalized. These commenters
requested that CMS delay the beginning
of the data submission period until at
least 30 days after the rule is finalized.
Response: After consideration of the
public comments we received, we are
not finalizing our proposal to use paid
Medicare FFS claims from a 12-month
period from July 1 of the year 3 years
before the payment determination year
to June 30 of the following year. We will

not use administrative claims data for
services that occur prior to January 1,
2015. Instead, after the dry run, we will
use paid Medicare FFS claims from a
12-month period from January 1 to
December 31 of the year 2 years before
a payment determination year.
Specifically, since we are finalizing this
measure beginning with the CY 2018
payment determination, and we will
start with paid Medicare FFS claims
from January 1, 2016 to December 31,
2016.
Comment: Some commenters
suggested that CMS consider developing
additional outcomes measures specific
to colonoscopies, such as a measure of
whether colonoscopy patients remain
cancer free.
Response: We appreciate the
commenters’ suggestions and will take
them into consideration for future
measure selection.
We continue to believe that quality of
care measurement in the clinical area of
outpatient colonoscopy is an important
gap area with ample room for
improvement and that this measure has
sufficient reliability and validity for use
in the Hospital OQR Program.
Therefore, after consideration of the
public comments we received, we are

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finalizing our proposal to adopt the OP–
32: Facility Seven-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy measure for the
Hospital OQR Program. However, to
allow HOPDs sufficient time to review
their measure data from the dry run and
utilize the confidential facility reports
with patient-level associated hospital
event information, we are finalizing to
make this measure required beginning
with the CY 2018 payment
determination and subsequent years,
instead of the CY 2017 payment
determination and subsequent years as
proposed.
We plan to perform a dry run of the
measure in 2015. Also, with national
implementation of a dry run of this
measure, we will also review the
appropriate cutoff volume for facilities,
if necessary, in reporting the measure
score. We refer readers to our discussion
of the dry run and the cutoff volume
above, in responses to previous
comments.
The finalized measure set for the
Hospital OQR Program CY 2017
payment determination and subsequent
years, which includes previously
finalized measures, is listed below.

FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT
YEARS
NQF No.

Measure name

N/A ...............
0288 .............
0290 .............
0286 .............
0289 .............
0514 .............
N/A ...............
N/A ...............
0513 .............
N/A ...............

OP–1: Median Time to Fibrinolysis.
OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival. ****
OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention.
OP–4: Aspirin at Arrival.
OP–5: Median Time to ECG.
OP–8: MRI Lumbar Spine for Low Back Pain.
OP–9: Mammography Follow-up Rates.
OP–10: Abdomen CT—Use of Contrast Material.
OP–11: Thorax CT—Use of Contrast Material.
OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data.
OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery.
OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT).
OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache.
OP–17: Tracking Clinical Results between Visits.
OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients.
OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional.
OP–21: Median Time to Pain Management for Long Bone Fracture.
OP–22: ED—Left Without Being Seen. ***
OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI
Scan Interpretation Within 45 minutes of Arrival.
OP–25: Safe Surgery Checklist Use.
OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures. *
OP–27: Influenza Vaccination Coverage among Healthcare Personnel.
OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients.
OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of
Inappropriate Use.
OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery. **

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0669 .............
N/A ...............
N/A ...............
N/A ...............
0496 .............
N/A ...............
0662 .............
N/A ...............
0661 .............
N/A ...............
N/A ...............
0431 .............
0658 .............
0659 .............
1536 .............

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/BlobServer?blobkey=
id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheader
value1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.

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The finalized measure set for the
Hospital OQR Program CY 2018
payment determination and subsequent

years, which includes previously
finalized measures, and which includes

the newly adopted measure, OP–32, is
listed below.

FINALIZED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT
YEARS
NQF No.

Measure name

N/A ...............
0288 .............
0290 .............
0286 .............
0289 .............
0514 .............
N/A ...............
N/A ...............
0513 .............
N/A ...............

OP–1: Median Time to Fibrinolysis.
OP–2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival. ****
OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention.
OP–4: Aspirin at Arrival.
OP–5: Median Time to ECG.
OP–8: MRI Lumbar Spine for Low Back Pain.
OP–9: Mammography Follow-up Rates.
OP–10: Abdomen CT—Use of Contrast Material.
OP–11: Thorax CT—Use of Contrast Material.
OP–12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into their ONC-Certified EHR System as Discrete Searchable Data.
OP–13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac Low Risk Surgery.
OP–14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus Computed Tomography (CT).
OP–15: Use of Brain Computed Tomography (CT) in the Emergency Department for Atraumatic Headache.
OP–17: Tracking Clinical Results between Visits.
OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients.
OP–20: Door to Diagnostic Evaluation by a Qualified Medical Professional.
OP–21: Median Time to Pain Management for Long Bone Fracture.
OP–22: ED—Left Without Being Seen. ***
OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or MRI
Scan Interpretation Within 45 minutes of Arrival.
OP–25: Safe Surgery Checklist Use.
OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures. *
OP–27: Influenza Vaccination Coverage among Healthcare Personnel.
OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients.
OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of
Inappropriate Use.
OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery. **
OP–32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. ****

0669 .............
N/A ...............
N/A ...............
N/A ...............
0496 .............
N/A ...............
0662 .............
N/A ...............
0661 .............
N/A ...............
N/A ...............
0431 .............
0658 .............
0659 .............
1536 .............
N/A ...............

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/BlobServer?blobkey=id&
blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheader
value1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.
**** New measure finalized for the CY 2018 payment determination and subsequent years.

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F. Possible Hospital OQR Program
Measures and Topics for Future
Consideration
The current measure set for the
Hospital OQR Program includes
measures that assess processes of care,
imaging efficiency patterns, care
transitions, ED throughput efficiency,
the use of health information technology
(health IT), care coordination, patient
safety, and volume. For future payment
determinations, we are considering
expanding these measure areas and
creating measures in new areas.
Specifically, we are exploring (1)
electronic clinical quality measures; (2)
partial hospitalization measures; (3)
behavioral health measures; and (4)
other measures that align with the
National Quality Strategy and the CMS
Quality Strategy domains.
1. Electronic Clinical Quality Measures
HHS believes all patients, their
families, and their health care providers
should have consistent and timely

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access to their health information in a
standardized format that can be securely
exchanged between the patient,
providers, and others involved in the
patient’s care. (HHS August 2013
Statement, ‘‘Principles and Strategy for
Accelerating Health Information
Exchange’’ (http://www.healthit.gov/
sites/default/files/
acceleratinghieprinciples_strategy.pdf).
The Department is committed to
accelerating health information
exchange (HIE) through the use of
electronic health records (EHRs) and
other types of health information
technology (health IT) across the
broader care continuum through a
number of initiatives including: (1)
Alignment of incentives and payment
adjustments to encourage provider
adoption and optimization of health IT
and HIE services through Medicare and
Medicaid payment policies; (2) adoption
of common standards and certification
requirements for interoperable health
IT; (3) support for privacy and security

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of patient information across all HIEfocused initiatives; and (4) governance
of health information networks.
More information on the governance
of health information networks and its
role in facilitating interoperability of
health information systems can be
found at: http://www.healthit.gov/sites/
default/files/ONC10yearInteroperability
ConceptPaper.pdf.
These initiatives are designed to
encourage HIE among health care
providers, including professionals and
hospitals eligible for the Medicare and
Medicaid EHR Incentive Programs as
well as those who are not eligible for
those programs, and are designed to
improve care delivery and coordination
across the entire care continuum. For
example, the Transition of Care Measure
#2 in Stage 2 of the Medicare and
Medicaid EHR Incentive Programs (77
FR 54017 through 54020) requires HIE
to share summary records for more than
10 percent of care transitions.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
We anticipate that as EHR technology
evolves and more infrastructure is
operational, we will begin to accept
electronic reporting of many measures
from EHR technology certified under the
ONC health IT Certification Program.
We are working diligently toward this
goal. We believe that submitting data for
the Hospital OQR Program
electronically would significantly
reduce the administrative burden
associated with reporting chartabstracted measures. We recognize that
considerable work needs to be done by
measure owners and health IT
developers and implementers to make
this possible with respect to the clinical
quality measures targeted for electronic
specifications (e-specifications). This
work includes completing especifications for measures, pilot
testing, reliability and validity testing,
and implementing such specifications
in certified EHR technology to capture
and calculate the results.
We received the following comments
on these future measures.
Comment: Many commenters
supported CMS’ efforts to establish
electronic clinical quality measures after
validation and testing, but expressed
concerns and offered suggestions. One
commenter specifically noted the
importance of health information
exchanges in disseminating infection
prevention and control information
across the care continuum. Some
commenters encouraged CMS to obtain
input from ONC and hospital staff, for
the purpose of ensuring the maturity of
e-specifications and the ability of
certified EHRs to support valid, feasible,
and reliable electronic clinical quality
measures for implementation in
different programs. Some commenters
urged CMS to proceed in a phased
approach to implementing electronic
clinical quality measures.
Response: We agree that health
information exchanges are critical in
quality care improvement, including
infection prevention and control. To the
greatest extent feasible, we strive to
work with ONC and stakeholders,
including hospital staff, to develop and
specify electronic clinical quality
measures before their adoption. If we
decide to propose electronic clinical
quality measures in the future, we will
consider a phased approach.
Comment: One commenter stated that
it is premature to expand the measure
set to include electronic clinical quality
measures at this time because
tremendous work in developing or
defining e-specifications, pilot testing,
and validity and reliability testing is
still needed.

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Response: We recognize that much
work needs to be done before the
adoption of electronic clinical quality
measures. However, we also believe that
implementation of electronic clinical
quality measures will ultimately reduce
provider burden and facilitate care
coordination and patient engagement.
We will weigh and balance these
concerns when we propose to adopt
electronic clinical quality measures in
the future.
Comment: One commenter stated that
the additional time needed to develop
electronic clinical quality measures will
allow hospitals to optimize their EHRs
and develop information sharing
networks.
Response: We thank the commenter
for raising this concern. We believe, to
the extent feasible, it is important to
ensure that hospitals are ready to
implement EHRs and will continue to
work with them as we implement
electronic clinical quality measures.
We thank the commenters for their
views and will consider them as we
develop and implement future
electronic clinical quality measures.
2. Partial Hospitalization Program
Measures
We seek to develop a comprehensive
set of quality measures to be available
for widespread use for informed
decision-making and quality
improvement in the hospital outpatient
setting. Therefore, in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75106), we stated that,
through future rulemaking, we intended
to propose new measures that help us
further our goal of achieving better
health care and improved health for
Medicare beneficiaries who receive
health care in hospital outpatient
settings, such as partial hospitalization
programs (PHPs) that are part of HOPDs.
Partial hospitalization is an intensive
outpatient program of psychiatric
services provided to patients as an
alternative to inpatient psychiatric care
for individuals who have acute mental
illness. The PHP was designed to assist
individuals with acute psychiatric
illness in managing debilitating
symptoms and prevent the need for
hospitalization or rehospitalization.
Behavioral health treatments and
services have improved and evolved
through medication advances, recoverybased therapy, and evidenced-based
interventions, including peer supports.
PHP services have had the opportunity
to evolve to provide individuals with a
unique setting that can contribute to
maintaining social and community
connectivity while focusing on
sustained recovery to prevent initial

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66957

hospitalization during a given episode
and subsequent rehospitalization.
Currently, the Hospital OQR Program
has not adopted measures applicable to
PHPs.
Although we believe that the PHP is
an important program offering an
alternative to inpatient stays, we note
that PHP utilization has been
declining.23 Therefore, as we consider
implementing PHP measures in future
years, we invited public comment
regarding the utility of including
measures for this care setting in the
Hospital OQR Program.
We specifically requested public
comment on three PHP measures we
submitted to the MAP for consideration
as part of the ‘‘MAP Pre-Rulemaking
Report: 2014 Recommendations on
Measures for More than 20 Federal
Programs’’ (http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_Report_
_2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx (formerly referred to as
the ‘‘List of Measures Under
Consideration’’)):
• 30-Day Readmission;
• Group Therapy; and
• No Individual Therapy.
These measures are included in the
Program for Evaluating Payment
Patterns Electronic Reports (PEPPERs)
developed under the Comprehensive
Error Rate Testing (CERT) Program.
Further information on these claimsbased measures that provide indicators
of quality of care can be found at
http://www.pepperresources.org/
LinkClick.aspx?fileticket=
stK9uUmQWlM%3d&tabid=148.
We also requested public input on
other possible quality measures for
partial hospitalization services for
inclusion in the Hospital OQR Program
in future years.
Comment: Some commenters
supported CMS’ consideration of PHP
measures, noting that these measures
will encourage hospitals to monitor
their performance over time and
identify opportunities for quality
improvement.
Response: We thank the commenters
for their support. We agree that PHPs
are an important alternative to inpatient
stays and there may be value in
collecting and reporting this data.
Comment: Many commenters did not
support PHP quality metrics in the
Hospital OQR Program, stating that
there are significant differences between
outpatient and PHP treatment services,
23 http://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/
Reports/downloads/Leung_PHP_PPS_2010.pdf.

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structure, and supervision, as well as
other concerns. Commenters
recommended that CMS adopt PHP
measures that have been NQF-endorsed
and are MAP-recommended, noting that
the three PHP measures mentioned in
the proposed rule were not
recommended by the MAP because they
were not well-defined or required
additional evidence relating to their
value. Commenters suggested that CMS
address the MAP’s concerns before
proposing these measures for use in the
Hospital OQR Program.
Response: We disagree that PHP
measures are not appropriate for the
Hospital OQR Program based on
differences between outpatient and PHP
treatment services, structure, and
supervision. Because PHP services are
provided by HOPDs, are an important
alternative to inpatient stays, and are
utilized by Medicare beneficiaries, we
believe that there may be value in
collecting and reporting quality measure
data for these services. However, at this
time, we are not proposing any PHP
measures for the Hospital OQR Program.
The PHP measures on which we invited
comment have not been recommended
by the MAP. The MAP stated that it
needed further information on the 30Day Readmission measure and
recommended that the No Individual
Therapy and Group Therapy measures
be submitted for NQF endorsement
before they are adopted by the Hospital
OQR Program (http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_Report_
_2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx).
If we do consider proposing PHP
measures in the future, to the extent
feasible, we intend to propose to adopt
measures which are NQF-endorsed and
have been MAP-recommended. Before
adopting a measure, we try to address
stakeholder concerns, including the
differences in the outpatient and PHP
settings. Finally, if we choose to
propose the three measures discussed in
the proposed rule, we will consider the
comments of the MAP and address them
to the extent feasible. We note, however,
that not all of the measures adopted by
the Hospital OQR Program are NQFendorsed, nor is NQF endorsement a
program requirement (section
1833(t)(17)(C)(i) of the Act).
Comment: Some commenters believed
that using PHP measures in the Hospital
OQR Program would constitute a
duplication of efforts because the
measures are already included in
PEPPER. Other commenters also viewed
PEPPER measures as auditing tools
rather than quality measures.

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Response: We will consider the
commenters’ viewpoint if we propose to
adopt the PEPPER measures in future
rulemaking. We note that these
measures, while addressing areas of
payment concern, also address areas of
quality of care concern and that the
PEPPER measures are not publicly
reported at the facility level.
Comment: Commenters expressed
concerns about the 30-day readmissions
measure because this patient population
tends to be readmitted for behavioral
conditions due to social issues for
which hospitals have little control.
Commenters stated that PHP patients’
clinical needs evolve over time, that
readmissions are often needed to
stabilize patients, and that measuring
facilities on readmission rates could
cause unintended consequences.
Commenters further stated that the
readmission measure is not sufficiently
risk-adjusted.
Response: We thank the commenters
for raising these concerns. We will
consider these concerns if we propose to
adopt the 30-day readmission PEPPER
measure for the Hospital OQR Program
in future rulemaking.
Comment: Some commenters stated
that CMS should better understand the
challenges facing PHP and readmissions
before imposing PHP quality measures
because quality measures could further
destabilize the PHP rate and threaten
access to this service.
Response: We understand that
utilization of PHP services has been
decreasing and that many challenges
may be unique to the PHP setting. We
will consider these issues before
proposing to adopt any PHP measures in
future rulemaking.
Comment: One commenter
recommended that CMS include the 60+
Days of Service measure in the PHP
measure suite as well as assessments of
intensive outpatient programs that treat
individuals with substance use
disorders.
Response: We thank the commenter
for the recommendation and will
consider this measure if we propose to
adopt PHP measures in future
rulemaking. We note that Medicare does
not cover intensive outpatient program
(IOP) services, and this could affect the
usefulness of the recommended measure
for the Hospital OQR Program.
Comment: Some commenters
encouraged CMS to develop specific
PHP measures such as: (1) Requiring
PHPs to identify a specific appointment
within 14 days; (2) requiring continuing
care information be provided directly to
the follow-up provider; and (3)
establishing Quality Service Criteria for
use in judging performance, including

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criteria relating to access, treatment
intensity, discharge planning, and
continuity of care.
Response: We appreciate the
commenters’ suggestions. We support
coordination of care efforts and will
consider developing these types of
measures for the Hospital OQR Program.
Comment: One commenter argued
that the Group Therapy measure should
only be adopted as a percentage rating
of group therapy as a comparison to all
interventions billed. The commenter
also noted that both group therapy and
individual psychotherapy are needed
for optimal success.
Response: We thank the commenter
for sharing its views. We are unclear
what the commenter means by ‘‘a
percentage rating of group therapy’’ and
so cannot respond at this time.
However, we welcome clarification and
will consider all of the commenter’s
concerns if we propose to adopt PHP
measures in future rulemaking.
Comment: One commenter voiced
support for our efforts in working
toward electronic quality of care
measures in the PHP setting of care.
Response: We note that we did not
specifically discuss electronic qualityof-care measures for the PHP setting in
the proposed rule. However, we are
working diligently to implement
electronic measures across the quality
reporting programs, and we may
consider electronic clinical quality
measures for the PHP setting in the
future.
We thank the commenters for their
views and will consider them as we
develop future policies.
3. Behavioral Health Measures
In addition to PHP measures, we are
considering other measures specific to
behavioral health in the outpatient
setting, including measures addressing
depression and alcohol abuse. Major
depression is a leading cause of
disability in the United States,
complicates the treatment of other
serious illnesses, and is associated with
an increased risk of suicide. Major
depression is a common mental health
condition, affecting 6 to 9 percent of
those over 55 years of age.24 Along with
other serious mental health conditions,
it has a higher Medicare inpatient
readmission rate than all other
conditions with the exception of heart
failure.25 Alcohol use disorders are the
24 O’Connor E, Whitlock E, Beil T, et al. Screening
for depression in adult patients in primary care
settings: a systematic evidence review. Annals of
Internal Medicine 2009 December 1:151(11):793–
803.
25 Stephen F. Jencks, M.D., M.P.H., Mark V.
Williams, M.D., and Eric A. Coleman, M.D., M.P.H.

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most prevalent type of addictive
disorder in individuals ages 65 and
over.26 Roughly 6 percent of the elderly
are considered to be heavy users of
alcohol.27 Alcohol abuse is often
associated with depression and
contributes to the etiology of serious
medical conditions, including liver
disease and coronary heart disease.
Because of the prevalence of depression
and alcohol abuse and their impact on
the Medicare population, we believe
that we should consider measures in
these and other behavioral health areas
for use in future Hospital OQR Program
payment determination years.
Therefore, we invited public comment
on measures applicable to these areas
that would be suitable for the Hospital
OQR Program.
Comment: Many commenters
supported CMS’ efforts to develop and
implement quality measurement tools
related to alcohol abuse and depression
because of the prevalence of these
conditions within the Medicare
population and the need to improve
care coordination for these conditions.
Commenters encouraged CMS to
incorporate measures that address the
following principles: (1) The patient’s
readiness for treatment; (2) the
treatment will address mental health
issues in conjunction with the alcohol
abuse; and (3) the patient’s willingness
to participate in an alcohol abuse
program without the need for coerced
efforts.
Response: We thank commenters for
their support, and we will consider
these principles if we choose to propose
to adopt behavioral health measures in
the future.
Comment: One commenter suggested
adopting a measure that evaluates
screening for psychological/physical or
sexual trauma, arguing that trauma
informed care is critical to successful
recovery and better engagement and
retention in ambulatory care.
Response: We agree that this clinical
topic is important, and we will consider
adopting a measure screening for trauma
in the future.
Comment: Some commenters argued
that behavioral health measures are
more suited to the IPFQR Program.
Response: We disagree with this view.
We believe all care settings should seek
Rehospitalizations among Patients in the Medicare
Fee-for-Service Program. N Engl J Med
2009;360:1418–28.
26 Stephen Ross. Alcohol Use Disorders in the
Elderly. Psychiatry Weekly (no date) Available at:
http://www.psychweekly.com/aspx/article/
ArticleDetail.aspx?articleid=19.
27 AL Mirand and JW Welte. Alcohol
consumption among the elderly in a general
population, Erie County, New York. Am J Public
Health. 1996 July; 86(7): 978–984.

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to improve the behavioral health
outcomes of their patients.
Comment: One commenter
recommended that CMS work with the
NQF to develop appropriate measures
related to beneficiary wellness concerns.
The commenter noted that behavioral
health quality measures are used in the
nursing home and home health care
settings, and that these measures should
be reviewed to determine if they are
applicable to the outpatient setting. The
commenter believed that any measures
used should be claims-based and not
generated by chart abstraction to
minimize administrative burden.
Response: We interpret ‘‘beneficiary
wellness concerns’’ to mean measures of
behavioral health. We endeavor to adopt
measures that are NQF-endorsed and
believe it is critical to work with
stakeholders to develop measures.
However, we note that not all of the
measures adopted by the Hospital OQR
Program are NQF-endorsed, nor is NQF
endorsement a program requirement
(section 1833(t)(17)(C)(i) of the Act) as
consensus among affected parties can be
reflected through means other than NQF
endorsement. In addition, to the extent
feasible, we believe it is important to
align measures across all our quality
reporting programs, and we will look to
other settings for measures of behavioral
health. Finally, we will continue to
examine options for less burdensome
reporting mechanisms for these and
other program measures in the future;
this includes claims-based and
electronically submitted data.
Comment: Some commenters
recommended that behavioral health
quality measures not be considered at
this time for the Hospital OQR Program,
arguing that additional research and
education needs to be done to develop
helpful behavioral measures.
Response: We will continue to
research appropriate measures and work
with stakeholders as we consider
behavioral health measures for the
Hospital OQR Program in the future.
Comment: One commenter urged
CMS to work with its behavioral health
Technical Experts Panel (TEP) and the
MAP to identify and bring forward
behavioral health measures that are
suitable for this population and for
consideration by all stakeholders.
Response: We convene TEPs, groups
of stakeholders and experts, to provide
technical input on the development,
selection, and maintenance of measures.
Convening TEPs is one important step
in the measure development or
reevaluation process to ensure
transparency and it provides an
opportunity to receive multistakeholders input early in the process.

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We refer readers to http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/
TechnicalExpertPanels.html for more
information on TEPs. We believe it is
important to work with stakeholders as
we develop and adopt behavioral health
measures. We will leverage both TEPs
and the MAP as we consider future
measures.
Comment: One commenter
recommended that CMS incorporate
standardized behavioral health
measures that are currently in
widespread use, such as the National
Center for Quality Assurance’s
behavioral health measures.
Response: We thank the commenter
for its recommendation, and we will
consider these measures for future
rulemaking.
Comment: Some commenters
supported CMS’ efforts to identify
depression and depression-related
issues in the Medicare population. The
commenters believed that an
identification tool should be used for
any new patient encounter and
recommended that every Medicare
provider should be required to use a
depression screening tool at any initial
patient screening/encounter. Some
commenters, however, noted that
depression screening in the ambulatory
setting is nearly universal, and,
therefore, such a measure may be
‘‘topped-out’’ even before adoption.
Response: We thank commenters for
their support. We interpret the
commenters’ suggestions to mean that
we should include measures that
encourage providers to screen patients
to identify depression. We will consider
depression screening measures in the
future.
We thank the commenters for their
views on behavioral health measures in
the outpatient setting and will consider
them as we develop future policies.
4. National Quality Strategy and CMS
Quality Strategy Measure Domains
In considering future Hospital OQR
Program measures, we are focusing on
the following National Quality Strategy
and CMS Quality Strategy measure
domains: make care safer, strengthen
person and family engagement, promote
effective communication and
coordination of care, promote effective
prevention and treatment, work with
communities to promote best practices
of healthy living, and make care
affordable. We believe measures in these
areas will promote better care and align
measures across multiple CMS quality
programs, in particular, the Hospital
OQR, Hospital IQR, and ASCQR
Programs.

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We received the following comments
on these future measures.
Comment: Many commenters
supported the Hospital OQR Program’s
effort to align future measures with the
NQS priorities and CMS quality
strategy, noting that doing so will make
the Hospital OQR Program more
consistent with the Hospital IQR
Program. Commenters urged CMS to
further align our measures with other
quality reporting programs. One
commenter stated that CMS should
respond to all MAP recommendations as
part of any proposed rule so that
stakeholders may gain a better
understanding of our decisions,
particularly when a MAP
recommendation is not being followed.
Response: We thank the commenters
for their support. To the extent
practicable, we strive to align measures
across our quality reporting programs.
We also appreciate the feedback of the
MAP and work to address its concerns
before adopting measures in the
Hospital OQR Program. As we stated
above, to the extent feasible, we strive
to state and address the MAP concerns
when adopting a measure.
Comment: Some commenters
recommended that CMS introduce
measures to track and monitor radiation
dose exposure and contrast dose
exposure, including organ-specific
radiation exposure based on patient
weight and contrast administration, and
a meaningful tracking mechanism for
patient longitudinal exposure. One
commenter noted that the PQRS
program has included some similar
measures giving radiologists an
incentive to track patient exposure. In
addition, the commenter noted that The
Joint Commission, the FDA, and the
EPA have all issued guidance
recommending that exposure to
radiation through medical devices be
minimized.
Response: We thank the commenters
for their recommendations, and we may
consider these types of measures in
future years.
Comment: One commenter urged
CMS to require hospitals to comply with
all manufacturing standards for imaging
equipment to facilitate patient safety
and promote the overall quality of
patient care in hospitals. The
commenter also recommended a
measure tracking the demonstrated
reduction in suboptimal or
nondiagnostic echocardiograms and the
resulting improvements in diagnosis
and reductions in costs to Medicare and
beneficiaries.
Response: We thank the commenter
for its recommendation, and we may

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consider these types of measures in
future years.
Comment: One commenter
encouraged the implementation of a
CAHPS survey used to encourage
patient experience improvement across
the ambulatory surgery sector. The
commenter urged CMS to continue to
analyze and address the role of the
survey and discuss the comparative
roles of surveys across other care
settings and quality reporting programs.
Another commenter encouraged CMS to
involve consumers and purchasers in
refinement of the CAHPS survey for the
outpatient setting.
Response: We thank the commenters
for these suggestions. We intend to
include such survey measures for the
outpatient setting on our December 1,
2014 Measures under Consideration
(MUC) List for MAP review. We
currently use patient experience-of-care
surveys in a variety of health care
settings. For example, both the ESRD
QIP and the Hospital IQR Program use
patient experience-of-care surveys, the
In-center Hemodialysis Consumer
Assessment of Healthcare Providers and
Systems (ICH CAHPS) and the Hospital
Consumer Assessment of Healthcare
Providers and Systems (HCAHPS),
respectively. We agree that, to the extent
feasible, survey instruments should be
aligned and coordinated across settings.
The developmental process of CAHPS
and patient experience-of-care surveys
involves several opportunities for input
from patients, patient advocates, and
stakeholders from the HOPD and ASC
industry, including professional
associations, clinicians, accreditation
organizations, and the government.
These opportunities include serving on
the TEP, responding to the Federal
Register notice requesting measures,
topics, or public domain questionnaires,
and providing comment on the survey
through the OMB clearance process.
Comment: One commenter
recommended that CMS target high
volume procedures that may be
unnecessary at the composite,
individual hospital, and physician
levels, including those that are part of
the Choosing Wisely campaign.
Response: We thank the commenter
for its recommendation, and we may
consider these types of measures in
future years.
Comment: One commenter requested
that CMS risk-adjust measures of
clinical outcomes for SES in order to
avoid disadvantaging hospitals,
particularly safety-net hospitals that are
evaluated on these outcomes.
Response: We thank the commenter
for this feedback. We addressed the
topic of risk adjustment with respect to

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the Hospital IQR and Hospital
Readmissions Reduction Programs in
the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50219 and 50026 through 50027),
and we believe the same approach
would apply to risk adjustment for
Hospital OQR Program measures
because the Hospital OQR Program
outcome measures are risk-adjusted, and
this approach aligns with outcome
measures methodology used in other
programs across settings. The purpose of
risk adjustment when comparing
outcome rates for two different
outpatient facilities is to statistically
compensate (or adjust) for risk factor
differences in the two facilities so that
the outcome rates can be compared
legitimately despite the differences in
risk factors.
We appreciate the commenters’
suggestions on the importance of
addressing SES in the Hospital OQR
Program. We continue to consider and
evaluate stakeholder concerns regarding
the impact of patients’ SES on Hospital
OQR measures.
Comment: Many commenters urged
CMS to adopt only NQF-endorsed
measures for its quality reporting and
pay-for-performance programs, arguing
that the consensus-based process
validates quality measures’ rigor and
ensures that the measures have been are
reliable and have been carefully tested,
validated, and scrutinized. Commenters
also commended CMS for considering
the MAP’s input in selecting measures,
particularly because the MAP considers
NQF endorsement, measures’ feasibility
of implementation, stakeholder input,
and validity.
Response: We thank commenters for
their support for the MAP process. To
the extent feasible, we seek to adopt
measures that have been NQF-endorsed.
However, we also note that consensus
among affected parties can be reflected
through means other than NQF
endorsement. We also refer readers to
our discussion above in section XIII.E.
of this final rule with comment period
in response to a similar comment.
Comment: Commenters suggested that
CMS consider adopting measures of
HAIs, such as SSI, CLABSI, CAUTI,
MRSA, and C. difficile, or infection
control process measures, such as
MRSA colonization at admission or
hand hygiene adherence, use of barrier
precautions, or other process measures.
Commenters noted that infections such
as MRSA and C. difficile are a
significant source of morbidity and
mortality. One commenter encouraged
CMS to develop composite measures of
common surgical infections; another
commenter requested that CMS adopt

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measures that have aligned data
elements with the CDC’s NHSN.
Response: We agree that it is
important to minimize infection events
that present significant health risks to
patients. We also believe that infection
prevention measures provide
information critical to quality
improvement efforts. We note that
several measures that focus on these
infections are already included in the
Hospital IQR Program (79 FR 50202)
and are aligned with the CDC’s NHSN.
We will consider including these types
of measures for the outpatient setting in
the Hospital OQR Program and aligning
them with other quality reporting
programs, such as the Hospital IQR
Program, to the extent feasible in future
years.
Comment: One commenter suggested
that CMS consider measures of adverse
outcomes from high-volume procedures
such as cataract removals, other eye
procedures, endoscopies,
musculoskeletal procedures, and
colonoscopies.
Response: We thank the commenter
for its suggestion and may consider
these types of measures in future years.
We thank the commenters for their
views and will consider them as we
develop future policies.
G. Payment Reduction for Hospitals
That Fail To Meet the Hospital
Outpatient Quality Reporting (OQR)
Program Requirements for the CY 2015
Payment Update

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1. Background
Section 1833(t)(17) of the Act, which
applies to subsection (d) hospitals (as
defined under section 1886(d)(1)(B) of
the Act), states that hospitals that fail to
report data required to be submitted on
the measures selected by the Secretary,
in the form and manner, and at a time,
required by the Secretary will incur a
2.0 percentage point reduction to their
Outpatient Department (OPD) fee
schedule increase factor; that is, the
annual payment update factor. Section
1833(t)(17)(A)(ii) of the Act specifies
that any reduction applies only to the
payment year involved and will not be
taken into account in computing the
applicable OPD fee schedule increase
factor for a subsequent payment year.
The application of a reduced OPD fee
schedule increase factor results in
reduced national unadjusted payment
rates that apply to certain outpatient
items and services provided by
hospitals that are required to report
outpatient quality data in order to
receive the full payment update factor
and that fail to meet the Hospital OQR
Program requirements. Hospitals that

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meet the reporting requirements receive
the full OPPS payment update without
the reduction. For a more detailed
discussion of how this payment
reduction was initially implemented,
we refer readers to the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68769 through 68772).
The national unadjusted payment
rates for many services paid under the
OPPS equal the product of the OPPS
conversion factor and the scaled relative
payment weight for the APC to which
the service is assigned. The OPPS
conversion factor, which is updated
annually by the OPD fee schedule
increase factor, is used to calculate the
OPPS payment rate for services with the
following status indicators (listed in
Addendum B to this proposed rule,
which is available via the Internet on
the CMS Web site): ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’
‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘U.’’ We
note that we are finalizing our proposal
to delete status indicator ‘‘X’’’ as
described in sections II.A.3. and X. of
this final rule with comment period. We
also note that we are finalizing our
proposal to develop status indicator
‘‘J1’’ as part of our comprehensive APC
policy, effective for CY 2015, discussed
in section II.A.2.e. of the CY 2014
OPPS/ASC final rule with comment
period (78 FR 74861 through 74910) and
sections II.A.2.e. of the CY 2015 OPPS/
ASC proposed rule and this final rule
with comment period. Payment for all
services assigned to these status
indicators will be subject to the
reduction of the national unadjusted
payment rates for hospitals that fail to
meet Hospital OQR Program
requirements, with the exception of
services assigned to New Technology
APCs with assigned status indicator ‘‘S’’
or ‘‘T.’’ We refer readers to the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68770 through 68771) for
a discussion of this policy.
The OPD fee schedule increase factor
is an input into the OPPS conversion
factor, which is used to calculate OPPS
payment rates. To reduce the OPD fee
schedule increase factor for hospitals
that fail to meet reporting requirements,
we calculate two conversion factors—a
full market basket conversion factor
(that is, the full conversion factor), and
a reduced market basket conversion
factor (that is, the reduced conversion
factor). We then calculate a reduction
ratio by dividing the reduced
conversion factor by the full conversion
factor. We refer to this reduction ratio as
the ‘‘reporting ratio’’ to indicate that it
applies to payment for hospitals that fail
to meet their reporting requirements.
Applying this reporting ratio to the
OPPS payment amounts results in

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reduced national unadjusted payment
rates that are mathematically equivalent
to the reduced national unadjusted
payment rates that would result if we
multiplied the scaled OPPS relative
payment weights by the reduced
conversion factor. For example, to
determine the reduced national
unadjusted payment rates that applied
to hospitals that failed to meet their
quality reporting requirements for the
CY 2010 OPPS, we multiplied the final
full national unadjusted payment rate
found in Addendum B of the CY 2010
OPPS/ASC final rule with comment
period by the CY 2010 OPPS final
reporting ratio of 0.980 (74 FR 60642).
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68771
through 68772), we established a policy
that the Medicare beneficiary’s
minimum unadjusted copayment and
national unadjusted copayment for a
service to which a reduced national
unadjusted payment rate applies would
each equal the product of the reporting
ratio and the national unadjusted
copayment or the minimum unadjusted
copayment, as applicable, for the
service. Under this policy, we apply the
reporting ratio to both the minimum
unadjusted copayment and national
unadjusted copayment for services
provided by hospitals that receive the
payment reduction for failure to meet
the Hospital OQR Program reporting
requirements. This application of the
reporting ratio to the national
unadjusted and minimum unadjusted
copayments is calculated according to
§ 419.41 of our regulations, prior to any
adjustment for a hospital’s failure to
meet the quality reporting standards
according to § 419.43(h). Beneficiaries
and secondary payers thereby share in
the reduction of payments to these
hospitals.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68772), we
established the policy that all other
applicable adjustments to the OPPS
national unadjusted payment rates
apply when the OPD fee schedule
increase factor is reduced for hospitals
that fail to meet the requirements of the
Hospital OQR Program. For example,
the following standard adjustments
apply to the reduced national
unadjusted payment rates: the wage
index adjustment; the multiple
procedure adjustment; the interrupted
procedure adjustment; the rural sole
community hospital adjustment; and the
adjustment for devices furnished with
full or partial credit or without cost.
Similarly, OPPS outlier payments made
for high cost and complex procedures
will continue to be made when outlier
criteria are met. For hospitals that fail to

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meet the quality data reporting
requirements, the hospitals’ costs are
compared to the reduced payments for
purposes of outlier eligibility and
payment calculation. We established
this policy in the OPPS beginning in the
CY 2010 OPPS/ASC final rule with
comment period (74 FR 60642). For a
complete discussion of the OPPS outlier
calculation and eligibility criteria, we
refer readers to section II.G. of this final
rule with comment period.
2. Reporting Ratio Application and
Associated Adjustment Policy for CY
2015
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41017), we proposed to
continue our established policy of
applying the reduction of the OPD fee
schedule increase factor through the use
of a reporting ratio for those hospitals
that fail to meet the Hospital OQR
Program requirements for the full CY
2015 annual payment update factor. For
the CY 2015 OPPS, the proposed
reporting ratio is 0.980, calculated by
dividing the proposed reduced
conversion factor of $72.692 by the
proposed full conversion factor of
$74.176. We proposed to continue to
apply the reporting ratio to all services
calculated using the OPPS conversion
factor. For the CY 2015 OPPS, we
proposed to apply the reporting ratio,
when applicable, to all HCPCS codes to
which we have assigned status
indicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’
‘‘S,’’ ‘‘T,’’ ‘‘V,’’ and ‘‘U’’ (other than new
technology APCs to which we have
assigned status indicators ‘‘S’’ and ‘‘T’’).
We note that we are finalizing our
proposal to delete status indicator ‘‘X’’
as described in sections II.A.3. and X. of
the proposed rule and this final rule
with comment period. We note that we
are finalizing our proposal to develop
status indicator ‘‘J1’’ as part of our CY
2015 comprehensive APC policy,
discussed in sections II.A.2.e. of the CY
2015 OPPS/ASC proposed rule and this
final rule with comment period and to
apply the reporting ratio to the
comprehensive APCs. We proposed to
continue to exclude services paid under
New Technology APCs. We proposed to
continue to apply the reporting ratio to
the national unadjusted payment rates
and the minimum unadjusted and
national unadjusted copayment rates of
all applicable services for those
hospitals that fail to meet the Hospital
OQR Program reporting requirements.
We also proposed to continue to apply
all other applicable standard
adjustments to the OPPS national
unadjusted payment rates for hospitals
that fail to meet the requirements of the
Hospital OQR Program. Similarly, we

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proposed to continue to calculate OPPS
outlier eligibility and outlier payment
based on the reduced payment rates for
those hospitals that fail to meet the
reporting requirements.
We did not receive public comments
on our proposal. Therefore, we are
finalizing our proposal to apply the
Hospital OQR Program reduction in the
manner described above. We also are
finalizing our proposal, with
modification, to reflect the CY 2015
OPPS status indicators to which the
adjustment would apply. For the CY
2015 OPPS, the final reporting ratio is
0.980, calculated by dividing the final
reduced conversion factor of $72.661 by
the final full conversion factor of
$74.144.
As a result, for the CY 2015 OPPS, we
are applying a reporting ratio of 0.980 to
the national unadjusted payments,
minimum unadjusted copayments, and
national unadjusted copayments for all
applicable services for those hospitals
failing to meet the Hospital OQR
Program reporting requirements. This
reporting ratio applies to HCPCS codes
assigned status indicators ‘‘J1,’’ ‘‘P,’’
‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’
or ‘‘V,’’ excluding services paid under
New Technology APCs. All other
applicable standard adjustments to the
OPPS national unadjusted payment
rates for hospitals that fail to meet the
requirements of the Hospital OQR
Program will continue to apply. We
continue to calculate OPPS outlier
eligibility and outlier payment based on
the reduced rates for those hospitals that
fail to meet the reporting requirements.
H. Requirements for Reporting Hospital
OQR Program Data for the CY 2017
Payment Determination and Subsequent
Years
1. Administrative Requirements for the
CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75108 through 75109) for
a discussion of the Hospital OQR
Program procedural requirements for
the CY 2015 payment determination and
subsequent years. In that final rule with
comment period, we codified these
procedural requirements at 42 CFR
419.46(a).
2. Form, Manner, and Timing of Data
Submitted for the Hospital OQR
Program
a. General Procedural Requirements
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75110 through 75111) for
a discussion of Hospital OQR Program

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general procedural requirements. In that
final rule with comment period, we
finalized our proposal to codify these
general procedural requirements at 42
CFR 419.46(c).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41042), we proposed to
correct a typographical error in 42 CFR
419.46(c). This section states, ‘‘Except as
provided in paragraph (d) of this
section, hospitals that participate in the
Hospital OQR Program must submit to
CMS data on measures selected under
section 1833(17)(C) of the Act . . .’’ We
proposed to correct the erroneous
reference of ‘‘section 1833(17)(C)’’ to
‘‘section 1833(t)(17)(C).’’
We invited public comment on this
proposal.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing the typographical
correction as proposed.
b. Requirements for Chart-Abstracted
Measures Where Data Are Submitted
Directly to CMS for the CY 2017
Payment Determination and Subsequent
Years
The following chart-abstracted
measures finalized previously and
retained in the Hospital OQR Program
require data to be submitted for the CY
2017 payment determination and
subsequent years:
• OP–1: Median Time to Fibrinolysis;
• OP–2: Fibrinolytic Therapy
Received Within 30 Minutes of ED
Arrival (NQF # 0288);
• OP–3: Median Time to Transfer to
Another Facility for Acute Coronary
Intervention (NQF # 0290);
• OP–4: Aspirin at Arrival (NQF#
286)
• OP–5: Median Time to ECG (NQF #
0289);
• OP–18: Median Time from ED
Arrival to ED Departure for Discharged
ED Patients (NQF # 0496);
• OP–20: Door to Diagnostic
Evaluation by a Qualified Medical
Professional;
• OP–21: ED—Median Time to Pain
Management for Long Bone Fracture
(NQF # 0662);
• OP–22: ED—Left Without Being
Seen;
• OP–23: ED—Head CT Scan Results
for Acute Ischemic Stroke or
Hemorrhagic Stroke who Received Head
CT Scan Interpretation Within 45
Minutes of Arrival (NQF # 0661);
• OP–29: Endoscopy/Polyp
Surveillance: Appropriate Follow-up
Interval for Normal Colonoscopy in
Average Risk Patients (NQF # 0658); and
• OP–30: Endoscopy/Polyp
Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous

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Polyps—Avoidance of Inappropriate
Use (NQF # 1536).
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68481 through 68484) for
a discussion of the form and manner for
data submission of these measures.
As we noted in the CY 2015 OPPS/
ASC proposed rule (79 FR 41042), we
neither proposed new chart-abstracted
measures where patient-level data is
submitted directly to CMS nor proposed
new requirements for data submission
for chart-abstracted measures.

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c. Claims-Based Measure Data
Requirements for the CY 2017 and CY
2018 Payment Determination and
Subsequent Years
We proposed one additional claimsbased measure for the CY 2017 payment
determination and subsequent years,
OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy (79 FR 41036
through 41039). However, as discussed
in section XIII.E. of this final rule with
comment period, we are finalizing this
measure for the CY 2018 payment
determination and subsequent years
instead of the CY 2017 payment
determination and subsequent years as
proposed. As discussed in section
XIII.E. of this final rule with comment
period, we will use claims data from
January 1, 2016–December 31, 2016 to
calculate OP–32 for the CY 2018
payment determination in order to use
the most recently available data.
Therefore, we are finalizing that to
calculate OP–32, we will use claims
data from January 1—December 31 of
the calendar year 2 years prior to the
payment determination year (for
example, for the CY 2018 payment
determination, we will use data from
January 1, 2016—December 31, 2016).
Therefore, there will be a total of
seven claims-based measures for the CY
2017 payment determination and
subsequent years:
• OP–8: MRI Lumbar Spine for Low
Back Pain (NQF # 0514);
• OP–9: Mammography Follow-Up
Rates;
• OP–10: Abdomen CT—Use of
Contrast Material;
• OP–11: Thorax CT—Use of Contrast
Material;
• OP–13: Cardiac Imaging for
Preoperative Risk Assessment for NonCardiac Low Risk Surgery (NQF # 0669);
• OP–14: Simultaneous Use of Brain
Computed Tomography (CT) and Sinus
Computed Tomography (CT); and
• OP–15: Use of Brain Computed
Tomography (CT) in the Emergency
Department for Atraumatic Headache.

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For the CY 2018 payment
determination and subsequent years,
there will be a total of eight claimsbased measures:
• OP–8: MRI Lumbar Spine for Low
Back Pain (NQF # 0514);
• OP–9: Mammography Follow-Up
Rates;
• OP–10: Abdomen CT—Use of
Contrast Material;
• OP–11: Thorax CT—Use of Contrast
Material;
• OP–13: Cardiac Imaging for
Preoperative Risk Assessment for NonCardiac Low Risk Surgery (NQF # 0669);
• OP–14: Simultaneous Use of Brain
Computed Tomography (CT) and Sinus
Computed Tomography (CT);
• OP–15: Use of Brain Computed
Tomography (CT) in the Emergency
Department for Atraumatic Headache;
and
• OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy.
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75111 through 75112) for
a discussion of the claims-based
measure data submission requirements
for the CY 2015 payment determination
and subsequent years.
In the CY 2012 OPPS/ASC final rule
with comment period, we deferred the
public reporting of OP–15 (76 FR
74456). We extended the postponement
of public reporting for this measure in
the CY 2013 and CY 2014 OPPS/ASC
final rules with comment period (77 FR
68481, 78 FR 75111). As we noted in the
CY 2015 OPPS/ASC proposed rule (79
FR 41042), we did not propose any
changes to this policy. Public reporting
for OP–15 continues to be deferred, and
this deferral has no effect on any
payment determinations; however,
hospitals are still required to submit
data as previously finalized (76 FR
74456).
Comment: One commenter supported
the proposed deferral of the public
reporting of OP–15. The commenter
appreciated CMS’ concerns regarding
inappropriate use of brain CT imaging
and the need for an established clinical
guideline to address this issue.
However, the commenter did not
believe older adults or adults on
anticoagulant medications should be
included in OP–15, and noted that
current research suggests headaches are
a potential contraindication. The
commenter also expressed concern that
claims are not detailed enough to
capture the clinical indications needed
for appropriate exclusions. As a result,
the commenter was concerned that this
measure may discourage clinically
appropriate brain CTs for higher-risk

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older populations. The commenter
believed that CMS should focus its
efforts on other CT measures,
particularly after trauma or suspected
pulmonary embolism. Another
commenter asked CMS to remove OP–
15 from the measure set.
Response: Given stakeholder
concerns, including those of this
commenter, we continue to evaluate
whether OP–15 needs to be refined
before being publicly reported. We
continue to believe, for the reasons
stated in the CY 2012 OPPS/ASC final
rule with comment period (76 FR
74456), that the measure has value, and
we will continue to collect data with
regard to this measure. However, we
will also continue to defer public
reporting until we have resolved these
concerns. Because the measure is
claims-based, this deferral does not
affect data submission requirements for
the Hospital OQR Program (that is,
HOPDs do not submit data for claimsbased measures other than the actual
FFS claims), and an HOPD’s payment
determination will not be affected based
on OP–15 while public reporting is
deferred.
d. Data Submission Requirements for
Measure Data Submitted via the CMS
Web-Based Tool for the CY 2017
Payment Determination and Subsequent
Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75112 through 75115) for
a discussion of the requirements for
measure data submitted via the Webbased tool on a CMS Web site (the
QualityNet Web site) for the CY 2016
payment determination and subsequent
years.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41042), we did not propose
any changes to the data submission
requirements for data submitted via the
CMS Web-based tool.
e. Population and Sampling Data
Requirements for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2011
OPPS/ASC final rule with comment
period (75 FR 72100 through 72103) and
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74482 through
74483) for discussions of our policy that
hospitals may voluntarily submit
aggregate population and sample size
counts for Medicare and non-Medicare
encounters for the measure populations
for which chart-abstracted data must be
submitted. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41042), we did not
propose any changes to this policy.

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f. Review and Corrections Period for
Chart-Abstracted Measures
Under the Hospital OQR Program,
hospitals submit chart-abstracted data to
CMS on a quarterly basis. These data are
typically due 4 months after the quarter
has ended, unless we grant an extension
or exception, as further described in
section XIII.J. of this final rule with
comment period. We refer readers to the
CY 2014 OPPS/ASC final rule with
comment period for a discussion of our
previously finalized policies regarding
submissions deadlines for chartabstracted measures (78 FR 68482).
Hospitals may begin submitting data on
the first discharge day of any reporting
quarter and can modify this data up
until the close of the submission period
(or 4 months after the quarter has
ended). For example, if a hospital enters
data on January 2, it could continue to
review, correct, and change these data
until August 1, the first quarter
submission deadline. We generally
provide rates for the measures that have
been submitted for chart-abstracted,
patient-level data 24 to 48 hours
following submission. Hospitals are
encouraged to submit data early in the
submission schedule so that they can
identify errors and resubmit data before
the quarterly submission deadline.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41042 through 41043), we
proposed to formalize this 4-month
period as the review and corrections
period for chart-abstracted data for the
Hospital OQR Program. During this
review and corrections period, hospitals
can enter, review, and correct data
submitted directly to CMS. However,
after the submission deadline, hospitals
would not be allowed to change these
data. We believe that 4 months is
sufficient time for hospitals to perform
these activities.
We invited public comment on this
proposal.
Comment: Many commenters did not
support CMS’ proposal to have the data
submission period run concurrently
with the review and corrections period,
stating that CMS allows a separate time
period for review and corrections for
nearly all of CMS’ other quality
reporting programs. Commenters
specifically stated that, with the
proliferation of quality measures in each
of CMS’ quality reporting programs,
hospitals need all of the time currently
afforded to capture and report data
accurately. Commenters recommended
that CMS provide at least 30 days
immediately after the submission
deadline to allow hospitals to review
and correct their data.

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Response: We disagree with the
commenters who believed that our other
quality reporting programs have a
separate review and corrections period.
Providers may review their data during
the submission period, but are not
afforded time after this period to correct
their data. We note that our proposed
review and corrections period is
consistent with the informal review and
corrections period of other quality
reporting programs, including the
Hospital IQR Program.
As stated in the proposed rule (79 FR
41042–41043), hospitals typically have
4 months to submit, review, and correct
their chart-abstracted data, and we
merely proposed to formalize this time
period as the review and corrections
period. We believe that 4 months is
adequate because hospitals have been
using this period of time to submit,
view, and correct their chart-abstracted
data for the life of the program. We
strongly encourage hospitals to submit
their data as early as possible so they
can take full advantage of the time
needed for review and correction. In
addition, the length of time for data
submission for chart-abstracted data that
is validated affects the timeliness of the
validation process; additional time
would further lengthen the time from
when care is rendered to when data can
be made publicly available.
After consideration of the public
comments we received, and consistent
with our policy in other quality
reporting programs, we are finalizing
the 4 months review and corrections
period as proposed. We strongly
encourage hospitals to submit their data
to CMS as early as possible to have the
maximum time to review and correct
their data.
3. Hospital OQR Program Validation
Requirements for Chart-Abstracted
Measure Data Submitted Directly to
CMS for the CY 2017 Payment
Determination and Subsequent Years
a. Background
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68484 through 68487) for
a discussion of finalized policies
regarding our validation requirements.
We codified these policies at 42 CFR
419.46(e). In the CY 2015 OPPS/ASC
proposed rule (79 FR 41043 through
41044), we proposed three changes to
our validation procedures: (1) We
proposed to change the eligibility
requirements for hospitals selected for
validation so that a hospital would be
eligible if it submits at least one case to
the Hospital OQR Program Clinical Data
Warehouse during the quarter

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containing the most recently available
data; (2) we proposed to give hospitals
the option to either submit paper copies
of patient charts or securely transmit
electronic versions of medical
information for validation; and (3) we
proposed that a hospital must identify
the medical record staff responsible for
submission of records under the
Hospital OQR Program to the designated
CMS contractor.
b. Selection of Hospitals for Data
Validation of Chart-Abstracted Measures
for the CY 2017 Payment Determination
and Subsequent Years
We refer readers to the CY 2012 and
CY 2013 OPPS/ASC final rules with
comment period (76 FR 74484 through
74485 and 77 FR 68484 through 68485)
for a discussion of finalized policies
regarding our sampling methodology,
including sample size, eligibility for
validation selection, and encounter
minimums for patient-level data for
measures where data is obtained from
chart abstraction and submitted directly
to CMS from selected hospitals.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41043), we proposed one
change to this process. Previously, to be
eligible for random selection for
validation, a hospital must have been
coded as ‘‘open’’ in the CASPER system
at the time of selection and must have
submitted at least 10 encounters to the
Clinical Data Warehouse during the data
collection period for the applicable
payment determination (76 FR 74484).
We proposed that, beginning with the
CY 2015 encounter period for the CY
2017 payment determination and
subsequent years, a hospital will be
eligible for validation if it submits at
least one case to the Hospital OQR
Program Clinical Data Warehouse
during the quarter containing the most
recently available data. The quarter
containing the most recently available
data will be defined based on when the
random sample is drawn. For example,
if we draw a sample in December 2014,
the most recent data available would be
that from the second quarter of 2014,
which ends June 2014, because the
submission deadline for second quarter
data would be November 1, 2014
(https://www.qualitynet.org/dcs/Content
Server?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier2&
cid=1205442125082; 78 FR 68482). As
another example, if a sample is drawn
in October 2014, the most recent
available data would be from quarter
one, which ended in March 2014,
because data must have been submitted
by August 1, 2014. We believe this
change is necessary because it increases
the probability that selected hospitals

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have current data in the Clinical Data
Warehouse to be validated. Previously,
hospitals that did not have data from the
current year available could still be
selected for validation.
We invited public comment on this
proposal.
Comment: Many commenters
supported CMS’ proposal to allow a
hospital to be eligible for validation if it
submits at least one case to the Hospital
OQR Program Clinical Data Warehouse
during the quarter with the most
recently available data. One commenter,
however, recommended that CMS
change the number of cases for a facility
to be eligible for validation from at least
1 case to at least 12 cases because up to
12 records are required per hospital per
quarter for validation. Commenters also
urged CMS to evaluate the
appropriateness of hospital selection
based on this narrower criterion and to
propose refinements, if necessary, in the
future.
Response: We thank commenters for
their support. We agree with the
suggestion that a hospital should only
be eligible for random selection for
validation if it submits at least 12 cases
to the Hospital OQR Program Clinical
Data Warehouse during the quarter with
the most recently available data. As the
commenter noted, currently, when a
hospital is selected for validation, we
request up to 12 cases per quarter per
hospital. We stated our rationale for
requesting up to 12 cases per quarter in
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74486), where
we explained that we attempt to balance
burden to hospitals with data accuracy.
Accordingly, we recognize that allowing
a hospital to be eligible for random
selection for validation if it is ‘‘open’’ or
requiring only one case in the quarter
containing the most recently available
data may not allow us an adequate
number of records to ensure data
submitted by the hospital is valid and
are modifying our proposal accordingly
to align with our validation procedures
and goals.
After consideration of the public
comments we received, and for the
reasons stated above, we are finalizing
our proposal with a modification that,
beginning with the CY 2015 encounter
period for the CY 2017 payment
determination and subsequent years, a
hospital will be eligible for random
selection for validation if it submits at
least 12 cases, instead of just 1 as
proposed, to the Hospital OQR Program
Clinical Data Warehouse during the
quarter containing the most recently
available data. The quarter containing
the most recently available data will be

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defined based on when the random
sample is drawn.
c. Targeting Criteria for Data Validation
Selection for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68485 through 68486) for
a discussion of our targeting criteria. In
the CY 2015 OPPS/ASC proposed rule
(79 FR 41043), we did not propose any
changes to these policies.
d. Methodology for Encounter Selection
for the CY 2017 Payment Determination
and Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68486) for a discussion of
our methodology for encounter
selection. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41043), we did not
propose any changes to this policy.
e. Medical Record Documentation
Requests for Validation and Validation
Score Calculation for the CY 2017
Payment Determination and Subsequent
Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68486 through 68487) for
a discussion of our previously finalized
procedures for requesting medical
record documentation for validation and
validation score calculation. In the CY
2014 OPPS/ASC final rule with
comment period (78 FR 75118), we
codified these procedures at 42 CFR
419.46(e)(1) and (e)(2). In the CY 2015
OPPS/ASC proposed rule (79 FR 41043
through 41044), we proposed two
changes to these policies for the CY
2017 payment determination and
subsequent years: (1) We proposed to
give hospitals the option to either
submit paper copies of patient charts or
securely transmit electronic versions of
medical information for validation; and
(2) we proposed that a hospital must
identify the medical record staff
responsible for submission of records
under the Hospital OQR Program to the
designated CMS contractor.
For records stored electronically,
hospitals expend additional resources
printing records onto paper that may be
more efficiently transmitted
electronically. In addition, the length of
paper charts has been increasing, and
the paper used to submit these records
has an environmental impact. Therefore,
we proposed to give hospitals the option
to either submit copies of paper patient
charts or securely transmit electronic
versions of medical information, which
has the potential to significantly reduce
administrative burden, cost, and

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environmental impact. We have already
finalized a similar policy for the
Hospital IQR Program in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50834
through 50836) that allows hospitals for
the Hospital IQR Program to submit
electronic records through the mail on
a CD, DVD, or flash drive. In addition,
in the FY 2015 IPPS/LTCH PPS final
rule for the Hospital IQR Program (79
FR 50269), we finalized our proposal to
also allow hospitals to submit patient
charts using a Secure File Transfer
Portal on the QualityNet Web site.
The current Hospital OQR Program
regulation at § 419.46(e)(1) states:
‘‘Upon written request by CMS or its
contractor, a hospital must submit to
CMS supporting medical record
documentation that the hospital used
for purposes of data submission under
the program . . . .’’ We proposed that
this requirement may be met by
employing either of the following
options for the CY 2017 payment
determination and subsequent years: (1)
A hospital may submit paper medical
records, the form in which we have
historically requested them; or (2) a
hospital may securely transmit
electronic versions of medical
information.
For the CY 2017 payment
determination and subsequent years, we
proposed that hospitals that chose to
securely transmit electronic versions of
medical information should either: (1)
Download or copy the digital image
(that is, PDF) of the patient chart onto
CD, DVD, or flash drive and ship the
electronic media following instructions
specified on the QualityNet Web site; or
(2) securely submit digital images
(PDFs) of patient charts using a Secure
File Transfer Portal on the QualityNet
Web site. The Secure File Transfer
Portal would allow hospitals to transfer
files through either a Web-based portal
or directly from a client application
using a secure file transfer protocol. The
system provides a mechanism for
securely exchanging documents
containing sensitive information such as
Protected Health Information (PHI) or
Personally Identifiable Information (PII).
Detailed instructions on how to use this
system are available in the Secure File
Transfer 1.0 User Manual available on
QualityNet at: http://www.qualitynet.
org/dcs/ContentServer?c=Page&
pagename=QnetPublic%2FPage%2
FQnetBasic&cid=1228773343598.
In addition, in the CY 2013 OPPS/
ASC final rule with comment period (77
FR 68486 through 68487), we stated that
our validation contractor would request
medical documentation from each
hospital selected for validation via
certified mail or other trackable method.

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This request would be sent to ‘‘the
hospital’s medical record staff identified
by the hospital for the submission of
records under the Hospital IQR Program
(that is, the hospital’s medical records
staff identified by the hospital to the
State QIO)’’ (77 FR 68487). Quality
Improvement Organizations (QIOs) are
CMS contractors required by the Act
(section 1152 through 1154) tasked
with, among other responsibilities,
assisting hospitals with quality
improvement activities. Due to the
evolution of the structure of the QIO
program, beginning with CY 2015 for
the CY 2017 payment determination and
subsequent years, we proposed that a
hospital must identify the medical
record staff responsible for submission
of records under the Hospital OQR
Program to the designated CMS
contractor; this CMS contractor may be
a contractor other than the State QIO.
Finally, we noted that a typographical
error exists in our validation language in
§ 419.46(e). This section states, ‘‘CMS
may validate one or more measures
selected under section 1833(17)(C) of
the Act . . . .’’ ‘‘[S]ection 1833(17)(C)’’
should instead state ‘‘section
1833(t)(17)(C).’’ We proposed to make
this change in the regulation text.
We invited public comment on these
proposals.
Comment: Commenters supported
CMS’ proposal to offer hospitals the
option to submit, for validation
purposes, either paper copies of patient
charts or to securely transmit electronic
versions of medical information using
either electronic media (for example,
CD, DVD, flash drive) or PDFs submitted
using the Secure File Transfer Portal on
the QualityNet Web site. Commenters
noted that the prevalence of electronic
medical records lends itself well to
electronic submission of records.
Response: We thank commenters for
their support and we agree with their
comments.
Comment: Commenters supported
CMS’ proposal to require hospitals to
identify the medical record staff
responsible for submitting validation
records for the Hospital OQR Program,
but requested that CMS make every
effort to work with State hospital
associations to ensure that the correct
individuals have been identified
through this new process. Commenters
also requested that CMS require
contractors to update their lists
quarterly to ensure that information is
kept current.
Response: We thank commenters for
their support. We will consider
commenters’ concerns when instructing
our contractors to keep validation
contacts up-to-date, and, to the extent

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feasible, we will attempt to work with
state hospital associations.
After consideration of the public
comments we received, we are
finalizing our proposals: (1) To give
hospitals the option to either submit: (a)
Paper copies of patient charts; or (b)
electronic versions of medical
information by: (i) Downloading or
copying the digital image (that is, PDF)
of the patient chart onto encrypted CD,
DVD, or flash drive and shipping the
encrypted electronic media following
instructions specified on the QualityNet
Web site; or (ii) securely submitting
PDFs of patient charts using a Secure
File Transfer Portal on the QualityNet
Web site; (2) that hospitals must identify
the medical record staff responsible for
submission of records under the
Hospital OQR Program to the designated
CMS contractor as proposed; and (3) to
correct our typographical error in
regulation text to read ‘‘section
1833(t)(17)(C)’’ as proposed.
I. Hospital OQR Program
Reconsideration and Appeals
Procedures for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68487 through 68489) and
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75118 through
75119) for a discussion of our
reconsideration and appeals procedures.
We codified this process by which
participating hospitals may submit
requests for reconsideration at 42 CFR
419.46(f). We also codified language at
§ 419.46(f)(3) stating that a hospital that
is dissatisfied with a decision made by
CMS on its reconsideration request may
file an appeal with the Provider
Reimbursement Review Board.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41044), we did not propose
any changes to the reconsideration and
appeals procedures.
J. Extension or Exception Process for the
CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75119 through 75120),
and 42 CFR 419.46(d) for a complete
discussion of our extraordinary
circumstances extension or waiver
process under the Hospital OQR
Program. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41044), we did not
propose any substantive changes to
these policies or the processes.
However, in the future, we will refer
to the process as the Extraordinary

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Circumstances Extensions or
Exemptions process, instead of the
Extraordinary Circumstances Extensions
or Waiver process. We are in the process
of revising the Extraordinary
Circumstances/Disaster Extension or
Waiver Request form (CMS–10432),
approved under OMB control number
0938–1171. We are updating the forms
and instructions so that a hospital or
facility may apply for an extension for
all applicable quality reporting
programs at one time.
In addition, we proposed to make a
conforming change from the phrase
‘‘extension or waiver’’ to the phrase
‘‘extension or exemption’’ in 42 CFR
419.46(d).
We proposed to revise the language in
42 CFR 419.46(d) at 79 FR 41081 (July
14, 2014) to state that CMS may grant
an extension or exception of one or
more data submission deadlines and
requirements in the event of
extraordinary circumstances beyond the
control of the hospital, such as when an
act of nature affects an entire region or
locale or a systemic problem with one
of CMS’ data collection systems directly
or indirectly affects data submission.
CMS may grant an extension or
exception as follows:
• Upon request by the hospital.
Specific requirements for submission of
a request for an extension or exception
are available on the QualityNet Web
site.
• At the discretion of CMS. CMS may
grant exceptions or extensions to
hospitals that have not requested them
when CMS determines that an
extraordinary circumstance has
occurred.
We invited comments on this
proposal.
Comment: Commenters supported
CMS’ decision to update the forms and
instructions for the extension or
exception process so that a hospital may
apply for an extension for all applicable
quality programs at one time.
Response: We thank commenters for
their support.
After consideration of the public
comments we received, we are
finalizing our proposal to change the
phrase ‘‘extension or waiver’’ to the
phrase ‘‘extension or exemption’’ at 42
CFR 419.46(d) as proposed.
XIV. Requirements for the Ambulatory
Surgical Center Quality Reporting
(ASCQR) Program
A. Background
1. Overview
We refer readers to section XIII.A.1. of
this final rule with comment period for

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a general overview of our quality
reporting programs.
2. Statutory History of the Ambulatory
Surgical Center Quality Reporting
(ASCQR) Program
We refer readers to section XIV.K.1. of
the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74492 through
74493) for a detailed discussion of the
statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR
Program
We refer readers to section XV.A.3. of
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75122) for an
overview of the regulatory history of the
ASCQR Program.
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1. Considerations in the Selection of
ASCQR Program Quality Measures
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68493 through 68494) for
a detailed discussion of the priorities we
consider for ASCQR Program quality
measure selection.
2. Policy for Removal of Quality
Measures From the ASCQR Program
We previously adopted a policy to
retain measures from the previous year’s
ASCQR Program measure set for
subsequent years’ measure sets except
when they are removed, suspended, or
replaced as indicated (76 FR 74504; 77
FR 68494 through 68495; 78 FR 75122).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41045), we proposed a
process for removing adopted measures.
In the FY 2010 IPPS/LTCH PPS final
rule (74 FR 43863 through 43865), we
finalized a process for immediate
retirement (a term we later changed to
‘‘removal’’) of RHQDAPU Program (now
referred to as the Hospital IQR Program)
measures based on evidence that the
continued use of the measure as
specified raised patient safety concerns.
We stated that we believe immediate
retirement of quality measures should
occur when the clinical evidence
suggests that continued collection of the
data may result in harm to patients. For
example, we removed the AMI–6: Beta
Blocker at Arrival measure from the
Hospital IQR Program because it
encouraged care that raised potential
safety concerns according to newly
published research suggesting that betablockers could increase mortality risks
for certain patient populations (74 FR
43863). Under such circumstances, we
may not be able to wait until the annual
rulemaking cycle or until we have had
the opportunity to obtain input from the
public to retire a measure because of the

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need to discourage potentially harmful
practices, which may result from
continued collection of the measure.
In these situations, we would
promptly retire the measure and notify
hospitals and the public of the
retirement of the measure and the
reasons for its retirement through the
usual communication channels. Further,
we would confirm the retirement of the
measure that was the subject of
immediate retirement in the next
program rulemaking. Finally, we stated
that, in other circumstances where we
do not believe that continued use of a
measure raises specific safety concerns,
we intend to use the rulemaking process
to retire the measure. For the same
reasons stated for the Hospital IQR
Program, we believe that this process
also would be appropriate for the
ASCQR Program. Therefore, in the CY
2015 OPPS/ASC proposed rule (79 FR
41045), we proposed to adopt this same
removal process for the ASCQR
Program. Under this process, we would
immediately remove an ASCQR
Program measure based on evidence
that the continued use of the measure as
specified raised patient safety concerns.
In these situations, we would promptly
remove the measure and notify ASCs
and the public of the removal of the
measure and the reasons for its removal
through the ASCQR Program ListServe
and the ASCQR Program QualityNet
Web site at: http://www.qualitynet.org/
dcs/ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier2&
cid=1228772879650. Further, we would
confirm the removal of the measure that
was the subject of immediate removal in
the next OPPS/ASC rulemaking.
For situations where we do not
believe the continued use of a measure
raises specific safety concerns, we
proposed to use the regular rulemaking
process to remove a measure to allow
for public comment. In the FY 2013
IPPS/LTCH PPS final rule (77 FR 53505
through 53506), we listed the criteria we
have used to determine whether to
remove measures from the Hospital IQR
Program. These criteria are: (1) Measure
performance among hospitals is so high
and unvarying that meaningful
distinctions and improvements in
performance can no longer be made
(‘‘topped out’’ measures); (2) availability
of alternative measures with a stronger
relationship to 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) 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

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availability of a measure that is more
strongly associated with desired patient
outcomes for the particular topic; and
(7) collection or public reporting of a
measure leads to negative unintended
consequences other than patient harm.
These criteria were suggested through
public comment on proposals for the
Hospital IQR Program, and we agreed
that these criteria should be considered
in evaluating the Hospital IQR Program
quality measures for removal (75 FR
53506). We believe that these criteria
also are applicable in evaluating ASCQR
Program quality measures for removal
because we have found them useful for
evaluating measures in the Hospital IQR
Program and our other quality reporting
programs, which share similar goals to
the ASCQR Program. Accordingly, we
proposed to adopt these measure
removal criteria for the ASCQR
Program.
We invited public comment on these
proposals.
Comment: Many commenters
supported CMS’ proposed measure
removal policy and commended CMS
for fostering an aligned approach for
measures removal criteria across our
quality reporting and value-based
purchasing programs.
Response: We thank the commenters
for their support. We agree that for
consistency, an approach to removing
measures should be aligned across our
quality reporting and value-based
purchasing programs to the extent
possible.
Comment: One commenter supported
CMS’ proposal to immediately remove
measures that raise public safety
concerns. The commenter
recommended that CMS notify ASCs by
mail and also post notification on the
CMS Web site on the ASCQR Web page
under the ‘‘Announcements’’ heading,
in addition to communication through
the ASCQR Program ListServe and the
QualityNet Web site.
Response: We thank the commenter
for supporting our proposal and the
suggestions for notifying ASCs. Past
experience indicates that the current
notification process using the
QualityNet Web site and the ASCQR
Program ListServe is a fast, efficient,
and effective means of publicly
communicating information about the
ASCQR Program, and using this process
would be consistent with how other
ASCQR Program information is
provided. Therefore, we are not
including these additional modes of
communication with ASCs for purposes
of ASCQR Program notices at this time.
Comment: One commenter believed
that proposed measure removal criteria
(2) (availability of alternative measures

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with a stronger relationship to patient
outcomes) and (6) (the availability of a
measure that is more strongly associated
with desired patient outcomes for the
particular topic) are duplicative, and
that criterion (2) should read as
‘‘performance or improvement on a
measure does not result in better patient
outcomes.’’ The commenter also
suggested that criterion (3) (a measure
does not align with current clinical
guidelines or practice) and criterion (7)
(collection or public reporting of a
measure leads to negative unintended
consequences other than patient harm)
should be applied to all measures, but
the remaining criteria should be applied
more selectively on a measure-bymeasure basis.
Response: We thank the commenter
for these recommendations. We disagree
with the commenter that criterion (2)
and criterion (6) are the same and that
criterion (2) should be reworded as
suggested. Criterion (2) applies when
there is more than one alternative
measure with a stronger relationship to
patient outcomes that is available, and
criterion (6) applies where there is only
one measure that is strongly and
specifically associated with desired
patient outcomes for the particular topic
that is available. For criterion (2), there
may be different alternative measures
available that meet this criterion to
different degrees. The suggestion to
rephrase criterion (2) to read
‘‘performance or improvement on a
measure does not result in better patient
outcomes’’ would change the meaning
of criterion (2).
As we discuss earlier, the measure
removal criteria have been developed
through public comment on proposals
for the Hospital IQR Program. We
believe that these criteria also are
applicable in evaluating the ASCQR
Program quality measures for removal,
because we have found them useful for
evaluating measures in the Hospital IQR
Program as well as other quality
reporting programs, which share similar
goals to the ASCQR Program. We note
that we did not propose any changes to
criterion (2) in the CY 2015 OPPS/ASC
proposed rule. Further, based on our
experience with the Hospital IQR
Program, we believe criterion (2) is
appropriate and do not believe that
additional refinement is necessary.
Therefore, we are not revising this
criterion. We thank the commenters for
their views and will take them into
consideration as we continuously assess
these criteria.
With respect to the commenter’s
suggestion that criteria (3) and (7) apply
to all measures but the remaining
criteria be applied more selectively on

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a case-by-case basis, we disagree with
respect to selective application of the
criteria. We intend for all the criteria,
including criteria (3) and (7), to apply to
all measures to the extent possible. In
any given situation, we will focus only
on removal criteria that are relevant to
a particular set of circumstances. If more
than one of the measure removal criteria
appears to be relevant, we intend to take
a balanced approach in assessing the
value of each of the different criteria in
a given situation before removing any
measure.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification on the measure removal
process and criteria. Specifically, we
will immediately remove an ASCQR
Program measure based on evidence
that the continued use of the measure as
specified raises patient safety concerns.
In these situations, we will promptly
remove the measure and notify ASCs
and the public of the removal of the
measure and the reasons for its removal
through the ASCQR Program ListServe
and the ASCQR Program QualityNet
Web site. Further, we will confirm the
removal of the measure that was the
subject of immediate removal in the
next OPPS/ASC rulemaking.
For situations where we do not
believe the continued use of a measure
raises specific safety concerns, we will
use the regular rulemaking process to
remove a measure to allow for public
comment. In these situations, we will
use the following criteria to determine
whether to remove the measures from
the ASCQR Program: (1) measure
performance among ASCs is so high and
unvarying that meaningful distinctions
and improvements in performance can
no longer be made (‘‘topped out’’
measures); (2) availability of alternative
measures with a stronger relationship to
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) 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; and
(7) collection or public reporting of a
measure leads to negative unintended
consequences other than patient harm.
3. Criteria for Removal of ‘‘Topped-Out’’
Measures
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41045 through 41046), we
proposed to define criteria for when we

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would consider a measure to be
‘‘topped-out.’’ A measure is ‘‘toppedout’’ when measure performance among
ASCs is so high and unvarying that
meaningful distinctions and
improvements in performance can no
longer be made (‘‘topped-out’’
measures). We do not believe that
measuring ASC performance on
‘‘topped-out’’ measures provides
meaningful information on the quality
of care provided by ASCs. We further
believe that quality measures, once
‘‘topped-out,’’ represent care standards
that have been widely adopted by ASCs.
We believe such measures should be
considered for removal from the ASCQR
Program because their associated
reporting burden may outweigh the
value of the quality information they
provide.
Specifically, we proposed that a
measure under the ASCQR Program is
‘‘topped-out’’ when it meets both of the
following criteria:
• Statistically indistinguishable
performance at the 75th and 90th
percentiles; and
• A truncated coefficient of variation
less than or equal to 0.10.
To identify if a measure has
statistically indistinguishable
performance at the 75th and 90th
percentiles, we would determine
whether the difference between the 75th
and 90th percentiles for an ASC’s
measure is within two times the
standard error of the full dataset. The
coefficient of variation (CV) is a
descriptive statistic that expresses the
standard deviation as a percentage of
the sample mean; this provides a
statistic that is independent of the units
of observation. Applied to this analysis,
a large CV would indicate a broad
distribution of individual ASC scores,
with large and presumably meaningful
differences between ASCs in relative
performance. A small CV would
indicate that the distribution of
individual facility scores is clustered
tightly around the mean value,
indicating that it is not useful to draw
distinctions among individual ASCs on
measure performance. The truncated CV
excludes observations whose rates are
below the 5th percentile and above the
95th percentile; this avoids undue
effects of the highest and lowest outlier
values, which, if included, can
inappropriately widen the dispersion of
the distribution. These same criteria for
when we would consider a measure to
be ‘‘topped-out’’ have been adopted in
the Hospital VBP Program (79 FR
50055), the Hospital IQR Program (79
FR 50204), and the Hospital OQR
Program (section XIII.C.2 of this final
rule with comment period).

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
We invited public comment on this
proposal.
Comment: Many commenters
supported CMS’ proposed ‘‘topped-out’’
criteria for measure removal and the
alignment of these criteria across the
Hospital IQR and Hospital VBP
Programs. One commenter suggested
that CMS refine the first criterion to
ensure that measures exhibit sufficient
lack of variability before they are
removed. Several commenters suggested
that CMS have a mechanism in place to
identify a significant decline in
adherence rates after a measure has been
removed.
Response: We thank the commenters
for their support of the proposed
topped-out criteria. We expect ASCs to
always follow appropriate standards-ofcare and clinical guidelines, regardless
of whether a quality measure exists. We
believe that ASCs are committed to
providing quality care to patients, and
we do not have any indication that
ASCs will stop doing so when measures
are removed.
While it is possible that removing a
measure could result in reduced
performance, we have guarded against
this possibility by setting topped-out
criteria that evidence very high,
unvarying levels of performance.
Further, we intend to continue to work
with quality measurement stakeholders
to ensure that performance does not
decline significantly after removing a
measure. However, we must balance the
costs of continued monitoring of a
successful measure with high levels of
performance with the adoption of other
measures where there are opportunities
for improvement in clinical quality.
Regarding the suggestion to further
refine the first criterion, which refers to
determining that a measure exhibits
sufficient lack of variability before
removal, we proposed topped-out
criteria that evidence very high,
unvarying levels of performance and, at
this time, do not believe additional
refinement that would make the criteria
more stringent is necessary. However,
we will consider the need for
refinement and, if we determine
changes may be necessary, we will
propose such changes in future
rulemaking. In addition, we will not use
our topped-out criteria exclusively
when evaluating the retention or
removal of a measure; a measure that
meets our topped-out criteria could be

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retained for other program reasons as
discussed below.
Comment: One commenter cautioned
against removing measures solely based
on the proposed ‘‘topped out’’ criteria,
and was concerned that these criteria
might lead to the removal of valuable
program measures. The commenter
cited the example of patient safety
measures and surgical site infection
rates, which are intended to drive
toward and sustain zero harm. The
commenter believed that these types of
measures could have performance
scores that meet the topped out criteria
over time. However, the commenter
believed they would have enduring
value to consumers and providers. Some
commenters urged CMS to assess
‘‘topped-out’’ measures individually,
that is, case-by-case, and in a broader
context before removing them from the
ASCQR Program.
Response: We agree that some
measures that are quantitatively
‘‘topped-out’’ may still be appropriate
for other reasons. Therefore, as we do
for the Hospital IQR Program and the
Hospital VBP Program, and consistent
with our discussion above in section
XIV.B.3. of this final rule with comment
period, we will evaluate several factors
in considering the removal of measures
for the ASCQR Program. We will assess
the benefits of retaining a measure on a
case-by-case basis before proposing to
remove a measure from a quality data
reporting program and will not remove
a measure solely on the basis of meeting
any specific criterion.
Comment: One commenter requested
clarification whether ASC–5:
Prophylactic IV antibiotic timing is
topped-out because this measure is
topped-out in the HOPD setting.
Response: We thank the commenter
for this request. In response, we have
reviewed data collected under the
ASCQR Program. Our analysis indicated
that performance for the prophylactic IV
antibiotic timing measure is relatively
high. However, because we continue to
have some facilities with completeness
of reporting issues and data have been
collected for a relatively short time, we
do not believe we have sufficient data
to support a topped out analysis for the
purposes of measure removal for the
ASCQR Program at this time.
Furthermore, we believe that a
prophylactic antibiotic timing measure
remains relevant clinically or for quality

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improvement purposes under the
ASCQR Program.
After consideration of the public
comments we received, we are
finalizing the proposed ‘‘topped-out’’
criteria. Specifically, we are finalizing a
policy that a measure under the ASCQR
Program is ‘‘topped-out’’ when it meets
both of the following criteria: (1)
Statistically indistinguishable
performance at the 75th and 90th
percentiles; and (2) a truncated
coefficient of variation less than or
equal to 0.10. To identify if a measure
has statistically indistinguishable
performance at the 75th and 90th
percentiles, we will determine whether
the difference between the 75th and
90th percentiles for an ASC’s measure is
within two times the standard error of
the full dataset.
As we do for the Hospital IQR
Program and the Hospital VBP Program,
and consistent with our discussion
above in section XIV.B.3. of this final
rule with comment period, we will
evaluate several factors in considering
the removal of measures for the ASCQR
Program. We will assess the benefits of
retaining a measure on a case-by-case
basis before proposing to remove a
measure from the ASCQR Program and
will not remove a measure solely on the
basis of meeting any specific criterion.
4. ASCQR Program Quality Measures
Adopted in Previous Rulemaking
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74492
through 74517), we implemented the
ASCQR Program beginning with the CY
2014 payment determination. In the CY
2012 OPPS/ASC final rule with
comment period, we adopted five
claims-based measures for the CY 2014
payment determination and subsequent
years, two measures with data
submission via an online Web page for
the CY 2015 payment determination and
subsequent years, and one process of
care, healthcare-associated infection
measure for CY 2016 payment
determination and subsequent years (76
FR 74496 to 74511). In the CY 2014
OPPS/ASC final rule with comment
period, we adopted three chartabstracted measures for the CY 2016
payment determination and subsequent
years (78 FR 75124 to 75130).
The quality measures that we
previously adopted are listed in the
chart below.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

ASC PROGRAM MEASURE SET PREVIOUSLY ADOPTED FOR THE CY 2016 PAYMENT DETERMINATION AND SUBSEQUENT
YEARS
ASC #

NQF #

Measure name

.......................................
.......................................
.......................................
.......................................
.......................................
.......................................
.......................................

0263 .........................................
0266 .........................................
0267 .........................................
0265 .........................................
0264 .........................................
N/A ...........................................
N/A ...........................................

ASC–8 .......................................
ASC–9 .......................................

0431 .........................................
0658 .........................................

ASC–10 .....................................

0659 .........................................

ASC–11 .....................................

1536 .........................................

Patient Burn.
Patient Fall.
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant.
Hospital Transfer/Admission.
Prophylactic Intravenous (IV) Antibiotic Timing.
Safe Surgery Checklist Use.
ASC Facility Volume Data on Selected ASC Surgical Procedures.
Procedure categories and corresponding HCPCS codes are located at: http://
qualitynet.org/dcs/ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
Influenza Vaccination Coverage among Healthcare Personnel.
Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal
Colonoscopy in Average Risk Patients.
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use.
Cataracts: Improvement in Patient’s Visual Function within 90 Days Following
Cataract Surgery.*

ASC–1
ASC–2
ASC–3
ASC–4
ASC–5
ASC–6
ASC–7

* Measure voluntarily collected as set forth in section XIV.E.3.c. of this final rule with comment period.

The comments we received on these
previously adopted measures and our
responses are set forth below.
Comment: Some commenters asked
CMS to remove some previously
adopted measures for ASCs, because
they believed these measures were
either inappropriate or too burdensome
for ASCs.
Response: We thank the commenters
for their suggestions. At this time, we
are not removing any of the measures
suggested by commenters. We did not
propose to remove any measures from
the ASCQR Program in the CY 2015
OPPS/ASC proposed rule. Further, there
is no evidence that continued use of the
measures as specified raises patient
safety concerns that would require
immediate removal of the measures
based on the process we are finalizing
in this final rule with comment period.
However, we will take these suggestions
into consideration in future years using
the measure removal criteria we are
adopting in this final rule with
comment period.

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5. New ASCQR Program Quality
Measure for the CY 2018 Payment
Determination and Subsequent Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75124) for a detailed
discussion of our approach to ASCQR
measure selection. In the CY 2015
OPPS/ASC proposed rule (79 FR 41046
through 41048), we proposed to adopt
one new claims-based measure into the
ASCQR Program for the CY 2017
payment determination and subsequent
years: ASC–12: Facility Seven-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy.

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Colonoscopy is the most commonly
performed ambulatory surgery in the
United States.28 The most recent data
available indicate that, in 2002 alone,
physicians performed an estimated 14
million colonoscopies in the United
States.29 Colonoscopies are associated
with a range of well-described and
potentially preventable adverse events
that can lead to hospital visits, repeat
procedures, or surgical intervention for
treatment, including colonic
perforation, gastrointestinal (GI)
bleeding, and cardiopulmonary events
such as hypoxia, aspiration pneumonia,
and cardiac arrhythmias. While hospital
visits are generally unexpected after
outpatient colonoscopy, the literature
suggests that the majority of these visits
occur within the first 7 days.30 31 32
Reported hospital visit rates after
outpatient colonoscopy range from 0.8
to 1.0 percent at 7 to 14 days post
procedure, and from 2.4 to 3.8 percent
28 Russo A, Elixhauser A, Steiner C, Wier L.
Hospital-Based Ambulatory Surgery, 2007:
Statistical Brief #86. Healthcare Cost and
Utilization Project (HCUP) Statistical Briefs.
Rockville (MD) 2006.
29 Seeff LC, Richards TB, Shapiro JA, et al. How
many endoscopies are performed for colorectal
cancer screening? Results from CDC’s survey of
endoscopic capacity. Gastroenterology. Dec 2004;
127(6):1670–1677.
30 Rathgaber SW., Wick TM. Colonoscopy
completion and complication rates in a community
gastroenterology practice. Gastrointest Endosc.
2006; 64:556–62.
31 Rabeneck L, Saskin R, Paszat LF. Onset and
clinical course of bleeding and perforation after
outpatient colonoscopy: a population-based study.
Gastrointest Endosc. 2011; 73:520–3.
32 Ko CW, Riffle S, Michael L, et al. Serious
complications within 30 days of screening and
surveillance colonoscopy are uncommon. Clin
Gastroenterol Hepatol. 2010; 8:166–73.

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at 30 days post procedure.33 34 35 Some
adverse events such as bleeding occur
after day 7, but based on input from
clinical experts, public comment, and
empirical analyses, we concluded that
unplanned hospital visits within 7 days
is the optimal outcome to ensure
capture of procedure-related adverse
events and to minimize capture of
hospital visits unrelated to the
procedure. This measure provides the
opportunity for ASCs to improve quality
of care and to lower the rates of adverse
events leading to hospital visits after
outpatient colonoscopy; this would
encourage ASCs to achieve the outcome
rates of the best performers.
We believe it is important to reduce
adverse patient outcomes associated
with preparation for colonoscopy, the
procedure itself, and follow-up care.
Therefore, we proposed to include the
ASC–12: Facility Seven-Day RiskStandardized Hospital Visit Rate after
Outpatient Colonoscopy measure,
which is calculated from paid Medicare
FFS claims, in the ASCQR Program for
the CY 2017 payment determination and
subsequent years. We expect the
measure would promote improvement
in patient care over time because
transparency in publicly reporting
33 Ko CW, Riffle S, Shapiro JA, et al. Incidence
of minor complications and time lost from normal
activities after screening or surveillance
colonoscopy. Gastrointest Endosc. Apr 2007;65
(4):648–656.
34 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010; 170(19):1752–1757.
35 Chukmaitov AS, Menachemi N, Brown SL,
Saunders C, Tang A, Brooks R. Is there a
relationship between physician and facility
volumes of ambulatory procedures and patient
outcomes? J Ambul Care Manage. Oct–Dec 2008;
31(4):354–369.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
measure scores would make patient
unplanned hospital visits (emergency
department visits, observation stays,
and inpatient admissions) following
colonoscopies more visible to ASCs and
patients and incentivize ASCs to
incorporate quality improvement
activities in order to reduce these visits.
ASCs are often unaware of
complications following colonoscopy
for which patients visit the hospital.36
This risk-standardized quality measure
would address this information gap and
promote quality improvement by
providing feedback to facilities and
physicians, as well as transparency for
patients on the rates and variation
across facilities in unplanned hospital
visits after colonoscopy.
The outcome measured in the ASC–12
measure is all-cause, unplanned
hospital visits (admissions, observation
stays, and emergency department visits)
within 7 days of an outpatient
colonoscopy procedure. The measure
score, also referred to as the facilitylevel risk-standardized hospital visit
rate, is derived from the calculation of
the ratio of the numerator to the
denominator multiplied by the crude
rate. The numerator is the number of
predicted (meaning adjusted actual)
hospital visits, which is the number of
unplanned hospital visits within 7 days
of colonoscopy that the facility is
predicted to have based on its case-mix.
The denominator is the number of
expected hospital visits, which is the
number of unplanned hospital visits the
facility is expected to have based on the
nation’s performance with the facility’s
case-mix. The crude rate is the national
unadjusted number of patients who had
a hospital visit post-colonoscopy among
all patients who had a colonoscopy.
Based on discussions with clinical
and technical panel experts, the
measure excludes colonoscopies for
patients undergoing concomitant highrisk upper GI endoscopy because these
patients are at a higher risk for hospital
visits than patients undergoing a typical
colonoscopy, and patients with a history
of inflammatory bowel disease (IBD) or
diverticulitis in the year preceding the
colonoscopy because we likely could
not fully characterize and adjust for
their pre-procedure risk of needing a
post-procedure hospital visit or identify
whether these admissions are planned
or unplanned. The measure also
excludes procedures for patients who
lack continuous enrollment in Medicare
FFS Parts A and B in the first month
36 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010; 170(19):1752–1757.

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after the procedure to ensure all patients
included in the analysis have complete
data available for outcome assessment.
The statistical risk adjustment model
includes 15 clinically relevant riskadjustment variables that are strongly
associated with risk of hospital visits
within 7 days following a colonoscopy.
Additional methodology details and
information obtained from public
comment for measure development are
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html.
Section 1890A of the Act requires the
Secretary to establish a pre-rulemaking
process with respect to the selection of
certain categories of quality and
efficiency measures. Under section
1890A(a)(2) of the Act, the Secretary
must make available to the public by
December 1 of each year a list of quality
and efficiency measures that the
Secretary is considering for the
Medicare program. The measure that we
proposed was reviewed by the MAP and
was included on a publicly available
document entitled ‘‘MAP PreRulemaking Report: 2014
Recommendations on Measures for
More than 20 Federal Programs’’
(formerly referred to as the ‘‘List of
Measures Under Consideration’’) on the
NQF Web site at: http://www.quality
forum.org/Publications/2014/01/MAP_
Pre-Rulemaking_Report__2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx
(‘‘MAP Report’’). We note that, at the
time the measure was listed on the
‘‘MAP Pre-Rulemaking Report: 2014
Recommendations on Measures for
More than 20 Federal Programs,’’ it was
named ‘‘High-Acuity Care Visits after
Outpatient Colonoscopy Procedure.’’
The MAP conditionally supported this
measure for the ASCQR Program.
The MAP Report stated that the
measure ‘‘[s]hould be submitted for and
receive NQF endorsement; Measure is
promising but needs further
development’’ (p. 187). Further, the
MAP Report stated that the measure
‘‘would provide valuable outcome
information to inform consumer
decision and drive quality
improvement’’ and that the ‘‘NQF
endorsement process would resolve
questions about the reliability and
validity of the measure.’’ The MAP also
stated that NQF endorsement would
resolve questions about ‘‘the feasibility
of the algorithm for attributing claims
data in light of possible effects of the
Medicare three-day payment window’’
(p. 187, MAP Report). However, this
concern with Medicare Part A hospital

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payments relates to the Hospital OQR
Program and not the ASCQR Program.
As required under section 1890A(a)(4)
of the Act, we considered the input and
recommendations provided by the MAP
in selecting measures to propose for the
ASCQR Program.
We believe we have addressed the
concerns raised by the MAP to the
greatest extent possible. The measure
was submitted to NQF for endorsement
on February 21, 2014. The measure is
well-defined and precisely specified for
consistent implementation within and
between organizations that will allow
for comparability. Reliability testing
demonstrated the measure data
elements produced were repeatable; that
is, the same results were produced a
high proportion of the time when
assessed in the same population in the
same time period. Validity testing
demonstrated that the measure data
elements produce measure scores that
correctly reflect the quality of care
provided and that adequately identify
differences in quality.
Currently, there are no publicly
available quality of care reports for
ASCs that conduct outpatient
colonoscopies. Therefore, adoption of
this measure provides an opportunity to
enhance the information available to
patients choosing among ASCs that offer
this elective procedure. We believe this
measure would reduce adverse patient
outcomes associated with preparation
for colonoscopy, the procedure itself,
and follow-up care by capturing and
making more visible to ASCs and
patients all unplanned hospital visits
following the procedure. In addition,
providing outcome rates to ASCs would
make visible to clinicians meaningful
quality differences and incentivize
improvement.
Sections 1833(i)(7)(B) and
1833(t)(17)(C)(i) of the Act, when read
together, require the Secretary, except as
the Secretary may otherwise provide, to
develop measures appropriate for the
measurement of the quality of care
furnished by ASCs, that reflect
consensus among affected parties and,
to the extent feasible and practicable,
that include measures set forth by one
or more national consensus building
entities. As stated in the CY 2012 OPPS/
ASC final rule with comment period (76
FR 74465 and 74505), we believe that
consensus among affected parties can be
reflected through means other than NQF
endorsement, including consensus
achieved during the measure
development process, consensus shown
through broad acceptance and use of
measures, and consensus through public
comment. We believe this proposed
measure meets these statutory

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requirements. We believe that this
measure is appropriate for the
measurement of quality of care
furnished by ASCs because this
procedure is commonly performed in
ASCs and, as discussed above, can
signify important issues in the care
being provided in ASCs. We also believe
this measure reflects consensus among
affected parties because the MAP, which
represents stakeholder groups, reviewed
and conditionally supported the
measure, and stated that it ‘‘would
provide valuable outcome information
to inform consumer decision and drive
quality improvement.’’ Further, the
measure was subject to public comment
during the MAP and measure

development processes, with some
public commenters agreeing with the
MAP’s conclusions on the measure (p.
187, MAP Report, January 2014; http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_
Report__2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx).
As discussed above, the statute also
requires the Secretary, except as the
Secretary may otherwise provide, to
include measures set forth by one or
more national consensus building
entities to the extent feasible and
practicable. This measure is not NQFendorsed; however, as noted above, this
measure is currently undergoing the
NQF endorsement process. We note that

sections 1833(i)(7)(B) and (t)(17) of the
Act do not require that each measure we
adopt for the ASCQR Program be
endorsed by a national consensus
building entity, or by the NQF
specifically. Further, under section
1833(i)(7)(B) of the Act, section
1833(t)(17)(C)(i) of the Act, which
contains this requirement, applies to the
ASCQR Program, except as the Secretary
may otherwise provide. Under this
provision, the Secretary has further
authority to adopt nonendorsed
measures.
In summary, we proposed to adopt
one new measure for the ASCQR
Program for the CY 2017 payment
determination and subsequent years.

ASC #

NQF #

Proposed ASCQR measure for the CY 2017 payment determination and subsequent years.

ASC–12 .....................................

Pending ...................................

Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy.

We invited public comment on our
proposal to include ASC–12: Facility
Seven-Day Risk-Standardized Hospital
Visit Rate after Outpatient Colonoscopy
in the ASCQR Program beginning with
the CY 2017 payment determination.
Comment: Several commenters agreed
that the ASC–12 measure addresses an
important area to monitor for quality
improvement, given the number of
colonoscopy procedures performed
annually in ASCs.
Response: We thank the commenters
for their support. We agree that the
quality of care associated with
colonoscopy procedures is an important
clinical care area to assess quality of
care for ASCs.
Comment: Many commenters urged
CMS not to adopt ASC–12 until it is
NQF-endorsed. Several of these
commenters also noted that the MAP
supported this measure on condition of
NQF-endorsement, noting that the NQF
process would resolve a number of
questions about the reliability, validity
and feasibility of this measure. These
commenters requested that, in general,
CMS only include measures in the
ASCQR Program that have been NQFendorsed in order to avoid later
suspending or removing these measures.
Response: We appreciate the
commenters’ concerns. Under sections
1833(i)(7)(B) and (t)(17)(C)(i) of the Act,
except as the Secretary may otherwise
provide, the Secretary must develop
measures that reflect consensus among
affected parties and, to the extent
feasible and practicable, must include
measures set forth by a national
consensus building entity. Whenever

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possible, we strive to adopt NQFendorsed measures because these
measures will meet these requirements.
However, we believe the requirements
that measures reflect consensus among
affected parties can be achieved in other
ways, including through the measure
development process, through broad
acceptance and use of the measure, and
through public comments.
Further, it may not be feasible or
practicable to adopt an NQF-endorsed
measure, such as when an NQFendorsed measure does not exist.
Section 1833(t)(17)(C)(i) of the Act does
not require that each measure we adopt
for the ASCQR Program be endorsed by
a national consensus building entity, or
by the NQF specifically. Moreover,
section 1833(i)(7)(B) of the Act states
that section 1833(t)(17) of the Act,
which contains this requirement,
applies to the ASCQR Program, except
as the Secretary may otherwise provide.
Under this provision, the Secretary has
further authority to adopt measures that
do not reflect consensus among affected
parties and that are not endorsed by a
national consensus building entity.
Therefore, not all of the measures
adopted for the ASCQR Program are
required to be NQF-endorsed.
As discussed below, we believe the
measure as developed exhibits sufficient
levels of reliability, validity, and
feasibility to be adopted for the ASCQR
Program. As noted above, we also have
submitted this measure to NQF for
endorsement.
Comment: Many commenters did not
support CMS’ proposal to finalize ASC–
12 because complications from

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colonoscopies are very rare and ASCs
already take steps to ensure
colonoscopies are conducted to
eliminate preventable complications.
Many commenters noted that the
literature on the measure indicates the
incidence of complications following
colonoscopy is less than 2 percent.
These commenters suggested that this
low incidence meant that the measure
should not be included in the ASCQR
Program as it may be topped out or that
the quality concern addressed by the
measure does not rise to the level of
importance needed for a national
quality measurement program.
Response: Given the widespread use
of colonoscopy for colorectal cancer
screening in the outpatient setting, we
consider colonoscopy a high volume
procedure and measuring the quality of
care associated with colonoscopies a
high priority for us. We commend ASCs
that are already taking steps to ensure
colonoscopies are conducted to
eliminate preventable complications.
While we agree that the incidence of
colonoscopy complications is relatively
low, serious adverse events, such as
perforation of the bowel and bleeding,
may occur following colonoscopies. We
view this measure as a critical outcome
measure where the goal is to drive
toward and sustain zero harm.
In addition, some literature suggests
that many facilities performing
colonoscopies are unaware of patients
accessing hospital-based care with
adverse events because patients return
to different facilities, including
hospitals and emergency departments,
and would not return to the ASC

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facility. For example, one study showed
that physicians were unaware of nearly
75 percent of hospital admissions for
adverse events following colonoscopy.37
While most colonoscopies are
performed without subsequent
complication, we note that, in our
analysis of Medicare FFS data, this
measure showed that among Medicare
patients aged ≥65, 1.6 percent of
outpatient colonoscopies resulted in an
unplanned hospital visit within 7
days.38 This estimate is based on a 20
percent sample of nationwide Medicare
fee-for-service patients. If we were to
use full national data (that is, a 100
percent sample), we estimate 1.7 million
colonoscopies would have been
performed among Medicare FFS
patients and nearly 27,000 unplanned
hospitals visits would have occurred
within 7-days of the procedure. These
findings suggest adverse events are not
as rare or inconsequential as many
believed and that quality measurement
for colonoscopy procedures in the
outpatient setting is important.
We agree with the commenters’
statement that the low incidence rate
may suggest that the measure is toppedout, but in addition to the reasons for
adopting this measure discussed above,
we believe that a low incidence rate
does not conclusively determine
whether a measure has reached toppedout status. After the measure has been
implemented, over time, we will assess
it again for topped-out status using the
two topped-out criteria we are finalizing
in section XIV.B.3. of this final rule with
comment period.
Comment: Many commenters
expressed concern that ASC–12 is not
sufficiently reliable to be included in
the ASCQR Program, specifically, that
the measure developer has indicated
that the measure is only ‘‘fairly’’
reliable, with an interclass correlation
coefficient (ICC) of 0.335. These
commenters contended that ‘‘fair’’
reliability is not sufficient for publicly
reported quality metrics because such
information could misinform the public,
and urged CMS to conduct an analysis
on the measure’s reliability to
understand the amount of data required
to achieve ‘‘good’’ reliability. Several
37 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med.
Oct 25 2010;170(19):1752–1757.
38 2010 Medicare 20 percent fee-for-service
sample. Based on an analysis of 20 percent sample
of Medicare FFS data from 2010 during measure
development. The 20 percent sample included
332,391 outpatient colonoscopies meeting the
measure inclusion and exclusion criteria, and 1.6
percent of these colonoscopies were followed by an
unplanned hospital visit. This equates to 5,331
unplanned hospital visits in the 20 percent sample.

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commenters argued that ‘‘good’’
reliability should result in an ICC of at
least 0.60. Other commenters believed
that reliability will improve with several
years’ worth of data. Another
commenter requested that data from this
measure be withheld from public
reporting until concerns about its
reliability and validity can be
thoroughly assessed.
Response: We disagree with
commenters and believe that ASC–12 is
sufficiently reliable to be included in
the ASCQR Program. The ICC value
submitted in the initial NQF application
(0.335) was calculated using a split
sample of data from 2 years. We
randomly split the patient cohort at
each hospital into two equal halves,
calculated the measure using each half,
and then calculated the agreement
between these two (the ‘test’ and the
‘retest’). After submitting the measure to
NQF for endorsement review, we
conducted additional calculations of the
reliability testing score, this time using
the Spearman-Brown prophecy formula.
The Spearman-Brown prophecy formula
is an accepted statistical method which
estimates the ICC if the sample were
increased. Therefore, it allows us to
estimate what the reliability score
would be if all observations were used
for public reporting rather than using a
split sample. Our Spearman-Brown
prophecy formula calculations resulted
in a higher ICC of 0.43.
The NQF considers the ICC values
ranging from 0.21 to 0.40 as ‘‘fair’’
reliability and values ranging from 0.41
to 0.60 as ‘‘moderate’’ reliability.
Therefore, the ICC values of 0.335 and
0.43 are interpreted as ‘‘fair’’ and
‘‘moderate’’ reliability, respectively.
These ICC values are also in line with
other NQF-endorsed outcome measures
used in other CMS programs. For
example, in the Hospital Readmissions
Reduction Program (76 FR 51667), the
Inpatient Acute Myocardial Infarction
(AMI) 30-day Risk Standardized
Readmission measure (NQF #0505) has
an ICC of 0.369 and the Pneumonia (PN)
30-day Risk Standardized Readmission
measure (NQF #0506) has an ICC of
0.406. Both measures are NQFendorsed. We consider the reliability of
0.335, as noted in the proposed rule,
acceptable for the ASCQR Program.
Regarding the concerns that we
should withhold public reporting until
the measure’s reliability and validity is
addressed, as stated above, we believe
the reliability of the measure is
sufficiently reliable for inclusion in the
ASCQR Program and do not agree that
the public may be misinformed or that
we should withhold public reporting. In
addition to our calculations above,

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reliability testing previously conducted
by the measure steward demonstrated
the measure data elements produced
were repeatable; that is, the same results
were produced a high proportion of the
time when assessed in the same
population in the same time period.
Also, validity testing by the measure
steward demonstrated that the measure
data elements produce measure scores
that correctly reflect the quality of care
provided and that adequately identify
differences in quality.
As the commenters suggested, the
measure reliability may be further
improved by using several years’ worth
of data; however, we must balance the
reliability of the measure with the
timeliness of the measure. As discussed,
at this time, we believe that 1 year of
data appropriately balances these
competing interests for payment
determination purposes, but we will
continue to assess this belief during the
dry run we discuss below. Also, we will
consider conducting additional
reliability assessments of the measure
using an extended data period.
Moreover, we believe it is important
to include this measure in the program
because colonoscopy is a high volume,
common procedure performed at
outpatient facilities and is frequently
performed on relatively healthy patients
to screen for colorectal cancer. Given
the widespread use of colonoscopy,
understanding and minimizing
procedure-related adverse events is a
high priority. These adverse events,
such as abdominal pain, bleeding, and
intestinal perforation, can result in
unanticipated hospital visits post
procedure. Physicians performing
colonoscopies are often unaware that
patients seek acute care at hospitals
following the procedure and the
associated adverse events are potentially
preventable. We strongly believe that
the measure would promote
improvement in patient care over time
because transparency in publicly
reporting measure scores would make
patient unplanned hospital visits
(emergency department visits,
observation stays, and inpatient
admissions) following colonoscopies
more visible to ASCs and patients and
incentivize ASCs to incorporate quality
improvement activities in order to
reduce these visits.
Finally, we believe this measure
should be included in the program
because currently this risk-standardized
quality measure is the only measure
available that would address this
information gap and promote quality
improvement by providing feedback to
facilities and physicians, as well as
transparency for patients on the rates

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and variation across facilities in
unplanned hospital visits after
colonoscopy. There are no publicly
available quality of care reports for
ASCs that conduct outpatient
colonoscopies. Therefore, adoption of
this measure provides an opportunity to
enhance the information available to
patients choosing among ASCs that offer
this elective procedure. We believe this
measure would reduce adverse patient
outcomes associated with preparation
for colonoscopy, the procedure itself,
and follow-up care by capturing and
making more visible to ASCs and
patients all unplanned hospital visits
following the procedure. In addition,
providing outcome rates to ASCs would
make visible to clinicians meaningful
quality differences and incentivize
improvement.
In response to comments, however, to
allow sufficient time to conduct further
analysis of this measure, we are
finalizing the adoption of this measure
beginning with the CY 2018 payment
determination, rather than beginning
with the CY 2017 payment
determination as proposed. We plan to
perform a dry run of the measure in
2015. From our perspective, a dry run
is a preliminary analysis of data in
which ASCs may review their measure
results, and ask questions about and
become familiar with the measure
methodology. Dry runs will include
three to four years of paid Medicare FFS
claims. We will use the most recent
complete claims samples (usually 6 to 9
months prior to the start date) for dry
runs. For example, if the dry run begins
in March 2015, the most recent data
available may be July 2011 to June 2014
(assuming 3 years of data). Because we
use paid Medicare FFS claims, ASCs
will not need to submit any data for the
dry run. The general information on the
dry run as well as the confidential dry
run reports will be available for ASCs to
review on their accounts at https://
www.qualitynet.org. The dry run will
generate confidential reports at the
patient level, indicating whether the
patient had a hospital visit, the type of
visit (admission, emergency department
visit, or observational stay), the
admitting facility, and the principal
discharge diagnosis. Further, the dry
run will enable ASCs to see the measure
score reports and have the opportunity
to receive individual patient data and
information contained within
individual patient records. ASCs can
use the information to identify
performance gaps and develop quality
improvement strategies. Dry run results
are not linked to public reporting or
payment determinations. We expect the

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dry run to take approximately 1 month
to conduct once data are obtained, after
which facilities will be provided the
confidential report and the opportunity
to review their performance and provide
feedback to us.
In addition, we will continue to
generate these reports for ASCs after we
implement the measure beginning with
the CY 2018 payment determination.
The measure will have no payment
impact until the CY 2018 payment
determination and subsequent years.
Public display of measure data will
occur on or after December 1, 2017, but
there will be no public display of the
dry run data.
With national implementation of a
dry run of this measure, we also will
review the appropriate cutoff volume for
facilities, if necessary, in reporting the
measure score. We require a minimum
volume (cutoff volume) of
colonoscopies per facility to be able to
calculate a reliable measure score. We
have yet to determine the minimum
volume per facility (that is, the cutoff
colonoscopy volume). Because we used
a Medicare 20-percent sample to
develop the measure, we could not
estimate this cutoff during measure
development. However, testing during
the measure dry-run with 100 percent of
the sample per facility will help us to
determine the appropriate cutoff volume
of colonoscopies per facility. ASCs will
be notified via the QualityNet Web site
of the cutoff volume of colonoscopies
per facility, if any.
While some ASCs perform too few
colonoscopies for us to calculate a
measure score and we would not
publicly report their data, these
facilities would remain in the measure
cohort. Typically, for public reporting of
hospital measures on the CMS Web site
Hospital Compare, the measure score is
reported as ‘‘Number of cases too small’’
for hospitals with fewer cases than the
cutoff. We will use the same protocol
when the measure is publicly reported
for the ASCQR Program, and will report
a measure score as ‘‘Number of cases too
small’’ for ASCs with fewer cases than
the cutoff on the QualityNet Web site.
Comment: Several commenters
pointed out that, from the perspective of
using claims as a data source for this
measure, the codes for ASCs are services
rendered-driven, while the codes for
HOPDs are diagnosis-driven.
Commenters were concerned that the
coded information and the associated
risk-adjustment for this measure may
not be able to capture the sensitivity and
specificity of the clinical care following
an outpatient colonoscopy. Given the
difference in coding practices and
claims architecture between HOPDs and

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ASCs, commenters recommended
further testing for a fair performance
comparison between HOPDs and ASCs.
One commenter inquired if CMS plans
to field test this measure prior to
implementation. Commenters
contended that the measure must be
systematically assessed to assure the
measure results are attributable to
differences in quality alone. The
commenters suggested that the measure
score should be directly validated
against outpatient medical records and
measure results across settings must be
assessed to ensure that any comparisons
are valid.
Response: We thank the commenters
for expressing their concerns regarding
possible effects of coding practices and
claims architecture on the data available
through administrative claims in
capturing the sensitivity and specificity
of the clinical care following an
outpatient colonoscopy. The measure is
designed, however, to mitigate any
differences in coding practices across
HOPDs and ASCs. For example, to
capture comorbidities for risk
adjustment, the measure uses claims
across care settings, including physician
outpatient claims, so differences in
claims submitted during the procedure
are not likely to affect the comorbidities
assigned to the patient. In addition, the
outcome counts hospital visits
regardless of whether they are billed as
admissions, emergency room visits, or
observations stays; therefore, if there are
differences between colonoscopies done
at ASCs and HOPDs in the type of
hospital visit a patient with
complications incurs (for example,
whether observation stays or ED visits
are used), the measure will be
insensitive to these differences.
We recognize that the claims
architecture differs for HOPDs and ASCs
because the two facility types utilize
different bill forms and have different
payment systems. However, we do not
agree that our measure specifications do
not account for differences in claims
architecture and necessary billing codes
in discerning hospital events following
colonoscopy. The measure includes
colonoscopies from all outpatient
settings to ensure that the expected
hospital visit rate for any facility is
estimated using the full national
experience of colonoscopy patients.
Specifically, we include all outpatient
colonoscopies to make sure that: (1) The
effects that risk factors exert on the
outcome are estimated based on
colonoscopies performed among all
outpatient settings; and (2) the national
average rate of hospital visits following
colonoscopy is calculated based on all
outpatient colonoscopies. Our approach

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includes all outpatient claims, including
HOPD, ASC, and physician claims. To
identify all outpatient colonoscopy
claims, including claims affected by the
Medicare 3-day payment window
policy, the measure specifications link
claims across multiple care settings
(outpatient and inpatient). Furthermore,
the measure specifications link claims
across multiple care settings to derive
comorbidity data to ensure the patient
comorbidities are captured to the fullest
extent possible for risk-adjustment and
to identify patient outcomes.
Linking patient claims across multiple
settings largely mitigates the impact of
potential difference in coding practice
among settings and allows comparisons
of colonoscopy quality across settings.
For example, potential variation in the
coding of comorbidities in the index
colonoscopy claim may occur based on
the setting. However, we derive
comorbidities for risk adjustment from
all inpatient and outpatient claims in
the preceding 12 months. By using all
claims in the preceding year, we capture
patient comorbidities to the fullest
extent possible and mitigate the impact
of potential coding differences between
settings that would occur if we used the
index colonoscopy claim alone.
Further, similar approaches to
deriving comorbidities from claims data
are used for other risk-adjusted outcome
measures. The measure developer has
validated the accuracy of this approach
on multiple occasions for prior
measures developed for the inpatient
setting. For example, in the Hospital
Readmissions Reduction Program (76
FR 51667), the Inpatient Acute
Myocardial Infarction (AMI) 30-day Risk
Standardized Readmission measure
(NQF #0505) has an ICC of 0.369, and
the Pneumonia (PN) 30-day Risk
Standardized Readmission measure
(NQF #0506) has an ICC of 0.406. Both
measures are NQF-endorsed.
Regarding the suggestion that the
measure score should be directly
validated against outpatient medical
records, at this time, we believe that it
would be overly burdensome to validate
the reported data, because of the limited
experience that ASCs have with
reporting quality data to CMS coupled
with the low incidence of cases for this
measure. In addition, as stated in
section XIV.D.6. of this final rule with
comment period, we refer readers to the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53641 through 53642) for a complete
discussion of our policy not to require
validation of claims-based measures
(beyond the usual claims validation
activities conducted by our Medicare
Administrative Contractors).

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We appreciate commenters’ concerns
regarding factors that may impact
HOPDs and ASCs. In response to
comments, to allow sufficient time to
conduct further analysis of this
measure, we are finalizing the adoption
of this measure beginning with the CY
2018 payment determination, rather
than beginning with the CY 2017
payment determination as proposed.
In addition, we plan to perform a dry
run (a preliminary analysis) of the
measure in 2015. We refer readers to our
discussion of the dry run above, in
response to a previous comment.
Comment: Several commenters
disagreed with the statement in the
proposed rule (79 FR 41047) that the
ASC–12 measure is ‘‘well-defined and
precisely specified for consistent
implementation within and between
organizations that will allow for
comparability.’’ These commenters
raised the issue that the Medicare
payment window policy that applies to
hospitals will result in under-detection
of hospital events for colonoscopies
performed by HOPDs; the 3-day (or 1day) payment window applies to
outpatient services furnished by
hospitals and hospitals that are wholly
owned or wholly operated Part B
entities. Hospitals are required to
bundle the technical component of all
outpatient diagnostic services and
related nondiagnostic services (for
example, therapeutic) with the claim for
an inpatient stay when services are
furnished to a Medicare beneficiary in
the 3 days (or, in the case of a hospital
that is not a subsection (d) hospital,
during the 1-day) preceding an inpatient
admission in compliance with section
1886 of the Act. Commenters expressed
their concern that as a result of this
payment policy, HOPDs may have
systematic undercounting of hospital
visits while ASCs get a full count of all
hospital visits within 7 days subsequent
to outpatient colonoscopy. Commenters
did not believe the methodological
solution proposed by the measure
developer, using physician claims with
an HOPD Place of Service (POS) code
indicating the colonoscopy was
performed at an HOPD, is adequate due
to the high error rates in POS coding on
physician claims. Commenters were
concerned that these challenges would
make comparison of HOPD and ASC
data impossible, and significantly
reduce the validity of the measure in the
HOPD setting.
Response: We disagree with the
commenters, and we continue to believe
this measure is ‘‘well-defined and
precisely specified for consistent
implementation within and between
organizations that will allow for

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comparability,’’ as we stated in the CY
2015 OPPS/ASC proposed rule (79 FR
41047).
We agree that the ability to detect
meaningful variation is an important
indication of the value of a measure. As
the commenter has correctly noted, we
have shown facility variation in
unplanned hospital visits following
colonoscopy in both nationwide
Medicare data from HOPDs and also in
the 2010 Healthcare Cost and Utilization
Project (HCUP) data. We have also
shown facility variation in unplanned
hospital visits among ASCs alone using
HCUP data from California.39 The
observed average hospital visit rate and
the variation in unplanned hospital visit
rates among ASCs, which are unaffected
by the 3-day payment window policy,
were very similar to HOPDs suggesting
that the measure performs equally well
in both settings. Accordingly, we are
confident that the variation shown is a
reflection of facility variation in quality
and not as a result of any issues to do
with the 3-day payment window policy.
Based on our internal testing with
claims data, we believe our current
algorithm is appropriate and accurate.
However, since we always strive for
improvement, we will evaluate the
colonoscopy measure dry run data and
work with HOPDs and ASCs to further
review and refine the algorithm if
necessary.
Regarding POS billing, the OIG has
found billing errors incorrectly
assigning the service site for both
HOPDs and ASC-related claims on
physician claims where there were
matching HOPD or ASC claims and that
the percentage of incorrectly billed
claims was significantly higher for ASCrelated claims.40 Many physicians’
services can be furnished either in a
facility setting such as an HOPD or ASC,
or in a non-facility setting such as a
physician’s office, urgent care center or
independent clinic. For these services,
Medicare has two different payment
rates under the physician fee schedule
(PFS). The PFS facility rate is generally
lower to reflect the fact that certain
resources are supplied by the facility,
and Medicare makes a separate payment
to the facility under another payment
system. By matching both facility and
physician colonoscopy claims for any
given patient, the current measure
methodology ensures that colonoscopy
claims are identified to the fullest extent
39 Center for Medicare and Medicaid Services,
‘‘Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy,’’ National
Quality Form Measure Submission Form, 20.
40 OIG, Physician services processed by Medicare
Part B Contractors during Calendar Year 2009,
September 2011, A–01–10–00516.

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possible and attribute the colonoscopy
to the appropriate provider when billing
is affected by the 3-day window
payment policy.
We clarify that HOPD claims for
colonoscopy procedures for calculation
of the measure are identified using both
physician and facility claims. We did
not intend to imply that HOPD
colonoscopy claims are identified solely
from physician claims. For both ASCs
and HOPDs, the measure first identifies
colonoscopy claims using both the
physician claim and the corresponding
facility claim to ensure the site of the
colonoscopy service is attributed to the
appropriate provider. As a second step,
the measure matches: (1) Physician
claims that contain HOPD as the POS
that do not have a matching facility
claim with (2) inpatient claims to
identify potential HOPD colonoscopies
resulting in an inpatient admission.
This second additional step identifies
HOPD colonoscopy claims affected by
the 3-day window payment policy.
Therefore, we do not agree that ASCs
will be adversely affected by use of POS
billing to locate colonoscopies
performed by physicians due to high
levels of coding errors in POS coding on
Part B for physician services because
our measure calculation methodology
addresses this concern.
We also have taken steps to educate
physicians about the appropriate POS
coding and actively audit physicians to
improve the accuracy of POS coding
http://www.cms.gov/Outreach-andEducation/Medicare-Learning-NetworkMLN/MLNMattersArticles/downloads/
MM7502.pdf. In addition, from 2012
onwards, Medicare billing introduced
the ‘‘PD’’ modifier to indicate physician
claims affected by the 3-day window
payment policy.
Comment: In reference to the
statement in the CY 2015 OPPS/ASC
proposed rule (79 FR 41047) that ‘‘there
are no publicly available quality of care
reports for ASCs that conduct outpatient
colonoscopies,’’ one commenter stated
that, on the Physician Compare Web
site, CMS includes data on colonoscopy
measures that provide a detailed look at
the quality of colonoscopy services
provided. This commenter suggested
that CMS further enhance publicly
available data by including measures
captured by Qualified Clinical Data
Registries to increase the robustness of
publicly available data on colonoscopy
provided across all sites of service.
Response: We thank the commenter
for providing this input, but note that
the cited information is available at the
physician level. We believe that quality
of care measure information also should
be reported at the facility level, and that

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facilities have a role in monitoring the
surgical procedures performed at their
facility and subsequent adverse
outcomes. Patients and facilities should
be able to review reported quality of
care measure information at the ASCfacility level. We thank the commenter
for the suggestion to include measures
captured by Qualified Clinical Data
Registries to further enhance publicly
available data such as the colonoscopy
data and we may take this into
consideration in future rule making.
Comment: While some commenters
believed that a long collection period,
such as three years, is needed in order
to generate measure scores that are
moderately reliable, they also were
concerned that the publicly reported
measure score would not be a reflection
of current, or even recent, performance.
Commenters were concerned that
consumers could be misled by the
outdated data.
Response: As discussed previously,
we agree with the commenter that a
longer data collection period may
increase measure reliability. However,
we must balance the reliability of the
measure with the timeliness of the
measure and, as discussed later, at this
time, we believe that 1 year of data
appropriately balances these competing
interests. We will continue to assess this
belief during the dry run.
Comment: Several commenters
expressed concern that the measure that
was put forth to NQF review retained
elements of the inpatient measure.
Commenters stated that including these
elements was inappropriate, and
interpreted this action to mean that the
measure has not been thoroughly
reviewed and fully adapted for
outpatient use. These commenters gave
examples of the alleged inappropriate
inpatient elements: (1) Certain condition
categories (CCs) are not included in risk
adjustment if they are only recorded at
the time of the colonoscopy, and yet
they are considered to be possible
adverse outcomes; and (2) although end
stage renal disease (ESRD) would not be
a complication of colonoscopy
diagnosed and recorded at the time of
the procedure, it was included on the
list of CCs. Commenters urged CMS to
ensure that revised specifications are
developed and then independently
reviewed to ensure outpatient
adaptation is complete prior to measure
implementation.
Response: We appreciate the
commenters’ concerns. In keeping with
good practice, we have continued to
review and seek comment on the
measure specifications subsequent to
measure development and
implementation to ensure the measure

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remains up-to-date in view of any
potential new information. As the
commenters noted, the measure
technical specifications included a list
of CCs that the measure does not
consider for risk adjustment if the CC(s)
occurred at the time of colonoscopy. In
view of the comments, we have revised
the list of CCs and updated the measure
specifications to ensure only conditions
relevant to colonoscopy are included. Of
note, the inclusion of ESRD on the list
was an error; we have revised the list
and will use the revised list in
implementing the measure. We
corrected the list in subsequent measure
descriptions during the NQF public
comment period.
Comment: Many commenters
expressed concern that the ASC–12
measure includes hospital visits
unrelated to colonoscopy. Some
commenters requested explanation for
why the measure uses an all-cause
categorization rather than only
admissions related to colonoscopies.
Response: We clarify that this
measure is purposely designed to use a
broad outcome of hospital visits
following surgery rather than a narrow
set of easily identifiable complications.
From a patient and health system
perspective, the goal of this measure is
to encourage and inform ASC efforts to
minimize all potential acute
complications, not just those narrowly
related to procedural technique. This is
important as the literature
suggests,41, 42, 43, 44 that hospital visits
following colonoscopy occur due to a
range of adverse events relating to the
bowel preparation, anesthesia, the
colonoscopy procedure itself, and
follow-up care. These include a range of
symptoms and signs such as abdominal
pain, bloating, dizziness and collapse,
electrolyte disturbances, and
cardiorespiratory symptoms (from
sedation use), in addition to
complications that are directly related to
procedural technique such as bleeding
and bowel perforation. The broad
outcome of unplanned hospital visits
captures all of these potential acute
complications of colonoscopy.
41 Ko CW, Dominitz JA. Complications of
colonoscopy: magnitude and management.
Gastrointest Endosc Clin N Am 2010;20:659–71.
42 ASGE Standards of Practice Committee, Fisher
DA, Maple JT, et al. Complications of colonoscopy.
Gastrointest Endosc 2011;74:745–52.
43 Baudet JS, Diaz-Bethencourt D, Aviles J, et al.
Minor adverse events of colonoscopy on ambulatory
patients: the impact of moderate sedation. Eur J
Gastroenterol Hepatol 2009;21:656–61.
44 Ko CW, Riffle S, Shapiro JA, et al. Incidence
of minor complications and time lost from normal
activities after screening or surveillance
colonoscopy. 2007;65:648–56.

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Our goal for the measure is to
encourage ASCs to be mindful of
reducing post-colonoscopy admissions
caused by the prior colonoscopy
procedure performed at their facility.
For example, patients may be at higher
risk of falls post-colonoscopy secondary
to dehydration following the bowel
preparation for the procedure and there
may be opportunities for ASCs to
minimize this risk. We removed
planned admissions from the measure
outcome adapting CMS’ Planned
Readmission Algorithm version 3.0.45 46
This algorithm removes nonacute
admissions for scheduled procedures
(for example, total hip replacement) and
other types of care always considered
planned (for example, rehabilitation or
maintenance chemotherapy) from the
outcome. That is, we removed planned
admissions from the outcome because
planned admissions do not reflect
differences in colonoscopy quality of
care.
Comment: One commenter requested
that CMS clarify how the numerator and
denominator for ASC–12 are calculated.
Response: The measure score is the
ratio of predicted hospital visits
(numerator) over the expected hospital
visits (denominator) multiplied by the
crude national rate. The measure score
numerator is the predicted rate, which
is the number of unplanned hospital
visits the facility is predicted to have
within 7 days of colonoscopy, and it
accounts for the observed unplanned
hospital visit rate, the number of
colonoscopies performed at the facility,
and the facility’s case mix. This is
sometimes referred to as the ‘‘adjusted
actual rate.’’
The measure score denominator is the
expected rate, which is the number of
unplanned hospital visits the facility is
expected to have, based on the nation’s
performance with that facility’s casemix. It is the sum of all patients’
expected probabilities of a hospital visit,
given their risk factors and the risk of
readmission at an average hospital. The
contribution of each risk factor (for
example, age) to the patient’s risk of a
hospital admission is based on all of the
patients in the measure cohort. The
crude national rate is the average rate of
hospital visits following colonoscopy
observed in the entire measure cohort.
45 Horwitz L, Grady J, Dorsey K, Zhang W, Keenan
M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu
C, Lin Z, Bhat K, Krumholz H, Bernheim S,. 2014
Measures Updates and Specifications Report:
Hospital-Wide All-Cause Unplanned
Readmission—Version 3.0. 2014: Centers for
Medicare & Medicaid Services, 2014.
46 Available at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/
HospitalQualityInits/Measure-Methodology.html.

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We also refer readers to the measure
discussion above and measure
specifications (http://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=75057) for a more
detailed discussion of how the
numerator and denominator are
calculated.
Comment: Many commenters were
concerned that facilities would lack
actionable information generated from
ASC–12. Several of these commenters
questioned whether this measure will
benefit facilities and patients because
each facility will only receive a report
with an aggregate number of claims that
will be based on historical data, which
will make it difficult for the facility to
set a course for improvement if needed.
Commenters requested that CMS clarify
its plan to report detailed patient-level
data confidentially to ASCs that
indicates whether the patient had a
hospital visit, the type of visit
(admission, emergency department visit,
or observational stay), the admitting
facility, and the principal discharge
diagnosis to assist facilities with quality
improvement, to enable facilities to
understand their performance and take
steps where remediation is needed.
Several commenters also noted that
ASCs do not provide post-operative
follow-up care after patient discharges
and do not have direct access to the
records of other health care facilities.
Consequently, this constraint would
limit their ability to identify
improvements based on the data
provided by this measure.
Response: The primary purpose of
this measure is to illuminate the quality
differences in colonoscopies that are
presently not visible to patients and
may not be visible to some facilities. In
measure development, we found the
facility variations in the measure score
suggest some facilities provide worse
than expected care. We believe the
detailed patient-level data that we will
provide confidentially to ASCs will help
them identify areas for improvement
efforts. The data would indicate
whether the patient had a hospital visit,
the type of visit (admission, emergency
department visit, or observational stay),
the admitting facility, and the principal
discharge diagnosis. The dry run will
enable ASCs to see the measure score
reports and have the opportunity to
receive individual patient data and
information contained within
individual patient records. We will
continue to generate these reports for
ASCs after we implement the measure
beginning with the CY 2018 payment
determination. ASCs can use the
information to identify performance

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gaps and develop quality improvement
strategies.
We understand the challenges
involved in following up with ASC
patients. The colonoscopy measure
addresses these challenges by providing
feedback to facilities and clinicians
about the outcomes experienced by their
patients following colonoscopy. Many
clinical experts noted that facilities
were often unaware of patients’ return
visits to hospitals. They noted that
many patients would often return to a
different facility or an emergency
department. One study noted that
physicians were unaware of 75 percent
of return hospital visits following
colonoscopy at a major tertiary center.47
Comment: Several commenters
expressed concern that ASC–12 does
not include risk-adjustment to account
for patient differences, stating that CMS
does not report the variation between
ASCs once this risk adjustment has been
applied and that there may be no
statistically significant difference
between an ASC’s risk-adjusted visit
rate and the national average making it
impossible to identify low performers
and high performers. One commenter
specifically recommended that patients
with conditions such as inflammatory
bowel disease and diverticulitis should
be included with appropriate risk
adjustment. Commenters recommended
CMS consider the drawbacks of the
current methodology, conduct analysis
to test the variation of the measure
between ASCs, and reconsider this
measure for inclusion in future
proposals.
Response: We thank the commenters
for all the suggestions to improve the
measure. In the measure application for
NQF endorsement, we note that the
measure, following risk-adjustment, is
able to detect statistically significant
variation between outpatient facilities
by demonstrating measure score
variation using the 2010 HCUP data
from four States (California, New York,
Nebraska, and Florida). Using a very
conservative sampling technique
(sampling with replacement),48 we
constructed 95 percent interval
estimates around the facility measure
score (similar to confidence intervals)
and used the estimates to place facilities
into three performance categories:
Worse than expected; no different than
expected; and better than expected.
Based on this analysis, we identified 5
outlier facilities among a total of 992
47 Leffler DA, Kheraj R, Garud S, et al. The
incidence and cost of unexpected hospital use after
scheduled outpatient endoscopy. Arch Intern Med
2010;170:1752–7.
48 Efron, B. (1979). Bootstrap methods: Another
look at jackknife. Ann. Stat. 7, 1–26.

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ASCs and HOPDs. This analysis
included only about one-tenth of all
outpatient facilities in the United States.
Typically, we see greater variation
between facilities when 100 percent of
nationwide facilities are included for
actual measure implementation and
reporting.
As to the commenter’s
recommendation to risk-adjust patients
with certain conditions, we excluded
patients with inflammatory bowel
disease (IBD) and diverticulitis because
it is difficult to assess from claims data
whether these patients have an active or
inactive disease which may alter their
risk of the outcome. We determined that
we could not adequately risk-adjust for
the risk of the outcome for these
patients. Second, our analysis suggested
that nearly half of the patients with IBD
and diverticulitis have postcolonoscopy hospital visits with a
primary diagnosis of IBD and
diverticulitis respectively. We could not
tell from the claims data whether these
visits were planned or unplanned. We
did test for variation among ASCs and
HOPDs independently using HCUP data
from California (see Measure Technical
Report). As we previously discussed,
the measure was able to adequately
detect variation in the measure score
among ASCs.

As for the inquiry about further
testing the measure, we have more time
to further test the measure because, in
response to comments, we are finalizing
the adoption of this measure beginning
with the CY 2018 payment
determination, rather than beginning
with the CY 2017 payment
determination as proposed. We plan to
perform a dry run (a preliminary
analysis) of the measure in 2015. We
refer readers to our discussion of the dry
run above, in response to a previous
comment.
Comment: One commenter expressed
concern that ASCs would have
difficulty gathering and reporting the
information for the proposed ASC–12
measure.
Response: We thank the commenter
for providing this input and note that
this measure will be calculated
completely from data obtained from
paid Medicare FFS claims submitted by
ASCs, hospitals, and physicians. For
this reason, it will not require any
additional information-gathering on the
part of ASCs.
We continue to believe that quality of
care measurement in the clinical area of
outpatient colonoscopy is an important
gap area with ample room for
improvement and that this measure has
sufficient reliability and validity for use

in the ASCQR Program. Therefore, after
consideration of the public comments
we received, we are finalizing our
proposal to adopt the ASC–12: Facility
Seven-Day Risk-Standardized Hospital
Visit Rate after Outpatient Colonoscopy
measure for the ASCQR Program.
However, to allow ASCs sufficient time
to review their measure data from the
dry run and utilize the confidential
facility reports with patient-level
associated hospital event information,
we are finalizing the adoption of this
measure for the CY 2018 payment
determination and subsequent years,
instead of the CY 2017 payment
determination and subsequent years as
proposed.
We plan to perform a dry run (a
preliminary analysis) of the measure in
2015. Also, with national
implementation of a dry run of this
measure, we also will review the
appropriate cutoff volume for facilities,
if necessary, in reporting the measure
score. We refer readers to our discussion
of the dry run and the cutoff volume
above, in our response to a previous
comment.
The finalized measure set for the
ASCQR Program CY 2017 payment
determination and subsequent years, is
listed below.

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
ASC No.

NQF No.

Measure name

.........
.........
.........
.........
.........
.........
.........

0263
0266
0267
0265
0264
N/A
N/A

ASC–8 .........
ASC–9 .........

0431
0658

ASC–10 .......

0659

ASC–11 .......

1536

Patient Burn.
Patient Fall.
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant.
Hospital Transfer/Admission.
Prophylactic Intravenous (IV) Antibiotic Timing.
Safe Surgery Checklist Use.
ASC Facility Volume Data on Selected ASC Surgical Procedures.
Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/ContentServer?
c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
Influenza Vaccination Coverage among Healthcare Personnel.
Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients.
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use.
Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.*

ASC–1
ASC–2
ASC–3
ASC–4
ASC–5
ASC–6
ASC–7

* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment period.

The finalized measure set for the
ASCQR Program CY 2018 payment

determination and subsequent years,
which includes previously finalized

measures and the newly-adopted
measure, ASC–12, is listed below.

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT YEARS

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ASC No.
ASC–1
ASC–2
ASC–3
ASC–4
ASC–5
ASC–6

.........
.........
.........
.........
.........
.........

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NQF No.
0263
0266
0267
0265
0264
N/A

17:07 Nov 07, 2014

Measure name
Patient Burn.
Patient Fall.
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant.
Hospital Transfer/Admission.
Prophylactic Intravenous (IV) Antibiotic Timing.
Safe Surgery Checklist Use.

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66979

FINALIZED ASC PROGRAM MEASURE SET FOR THE CY 2018 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—
Continued
ASC No.

NQF No.

Measure name

ASC–7 .........

N/A

ASC–8 .........
ASC–9 .........

0431
0658

ASC–10 .......

0659

ASC–11 .......
ASC–12 .......

1536
Pending

ASC Facility Volume Data on Selected ASC Surgical Procedures.
Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/ContentServer?
c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
Influenza Vaccination Coverage among Healthcare Personnel.
Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients.
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate Use.
Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.*
Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy.**

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* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment period.
** New measure finalized for CY 2018 payment determination and subsequent years.

6. ASCQR Program Measures for Future
Consideration
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68493 through 68494),
where we finalized our approach to
future measure selection for the ASCQR
Program. We seek to develop a
comprehensive set of quality measures
to be available for widespread use for
informed ‘‘patient decision-making and
quality improvement in the ASC
setting’’ (77 FR 68496). We also seek to
align these quality measures with the
National Quality Strategy (NQS), the
CMS Strategic Plan (which includes the
CMS Quality Strategy), and our other
quality reporting and value-based
purchasing programs, as appropriate.
Accordingly, as we stated in the CY
2015 OPPS/ASC proposed rule (79 FR
41048 through 41049), in considering
future ASCQR Program measures, we
are focusing on the following NQS and
CMS Quality Strategy measure domains:
Make care safer; strengthen person and
family engagement; promote effective
communication and coordination of
care; promote effective prevention and
treatment; work with communities to
promote best practices of healthy living;
and make care affordable.
Comment: Commenters supported
CMS’ alignment efforts. One commenter
supported the direction of the ASCQR
Program to align future measures with
the NQS priorities, noting that doing so
will make the ASCQR Program more
consistent with the Hospital IQR
Program. Another commenter agreed
with the goal of aligning measures in the
ASCQR Program with the Hospital OQR
Program and the Hospital IQR Program,
and urged that the alignment should
eliminate confusion and avoid
disadvantaging ASCs.
Response: We thank the commenters
for supporting our alignment efforts. To
the extent practicable, we strive to align
measures with national priorities,

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including the NQS priorities as well as
across our quality reporting and valuebased purchasing programs.
Comment: Several commenters
requested that CMS collaborate with
stakeholder communities to develop
and implement appropriate ophthalmic
measures for the ASC setting,
potentially including measures of
incidence of toxic anterior segment
syndrome in cataract surgery patients,
incorrect intraocular lens implantation
in cataract surgery patients, and
unplanned anterior vitrectomy in
cataract surgery patients. Another
commenter suggested that CMS consider
several new measures in the future,
including adverse outcomes from highvolume procedures such as cataract
removals, other eye procedures,
endoscopies, musculoskeletal
procedures, and colonoscopies. This
commenter also encouraged CMS to
develop composite measures of common
surgical infections and to involve
consumers and purchasers in
refinement of the CAHPS survey for the
outpatient setting. In addition, this
commenter urged CMS to continue to
analyze and address the role of the
survey and discuss the comparative
roles of PQRS CAHPS, ACO CAHPS,
S–CAHPS, or the HOSD/ASC CAHPS
surveys.
Response: We thank the commenters
for these recommendations and will
consider these types of measures in
future years. We have included an
unplanned anterior vitrectomy in
cataract surgery patients and patient
experience of care survey measures in
our Measures under Consideration
(MUC) list for the MAP for the ASC
setting. We agree that the adoption and
implementation of appropriate cataract
surgery measures are important for the
ASCQR Program, given the number of
such procedures performed on Medicare
beneficiaries in this setting.

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We use patient experience of care
surveys in a variety of health care
settings. We agree that, to the extent
feasible, survey instruments should be
aligned and coordinated across settings.
The developmental process of CAHPS
and patient experience of care surveys
involves several opportunities for input
from patients, patient advocates, and
stakeholders from the HOPD and ASC
industry, including professional
associations, clinicians, accreditation
organizations, and the government.
Comment: One commenter requested
that CMS provide additional guidance
with respect to the process for
suggesting and submitting future
ASCQR Program measures. This
commenter further requested that CMS
distinguish, when establishing reporting
requirements, between ASCs that are
equipped for the performance of sterile
surgical operations and ambulatory
endoscopy centers that are equipped to
perform nonsurgical endoscopy
procedures.
Response: We generally request
comments on future ASCQR Program
measure topics through the rulemaking
process and did so in the CY 2014
OPPS/ASC proposed rule (78 FR 43664).
We also accepted measures for
consideration from associations through
ONC’s measure project tracking system
(http://oncprojectracking.org/);
associations were invited via the CMS
Listserv to attend a training session for
how to submit measures into this
system. Regarding distinguishing ASCs
by the services provided, we are aware
that ASCs vary in the types of services
they provide. This variety presents
challenges in devising a measure set
that can glean applicable quality of care
information across ASCs. With respect
to current claims-based measures that
include surgical procedures, at this
time, we are not able to identify
facilities that would never perform
surgical procedures from the

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information on claims. Therefore, we
are not able to distinguish ineligibility
for a measure from non-reporting.
Comment: One commenter
recommended that CMS consider the
following measure topics for the ASCQR
Program: (1) Equipment Reprocessing
(for patient safety, high-level
disinfection and sterilization, with a
particular emphasis on endoscope
reprocessing); and (2) Sedation Safety—
A possible anesthesia-related measure
could include the use of reversal agents
to patients given moderate sedation
agents (medications used to rescue
patients from deeper levels of sedation
than intended).
Response: We thank the commenter
for these recommendations and will
consider these measure topics for the
ASCQR Program in future years.
Comment: One commenter noted that
the program currently includes a
measure on hospital transfer or
admission after a procedure, which
tracks whether patients are transferred
or admitted directly to a hospital
(including a hospital emergency room)
upon discharge from an ASC. This
commenter believed that this measure
could be expanded to include patients
who return home after the ASC
procedure, but are admitted to a
hospital shortly thereafter because of a
problem related to the procedure
because doing so would enable us to
more comprehensively track patients
who experience serious complications
or medical errors related to an ASC
procedure.
Response: We thank the commenter
for providing this information and note
that the ASC–12: Facility Seven-Day
Risk-Standardized Hospital Visit Rate
after Outpatient Colonoscopy measure
includes all unplanned hospital visits
(emergency department visits,
observation stays and inpatient
admissions) within 7 days following the
procedure. We will continue to consider
additional measures that track hospital
visits following ASC procedures as
appropriate in the future.
Comment: One commenter
recommended that CMS develop a
measure to track surgical site infection
rates for ambulatory surgeries in ASCs.
The commenter observed that CMS
stated in the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74503
through 74504) that we would consider
proposing an SSI measure and requested
an update.
Response: We agree that it is
important to encourage the reduction of
SSIs. In the CY 2012 OPPS/ASC
rulemaking, we proposed but did not
finalize the Surgical Site Infection Rate
measure (NQF #0299), but stated that

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we will consider proposing the measure
once a suitable set of procedures and a
protocol for ASCs and HOPDs has been
developed (76 FR 74504). We are not
aware of any updates to this measure,
but will consider these types of
measures in future years.
Comment: One commenter
recommended that the ASCQR Program
should move to a value-based
purchasing model no later than 2016,
rewarding high-performing ASCs and
penalizing low-performing ASCs.
Response: We thank the commenter
for this recommendation. As we noted
in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75122), we
currently do not have express statutory
authority to implement a value-based
purchasing program for ASCs.
Comment: One commenter requested
that CMS publish each year, as part of
the proposed rule, a 2-year or 3-year
timeline of anticipated changes to the
ASCQR Program to facilitate ASC
facility planning.
Response: We thank the commenter
for the comment and note that we seek
to provide information to ASC facilities
in advance whenever possible to
support future planning. For example,
in the CY 2012 OPPS/ASC rulemaking,
we finalized measures sets for the CY
2014, CY 2015, and CY 2016 payment
determinations (76 FR 74496 to 74511).
Similarly, in the CY 2013 OPPS/ASC
final rule with comment period, we
finalized a data collection and
processing period policy for claimsbased measures using QDCs for the CY
2015 payment determination and
subsequent years (77 FR 68497 through
68498), and in the CY 2014 OPPS/ASC
final rule with comment period, we
finalized our policy regarding
participation status for the CY 2016
payment determination and subsequent
years (78 FR 75134 through 75135). In
this year’s rulemaking, we also are
finalizing policies that span more than
one year, such as including the ASC–12
measure in the ASCQR Program
measure set for the CY 2018 payment
determination and subsequent years, the
process for removing measures, and
topped-out criteria. While we cannot
commit to providing a 2-year or 3-year
timeline at this point due to the rapidly
evolving quality measurement and
program environment, we will continue
to provide information to ASCs through
the QualityNet Web site, the ASCQR
Program ListServe, and the rulemaking
process as appropriate.
Comment: Several commenters stated
that they would welcome opportunities
to work with CMS to explore alternative
reporting options for measures that cut
across CMS quality reporting programs,

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particularly measures that are included
in both the ASCQR Program and PQRS.
Response: We thank the commenters
for their offer to collaborate with CMS
on alternative reporting options. We
will continue to look for opportunities
to work with ASC community
stakeholders to continuously improve
the ASCQR Program.
Comment: Several commenters
expressed concern about the MAP,
specifically the public comment process
and the practice of submitting measure
concepts for consideration. These
commenters believed that the MAP does
not adequately consider public
comments, and stated that the MAP
session agendas scheduled voting
activities prior to public comments,
which limited the ability of comments
to impact voting, and that the public
could not address the Coordinating
Committee until after deliberations were
completed. These commenters also
stated that the public could comment on
the draft MAP Pre-Rulemaking Report,
but that these comments were not
considered by the Coordinating
Committee and, therefore, did not result
in revisions to the final report. These
commenters recommended that public
comments be solicited prior to, rather
than, after voting on agenda items, and
that the MAP Coordinating Committee
be required to formally consider and
respond to public comments on the
draft report. Several other commenters
expressed concern regarding the MAP’s
review of measure ‘‘concepts’’ that have
not been fully developed, saying that
recommendations are premature for
measure concepts or measure drafts.
These commenters recommended that
when ‘‘concepts’’ are presented, the
MAP should determine whether the
measure concept/draft would fill a
measure gap but reserve further
judgment for the completed measure.
These commenters are further
concerned that the inclusion of measure
‘‘concepts’’ results in an unreasonably
large number of items for the MAP to
consider, which can limit the time
allotted to consider each measure.
Response: We thank the commenters
for their comments and concerns, but
note that they do not directly address
any proposals included in the CY 2015
OPPS/ASC proposed rule; rather, they
are directed towards MAP-specific
processes. We invite the commenters to
submit their MAP-specific concerns
directly to the NQF, which convenes the
MAP.
In response to the comments
concerning the MAP’s review of
measure ‘‘concepts’’ that have not been
fully developed, resulting in
recommendations that are premature for

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measure concepts or measure drafts, we
interpret the commenters’ use of the
terms ‘‘concept’’ and ‘‘draft’’ to refer to
measures under development as defined
in our legend on page 87 of the List of
Measures under Consideration for
December 1, 2013 (https://www.google.
com/url?sa=t&rct=j&q=&esrc=s&
source=web&cd=1&cad=rja&uact=8&
ved=0CCAQFjAA&url=http%3A%2F
%2Fwww.qualityforum.org%2FSetting_
Priorities%2FPartnership%2F
Measures_Under_Consideration_List.
aspx&ei=aQUuVJrsM6nIsAT61IDQAg&
usg=AFQjCNFPjzG9-t7flmf-RFf-7o_
rSvpxxQ&sig2=V6Hi_
GdCM2OUcP5xkoudcw&bvm=bv.
76802529,d.cWc). We strive to ensure
that the pre-rulemaking process allows
for thorough review by the MAP and
other stakeholders of all measures under
consideration.
Comment: Some commenters
suggested that CMS consider developing
additional outcomes measures specific
to colonoscopies and consider
developing a measure of whether or not
colonoscopy patients remain cancer
free, specifically suggesting that we
work with stakeholders to improve
existing measures.
Response: We thank the commenter
for their recommendations and will
consider these types of measures in
future years.
We also thank all commenters for
providing their views and we will
consider them as we develop future
measures for the ASCQR Program.
7. Maintenance of Technical
Specifications for Quality Measures
We refer readers to the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74513 through 74514),
where we finalized our proposal to
follow the same process for updating the
ASCQR Program measures that we
adopted for the Hospital OQR Program
measures, including the subregulatory
process for making updates to the
adopted measures. In the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68496 through 68497) and
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75131), we
provided additional clarification
regarding the ASCQR Program policy in
the context of the previously finalized
Hospital OQR Program policy, including
the processes for addressing
nonsubstantive and substantive changes
to adopted measures.
We maintain technical specifications
for previously adopted ASCQR Program
measures. These specifications are
updated as we continue to develop the
ASCQR Program. The manuals that
contain specifications for the previously

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adopted measures can be found on the
QualityNet Web site at: https://www.
qualitynet.org/dcs/ContentServer?c=
Page&pagename=QnetPublic%2FPage
%2FQnetTier2&cid=1228772475754.
Many of the quality measures used in
Medicare and Medicaid reporting
programs are NQF-endorsed. We note
that two of the measures previously
adopted for the ASCQR Program are not
NQF-endorsed, and NQF endorsement
is not a program requirement. However,
for those measures that are NQFendorsed, the NQF requires measure
stewards to submit annual measure
maintenance updates and undergo
maintenance of endorsement review
every 3 years as part of its regular
maintenance process for NQF-endorsed
performance measures. In the measure
maintenance process, the measure
steward (owner/developer) is
responsible for updating and
maintaining the currency and relevance
of the measure and will confirm existing
or minor specification changes with the
NQF on an annual basis. The NQF
solicits information from measure
stewards for annual reviews, and it
reviews measures for continued
endorsement in a specific 3-year cycle.
We note that the NQF’s annual or
triennial maintenance processes for
endorsed measures may result in the
NQF requiring updates to measures in
order to maintain endorsement status.
Other non-NQF measures may undergo
maintenance changes as well. We
believe that it is important to have in
place the subregulatory process that we
have adopted for the ASCQR Program to
incorporate nonsubstantive updates into
the measure specifications for measures
so that the measure specifications
remain current. We also recognize that
some changes to measures are
substantive in nature and might not be
appropriate for adoption using a
subregulatory process.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41049), we did not propose
any changes to this policy.
8. Public Reporting of ASCQR Program
Data
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74514
through 74515), we finalized a policy to
make data that an ASC submitted for the
ASCQR Program publicly available on a
CMS Web site after providing an ASC an
opportunity to review the data to be
made public. When available, these data
will be displayed at the CCN level; we
intend to make data collected under the
ASCQR program publicly available in
CY 2015. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41049), we did not
propose any changes to this policy.

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Comment: One commenter urged
CMS to make the data submitted by
ASCs available to the public after giving
ASCs an opportunity to preview the
data.
Response: We thank the commenter
for their comment, and note that in the
CY 2012 OPPS/ASC final rule with
comment period (76 FR 74514 through
74515), we finalized a policy to make
data that an ASC submitted for the
ASCQR Program publicly available on a
CMS Web site after providing an ASC an
opportunity to review the data to be
made public. These data will be
displayed at the CCN level. We did not
propose any changes to this policy (79
FR 41049).
C. Payment Reduction for ASCs That
Fail To Meet the ASCQR Program
Requirements
1. Statutory Background
We refer readers to section XV.C.1. of
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75131 through
75132) for a detailed discussion of the
statutory background regarding payment
reductions for ASCs that fail to meet the
ASCQR Program requirements.
2. Reduction to the ASC Payment Rates
for ASCs That Fail To Meet the ASCQR
Program Requirements for a Payment
Determination Year
The national unadjusted payment
rates for many services paid under the
ASC payment system equal the product
of the ASC conversion factor and the
scaled relative payment weight for the
APC to which the service is assigned.
Currently, the ASC conversion factor is
equal to the conversion factor calculated
for the previous year updated by the
MFP-adjusted CPI–U update factor,
which is the adjustment set forth in
section 1833(i)(2)(D)(v) of the Act. The
MFP-adjusted CPI–U update factor is
the Consumer Price Index for all urban
consumers (CPI–U), which currently is
the annual update for the ASC payment
system, minus the MFP adjustment. As
discussed in the CY 2011 MPFS final
rule with comment period (75 FR
73397), if the CPI–U is a negative
number, the CPI–U would be held to
zero. Under the ASCQR Program, any
annual update will be reduced by 2.0
percentage points for ASCs that fail to
meet the reporting requirements of the
ASCQR Program. This reduction
applied beginning with the CY 2014
payment rates. For a complete
discussion of the calculation of the ASC
conversion factor, we refer readers to
section XII.G. of this final rule with
comment period.

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In the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68499
through 68500), in order to implement
the requirement to reduce the annual
update for ASCs that fail to meet the
ASCQR Program requirements, we
finalized our proposal that we would
calculate two conversion factors: A full
update conversion factor and an ASCQR
Program reduced update conversion
factor. We finalized our proposal to
calculate the reduced national
unadjusted payment rates using the
ASCQR Program reduced update
conversion factor that would apply to
ASCs that fail to meet their quality
reporting requirements for that calendar
year payment determination. We
finalized our proposal that application
of the 2.0 percentage point reduction to
the annual update may result in the
update to the ASC payment system
being less than zero prior to the
application of the MFP adjustment.
The ASC conversion factor is used to
calculate the ASC payment rate for
services with the following payment
indicators (listed in Addenda AA and
BB to this final rule with comment
period, which are available via the
Internet on the CMS Web site): ‘‘A2,’’
‘‘G2,’’ ‘‘P2,’’ ‘‘R2,’’ ‘‘Z2,’’ as well as the
service portion of device-intensive
procedures identified by ‘‘J8.’’ We
finalized our proposal that payment for
all services assigned the payment
indicators listed above would be subject
to the reduction of the national
unadjusted payment rates for applicable
ASCs using the ASCQR Program
reduced update conversion factor.
The conversion factor is not used to
calculate the ASC payment rates for
separately payable services that are
assigned status indicators other than
payment indicators ‘‘A2,’’ ‘‘G2,’’ ‘‘J8,’’
‘‘P2,’’ ‘‘R2,’’ and ‘‘Z2.’’ These services
include separately payable drugs and
biologicals, pass-through devices that
are contractor-priced, brachytherapy
sources that are paid based on the OPPS
payment rates, and certain office-based
procedures and radiology services
where payment is based on the MPFS
PE RVU amount and a few other specific
services that receive cost-based
payment. As a result, we also finalized
our proposal that the ASC payment rates
for these services would not be reduced
for failure to meet the ASCQR Program
requirements because the payment rates
for these services are not calculated
using the ASC conversion factor and,
therefore, not affected by reductions to
the annual update.
Office-based surgical procedures
(performed more than 50 percent of the
time in physicians’ offices) and
separately paid radiology services

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(excluding covered ancillary radiology
services involving certain nuclear
medicine procedures or involving the
use of contrast agents, as discussed in
section XII.C.1.b. of this final rule with
comment period) are paid at the lesser
of the MPFS nonfacility PE RVU-based
amounts or the amount calculated under
the standard ASC ratesetting
methodology. Similarly, in section
XII.D.2.b. of this final rule with
comment period, we are finalizing that
payment for the new category of covered
ancillary services (that is, certain
diagnostic test codes within the medical
range of CPT codes for which separate
payment is allowed under the OPPS and
when they are integral to an ASC
covered surgical procedure) will be at
the lesser of the MPFS nonfacility PE
RVU-based amounts or the rate
calculated according to the standard
ASC ratesetting methodology. In the CY
2013 OPPS/ASC final rule with
comment period (77 FR 68500), we
finalized our proposal that the standard
ASC ratesetting methodology for this
type of comparison would use the ASC
conversion factor that has been
calculated using the full ASC update
adjusted for productivity. This is
necessary so that the resulting ASC
payment indicator, based on the
comparison, assigned to these
procedures or services is consistent for
each HCPCS code regardless of whether
payment is based on the full update
conversion factor or the reduced update
conversion factor.
For ASCs that receive the reduced
ASC payment for failure to meet the
ASCQR Program requirements, we
believe that it is both equitable and
appropriate that a reduction in the
payment for a service should result in
proportionately reduced copayment
liability for beneficiaries. Therefore, in
the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we
finalized our proposal that the Medicare
beneficiary’s national unadjusted
copayment for a service to which a
reduced national unadjusted payment
rate applies would be based on the
reduced national unadjusted payment
rate.
In that final rule with comment
period, we finalized our proposal that
all other applicable adjustments to the
ASC national unadjusted payment rates
would apply in those cases when the
annual update is reduced for ASCs that
fail to meet the requirements of the
ASCQR Program (77 FR 68500). For
example, the following standard
adjustments would apply to the reduced
national unadjusted payment rates: The
wage index adjustment, the multiple
procedure adjustment, the interrupted

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procedure adjustment, and the
adjustment for devices furnished with
full or partial credit or without cost. We
believe that these adjustments continue
to be equally applicable to payment for
ASCs that do not meet the ASCQR
Program requirements.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75132), we
did not make any changes to these
policies. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41049 through
41050), we did not propose any changes
to these policies.
D. Administrative Requirements
We received a public comment on the
ASCQR Program requirements in
general.
Comment: One commenter expressed
appreciation that CMS did not propose
any substantial changes to participatory
requirements, stating that this will
provide ASCs with valuable time to
stabilize the processes for what is
currently required without adding
additional burden on resources.
Response: We interpret the
commenter as referring to program
administrative requirements overall,
and not to just participation status as
the commenter makes reference to
issues of burden. We thank the
commenter for this support. We agree
that program administrative process
stability to the extent possible is
important in developing the ASCQR
Program. We continue to look for ways
to minimize burden as we pursue the
quality objectives of the ASCQR
Program.
1. Requirements Regarding QualityNet
Account and Security Administrator
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75132 through 75133) for
a detailed discussion of the QualityNet
security administrator requirements,
including setting up a QualityNet
account, and the associated timelines,
for the CY 2014 payment determination
and subsequent years. In the CY 2015
OPPS/ASC proposed rule (79 FR 41050),
we did not propose any changes to these
policies.
2. Requirements Regarding Participation
Status
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75133 through 78 FR
75135) for a complete discussion of the
participation status requirements for the
CY 2014 payment determination and
subsequent years. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41050), we
did not propose any changes to these
policies.

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E. Form, Manner, and Timing of Data
Submitted for the ASCQR Program
We received public comments on
alternate methods for submitting data
for the ASCQR Program.
Comment: One commenter
recommended that CMS allow ASCs to
meet the requirements of the ASCQR
Program using registry-based reporting,
noting that using a registry is an option
under the PQRS and that other registries
are already in existence. This
commenter recommended CMS issue
proposals regarding this option in next
year’s proposed rule. The commenter
also recommended that ASCs should
also have the option of submitting
quality data to CMS through an EHRbased reporting mechanism, as there are
ASCs that have implemented this
technology and could benefit from this
option.
Response: We thank the commenter
for these suggestions. We agree that it
could reduce burden to have a registrybased mechanism for data submission.
We have not proposed a registry-based
reporting option because currently,
there is not a registry in place that is
collecting information on the quality
measures that we have adopted for this
program. Should registry-based
reporting of the ASC quality measures
adopted for the ASCQR Program become
available in the future, we will explore
further the viability of incorporating a
registry-based reporting mechanism in
the ASCQR Program.
Regarding the use of EHR systems for
reporting quality data, we agree that
reporting by this method could reduce
reporting burden. However, we are not
aware of quality measures for ASCs that
have been specified for electronic
reporting. If such measures do exist, an
understanding of the level of EHR
adoption and capabilities of ASCs to
utilize this method would be necessary
before proposing their adoption by the
ASCQR Program. As we discussed in
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75124 through
75126), in a recent environmental scan,
which included an assessment of the
readiness of ASC to electronically report
quality data, we found evidence of low
levels of EHR use by ASCs. We believe
that ASCs continue to be slow to adopt
EHRs because many of these facilities
are small and the cost of EHRs may pose
a barrier to adoption. Further, there has
been no incentive program to encourage
such adoption by ASCs.
Comment: One commenter requested
a batch-processing data submission
option for entities that own multiple
ASCs.

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Response: We interpret this comment
as referring to the ability to send quality
measure data electronically in a format
that allows for data submission for
multiple ASCs, rather than requiring
individual ASC data entry as is
currently required for data submitted
via a CMS online data submission tool
measure data. We thank the commenter
for their request and are considering
how to implement this capability into
our data submission processes. In the
event this method can be available for
data submission, we would issue
proposals through rulemaking for
ASCQR Program implementation.
1. Requirements Regarding Data
Processing and Collection Periods for
Claims-Based Measures Using Quality
Data Codes (QDCs)
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75135) for a complete
summary of the data processing and
collection periods for the claims-based
measures using QDCs for the CY 2014
payment determination and subsequent
years. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41050), we did not
propose any changes to these policies.
We did not receive any public
comments on data submission for
claims-based measures using QDCs.
2. Minimum Threshold, Minimum Case
Volume, and Data Completeness for
Claims-Based Measures Using QDCs
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75135 through 75137) for
a complete discussion of the minimum
thresholds, minimum case volume, and
data completeness for successful
reporting for the CY 2014 payment
determination and subsequent years. In
the CY 2015 OPPS/ASC proposed rule
(79 FR 41050), we did not propose any
changes to these policies.
We received the following public
comments on data collection using
QDCs.
Comment: One commenter
recommended that CMS raise the 50
percent threshold for claims meeting
measure specifications containing
QDCs, noting that many of the issues in
the early years of the program that led
to this standard have been resolved.
Response: We thank the commenter
for the recommendation and, while we
did not propose any changes to our QDC
use threshold in this rulemaking, we
will consider this comment as we move
forward with program planning as ASCs
now have experience in submitting data
in this manner.
Comment: One commenter supported
CMS’ decision not to propose any

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changes to minimum thresholds,
minimum case volume, and data
completeness for successful reporting,
noting that program stability is
important. Specifically, the commenter
supports maintaining the sample size
requirements for the endoscopy
measures, ASC–9 and ASC–10.
Response: We thank the commenter
for its support of these data-related
policies, including the maintenance of
the sample size requirements for the
endoscopy measures.
3. Requirements for Data Submitted Via
a CMS Online Data Submission Tool
a. Data Collection for ASC–6 and ASC–
7
We refer readers to the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74509) and the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75137 through 75138) for
a complete discussion of the
requirements for data collection and
submission for the ASC–6: Safe Surgery
Checklist Use and ASC–7: ASC Facility
Volume Data on Selected ASC Surgical
Procedures measures for the CY 2015
payment determination and subsequent
years. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41050), we did not
propose any changes to these policies.
b. Delayed Data Collection for ASC–9
and ASC–10
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75124
through 75130), we adopted ASC–9:
Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk
Patients (NQF #0658) and ASC–10:
Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps—
Avoidance of Inappropriate Use (NQF
#0659), two additional chart-abstracted
measures, and we finalized a policy that
aggregate data (numerators,
denominators, and exclusions) on all
ASC patients would be collected via an
online Web-based tool that would be
made available to ASCs via the
QualityNet Web site.
We finalized that the data collection
time period would be the calendar year
(January 1 to December 31) 2 years prior
to the affected payment determination
year, and the data collected would be
submitted during the time period of
January 1 to August 15 in the year prior
to the affected payment determination
year. Thus, for the CY 2016 payment
determination, ASCs would be required
to submit aggregate-level encounter data
from January 1, 2014 to December 31,
2014 using our Web-based tool during

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the data submission window of January
1, 2015 to August 15, 2015 (78 FR 75138
through 75139).
On December 31, 2013, we issued
guidance stating that we would delay
the implementation of ASC–9 and ASC–
10 for 3 months for the CY 2016
payment determination, with a resulting
encounter period of April 1, 2014 to
December 31, 2014 instead of January 1,
2014 to December 31, 2014 (https://
www.qualitynet.org/dcs/ContentServer?
c=Page&pagename=QnetPublic%2F
Page%2FQnetTier3&cid=
1228772879036). The data submission
timeframe and the encounter period for
subsequent years remain as previously
finalized (78 FR 75139).
c. Delayed Data Collection and
Exclusion for ASC–11 for the CY 2016
Payment Determination and Voluntary
Data Collection for ASC–11 for the CY
2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period, where we adopted ASC–11:
Cataracts—Improvement in Patient’s
Visual Function within 90 Days
Following Cataract Surgery (NQF #1536)
beginning with the CY 2016 payment
determination (78 FR 75129), and
finalized the data collection and data
submission timelines (78 FR 75138 to
75139). This measure assesses the rate
of patients 18 years and older (with a
diagnosis of uncomplicated cataract) in
a sample who had improvement in
visual function achieved within 90 days
following cataract surgery based on
completing both a pre-operative and
post-operative visual function survey.
Since our adoption of this measure,
we have come to believe that it can be
operationally difficult at this time for
ASCs to collect and report this measure.
Specifically, we are concerned that the
results of the survey used to assess the
pre-operative and post-operative visual
function of the patient may not be
shared across clinicians and facilities,
making it difficult for ASCs to have
knowledge of the visual function of the
patient before and after surgery. We are
also concerned about the surveys used
to assess visual function; the measure
allows for the use of any validated
survey and results may be inconsistent
should clinicians use different surveys.
Therefore, on December 31, 2013, we
issued guidance stating that we would
delay data collection for ASC–11 for 3
months (data collection would
commence with April 1, 2014
encounters) for the CY 2016 payment
determination (https://www.qualitynet.
org/dcs/ContentServer?c=Page&page
name=QnetPublic%2FPage%2F

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QnetTier3&cid=1228772879036). We
issued additional guidance on April 2,
2014, stating that we would further
delay the implementation of ASC–11 for
an additional 9 months, until January 1,
2015 for the CY 2016 payment
determination, due to continued
concerns (https://www.qualitynet.org/
dcs/ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier3&
cid=1228773811586).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41051), we proposed to
exclude ASC–11 Cataracts:
Improvement in Patient’s Visual
Function within 90 Days Following
Cataract Surgery (NQF #1536) from the
CY 2016 payment determination
measure set. We would not subject
ASCs to a payment reduction with
respect to this measure for the CY 2016
payment determination.
We continue to believe that this
measure addresses an area of care that
is not adequately addressed in our
current measure set and the measure
serves to drive coordination of care (78
FR 75129). Further, we believe ASCs
should be a partner in care with
physicians and other clinicians using
their facility and that this measure
provides an opportunity to do so.
Therefore, we are continuing to include
this measure in the ASCQR Program
measure set for the CY 2017 payment
determination and subsequent years.
However, we understand the concerns
and, therefore, proposed that data
collection and submission be voluntary
for this measure for the CY 2017
payment determination and subsequent
years. ASCs would not be subject to a
payment reduction for failing to report
this measure during the period of
voluntary reporting. For ASCs that
choose to submit data, we continue to
request that they submit such data using
the means and timelines finalized in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75138 to
75139). Data submitted voluntarily will
be publicly reported as discussed in the
CY 2014 OPPS/ASC proposed rule (78
FR 75138 to 75139).
We invited public comment on this
proposal.
Comment: Some commenters stated
that complications following cataract
surgery are not acceptable and believed
that ASC–11 tracks patient-centered
clinical outcomes. The commenters
stated that the measure would promote
and improve care coordination among
providers. Some commenters
commended CMS’ recognition of the
associated operational issues and taking
the approach to delay implementation
of this measure as well as allowing
voluntary collection.

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Response: We appreciate the
commenters that supported and agreed
with our view and the approach we take
for this measure. We agree that
complications following cataract surgery
are not acceptable. While ASC–11 does
not address complications following
cataract surgery, it does address
improvement in visual function
following cataract surgery and it tracks
an important patient-centered clinical
outcome.
Comment: Some commenters did not
support voluntary data reporting based
on concerns regarding the extent to
which ASCs would report data for ASC–
11 if reporting was voluntary. Some
commenters stated that incomplete
display of data is not meaningful to
consumers. Other commenters
expressed concerns that the display of
data from some ASCs but not others
would lead some patients to conclude
that some ASCs are more committed to
improving cataract surgery. Several
other commenters predicted that very
few ASCs will report data for the ASC–
11 measure, leading to an insufficient
sample.
Response: We thank the commenters
for their views. We note that the
proposal, which we are finalizing in this
final rule with comment period, is for
the measure to be voluntarily reported
by ASCs. Therefore, ASCs would be able
to choose whether to implement data
collection and reporting processes for
this measure. We continue to believe the
ASC–11 measure has value in this care
setting. We do not agree that an
insufficient sample of facilities will
report data for the ASC–11 measure
because we also have self-reports from
ASCs that some did put processes in
place to collect data for this measure,
and that these ASCs would like to report
data for this measure because they view
the measure as an important quality
measure for facilities.
We do not agree that ASC–11 data
reported on a voluntary basis would not
be meaningful for consumers. There are
many situations where ASCs do not
submit information to the ASCQR
Program because they do not have such
information due to lack of cases or low
case volume. In the CY 2012 OPPS/ASC
final rule with comment period (76 FR
74514 through 74515), we finalized a
policy to make data that an ASC
submitted for the ASCQR Program
publicly available on a CMS Web site
after providing an ASC an opportunity
to review the data to be made public.
Therefore, when ASCs’ information is
submitted, we will make this
information publicly available. Where
this information is not submitted, we
will state that the information is not

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available. We also do not agree that
reporting of measure data by some ASCs
and not others under voluntary
reporting would affect the validity of
data reported for this Web-based
measure because this situation is no
different than any other measure where
not all ASCs had cases.
Comment: Many commenters
requested that CMS remove the ASC–11
measure from the program entirely,
rather than delaying implementation
and allowing voluntary reporting. These
commenters reiterated similar concerns
expressed in the CY 2014 OPPS/ASC
final rule with comment period
regarding associated burden, suitability
for ASCQR Program versus PQRS,
program alignment of this measure,
nonstandardization of collected
information, NQF endorsement, MAP
recommendation, and coordination
challenges faced by facilities.
Response: We continue to believe this
measure addresses the importance area
of care coordination and responsibility
for monitoring patient outcomes
between performing physicians,
practitioners that assess visual function,
and facilities where procedures are
performed; therefore, we are not
removing ASC–11 from the ASCQR
Program measure set for the CY 2017
payment determination and subsequent
years.
With respect to the concerns raised by
commenters about the measure, we refer
commenters to the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75124 through 75126, 75129, and 75138
through 75139) where we previously
have responded to these concerns.
After consideration of the public
comments we received, for the reasons
discussed above, we are finalizing our
proposal to allow voluntary data
collection and reporting of this measure
for the CY 2017 payment determination
and subsequent years. We also are
finalizing our proposal to exclude the
measure entirely from the CY 2016
payment determination measure set.
ASCs will be able to begin reporting
with January 1, 2015 services as
described above in section XIV.E.3. of
this final rule with comment period. For
ASCs that choose to submit data, we
request that they submit such data using
the means and timelines finalized in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75138 to
75139). ASCs will not be subject to a
payment reduction for failing to report
this measure during the period of
voluntary reporting. Data voluntarily
submitted will be publicly reported.

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4. Claims-Based Measure Data
Requirements for the New Measure for
the CY 2018 Payment Determination
and Subsequent Years
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41046–41048), we proposed
to adopt the ASC–12: Facility SevenDay Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy
measure, which is a claims-based
measure that does not require any
additional data submission apart from
standard Medicare FFS claims. In the
CY 2015 OPPS/ASC proposed rule (79
FR 41051), we also proposed that, for
this measure, which uses ASC Medicare
claims data as specified in the ASCQR
Specifications Manual and does not
require any additional data submission
such as QDCs, we would use paid
Medicare FFS claims from a 12-month
period from July 1 of the year 3 years
before the payment determination year
to June 30 of the following year. Thus,
we stated, for the CY 2017 payment
determination for this measure, claims
from July 1, 2014 to June 30, 2015
would be used. We noted that we
proposed to adopt this measure under
the ASCQR Program as well as the
Hospital OQR Program, as described in
section XIII.H.2.c. of the proposed rule.
We stated that this ASCQR Program
time period provides for the timeliest
data possible while aligning the
proposed data submission requirements
with our Hospital OQR Program
proposal, which would use the claimsbased measure data submission
requirements for the CY 2015 payment
determination and subsequent years that
we adopted in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75111 through 75112).
We invited public comment on this
proposal.
Comment: Many commenters
expressed concern that, if finalized, the
ASC–12 measure’s data collection
period would begin July 1, 2014, several
months before adoption of the measure
is finalized. Several commenters
recommended that data collection begin
July 1, 2015.
Response: As we stated above in
section XIV.B.5. of this final rule with
comment period, we are finalizing the
adoption of ASC–12 for the CY 2018
payment determination and subsequent
years instead of the CY 2017 payment
determination and subsequent years as
proposed. We are finalizing the data
submission time period for ASC–12 to
use paid Medicare FFS claims from the
calendar year 2 years before the
payment determination calendar year.
For the CY 2018 payment
determination, we will use paid

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Medicare FFS claims from January 1,
2016 to December 31, 2016. We believe
the reliability of the measure using 1
year of data is sufficiently reliable.
While we believe that measure
reliability may be further improved by
using a longer time period, we must
balance the reliability of the measure
with the timeliness of the measure. At
this time, we believe that 1 year of data
appropriately balances these competing
interests, but we will continue to assess
this belief during the dry run.
After consideration of the public
comments we received, we are not
finalizing our proposal to use paid
Medicare FFS claims from a 12-month
period from July 1 of the year 3 years
before the payment determination year
to June 30 of the following year. Instead,
we will use paid Medicare FFS claims
from the calendar year 2 years before the
payment determination calendar year.
Specifically, with respect to the CY
2018 payment determination, for
calculating ASC–12, we will use paid
Medicare FFS claims from January 1,
2016 to December 31, 2016.
5. Data Submission Requirements for
ASC–8 (Influenza Vaccination Coverage
Among Healthcare Personnel) Reported
via the National Healthcare Safety
Network (NHSN) for the CY 2016
Payment Determination and Subsequent
Years
a. Previously Adopted Requirements for
the CY 2016 Payment Determination
We refer readers to the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74510) and the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75139 through 75140) for
a complete discussion of the ASC–8
measure (Influenza Vaccination
Coverage among Healthcare Personnel)
(NQF #0431), including the data
collection timeframe and the data
reporting standard procedures for the
CY 2016 payment determination.
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75139
through 75140), we finalized our
proposal to use the data submission and
reporting standard procedures that have
been set forth by the CDC for NHSN
participation in general and for
submission of this measure to NHSN.
We refer readers to the CDC’s NHSN
Web site for detailed procedures for
enrollment (http://www.cdc.gov/nhsn/
ambulatory-surgery/enroll.html), set-up
(http://www.cdc.gov/nhsn/ambulatorysurgery/setup.html), and reporting
(https://sams.cdc.gov) (user
authorization through Secure Access
Management Services (SAMS) is
required for access to NHSN). We note

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that the reporting link was updated in
the CY 2015 OPPS/ASC proposed rule
(79 FR 41051).
b. Data Collection Timeframes for the
CY 2017 Payment Determination and
Subsequent Years and Submission
Deadlines for the CY 2016 Payment
Determination and Subsequent Years
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74510), we
finalized our policy that data collection
for the CY 2016 payment determination
would be from October 1, 2014 through
March 31, 2015 (the 2014–2015
influenza season data). In the CY 2015
OPPS/ASC proposed rule (79 FR 41051
through 41052, we proposed that for the
CY 2017 payment determination and
subsequent years, ASCs would collect
data from October 1 of the year 2 years
prior to the payment determination year
to March 31 of the year prior to the
payment determination year. For
example, the CY 2017 payment
determination would require data
collection from October 1, 2015 to
March 31, 2016.
In the CY 2014 OPPS/ASC proposed
rule, we proposed that ASCs would
have until August 15, 2015 to submit
their 2014–2015 influenza season data
(October 1, 2014 through March 31,
2015) to NHSN. We stated that this date
is the latest date possible for data entry
that would provide sufficient time for us
to make the CY 2016 payment
determinations and is aligned with the
data entry deadline for the measures
entered via the CMS online tool (78 FR
43670). While some commenters
supported this proposal, others
expressed disagreement with this
proposal because it differed from the
May 15 deadline proposed for the
Hospital IQR Program (78 FR 27700,
50822) and the Hospital OQR Program
(78 FR 43656, 75116 through 75117) and
they believed this difference in
deadlines could cause confusion,
thereby disadvantaging ASCs (78 FR
75140). Other commenters believed that
providing ASCs with a later deadline
would provide an unfair advantage
because ASCs would have longer to
submit their data. Due to these
concerns, we did not finalize the August
15, 2015 deadline. We stated that we
intended to propose a submission
deadline for this measure for the CY
2016 payment determination in this
proposed rule.
In the proposed rule, we proposed
that May 15 of the year in which the
influenza season ends be the submission
deadline for each payment
determination year, similar to the
Hospital IQR and OQR Programs. For
example, for the CY 2016 payment

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determination, ASCs would be required
to submit their 2014–2015 influenza
season data (October 1, 2014 through
March 31, 2015) by May 15, 2015.
Similarly, for the CY 2017 payment
determination, ASCs would be required
to submit their 2015–2016 influenza
season data (October 1, 2015 through
March 31, 2016) by May 15, 2016. We
believe a May 15 reporting deadline
would enable ASCs to use data
summarizing the results of their
previous influenza vaccination
campaign to set targets and make plans
for their influenza vaccination
campaigns prior to the next influenza
season. This deadline also would enable
us to post and the public to review the
summary data before the start of the
next influenza season. Finally, this date
aligns to the May 15 deadline used in
the Hospital IQR and OQR Programs for
this measure.
We invited public comment on this
proposal.
Comment: Many commenters
supported the proposed submission
deadline of May 15 for ASC–8. One
commenter expressed concern that there
is a time lag for reporting this data, and
urged that the public should have access
to the data at the time the data is most
useful.
Response: We thank the commenters
for their support. We believe a May 15
reporting deadline will enable ASCs to
use data summarizing the results of
their previous influenza vaccination
campaign to set targets and make plans
for their influenza vaccination
campaigns prior to the next influenza
season. This deadline also will enable
us to post and the public to review the
summary data before the start of the
next influenza season. Finally, this date
aligns with the May 15 deadline used in
the Hospital IQR and OQR Programs for
this measure.
Comment: Several commenters
opposed setting the submission
deadline for ASC–8 to May 15, arguing
that the August 15 deadline considered
in the prior year rule was better aligned
with the other measures in the ASCQR
Program and would minimize confusion
and reporting burden. One commenter
suggested that the Hospital IQR and
Hospital OQR Programs should move
their deadlines to August 15 to support
program alignment.
Response: We thank the commenters
for supporting last year’s proposal
regarding a data submission deadline for
the ASC–8 measure. We proposed an
August 15 data submission deadline in
the CY 2014 OPPS/ASC proposed rule
(78 FR 43670), but did not finalize this
proposal due to commenters’ concerns

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with nonalignment with other quality
reporting programs (78 FR 75140).
While we seek to align reporting
deadlines whenever possible within the
ASCQR Program (78 FR 75140), we
believe alignment across programs with
the May 15 reporting deadline will
prevent confusion in reporting across
different facilities. We also believe this
earlier deadline will enable us to make
the data publicly available in time for
ASCs to use the data summarizing the
results of their previous influenza
vaccination campaign to set targets and
make plans for their influenza
vaccination campaigns prior to the next
influenza season. This would be very
difficult to achieve with an August 15
reporting deadline.
After consideration of the public
comments we received, for the reasons
set forth above, we are finalizing our
proposal without modification to adopt
May 15 of the year in which the
influenza season ends as the data
submission deadline for the ASC–8
measure for each payment
determination year, beginning with the
CY 2016 payment determination. We
also are finalizing our proposal without
modification that, for the CY 2017
payment determination and subsequent
years, ASCs will collect data from
October 1 of the year 2 years prior to the
payment determination year to March
31 of the year prior to the payment
determination year.
6. ASCQR Program Validation of
Claims-Based and CMS Web-Based
Measures
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53641
through 53642) for a complete
discussion of our policy not to require
validation of claims-based measures
(beyond the usual claims validation
activities conducted by our Medicare
Administrative Contractors) or Webbased measures for the ASCQR Program,
which is in alignment with our
requirements for the Hospital IQR and
OQR Programs. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41052), we
did not propose any changes to this
policy.
We received the following comment
on data validation for the ASCQR
Program.
Comment: One commenter
recommended that CMS develop an
ASCQR data validation program to
assure the accuracy and integrity of
quality data that will be publicly
reported under the ASCQR Program.
Response: We thank the commenter
for the comment, and note that we
continue to evaluate the feasibility of
data validation for the ASCQR Program.

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We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53641
through 53642) for a complete
discussion of our policy not to require
validation of claims-based measures
(beyond the usual claims validation
activities conducted by our Medicare
Administrative Contractors) or Webbased measures for the ASCQR Program.
At this time, we believe that it would be
overly burdensome to validate the
reported data given the inexperience
that ASCs have with reporting quality
data to CMS coupled with the low
incidence of cases for the claims-based
measures. As we gain more experience
with the ASCQR Program, we will
reassess whether a data validation
process for claims-based measures and
measures where aggregate data are
reported via an online tool is needed.

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7. Extraordinary Circumstances
Extensions or Exemptions for the CY
2017 Payment Determination and
Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53642
through 53643) and the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75140 through 75141) for a complete
discussion of our extraordinary
circumstances extension or waiver
process under the ASCQR Program. In
the CY 2015 OPPS/ASC proposed rule
(79 FR 41052), we did not propose any
substantive changes to these policies or
the processes. However, in the future,
we will refer to the process as the
‘‘Extraordinary Circumstances
Extensions or Exemptions’’ process
rather than the ‘‘Extraordinary
Circumstances Extensions or Waivers’’
process.
We also are in the process of revising
the Extraordinary Circumstances/
Disaster Extension or Waiver Request
form (CMS–10432), approved under
OMB control number 0938–1171. We
are updating the instructions and the
form so that a hospital or facility may
apply for an extension for all applicable
quality reporting programs at the same
time. In addition, the instructions for
the form will be updated.
8. ASCQR Program Reconsideration
Procedures for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53643
through 53644) and the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75141) for a complete discussion of
our informal reconsideration process for
the ASCQR Program for the CY 2014
payment determination and subsequent
years. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41052), we did not

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propose any changes to the informal
reconsideration process.
XV. Changes to the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law: Expansion
Exception Process
A. Background
1. Statutory Basis
Unless the requirements of an
applicable exception are satisfied,
section 1877 of the Act, also known as
the ‘‘physician self-referral law’’—(1)
prohibits a physician from making
referrals for certain designated health
services payable by Medicare to an
entity with which the physician (or an
immediate family member) has a
financial relationship (ownership or
compensation); and (2) prohibits the
entity from submitting claims to
Medicare (or billing another individual,
entity, or third party payer) for those
designated health services furnished as
a result of a prohibited referral. The Act
establishes a number of specific
exceptions to the physician self-referral
law and grants the Secretary the
authority to create regulatory exceptions
for financial relationships that the
Secretary determines pose no risk of
program or patient abuse. Since the
original enactment of the statute in
1989, we have published a series of final
rules interpreting the statute and
promulgating numerous exceptions.
Section 1877(d) of the Act sets forth
exceptions related to ownership and
investment interests held by a physician
(or an immediate family member of a
physician) in an entity that furnishes
designated health services. Section
1877(d)(2) of the Act provides an
exception for ownership and investment
interests in rural providers. Under the
provision of section 1877(d)(2) of the
Act, in order for an ownership or
investment interest to qualify for the
exception, the designated health
services must be furnished in a rural
area (as defined in section 1886(d)(2) of
the Act), and substantially all of the
designated health services furnished by
the entity must be furnished to
individuals residing in a rural area.
Section 1877(d)(3) of the Act provides
the hospital ownership exception, often
referred to as the ‘‘whole hospital
exception,’’ for ownership and
investment interests in a hospital
located outside of Puerto Rico, provided
that the referring physician is
authorized to perform services at the
hospital and the ownership or
investment interest is in the hospital
itself (and not merely in a subdivision
of the hospital).

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2. Affordable Care Act Amendments to
the Rural Provider and Hospital
Ownership Exceptions to the Physician
Self-Referral Law
Section 6001(a) of the Affordable Care
Act amended the rural provider and
whole hospital exceptions to the
physician self-referral law to impose
additional restrictions on physician
ownership and investment in rural
providers and hospitals. Section 6001(a)
defines a ‘‘physician owner or investor’’
as a physician, or immediate family
member of a physician, who has a direct
or indirect ownership or investment
interest in a hospital. We refer to
hospitals with direct or indirect
physician owners or investors as
‘‘physician-owned hospitals.’’
Section 6001(a)(3) of the Affordable
Care Act established new section 1877(i)
of the Act, which imposes additional
requirements for physician-owned
hospitals to qualify for the rural
provider or whole hospital exception. In
addition to other requirements, section
1877(i)(1) of the Act prohibits a
physician-owned hospital from
expanding its facility capacity beyond
the number of operating rooms,
procedure rooms, and beds for which
the hospital was licensed as of March
23, 2010, unless an exception is granted
by the Secretary.
Section 1877(i)(3) of the Act requires
the Secretary to establish and
implement an exception process to the
prohibition on expansion of facility
capacity. We refer to this process as the
‘‘expansion exception process.’’ Section
1877(i)(3)(A)(i) of the Act provides that
a hospital qualifying as an ‘‘applicable
hospital’’ or a ‘‘high Medicaid facility’’
may apply for an expansion exception.
Section 1877(i)(3)(E) of the Act sets
forth the eligibility criteria for
applicable hospitals, which include
criteria concerning inpatient Medicaid
admissions, bed capacity, and bed
occupancy. Section 1877(i)(3)(F) of the
Act sets forth the eligibility criteria for
high Medicaid facilities, which include
a criterion concerning inpatient
Medicaid admissions.
In the CY 2011 OPPS/ASC final rule
with comment period (75 FR 72240), we
addressed many of the additional
requirements that were established by
section 6001(a) of the Affordable Care
Act for the rural provider and whole
hospital exceptions, including the
prohibition on expansion of facility
capacity. In that final rule with
comment period, we finalized
regulations at 42 CFR 411.362(b)(2) that
prohibit a physician-owned hospital
from increasing the number of operating
rooms, procedure rooms, and beds

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beyond that for which the hospital was
licensed on March 23, 2010 (or, in the
case of a physician-owned hospital that
did not have a provider agreement in
effect as of that date, but did have a
provider agreement in effect on
December 31, 2010, the effective date of
such agreement), if the hospital seeks to
avail itself of the rural provider or
whole hospital exception.
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74517), we
promulgated regulations under 42 CFR
411.362(c) that govern the expansion
exception process. Section 411.362(c)(2)
sets forth the criteria for a physicianowned hospital to qualify for an
expansion exception as an applicable
hospital. Specifically, § 411.362(c)(2)
states that: (1) The hospital’s annual
percent of total inpatient admissions
under Medicaid must be equal to or
greater than the average percent with
respect to such admissions for all
hospitals located in the county in which
the hospital is located during the most
recent fiscal year for which data are
available as of the date that the hospital
submits its exception request; (2) the
hospital must be located in a State in
which the average bed capacity in the
State is less than the national average
bed capacity during the most recent
fiscal year for which data are available
as of the date that the hospital submits
its request; and (3) the hospital must
have an average bed occupancy rate that
is greater than the average bed
occupancy rate in the State in which the
hospital is located during the most
recent fiscal year for which data are
available as of the date that the hospital
submits its request.
Section 411.362(c)(3) specifies the
criteria for a physician-owned hospital
seeking an exception under the
expansion exception process on the
basis that it is a high Medicaid facility,
including the requirement that, with
respect to each of the three most recent
fiscal years for which data are available
as of the date that the hospital submits
its exception request, the hospital must
have an annual percent of total inpatient
admissions under Medicaid that is
estimated to be greater than such
percent with respect to such admissions
for any other hospital located in the
county in which the hospital is located.
In the CY 2012 OPPS/ASC proposed
rule (76 FR 42350 through 42352), we
proposed that filed Medicare hospital
cost report data from the CMS
Healthcare Cost Report Information
System (HCRIS) be used to determine
whether a hospital satisfies the inpatient
Medicaid admissions, bed capacity, and
bed occupancy criteria for applicable
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admissions criterion for high Medicaid
facilities. We requested public
comments concerning alternative data
sources that could result in more
accurate determinations as to whether a
hospital satisfies the relevant criteria (76
FR 42350). The public comments that
we received provided no persuasive
support for a data source more accurate
than the filed hospital cost report data
reported to HCRIS. Therefore, we
finalized the requirement to use filed
hospital cost report data for purposes of
facility capacity expansion exception
requests in the CY 2012 OPPS/ASC final
rule with comment period (76 FR
74518). In this final rule with comment
period, we refer to the filed hospital cost
report data that are required under our
existing regulations as ‘‘HCRIS data.’’
As required by section 1877(i)(3)(A) of
the Act, the regulations addressing the
expansion exception process in the CY
2012 OPPS/ASC final rule with
comment period were issued by January
1, 2012, and the process was
implemented on February 1, 2012.
B. Limitations Identified by
Stakeholders Regarding the Required
Use of HCRIS Data
Following the implementation of the
expansion exception process on
February 1, 2012, industry stakeholders
informed us of what they believed to be
certain limitations regarding the
required use of HCRIS data under the
regulations at 42 CFR 411.362. In the CY
2015 OPPS/ASC proposed rule (79 FR
41053), we discussed the existing
required use of HCRIS data and certain
limitations of the data that were
identified by stakeholders and CMS. We
do not repeat that information here;
rather, we refer readers to the proposed
rule for a complete discussion of the
issues. To address the limitations
regarding the required use of HCRIS
data, we proposed to modify the
expansion exception process to permit
the use of certain non-HCRIS data
sources for the inpatient Medicaid
admissions, bed capacity, and bed
occupancy criteria.
As of the publication date of the CY
2015 OPPS/ASC proposed rule, a
correctly completed hospital cost report
did not include Medicaid managed care
admissions or discharges and, therefore,
Medicaid managed care admissions and
discharges were not available in HCRIS.
As a result, the information collected to
date through HCRIS cannot be used to
estimate reliably Medicaid managed
care admissions or discharges for
purposes of estimating the percentages
of inpatient Medicaid admissions under
§§ 411.362(c)(2)(ii) and (c)(3)(ii). In
addition, a hospital that has not

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participated as a provider in the
Medicare program for each of the 3 most
recent fiscal years for which data is
available would be precluded from
seeking a facility expansion exception
as a high Medicaid facility. It would be
similarly prohibitive if the requesting
hospital is seeking an exception as
either an applicable hospital or high
Medicaid facility, and the hospitals in
the county in which the requesting
hospital is located were not Medicare
participating providers or were not
participating in the Medicare program
during each of the years for which
comparisons are required under the
statute and our regulations.
We believe that some physicianowned hospitals that serve a significant
number of Medicaid managed care
patients and are interested in the
expansion exception process may fail to
qualify for an exception due to the
exclusion of Medicaid managed care
data. Accordingly, as detailed in section
XV.C. of the CY 2015 OPPS/ASC
proposed rule (79 FR 41054), we
proposed to revise the expansion
exception process to permit physicianowned hospitals to use filed hospital
cost report data, data from internal data
sources, or data from external data
sources to estimate the required
percentages of inpatient admissions
under Medicaid. (We referred in the
proposal to the non-HCRIS internal data
sources and external data sources that
we proposed to permit for purposes of
the expansion exception process as
‘‘supplemental data sources.’’) Also, as
explained in section XV.B. of the CY
2015 OPPS/ASC proposed rule (79 FR
41054), we proposed to revise the
expansion exception process to permit
the use of supplemental data sources for
the bed capacity and bed occupancy
criteria for applicable hospitals.
C. Changes to the Physician-Owned
Hospital Expansion Exception Process
Below we discuss the provisions of
the proposed rule and summarize and
respond to the public comments we
received in response to our proposals.
For ease of reference, we have divided
the comments and responses into the
following categories: supplemental data
sources; fiscal year standard;
community input and timing of
complete request; and additional
considerations.
1. Supplemental Data Sources
Given the limitations regarding the
required use of HCRIS data (which we
described in sections XV.B.1. and
XV.B.2. of the CY 2015 OPPS/ASC
proposed rule (79 FR 41053 through
41054)), we proposed to revise our

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regulations at §§ 411.362(c)(2)(ii),
(c)(2)(iv), (c)(2)(v), and (c)(3)(ii) to
permit physician-owned hospitals to
use data from certain internal data
sources or external data sources, in
addition to HCRIS data, in order to
estimate the percentages of inpatient
Medicaid admissions, and to determine
the bed capacities and the bed
occupancy rates referenced in those
sections. We stated in the proposed rule
that we were not prescribing that
hospitals use a specific individual data
source or combination of data sources.
We proposed that, for purposes of the
expansion exception process, internal
data sources would be sources
generated, maintained, or under the
control of the Department, and we gave
as examples the Healthcare Cost and
Utilization Project (HCUP), the
Medicaid Statistical Information System
(MSIS), and the Medicaid Analytic
Extract (MAX). We sought public
comments that recommended other
possible internal data sources. We also
proposed that, for purposes of the
expansion exception process, ‘‘external
data sources’’ would be data sources
generated, maintained, or under the
control of a State Medicaid agency, and
we sought public comments that
recommended other possible external
data sources, including those of other
State agencies or departments. Finally,
we proposed to amend 42 CFR 411.351:
(1) to define ‘‘internal data source’’ to
include only non-HCRIS data sources
that are reliable and transparent, and
that maintain or generate data that are
accurate, complete, and objectively
verifiable for purposes of the expansion
exception process, and to define
‘‘external data source’’ to include only
data sources that are reliable and
transparent, and that maintain or
generate data that are accurate,
complete, and objectively verifiable for
purposes of the expansion exception
process; and (2) to state that internal
data sources and external data sources
must maintain data that are readily
available and accessible to the
requesting hospital, comparison
hospitals, and to CMS for purposes of
the expansion exception process.
We noted in the proposed rule that
the expansion exception process
includes both the physician-owned
hospital’s completion of its request and
CMS’ consideration of the physicianowned hospital’s request.
We stated in the proposed rule that
we believe that the supplemental data
sources should—
• Be transparent regarding what
comprises the data, where the data
originated, and the manner and method

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by which the data source received the
data;
• Be maintained on a secure database
that prevents distortion or corruption of
data and that ensures the accuracy of
the data;
• Contain sufficient information to
enable accurate estimates of the
percentages of inpatient Medicaid
admissions, and accurate
determinations of bed capacities and
bed occupancy rates;
• Contain sufficient information to
enable the comparisons required by
§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v),
and (c)(3)(ii) for the fiscal year(s) at
issue; and
• Contain sufficiently clear and
detailed data that will enable multiple
users to produce consistent results and
outcomes when using the same data set.
In the proposed rule, we recognized
that, if a physician-owned hospital uses
data from a supplemental data source,
the hospital may ultimately need to
make estimates or determinations in
addition to those referenced in our
existing regulations. Accordingly, we
proposed to revise our regulations to
allow for the additional estimates or
determinations that may be necessary
under our revised process. Specifically,
we proposed to permit a requesting
hospital to use data from a
supplemental data source to:
• Estimate its own annual percentage
of inpatient Medicaid admissions
(§ 411.362(c)(2)(ii)).
• Estimate the average percentage
with respect to such admissions for all
hospitals located in the county in which
the hospital is located
(§ 411.362(c)(2)(ii)).
• Determine the average bed capacity
in the State in which the hospital is
located (§ 411.362(c)(2)(iv)).
• Determine the national average bed
capacity (§ 411.362(c)(2)(iv)).
• Determine its own average bed
occupancy rate (§ 411.362(c)(2)(v)).
• Determine the average bed
occupancy rate for the State in which
the hospital is located
(§ 411.362(c)(2)(v)).
• Estimate its annual percentage of
total inpatient admissions under
Medicaid for each of the 3 most recent
fiscal years for which data are available
(§ 411.362(c)(3)(ii)).
• Estimate the annual percentages of
total inpatient admissions under
Medicaid for every other hospital
located in the county in which the
hospital is located for each of the 3 most
recent fiscal years for which data are
available (§ 411.362(c)(3)(ii)).
We respond below to the specific
comments that we received in response
to our proposal.

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66989

a. Internal Data Sources
Comment: All of the commenters
supported CMS’ efforts to permit
physician-owned hospitals to use
supplemental data sources in the
expansion exception process because of
the limitations of the HCRIS data,
especially with respect to the inpatient
Medicaid admissions criteria. The
commenters generally agreed that a
more flexible approach would help
ensure that the physician-owned
hospitals that satisfy the statutory
criteria are able to expand facility
capacity under the CMS process.
Response: We appreciate the
commenters’ support. Accordingly, we
are finalizing a number of our proposals
to revise the expansion exception
process to provide for the flexibility
called for by the commenters and other
industry stakeholders to effectuate the
purpose of section 6001(a) of the
Affordable Care Act.
Comment: One commenter stated that
it appreciated CMS’ efforts to permit
physician-owned hospitals to use
supplemental data sources but also
expressed concern that an internal data
source as defined in the proposed rule
would have limited utility in the
expansion exception process. With
respect to the internal data sources
provided as examples in the proposed
rule, the commenter identified
limitations concerning the data sources’
completeness for purposes of the
expansion exception process.
Specifically, the commenter stated that
certain States do not provide
information to the HCUP and that the
MSIS does not provide sufficient detail
at the State or county level for purposes
of the expansion exception process. The
commenter added that the Medicaid
Analytic Extract (MAX) would not be
appropriate for the expansion exception
process because it may not be used for
nonresearch purposes.
Response: We share the concerns
identified by the commenter. After
publication of the proposed rule, we
made additional inquiries into the
utility of internal data sources with
respect to the inpatient Medicaid
admissions criteria. As a result of those
inquiries and further review, we agree
with the commenter that these data
sources contain significant limitations,
including incomplete data for purposes
of the exception process, as well as
issues related to timeliness, availability,
and accessibility of the data.
Accordingly, we do not believe that the
three sources listed in the proposed rule
satisfy all of the standards that we set
forth in the proposed rule for
supplemental data sources (79 FR

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41055), which we continue to believe
are critical for any supplemental data
source that could be used in the
expansion exception process. None of
the commenters provided information
regarding other potentially acceptable
internal data sources, and we are
unaware of any other internal data
sources that could be used to estimate
accurately and reliably the percentages
of inpatient Medicaid admissions
required. Therefore, we are not
finalizing our proposal to permit the use
of any non-HCRIS internal data source
for the inpatient Medicaid admissions
criteria required at §§ 411.362(c)(2)(ii)
and (c)(3)(ii).
We also believe that many of the
limitations that the commenter and our
review identified regarding the
proposed internal data sources would
also apply to the bed capacity and bed
occupancy criteria at § 411.362(c)(2)(iv)
and (c)(2)(v). Specifically, we do not
believe that internal data sources other
than HCRIS would include relevant and
adequate information to determine
accurately the average bed capacity for
hospitals within a State or nationally;
nor do we believe internal data sources
other than HCRIS would include
information to determine accurately bed
occupancy rates in a State. Accordingly,
we are not finalizing our proposed
revisions to §§ 411.362(c)(2)(iv) and
(c)(2)(v) that would permit the use of
any non-HCRIS internal data source for
those criteria. Because no internal data
source, other than HCRIS, will be
permitted in the expansion exception
process under this final rule with
comment period, we are not finalizing
our proposal to add a definition of
‘‘internal data source’’ to § 411.351.
Comment: One commenter
recommended that physician-owned
hospitals be allowed to use as an
internal data source the same Medicaid
eligibility determination process that
hospitals use for Medicare
disproportionate share hospital (DSH)
determinations.
Response: Medicare DSH
determinations are based on Medicaid
days, not admissions (or discharges).
Based on our review, we do not believe
that Medicaid days, without additional
detailed information for the requesting
and each comparison hospital, could be
used in calculations to estimate
accurately or reliably the required
percentages of inpatient Medicaid
admissions. The commenter did not
explain how Medicaid eligibility data
could be used to estimate inpatient
admissions under Medicaid for the
requesting hospital and each
comparison hospital, when required.
Without further explanation, we cannot

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agree that the Medicaid eligibility
determination process that hospitals use
for Medicare DSH determinations
should be considered a data source.
b. External Data Sources
Comment: Most commenters urged
CMS to finalize its proposal to permit
the use of data from external data
sources for the inpatient Medicaid
admissions criteria. One commenter
stated that its State Medicaid agency’s
data on inpatient Medicaid admissions
includes fee-for-service and managed
care data, and that the data on total
patient admissions are readily available
from the Medicaid agency. The
commenter indicated that the State
Medicaid agency data could be used to
determine accurately the percentages of
inpatient Medicaid admissions
referenced in § 411.362(c)(2)(ii) and
(c)(3)(ii). The commenter also stated that
the State did not charge a fee for
providing the necessary data.
Response: We believe that States have
a significant interest in ensuring that
data generated, maintained, or under the
control of the State Medicaid agency are
accurate and reliable. In general,
submission of data to a State Medicaid
agency is not voluntary, and hospitals
are incented to provide accurate data
and other information to receive
payment for the services that they
provide to the State’s Medicaid
enrollees. Accordingly, we are
persuaded to finalize our proposal to
permit the use of an external data source
for the inpatient Medicaid admissions
criteria at § 411.362(c)(2)(ii) and
(c)(3)(ii) with the modification
stemming from the recent revision to the
Medicare hospital cost report described
in this response. We also are adopting
as final our proposed definition of
‘‘external data source’’ with no
modification. We are adding this
definition at § 411.362(a), rather than at
§ 411.351 as proposed, because the
definition of ‘‘external data source’’
applies only to our regulations at
§ 411.362.
We note that CMS recently revised the
hospital cost report to require the
reporting of Medicaid managed care
discharges in addition to Medicaid feefor-service discharges. As a result of this
revision, a correctly completed hospital
cost report will include Medicaid
managed care discharges and, thus,
Medicaid managed care discharges
eventually will be available in HCRIS.
At such time, the limitations that led to
our proposal will be resolved, and
HCRIS should be sufficiently complete
to estimate the percentages of Medicaid
inpatient admissions required in
§ 411.362(c)(2)(ii) and (c)(3)(ii).

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However, we anticipate that it will take
several years before physician-owned
hospitals that are interested in
requesting an expansion exception will
be able to utilize the necessary Medicaid
managed care data through HCRIS.
Therefore, we are permitting physicianowned hospitals to use data from an
external data source for the inpatient
Medicaid admissions criteria until such
time that the Secretary determines that
HCRIS contains sufficiently complete
inpatient Medicaid discharge data. At
that time, going forward, physicianowned hospitals may use only filed
Medicare hospital cost report data for
the inpatient Medicaid admissions
criteria. For additional information
about the recent revisions to the
hospital cost report, we refer readers to
Transmittal 6 on the CMS Web site at:
http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2014Transmittals-Items/R6P240.html.
We did not receive any public
comments regarding whether an
external data source would contain
adequate information to determine the
remaining four calculations required for
the Secretary to grant an exception to
the facility expansion prohibition for an
applicable hospital (that is, the average
bed capacity in the State where the
requesting hospital is located, national
average bed capacity, the requesting
hospital’s average bed occupancy, and
the average bed occupancy for all
hospitals in the State where the
requesting hospital is located). Based on
our own review, we do not believe that
an external data source would meet the
standards set forth in the proposed rule
when used for the criteria at
§ 411.362(c)(2)(iv) and (c)(2)(v).
Therefore, we are not finalizing our
proposal to permit the use of external
data sources for the four calculations
specified in this paragraph and, thus,
we are limiting the use of external data
sources to the estimations of the
percentages of inpatient Medicaid
admissions at § 411.362(c)(2)(ii) and
(c)(3)(ii).
Comment: One commenter suggested
that physician-owned hospitals seeking
an expansion exception be permitted to
use the most current external data
available, regardless of source.
Response: We interpret the comment
as a suggestion that a requesting
hospital should be able to use multiple
external data sources to achieve the goal
of using the ‘‘most current’’ data
available when requesting an expansion
exception, provided that each data
source meets the criteria for an
‘‘external data source.’’ We disagree
with the commenter because we believe
that the use of more than one data

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
source would add unnecessary
complexity to the Secretary’s review
and lead to inconsistent results,
including from year to year where
multiple-year comparisons are required.
In order to ensure accurate and
consistent estimates and determinations
and to facilitate the Secretary’s review
of a physician-owned hospital’s request
for a facility expansion exception, all of
the data necessary for a physicianowned hospital to estimate or determine
the percentages of inpatient Medicaid
admissions referenced in
§§ 411.362(c)(2)(ii) and (c)(3)(ii) must
come from a single data source.
Specifically, the same data source,
whether HCRIS or an external data
source, must be used in the numerator
and denominator when determining or
estimating the percentages of inpatient
admissions under Medicaid for the
requesting hospital and any other
comparison hospital required under
§ 411.362(c)(2)(ii) and (c)(3)(ii). We will
continue to monitor the use of data
sources in the expansion exception
process and, if necessary, we will
provide additional guidance on the CMS
Web site regarding how an external data
source should be used for the inpatient
Medicaid admissions criteria.
Comment: One commenter identified
potential shortcomings in the data that
its State Medicaid agency collects.
Specifically, this commenter stated that
its State collects Medicaid inpatient
admissions data from general acute care
hospitals but not psychiatric or
specialty hospitals. (The commenter did
not define ‘‘specialty hospital.’’) For this
reason, the commenter claimed that its
State Medicaid agency data would be
incomplete if the requesting hospital is
a psychiatric or specialty hospital or
must compare itself to a psychiatric or
specialty hospital.
Response: Although we understand
the potential implication of a State
Medicaid agency not requiring a
particular type of hospital to report
admissions (or discharges) data to the
agency, we note that HCRIS remains
available under the policies set forth in
this final rule with comment period. No
Medicare participating hospital is
exempt from reporting cost report data
in HCRIS. Hospitals requesting an
exception to the Affordable Care Act’s
facility expansion prohibition may use
HCRIS data to make the necessary
estimates and determinations required
under the statute and our regulations.
Comment: One commenter
recommended that physician-owned
hospitals be permitted to use a Stateprovided listing of Medicaid DSHeligible hospitals as an external data
source. The commenter suggested that,

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if a hospital has been determined by its
State Medicaid agency to be eligible for
Medicaid DSH payments, the
supporting data that show the Medicaid
inpatient utilization rate or low-income
utilization rate status of the hospital
would be an adequate external data
source.
Response: We do not believe that a
listing of Medicaid DSH-eligible
hospitals, even if developed by a State
Medicaid agency, qualifies as an
external data source under our proposed
definition. Moreover, we are not
persuaded to expand the definition of
‘‘external data source’’ to include such
a listing because we are unclear how a
listing, by itself, could provide the data
necessary to estimate the percentages of
inpatient Medicaid admissions required
under the statute and our regulations.
Comment: One commenter suggested
that admissions data, which it was able
to obtain from the State health and
human services commission, should be
preferred over discharge data for
purposes of the inpatient Medicaid
admissions criteria.
Response: In the CY 2012 OPPS/ASC
final rule with comment period (76 FR
74519), we determined that discharge
data may be used to estimate the
percentages of inpatient Medicaid
admissions. We did not propose to
revise this policy in the CY 2015 OPPS/
ASC proposed rule. However, we are
clarifying in this CY 2015 OPPS/ASC
final rule with comment period that
either admissions data or discharge data
may be used to either determine or
estimate the percentages referenced in
§ 411.362(c)(2)(ii) and (c)(3)(ii),
provided that the data being used are
from a permitted data source. We are
not persuaded to rank or prioritize these
types of data. The Secretary will
determine whether an estimate is
accurate or appropriate given the
specific facts and circumstances
underlying a physician-owned
hospital’s expansion exception request.
c. Completeness of Supplemental Data
Sources
Comment: One commenter expressed
concern about the utility of an external
data source, as defined in the proposed
rule, for purposes of the expansion
exception process. The commenter
stated that, in some States, certain types
of hospitals are not required to report
any data to the States in which they are
located. The commenter did not provide
information regarding whether State
Medicaid agencies can or do generate on
their own (that is, without relying on
reported information from hospitals)
inpatient admissions data for those
hospitals not required to report such

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66991

data. The commenter requested that
CMS clarify whether the State Medicaid
sources would be considered
‘‘complete’’ for purposes of the
expansion exception process under such
circumstances.
Response: We recognize the
possibility that a State Medicaid agency
may not generate, maintain, or
otherwise control a data source that
would contain sufficient data for the
inpatient Medicaid admissions criteria,
the only eligibility criteria for which we
are permitting the use of an external
data source in this final rule with
comment period. Thus, the utility of the
external data sources that we are
permitting likely will depend on the
State in which the physician-owned
hospital is located.
Whether an external data source is
considered complete depends on the
facts and circumstances of the particular
situation. For example, if a physicianowned hospital is seeking to qualify as
a high Medicaid facility and the State’s
data source does not include data on
one of the comparison hospitals, the
State’s data would not be considered
complete for purposes of the process
because a high Medicaid facility must
compare itself against each other
hospital in the county in which it is
located.
d. Other Issues Related to Supplemental
Data Sources
Comment: One commenter expressed
concern that contradictory data sources
could create confusion for requesting
physician-owned hospitals, those who
wish to comment on an expansion
exception request, and the Secretary in
her review of a request. The commenter
provided an example where a
physician-owned hospital chooses to
utilize available HCRIS data for its
expansion request, but the available
data from the State Medicaid agency
conflict with the HCRIS data, appearing
to show that the physician-owned
hospital was not the highest Medicaid
facility in a more recent fiscal year(s).
Two commenters recommended that
CMS consider issuing guidance as to
how external data sources will be
characterized or measured in
comparison to HCRIS data, how CMS
and the Secretary will evaluate
comments received from opposing
hospitals, and what criteria the
Secretary intends to rely upon to make
the ultimate determinations. Another
commenter recommended that CMS not
prioritize or rank additional data
sources, given that access to
supplemental data sources will vary
based upon the entity requesting an
expansion exception.

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Response: Determinations regarding
expansion exception requests will be
made on a case-by-case basis, with
consideration given to all information
available to CMS at the time of the
review. We are not able to provide the
specific guidance requested by the first
commenter because the example
provided is hypothetical in nature and
not part of an actual request for the
Secretary’s consideration. As we stated
in the proposed rule, we believe that
permissible data sources should, among
other things, be transparent, be secure,
enable accurate estimates of the
percentages of inpatient Medicaid
admissions, and provide for consistent
results in order to enable the Secretary
to make an informed decision regarding
whether a requesting physician-owned
hospital satisfies the statutory
requirements for an exception to the
facility expansion prohibition. We
continue to believe in the importance of
these attributes, and all data sources
utilized by a requesting hospital and
any community comments provided
during the exception expansion process
will be evaluated with them in mind.
Because each request will be reviewed
on a case-by-case basis, we decline to
issue guidance regarding the relative
priority of data sources. The Secretary
will make determinations based on the
criteria enumerated in the Affordable
Care Act, as set forth in section
1877(i)(3) of the Act and our
regulations.
Comment: One commenter
recommended that, in addition to
considering other data sources, CMS
consider other factors when reviewing
an expansion exception request. The
commenter claimed that Medicaid

e. Summary of Final Provisions
Regarding Supplemental Data Sources
After consideration of the public
comments we received on the use of

Requirement

§ 411.362(c)(2)(ii) ........

Estimate the requesting hospital’s own annual percentage of inpatient Medicaid admission.

HCRIS, external data
source.

§ 411.362(c)(2)(ii) ........

Estimate the average percentage with respect to such admissions for all hospitals
located in the county in which the requesting hospital is located.
Determine the average bed capacity in the
State in which the requesting hospital is located.
Determine the national average bed capacity
Determine the requesting hospital’s own average bed occupancy rate.
Determine the average bed occupancy rate
for the State in which the requesting hospital is located.
Estimate the requesting hospital’s annual percentage of total inpatient admissions under
Medicaid for each of the three most recent
fiscal years for which data are available.

HCRIS, external data
source.

§ 411.362(c)(2)(iv) .......
§ 411.362(c)(2)(v) ........
§ 411.362(c)(2)(v) ........

§ 411.362(c)(3)(ii) ........

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supplemental data sources, we are not
finalizing the proposed revisions to
§ 411.362(c)(2)(ii) and (c)(3)(ii) that
would permit physician-owned
hospitals to use data from an internal
data source other than HCRIS to
estimate the percentages of inpatient
Medicaid admissions referenced in
those sections. Accordingly, we are not
finalizing our proposal to add a
definition of the term ‘‘internal data
source’’ under § 411.351. As finalized,
§ 411.362(c)(2)(ii) and (c)(3)(ii) reflect
modifications from our proposal that
would have permitted physician-owned
hospitals to use data from an external
data source to estimate the percentages
of inpatient Medicaid admissions
referenced in those sections.
Specifically, we are revising these
sections to require the use of HCRIS
data once they are complete and permit
the use of data from an external data
source only until then. We also are
finalizing the definition of ‘‘external
data source’’ without modification,
although we are adding the definition at
§ 411.362(a), rather than at § 411.351 as
proposed. Finally, we are not finalizing
the proposed revisions to those sections
that would permit physician-owned
hospitals to use data from a non-HCRIS
data source to determine State average
bed capacity, national averaged bed
capacity, the requesting physicianowned hospital’s average bed
occupancy rate, or the State average bed
occupancy rate. We provide the
following chart of the final provisions to
assist the reader.

Permissible data
source(s)

Regulation

§ 411.362(c)(2)(iv) .......

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patient days are a better metric than
Medicaid admissions because Medicaid
patient days reflect a hospital’s use of
resources to care for a Medicaid patient.
The commenter also suggested that CMS
consider the specialty services, such as
neonatal intensive care unit (NICU)
services, that a hospital provides.
Specifically, the commenter suggested
that CMS consider the bed occupancy of
a particular specialty service if that
service treats a very large Medicaid
population.
Response: We do not have the
authority to revise the expansion
exception process to incorporate the
factors that the commenter
recommended. Section 6001(a) of the
Affordable Care Act established criteria
that physician-owned hospitals must
satisfy in order to qualify for an
expansion exception request, including
criteria concerning inpatient Medicaid
admissions. As we understand the
comment, the commenter is
recommending that we substitute (or
additionally consider) a hospital’s
inpatient Medicaid days as a criterion
for granting an exception to the
prohibition on facility expansion. The
statute does not provide the Secretary
discretion to consider inpatient
Medicaid days in lieu of the inpatient
Medicaid admissions criteria. Similarly,
we lack the authority to consider the
bed occupancy of specific specialty
services, a factor which, even if
permissible, would complicate our
review of an exception request.

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Limitations
An external data source may be used only
until such time as the Secretary determines
that HCRIS contains sufficiently complete
inpatient Medicaid discharge data.
An external data source may be used only
until such time as the Secretary determines
that HCRIS contains sufficiently complete
inpatient Medicaid discharge data.

HCRIS

HCRIS
HCRIS
HCRIS

HCRIS, external data
source.

Sfmt 4700

An external data source may be used only
until such time as the Secretary determines
that HCRIS contains sufficiently complete
inpatient Medicaid discharge data.

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Permissible data
source(s)

Regulation

Requirement

§ 411.362(c)(3)(ii) ........

Estimate the annual percentages of total inpatient admissions under Medicaid for
every other hospital located in the county
in which the requesting hospital is located
for each of the three most recent fiscal
years for which data are available.

2. Fiscal Year Standard
Section 1877(i)(3)(F) of the Act
requires that a high Medicaid facility
use data from each of the 3 most recent
fiscal years for which data are available.
In the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74518), we
stated that we consider the most recent
fiscal year for which data are available
to be the most recent year for which
HCRIS contains data from at least 6,100
hospitals. We currently apply this
standard to expansion exception
requests for both applicable hospitals
and high Medicaid facilities.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41055), we proposed to
revise our standard so that the most
recent fiscal year for which data are
available would be the year for which
the data source(s) used in an expansion
exception request contain sufficient data
to perform the comparisons required
under § 411.362(c)(2)(ii), (c)(2)(iv),
(c)(2)(v), and (c)(3)(ii). Specifically, we
proposed that data sources, either alone
or in combination with other data
sources, would be considered to contain
‘‘sufficient data’’ if they contain all data
from the requesting hospital and each
hospital to which the requesting
hospital must compare itself that are
necessary to perform the estimates
required in the expansion exception
process. In addition, with respect to a
hospital seeking an expansion exception
as an applicable hospital, we proposed
that, in order to be considered to
contain ‘‘sufficient data,’’ the data
sources, either alone or in combination
with other data sources, must contain
the data necessary to determine the
State and national average bed capacity
and the average bed occupancy rate in
the State in which the requesting
hospital is located for purposes of the
expansion exception process.
We also proposed to require that data
from the same fiscal year be used for the
applicable hospital eligibility criteria at
§ 411.362(c)(2)(ii), (c)(2)(iv) and
(c)(2)(v), even if the hospital uses
multiple data sources for those criteria.
We stated our belief that requiring the
use of data from the same fiscal year
will ensure consistency and equitability
in the expansion exception process. We
sought public comments on our

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66993

Limitations

HCRIS, external data
source.

An external data source may be used only
until such time as the Secretary determines
that HCRIS contains sufficiently complete
inpatient Medicaid discharge data.

proposal to revise the standard that
determines the most recent fiscal year(s)
for which data are available, as well as
other ways to define ‘‘sufficient data’’
for purposes of the expansion exception
process.

and (c)(3)(ii), we are adopting a standard
under which we will consider a data
source sufficient when it contains data
from the requesting hospital and every
hospital located in the same county as
the requesting hospital. This applies to
both external data sources and HCRIS.
The statutory criteria at sections
1877(i)(3)(E)(ii) and (i)(3)(F)(ii) of the
Act afford no flexibility to make these
determinations based on data from
fewer than all of the hospitals located in
the same county as the requesting
hospital. For purposes of the bed
capacity and occupancy determinations
required in § 411.362(c)(2)(iv) and
(c)(2)(v), we will consider HCRIS
sufficient for a particular fiscal year on
a State-by-State basis, rather than the
current ‘‘6,100 hospitals reporting’’
standard. Specifically, this final rule
with comment period requires a
requesting physician-owned hospital to
satisfy the bed capacity criterion in
§ 411.362(c)(2)(iv) during the most
recent fiscal year for which HCRIS
contains data from a sufficient number
of hospitals in the requester’s State to
determine the State’s average bed
capacity and a sufficient number of
hospitals nationally to determine the
national average bed capacity. In
addition, this final rule with comment
period requires a requesting physicianowned hospital to satisfy the bed
occupancy criterion in § 411.362(c)(2)(v)
during the most recent fiscal year for
which HCRIS contains data from a
sufficient number of hospitals in the
State to determine the requesting
hospital’s average bed occupancy rate
and the State’s average bed occupancy
rate. ‘‘Sufficient number’’ means that
enough hospitals have reported data
such that the determinations in
§ 411.362(c)(2)(iv) and (c)(2)(v) would
not materially change after additional
hospital data are reported.
We will consult with the CMS Office
of the Actuary to determine whether
average bed capacity and bed occupancy
rates would materially change upon
additional hospital reporting. CMS
intends to report on its Web site each
State’s average bed capacity, the
national average bed capacity, and each
State’s average bed occupancy, per fiscal
year, as they become available. A

a. Summary of Public Comments and
Our Responses Regarding the Fiscal
Year Standard
Comment: All of the commenters that
addressed this issue supported CMS’
proposal to revise the interpretation of
the standard ‘‘the most recent fiscal year
for which data are available.’’ The
commenters stated generally that
external data sources often have more
recent data than the fiscal year for
which HCRIS contains data from at least
6,100 hospitals. Two commenters
recommended deeming a data source
‘‘sufficient’’ and, thus, acceptable for
use in an expansion exception request,
if it contains all of the information
necessary to complete the calculations
required to determine eligibility for an
exception as a high Medicaid facility or
applicable hospital. Another commenter
similarly supported the proposal and
suggested that CMS consider the
sufficiency of data on a case-by-case
basis.
Response: We agree with the
commenters that recommended that we
deem a data source ‘‘sufficient’’ and,
thus, acceptable for use in an expansion
exception request, if it contains all of
the information necessary to complete
the calculations required to determine
eligibility for an exception as a high
Medicaid facility or applicable hospital.
Although determining the sufficiency of
a data source on a case-by-case basis
could significantly lengthen the period
of time required for a thorough review
of an expansion exception request, we
believe that evaluating the sufficiency of
data on a modified case-by-case basis is
nonetheless appropriate, as explained
more fully below.
We are adopting separate standards to
determine the sufficiency of data
sources for the Medicaid inpatient
admissions criteria and the bed capacity
and occupancy criteria set forth in our
regulations. For purposes of the
Medicaid inpatient admissions
estimates required in § 411.362(c)(2)(ii)

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requesting physician-owned hospital
may use only the averages posted on the
CMS Web site as of the date that the
hospital submits its expansion
exception request.
We provide the following examples to
illustrate the application of the standard
applicable to the determinations
required in § 411.362(c)(2)(iv) and
(c)(2)(v). Assume that, for FY 2013, the
requesting hospital is one of 200
Medicare-participating hospitals located
in State A. Assume also that, after
consultation with the CMS Office of the
Actuary, we determine that State A’s FY
2013 average bed capacity and bed
occupancy rates would not materially
change once HCRIS contains data from
at least 85 percent of State A hospitals
(170 hospitals). Finally, assume that
CMS is able to determine the FY 2013
national average bed capacity rate once
5,500 hospitals have reported bed
capacity data in HCRIS, and that this
rate would not materially change even
if the remaining Medicare-participating
hospitals reported data in HCRIS. Under
the standard adopted in this final rule
with comment period, the requesting
hospital may use FY 2013 HCRIS data
to make the State bed capacity and
occupancy determinations required in
§ 411.362(c)(2)(iv) and (c)(2)(v) once
HCRIS contains data from at least 170 of
the Medicare-participating hospitals in
State A for that fiscal year. The
requesting hospital may use FY 2013
HCRIS data to determine the national
average bed capacity required in
§ 411.362(c)(2)(iv) once HCRIS contains
data from at least 5,500 Medicareparticipating hospitals for that fiscal
year.
In contrast, assume that, for FY 2013,
there are only 10 Medicare-participating
hospitals in State B. Assume also that,
after consultation with the CMS Office
of the Actuary, we determine that State
B’s FY 2013 average bed capacity and
bed occupancy rates would materially
change unless HCRIS contains data from
all of State B’s hospitals. Thus, a
physician-owned hospital located in
State B could not use FY 2013 HCRIS
data until all 10 Medicare-participating
hospitals in State B reported their bed
capacity and occupancy data in HCRIS
for that fiscal year.
With respect to external data sources,
because we recognize that State
Medicaid agencies likely will have
varying collection time periods that may
not line up with the Federal fiscal year
end for which HCRIS data are available
(for example, calendar year or State
fiscal year), we are permitting the use of
any 12-month period for the data,
provided that all 3 years use the same
12-month cycle. For example, a State

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Medicaid agency may collect Medicaid
inpatient admissions data on a calendar
year cycle. A physician-owned hospital
requesting an expansion exception as a
high Medicaid facility may use calendar
years 2013, 2012 and 2011 if the
external data source, for each of those
years, contains all data from the
requesting hospital and every hospital
located in the same county as the
requesting hospital.
We note that, if the latest year for
which HCRIS contained data sufficient
to determine the average bed capacity in
the State in which the requesting
hospital is located and the national bed
capacity was FY 2011, but HCRIS
contained FY 2012 data sufficient to
determine the requesting hospital’s own
average bed occupancy and the average
bed occupancy rate for the State in
which the requesting hospital is located,
the hospital could use FY 2011 data for
the determinations required in
§ 411.362(c)(2)(iv) and FY 2012 data for
the determinations required in
§ 411.362(c)(2)(v). We recognize that
using different years from the same
permissible data source to make the
estimates or determinations set forth in
the criteria for applicable hospitals may
require additional review of an
expansion exception request by the
Secretary. However, in light of our
interpretation that each criterion that a
physician-owned hospital seeking a
facility expansion exception must meet
is analyzed separately, we believe that
allowing a requesting hospital to use
data from 12-month periods that may be
different for each criterion will permit
use of the most recent data, result in
more accurate determinations, and best
effectuate the plain meaning of the
statutory and regulatory language
regarding these criteria.
b. Summary of Final Provisions
Regarding the Fiscal Year Standard
After consideration of the public
comments we received on the standard
regarding the most recent available data,
we are finalizing our proposals with
several modifications. For purposes of
the estimates required in
§ 411.362(c)(2)(ii) and (c)(3)(ii), the most
recent 12-month period for which data
are available is the most recent 12month period for which the data source
used contains all data from the
requesting hospital and each hospital to
which the requesting hospital must
compare itself. For purposes of the
determinations required in
§ 411.362(c)(2)(iv), we require a
requesting physician-owned hospital to
satisfy the criterion during the most
recent fiscal year for which HCRIS
contains data from a sufficient number

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of hospitals to determine the relevant
State’s average bed capacity and the
national average bed capacity. For
purposes of the determinations required
in § 411.362 (c)(2)(v), we require a
requesting physician-owned hospital to
satisfy the criterion during the most
recent fiscal year for which HCRIS
contains data from a sufficient number
of hospitals to determine the requesting
hospital’s average bed occupancy rate
and the relevant State’s average bed
occupancy rate. Because we are
continuing to require the use of HCRIS
data for the determinations required in
§ 411.362(c)(2)(iv) and (c)(2)(v), we
believe that this bifurcated approach is
necessary.
Finally, we note that we analyze each
estimate or determination required
under § 411.362(c)(2) separately. We
interpret the statute and our regulations
to allow the use of different time
periods for each estimate or
determination, provided that the data
source (or time period) used to perform
the necessary calculation contains: (1)
for purposes of § 411.362(c)(2)(ii) and
(c)(3)(ii), all data from the requesting
hospital and each hospital to which the
requesting hospital must compare itself;
(2) for purposes of § 411.362(c)(2)(iv),
data from a sufficient number of
hospitals to determine the relevant
State’s average bed capacity and the
national average bed capacity; and (3)
for purposes of § 411.362(c)(2)(v), data
from a sufficient number of hospitals to
determine the requesting hospital’s
average bed occupancy rate and the
relevant State’s average bed occupancy
rate, respectively. CMS will continue to
determine and make available on its
Web site State bed capacity and
occupancy rates and the national
average bed capacity rate. ‘‘Sufficient
number’’ means that enough hospitals
have reported data such that the
determinations in § 411.362(c)(2)(iv)
and (c)(2)(v) would not materially
change even if data that may be missing
from comparison hospitals were
included.
3. Community Input and Timing of a
Complete Request
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41055 through 41056), we
proposed to require that a physicianowned hospital requesting an expansion
exception provide actual notification
directly to hospitals whose data are part
of the comparisons set forth under
§ 411.362(c)(2)(ii) and (c)(3)(ii) of the
regulations. Under proposed
§ 411.362(c)(5), the notification must be
in writing, in either electronic or hard
copy form, and must be provided at the
same time that the hospital discloses on

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any public Web site for the hospital that
it is requesting an exception. We stated
in the proposed rule that we believe that
this additional safeguard would ensure
that comparison hospitals are aware of
the opportunity to confirm or dispute
the accuracy or reliability of the data in
the physician-owned hospital’s request.
Our existing regulations at
§ 411.362(c)(5) set forth the process for
community input and the timing of a
complete expansion exception request.
These regulations provide for a 30-day
comment period following publication
in the Federal Register of notice of the
physician-owned hospital’s expansion
exception request and a 30-day rebuttal
period for the requesting hospital to
respond, if it chooses, to any written
comments that CMS receives from the
community. Currently, an expansion
exception request is considered
complete at the end of the 30-day
comment period if CMS does not
receive written comments from the
community. If CMS receives written
comments from the community, the
request is considered complete at the
end of the 30-day rebuttal period,
regardless of whether the requesting
hospital submits a rebuttal statement.
In the proposed rule, we explained
that permitting the use of non-HCRIS
data in an expansion exception request
would likely require additional time for
our review of the request, including any
comments submitted with respect to the
request. Therefore, we proposed to
revise our regulations at § 411.362(c)(5)
to extend the date by which certain
expansion exception requests will be
deemed complete. Specifically, we
proposed to revise § 411.362(c)(5) to
provide that, where the request, any
written comments, and any rebuttal
statement include only HCRIS data, the
current timeframes would apply. That
is, such an expansion exception request
would be deemed complete no later
than: (1) The end of the 30-day
comment period if no written comments
from the community are received; and
(2) the end of the 30-day rebuttal period
if written comments from the
community are received, regardless of
whether the physician-owned hospital
submitting the request submits a
rebuttal statement. We also proposed
that, where the request, any written
comments, or a rebuttal statement
includes data from a supplemental data
source, an expansion exception request
would be deemed complete no later
than: (1) 180 days after the end of the
30-day comment period if no written
comments from the community are
received; and (2) 180 days after the end
of the 30-day rebuttal period if written
comments from the community are

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received, regardless of whether the
physician-owned hospital submitting
the request submits a rebuttal statement.
a. Summary of Public Comments and
Our Responses Regarding Community
Input and Timing of a Complete Request
Comment: Some commenters
encouraged CMS not to finalize the
actual notification requirement, stating
that it would impose a burden (both
procedural and financial) on the
requesting hospital or could lead to an
increase in comments regarding each
request and the complexity of those
comments. One commenter stated that
requiring actual notification to other
hospitals located in the same county as
the requesting hospital goes beyond the
intent of the Congress in enacting this
provision of the Affordable Care Act.
Response: We believe that an actual
notification requirement is important to
ensure that comparison hospitals are
aware of the opportunity to confirm or
dispute the accuracy or reliability of the
data in the physician-owned hospital’s
request, and that any burden on the
requesting hospital is outweighed by the
facilitation of robust community input
that can help inform the Secretary’s
review of an expansion exception
request. We believe that thorough
vetting of all relevant information, both
from the requesting hospital and the
community in which the hospital is
located, in fact, was the intent of the
Congress. We disagree with the
commenter that stated that this
requirement goes beyond the
congressional intent or our statutory
authority.
Comment: One commenter opposed
CMS’ proposal to deem an expansion
exception request that relies on a nonHCRIS data source complete no later
than 180 days after the end of the 30day comment period if no written
comments from the community are
received, and 180 days after the end of
the 30-day rebuttal period if written
comments from the community are
received, regardless of whether the
physician-owned hospital submitting
the request submits a rebuttal statement.
The commenter stated that the
additional time beyond the 30-day
period provided for in our existing
regulations is particularly unnecessary
if the requesting hospital uses inpatient
admissions data from a State Medicaid
agency that shows the percentage of
Medicaid admissions for all of the
hospitals operating in the same county
as the requesting hospital.
Response: The purpose of our
proposed policy extending the
timeframe for deeming complete an
expansion exception request where the

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66995

request itself, any community input, or
any rebuttal statement includes nonHCRIS data is to provide CMS with
sufficient time to address any potential
conflicts between data presented by the
requesting hospital and data or other
information presented by a commenter
or in the possession of CMS. As we
noted in the CY 2012 OPPS/ASC final
rule with comment period, the
limitations on data sources that may be
used in a physician-owned hospital’s
expansion exception request do not
apply to members of the community or
to CMS (76 FR 74522). Therefore, it is
possible (if not likely) that, when
reviewing an expansion exception
request, CMS would need to verify the
data (and other information, if any)
provided by the requesting hospital and
any commenters, as well as consider the
data in light of the information
otherwise available to CMS. This review
could involve the use of internal experts
or contractors, which will require
additional time. We note that the
timeframe for deeming an expansion
exception request complete will be ‘‘no
later than’’ 180 days after the end of the
30-day comment period (if no written
comments from the community are
received) and 180 days after the end of
the 30-day rebuttal period (if written
comments from the community are
received) does not preclude an earlier
timeframe where the information
submitted by the requesting hospital
does not conflict with any community
input or information otherwise available
to CMS.
b. Final Provisions Regarding
Community Input and Timing of a
Complete Request
After consideration of the public
comments we received on community
input and timing of a complete
response, we are finalizing our proposal,
without modification, recognizing that,
under this final rule with comment
period, the only permissible
supplemental data sources are external
data sources, as defined in this final rule
with comment period at § 411.362.
D. Additional Considerations
We recognize the importance of an
accurate and consistent expansion
exception process. We stated in the CY
2015 OPPS/ASC proposed rule (79 FR
41056) that we are aware that data
sources have unique characteristics due
to their inputs, collection methods,
compilation, and other factors, and that
we would take this into consideration if
we finalized our proposal to permit the
use of supplemental data sources. In an
effort to implement an accurate and
consistent expansion exception process,

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we solicited comments on the utility,
appropriateness, and limitations of our
proposal to permit the use of
supplemental data sources. Specifically,
we sought comments that:
• Address whether permitting the use
of supplemental internal or external
data sources would significantly affect
the outcomes for any of the estimates or
determinations required in our
regulations.
• Address whether permitting the use
of supplemental data sources would
materially affect a physician-owned
hospital’s ability to request an exception
or CMS’ determination on an exception
request.
• Describe the length of time that
would be necessary to obtain or generate
the required data from a specific data
source.
• Address whether and when the data
will be available and accessible per
fiscal year.
• Address whether the data will be
available and accessible in a format that
enables the requesting hospital to
perform the necessary comparisons.
• Describe how supplemental data
sources could or should be prioritized,
including, but not limited to, rankings
related to accuracy or reliability.
• Describe how data from a particular
data source could be used in the
expansion exception process. We
encouraged commenters to specify
whether a particular data source already
maintains the percentages or rates
required, or whether calculations will
be necessary to generate the required
percentages or rates. If calculations will
be necessary, we requested that
commenters describe the calculations.
• Describe the cost to industry
stakeholders, State governments, and
the Federal government for obtaining or
generating data from any potential data
sources. We consider cost to include
both resources (for example, human
capital and information technology) and
actual financial burden (for example,
fees to use or purchase the data).
We also solicited comments on
whether any additional burdens would
affect the quality of care for
beneficiaries as a result of additional
costs borne by a requesting hospital.
We note that our inquiries were
limited to solicitations of comments
intended to inform our decision making
regarding our actual proposals and,
therefore, do not require a response in
this final rule with comment period.
However, we have chosen to summarize
and respond to the comments that
addressed ranking or prioritizing data
sources and types of data because we
believe discussion of these issues helps
clarify how our revisions to the

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expansion exception process that we are
finalizing will be implemented.
Comment: A few commenters who
addressed the additional considerations
set forth in the proposed rule discussed
ranking or prioritizing permitted data
sources. One commenter recommended
that CMS not prioritize or rank
additional data sources, given that
access to supplemental data sources will
vary based on the hospital seeking the
exception. Another commenter
suggested that CMS give the highest
priority to admissions data from State
Medicaid agencies for the inpatient
Medicaid admissions criteria. The
commenter stated that the State in
which the commenter is located
provides an unbiased, reliable, single
source of inpatient Medicaid admissions
percentages that would eliminate the
need for independent calculations by
the requesting hospital and individuals
and entities in the community in which
the hospital is located. The commenter
further suggested that if actual
admissions data are unavailable through
the State Medicaid agency, CMS permit
the use of other data, including
estimates of Medicaid admissions based
on discharges using supplemental data.
Response: We share the concerns of
the commenters that noted that the
external data sources available to
requesting hospitals will vary from State
to State. We also believe that the quality
and completeness of the external data
sources available to requesting hospitals
will vary in the same manner. We
further note the complexity involved in
making a generally applicable policy as
to how to rank or prioritize various data
sources. Therefore, we decline to
provide guidance regarding the rank or
prioritization of potentially available
data sources for use in the expansion
exception process. Our goal remains to
ensure a fair, accurate, and consistent
process to implement section 6001 of
the Affordable Care Act. As discussed
elsewhere in this preamble, each
expansion exception request will be
considered on a case-by-case basis. The
Secretary will consider only reliable,
credible information to determine
whether a requesting physician-owned
hospital qualifies for an exception to the
facility expansion prohibition.
E. Summary of the Final Provisions
Regarding the Expansion Exception
Process Under the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law
In this final rule with comment
period, we are finalizing the following
policies related to the expansion
exception process for physician-owned
hospitals:

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• We are permitting the use of
external data sources to estimate a
physician-owned hospital’s annual
percentage of inpatient admissions
under Medicaid (§ 411.362(c)(2)(ii) and
(c)(3)(ii)), the average percentage of
inpatient admissions under Medicaid of
all hospitals in the county in which a
physician-owned hospital requesting an
expansion exception as an ‘‘applicable
hospital’’ is located (§ 411.362(c)(2)(ii)),
and the annual percentage of inpatient
admissions under Medicaid of any other
hospital in the county in which a
physician-owned hospital requesting an
expansion exception as a ‘‘high
Medicaid facility’’ is located
(§ 411.362(c)(3)(ii)). However, on or after
such date that the Secretary determines
that HCRIS contains sufficiently
complete inpatient Medicaid discharge
data, a hospital may use only filed
Medicare hospital cost report data to
estimate the percentages of inpatient
Medicaid admissions referenced in
§ 411.362(c)(2)(ii) and (c)(3)(ii).
• We are defining ‘‘external data
source’’ at § 411.362 to mean a data
source that (1) is generated, maintained,
or under the control of a State Medicaid
agency; (2) is reliable and transparent;
(3) maintains data that, for purposes of
the process described in § 411.362(c),
are readily available and accessible to
the requesting hospital, comparison
hospitals, and CMS; and (4) maintains
or generates data that, for purposes of
the process described in § 411.362(c),
are accurate, complete, and objectively
verifiable. We are not finalizing our
proposed definition of ‘‘internal data
source.’’
• For purposes of § 411.362(c)(2)(ii)
and (c)(3)(ii), we are interpreting the
most recent 12-month period for which
data are available as the most recent 12month period for which the data source
used contains all data from the
requesting hospital and each hospital to
which the requesting hospital must
compare itself.
• For purposes of the determinations
required in § 411.362(c)(2)(iv), we
require a requesting physician-owned
hospital to satisfy the criterion during
the most recent fiscal year for which
HCRIS contains data from a sufficient
number of hospitals to determine a
State’s average bed capacity and the
national average bed capacity. For
purposes of the determinations required
in § 411.362 (c)(2)(v), we require a
requesting physician-owned hospital to
satisfy the criterion during the most
recent fiscal year for which HCRIS
contains data from a sufficient number
of hospitals to determine the requesting
hospital’s average bed occupancy rate
and the relevant State’s average bed

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occupancy rate. ‘‘Sufficient number of
hospitals’’ means in this final rule with
comment period that enough hospitals
have reported data such that the
determinations in § 411.362(c)(2)(iv)
and (c)(2)(v) would not materially
change even if data that may be missing
from comparison hospitals were
included.
• Where the request, any written
comments, and any rebuttal statement
include only HCRIS data, we will
consider a request for an expansion
exception complete no later than: (1)
The end of the 30-day comment period
if no written comments from the
community are received; and (2) the end
of the 30-day rebuttal period if written
comments from the community are
received, regardless of whether the
physician-owned hospital submitting
the request submits a rebuttal statement
(§ 411.362(c)(5)(i)).
• Where the request, any written
comments, or any rebuttal statement
include data from an external data
source (as defined in this final rule with
comment period), we will consider a
request for an expansion exception
complete no later than: (1) 180 days
after the end of the 30-day comment
period if no written comments from the
community are received; and (2) 180
days after the end of the 30-day rebuttal
period if written comments from the
community are received, regardless of
whether the physician-owned hospital
submitting the request submits a
rebuttal statement (§ 411.362(c)(5)(ii)).
We are not finalizing our proposal to
revise the bed capacity and bed
occupancy criteria at § 411.362(c)(2)(iv)
and (c)(2)(v) to permit the use of nonHCRIS data sources. However, we are
revising §§ 411.362(c)(2)(iv) and (c)(2)(v)
to clarify the fiscal year periods that
requesting hospitals must use to make
the determinations required in those
sections.
XVI. Revision of the Requirements for
Physician Certification of Hospital
Inpatient Services Other Than
Psychiatric Inpatient Services
In the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27644 through
27650), we discussed the statutory
requirement for certification of hospital
inpatient services for payment under
Medicare Part A. The certification
requirement for inpatient services other
than psychiatric inpatient services is
found in section 1814(a)(3) of the Act,
which provides that Medicare Part A
payment will only be made for such
services ‘‘which are furnished over a
period of time, [if] a physician certifies
that such services are required to be
given on an inpatient basis.’’

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As discussed in the CY 2015 OPPS/
ASC proposed rule (79 FR 41056
through 41058), in commenting on our
FY 2014 proposal mentioned above,
some commenters argued that the
statutory reference to services furnished
‘‘over a period of time’’ and the thenexisting regulation’s lack of any specific
deadline for physician certifications in
nonoutlier cases indicated that no
certification was required for short-stay
cases. In support of their argument, the
commenters cited the legislative history
of section 1814(a)(3) of the Act, which
these commenters interpreted as
indicating that the certification
requirements should apply only to
certain long-term stays.
As we indicated in our response to
these public comments in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50939), we do not agree with the
assertion that the only possible
interpretation of the statute is that the
requirement for physician certification
only applies to long-stay cases. The
statute does not define ‘‘over a period of
time,’’ and further provides that ‘‘such
certification shall be furnished only in
such cases, and with such frequency,
and accompanied by such supporting
material . . . as may be provided by
regulations.’’ By this language, Congress
explicitly delegated authority to the
agency to elucidate this provision of the
statute by regulation.
In our previous regulations, we
interpreted the statute’s requirement of
a physician certification for inpatient
hospital services furnished ‘‘over a
period of time’’ to apply to all inpatient
admissions. While this is not the only
possible interpretation of the statute, we
believe that it is a permissible
interpretation.
We continue to believe that an order
from a physician or other qualified
practitioner in order to trigger an
inpatient hospital admission as
specified in 42 CFR 412.3 is necessary
for all inpatient admissions. As
described more fully in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50938
through 50954), the requirement for a
physician order for a hospital inpatient
admission has long been clear in the
Medicare hospital conditions of
participation (CoPs), and we
promulgated § 412.3 to make more
explicit that admission pursuant to this
order is the means whereby a
beneficiary becomes a hospital inpatient
and, therefore, is required for payment
of hospital inpatient services under
Medicare Part A. A beneficiary becomes
a hospital inpatient when admitted as
such after a physician (or other qualified
practitioner as provided in the
regulations) orders inpatient admission

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in accordance with the CoPs, and
Medicare pays under Part A for such an
admission if the order is documented in
the medical record. The order must be
supported by objective medical
information for purposes of the Part A
payment determinations. Thus, the
physician order must be present in the
medical record and be supported by the
physician admission and progress notes
in order for the hospital to be paid for
hospital inpatient services.
As further noted in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50938
through 50954), we believe the
additional certification requirements
now specified under § 424.13(a)(2),
(a)(3), and (a)(4) (that is, the reason for
hospitalization, the estimated time the
patient will need to remain in the
hospital, and the plan of posthospital
care, if applicable) generally can be
satisfied by elements routinely found in
a patient’s medical record, such as
progress notes.
However, as we look to achieve our
policy goals with the minimum
administrative requirements necessary,
and after considering previous public
comments and our experience with our
existing regulations, we believe that, in
the majority of cases, the additional
benefits (for example, as a program
safeguard) of formally requiring a
physician certification may not
outweigh the associated administrative
requirements placed on hospitals.
Because we continue to believe that an
inpatient admission order is necessary
for all inpatient admissions, we
proposed in the CY 2015 OPPS/ASC
proposed rule (79 FR 41057) to require
such orders as a condition of payment
based upon our general rulemaking
authority under section 1871 of the Act
rather than as an element of the
physician certification under section
1814(a)(3) of the Act. Section 1871 of
the Act authorizes the Secretary to
‘‘prescribe such regulations as may be
necessary to carry out the
administration of the insurance
programs under [Title XVIII].’’ A clear
regulatory definition of when and how
a beneficiary becomes an inpatient is
necessary to carry out the
administration of Medicare Part A.
Section 1861(b) of the Act defines
‘‘inpatient hospital services’’ as certain
items and services furnished to ‘‘an
inpatient of a hospital,’’ but does not
define ‘‘an inpatient of a hospital.’’
Accordingly, § 412.3 provides the
necessary definition for purposes of
Medicare Part A payment by clarifying
when ‘‘an individual is considered an
inpatient of a hospital, including a
critical access hospital.’’ We proposed
to remove paragraph (c) from § 412.3. As

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we proposed to rely on a different
statutory authority for such regulation,
we proposed that an admission order
would no longer be a required
component of physician certification of
medical necessity.
As to the physician certification
requirement, we maintain that our prior
longstanding policy was based upon a
permissible interpretation of section
1814(a)(3) of the Act pursuant to that
provision’s express delegation of
authority to the agency to determine the
circumstances under which such
certification should be required.
Nonetheless, after consideration of
public feedback, our experience under
the then-existing regulations, and our
policy goals, in the CY 2015 OPPS/ASC
proposed rule (79 FR 41057), we
proposed to change our interpretation of
section 1814(a)(3) of the Act to require
a physician certification only for longstay cases and outlier cases.
As noted above, we believe that, in
most cases, the admission order,
medical record, and progress notes will
contain sufficient information to
support the medical necessity of an
inpatient admission without a separate
requirement of an additional, formal,
physician certification. However, we
believe that evidence of additional
review and documentation by a treating
physician beyond the admission order is
necessary to substantiate the continued
medical necessity of long or costly
inpatient stays. While granting the
Secretary broad discretion to determine
the circumstances under which a
physician certification should be
required, the statute specifies that the
certification by a physician with respect
to inpatient hospital services (other than
inpatient psychiatric hospital services)
‘‘shall be furnished no later than the
20th day’’ of the stay. Because the
statute specifically requires that
certification must occur no later than
the 20th day, we believe that, at a
minimum, Congress intended that
physicians should conduct a more
thorough review of such cases to help
ensure that all requirements of medical
necessity continue to be met. We also
note the regulations at § 424.13(f)(2)
specify our longstanding requirement
that the physician certification for cost
outlier cases occur no later than 20 days
into the hospital stay, and we did not
propose to change the requirements for
these cases. Therefore, we believe that,
for nonoutlier cases, 20 days is also an
appropriate minimum threshold for the
physician certification, and we
proposed to define long-stay cases as
cases with stays of 20 days or longer.
Specifically, in the CY 2015 OPPS/
ASC proposed rule (79 FR 41057), we

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proposed to revise paragraph (a) of
§ 424.13 to specify that Medicare Part A
pays for inpatient hospital services
(other than inpatient psychiatric facility
services) for cases that are 20 inpatient
days or more, or are outlier cases under
subpart F of Part 412 of this chapter,
only if a physician certifies or recertifies
the following:
(1) The reasons for either—
(i) Continued hospitalization of the
patient for medical treatment or
medically required diagnostic study; or
(We note that, in setting out the
corresponding regulation text for this
provision in the proposed rule (79 FR
41083), we inadvertently omitted the
word ‘‘Continued’’ at the beginning of
this paragraph (a)(1)(i). We are making
a conforming correction in this final
rule with comment period. We do not
believe that this conforming correction
results in any substantive change in
policy.)
(ii) Special or unusual services for
cost outlier cases (under the prospective
payment system set forth in subpart F of
Part 412 of this chapter).
(2) The estimated time the patient will
need to remain in the hospital.
(3) The plans for posthospital care, if
appropriate.
We also proposed to revise paragraph
(b) of § 424.13 to specify that
certifications for long-stay cases must be
furnished no later than 20 days into the
hospital stay.
Because the care furnished in
inpatient psychiatric facilities is often
purely custodial and therefore not
covered under Medicare and because
the primary purpose of the certification
of these cases is to help ensure that
Medicare pays only for services of the
type appropriate for Medicare coverage,
we did not propose changes to the
certification requirements for inpatient
psychiatric hospital services.
As discussed more fully in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50942 through 50943), there also are
inherent differences in the operation of
and beneficiary admission to IRFs.
Therefore, we also did not propose any
changes to the admission requirements
for IRFs.
We invited public comment on these
proposals. Summaries of the public
comments we received and our
responses to those public comments are
set forth below.
Comment: Most commenters were
supportive of the proposal to eliminate
physician certification requirements for
the majority of inpatient cases (other
than long stay and cost outlier cases).
Many commenters stated that the
proposal would improve efficiency and
would reduce the overall administrative

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burden on hospitals. Several
commenters stated that the proposal
would resolve ongoing issues within
hospitals wherein certain practitioners
routinely and appropriately admit
patients, but are unable to complete the
certification requirement because they
do not meet the statutory definition of
a physician. The commenters indicated
that, because these cases rarely exceed
20 days, and do not typically exceed
outlier thresholds, these practitioners
would not be required to seek approval
from a physician to complete a
physician certification statement.
Response: We thank the commenters
for their support of our proposal to
apply certification requirements at
§ 424.13 only to long-stay and outlier
cases. We agree that our proposal would
reduce administrative burden in
general, and in particular would reduce
the administrative burden associated
with the majority of cases involving an
admission order issued by a practitioner
qualified to issue the order but who did
not meet the statutory definition of a
physician and therefore could not
certify the case.
Comment: Several commenters, while
appreciative of the proposal to limit
physician certification requirements,
continued to disagree that CMS has the
statutory authority to require signed
admission orders for all inpatient cases.
The commenters contended that CMS
cannot use its general rulemaking
authority under section 1871 of the Act
to require a signed physician order for
every inpatient admission. These
commenters argued that that the
continued requirement for admission
orders is essentially the same as the
certification requirement and stated that
section 1814(a)(2) of the Act is explicit
in requiring physician certification only
for services ‘‘furnished over a period of
time’’ and not for all services.
Response: We disagree with these
commenters. While the inpatient
admission order was a required
component of the physician certification
under our previous policy, the order
and the physician certification do not
serve identical policy goals under our
proposal, which we are now finalizing.
For all cases, a properly authorized and
documented admission order is
necessary because the admission order
is integral to a clear regulatory
definition of when and how a
beneficiary becomes an inpatient. Such
a definition is necessary to carry out the
administration of Medicare Part A
because, as noted previously, section
1861(b) of the Act defines ‘‘inpatient
hospital services’’ as certain items and
services furnished to ‘‘an inpatient of a
hospital,’’ but does not define ‘‘an

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inpatient of a hospital.’’ Accordingly,
for all cases, our admission order
requirements at § 412.3 provide the
necessary definition for purposes of
Medicare Part A payment by clarifying
when ‘‘an individual is considered an
inpatient of a hospital, including a
critical access hospital.’’ The
development of admission order
requirements is a necessary and
appropriate use of our general
rulemaking authority under section
1871 of the Act.
In most cases, the admission order,
along with the medical record and
progress notes, may also provide
sufficient information to support the
medical necessity of an inpatient
admission without the separate
requirement of an additional, formal,
physician certification. However, for
long or very costly inpatient stays, we
believe that additional review and
documentation by a treating physician
are necessary to help substantiate the
continued medical necessity of such
stays, and a physician certification
provides evidence of such additional
review. The fact that we have
determined, in the majority of cases,
that the additional benefits (for
example, as a program safeguard) of
formally requiring a physician
certification do not outweigh the
associated administrative requirements
placed on hospitals in no way changes
the necessity and appropriateness of
requiring a signed admission order for
all cases.
Comment: Some commenters
requested that CMS require the
admission order to be signed by the time
of billing, not before discharge, as is
permitted for CAH certification
requirements. The commenters cited the
administrative burden and logistical
challenges involved with CMS’
requirements.
Response: We believe that, in most
cases, matters relating to the
determination of patient status should
be resolved before discharge, due to the
consequences that flow from such a
determination. For example, whether
services are billed under Medicare Part
A or Part B can have a significant
impact on a beneficiary’s financial
liability. Therefore, we do not believe it
is appropriate to change our existing
policy which requires that inpatient
orders be signed prior to discharge by a
practitioner familiar with the case and
authorized by the hospital to admit
inpatients.
In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50163 through 50165), we
did finalize a provision to allow CAHs
to complete certification requirements
(including completion of the admission

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order) no later than 1 day before the
date on which the claim for payment is
submitted as they had been allowed to
do prior to FY 2014. However, this
policy exists in part to provide CAHs
with greater flexibility in meeting
certification requirements unique to
CAHs. For example, CAHs face a
statutory requirement that a physician
certify that a patient will be expected to
be transferred or discharged within 96
hours of admission. We do not believe
it would be appropriate to apply this
historical CAH policy more broadly to
hospitals that do not face the same
circumstances as CAHs.
Comment: Several commenters
requested that CMS provide additional
guidance regarding the required content
and format of the physician certification
statement. Some commenters asked that
CMS confirm that the policy requiring
physician certification only for long-stay
and outlier cases did not otherwise alter
the inpatient hospital admission
guidelines discussed in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50944
through 50953). Others commenters
requested general guidance and
clarification regarding CMS policies in
this area.
Response: As discussed previously in
the section, the physician certification
requirements at § 424.13 generally may
be satisfied by elements routinely found
in a patient’s medical record, such as
progress notes. CMS does not require
that a physician certification comply
with a specific standard or format—only
that it ensures that the conditions at
§ 424.13(a) were met. If the medical
record adequately describes the reasons
for continued hospitalization, the
estimated time the patient is expected to
require inpatient care, and discharge
planning (where appropriate), and the
medical record is signed by a physician
involved with and responsible for the
patient’s care, this would satisfy
certification requirements.
Our proposed policy change regarding
the physician certification requirements
does not change unrelated requirements
implemented in the FY 2014 IPPS/
LTCH PPS final rule such as the
requirements related to the 2-midnight
policy. It also does not alter or remove
any requirements for hospitals regarding
admission orders.
We are committed to continuing to
work closely with and provide outreach
to stakeholders regarding inpatient
admission policies and certification
requirements.
Comment: Some commenters
requested that CMS provide guidance
on how MACs will review cases in the
interim time period between publication
of this final rule and the effective date

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66999

of the regulation changes (January 1,
2015).
Response: Since the effective date of
the FY 2014 IPPS/LTCH PPS final rule,
we have worked closely with the MACs
to ensure that the 2-midnight policy and
related certification requirements are
applied appropriately. As discussed
previously, we believe that physician
certification requirements for a high
percentage of inpatient stays can be
readily satisfied by elements routinely
found in the medical record. Hospitals
need to comply with all existing
certification requirements until the
finalized policy changes in this final
rule with comment period go into effect
on January 1, 2015. We are committed
to continue to work with the MACs to
prioritize medical review cases.
In summary, after consideration of the
public comments we received, we
continue to believe our certification
proposal satisfies our policy goals while
reducing the administrative burden on
hospitals. Therefore, we are finalizing
the policy as proposed in the CY 2015
OPPS/ASC proposed rule, which limits
the requirement for physician
certification to long-stay (20 days or
longer) and outlier cases. We are
finalizing our proposed revisions of
paragraph (a) of § 424.13, with one
minor modification. We are adding the
word ‘‘Continued’’ at the beginning of
paragraph (a)(1)(i), which we
inadvertently omitted when we set out
the regulation text in the proposed rule.
We note that the preamble discussion in
the proposed rule included this word
(79 FR 41057), as discussed earlier. We
also are finalizing our proposed revision
of paragraph (b) of § 424.13, without
modification, to specify that
certifications for long-stay cases must be
furnished no later than 20 days into the
hospital stay.
XVII. CMS-Identified Overpayments
Associated With Payment Data
Submitted by Medicare Advantage
(MA) Organizations and Medicare Part
D Sponsors (§§ 422.330 and 423.352)
A. Background
Medicare Part C and Part D payments
to Medicare Advantage (MA)
organizations and Part D sponsors are
determined, in part, using data
submitted to CMS by the MA
organizations and Part D sponsors.
These ‘‘payment data’’ include
diagnosis data that are used by CMS to
risk adjust Part C and Part D payments,
Prescription Drug Event (PDE) data that
are used by CMS to cost reconcile
various Part D subsidies, as well as
other types of data discussed below. MA
organizations and Part D sponsors are

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obliged to submit accurate, complete,
and truthful payment-related data, as
described in regulations at 42 CFR
422.504(l) and 423.505(k). Through our
review and oversight of payment data
submitted by MA organizations and Part
D sponsors, CMS identifies situations
where MA organizations and/or Part D
sponsors have submitted payment data
to CMS that should not have been
submitted either because the data
submitted are inaccurate or because the
data are inconsistent with Part C and
Part D requirements. (Throughout this
section, we refer to these data
submissions as ‘‘erroneous payment
data.’’) If an MA organization or Part D
sponsor submits erroneous payment
data to CMS, the MA organization or
Part D sponsor can address errors by
submitting corrected data to CMS
payment systems. Our approach thus far
to these types of situations has been to
request that MA organizations and Part
D sponsors make these data corrections
voluntarily.
However, in instances where the MA
organization or Part D sponsor fails to
make the requested data correction, the
payment amount for the plan, calculated
using that erroneous payment data, may
also be incorrect. As a result, we have
concluded that CMS needs to establish
a formal process that allows us to
recoup overpayments that result from
the submission of erroneous payment
data by an MA organization or Part D
sponsor in the limited circumstances
when the organization fails to correct
those data. We emphasize that, in our
experience, the circumstance where an
MA organization or Part D sponsor fails
to correct identified erroneous payment
data arises very infrequently.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41058 through 41063), we
proposed a new process that is not
intended to replace established recovery
and appeals processes such as the Risk
Adjustment Data Validation (RADV)
audit dispute and appeal process
described at 42 CFR 422.311 or the Part
D payment appeals process described at
42 CFR 423.350. We stated that this
proposed process would not constitute
a change to the existing Part C or Part
D payment methodologies. Rather, we
merely proposed to adopt a procedural
mechanism for recouping overpayments
that CMS will use in those limited
circumstances when an MA
organization or Part D sponsor fails to
correct erroneous payment data after
notice and request from CMS to do so.
The established recovery and appeals
processes do not support this scenario.
Section 1856(b) of the Act establishes
authority for CMS to add standards for
Part C and MA organizations. Section

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1853 of the Act for Part C and sections
1860D–14 and 1860D–15 of the Act for
Part D establish the methodology for
computing payments to MA
organizations and Part D sponsors,
respectively. We believe that inherent in
the methodology under which we
calculate payments to MA organizations
and Part D sponsors is the authority for
CMS to establish a process for
identifying and recouping overpayments
in order to ensure that payments are
made consistent with the payment
framework established in the statute.
Therefore, we proposed to implement
such a process through changes to our
regulations.
1. Medicare Part C Payment Background
For Medicare Part C, CMS makes
prospective monthly payments to MA
organizations for each enrollee in the
plan. CMS’ monthly Part C payment for
each MA plan enrollee consists of two
components: the capitated payment for
each enrollee (calculated as the planspecific county payment rate multiplied
by the enrollee risk score), plus the plan
rebate amount (if any). The plan-specific
county rates and the plan rebate amount
are based on the bid approved by CMS
and are set in advance for a payment
year. In addition, payment rates may be
adjusted for enrollees with end-stage
renal disease, enrollees in Medical
Savings Account MA plans, and
enrollees in religious fraternal benefit
society MA plans under § 422.304.
Prospective payments are made during
the year, subject to a reconciliation after
the end of the year.
CMS adjusts the plan-specific county
payment rate for each enrollee based on
an enrollee risk score. Enrollee risk
scores are determined using the CMSHierarchical Condition Category (CMS–
HCC) risk adjustment model in effect for
the payment year, plan-submitted
diagnoses for the data collection year,
and other data that CMS determines to
be appropriate to perform risk
adjustment. The CMS–HCC model is
prospective in that it uses diagnosis
information from a base year (data
collection year) to adjust payments for
the next year (payment year or coverage
year). For example, the risk adjustment
model uses diagnosis data from 2013 to
adjust payments to MA organizations for
coverage in 2014.
To determine the appropriate risk
score for each beneficiary, CMS uses
demographic characteristics of
beneficiaries and diagnostic information
gathered in the administration of
Original Medicare and submitted by MA
organizations. MA organizations are
currently required to submit an
occurrence of an HCC model-relevant

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diagnosis only once during the data
collection year, even though a
beneficiary may have several service
dates in a data collection year associated
with a given diagnosis. The minimum
data elements currently collected from
MA organizations under § 422.310 are:
Health Insurance Claim (HIC) Number;
provider type (hospital inpatient,
hospital outpatient, or physician);
service from date; service through date;
and ICD–9 codes at the level of
specificity used by the HCC model. In
addition, effective January 2012, CMS
collects more detailed Part C utilization
and cost data from MA organizations
(often referred to as encounter data),
that will be used in setting risk scores.
CMS allows 13 months after the end
of a data collection year for MA
organizations to update the risk
adjustment data submitted under
§ 422.310; this period provides MA
organizations an opportunity to identify
and correct errors in data they have
submitted for that data collection year
(that is, by deleting diagnoses from
CMS’ systems) and to identify and
submit additional diagnoses not
submitted during the data collection
year. During this 13-month period, CMS
uses the diagnosis data that MA
organizations have submitted up to that
point to calculate interim beneficiary
risk scores for adjusting prospective
payments made during the payment
year. The end of this 13-month period
is called the final risk adjustment data
submission deadline
(§ 422.310(g)(2)(ii)).
For each payment year, we apply
three sets of risk scores to adjust
payments: initial and midyear risk
scores during the payment year (both
sets are based on incomplete diagnosis
data from the data collection year) and
final risk scores after the payment year
using data MA organizations submitted
as of the final deadline for risk
adjustment data (which reflect complete
data for the data collection year). During
the year, CMS makes monthly
prospective payments to MA
organizations based on enrollment
information and using interim risk
scores calculated based on the data
available before the final risk
adjustment data submission deadline.
CMS calculates the preliminary risk
scores before the first payment is made
(that is, for January of the payment year)
and again in the middle of the payment
year; an interim reconciliation is made
so that the prospective payments to MA
organizations are based on the most
recent risk score available for each
enrollee.
After the final risk adjustment data
submission deadline, CMS conducts a

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reconciliation, in which the prospective
Part C payments made during the
coverage year based on interim risk
scores are compared to Part C payments
recalculated using final risk scores and
the latest enrollment data. While
changes in enrollment data are updated
every month by CMS’ systems during
the payment year (for example,
disenrollments from MA organizations
and dates of death from the Social
Security Administration (SSA)), risk
adjustment data are not finalized until
the final risk adjustment data
submission deadline.
We note that after the deadline for
submission of final risk adjustment data,
MA organizations are allowed to submit
corrected diagnosis data to correct
overpayments they received from CMS.
However, after this deadline, MA
organizations are not allowed to submit
diagnosis codes for additional payment,
as specified in § 422.310(g)(2)(ii); this
provision was recently adopted in the
final rule entitled ‘‘Medicare Program;
Contract Year 2015 Policy and
Technical Changes to the Medicare
Advantage and the Medicare
Prescription Drug Benefit Programs’’ (79
FR 29843). When such corrections are
submitted, CMS conducts another
reconciliation to correct the payments
made to the MA organization using the
established payment adjustment
process. In addition, under § 422.311,
CMS conducts Risk Adjustment Data
Validation (RADV) audits of the risk
adjustment data submitted by MA
organizations pursuant to § 422.310.
Such RADV audits are conducted at the
MA organization contract level and are
designed to calculate a contract–level
error rate and payment adjustment
amount for a specific payment year
under audit.
2. Medicare Part D Payment Background
For Medicare Part D, the Medicare
Prescription Drug Benefit, Improvement,
and Modernization Act (MMA), which
amended the Act by adding Part D
under Title 18, provides four payment
mechanisms: direct subsidy (codified at
§ 423.329(a)); reinsurance subsidy
(codified at § 423.329(c)); low-income
subsidy (codified at §§ 423.780 and
423.782); and risk sharing (codified at
§ 423.336(b)). As a condition of
payment, section 1860D–15(d)(2)(A) of
the Act requires that Part D sponsors
submit data and information necessary
for CMS to carry out those payment
provisions. Part D sponsors submit PDE
data, direct and indirect remuneration
(DIR) data and risk adjustment data to
CMS for payment purposes.
Throughout the coverage year, CMS
makes prospective payments to Part D

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sponsors that cover three subsidies: the
direct subsidy; the low-income costsharing subsidy; and the reinsurance
subsidy. The payment amounts are
based on information in the approved
basic bid and on data received by CMS
that are used to update payments
throughout the year. Following the end
of the coverage year, the prospective
payments are reconciled against the
actual costs of the Part D sponsor.
Reconciliation of the low-income costsharing subsidy and reinsurance and the
calculation of risk sharing are based on
PDE and DIR data submitted by the Part
D sponsor, as well as data captured from
other CMS systems. CMS instructs Part
D sponsors that they should continually
monitor their submitted data throughout
the year in order to ensure that the
reconciliation and final payment
determinations are accurate.
The final Part D payment
determination may be reopened and
revised at CMS discretion under
§ 423.346. In our final rule, ‘‘Medicare
Program; Medicare Prescription Drug
Benefit’’ published in the Federal
Register on January 28, 2005 (70 FR
4194), we stated that including the
Medicare Part D reopening provision at
§ 423.346 would ‘‘ensure that the
discovery of any overpayment or
underpayments could be rectified’’ (70
FR 4316). However, this is only possible
to the extent that the data submitted by
Part D sponsors are accurate.
Accordingly, prior to making a payment
determination for a coverage year, either
through a reconciliation described at
§ 423.343 or a reopening described at
§ 423.346, CMS periodically makes
requests that Part D sponsors correct
payment data that do not comply with
program requirements (that is, what we
have defined as ‘‘erroneous payment
data’’). These may be general requests to
all Part D sponsors to look for a type of
payment issue (see for example, the
Health Plan Management System
(HPMS) memorandum, ‘‘Correcting
Missing, Invalid, and Inactive Prescriber
Identifiers on 2012 Prescription Drug
Event (PDE) Records,’’ dated February 4,
2013.) or targeted requests to specific
Part D sponsors known to have
particular payment issues (as was done
in the ‘‘Prescriber NPI Project’’
announced in the HPMS memorandum,
‘‘Announcement of Prescriber NPI
Project and Web site Release,’’ dated
December 4, 2012). If a Part D sponsor
fails to correct its payment data, the
erroneous payment data remain in the
payment system, rendering the
reopening provision ineffective for
rectifying overpayments as it was
intended.

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B. Provisions of the Proposed Rule and
Final Policies
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41058 through 41063), we
proposed to establish regulations at 42
CFR 422.330, relating to MA
organizations, and at 42 CFR 423.352,
relating to Part D sponsors, that would
specify the procedural mechanism for
CMS to recoup overpayments associated
with data errors identified by CMS in
payment data submitted by MA
organizations and Part D sponsors. We
also proposed to create a process
whereby an MA organization or Part D
sponsor can appeal the finding that
payment data are erroneous.
We noted that our proposed policy is
intended to establish a process to
address data errors and payment
adjustments that are not addressed by
existing processes such as the RADV
audit and appeal process or
overpayments identified by the MA
organization or Part D sponsor, which
are subject to separate procedures. If an
MA organization or a Part D sponsor
self-identifies an overpayment, that
overpayment must be reported and
returned to CMS in accordance with
section 1128J(d) of the Act, which was
added by section 6402 of the Affordable
Care Act. Regulations implementing
section 1128J(d) have recently been
adopted at §§ 422.326 and 423.360 in
the final rule entitled ‘‘Medicare
Program; Contract Year 2015 Policy and
Technical Changes to the Medicare
Advantage and the Medicare
Prescription Drug Benefit Programs’’ (79
FR 29843).
Comment: Several commenters
supported the establishment of a formal
overpayment collection and appeals
process.
Response: We appreciate the
commenters’ support.
Comment: Several commenters
expressed concern about including Part
C and Part D proposed provisions in the
OPPS/ASC proposed rule. The
commenters stated that these proposed
provisions are unrelated to the OPPS
and ASC payment systems.
Response: The Secretary generally has
discretion to schedule and group topics
for rulemaking, meaning any proposed
and final rule published in the Federal
Register, as long as proper public notice
is given that includes an explanation of
the proposed policies, the rationale and
basis for the proposal, and the public is
given an opportunity to comment.
Comment: A few commenters
requested that CMS make clear that the
proposal regarding CMS-identified
overpayments has no relationship to
other CMS overpayment regulations,

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specifically the overpayment regulations
that were promulgated to implement the
requirements of section 6402 of the
Affordable Care Act, codified at section
1128J(d) of the Act (79 FR 29847).
Commenters expressed concern that,
given the connection between planidentified overpayments and the False
Claims Act, there is a potential for
confusion and significant unintended
consequences.
Response: In the preamble to the CY
2015 OPPS/ASC proposed rule, we
expressly limited the scope of our
proposal to establishing a process to
address data errors and payment
adjustments that are not addressed by
existing processes. We stated that
overpayments identified by an MA
organization or a Part D sponsor are
subject to separate procedures and that
if an MA organization or a Part D
sponsor self-identifies an overpayment,
the overpayment must be reported and
returned to CMS in accordance with
§§ 422.326 and 423.360 of the
regulations. We are further clarifying
here that the CMS-identified
overpayment process that is being
finalized is separate and distinct from
the overpayment rule that implemented
the Affordable Care Act requirements
regarding plan-identified overpayments
codified at section 1128J(d) of the Act.
Comment: A few commenters
provided comments on and questioned
the provisions of §§ 422.326 and
423.360 which relate to reporting and
returning of overpayments identified by
MA organizations and Part D sponsors,
respectively.
Response: We consider these public
comments to be out of the scope of the
provisions of the proposed rule. The
proposed rule was limited to the issue
of CMS-identified overpayments arising
from the submission of erroneous
payment data. Therefore, we are not
addressing these comments in this final
rule.
Comment: A few commenters stated
that it is essential that CMS has overall
control over the CMS-identified
overpayment process to ensure proper
identification and monitoring of
overpayments. The commenters stated
that this control is necessary to ensure
that requests from separate CMS
components or the Department’s Office
of the Inspector General (OIG) for
payment data changes are consistent
with CMS-issued payment regulations
and guidance. The commenters
recommended that CMS provide
adequate resources to the appropriate
staff components in order to effectively
coordinate and manage this process.
Response: In the CY 2015 OPPS/ASC
proposed rule, we stated that we may

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identify payment data that need to be
corrected through a variety of different
mechanisms, including, but not limited
to, CMS analyses of payment data,
audits, and/or communications with the
MA organization or Medicare Part D
sponsor. Regardless of how a potential
overpayment is identified, CMS will
conduct an independent evaluation of
the erroneous data finding, before
issuing a data correction notice to an
MA organization or Part D sponsor.
Although CMS may utilize OIG reports
or other information to help to identify
erroneous payment data, it is CMS, not
the OIG, which will issue the request to
correct payment data. Likewise, other
separate CMS components may identify
erroneous payment data, but it is the
Medicare Part C and Part D payment
components at CMS that will determine
if that erroneous payment data could
result in an overpayment and whether
or not the CMS-identified overpayment
process will be used to correct the
overpayment. In addition, requests to
correct payment data will only be issued
after CMS has thoroughly reviewed the
source or the mechanism that identified
the payment data and has concurred
with the findings that the payment data
were erroneous.
We appreciate and agree with the
commenters’ suggestion that the CMS
administration should provide adequate
resources to the payment staff in order
to effectively coordinate and manage
this process.
Comment: One commenter asked
CMS to clarify whether this regulation
would be used as a means to collect any
alleged improper payments identified
through the Recovery Audit Contractors
(RAC) process.
Response: As we indicated in the
preamble of the proposed rule, this
process is not intended to replace
established recovery and appeals
processes. We do not anticipate using
this process to collect any overpayments
identified through the RAC process at
this time.
Comment: Several commenters
expressed concern that the proposed
rule does not address underpayments
identified by CMS or the health plan. A
few commenters suggested that CMS
add language to the regulation to
explain how health plans recover
underpayments that they or CMS have
identified. One commenter suggested
that CMS offset identified
underpayments against overpayments
before recouping any overpayments.
Response: The purpose of the
proposed provisions is to recover
overpayments identified by CMS and
return them to the Medicare Trust
Funds. The offset calculation used to

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determine the overpayments will follow
the Medicare Part C and Part D payment
rules, and, as a result, the offset
calculation may capture some
underpayments. The extent to which
underpayments will be recognized in
the offset calculation to net out an
overpayment will be limited and will
vary depending on the circumstance
surrounding the overpayment. The
purpose of the provisions is not to
provide the opportunity for MA
organizations and Part D sponsors to
secure additional payment by
submitting additional data after the data
submission deadlines. As noted in the
preamble of the proposed rule, MA
organizations and Part D sponsors have
a period of time after the end of the data
collection and coverage years,
respectively, to update and supplement
the payment data submitted throughout
the year. In Part C, that period is 13
months, and in the Part D context, it is
approximately 6 months. We believe
that these periods are adequate for MA
organizations and Part D sponsors to
ensure that they have submitted the data
necessary to substantiate their
payments.
Comment: One commenter expressed
concern that MA organizations’ or Part
D sponsors’ benefit filings, current
business dealings, and statutory rights
and obligations may be affected if the
plan’s financial information is rendered
uncertain due to an overpayment
recovery by CMS.
Response: While we understand the
commenter’s concern that the
possibility of returning overpayments
may introduce some financial
uncertainty for MA organizations and
Part D sponsors, CMS has an obligation
to ensure that payments to MA
organizations and Part D sponsors are
made consistent with the applicable
program requirements. Thus, we believe
that CMS has the authority to recover,
and MA organizations and Part D
sponsors have an obligation to return,
identified overpayments.
Comment: A few commenters stated
that overpayment recoupments from
Part D sponsors may negatively impact
beneficiaries. Commenters urged CMS
to ensure that any adjustments made to
recoup CMS overpayments from Part D
sponsors continue to be appropriate to
ensure that beneficiaries are not
financially negatively impacted.
Response: We understand the
commenters’ concerns that overpayment
recoupments not negatively affect
beneficiaries. However, CMS has
previously issued regulations that
address this issue. Section 423.466(a) of
the regulations states that whenever a
Part D sponsor receives information that

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necessitates a retroactive claims
adjustment, the Part D sponsor must
process the adjustment and issue
refunds or recovery notices within 45
days of the Part D sponsor’s receipt of
complete information regarding the
claims adjustment. In addition,
§ 423.466(b) states that Medicare Part D
sponsors must coordinate benefits with
State Pharmaceutical Assistance
Programs (SPAPs), other entities
providing prescription drug coverage,
beneficiaries, and other third party
entities paying on the beneficiaries’
behalf for a period not to exceed 3 years
from the date on which the prescription
for a covered Part D drug was filled.
Comment: A few commenters
expressed concern about the burden
imposed on providers. Commenters
stated that the overpayment recovery
process might cause financial
consequences or penalties for
physicians. Commenters expressed
concern over the burden of related
documentation requests. One
commenter urged CMS to ensure that
any associated provider record requests
are limited to the specific instance of
erroneous data under dispute. The
commenter suggested that the plan
requesting medical records be required
to provide documentation on the scope
of the erroneous data dispute identified
by CMS and to limit the data request to
the specific data issue identified.
Response: These commenters appear
to be focused on Part C and risk
adjustment data. We recognize the
commenters’ concerns that recoupment
of overpayments may entail negative
financial consequences for physicians.
However, it is CMS’ responsibility to
make payments to MA organizations
and Part D sponsors that are consistent
with the applicable statutes and
regulations; this includes the authority
to recover overpayments and return
them to the Medicare Trust Funds. In
addition, CMS is not allowed to
interfere with the financial
arrangements between MA
organizations and their providers.
Therefore, CMS is limited in how we
can respond to the commenters’
concern. While we recognize there may
be some burden relating to the request
for documentation, it is important for
the integrity of the payment process that
overpayments are properly identified
and documented.
Comment: One commenter suggested
that any Medical Loss Ratio (MLR)
remittances paid by the plan to CMS
should be considered when computing
the overpayment recovery amount. For
example, if a plan had an MLR below
the statutory minimum and paid an
MLR remittance to CMS, and then, at a

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later date, it was determined that the
plan was overpaid for that year, the
remittance would reduce the
overpayment recovery amount.
Response: From a conceptual
perspective, we believe that the impact
or relationship between an MLR
remittance and the overpayment offset
amount is an issue about the payment
calculation methodology and MLR
administration, rather than a procedural
issue. This regulation narrowly specifies
a procedural mechanism for, first,
recovering overpayments from MA
organizations and Part D sponsors and,
second, providing an appeals process
related to the accuracy and correctness
of the payment data underlying the
offset. Therefore, we believe that these
comments relating to MLR remittances
are out of the scope of the provisions of
the proposed rule.
Comment: One commenter expressed
concern that there might be a large
number of complications in situations
where a contract has been terminated, or
where there have been mergers or
acquisitions involving the sponsor, or
where other significant plan changes
have occurred. The commenter
requested guidance from CMS on the
process in these situations. The
commenter also asked that CMS be
flexible in these scenarios.
Response: We hold entities
contracting with CMS responsible for
returning overpayments, regardless of
their merger and acquisition history.
After consideration of the public
comments we received, we are
finalizing the proposal to establish a
process for recovering CMS-identified
overpayments associated with erroneous
payment data submitted by MA
organizations and Part D sponsors.
1. Definitions of ‘‘Payment Data’’ and
‘‘Applicable Reconciliation Date’’
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41060), we proposed to
define ‘‘payment data’’ to mean data
controlled and submitted to CMS by an
MA organization or a Part D sponsor
that is used for payment purposes
(proposed §§ 422.330(a) and 423.352(a)).
The MA organization or Part D sponsor
is responsible for the accuracy of such
data. MA organizations and Part D
sponsors are currently required to attest
to the accuracy, completeness, and
truthfulness of such data under
§ 422.504(l) and § 423.505(k),
respectively. For Medicare Part C, the
data submitted by the MA organization
to CMS include, for example,
enrollment data and risk adjustment
data specified at § 422.310. For
Medicare Part D, data submitted by the
Part D sponsor to CMS include

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67003

enrollment data and data submitted
under § 423.329(b)(3) (risk adjustment
data), § 423.336(c)(1) (cost data),
§ 423.343 (data for retroactive
adjustments and reconciliations), and
data provided for purposes of
supporting allowable reinsurance costs
and allowable risk corridor costs as
defined in § 423.308, which include
data submitted to CMS regarding direct
or indirect remuneration (DIR).
There are additional payment-related
data that CMS uses to calculate Part C
and Part D payments that are submitted
directly to CMS by other entities, such
as SSA. These entities are the
authoritative source for data that they
submit to CMS, and MA organizations
and Part D sponsors are not the official
source for data submitted by these other
entities. For example, the SSA is the
authoritative source for date of death of
Medicare beneficiaries. An MA
organization or a Part D sponsor
generally does not submit a
beneficiary’s date of death directly to
CMS’ systems; such data come from the
SSA data feed. When the SSA submits
corrected data regarding a beneficiary’s
date of death to CMS, CMS’ systems
recalculate the payments made to the
plan for that beneficiary and correct any
incorrect payment through a routine
retroactive payment adjustment process.
Therefore, we proposed to define
‘‘payment data’’ as only data that the
MA organization or Part D sponsor
controls and submits to CMS for
payment purposes.
For MA organizations under Part C, in
the CY 2015 OPPS/ASC proposed rule
(79 FR 41060), we proposed that the
‘‘applicable reconciliation date’’ occurs
on the date of the annual final risk
adjustment data submission deadline set
under § 422.310(g)(2)(ii). While changes
in enrollment data are updated every
month by CMS’ systems during the
payment year (for example,
disenrollments from MA organizations
and dates of death from the SSA), risk
adjustment data are not finalized until
the final risk adjustment data
submission deadline. Prior to that
deadline, CMS allows the MA
organization to continue submitting
corrected and new diagnosis data.
However, once the final risk adjustment
data submission deadline has passed,
CMS uses this final diagnosis data to
calculate the final risk scores for the
payment year. CMS then uses those
final risk scores for payment
reconciliation. By proposing that the
applicable reconciliation date occurs on
the risk adjustment data submission
deadline, we intend to signal that the
normal payment process for the year has
been concluded.

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For Part D sponsors, in the CY 2015
OPPS/ASC proposed rule (79 FR 41060),
we proposed that the ‘‘applicable
reconciliation date’’ is the later of either:
the annual deadline for submitting PDE
data for the annual Part D payment
reconciliations referenced in
§ 423.343(c) and (d); or the annual
deadline for submitting DIR data. The
annual deadline for submitting PDE data
is the last Federal business day prior to
June 30 of the year following the
coverage year being reconciled. The
annual deadline for submitting DIR data
is announced annually through
subregulatory guidance and generally
occurs around the last business day in
June of the year following the coverage
year being reconciled. We selected these
events to define the Part D applicable
reconciliation date because data must be
submitted by these deadlines in order to
be used for the purposes of the final Part
D payment reconciliation.
We noted in the proposed rule that
the proposed definitions of ‘‘applicable
reconciliation date’’ are nearly identical
to the definitions of ‘‘applicable
reconciliation’’ at existing §§ 422.326
and 423.360. Similarly, the proposed
definitions of ‘‘payment data’’ are nearly
identical to the definitions of ‘‘funds’’ at
existing §§ 422.326 and 423.360.
Although proposed §§ 422.330 and
423.352 addressed overpayments to MA
organizations and Part D sponsors that
have been identified by CMS, whereas
§§ 422.326 and 423.360 address
overpayments that are identified by the
MA organization or Part D sponsor, we
stated in the proposed rule that we do
not believe that the issue of which
entity (CMS or the plan) identified the
overpayment is relevant to the question
of when the overpayment occurred or
what information is at issue. Both the
regulations regarding overpayments
identified by MA organizations and Part
D sponsors finalized earlier this year in
the final rule entitled ‘‘Medicare
Program; Contract Year 2015 Policy and
Technical Changes to the Medicare
Advantage and the Medicare
Prescription Drug Benefit Programs’’
and the regulations we proposed in the
CY 2015 OPPS/ASC proposed rule to
establish offset and appeal procedures
for CMS-identified overpayments were
intended to address circumstances in
which an overpayment has been
identified; therefore, we believe it
would be appropriate and avoid
unnecessary confusion to use similar
definitions.
Comment: A few commenters
requested that CMS clarify the
definition of ‘‘payment data.’’
Specifically, commenters stated that the
definition of ‘‘payment data’’ in the

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proposed rule is supposed to
correspond to the definition of ‘‘funds’’
at §§ 422.326 and 423.360. However, the
commenters pointed out that, in the
proposed rule, CMS defined ‘‘payment
data’’ as ‘‘data controlled and submitted
by’’ an MA organization or a Part D
sponsor. Commenters noted that
definition of ‘‘funds’’ omits the word
‘‘controlled.’’ Commenters expressed
concern over the inclusion of the word
‘‘controlled’’ in the definition of
‘‘payment data’’ because MA
organizations and Part D sponsors do
not control all relevant data.
Commenters requested that CMS revise
the definition of ‘‘payment data’’ to
conform to the definition of ‘‘funds’’ at
§§ 422.326 and 423.360.
Response: We agree with the
commenters. Our intent was to align the
definitions of ‘‘payment data’’ with the
definition of ‘‘funds’’ at §§ 422.326 and
423.360 (79 FR 41060). Therefore, we
are removing the word ‘‘controlled’’
from the regulatory definition of
‘‘payment data’’ in this final rule.
Comment: One commenter requested
that CMS define ‘‘erroneous claims
data’’ as used in the proposed rule.
Response: We did not use the phrase
‘‘erroneous claims data’’ in the preamble
language or regulation text of the
proposed rule. In the preamble of the
proposed rule, we used the phrase
‘‘erroneous payment data’’ to mean
‘‘. . .payment data. . .that should not
have been submitted—either because
the data submitted are inaccurate or
because the data are inconsistent with
Part C and Part D requirements’’ (79 FR
41058). We are adding the definition of
‘‘erroneous payment data’’ to the final
regulation text at §§ 422.330(a) and
423.352(a).
Comment: A few commenters noted
that, in the preamble of the proposed
rule, CMS referenced specific provisions
of §§ 422.504 and 423.505 of the
regulations and stated that MA
organizations and Part D sponsors are
required to certify the accuracy,
completeness, and truthfulness of their
payment data. Commenters were
concerned that CMS did not include the
phrase ‘‘based on best knowledge,
information, and belief’’ that is included
under §§ 422.504 and 423.505.
Commenters requested that CMS revise
the preamble language of the final rule
to acknowledge the ‘‘best knowledge,
information, and belief’’ standard
articulated at §§ 422.504 and 423.505
and to remove any incorrect references
suggesting that MA organizations (or
Part D sponsors) bear unqualified
responsibility for data accuracy.
Response: We did not intentionally
exclude ‘‘based on best knowledge,

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information, and belief’’ from the
preamble discussion. We acknowledge
that MA organizations and Part D
sponsors certify, based on best
knowledge, information, and belief, the
accuracy, completeness, and
truthfulness of all data related to
payment as stated at §§ 422.504 and
423.505. After a review of the preamble
language, we do not believe that
additional edits are necessary as a result
of the omission.
After consideration of the public
comments we received, we are
finalizing the proposed regulatory
definition of ‘‘payment data,’’ with a
modification to remove the reference to
‘‘controlled,’’ as described earlier. We
also are adding a definition of
‘‘erroneous payment data’’ in the final
regulation text at §§ 422.330(a) and
423.352(a).
2. Request for Corrections of Payment
Data
Because MA organizations and Part D
sponsors are required to submit accurate
payment data, we have the authority to
request that erroneous data be corrected
when errors are discovered. In the CY
2015 OPPS/ASC proposed rule (79 FR
41060), we proposed a mechanism for
recouping overpayments in situations
where CMS has identified an error in
payment data, the MA organization or
Part D sponsor has not corrected that
erroneous data upon request, and CMS
determines that, as a result of the
erroneous payment data, an
overpayment was made. Under
proposed §§ 422.330(b) and 423.352(b),
we proposed that CMS would make the
request through a data correction notice
that would contain or make reference to
the specific payment data identified by
CMS as erroneous, the reason why CMS
believes that the payment data are
erroneous, and the timeframe in which
the MA organization or Part D sponsor
must make corrections to the data. This
proposal was not intended to limit our
authority to request correction of
erroneous payment data to only those
narrow circumstances in which an
overpayment has already been
identified. CMS may identify payment
data that need to be corrected through
a variety of different mechanisms,
including, but not limited to, CMS
analyses of payment data, CMS audits,
or communications with the MA
organization or Part D sponsor.
We understand that, at some point, it
would no longer be practical for MA
organizations and Part D sponsors to
correct payment data for coverage years
that have long since been reconciled.
Therefore, consistent with the look-back
period for overpayments that are

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identified by the MA organization or
Part D sponsor found at existing
§§ 422.326 and 423.360, in the CY 2015
OPPS/ASC proposed rule (79 FR 41060),
we proposed that CMS would request
corrections to erroneous payment data
only if the erroneous data affects
payments for one or more of the 6 most
recently completed payment years. That
would mean, for example, that after the
initial reconciliation takes place for Part
D payments under § 423.343 (that is, the
determination of the final amount of
direct subsidy described in
§ 423.329(a)(1), final reinsurance
payments described in § 423.329(c), the
final amount of the low-income subsidy
described in § 423.329(d), or final risk
corridor payments as described in
§ 423.336) for contract year 2015 (which
would take place in 2016), CMS may
request corrections to erroneous
payment data for contract years 2010
through 2015. We proposed to use the
same 6-year look-back period as applies
to plan-identified overpayments under
existing §§ 422.326 and 423.360 because
both overpayment policies are intended
to address circumstances in which an
overpayment has been identified, and
we do not believe that the issue of
which entity (CMS or the plan)
identified the overpayment is relevant
to the length of the look-back period.
We proposed that the timeframes for
correcting payment data would be the
same as under our current practice for
correcting payment data described in
existing procedural rules and
subregulatory guidance and would be
explained in additional procedural rules
and subregulatory guidance, as
necessary. For example, current Part D
guidance states that corrections to PDE
data must be completed within 90 days
from discovery of the issue. We refer
readers to the Health Plan Management
System (HPMS) memorandum entitled
‘‘Revision to Previous Guidance Titled
‘Timely Submission of Prescription
Drug Event (PDE) Records and
Resolution of Rejected PDEs,’’’ dated
October 6, 2011.
Comment: A few commenters
believed that the proposed rule on CMSidentified overpayments should only
apply to actual overpayments, not
merely the submission of incorrect
payment data. These commenters were
concerned that CMS incorrectly
assumes that erroneous payment data
equates to an overpayment.
Response: We understand that
correcting erroneous payment data
submitted by an MA organization or a
Part D sponsor and rerunning the
payment process to determine the
payment that should have been made
may reflect an underpayment,

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overpayment, or no change when
comparing the two results. Consistent
with §§ 422.504(l) and 423.505(k), MA
organizations and Part D sponsors must
submit accurate payment data (based on
best knowledge, information, and
belief). We clarify that CMS may make
the request to correct erroneous
payment data, regardless of whether or
not that data would result in an
overpayment under our existing and
inherent authority related to
administration of the payment
processes; this rule does not change or
limit that authority. Rather, this rule
provides authority to initiate an offset to
recover overpayments when erroneous
payment data have been submitted, the
erroneous payment data resulted in an
overpayment, and the erroneous
payment data were not subsequently
corrected upon request from CMS. The
intent of the provisions at §§ 422.330
and 423.352 is to provide a process
whereby CMS-identified overpayments
can be recovered; this process begins
with CMS’ request for correction of the
erroneous payment data that caused the
overpayment to occur. We will establish
the existence and extent of an
overpayment by applying the Part C and
Part D payment rules and formulas
applicable to the payment year in
question.
Comment: Commenters requested that
CMS clarify that the overpayment
recoupment process would apply only
to contract years for which CMS has
completed final reconciliation.
Commenters noted that CMS did not
link the proposed regulatory definition
of ‘‘applicable reconciliation date’’ to
other subsections of the proposed
regulations. The commenters stated that
based on the proposed regulations, if
CMS identifies an error in payment data
and the payment error identified affects
payments for any of the 6 most recently
completed payment years, CMS may
send a data correction notice to the MA
organization or the Part D sponsor.
However, CMS does not define
‘‘recently completed’’ or correlate the
definition with the phrase ‘‘applicable
reconciliation date.’’ Commenters
requested that CMS clarify its intention
to recoup overpayments only following
the ‘‘applicable reconciliation date.’’
Response: Our determination that an
overpayment has occurred will be made
after the applicable reconciliation date,
as defined in this final rule, for the
contract year in which the erroneous
payment data were identified. In
addition, the payment error must affect
payment in one of the 6 most recently
completed payment years. For example,
after the initial reconciliation takes
place for Part D payments under

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§ 423.343 (that is, the determination of
the final amount of direct subsidy
described in § 423.329(a)(1), final
reinsurance payments described in
§ 423.329(c), the final amount of the
low-income subsidy described in
§ 423.329(d), or final risk corridor
payments as described in § 423.336) for
contract year 2015 (which would take
place in 2016), the 6 most recently
completed payment years would be
2010 through 2015.
Consistent with our statements above
regarding our existing and inherent
authority related to administration of
the payment processes to make the
request to correct erroneous payment
data, regardless of whether or not that
data would result in an overpayment,
we believe we have authority to request
the correction of erroneous data at any
time. Accordingly, we are moving the
language that limits CMS to the 6-year
look-back period at §§ 422.330(b) and
423.352(b), ‘‘Request to correct payment
data,’’ and associating it with
§§ 422.330(c) and 423.352(c), ‘‘Payment
offset,’’ in order to clarify that, while we
may request the correction of erroneous
payment data at any time, we will only
use the payment offset procedures
established in this rule to recover
overpayments in the 6 most recently
completed payment years.
Therefore, we are modifying proposed
§§ 422.330(c) and 423.352(c) to indicate
that when the MA organization or Part
D sponsor fails to correct payment data
in response to a request under
§§ 422.330(b) and 423.352(b), CMS will
conduct a payment offset against
payments made to the MA organization
or Part D sponsor if: (1) the payment
error affects payments for any of the 6
most recently completed payment years;
and (2) the payment error for a
particular payment year is identified
after the applicable reconciliation date
for that payment year.
Comment: One commenter requested
that CMS institute a single, uniform
timeframe to correct any payment data
errors before CMS initiates paymentoffset procedures. The commenter
believed that the different time periods
associated with the resubmission or
correction of various data points can
lead to unnecessary confusion and the
potential for missed deadlines. This
commenter recommended that CMS
create a uniform timeframe of at least
120 days to submit data corrections. The
commenter expressed concern that the
process for collecting and verifying
corrected data will involve numerous
steps and that the process also likely
will involve third parties, potentially
including vendors no longer under
contract, which would add additional

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steps and time to the process of
collecting and validating the data. The
commenter stated that a turnaround
time of less than 120 days creates a risk
for not being able to collect the payment
data and conduct a diligent and fulsome
analysis before responding to CMS.
Response: We understand that it
makes sense to have a uniform
timeframe for submitting corrected
payment data in response to a CMS
notification of CMS-identified erroneous
payment data. We also understand that
different timeframes for submitting
corrected data could lead to confusion
and missed deadlines. However, we
disagree with the commenter that 120
days is necessary to correct all types of
payment data. As we cited in the
preamble of the proposed rule, current
Part D guidance in the HPMS
memorandum dated October 6, 2011,
states that corrections to PDE data must
be completed within 90 days from
discovery of the issue. We have no
reason to believe that the 90-day
timeframe for correcting Part D data
under this provision is inadequate.
Therefore, we will not be making
changes to this policy at this time.
Timeframes for correcting Part C
payment data will be explained in
additional procedural rules and
subregulatory guidance.
Comment: One commenter requested
clarification regarding the submission of
payment data corrections between the
final risk adjustment submission
deadline and when a payment
reconciliation or payment rerun is
conducted.
Response: This commenter’s request
appears to be directed at Part C and risk
adjustment data. An overpayment may
exist once applicable reconciliation has
occurred, which is the final deadline for
the submission of risk adjustment data
for Part C. MA organizations should
submit data corrections to correct an
overpayment the MA organization has
identified as soon as the MA
organization recognizes the
overpayment has occurred (§ 422.326).
In the context of that rule and the
process adopted under this rule, the
operational action of conducting a risk
adjustment payment rerun will be
implemented according to our policy
and schedules. The submission of data
corrections should not be delayed
relative to the timing of a risk
adjustment rerun. If the data correction
is not submitted, and we have identified
the erroneous risk adjustment payment
data, we may move forward with a
payment offset. We agree that additional
information on this issue would be
helpful to MA organizations and will be
providing further guidance as needed.

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Comment: A few commenters noted
that, in the proposed rule, CMS stated
that if the MA organization or Part D
sponsor submits corrected payment data
in response to CMS’ request, CMS will
perform a reconciliation in the payment
system using the established payment
adjustment process. The commenters
requested that CMS clarify that the
referenced reconciliation is in reference
to the established reopening of a
payment adjustment reconciliation
process. The commenter stated that the
current reopening process is wellestablished and equitable, balancing the
rights and obligations of Part D sponsors
and CMS, and, therefore, there is an
appropriate adjustment of both
overpayments and underpayments to
the Part D sponsor. The commenters
urged CMS to invest additional
operational resources to strengthen the
existing reopening process.
Response: If an MA organization or a
Part D sponsor submits corrected
payment data, as requested by CMS, we
will recoup any overpayment amounts
by performing a payment reconciliation
according to our payment processing
policies and schedules. We appreciate
the commenter’s suggestion to invest
additional operational resources to
strengthen the existing reopening
process, and will take this suggestion
into consideration.
Comment: Several commenters
expressed concern regarding the length
of the 6-year look-back period. Some of
the commenters indicated the length of
the look-back period would place undue
burden on plans and providers. Another
commenter stated that a 6-year
timeframe is typically reserved for fraud
and abuse processes and is not
considered appropriate for routine
operational processes. A few
commenters recommended that the
look-back period be 3 years.
Response: We believe that a 6-year
look-back period is an appropriate
timeframe for identifying overpayments.
As stated in the proposed rule, the 6year look-back period is consistent with
the look-back period established for
overpayments that are identified by MA
organizations or Part D sponsors
(§§ 422.326 and 423.360). Also as stated
in the proposed rule, we proposed to
use the same 6-year look-back period as
applies to plan-identified overpayments
because both overpayment policies are
intended to address circumstances in
which an overpayment has occurred
and has been identified. We do not
believe that the issue of which entity
(CMS or the plan) identified the
overpayment is relevant to the length of
the look-back period.

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Comment: A few commenters
recommended that the look-back period
be implemented prospectively. One
commenter stated that a 6-year lookback period could affect many
distributed risk arrangements between
plans and providers that cross multiple
years and have already been reconciled.
Another commenter asked that CMS
phase in the look-back period,
beginning with a 1-year look-back
period and each year adding an
additional year to the look-back period,
until 2020 when a 6-year look-back
could be applied.
Response: We disagree with the
commenters’ recommendations to
implement the look-back period
prospectively. We proposed 6 years as
the length of the look-back period
because we believe that this timeframe
best balances the government’s interest
in having overpayments returned with
entities’ interest in finality. We note that
the statute of limitations related to the
False Claims Act is 6 years from the date
of the violation or 3 years from the date
the relevant government official learns
of the situation, but in no case more
than 10 years from the date of the
violation. Furthermore, under
§ 422.504(d) and § 423.505(d), MA
organizations and Part D sponsors are
required to maintain, for 10 years books,
records, documents, and other evidence
of accounting procedures and practices
related to costs, financial statements,
cash flow, among others.
After consideration of the public
comments we received, we are
finalizing proposed §§ 422.330(b) and
423.352(b) and proposed §§ 422.330(c)
and 423.352(c) with modifications. We
are moving the language regarding the 6year look-back period from proposed
§§ 422.330(b) and 423.352(b) to
§§ 422.330(c)(1) and 423.352(c)(1) in
order to indicate that if the MA
organization or Part D sponsor fails to
correct payment data, CMS will conduct
a payment offset if the payment error
affects payments for any of the 6 most
recently completed payment years and
the payment error for a particular
payment year is identified after the
applicable reconciliation date for that
payment year.
3. Payment Offset
If the MA organization or Part D
sponsor submits corrected payment data
in response to CMS’ request pursuant to
proposed § 422.330(b) and § 423.352(b),
CMS will perform a reconciliation in the
payment system using the established
payment adjustment process. CMS’
systems will conduct a payment
reconciliation and determine the
associated payment adjustment based

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on the corrected data using established
payment policies and procedures.
However, if the MA organization or Part
D sponsor fails to correct the erroneous
payment data, in the CY 2015 OPPS/
ASC proposed rule (79 FR 41061), we
proposed that CMS would conduct a
payment offset from plan payments
(proposed §§ 422.330(c) and 423.352(c)).
a. Offset Amount
Because the data would not have been
corrected in the routine payment
process, in the CY 2015 OPPS/ASC
proposed rule (79 FR 41061 through
41062), we proposed, to be codified at
§§ 422.330(c) and 423.352(c), that CMS
determine the overpayment offset
amount by applying a payment
calculation algorithm to simulate the
payment calculations currently applied
by CMS to produce the routine Part C
and Part D payments. The payment
calculation algorithm would apply the
Part C or Part D payment rules for the
applicable year to calculate what the
correct payment should have been using
corrected payment data. CMS currently
simulates payment error amounts for a
variety of different purposes, including
for the annual Part C and Part D error
rate reporting (required by the Improper
Payment Elimination and Recovery Act
(IPERA) and subject to the annual
agency’s Chief Financial Officer’s (CFO)
audit and reported in the annual Agency
Financial Report (AFR)), RADV
payment error estimation (subject to
public comment), and the Part C and
Part D monthly payment validation
required by CFO auditors. These
payment error calculations are all
conducted outside of the suite of
payment systems that CMS uses to make
routine payments to MA organizations
and Part D sponsors. In the proposed
rule, we stated that we believe that these
calculations are reliable and an accurate
reflection of what the routine payment
systems would calculate using the
corrected data if the MA organization or
Part D sponsor had submitted corrected
payment data.
The actual process for calculating the
overpayment will be different for Part C
and Part D because of the different
payment rules for the two programs.
The Part C and Part D programs are both
subject to risk adjustment payment error
resulting from invalid diagnoses and to
payment error due to inaccurate
enrollment data. The Part D program is
further subject to payment
reconciliation error resulting from errors
in PDE data and/or DIR data. The two
programs also are subject to different
schedules with regard to the applicable
reconciliation date and subsequent
payment reconciliation processes.

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When new payment-related data are
submitted to CMS payment systems,
there is generally a change to the correct
amount of payment once CMS conducts
a payment reconciliation using the
established payment adjustment
process. However, it is not sufficient for
the plan to just submit the new
corrected risk adjustment, PDE, or DIR
data to CMS systems because data
submission does not automatically
trigger a system reconciliation and
payment adjustment. A change in
payment will only occur if a payment
reconciliation is conducted. If the
applicable reconciliation has already
been performed, CMS, at its discretion,
may conduct risk adjustment reruns or
Part D reopenings to ensure that
payments also are corrected to reflect
the newly corrected data.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41061), we proposed that,
under the payment calculation
algorithm, CMS would calculate the
payment to the MA organization or Part
D sponsor with and without the
corrected data as of a specified date. The
difference in the two amounts—that is,
the amount by which the payments
already made to the MA organization or
Part D sponsor exceed the payments that
should have been made as reflected in
the calculation using the corrected
data—would be the payment recovery or
offset amount. We provided the
following examples of how the offset
amount would be calculated for Part C
and Part D overpayments relative to two
different types of payment data errors to
illustrate our proposal:
• Part C Offset Calculation. The
example for Part C relates to incorrect
diagnosis data identified by CMS in the
process of calculating the national
payment error estimate. A beneficiary’s
final risk score and annual payment will
be recalculated outside of the routine
payment system without the invalid
diagnoses but using all the other data
used in the routine payment system.
The year-appropriate CMS–HCC risk
adjustment methodology will be used to
produce the revised risk scores. The
difference in payment for the
beneficiary pre- and post-change in the
invalid diagnosis will be the offset
amount. This offset amount—generated
using the same process for each
beneficiary for whom erroneous
payment data are identified by CMS—
will be summed across all beneficiaries.
• Part D Offset Calculation. The
example for Part D relates to the
situation in which a Part D plan sponsor
has submitted PDE records for a
beneficiary that include invalid
National Drug Codes (NDCs). For
payment purposes, PDEs are required to

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reference valid NDCs. In order to
calculate the Part D payment offset
amount, all of the beneficiary’s entire
post-reconciliation PDE data will be
pulled, and the incorrect PDEs will be
deleted or adjusted. The programmed
calculation logic will keep track of a
variety of payment-related information;
for example, a beneficiary’s benefit
phase, gross covered drug cost, true outof-pocket (TrOOP) costs, low-income
cost-sharing subsidies (if any), and plan
payment as the beneficiary progresses
through the Part D coverage benefit. The
calculation algorithm will tap into a
variety of different data sets, such as
health plan benefit parameters,
beneficiary low-income subsidy status,
and standard low-income cost-sharing
subsidy parameters. Reports will then
be produced on Gross Covered Drug
Cost (GCDC) and low-income costsharing subsidy payment differentials.
These payment differential amounts
will be incorporated into final
reinsurance, low-income cost-sharing
subsidy, and risk sharing summary
totals for a contract. DIR adjustments
will be factored into these calculations
to arrive at the related payment offset
amount to be applied at the contract
level. The difference in reinsurance,
low-income cost-sharing subsidy, and
risk sharing dollars with and without
the correction to the PDEs will
constitute the payment offset related to
the beneficiaries with the incorrect
PDEs.
If the erroneous payment data in
question is subsequently corrected
through the CMS payment system, the
offset amount will be reversed, and the
payment to the MA organization or Part
D sponsor will be updated through the
routine payment process. However, if
the data in the CMS system are not
corrected and CMS conducts a
reconciliation or reopening for the
applicable payment year after the offset
has been determined, the data will not
be properly synchronized, and it is
possible that the resulting payment
adjustments could be incorrect. In order
to resolve this problem, CMS may
reverse the original offset and
recalculate the offset using the more
recent data used in the most recent
payment reconciliation or reopening.
The new offset amount will replace the
previous offset amount, and CMS would
need to evaluate and act on the resulting
overpayment or underpayment.
Comment: A few commenters
expressed concern about the payment
calculation algorithm that will be used
to determine the overpayment amount
that should be recouped. Other
commenters stated that they could not
understand why CMS cannot simply

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correct the data in the payment systems
of record and ‘‘run a reopening.’’
Commenters requested that CMS clarify
why the traditional reopening process
cannot adequately address the types of
payment issues outlined in the
proposed rule. The commenters noted
that CMS has used its existing authority
in the past to remove PDEs it believed
should not have been submitted. One
commenter stated that this proposal
creates an environment where the
sponsor’s records of the PDEs and the
TrOOP accumulators would be out of
sync with CMS systems timing and
would pose challenges during the
reconciliations of PDEs and payment
data, as well as readjudication of
beneficiary claims, and as a result,
recommended that CMS withdraw the
proposal and assess whether there are
other current less onerous mechanisms
that can be adopted to better meet its
goals.
Response: For the Part C program and
the Part D program, we believe that the
traditional risk adjustment rerun and
other reopening processes are the best
mechanisms to recoup overpayments.
We believe that these processes will be
adequate to recoup overpayments in
most cases because we assume that the
majority of MA organizations and Part D
sponsors will adjust their payment data
upon request by CMS. However, as we
stated in the preamble to our proposed
rule, if an MA organization or Part D
sponsor fails to correct erroneous
payment data, the established risk
adjustment rerun and reopening
processes are inadequate. Because the
data would not have been corrected in
the CMS payment system, we will have
to determine the overpayment amount
by applying a payment calculation
algorithm to simulate the payment
calculations currently applied by CMS
systems to produce routine Part C and
Part D payments. It is true, as one
commenter stated, that, in the Part D
program, CMS has used existing
authority to remove PDE data that
should not have been submitted. We use
that authority in very limited
circumstances when the erroneous data
is PDE data. Part D payment data also
includes, however, direct and indirect
remuneration (DIR) data, for which we
do not have a means to ‘‘correct’’
erroneous data. Likewise, we do not
have a process in place to ‘‘correct’’
erroneous data in the Part C program. In
addition, because we only expect to
conduct these types of data corrections
in a limited set of circumstances, and it
would require significant resources to
make the payment system changes to
support such corrections, CMS is

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prepared to use a more economical
process based on running a payment
calculation algorithm to recover the
improper payments.
As stated in the proposed rule, CMS
already simulates Part C and Part D
payments outside of the core payment
systems to accurately calculate
payments and payment errors for a
variety of different purposes. Therefore,
we believe that this procedural
mechanism is the least onerous
mechanism that can be adopted to
recoup overpayments, return them to
the Medicare Trust Funds, and ensure
that payments are made consistent with
the payment framework established in
statute. Therefore, we are not
withdrawing the proposal, as one
commenter recommended.
Comment: One commenter stated that
CMS should not implement any type of
extrapolation methodology when
calculating the payment offset for MA
organizations or Part D sponsors. The
commenter believed that CMS may seek
to extrapolate the results of erroneous
payment data to all beneficiaries
enrolled under a contract if the MA
organization or Part D sponsor does not
submit corrected data as requested by
CMS. The commenter believed that the
proposed provision could be interpreted
to mean that CMS may apply the offset
amount to all beneficiaries, even though
not all beneficiaries may have been
affected by the incorrect data. The
commenter opined that it would not be
appropriate to extrapolate paymentoffset calculations without providing
MA organizations and Part D sponsors
with notice or an explanation of the
methodologies that CMS would employ.
Commenters recommended that CMS
expressly state that extrapolation will
not be involved in payment recoupment
under the CMS-identified overpayment
regulations, and the payment offsets
should be applied based on payment
errors that have been determined for
specific beneficiaries.
Response: CMS may identify
erroneous payment data submitted by
MA organizations or Part D sponsors
through a variety of different means. In
the proposed rule, we discussed the
procedures that CMS would undertake
when erroneous payment data are
identified, but did not address the
means by which CMS would identify
erroneous payment data. Therefore, this
comment is outside the scope of the
proposed rule.
Comment: Several commenters raised
the issue that, in cases where a CMSidentified overpayment is a result of
errors in diagnosis data submitted by
MA organizations, CMS’ determination
of the overpayment amount should take

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into account the fact that the CMS–HCC
risk adjustment model used to riskadjust payments to MA organizations is
calibrated on diagnoses from Medicare
fee-for-service claims not MA
organizations’ claims. Commenters
referred to this as the ‘‘data
inconsistency issue.’’ Specifically,
commenters noted that CMS has
recognized, in the contract-level RADV
context, that individual errors in risk
adjustment data cannot be equated with
overpayments without first accounting
for the error rate in the fee-for-service
(‘‘FFS’’) claims data. Commenters also
stated that CMS has acknowledged
when calculating overpayments based
on medical record review for RADV
audits that it must ‘‘account for the fact
that the documentation standard used in
RADV audits to determine a contract’s
payment error (medical records) is
different from the documentation
standard used to develop the Part C riskadjustment model (FFS claims).’’
Further, commenters noted that, to
address this problem, CMS
implemented a ‘‘FFS Adjuster’’ that
offsets the payment recovery amount to
account for FFS and MA program
differences in documentation standards.
These commenters believed that CMS’
application of the ‘‘FFS Adjuster’’ in the
RADV context does fulfill the actuarial
equivalence requirement under the risk
adjustment provisions in the Act, and
failure to maintain logical consistency
by applying this adjuster in the context
of the CMS-identified overpayments
addressed by this rule would be
contrary to the actuarial standard in
statute.
Response: We understand from these
comments that commenters are
specifically recommending that any risk
adjustment payment recovery amounts
be adjusted to reflect medical record
coding documentation differentials
between FFS providers and MA
organizations. We note that this type of
adjustment would not apply to other
types of data errors, such as those that
might be found in PDE data. We further
interpret the commenters to be saying
that the overpayment amounts should
be adjusted downward to take the
medical record coding documentation
differential into account. From a
conceptual perspective, we believe that
the application of a FFS adjuster is a
payment calculation methodology issue,
rather than a procedural issue. Our
proposal was narrowly tailored to
specify a procedure for correcting the
inaccurate data that MA organizations
and Part D sponsors have submitted for
payment and providing an appeals
process. Therefore, we believe that these

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comments relating to data inconsistency
and the application of a FFS adjuster to
overpayments are outside the scope of
the proposed provision.
After consideration of the public
comments we received, we are
finalizing our proposal, as proposed,
without modification.

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b. Payment Offset Notification
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we proposed that
CMS would provide a payment offset
notice to the MA organization or Part D
sponsor (proposed §§ 422.330(d)(1)
through (d)(3) and 423.352(d)(1) through
(d)(3)). The notice would provide the
dollar amount to be offset against a
plan’s monthly prospective payments
and an explanation of how the
erroneous data were identified and of
the calculation of the payment offset
amount. Under our proposal, the
payment offset notice would also
explain that, in the event that the MA
organization or Part D sponsor disagrees
with the payment offset, it may request
an appeal within 30 days of the issuance
of the payment offset notice.
Comment: A number of commenters
requested that CMS provide for an
appeals process prior to conducting the
payment recovery or offset.
Response: We are concerned that if
we allow for appeals prior to the offset,
we are at risk of having an extensive
process that inordinately delays the
offset and the recovery of the
overpayment. However, we are willing
to engage in a dialogue with plans prior
to the offset. We anticipate that this
dialogue will help to resolve data issues
prior to implementing the payment
offset and recovery. Therefore, we are
not making the requested changes to the
proposed process for payment offset
notification.
After consideration of the public
comments we received, we are
finalizing our proposal. However, we
are making a minor modification to the
accompanying regulation text at
§ 422.330(d) and § 423.352(d) to clarify
that the payment offset notice will
include at least the information outlined
in the regulation, but may include other
information relevant to the payment
offset.
4. Appeals Process for MA
Organizations and Part D Sponsors
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we proposed an
appeals process for MA organizations
and Part D sponsors with three levels of
review, including reconsideration
(described at proposed §§ 422.330(e)(1)
and 423.352(e)(1)), an informal hearing
(described at proposed §§ 422.330(e)(2)

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and 423.352(e)(2)), and an
Administrator review (described at
proposed §§ 422.330(e)(3) and
423.352(e)(3)).
a. Reconsideration
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we proposed that an
MA organization or Part D sponsor must
file its request for reconsideration
within 30 days from the date that CMS
issued the payment offset notice to the
MA organization or the Part D sponsor
(proposed §§ 422.330(e)(1)(i) and
423.352(e)(1)(i)). At proposed
§§ 422.330(e)(1)(ii) and 423.352(e)(1)(ii),
we address the information that must be
included in the MA organization’s or
Part D sponsor’s request for
reconsideration. The request would
have to contain the findings or issues
with which the MA organization or Part
D sponsor disagrees, the reasons for its
disagreement, and any additional
documentary evidence that the MA
organization or Part D sponsor wishes to
submit in support of its position. This
additional evidence would have to be
submitted with the request for
reconsideration. Under our proposal,
any information submitted after this
time would be rejected as untimely.
Under our proposal, the CMS
reconsideration official would review
the underlying data that were used to
determine the amount of the payment
offset and any additional documentary
evidence that the MA organization or
Part D sponsor timely submitted with its
reconsideration request
(§§ 422.330(e)(1)(iii) and
423.352(e)(1)(iii)). We note that, in some
instances, the CMS reconsideration
official’s review of the underlying data
may include review of information
identifying or explaining the error in the
payment data, such as information from
the source that identified the erroneous
payment data. We proposed at
§§ 422.330(e)(1)(iv) and 423.352(e)(1)(iv)
that the CMS reconsideration official
would inform the MA organization or
Part D sponsor of the decision. We
proposed at §§ 422.330(e)(1)(v) and
423.352(e)(1)(v) that a reconsideration
decision would be final and binding
unless a timely request for an informal
hearing is filed by the MA organization
or Part D sponsor.
Comment: Several commenters stated
that a 30-day window to submit an
appeal request is too short. A few
commenters asked that CMS provide at
least 60 days from the time a data
correction notice is issued for Part D
sponsors to appeal the data correction
decision. One commenter suggested a
timeframe of 30 days to appeal and an
additional 60 days for researching the

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issue and gathering supporting
documents necessary for consideration.
Response: We have considered these
concerns and suggestions, and we
continue to believe that 30 days is
sufficient time to file the appeal,
particularly because the MA
organization or Part D sponsor would
have received an earlier notification and
request to correct the erroneous data.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification.
b. Informal Hearing
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we proposed that if
the MA organization or Part D sponsor
is dissatisfied with CMS’
reconsideration decision, it would be
entitled to request an informal hearing
(proposed §§ 422.330(e)(2) and
423.352(e)(2)). As proposed at
§§ 422.330(e)(2)(i) and 423.352(e)(2)(i), a
request for an informal hearing must be
made in writing and filed within 30
days of the date of CMS’ reconsideration
decision. The request must include a
copy of CMS’ reconsideration decision
and must specify the findings or issues
in the decision with which the MA
organization or Part D sponsor disagrees
and the reasons for its disagreement
(proposed §§ 422.330(e)(2)(ii) and
423.352(e)(2)(ii)).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we set forth the
proposed procedures for conducting the
informal hearing at proposed
§§ 422.330(e)(2)(iii) and
423.352(e)(2)(iii). Under these
procedures, CMS would provide written
notice of the time and place of the
informal hearing at least 10 days before
the scheduled date of the hearing
(proposed § 422.330(e)(2)(iii)(A) and
§ 423.352(e)(2)(iii)(A)); the informal
hearing would be conducted by a CMS
hearing officer. The hearing officer
would be limited to reviewing the
record that was before CMS when CMS
made its reconsideration determination
(proposed § 422.330(e)(2)(iii)(B) and
§ 423.352(e)(2)(iii)(B)). Under our
proposal, no new or additional
documentation or evidence may be
submitted at this hearing. At proposed
§ 422.330(e)(2)(iii)(C) and
§ 423.352(e)(2)(iii)(C), we proposed that
the CMS hearing officer would review
the record of the proceeding before the
CMS reconsideration official using the
clearly erroneous standard of review.
CMS’ reconsideration decision would
not be reversed unless the MA
organization or Part D sponsor
establishes that the decision was clearly
erroneous in light of the evidence in the

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record before the CMS reconsideration
official.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), at proposed
§§ 422.330(e)(2)(iv) and
423.352(e)(2)(iv), we proposed that the
CMS hearing officer would send a
written decision of the informal hearing
to the MA organization or Part D
sponsor explaining the basis for the
decision. The CMS hearing officer’s
decision would be final and binding,
unless the decision is reversed or
modified by the Administrator
(proposed §§ 422.330(e)(2)(v) and
423.352(e)(2)(v)).
Comment: One commenter
recommended that CMS allow plans the
opportunity to present oral arguments
during the informal hearing appeal stage
and that written notice addressing the
time and location of the hearing be
provided at least 30 days prior, as
opposed to the proposed 10 days.
Response: As proposed and finalized,
this rule will permit MA organizations
and Part D sponsors, at the informal
hearing stage, to present oral arguments
regarding whether or not the CMS
reconsideration official’s decision was
clearly erroneous. At the informal
hearing, the hearing officer will review,
and the parties may discuss, the
contents of the administrative record,
which was before the reconsideration
official. We understand that 10 days’
notice of the time and place of the
hearing may be insufficient notice for
some MA organizations and Part D
sponsors to arrange for travel to the
hearing location. Therefore, we are
accepting the commenters’ suggestion to
extend the timeframe for CMS to
provide written notice of the time and
place of the hearing, and are extending
that timeframe to 30 days before the
scheduled date for the informal hearing.
Comment: A few commenters stated
that with the ‘‘clearly erroneous’’
standard, CMS is unfairly placing the
burden of proving CMS wrong
completely on the MA organizations
and Part D sponsors. Commenters
pointed out that a sponsor may be
unable—not unwilling—to collect the
data required to refute CMS’ assertions.
One commenter stated that while the
burden of proof falls to the sponsors to
disprove CMS’ claims, there is no
explicit requirement that CMS must be
able to substantiate its concerns
regarding data before it triggers the
proposed incorrect payment notification
process. The commenter is concerned
that without changes to these standards
the possibility exists for abuse of the
process, putting sponsors on a continual
defensive cycle. The commenter
suggested that CMS be obligated to

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provide reasonable substantiation of its
overpayment claim and that the
standard for review be that the MA
organization or Part D sponsor provide
reasonable evidence, in light of the
available data, that the CMS claim is not
supportable.
Response: The issue of whether or not
payment data submitted by an MA
organization or Part D sponsor are
erroneous is a factual issue that is
determined by looking at the payment
data in relation to the payment
framework established in statute and
regulation, which the MA organizations
and Part D sponsors agree to be
contractually bound by when they sign
the agreement with CMS to operate a
Medicare Advantage and/or a Voluntary
Medicare Prescription Drug Plan. Under
the clearly erroneous standard of
review, the hearing officer will only
overturn the reconsideration official’s
decision if that decision, based on the
record before the reconsideration
official, contains plain errors of fact or
law. Because the determination of
whether or not payment data submitted
by an MA organization or Part D
sponsor are erroneous is a factual one,
we believe that the clearly erroneous
standard is appropriate. The CMS
reconsideration official reviews the
underlying data that were submitted by
the MA organization or Part D sponsor
and any additional documentary
evidence timely submitted by the MA
organization or Part D sponsor, and thus
is in the best position to determine the
facts underlying the determination that
erroneous payment data have been
submitted. Accordingly, the
reconsideration official’s decision
should only be disturbed in the case of
a clear error.
We believe commenters are concerned
that there is no requirement that CMS
substantiate its claims of an
overpayment and that could lead to
abuse of the process. To the contrary,
paragraph (b) of both § 422.330 and
§ 423.352 imposes a burden and a
requirement on CMS. Under these
provisions, we can request corrections
to payment data through a notice in
which we are obligated to include or
make reference to the specific data that
need to be corrected and the reason why
we believe that the data are erroneous.
‘‘Erroneous payment data,’’ as stated in
the preamble of the proposed rule and
the text of the regulations being adopted
in this final rule, are data that should
not have been submitted because the
data are either inaccurate or
inconsistent with Part C or Part D
requirements. We will determine
payment data to be erroneous based on
the applicable statutes and regulations.

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Based on the payment framework
established in statute and regulation, we
will determine whether or not that
erroneous data result in an overpayment
prior to conducting the payment offset.
Commenters are concerned that they
will be unable—not unwilling—to refute
CMS’ decision that the submission of
erroneous payment data has resulted in
an overpayment. As we stated in the
preamble to our proposed rule, we
proposed to establish a process for
identifying and recouping overpayments
to ensure that payments are made
consistent with the payment framework
established by statute. If we determine
that an overpayment has occurred, the
MA organization or Part D sponsor must
be able to provide evidence to refute the
finding that the underlying payment
data are erroneous in order to succeed
on appeal. As stated in the proposed
rule at §§ 422.330(f) and 423.352(f), the
MA organization or Part D sponsor must
be able to prove by a preponderance of
the evidence that our finding that the
payment data are erroneous was
incorrect or otherwise inconsistent with
applicable program requirements. Thus,
we believe that it is reasonable to expect
that MA organizations and Part D
sponsors provide evidence to support
how their payment data are correct and
consistent with program requirements
in order for the CMS hearing officer to
reverse both an initial determination by
CMS and a reconsideration decision by
the CMS reconsideration official that
erroneous payment data have been
submitted.
After consideration of the public
comments we received, we are
finalizing our proposals with respect to
the procedures that will apply to a
request for an informal hearing, with a
modification to provide that we will
provide written notice of the time and
place of the hearing 30 days before the
scheduled date, as described above.
c. Review by Administrator
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41062), we proposed that
the MA organization or Part D sponsor
may request review of the hearing
officer’s decision by the Administrator
within 30 days of issuance of the
hearing officer’s decision (proposed
§§ 422.330(e)(3)(i) and 423.352(e)(3)(i)).
The MA organization or Part D sponsor
may provide written arguments to the
Administrator for review. Under
proposed §§ 422.330(e)(3)(ii) and
423.352(e)(3)(ii), after receiving the
request for review, the Administrator
would have the discretion to elect to
review the hearing determination or
decline to review it. As provided at
proposed §§ 422.330(e)(3)(iii) and

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423.352(e)(3)(iii), if the Administrator
declines to review the hearing officer’s
decision, the hearing officer’s decision
would be final and binding. At
proposed §§ 422.330(e)(3)(iv) and
423.352(e)(3)(iv), we proposed that if
the Administrator elects to review the
hearing officer’s decision, the
Administrator would review the hearing
officer’s decision, as well as any other
information included in the record of
the hearing officer’s decision and any
written arguments submitted by the MA
organization or Part D sponsor. The
Administrator would be able to uphold,
reverse, or modify the hearing officer’s
decision. The Administrator’s
determination would be final and
binding (proposed §§ 422.330(e)(3)(v)
and 423.352(e)(3)(v)).
We did not receive any public
comments on the proposal for review by
the Administrator and are finalizing this
proposal without modification.
5. Matters Subject To Appeal and
Burden of Proof
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41063), at proposed
§§ 422.330(f)(1) and (2) and
423.352(f)(1) and (2), we proposed to
limit the subject-matter that an MA
organization or Part D sponsor may
appeal under this provision and
establish the burden of proof that the
MA organization or Part D sponsor must
meet in its appeal. Under this provision,
an MA organization or a Part D sponsor
would be able to appeal the notice of
payment offset solely on the grounds
that CMS’ finding that the MA
organization’s or Part D sponsor’s
payment data were either erroneous or
otherwise inconsistent with applicable
program requirements. The MA
organization or Part D sponsor would
bear the burden of proof by a
preponderance of the evidence in
demonstrating that CMS’ finding was
incorrect or inconsistent with applicable
program requirements.
At proposed §§ 422.330(g) and
423.352(g), we proposed that the
appeals process under paragraph (e) of
these sections would apply only to
payment offsets described at proposed
§§ 422.330(c) and 423.352(c). It would
not apply to any other CMS payment
offset process.
Comment: One commenter noted that,
in the proposed rule, CMS stated that
the burden of proof is on the MA
organization or Part D sponsor to prove
that the CMS finding was ‘‘incorrect or
otherwise inconsistent with applicable
program requirements.’’ This
commenter asked that CMS clarify that
plans would not be expected to conform
to FFS requirements or business models

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in coding practices. The commenter
stated that in the past there have been
occasions when CMS has relied on the
use of FFS requirements or customary
practices in the absence of specific MA
or Part D guidelines. The commenter
stated that this creates an unreasonable
burden of regulations, rules, manuals,
notices, and bulletins that must be
considered in the process of identifying,
reporting, and appealing matters of data
accuracy and potential overpayment. In
addition, the commenter believed that
this practice does not address the fact
that an error may have been solely
caused by provider error, over which a
plan has no control, and therefore
places an unreasonable burden on the
plan.
Response: We are not clear about the
commenter’s concern. In the preamble
of the proposed rule, the phrase
‘‘applicable program requirements’’ is
referring to MA program requirements,
not to FFS program requirements. If the
commenter is asking about coding
practices, CMS does not provide
specific MA guidelines on how to code,
but instead requires that MA
organizations use the code sets and
guidelines in whatever version of the
International Classification of Diseases
that is in effect for the classification and
reporting of diseases for all U.S. health
care settings (not just Medicare).
Further, we are unsure as to what the
commenter is referring in the statement
‘‘in the past there have been occasions
when CMS has relied on the use of FFS
requirements or customary practices in
the absence of specific MA or Part D
guidelines.’’ The commenter did not
provide any examples, so we are unable
to respond to this concern. Regarding
the statement that an MA organization
has no control over provider errors in
data submission, we refer readers to the
contracting provisions in the MA
regulation at § 422.504 regarding the
MA organization’s responsibility for
data submissions.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification.
6. Effective Date of Appeals Process
Provisions
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41063), we proposed that
this new procedural mechanism for a
payment offset at proposed § 422.330
and § 423.352 would apply after the
effective date of any final rule
implementing the new payment offset
and appeals process, but that requests to
correct payment data under proposed
§§ 422.330(b) and 423.352(b) and the
payment offsets under proposed

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§§ 422.330(c) and 423.352(c) may apply
to any payment year, subject to the 6year limitation under §§ 422.330(b) and
423.352(b).
We invited public comments on these
proposals regarding the effective date
and application of the rule.
We did not receive any public
comments on these proposals, and we
are finalizing our proposals with the
modification discussed above to codify
the 6-year limitation in paragraph (c) of
§§ 422.330 and 423.352.
In summary, we are finalizing the
provisions at §§ 422.330 and 423.352,
with the following modifications. We
are removing the phrase ‘‘controlled
and’’ from the definition of ‘‘payment
data’’ at §§ 422.330(a) and 423.352(a).
We are adding the definition of
‘‘erroneous payment data’’ to the final
regulation text at §§ 422.330(a) and
423.352(a). At §§ 422.330(b) and
423.352(b), we are moving language
regarding the 6-year look-back period to
§§ 422.330(c)(1) and 423.352(c)(1) to
indicate that if the MA organization or
Part D sponsor fails to correct payment
data, CMS will conduct a payment offset
if the payment error identified affects
payments for any of the 6 most recently
completed payment years and the
payment error for a particular payment
year is identified after the applicable
reconciliation date for that payment
year. At §§ 422.330(c) and 423.352(c),
we are adding paragraph (2) to clarify
that CMS will calculate the payment
offset amount using the correct payment
data. In addition, we are making a minor
modification to the regulation text at
§ 422.330(d) and § 423.352(d) to clarify
that the payment offset notice will
include at least the information outlined
in the regulation, but may include other
information relevant to the payment
offset. Finally, we are revising
§§ 422.330(e)(2)(iii)(A) and
423.352(e)(2)(iii)(A) to state that we will
provide written notice of the time and
place of the informal hearing at least 30
days before the scheduled date.
XVIII. Files Available to the Public via
the Internet
Addendum J to this final rule with
comment period is a new addendum
that we proposed for CY 2015, in
response to requests by public
commenters on the CY 2014 OPPS/ASC
final rule with comment period for
additional data regarding ratesetting for
the new comprehensive APCs
established in that final rule with
comment period, which are discussed in
section II.A.2.e. of this final rule with
comment period. Addendum J lists the
HCPCS code pairs for which we are
finalizing complexity adjustments for

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CY 2015, by clinical family; the HCPCS
codes finalized for exclusion from the
comprehensive APC payment bundle;
and the relevant cost statistics.
The public comments that we
received related to the proposed
Addendum J to the CY 2015 OPPS/ASC
proposed rule are discussed in detail in
section II.A.2.e. of this final rule with
comment period. We are finalizing our
proposal to create Addendum J without
modification.
The Addenda to the OPPS/ASC
proposed rules and the final rules with
comment period are published and
available only via the Internet on the
CMS Web site. To view the Addenda to
this final rule comment period
pertaining to CY 2015 payments under
the OPPS, we refer readers to the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/
Hospital-Outpatient-Regulations-andNotices.html; select ‘‘1613–FC’’ from the
list of regulations. All OPPS Addenda to
this final rule with comment period are
contained in the zipped folder entitled
‘‘2015 OPPS 1613–F Addenda’’ at the
bottom of the page. To view the
Addenda to this final rule with
comment period pertaining to the CY
2015 payments under the ASC payment
system, we refer readers to the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASCRegulations-and-Notices.html; select
‘‘1613–FC’’ from the list of regulations.
All ASC Addenda to this final rule with
comment period are contained in the
zipped folders entitled ‘‘Addendum AA,
BB, DD1 and DD2,’’ and ‘‘Addendum
EE’’.
XIX. Collection of Information
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A. Legislative Requirements for
Solicitation of Comments
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
to solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.

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• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
In the CY 2015 OPPS/ASC proposed
rule (79 FR 741063 through 41067), we
solicited public comments on each of
the issues outlined above for the
information collection requirements
discussed below.
B. Requirements in Regulation Text:
Changes to the Rural Provider and
Hospital Ownership Exceptions to the
Physician Self-Referral Law: Expansion
Exception Process (§ 411.362)
As discussed in section XV.C. of the
CY 2015 OPPS/ASC proposed rule (79
FR 41054 through 41056) and in section
XV.C. of this final rule with comment
period, we proposed to modify the
physician-owned hospital expansion
exception process under the rural
provider and hospital ownership
exceptions to the physician self-referral
law. Specifically, we proposed to permit
physician-owned hospitals to use
certain non-HCRIS data sources to
demonstrate satisfaction of the
expansion exception process eligibility
criteria.
In section XIX.B. of the CY 2015
OPPS/ASC proposed rule (79 FR 41063),
we stated that we believe the burden
associated with our modifications to the
physician-owned hospital expansion
exception process is exempt from the
PRA under 5 CFR 1320.3(c) because the
information collection will not impact
10 or more entities in a 12-month
period. We did not receive any public
comments on the proposed stated
burden of our proposed modifications to
the physician-owned hospital expansion
exception process.
As discussed in section XV.C. of this
final rule with comment period, we are
finalizing our proposal with certain
modifications. The provisions are
exempt from the PRA under 5 CFR
1320.3(c) because the information
collection will not impact 10 or more
entities in a 12-month period.
C. Associated Information Collections
Not Specified in Regulatory Text
In the CY 2015 OPPS/ASC proposed
rule, we made reference to proposed
associated information collection
requirements that were not discussed in
the regulation text contained in the
proposed rule. The following is a
discussion of those requirements, any
public comments we received, and our
responses to those public comments.

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1. Hospital OQR Program
As we stated in section XIV. of the CY
2012 OPPS/ASC final rule with
comment period, the Hospital OQR
Program has been generally modeled
after the quality data reporting program
for the Hospital IQR Program (76 FR
74451). We refer readers to the CY 2011
OPPS/ASC final rule with comment
period (75 FR 72111 through 72114), the
CY 2012 OPPS/ASC final rule with
comment period (76 FR 74549 through
74554), the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68527
through 68532), and the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75170 through 75172) for detailed
discussions of Hospital OQR Program
information collection requirements we
have previously finalized.
a. Revisions to the CY 2016 Payment
Determination Estimates
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75103), we
finalized the adoption of four new
measures for the CY 2016 payment
determination and subsequent years: (1)
OP–27: Influenza Vaccination Coverage
among Healthcare Personnel (NQF #
0431); (2) OP 29: Endoscopy/Polyp
Surveillance: Appropriate Follow-up
Interval for Normal Colonoscopy in
Average Risk Patients (NQF # 0658); (3)
OP 30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps—
Avoidance of Inappropriate Use (NQF #
0659); and (4) OP–31: Cataracts—
Improvement in Patient’s Visual
Function within 90 Days Following
Cataract Surgery (NQF # 1536). In the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75171), we
estimated measures OP–29, OP–30, and
OP–31 would require 40 hours of
reporting per quarter (96 cases × 0.417
hours). We also estimated that reporting
these measures via our Web-based tool
would take 10 minutes (or 0.167 hours)
per measure per year (or 2.5 minutes for
each quarter’s data, which are submitted
on an annual basis) (78 FR 75171
through 75172).
We noted in section XIII.D.2. of the
CY 2015 OPPS/ASC proposed rule and
this final rule with comment period that
we have delayed reporting for OP–29
and OP–30 for the CY 2016 payment
determination by one quarter. Therefore,
we estimate a reduction in burden of 40
hours for each of these measures (40
hours per quarter for reporting + 2.5
minutes of reporting via the Web-based
tool) per hospital for the CY 2016
payment determination. In addition, in
section XIII.D.3. of the CY 2015 OPPS/
ASC proposed rule and this final rule

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with comment period, we are finalizing
our proposal to exclude OP–31 from the
CY 2016 payment determination
measure set. Therefore, we estimate that
there will be no burden for reporting
OP–31 for the CY 2016 payment
determination, and an overall reduction
in burden of 160 hours ((40 hours per
quarter for reporting × 4 quarters)
+ 0.167 hours per year for reporting via
the Web-based tool) per hospital for the
CY 2016 payment determination.
Combining the estimated reductions
in burden for all three of these
measures, we estimate a total reduction
in burden of 240 hours (40 hours + 40
hours + 160 hours) per hospital for the
CY 2016 payment determination due to
delayed data collection for OP–29 and
OP–30 and the exclusion of OP–31. We
estimate that approximately 3,300
hospitals will participate in the Hospital
OQR Program for the CY 2016 payment
determination. Therefore, we estimate a
total reduction in burden of 792,000
hours (240 hours × 3,300 hospitals) for
the CY 2016 payment determination
from our original estimate of 1.6 million
hours (160 hours/measure × 3 measures
× 3,300 hospitals) as discussed in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75171 through
75172) for all hospitals participating in
the Hospital OQR Program based on the
data collection delays for OP–29 and
OP–30 and the exclusion of OP–31. In
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75171), we
estimated that these measures would
result in a financial burden of $30 per
hour. Therefore, we estimate that the
changes to these three measures will
result in a reduction in financial burden
of $23.8 million ($30/hour × 792,000
hours) for the CY 2016 payment
determination from our original
estimate of $76.8 million ($1.6 million
× $30) as discussed in the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75171 through 75172).
b. Hospital OQR Program Requirements
for the CY 2017 Payment Determination
and Subsequent Years
As we stated in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75171), we believe there is a burden
associated with successful participation
in the Hospital OQR Program, where
successful participation results in a full
annual payment update (APU) for the
particular payment determination. For
the reasons stated in that rule, we
believe that the burden associated with
these requirements is 42 hours per
hospital or 138,600 hours for all
hospitals for the CY 2017 payment
determination and subsequent years. We
estimate a financial burden for these

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requirements of $4.2 million ($30/hour
× 138,600) for all hospitals.
(1) Claims-Based Measures for the CY
2017 and CY 2018 Payment
Determinations and Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68530) for detailed
discussions of the information
collection requirements for the
previously finalized claims-based
measures (OP–8, OP–9, OP–10, OP–11,
OP–13, OP–14, and OP–15). In section
XIII.E. of this final rule with comment
period, we are finalizing our proposal to
adopt one additional claims-based
measure, OP–32: Facility Seven-Day
Risk-Standardized Hospital Visit Rate
after Outpatient Colonoscopy, but are
finalizing its inclusion in the measure
set for the CY 2018 payment
determination and subsequent years
instead of for the CY 2017 payment
determination and subsequent years as
proposed. Before publicly reporting this
measure, however, we will conduct a
dry run (a preliminary analysis) for
facilities to review their performance
and provide feedback. For more detailed
information about the dry run, we refer
readers to our discussion in section
XIII.E. of this final rule with comment
period.
As we noted in the CY 2013 OPPS/
ASC final rule with comment period (77
FR 68530) and consistent with the
modifications we are finalizing in this
final rule with comment period, we
calculate claims-based measures using
Medicare FFS claims data that do not
require additional hospital data
submissions.
(2) Chart-Abstracted Measures for the
CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68530 through 68531) and
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75171) for
detailed discussions of the information
collection requirements for the
previously finalized chart-abstracted
measures (OP–1, OP–2, OP–3, OP–4,
OP–5, OP–6, OP–7, OP–18, OP–20, OP–
21, OP–22, OP–23, OP–29, OP–30, and
OP–31).
In the CY 2015 OPPS/ASC proposed
rule (79 FR 41034), we proposed to
remove three chart-abstracted measures
from the Hospital OQR Program
beginning with the CY 2017 payment
determination, OP–4: Aspirin at Arrival
(NQF # 0286); OP–6: Timing of
Prophylactic Antibiotics; and OP–7:
Perioperative Care: Prophylactic
Antibiotic Selection for Surgical

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Patients (NQF # 0528). In section
XIII.C.3. of this final rule with comment
period, we are finalizing our proposal to
remove two of these measures (OP–6
and OP–7) from the Hospital OQR
Program for the CY 2017 payment
determination and subsequent years. We
are not finalizing our proposal to
remove OP–4 and refer readers to
section XIII.C.3. of this final rule with
comment period for a detailed
discussion. We previously estimated
that each participating hospital will
spend 35 minutes (or 0.583 hours) per
case to collect and submit the data
required for the chart-abstracted
measures finalized for the CY 2015
payment determination and subsequent
years (OP–1, OP–2, OP–3, OP–4, OP–5,
OP–6, OP 7, OP–18, OP–20, OP–21, OP–
22, and OP–23) (78 FR 75171). Because
we are finalizing our proposals to
remove two of these measures, we
believe that the time to chart-abstract
measures will be reduced by 16.7
percent (2 of 12 measures) per case.
Therefore, we estimate that hospitals
will spend approximately 29 minutes
(0.483 hours) per case to collect and
submit these data.
Data submitted for the CY 2014
payment determination indicate that the
average hospital will submit
approximately 1,266 cases per year for
these measures. Therefore, as a result of
our removal of 2 chart-abstracted
measures, we estimate that the time it
will take for the average hospital to
abstract data for all of the chartabstracted measures will be 612 hours
per year (1,266 cases × 0.483 hours). We
estimate that there will be
approximately 3,300 hospitals that
participate in the Hospital OQR Program
for the CY 2017 payment determination
and subsequent years. Therefore, we
estimate that the chart-abstracted
measures for the CY 2017 payment
determination and subsequent years
will result in a burden of 2.02 million
hours (612 hours × 3,300 hospitals) for
all participating hospitals, for a total
financial burden of approximately $61
million (2.02 million hours × $30/hour).
In addition, in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75171), we estimated that OP–29 and
OP–30 would require 25 minutes (0.417
hours) per case per measure to chartabstract. We also estimated that
hospitals would abstract 384 cases per
year for each of these measures. Our
estimate for the CY 2017 payment
determination and subsequent years has
not changed from last year’s estimate
(although, as noted above, we have
changed our estimate for the CY 2016
payment determination based on the
delay of reporting OP–29 and OP–30).

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Therefore, for the CY 2017 payment
determination and subsequent years, we
estimate a burden of 1.1 million hours
(3,300 hospitals × 0.417 hours/case ×
384 case/measure × 2 measures) for all
participating hospitals for OP–29 and
OP–30 for a total financial burden of
approximately $33 million ($30/hour ×
1.1 million hours).
In section XIII.D.3. of this final rule
with comment period, we are finalizing
our proposal to exclude OP–31 from the
CY 2016 payment determination
measure set and, for the CY 2017
payment determination and subsequent
years, to change this measure from
required to voluntary. Hospitals will not
be subject to a payment reduction with
respect to this measure for the CY 2016
payment determination or during the
period of voluntary reporting. We
continue to believe this measure
addresses an important area of care, and
anticipate that many facilities will
report this measure on a voluntary basis.
In the CY 2014 ASC/OPPS final rule
with comment period (78 FR 75171), we
estimated that OP–31 would require 25
minutes (0.417 hours) per case to chartabstract. We also estimated that
hospitals would abstract 384 cases per
year for this measure. We estimate that
approximately 20 percent of hospitals
(660 hospitals (3,300 hospitals × 0.2))
will elect to report this measure on a
voluntary basis. Therefore, we are
revising the estimated burden for this
measure to 105,685 hours (660 hospitals
× 0.417 hours/case × 384 cases) for
participating hospitals for the CY 2017
payment determination and subsequent
years, for a total financial burden of
approximately $3.2 million ($30/hour ×
105,685 hours).
Therefore, for the chart-abstracted
measures, we estimate a total burden for
all participating hospitals of 3.23
million hours (2.02 million hours +
105,685 hours + 1.1 million hours) and
$96.9 million (3.23 million hours × $30/
hour) for the CY 2017 payment
determination and subsequent years.
(3) Web-Based Measures Submitted
Directly to CMS for the CY 2017
Payment Determination and Subsequent
Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75171) for detailed
discussions of the information
collection requirements for the
previously finalized measures submitted
via the Web-based tool. For the reasons
stated in that final rule with comment
period, we estimate that each
participating hospital would spend 10
minutes per measure per year to collect
and submit the data for the six measures

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(OP–12, OP–17, OP–25, OP–26, OP–29,
and OP–30) submitted via the Webbased tool. Therefore, the estimated
annual burden associated with these
measures for all participating hospitals
is 3,307 hours (3,300 hospitals × 0.167
hours/measure × 6 measures/hospital)
for the CY 2017 payment determination
and subsequent years.
As stated above, in section XIII.D.3. of
this final rule with comment period, we
are finalizing our proposal that hospitals
have the option to voluntarily collect
and submit OP–31 data beginning with
the CY 2015 encounter period for the
CY 2017 payment determination and
subsequent years; failing to report this
measure will not affect hospitals’
payment determinations for CY 2017
and subsequent years. We continue to
believe this measure addresses an
important area of care and estimate that
approximately 20 percent of hospitals or
660 hospitals (3,300 hospitals × 0.2) will
elect to report this measure on a
voluntary basis. Therefore, we are
revising the estimated burden for this
measure for all participating hospitals to
111 hours (660 hospitals × 0.167 hours)
for the CY 2017 payment determination
and subsequent years.
Moreover, we estimate that the
financial burden incurred for the Webbased submission of these measures for
all participating hospitals will be
$119,070 ($30/hour × (3,858 hours + 111
hours)) for the CY 2017 payment
determination and subsequent years.
(4) NHSN HAI Measure for the CY 2017
Payment Determination and Subsequent
Years
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75172) for detailed
discussions of the information
collection requirements for OP–27:
Influenza Vaccination Coverage among
Healthcare Personnel. In section
XIII.D.1. of this final rule with comment
period, we are clarifying the submission
deadline for this measure. We do not
believe there will be a change in burden
due to this clarification because it was
a typographical error and our previous
estimates were based on the correct
submission timeframe. We also noted
that facilities should collect and submit
a single vaccination count for each
health care facility enrolled in NHSN by
the facility OrgID. Although we believe
an overall reduction in burden will
occur because hospitals will only be
required to submit this information once
for both the Hospital IQR Program and
the Hospital OQR Program, we do not
believe there is a reduction in burden
that is directly attributable to the
Hospital OQR Program. That is, this

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requirement is independent of the
Hospital IQR Program requirements.
Therefore, our burden analysis remains
the same. For the reasons discussed in
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75172), we
estimate a total burden for all
participating hospitals of 106,940 hours
and a total financial burden of
$3,208,203 associated with this
measure.
c. Review and Corrections Period
Requirements for the CY 2017 Payment
Determination and Subsequent Years
In section XIII.H.2.f. of this final rule
with comment period, we are finalizing
our proposal to formalize that the time
during which hospitals submit chartabstracted data is the review and
corrections period for those data.
Because this proposal does not require
hospitals to submit additional data, we
do not believe it will increase burden
for these hospitals.
d. Hospital OQR Program Validation
Requirements for the CY 2017 Payment
Determination and Subsequent Years
In sections XIII.H.3.b. and XIII.H.3.e.
of this final rule with comment period,
we are finalizing three changes to our
validation procedures: (1) A hospital
will be eligible for random selection for
validation if it submits at least 12 cases
to the Hospital OQR Program Clinical
Data Warehouse during the quarter
containing the most recently available
data (we note that this is a modification
of our proposal that a hospital would be
eligible for random selection for
validation if it submitted 1 case); (2)
hospitals will have the option to either
submit paper copies of patient charts or
securely transmit electronic versions of
medical information for validation; and
(3) hospitals must identify the medical
records staff responsible for submission
of records under the Hospital OQR
Program to the designated CMS
contractor. We do not believe that these
changes to the eligibility requirements
will result in additional burden because
we will continue to select 500 hospitals
for validation consistent with our
previous burden estimates indicate (78
FR 75172). In addition, we do not
believe requiring hospitals to identify
the medical records staff responsible for
submission of records will result in
additional burden since hospitals must
already submit this information to our
designated contractors (the State QIO),
and only the contractor to whom the
data is submitted may change. However,
we do believe that the second
requirement regarding the method of
submission may result in a change in
burden.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
We are finalizing our proposal that
the requirement to submit patient charts
for validation of Hospital OQR Program
data may be met by employing either of
the following options: (1) A hospital
may submit paper medical records, the
form in which we have historically
requested them; or (2) a hospital may
securely transmit electronic versions of
medical information beginning in the
CY 2017 payment determination and for
subsequent years. We are finalizing our
proposal that hospitals that choose to
securely transmit electronic versions of
medical information should either: (1)
download or copy the digital image (that
is., a PDF) of the patient chart onto an
encrypted CD, DVD, or flash drive and
ship the encrypted electronic media
following instructions specified on the
QualityNet Web site; or (2) securely
submit PDFs of patient charts using a
Secure File Transfer Portal on the
QualityNet Web site. In the FY 2014
IPPS/LTCH PPS final rule (78 FR 50834
through 50835), the Hospital IQR
Program previously finalized a similar
policy that also allows hospitals to
submit electronic versions of records for
validation using the first method. In the
FY 2015 IPPS/LTCH PPS final rule, the
Hospital IQR Program finalized secure
submission of digital images via a
Secure File Transfer Portal (79 FR
50269). For the same reasons outlined in
the Hospital IQR Program (78 FR
50956), we are finalizing our proposal to
set a reimbursement rate of $3.00 per
patient chart submitted electronically
(using either of the finalized methods
for electronic submission) for validation
for the CY 2017 payment determination
and subsequent years. We will continue
to reimburse hospitals at a rate of 12
cents per page, plus shipping, for
records provided on paper (76 FR
74577).
The burden associated with validation
is the time and effort necessary to
submit validation data to the CMS
contractor. For some hospitals, we
believe that submitting these data
electronically may result in a reduction
in burden; for others we believe that
submitting paper copies will be the least
burdensome option. As we have
previously stated in the CY 2014 OPPS/
ASC final rule with comment period, we
sample 500 hospitals for validation, and
we estimate that it will take each
hospital 12 hours to comply with the
data submission requirements (78 FR
75172). Therefore, because the number
of hospitals we sample for validation
will remain the same, we estimate a
total burden of approximately 6,000
hours (500 hospitals x 12 hours/
hospital) and a total financial impact of

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$180,000 ($30/hour x 6,000 hours) for
the CY 2017 payment determination and
subsequent years.
e. Extraordinary Circumstances
Extensions or Exemptions Process
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014
OPPS/ASC final rule with comment
period (78 FR 75119 through 75120),
and 42 CFR 419.46(d) for a complete
discussion of our extraordinary
circumstances extension or waiver
process under the Hospital OQR
Program. In this final rule with
comment period, we are finalizing our
proposal to change the phrase
‘‘extension or waiver’’ to ‘‘extension or
exemption’’ throughout the regulation.
In section XIII.J. of this final rule with
comment period, we note that we intend
to make certain changes to the form to
ensure that the form is consistent across
CMS quality reporting programs. We do
not anticipate that these minor changes
will affect the collection of information
burden estimates for this process.
f. Reconsideration and Appeals
While there is burden associated with
filing a reconsideration request, the
regulations at 5 CFR 1320.4 for the PRA
(44 U.S.C. 3518(c)(1)(B)) exclude
collection activities during the conduct
of administrative actions such as
reconsiderations or appeals.
We invited public comment on the
burden associated with these
information collection requirements. We
did not receive any public comments on
this burden.
2. ASCQR Program Requirements
a. Background
We refer readers to the CY 2012
OPPS/ASC final rule with comment
period (76 FR 74554), the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53672), the
CY 2013 OPPS/ASC final rule with
comment period (77 FR 68532 through
68533), and the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75172 through 75174) for detailed
discussions of the ASCQR Program
information collection requirements we
have previously finalized.
b. Revisions to the CY 2016 Payment
Determination Estimates
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75124
through 75130), we finalized the
adoption of three new measures for the
CY 2016 payment determination and
subsequent years: ASC–9: Endoscopy/
Polyp Surveillance: Appropriate
Follow-up Interval for Normal
Colonoscopy in Average Risk Patients

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(NQF # 0658); ASC–10: Endoscopy/
Polyp Surveillance: Colonoscopy
Interval for Patients with a History of
Adenomatous Polyps—Avoidance of
Inappropriate Use (NQF # 0659); and
ASC–11: Cataracts—Improvement in
Patient’s Visual Function within 90
Days Following Cataract Surgery (NQF #
1536). In that final rule with comment
period, we estimated that each
participating ASC would spend 35
minutes per case to collect and submit
the data for these measures, resulting in
a total estimated burden for ASCs with
a single case per ASC of 3,067 hours
(5,260 ASCs × 0.583 hours per case per
ASC). We also stated that we expected
ASCs would vary greatly as to the
number of cases per ASC due to ASC
specialization (78 FR 75173).
As we stated in section XIV.E.3. of the
CY 2015 OPPS/ASC proposed rule and
this final rule with comment period, we
have delayed reporting for ASC–9 and
ASC–10 for the CY 2016 payment
determination by one quarter. Therefore,
we estimate a 25-percent reduction in
cases and burden for these measures for
the CY 2016 payment determination. As
we stated in section XIV.E.3.c. of the CY
2015 OPPS/ASC proposed rule and this
final rule with comment period, we
delayed reporting of ASC–11 by 1 year.
We also are finalizing our proposal to
exclude ASC–11 from the CY 2016
payment determination measure set. As
a result, we do not believe there would
be any burden associated with this
measure for the CY 2016 payment
determination.
c. Claims-Based Measures for the CY
2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014
OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for
detailed discussions of the information
collection requirements for the five
previously-adopted claims-based
ASCQR Program measures (four
outcome measures and one process
measure). The five previously adopted
measures are: ASC–1: Patient Burn
(NQF # 0263); ASC–2: Patient Fall (NQF
# 0266); ASC–3: Wrong Site, Wrong
Side, Wrong Patient, Wrong Procedure,
Wrong Implant (NQF # 0267); ASC–4:
Hospital Transfer/Admission (NQF #
0265); and ASC–5: Prophylactic
Intravenous (IV) Antibiotic Timing
(NQF # 0264). For the reasons we
discussed in the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75172 through 75173), we estimate that
the reporting burden to report Quality
Data Codes (QDCs) for these five claims-

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based outcome measures would be
nominal for the CY 2017 payment
determination and for subsequent years.
In section XIV.B.5. of this final rule
with comment period, we are finalizing
our proposal to add one additional
claims-based measure to the ASCQR
Program, but are finalizing its inclusion
in the measure sets for the CY 2018
payment determination and subsequent
years, instead of the measure set we
proposed for the CY 2017 payment
determination and subsequent years.
Before publicly reporting this measure,
we plan to perform a dry run (a
preliminary analysis) of the measure in
2015. We refer readers to section
XIV.B.5 of this final rule with comment
period for a detailed discussion of the
dry run.
Because this measure, ASC–12:
Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy, will be computed by CMS
based on paid Medicare FFS claims, and
will not require ASCs to submit QDCs,
we do not anticipate that this measure
would create additional burden to ASCs
during the dry run or for the CY 2018
payment determination and subsequent
years.
d. Web-Based Measures for the CY 2017
Payment Determination and Subsequent
Years
We refer readers to the CY 2013
OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014
OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for
detailed discussions of the information
collection requirements for the five
previously-adopted Web-based
measures, excluding ASC–11, which we
proposed for voluntary inclusion in the
ASCQR Program for the CY 2017
payment determination and subsequent
years. The five previously adopted
measures are: ASC–6: Safe Surgery
Checklist Use; ASC–7: ASC Facility
Volume Data on Selected ASC Surgical
Procedures; ASC–8: Influenza
Vaccination Coverage Among
Healthcare Personnel (NQF # 0431);
ASC–9: Endoscopy/Polyp Surveillance:
Appropriate Follow-Up Interval for
Normal Colonoscopy in Average Risk
Patients (NQF # 0658); and ASC–10:
Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous PolypsAvoidance of Inappropriate Use (NQF #
0659).
For the reasons we discussed in the
CY 2014 OPPS/ASC final rule with
comment period (78 FR 75173 through
75174), we estimate that the reporting
burden for the ASC–6: Safe Surgery
Checklist Use and the ASC–7: ASC

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Facility Volume measures would be
1,756 hours (5,260 ASCs × 2 measures
× 0.167 hours per ASC) and $52,680
(1,756 hours × $30.00 per hour)
annually for the CY 2017 payment
determination and for subsequent years.
For the reasons discussed in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 75173 through
75174), we estimate that the reporting
burden for the ASC–8: Influenza
Vaccination Coverage Among
Healthcare Personnel (NQF #0431)
measure would be 18,005 hours and
$540,150 (18,005 hours × $30.00 per
hour) annually for the CY 2017 payment
determination and for subsequent years.
For the reasons discussed in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 75173 through
75174), we estimate that the reporting
burden for ASCs with a single case per
ASC for the chart-abstracted ASC–9:
Endoscopy/Polyp Surveillance:
Appropriate Follow-Up Interval for
Normal Colonoscopy in Average Risk
Patients (NQF # 0658) and ASC–10:
Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous PolypsAvoidance of Inappropriate Use (NQF #
0659) measures would be 3,067 hours
and $92,010 (3,067 hours × $30.00 per
hour) annually for the CY 2017 payment
determination and for subsequent years.
In section XIV.E.3.c. of this final rule
with comment period, we are finalizing
our proposal that data collection and
submission be voluntary for the CY
2017 payment determination and
subsequent years for ASC–11: Cataracts:
Improvement in Patient’s Visual
Function within 90 Days Following
Cataract Surgery (NQF # 1536), meaning
we would not subject ASCs to a
payment reduction with respect to this
measure during the period of voluntary
reporting. We continue to believe this
measure addresses an important area of
care, and anticipate that many facilities
will report this measure on a voluntary
basis. In the CY 2014 ASC/OPPS final
rule with comment period (78 FR
75173), we estimated that each
participating ASC would spend 35
minutes per case to collect and submit
the data for this measure, making the
total estimated burden for ASCs with a
single case per ASC 3,067 hours (5,260
ASCs × 0.583 hours per case per ASC)
annually. We expect that ASCs would
vary greatly as to the number of cases
per ASC due to ASC specialization. We
estimate that approximately 20 percent
of ASCs would elect to report this
measure on a voluntary basis; therefore,
we estimate the total estimated burden
for ASCs with a single case per ASC to
be 613 hours (1,052 ASCs × 0.583 hours

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per case per ASC) and $18,390 (613
hours × $30.00 per hour) annually for
the CY 2017 payment determination and
subsequent years.
e. Extraordinary Circumstances
Extension or Exemptions Process
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53642
through 53643) and the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75140) for a complete discussion of
our extraordinary circumstances
extension or waiver process under the
ASCQR Program. In the CY 2015 OPPS/
ASC proposed rule, we did not propose
to make any substantive changes to this
process. However, in the future, we will
refer to the process as the extraordinary
circumstances extensions or exemptions
process. In section XIV.E.7. of this final
rule with comment period, we note that
we intend to make certain changes to
the form to ensure that the form is
consistent across CMS quality reporting
programs. We do not anticipate that
these minor changes would affect the
burden estimates for this process.
f. Reconsideration
While there is burden associated with
filing a reconsideration request, the
regulations at 5 CFR 1320.4 for the PRA
(44 U.S.C. 3518(c)(1)(B)) exclude
collection activities during the conduct
of administrative actions such as
reconsiderations.
We invited public comment on the
burden associated with these
information collection requirements. We
did not receive any public comments on
this burden.
XX. Waiver of Proposed Rulemaking
and Response to Comments
A. Waiver of Proposed Rulemaking
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register and invite public comment on
a proposed rule. The notice of proposed
rulemaking includes a reference to the
legal authority under which the rule is
proposed, and the terms and substance
of the proposed rule or a description of
the subjects and issues involved. This
procedure can be waived, however, if an
agency finds good cause that a noticeand-comment procedure is
impracticable, unnecessary, or contrary
to the public interest and incorporates a
statement of the finding and its reasons
in the rule issued.
We utilize HCPCS codes for Medicare
payment purposes. The HCPCS is a
national coding system comprised of
Level I codes (CPT codes) and Level II
codes that are intended to provide
uniformity to coding procedures,

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services, and supplies across all types of
medical providers and suppliers. CPT
codes are copyrighted by the AMA and
consist of several categories, including
Category I codes which are 5-digit
numeric codes, and Category III codes
which are temporary codes to track
emerging technology, services, and
procedures. The AMA issues an annual
update of the CPT code set each Fall,
with January 1 as the effective date for
implementing the updated CPT codes.
The HCPCS, including both CPT codes
and Level II codes, is similarly updated
annually on a calendar year basis.
Annual coding changes are not available
to the public until the Fall immediately
preceding the annual January update of
the OPPS and the ASC payment system.
Because of the timing of the release of
these new codes, it is impracticable for
us to provide prior notice and solicit
comment on these codes and the
payments assigned to them in advance
of publication of the final rule that
implements the OPPS and the ASC
payment system. However, it is
imperative that these coding changes be
accounted for and recognized timely
under the OPPS and the ASC payment
system for payment because services
represented by these codes will be
provided to Medicare beneficiaries in
hospital outpatient departments and
ASCs during the calendar year in which
they become effective. Moreover,
regulations implementing the HIPAA
(42 CFR Parts 160 and 162) require that
the HCPCS be used to report health care
services, including services paid under
the OPPS and the ASC payment system.
We assign interim payment amounts
and status indicators to any new codes
according to our assessment of the most
appropriate APC based on clinical and
resource homogeneity with other
procedures and services in the APC. If
we did not assign payment amounts to
new codes on an interim basis, the
alternative would be to not pay for these
services during the initial calendar year
in which the codes become effective.
We believe it would be contrary to the
public interest to delay establishment of
payment amounts for these codes.
Therefore, we find good cause to
waive the notice of proposed
rulemaking for the establishment of
payment amounts for selected HCPCS
codes identified with comment
indicator ‘‘NI’’ in Addendum B and
Addendum BB to this final rule with
comment period. We are providing a 60day public comment period.
B. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not

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able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this final rule with comment period,
and, when we proceed with a
subsequent document(s), we will
respond to those comments in the
preamble to that document.
XXI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We have examined the impacts of this
final rule with comment period, as
required by Executive Order 12866 on
Regulatory Planning and Review
(September 30, 1993), Executive Order
13563 on Improving Regulation and
Regulatory Review (January 18, 2011),
the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354),
section 1102(b) of the Social Security
Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
(March 22, 1995, Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999), and the Contract with
America Advancement Act of 1996
(Pub. L. 104–121) (5 U.S.C. 804(2)). This
section of the final rule with comment
period contains the impact and other
economic analyses for the provisions
that we are finalizing.
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This final
rule with comment period has been
designated as an economically
significant rule under section 3(f)(1) of
Executive Order 12866 and a major rule
under the Contract with America
Advancement Act of 1996 (Pub. L. 104–
121). Accordingly, this final rule with
comment period has been reviewed by
the Office of Management and Budget.
We have prepared a regulatory impact
analysis that, to the best of our ability,
presents the costs and benefits of this
final rule with comment period. We
solicited comments on the regulatory
impact analysis in the proposed rule,
and we address the public comments we
received in this section below and in
other sections of this final rule with
comment period as appropriate.

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2. Statement of Need
This final rule with comment period
is necessary to update the Medicare
hospital OPPS rates. It is necessary to
make changes to the payment policies
and rates for outpatient services
furnished by hospitals and CMHCs in
CY 2015. We are required under section
1833(t)(3)(C)(ii) of the Act to update
annually the OPPS conversion factor
used to determine the payment rates for
APCs. We also are required under
section 1833(t)(9)(A) of the Act to
review, not less often than annually,
and revise the groups, the relative
payment weights, and the wage and
other adjustments described in section
1833(t)(2) of the Act. We must review
the clinical integrity of payment groups
and relative payment weights at least
annually. We are revising the APC
relative payment weights using claims
data for services furnished on and after
January 1, 2013, through and including
December 31, 2013 and processed
through June 30, 2014, and updated cost
report information.
This final rule with comment period
also is necessary to update the ASC
payment rates for CY 2015, enabling
CMS to make changes to payment
policies and payment rates for covered
surgical procedures and covered
ancillary services that are performed in
an ASC in CY 2015. Because ASC
payment rates are based on the OPPS
relative payment weights for the
majority of the procedures performed in
ASCs, the ASC payment rates are
updated annually to reflect annual
changes to the OPPS relative payment
weights. In addition, we are required
under section 1833(i)(1) of the Act to
review and update the list of surgical
procedures that can be performed in an
ASC not less frequently than every 2
years.
3. Overall Impacts for the OPPS and
ASC Payment Provisions
We estimate that the total increase in
Federal government expenditures under
the OPPS for CY 2015 compared to CY
2014 due to the changes in this final
rule with comment period, will be
approximately $900 million. Taking into
account our estimated changes in
enrollment, utilization, and case-mix,
we estimate that the OPPS expenditures
for CY 2015 will be approximately
$5.135 billion higher relative to
expenditures in CY 2014. Because this
final rule with comment period is
economically significant as measured by
the threshold of an additional $100
million in expenditures in one year, we
have prepared this regulatory impact
analysis that, to the best of our ability,

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presents its costs and benefits. Table 49
displays the redistributional impact of
the CY 2015 changes in OPPS payment
to various groups of hospitals and for
CMHCs.
We estimate that the update to the
conversion factor and other adjustments
(not including the effects of outlier
payments, the pass-through estimates,
and the application of the frontier State
wage adjustment for CY 2015) will
increase total OPPS payments by 2.2
percent in CY 2015. The changes to the
APC weights, the changes to the wage
indexes, the continuation of a payment
adjustment for rural SCHs, including
EACHs, and the payment adjustment for
cancer hospitals will not increase OPPS
payments because these changes to the
OPPS are budget neutral. However,
these updates will change the
distribution of payments within the
budget neutral system. We estimate that
the total change in payments between
CY 2014 and CY 2015, considering all
payments, including changes in
estimated total outlier payments, passthrough payments, and the application
of the frontier State wage adjustment
outside of budget neutrality, in addition
to the application of the OPD fee
schedule increase factor after all
adjustments required by sections
1833(t)(3)(F), 1833(t)(3)(G), and
1833(t)(17) of the Act, will increase total
estimated OPPS payments by 2.3
percent.
We estimate the total increase (from
changes to the ASC provisions in this
final rule with comment period as well
as from enrollment, utilization, and
case-mix changes) in Medicare
expenditures under the ASC payment
system for CY 2015 compared to CY
2014 to be approximately $236 million.
Because the provisions for the ASC
payment system are part of a final rule
that is economically significant as
measured by the $100 million threshold,
we have prepared a regulatory impact
analysis of the changes to the ASC
payment system that, to the best of our
ability, presents the costs and benefits of
this portion of the final rule with
comment period. Table 50 and Table 51
of this final rule with comment period
display the redistributional impact of
the CY 2015 changes on ASC payment,
grouped by specialty area and then
grouped by procedures with the greatest
ASC expenditures, respectively.
4. Detailed Economic Analyses
a. Estimated Effects of OPPS Changes in
This Final Rule With Comment Period
(1) Limitations of Our Analysis
The distributional impacts presented
here are the projected effects of the CY

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2015 policy changes on various hospital
groups. As we did for the proposed rule,
we post on the CMS Web site our
hospital-specific estimated payments for
CY 2015 with the other supporting
documentation for this final rule with
comment period. To view the hospitalspecific estimates, we refer readers to
the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
HospitalOutpatientPPS/index.html. At
the Web site, select ‘‘regulations and
notices’’ from the left side of the page
and then select ‘‘CMS–1613–FC’’ from
the list of regulations and notices. The
hospital-specific file layout and the
hospital-specific file are listed with the
other supporting documentation for this
final rule with comment period. We
show hospital-specific data only for
hospitals whose claims were used for
modeling the impacts shown in Table
49 below. We do not show hospitalspecific impacts for hospitals whose
claims we were unable to use. We refer
readers to section II.A. of this final rule
with comment period for a discussion of
the hospitals whose claims we do not
use for ratesetting and impact purposes.
We estimate the effects of the
individual policy changes by estimating
payments per service, while holding all
other payment policies constant. We use
the best data available, but do not
attempt to predict behavioral responses
to our policy changes. In addition, we
do not make adjustments for future
changes in variables such as service
volume, service-mix, or number of
encounters. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41068), we
solicited public comment and
information about the anticipated effects
of our proposed changes on providers
and our methodology for estimating
them. Any public comments that we
received are addressed in the applicable
sections of the final rule with comment
period that discuss the specific policies.
(2) Estimated Effects of OPPS Changes
on Hospitals
Table 49 below shows the estimated
impact of this final rule with comment
period on hospitals. Historically, the
first line of the impact table, which
estimates the change in payments to all
facilities, has always included cancer
and children’s hospitals, which are held
harmless to their pre-BBA amount. We
also include CMHCs in the first line that
includes all providers. We now include
a second line for all hospitals, excluding
permanently held harmless hospitals
and CMHCs.
We present separate impacts for
CMHCs in Table 49, and we discuss
them separately below, because CMHCs

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are paid only for partial hospitalization
services under the OPPS and are a
different provider type from hospitals.
In CY 2015, we are continuing to pay
CMHCs under APC 0172 (Level I Partial
Hospitalization (3 services) for CMHCs)
and APC 0173 (Level II Partial
Hospitalization (4 or more services) for
CMHCs), and we are paying hospitals
for partial hospitalization services under
APC 0175 (Level I Partial
Hospitalization (3 services) for hospitalbased PHPs) and APC 0176 (Level II
Partial Hospitalization (4 or more
services) for hospital-based PHPs).
The estimated increase in the total
payments made under the OPPS is
determined largely by the increase to
the conversion factor under the
statutory methodology. The
distributional impacts presented do not
include assumptions about changes in
volume and service-mix. The
conversion factor is updated annually
by the OPD fee schedule increase factor
as discussed in detail in section II.B. of
this final rule with comment period.
Section 1833(t)(3)(C)(iv) of the Act
provides that the OPD fee schedule
increase factor is equal to the market
basket percentage increase applicable
under section 1886(b)(3)(B)(iii) of the
Act, which we refer to as the IPPS
market basket percentage increase. The
IPPS market basket percentage increase
for FY 2015 is 2.9 percent (79 FR
49994). Section 1833(t)(3)(F)(i) of the
Act reduces that 2.9 percent by the
multifactor productivity adjustment
described in section 1886(b)(3)(B)(xi)(II)
of the Act, which is 0.5 percentage point
for FY 2015 (which is also the MFP
adjustment for FY 2015 in the FY 2015
IPPS/LTCH PPS final rule (79 FR
49994)); and sections 1833(t)(3)(F)(ii)
and 1833(t)(3)(G)(iv) of the Act further
reduce the market basket percentage
increase by 0.2 percentage point,
resulting in the OPD fee schedule
increase factor of 2.2 percent. We are
using the OPD fee schedule increase
factor of 2.2 percent in the calculation
of the CY 2015 OPPS conversion factor.
Section 10324 of the Affordable Care
Act, as amended by HCERA, further
authorized additional expenditures
outside budget neutrality for hospitals
in certain frontier States that have a
wage index less than 1.00. The amounts
attributable to this frontier State wage
index adjustment are incorporated in
the CY 2015 estimates in Table 49.
To illustrate the impact of the CY
2015 changes, our analysis begins with
a baseline simulation model that uses
the CY 2014 relative payment weights,
the FY 2014 final IPPS wage indexes
that include reclassifications, and the
final CY 2014 conversion factor. Table

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49 shows the estimated redistribution of
the increase in payments for CY 2015
over CY 2014 payments to hospitals and
CMHCs as a result of the following
factors: The impact of the APC
reconfiguration and recalibration
changes between CY 2014 and CY 2015
(Column 2); the wage indexes and the
provider adjustments (Column 3); the
combined impact of all the changes
described in the preceding columns
plus the 2.2 percent OPD fee schedule
increase factor update to the conversion
factor (Column 4); the combined impact
shown in Column 4 plus the CY 2015
frontier State wage index adjustment
(Column 5); and the estimated impact
taking into account all payments for CY
2015 relative to all payments for CY
2014, including the impact of changes
in estimated outlier payments and
changes to the pass-through payment
estimate (Column 6).
We did not model an explicit budget
neutrality adjustment for the rural
adjustment for SCHs because we are
finalizing our proposal to maintain the
current adjustment percentage for CY
2015. Because the updates to the
conversion factor (including the update
of the OPD fee schedule increase factor),
the estimated cost of the rural
adjustment, and the estimated cost of
projected pass-through payment for CY
2015 are applied uniformly across
services, observed redistributions of
payments in the impact table for
hospitals largely depend on the mix of
services furnished by a hospital (for
example, how the APCs for the
hospital’s most frequently furnished
services will change), and the impact of
the wage index changes on the hospital.
However, total payments made under
this system and the extent to which this
final rule with comment period will
redistribute money during
implementation also will depend on
changes in volume, practice patterns,
and the mix of services billed between
CY 2014 and CY 2015 by various groups
of hospitals, which CMS cannot
forecast.
Overall, we estimate that the rates for
CY 2015 will increase Medicare OPPS
payments by an estimated 2.3 percent.
Removing payments to cancer and
children’s hospitals because their
payments are held harmless to the preOPPS ratio between payment and cost
and removing payments to CMHCs
results in an estimated 2.3 percent
increase in Medicare payments to all
other hospitals. These estimated
payments will not significantly impact
other providers.

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Column 1: Total Number of Hospitals
The first line in Column 1 in Table 49
shows the total number of facilities
(4,006), including designated cancer and
children’s hospitals and CMHCs, for
which we were able to use CY 2013
hospital outpatient and CMHC claims
data to model CY 2014 and CY 2015
payments, by classes of hospitals, for
CMHCs and for dedicated cancer
hospitals. We excluded all hospitals and
CMHCs for which we could not
plausibly estimate CY 2014 or CY 2015
payment and entities that are not paid
under the OPPS. The latter entities
include CAHs, all-inclusive hospitals,
and hospitals located in Guam, the U.S.
Virgin Islands, Northern Mariana
Islands, American Samoa, and the State
of Maryland. This process is discussed
in greater detail in section II.A. of this
final rule with comment period. At this
time, we are unable to calculate a
disproportionate share hospital (DSH)
variable for hospitals not participating
in the IPPS. Hospitals for which we do
not have a DSH variable are grouped
separately and generally include
freestanding psychiatric hospitals,
rehabilitation hospitals, and long-term
care hospitals. We show the total
number of OPPS hospitals (3,871),
excluding the hold-harmless cancer and
children’s hospitals and CMHCs, on the
second line of the table. We excluded
cancer and children’s hospitals because
section 1833(t)(7)(D) of the Act
permanently holds harmless cancer
hospitals and children’s hospitals to
their ‘‘pre-BBA amount’’ as specified
under the terms of the statute, and
therefore, we removed them from our
impact analyses. We show the isolated
impact on 72 CMHCs at the bottom of
the impact table and discuss that impact
separately below.
Column 2: APC Recalibration—All
Changes
Column 2 shows the estimated effect
of APC recalibration. Column 2 also
reflects any changes in multiple
procedure discount patterns or
conditional packaging that occur as a
result of the changes in the relative
magnitude of payment weights. As a
result of APC recalibration, we estimate
that urban hospitals will experience no
change, with the impact ranging from an
increase of 0.3 percent to a decrease of
¥0.1 percent, depending on the number
of beds. Rural hospitals will experience
no change, with the impact ranging from
an increase of 0.3 percent to a decrease
of ¥0.4 percent, depending on the
number of beds. Major teaching
hospitals will experience an increase of
0.7 percent overall.

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Column 3: New Wage Indexes and the
Effect of the Provider Adjustments
Column 3 demonstrates the combined
budget neutral impact of the APC
recalibration; the updates for the wage
indexes with the fiscal year (FY) 2015
IPPS post-reclassification wage indexes;
and the rural adjustment. We modeled
the independent effect of the budget
neutrality adjustments and the OPD fee
schedule increase factor by using the
relative payment weights and wage
indexes for each year, and using a CY
2014 conversion factor that included the
OPD fee schedule increase and a budget
neutrality adjustment for differences in
wage indexes.
Column 3 reflects the independent
effects of the updated wage indexes,
including the application of budget
neutrality for the rural floor policy on a
nationwide basis. This column excludes
the effects of the frontier State wage
index adjustment, which is not budget
neutral and is included in Column 5.
We did not model a budget neutrality
adjustment for the rural adjustment for
SCHs because we are finalizing our
proposal to continue the rural payment
adjustment of 7.1 percent to rural SCHs
for CY 2015, as described in section II.E.
of this final rule with comment period.
We modeled the independent effect of
updating the wage indexes by varying
only the wage indexes, holding APC
relative payment weights, service-mix,
and the rural adjustment constant and
using the CY 2015 scaled weights and
a CY 2014 conversion factor that
included a budget neutrality adjustment
for the effect of changing the wage
indexes between CY 2014 and CY 2015.
The FY 2015 wage policy results in
modest redistributions.
There is no difference in impact
between the CY 2014 cancer hospital
payment adjustment and the CY 2015
cancer hospital payment adjustment
because we are finalizing our proposal
to use the same payment-to-cost ratio
target in CY 2015 as in CY 2014.
Column 4: All Budget Neutrality
Changes Combined With the Market
Basket Update
Column 4 demonstrates the combined
impact of all the changes previously
described and the update to the
conversion factor of 2.2 percent.
Overall, these changes will increase
payments to urban hospitals by 2.3
percent and to rural hospitals by 1.9
percent. Most classes of hospitals will
receive an increase in line with the 2.2
percent overall increase after the update
is applied to the budget neutrality
adjustments.

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Column 5: All Adjustments With the
Frontier State Wage Index Adjustment
This column shows the impact of all
budget neutrality adjustments,
application of the 2.2 percent OPD fee
schedule increase factor, and the
nonbudget-neutral impact of applying
the CY 2015 frontier State wage
adjustment. Rural hospitals in West
North Central and Mountain States will
experience estimated increases in
payment of 3.4 and 4.2 percent,
respectively, as a result of the frontier
State wage index adjustment, while
urban hospitals in those States will
experience estimated increases of 3.2
and 2.5 percent, respectively.
Column 6: All Changes for CY 2015
Column 6 depicts the full impact of
the CY 2015 policies on each hospital
group by including the effect of all of
the changes for CY 2015 and comparing
them to all estimated payments in CY
2014. Column 6 shows the combined
budget neutral effects of Column 2 and
3; the OPD fee schedule increase; the
impact of the frontier State wage index
adjustment; the impact of estimated
OPPS outlier payments as discussed in
section II.G. of this final rule with
comment period; the change in the
Hospital OQR Program payment
reduction for the small number of
hospitals in our impact model that
failed to meet the reporting
requirements (discussed in section XIII.
of this final rule with comment period);
and the difference in total OPPS
payments dedicated to transitional passthrough payments.
Of those hospitals that failed to meet
the Hospital OQR Program reporting
requirements for the full CY 2014
update (and assumed, for modeling
purposes, to be the same number for CY
2015), we included 37 hospitals in our
model because they had both CY 2013
claims data and recent cost report data.
We estimate that the cumulative effect
of all changes for CY 2015 will increase

payments to all facilities by 2.3 percent
for CY 2015. We modeled the
independent effect of all changes in
Column 6 using the final relative
payment weights for CY 2014 and the
relative payment weights for CY 2015.
We used the final conversion factor for
CY 2014 of $72.672 and the CY 2015
conversion factor of $74.144 discussed
in section II.B. of this final rule with
comment period.
Column 6 contains simulated outlier
payments for each year. We used the 1year charge inflation factor used in the
FY 2015 IPPS/LTCH PPS final rule (79
FR 50379) of 5.09 percent (1.0509) to
increase individual costs on the CY
2013 claims, and we used the most
recent overall CCR in the July 2014
Outpatient Provider-Specific File
(OPSF) to estimate outlier payments for
CY 2014. Using the CY 2013 claims and
a 5.09 percent charge inflation factor,
we currently estimate that outlier
payments for CY 2014, using a multiple
threshold of 1.75 and a fixed-dollar
threshold of $2,900 will be
approximately 0.8 percent of total
payments. The estimated current outlier
payments of 0.8 percent are
incorporated in the comparison in
Column 6. We used the same set of
claims and a charge inflation factor of
10.44 percent (1.1044) and the CCRs in
the July 2014 OPSF, with an adjustment
of 0.9821, to reflect relative changes in
cost and charge inflation between CY
2013 and CY 2015, to model the CY
2015 outliers at 1.0 percent of estimated
total payments using a multiple
threshold of 1.75 and a fixed-dollar
threshold of $2,775. The charge
inflation and CCR inflation factors are
discussed in detail in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50379
through 50380).
We estimate that the anticipated
change in payment between CY 2014
and CY 2015 for the hospitals failing to
meet the Hospital OQR Program
requirements will be negligible. Overall,

we estimate that facilities will
experience an increase of 2.3 percent
under this final rule with comment
period in CY 2015 relative to total
spending in CY 2014. This projected
increase (shown in Column 6) of Table
49 reflects the 2.2 percent OPD fee
schedule increase factor, less 0.13
percent for the change in the passthrough estimate between CY 2014 and
CY 2015, plus 0.18 percent for the
difference in estimated outlier payments
between CY 2014 (0.82 percent) and CY
2015 (1.0 percent), less 0.1 percent due
to the frontier State wage index
adjustment in CY 2014, plus 0.1 percent
due to the frontier State wage index
adjustment in CY 2015. We estimate
that the combined effect of all changes
for CY 2015 will increase payments to
urban hospitals by 2.3 percent.
Overall, we estimate that rural
hospitals will experience a 1.9 percent
increase as a result of the combined
effects of all changes for CY 2015. We
estimate that rural hospitals that bill
less than 5,000 lines of OPPS services
will experience a decrease of ¥2.0
percent and rural hospitals that bill
11,000 or more lines of OPPS services
will experience adjustments ranging
from 0.9 to 2.1 percent.
Among hospitals by teaching status,
we estimate that the impacts resulting
from the combined effects of all changes
will include an increase of 3.1 percent
for major teaching hospitals and 2.0
percent for nonteaching hospitals.
Minor teaching hospitals will
experience an estimated increase of 2.0
percent.
In our analysis, we also have
categorized hospitals by type of
ownership. Based on this analysis, we
estimate that voluntary hospitals will
experience an increase of 2.4 percent,
proprietary hospitals will experience an
increase of 1.7 percent, and
governmental hospitals will experience
an increase of 2.1 percent.

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TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT
SYSTEM
Number of
hospitals

APC
Recalibration
(all changes)

New wage
index and
provider
adjustments

All budget neutral
changes
(combined cols 2,
3) with market
basket update

All budget neutral
changes and
update (column 4)
with frontier wage
index adjustment

All changes

(1)

(2)

(3)

(4)

(5)

(6)

4,006
3,871

0.0
0.0

0.0
0.0

2.2
2.2

2.3
2.3

2.3
2.3

3,008
1,646
1,362

0.0
0.1
0.0

0.0
0.2
¥0.1

2.3
2.5
2.1

2.4
2.5
2.3

2.3
2.5
2.1

ALL FACILITIES * ............................
ALL HOSPITALS .............................
(excludes hospitals permanently
held harmless and CMHCs)
URBAN HOSPITALS .......................
LARGE URBAN (GT 1 MILL.) ..
OTHER URBAN (LE 1 MILL.) ..

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

67021

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT
SYSTEM—Continued
Number of
hospitals

APC
Recalibration
(all changes)

New wage
index and
provider
adjustments

All budget neutral
changes
(combined cols 2,
3) with market
basket update

All budget neutral
changes and
update (column 4)
with frontier wage
index adjustment

All changes

(1)

(2)

(3)

(4)

(5)

(6)

863
376
487

0.0
0.1
¥0.2

¥0.3
¥0.2
¥0.3

1.9
2.2
1.6

2.2
2.6
1.7

1.9
2.2
1.6

1,067
856
458
410
217

0.0
0.0
¥0.1
¥0.1
0.3

0.0
0.0
0.1
0.1
¥0.1

2.3
2.2
2.2
2.2
2.4

2.4
2.3
2.4
2.4
2.4

2.3
2.2
2.2
2.3
2.5

345
315
116
46
41

0.1
0.3
¥0.3
¥0.4
¥0.3

¥0.2
¥0.3
¥0.1
¥0.4
¥0.4

2.2
2.2
1.8
1.4
1.5

2.4
2.5
2.1
2.1
1.5

2.2
2.2
1.8
1.4
1.5

544
135
117
228
526
1,458

¥1.7
¥0.8
¥1.5
¥0.7
¥0.3
0.1

¥0.3
¥0.2
0.0
0.0
0.0
0.0

0.2
1.3
0.6
1.5
1.9
2.3

0.4
1.3
1.2
1.5
1.9
2.4

0.4
1.4
0.9
1.6
1.9
2.4

34
27
42
161
599

¥3.8
¥1.8
¥1.1
0.2
0.0

¥0.3
¥0.5
¥0.3
¥0.3
¥0.3

¥1.9
¥0.1
0.8
2.1
1.9

1.1
1.1
0.8
2.7
2.1

¥2.0
0.0
0.9
2.1
1.9

152
361
482
473
179
194
527
203
389
48

1.1
0.5
¥0.2
0.1
¥0.9
0.0
¥0.7
0.0
0.3
¥0.4

0.2
0.5
¥0.3
¥0.1
¥0.5
¥0.2
¥0.5
¥0.1
1.1
0.3

3.5
3.2
1.7
2.2
0.9
2.0
1.0
2.1
3.6
2.1

3.5
3.2
1.7
2.1
0.9
3.2
1.0
2.5
3.6
2.1

3.4
3.2
1.7
2.2
0.9
2.0
1.1
2.2
3.7
1.9

23
58
130
120
165
101
181
61
24

1.6
0.8
¥0.6
0.0
¥0.8
0.2
¥0.7
0.7
0.8

¥0.1
0.2
¥0.5
0.0
¥0.5
¥0.2
¥0.8
¥0.4
0.9

3.6
3.2
1.0
2.2
0.9
2.2
0.7
2.5
4.0

3.6
3.2
1.0
2.2
0.9
3.4
0.7
4.2
3.9

3.6
3.2
1.0
2.1
0.9
2.1
0.7
2.6
3.9

2,839
706
326

¥0.2
¥0.2
0.7

0.0
¥0.1
0.1

2.0
1.9
3.1

2.1
2.2
3.0

2.0
2.0
3.1

21
328
334
680
1,076
824
608

0.0
0.3
0.1
0.1
0.0
0.1
¥3.6

0.3
0.2
0.0
0.0
0.0
0.1
0.0

2.5
2.7
2.3
2.2
2.1
2.3
¥1.4

2.5
2.8
2.5
2.3
2.3
2.3
¥1.4

2.5
2.7
2.3
2.2
2.1
2.4
¥1.5

938
1,477
18

0.2
¥0.2
¥0.1

0.0
0.1
0.4

2.4
2.1
2.5

2.6
2.1
2.5

2.5
2.1
2.5

RURAL HOSPITALS ........................
SOLE COMMUNITY .................
OTHER RURAL ........................
BEDS (URBAN):
0–99 BEDS ...............................
100–199 BEDS .........................
200–299 BEDS .........................
300–499 BEDS .........................
500 + BEDS ..............................
BEDS (RURAL):
0–49 BEDS ...............................
50–100 BEDS ...........................
101–149 BEDS .........................
150–199 BEDS .........................
200 + BEDS ..............................
VOLUME (URBAN):
LT 5,000 Lines ..........................
5,000–10,999 Lines ..................
11,000–20,999 Lines ................
21,000–42,999 Lines ................
42,999–89,999 Lines ................
GT 89,999 Lines .......................
VOLUME (RURAL):
LT 5,000 Lines ..........................
5,000–10,999 Lines ..................
11,000–20,999 Lines ................
21,000–42,999 Lines ................
GT 42,999 Lines .......................
REGION (URBAN):
NEW ENGLAND .......................
MIDDLE ATLANTIC ..................
SOUTH ATLANTIC ...................
EAST NORTH CENT. ...............
EAST SOUTH CENT. ...............
WEST NORTH CENT. ..............
WEST SOUTH CENT. ..............
MOUNTAIN ...............................
PACIFIC ....................................
PUERTO RICO .........................
REGION (RURAL):
NEW ENGLAND .......................
MIDDLE ATLANTIC ..................
SOUTH ATLANTIC ...................
EAST NORTH CENT. ...............
EAST SOUTH CENT. ...............
WEST NORTH CENT. ..............
WEST SOUTH CENT. ..............
MOUNTAIN ...............................
PACIFIC ....................................
TEACHING STATUS:
NON–TEACHING .....................
MINOR ......................................
MAJOR .....................................
DSH PATIENT PERCENT:
0 ................................................
GT 0–0.10 .................................
0.10–0.16 ..................................
0.16–0.23 ..................................
0.23–0.35 ..................................
GE 0.35 .....................................
DSH NOT AVAILABLE ** ..........
URBAN TEACHING/DSH:
TEACHING & DSH ...................
NO TEACHING/DSH ................
NO TEACHING/NO DSH ..........

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

TABLE 49—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT
SYSTEM—Continued
Number of
hospitals

APC
Recalibration
(all changes)

New wage
index and
provider
adjustments

All budget neutral
changes
(combined cols 2,
3) with market
basket update

All budget neutral
changes and
update (column 4)
with frontier wage
index adjustment

All changes

(1)

(2)

(3)

(4)

(5)

(6)

575

¥3.3

0.1

¥1.0

¥0.9

¥1.0

2,006
1,322
543
72

0.1
¥0.4
¥0.1
0.0

0.0
¥0.1
¥0.1
¥0.5

2.4
1.7
2.1
1.7

2.5
1.8
2.1
1.7

2.4
1.7
2.1
1.3

DSH NOT AVAILABLE ** ..........
TYPE OF OWNERSHIP:
VOLUNTARY ............................
PROPRIETARY ........................
GOVERNMENT ........................
CMHCs .............................................

Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all CY 2015 OPPS policies and compares those to the CY 2014 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2015 hospital inpatient wage index, including all
hold harmless policies and transitional wages. The rural adjustment continues our current policy of 7.1 percent so the budget neutrality factor is
1. The budget neutrality adjustment for the cancer hospital adjustment is 1.000 because the payment-to-cost ratio target remains the same as in
CY 2014.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the 2.2 percent OPD fee schedule update factor (2.9 percent reduced by 0.5 percentage point for the final productivity adjustment and further reduced by 0.2 percentage point in order to satisfy statutory
requirements set forth in the Affordable Care Act).
Column (5) shows the nonbudget neutral impact of applying the frontier State wage adjustment in CY 2015.
Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, adding estimated
outlier payments, and applying payment wage indexes.
* These 4,006 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
hospitals.

tkelley on DSK3SPTVN1PROD with RULES2

(3) Estimated Effects of OPPS Changes
on CMHCs
The last line of Table 49 demonstrates
the isolated impact on CMHCs, which
furnish only partial hospitalization
services under the OPPS. In CY 2014,
CMHCs are paid under two APCs for
these services: APC 0172 (Level I Partial
Hospitalization (3 services) for CMHCs)
and APC 0173 (Level II Partial
Hospitalization (4 or more services) for
CMHCs). Hospitals are paid for partial
hospitalization services under APC 0175
(Level I Partial Hospitalization (3
services) for hospital-based PHPs) and
APC 0176 (Level II Partial
Hospitalization (4 or more services) for
hospital-based PHPs). We use our
standard ratesetting methodology to
derive the payment rates for each APC
based on the cost data derived from
claims and cost data for the providertype-specific APC. For CY 2015, we are
finalizing our proposal to continue the
provider-type-specific APC structure
that we adopted in CY 2011. We
modeled the impact of this APC policy
assuming that CMHCs will continue to
provide the same number of days of
PHP care, with each day having either
3 services or 4 or more services, as seen
in the CY 2013 claims data used for this
final rule with comment period. We
excluded days with 1 or 2 services
because our policy only pays a per diem
rate for partial hospitalization when 3 or
more qualifying services are provided to
the beneficiary. We estimate that

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CMHCs will experience an overall 1.3
percent increase in payments from CY
2014 (shown in Column 6).
Column 3 shows that the estimated
impact of adopting the FY 2015 wage
index values will result in a small
decrease of ¥0.5 percent to CMHCs. We
note that all providers paid under the
OPPS, including CMHCs, will receive a
2.2 percent OPD fee schedule increase
factor. Column 4 shows that combining
this OPD fee schedule increase factor,
along with changes in APC policy for
CY 2015 and the FY 2015 wage index
updates, will result in an estimated
increase of 1.7 percent. Column 5 shows
that adding the frontier State wage
index adjustment will result in no
change to the cumulative 1.7 percent
increase. Column 6 shows that adding
the changes in outlier and pass-though
payments will result in a ¥0.4 percent
decrease in payment for CMHCs, for a
total increase of 1.3 percent. This
reflects all changes to CMHCs for CY
2015.
(4) Estimated Effect of OPPS Changes on
Beneficiaries
For services for which the beneficiary
pays a copayment of 20 percent of the
payment rate, the beneficiary share of
payment will increase for services for
which the OPPS payments will rise and
will decrease for services for which the
OPPS payments will fall. For further
discussion on the calculation of the
national unadjusted copayments and
minimum unadjusted copayments, we

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refer readers to section II.I. of this final
rule with comment period. In all cases,
section 1833(t)(8)(C)(i) of the Act limits
beneficiary liability for copayment for a
procedure performed in a year to the
hospital inpatient deductible for the
applicable year.
We estimate that the aggregate
beneficiary coinsurance percentage will
be 20.0 percent for all services paid
under the OPPS in CY 2015. The
estimated aggregate beneficiary
coinsurance reflects general system
adjustments, including recalibration of
the APC relative payment weights,
change in the portion of OPPS payments
dedicated to pass-through payments,
and the CY 2015 comprehensive APC
payment policy discussed in section
II.A.2.e. of this final rule with comment
period.
(5) Estimated Effects of OPPS Changes
on Other Providers
The relative payment weights and
payment amounts established under the
OPPS affect the payments made to ASCs
as discussed in section XII. of this final
rule with comment period. No types of
providers or suppliers other than
hospitals, CMHCs and ASCs will be
affected by the proposed changes in this
final rule with comment period.
(6) Estimated Effects of OPPS Changes
on the Medicare and Medicaid Programs
The effect on the Medicare program is
expected to be $900 million in
additional program payments for OPPS

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
services furnished in CY 2015. The
effect on the Medicaid program is
expected to be limited to increased
copayments that Medicaid may make on
behalf of Medicaid recipients who are
also Medicare beneficiaries. We refer
readers to our discussion of the impact
on beneficiaries in section XXI.A. of this
final rule with comment period.
(7) Alternative OPPS Policies
Considered
Alternatives to the OPPS changes we
proposed and are finalizing and the
reasons for our selected alternatives are
discussed throughout this final rule
with comment period. In this section,
we discuss some of the major issues and
the alternatives considered.
• Alternatives Considered for the
Establishment of Comprehensive
APCs
We refer readers to the CY 2014
OPPS/ASC final rule with comment
period (78 FR 74861 through 74910 and
75184 through 75185) for a discussion
of our policy to establish comprehensive
APCs for CY 2015 and the alternatives
we considered. We note that we
published tables in that final rule with
comment period to demonstrate how
this policy would have been
implemented in CY 2014, and stated
that we would be considering any
additional public comments we receive
when we update the policy for CY 2015
to account for changes that may occur
in the CY 2013 claims data.

tkelley on DSK3SPTVN1PROD with RULES2

b. Estimated Effects of CY 2015 ASC
Payment System Policies
Most ASC payment rates are
calculated by multiplying the ASC
conversion factor by the ASC relative
payment weight. As discussed fully in
section XII. of this final rule with
comment period, we are setting the CY
2015 ASC relative payment weights by
scaling the CY 2015 OPPS relative
payment weights by the ASC scaler of
0.9225. The estimated effects of the
updated relative payment weights on
payment rates are varied and are
reflected in the estimated payments
displayed in Tables 50 and 51 below.
Beginning in CY 2011, section 3401 of
the Affordable Care Act requires that the
annual update to the ASC payment
system (which currently is the CPI–U)
after application of any quality reporting
reduction be reduced by a productivity
adjustment. The Affordable Care Act
defines the productivity adjustment to
be equal to the 10-year moving average
of changes in annual economy-wide
private nonfarm business multifactor
productivity (MFP) (as projected by the
Secretary for the 10-year period ending

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with the applicable fiscal year, year,
cost reporting period, or other annual
period). For ASCs that fail to meet their
quality reporting requirements, the CY
2015 payment determinations will be
based on the application of a 2.0
percentage point reduction to the
annual update factor, which currently is
the CPI–U. We calculated the CY 2015
ASC conversion factor by adjusting the
CY 2014 ASC conversion factor by
0.9998 to account for changes in the prefloor and pre-reclassified hospital wage
indexes between CY 2014 and CY 2015
and by applying the CY 2015 MFPadjusted CPI–U update factor of 1.4
percent (projected CPI–U update of 1.9
percent minus a projected productivity
adjustment of 0.5 percentage point). The
CY 2015 ASC conversion factor is
$44.071.
(1) Limitations of Our Analysis
Presented here are the projected
effects of the changes for CY 2015 on
Medicare payment to ASCs. A key
limitation of our analysis is our inability
to predict changes in ASC service-mix
between CY 2013 and CY 2015 with
precision. We believe that the net effect
on Medicare expenditures resulting
from the CY 2015 changes will be small
in the aggregate for all ASCs. However,
such changes may have differential
effects across surgical specialty groups
as ASCs continue to adjust to the
payment rates based on the policies of
the revised ASC payment system. We
are unable to accurately project such
changes at a disaggregated level. Clearly,
individual ASCs will experience
changes in payment that differ from the
aggregated estimated impacts presented
below.
(2) Estimated Effects of ASC Payment
System Policies on ASCs
Some ASCs are multispecialty
facilities that perform the gamut of
surgical procedures from excision of
lesions to hernia repair to cataract
extraction; others focus on a single
specialty and perform only a limited
range of surgical procedures, such as
eye, digestive system, or orthopedic
procedures. The combined effect on an
individual ASC of the update to the CY
2015 payments will depend on a
number of factors, including, but not
limited to, the mix of services the ASC
provides, the volume of specific services
provided by the ASC, the percentage of
its patients who are Medicare
beneficiaries, and the extent to which an
ASC provides different services in the
coming year. The following discussion
presents tables that display estimates of
the impact of the CY 2015 updates to
the ASC payment system on Medicare

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67023

payments to ASCs, assuming the same
mix of services as reflected in our CY
2013 claims data. Table 50 depicts the
estimated aggregate percent change in
payment by surgical specialty or
ancillary items and services group by
comparing estimated CY 2014 payments
to estimated CY 2015 payments and
Table 51 shows a comparison of
estimated CY 2014 payments to
estimated CY 2015 payments for
procedures that we estimate will receive
the most Medicare payment in CY 2014.
Table 50 shows the estimated effects
on aggregate Medicare payments under
the ASC payment system by surgical
specialty or ancillary items and services
group. We have aggregated the surgical
HCPCS codes by specialty group,
grouped all HCPCS codes for covered
ancillary items and services into a single
group, and then estimated the effect on
aggregated payment for surgical
specialty and ancillary items and
services groups. The groups are sorted
for display in descending order by
estimated Medicare program payment to
ASCs. The following is an explanation
of the information presented in Table
50.
• Column 1—Surgical Specialty or
Ancillary Items and Services Group
indicates the surgical specialty into
which ASC procedures are grouped and
the ancillary items and services group
which includes all HCPCS codes for
covered ancillary items and services. To
group surgical procedures by surgical
specialty, we used the CPT code range
definitions and Level II HCPCS codes
and Category III CPT codes as
appropriate, to account for all surgical
procedures to which the Medicare
program payments are attributed.
• Column 2—Estimated CY 2014 ASC
Payments were calculated using CY
2013 ASC utilization (the most recent
full year of ASC utilization) and CY
2014 ASC payment rates. The surgical
specialty and ancillary items and
services groups are displayed in
descending order based on estimated CY
2014 ASC payments.
• Column 3—Estimated CY 2015
Percent Change is the aggregate
percentage increase or decrease in
Medicare program payment to ASCs for
each surgical specialty or ancillary
items and services group that are
attributable to updates to ASC payment
rates for CY 2015 compared to CY 2014.
As seen in Table 50, for the six
specialty groups that account for the
most ASC utilization and spending, we
estimate that the update to ASC rates for
CY 2015 will result in a 1-percent
decrease in aggregate payment amounts
for eye and ocular adnexa procedures, a
6-percent increase in aggregate payment

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

amounts for digestive system
procedures, a 1-percent increase in
aggregate payment amounts for nervous
system procedures, a 2-percent increase
in aggregate payment amounts for
musculoskeletal system procedures, a 3percent increase in aggregate payment
amounts for genitourinary system
procedures, and a 5-percent increase in
aggregate payment amounts for
integumentary system procedures.

An estimated increase in aggregate
payment for the specialty group does
not mean that all procedures in the
group will experience increased
payment rates. For example, the
estimated increase for CY 2015 for
digestive system procedures is likely
due to an increase in the ASC payment
weight for some of the high volume
procedures, such as CPT code 43239
(Upper GI endoscopy biopsy) where

estimated payment will increase by 9
percent for CY 2015.
Also displayed in Table 50 is a
separate estimate of Medicare ASC
payments for the group of separately
payable covered ancillary items and
services. The payment estimates for the
covered surgical procedures include the
costs of packaged ancillary items and
services. We estimate that aggregate
payments for these items and services
will decrease by 4 percent for CY 2015.

TABLE 50—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE CY 2015
MEDICARE PROGRAM PAYMENTS BY SURGICAL SPECIALTY OR ANCILLARY ITEMS AND SERVICES GROUP
Surgical specialty group

Estimated
CY 2014
ASC payments
(in millions)

Estimated CY
2015 percent
change

(1)

(2)

(3)

Total .........................................................................................................................................................................
Eye and ocular adnexa ............................................................................................................................................
Digestive system ......................................................................................................................................................
Nervous system .......................................................................................................................................................
Musculoskeletal system ...........................................................................................................................................
Genitourinary system ...............................................................................................................................................
Integumentary system .............................................................................................................................................
Respiratory system ..................................................................................................................................................
Cardiovascular system ............................................................................................................................................
Ancillary items and services ....................................................................................................................................
Auditory system .......................................................................................................................................................
Hematologic & lymphatic systems ...........................................................................................................................

Table 51 below shows the estimated
impact of the updates to the revised
ASC payment system on aggregate ASC
payments for selected surgical
procedures during CY 2015. The table
displays 30 of the procedures receiving
the greatest estimated CY 2014 aggregate
Medicare payments to ASCs. The
HCPCS codes are sorted in descending

order by estimated CY 2014 program
payment.
• Column 1—CPT/HCPCS code.
• Column 2—Short Descriptor of the
HCPCS code.
• Column 3—Estimated CY 2014 ASC
Payments were calculated using CY
2013 ASC utilization (the most recent
full year of ASC utilization) and the CY

$3,819
1,560
781
568
472
165
137
53
36
24
14
6

1
¥1
6
1
2
3
5
3
¥1
¥4
1
14

2014 ASC payment rates. The estimated
CY 2014 payments are expressed in
millions of dollars.
• Column 4—Estimated CY 2015
Percent Change reflects the percent
differences between the estimated ASC
payment for CY 2014 and the estimated
payment for CY 2015 based on the
update.

tkelley on DSK3SPTVN1PROD with RULES2

TABLE 51—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS
FOR SELECTED PROCEDURES
CPT/HCPCS
Code

Short descriptor

Estimated
CY 2014
ASC payments
(in millions)

Estimated
CY 2015
percent
change

(1)

(2)

(3)

(4)

66984 ................
43239 ................
45380 ................
45385 ................
66982 ................
64483 ................
62311 ................
45378 ................
66821 ................
64493 ................
G0105 ...............
64635 ................
63650 ................
G0121 ...............
64590 ................
15823 ................

Cataract surg w/iol, 1 stage ......................................................................................................
Upper GI endoscopy, biopsy ....................................................................................................
Colonoscopy and biopsy ..........................................................................................................
Lesion removal colonoscopy ....................................................................................................
Cataract surgery, complex ........................................................................................................
Inj foramen epidural l/s .............................................................................................................
Inject spine l/s (cd) ...................................................................................................................
Diagnostic colonoscopy ............................................................................................................
After cataract laser surgery ......................................................................................................
Inj paravert f jnt l/s 1 lev ...........................................................................................................
Colorectal scrn; hi risk ind ........................................................................................................
Destroy lumb/sac facet jnt ........................................................................................................
Implant neuroelectrodes ...........................................................................................................
Colon ca scrn not hi rsk ind .....................................................................................................
Insrt/redo pn/gastr stimul ..........................................................................................................
Revision of upper eyelid ...........................................................................................................

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

67025

TABLE 51—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS
FOR SELECTED PROCEDURES—Continued
CPT/HCPCS
Code

Short descriptor

Estimated
CY 2014
ASC payments
(in millions)

Estimated
CY 2015
percent
change

(1)

(2)

(3)

(4)

63685 ................
29827 ................
64721 ................
29881 ................
29824 ................
29880 ................
43235 ................
62310 ................
29823 ................
52000 ................
G0260 ...............
45384 ................
67042 ................
26055 ................

Insrt/redo spine n generator .....................................................................................................
Arthroscop rotator cuff repr ......................................................................................................
Carpal tunnel surgery ...............................................................................................................
Knee arthroscopy/surgery .........................................................................................................
Shoulder arthroscopy/surgery ...................................................................................................
Knee arthroscopy/surgery .........................................................................................................
Uppr gi endoscopy diagnosis ...................................................................................................
Inject spine c/t ...........................................................................................................................
Shoulder arthroscopy/surgery ...................................................................................................
Cystoscopy ...............................................................................................................................
Inj for sacroiliac jt anesth ..........................................................................................................
Lesion remove colonoscopy .....................................................................................................
Vit for macular hole ..................................................................................................................
Incise finger tendon sheath ......................................................................................................

(3) Estimated Effects of ASC Payment
System Policies on Beneficiaries
We estimate that the CY 2015 update
to the ASC payment system will be
generally positive for beneficiaries with
respect to the new procedures that we
are adding to the ASC list of covered
surgical procedures and for those that
we are designating as office-based for
CY 2015. First, other than certain
preventive services where coinsurance
and the Part B deductible is waived to
comply with section 1833(a)(1) and (b)
of the Act, the ASC coinsurance rate for
all procedures is 20 percent. This
contrasts with procedures performed in
HOPDs under the OPPS, where the
beneficiary is responsible for
copayments that range from 20 percent
to 40 percent of the procedure payment
(other than for certain preventive
services). Second, in almost all cases,
the ASC payment rates under the ASC
payment system are lower than payment
rates for the same procedures under the
OPPS. Therefore, the beneficiary
coinsurance amount under the ASC
payment system will almost always be
less than the OPPS copayment amount
for the same services. (The only

exceptions would be if the ASC
coinsurance amount exceeds the
inpatient deductible. The statute
requires that copayment amounts under
the OPPS not exceed the inpatient
deductible.) Beneficiary coinsurance for
services migrating from physicians’
offices to ASCs may decrease or increase
under the revised ASC payment system,
depending on the particular service and
the relative payment amounts under the
MPFS compared to the ASC. However,
for those additional procedures that we
are designating as office-based in CY
2015, the beneficiary coinsurance
amount under the ASC payment system
generally will be no greater than the
beneficiary coinsurance under the
MPFS because the coinsurance under
both payment systems generally is 20
percent (except for certain preventive
services where the coinsurance is
waived under both payment systems).
(4) Alternative ASC Payment Policies
Considered
Alternatives to the minor changes that
we are making to the ASC payment
system and the reasons that we have
chosen specific options are discussed
throughout this final rule with comment

34
34
32
30
27
25
23
23
22
22
21
21
21
19

29
1
¥1
¥1
1
¥1
10
0
1
1
0
7
1
¥2

period. There are no major changes to
ASC policies for CY 2015.
c. Accounting Statements and Tables
As required by OMB Circular A–4
(available on the Office of Management
and Budget Web site at: http://
www.whitehouse.gov/sites/default/files/
omb/assets/regulatory_matters_pdf/a4.pdf), we have prepared two
accounting statements to illustrate the
impacts of this final rule with comment
period. The first accounting statement,
Table 52 below, illustrates the
classification of expenditures for the CY
2015 estimated hospital OPPS incurred
benefit impacts associated with the CY
2015 OPD fee schedule increase, based
on the 2014 Trustee’s Report. The
second accounting statement, Table 53
below, illustrates the classification of
expenditures associated with the 1.4
percent CY 2015 update to the ASC
payment system, based on the
provisions of this final rule with
comment period and the baseline
spending estimates for ASCs in the 2014
Trustee’s Report. Lastly, the tables
classify most estimated impacts as
transfers.

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TABLE 52—ACCOUNTING STATEMENT: CY 2015 ESTIMATED HOSPITAL OPPS TRANSFERS FROM CY 2014 TO CY 2015
ASSOCIATED WITH THE CY 2015 HOSPITAL OUTPATIENT OPD FEE SCHEDULE INCREASE
Category

Transfers

Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................

$900 million.
Federal Government to outpatient hospitals and other providers who
receive payment under the hospital OPPS.

Total ...................................................................................................

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$900 million.

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

TABLE 53—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS FROM CY 2014 TO CY 2015 AS A
RESULT OF THE CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM
Category

Transfers

Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
Total ...................................................................................................

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d. Effects of Requirements for the
Hospital OQR Program
In section XIII. of this final rule with
comment period, we are finalizing
policies affecting the Hospital OQR
Program. Of 3,325 hospitals that met
eligibility requirements for the CY 2014
payment determination, we determined
that 88 hospitals did not meet the
requirements to receive the full OPD fee
schedule increase factor. Most of these
hospitals (70 of the 88) chose not to
participate in the Hospital OQR Program
for the CY 2014 payment determination.
We estimate that approximately 90
hospitals will not receive the full OPD
fee schedule increase factor for the CY
2017 payment determination and
subsequent years.
In section XIII.E. of this final rule
with comment period, we are finalizing
our proposal to add one claims-based
quality measure, OP–32: Facility 7-Day
Risk-Standardized Hospital Visit Rate
after Outpatient Colonoscopy, for the
Hospital OQR Program for the CY 2018
payment determination and subsequent
years, instead of the CY 2017 payment
determination and subsequent years as
proposed. Because this measure is
claims-based, it will not require
additional burden from data reporting or
other action on the part of the hospitals.
Therefore, we do not anticipate that this
measure will cause any additional
facilities to fail to meet requirements the
Hospital OQR Program for the CY 2018
payment determination and subsequent
years.
In section XIII.C.3. of this final rule
with comment period, for the CY 2017
payment determination and subsequent
years, we are finalizing our proposal to
remove OP–6 and OP–7 from the
Hospital OQR Program. However, we
are not finalizing our proposal to
remove OP–4 and are retaining that
measure in the Hospital OQR Program
for reasons discussed in section XIII.C.3.
In sections XIII.D.3.b. and c. of this final
rule with comment period, we are also
finalizing our proposal to exclude OP–
31 from the CY 2016 payment
determination measure set and to
change that measure from required to
voluntary for the CY 2017 payment
determination and subsequent years.

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$42 million.
Federal Government to Medicare Providers and Suppliers.
$42 million.

Hospitals will not be subject to a
payment reduction with respect to this
measure for the CY 2016 payment
determination or during the period of
voluntary reporting.
We anticipate a reduction in burden
of approximately 840,517 hours or $25.2
million across participating hospitals
from the two measures we are removing
and the measure we are making
voluntary, as further detailed in sections
XIII.C.3. and XIII.D.3.c. of this final rule
with comment period, respectively, and
the information collection requirements
in section XIX.C.1. of this final rule with
comment period. We refer readers to the
information collection requirements
section of this final rule with comment
period (section XIX.C.1. of this final rule
with comment period) for a detailed
discussion of the financial burden of the
requirements of the Hospital OQR
Program.
The validation requirements that we
are finalizing for the CY 2017 payment
determination and subsequent years
will result in medical record
documentation of approximately 6,000
cases per quarter (up to 12 cases per
quarter for 500 hospitals) submitted to
the designated CMS contractor. In
section XIII.H.3.e. of this final rule with
comment period, we are finalizing our
proposal to allow hospitals to submit
medical record documentation for
validation using either of two methods:
(1) Through paper medical records; or
(2) by securely transmitting electronic
versions of medical information by
either (a) downloading or copying the
digital image (that is, a PDF) of the
patient chart onto CD, DVD, or flash
drive and shipping the electronic media
following instructions specified on the
QualityNet Web site; or (b) securely
submitting digital images (PDFs) of
patient charts using a Secure File
Transfer Portal on the QualityNet Web
site.
As stated in prior rulemaking (76 FR
74577), we will pay for the cost of
sending paper medical record
documentation to the designated CMS
contractor at the rate of 12 cents per
page for copying and approximately
$1.00 per case for postage. For both new
electronic methods, we are finalizing
our proposal in the information

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collection requirements section of this
final rule with comment period to
reimburse hospitals for sending medical
records electronically at a rate of $3.00
per patient chart.
As we stated in the CY 2014 OPPS/
ASC final rule with comment period (78
FR 75192), we have found that an
outpatient medical chart generally
contains up to 10 pages. However,
because we do not yet know how many
hospitals will choose to submit data
electronically or through paper, we
cannot estimate the total cost of
expenditures and are unable to estimate
the number of hospitals that will fail the
validation documentation submission
requirement for the CY 2017 payment
determination. Because we will pay for
the data collection effort, we believe
that a requirement for medical record
documentation for up to12 cases per
quarter for 500 hospitals for CY 2015
represents a minimal burden to Hospital
OQR Program participating hospitals.
e. Effects of CY 2015 Policies for the
ASCQR Program
In section XIV. of this final rule with
comment period, we are adopting
policies affecting the ASCQR Program.
Of 5,260 ASCs that met eligibility
requirements for CY 2014, we
determined that 116 ASCs did not meet
the requirements to receive the full
annual payment update.
In section XIV.B.5. of this final rule
with comment period, we are finalizing
the adoption of one claims-based quality
measure, ASC–12: Facility Seven-Day
Risk-Standardized Hospital Visit Rate
after Outpatient Colonoscopy, for the
ASCQR Program beginning with the CY
2018 payment determination, rather
than beginning with the CY 2017
payment determination as proposed.
The measure is claims-based and will
not require additional data reporting or
other action by ASCs. Therefore, we do
not anticipate that this measure will
cause any additional ASCs to fail to
meet the ASCQR Program requirements.
We present the time and burdens
associated with our finalized policies
and proposals in section XIX.C.2. of this
final rule with comment period.
In section XIV.E.3.b. of this final rule
with comment period, we noted the 3-

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month delay in data collection for ASC–
9 and ASC–10 for the CY 2016 payment
determination. We do not believe that
this 3-month delay in data collection
will significantly affect the number of
ASCs that meet the ASCQR Program
requirements.
In section XIV.E.3.c. of this final rule
with comment period, we are finalizing
our proposal that ASC–11, which was to
be first included in the CY 2016
payment determination, will not be
included in the CY 2016 measure set,
and that the measure will be voluntary
for the CY 2017 payment determination
and subsequent years. ASCs will not be
subject to a payment reduction for the
CY 2016 payment determination, nor
will ASCs be subject to a payment
reduction for the CY 2017 payment
determination and subsequent years for
failing to report this voluntary measure.
Because this measure has not yet
affected any payment determination, we
do not believe that there will be any
impact on the number of ASCs that meet
the ASCQR Program requirements as a
result of our decision not to include this
measure in the measure set for the CY
2016 payment determination and to
make this measure voluntary for the CY
2017 payment determination and
subsequent years.
We do not believe that the other
measures we previously adopted will
cause any additional ASCs to fail to
meet the ASCQR Program requirements.
(We refer readers to the CY 2014 OPPS/
ASC final rule with comment period for
a list of these measures (78 FR 75130)).
Further, we do not believe that any of
the other proposals we are finalizing in
this final rule with comment period will
significantly affect the number of ASCs
that do not receive a full annual
payment update for the CY 2017
payment determination. We are unable
to estimate the number of ASCs that will
not receive the full annual payment
update based on the CY 2015 and CY
2016 payment determinations (78 FR
75192). For this reason, using the CY
2014 payment determination numbers
as a baseline, we estimate that
approximately 116 ASCs will not
receive the full annual payment update
in CY 2017 due to failure to meet the
ASCQR Program requirements.
We invited public comment on the
burden associated with these
information collection requirements. We
did not receive any public comments.
f. Effects of Changes to the Rural
Provider and Hospital Ownership
Exceptions to the Physician SelfReferral Law
Section 6001(a) of the Affordable Care
Act amended the rural provider and

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hospital ownership exceptions to the
physician self-referral law (sections
1877(d)(2) and (d)(3) of the Act,
respectively) to impose additional
restrictions on physician ownership or
investment in hospitals. The amended
rural provider and hospital ownership
exceptions provide that a hospital may
not increase the number of operating
rooms, procedure rooms, and beds
beyond that for which the hospital was
licensed on March 23, 2010 (or, in the
case of a hospital that did not have a
provider agreement in effect as of this
date, but did have a provider agreement
in effect on December 31, 2010, the date
of effect of such agreement). We issued
regulations addressing the prohibition
against facility expansion in the CY
2011 OPPS/ASC final rule with
comment period (75 FR 72240).
Section 6001(a)(3) of the Affordable
Care Act added section 1877(i)(3)(A)(i)
of the Act to set forth that the Secretary
shall establish and implement an
exception process to the prohibition on
expansion of facility capacity. We
issued regulations that govern the
expansion exception process in the CY
2012 OPPS/ASC final rule with
comment period (76 FR 74517) at 42
CFR 411.362(c). The regulations
addressing the expansion exception
process were issued by January 1, 2012,
and the process was implemented on
February 1, 2012.
As required by the statute, the
expansion exception process provides
that hospitals that qualify as an
‘‘applicable hospital’’ or a ‘‘high
Medicaid facility’’ may request an
exception to the prohibition on facility
expansion. The existing expansion
exception process requires the use of
filed Medicare cost report data from the
Healthcare Cost Report Information
System (HCRIS) for hospitals to
demonstrate that they satisfy the
relevant eligibility criteria set forth in
§ 411.362(c)(2) for applicable hospitals
and § 411.362(c)(3) for high Medicaid
facilities (76 FR 42350 through 42352).
As discussed in section XV.C. of the CY
2015 OPPS/ASC proposed rule (79 FR
41054 through 41056), we proposed to
permit physician-owned hospitals to
use certain non-HCRIS data sources to
demonstrate satisfaction of the
expansion exception process eligibility
criteria. In section XV.C. of this final
rule with comment period, we are
finalizing our proposal with certain
modifications. Under our policy, we
will continue to require each hospital
seeking to qualify for an expansion
exception to access and utilize data for
its estimations or determinations to
demonstrate that the hospital meets the
relevant criteria and to provide a

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67027

detailed explanation regarding whether
and how it satisfies each of the relevant
criteria. We believe the impact of our
modification on affected hospitals will
be minimal, given that the use of data
from a non-HCRIS data source is
voluntary.
Our policy will require each
requesting hospital also to provide
actual notification that it is requesting
an expansion exception directly to
hospitals whose data are part of the
comparisons set forth in
§ 411.362(c)(2)(ii) and (c)(3)(ii) of the
regulations, in addition to performing
the other methods of notification
specified in our existing regulations. We
are finalizing this policy, and we believe
the impact of this additional
requirement on physician-owned
hospitals will be minimal.
We believe that our policy will affect
a relatively small number of physicianowned hospitals. We estimate that there
are approximately 265 physician-owned
hospitals in the country. Since the
process was implemented in February
2012, we have received only four
requests, only one of which has been
considered sufficiently complete to
continue with publication in the
Federal Register, under the current
regulations. We anticipate receiving a
similar number of requests each year.
We do not believe that we can use the
four requests to estimate accurately the
potential increase in operating rooms,
procedure rooms, and beds pursuant to
approved expansion exception requests,
and we are not aware of any data that
may indicate such an increase. At this
time, we also have no data or
projections that may help estimate the
number of physicians that will be
affected by these proposals as a result of
their ownership interests in hospitals.
We believe that beneficiaries may be
positively impacted by our policies.
Specifically, an increase in operating
rooms, procedure rooms, and beds may
augment the volume or nature of
services offered by physician-owned
hospitals. An expansion in the number
of hospital beds may also permit
additional inpatient admissions and
overnight stays. Increased operating
rooms, procedure rooms, and beds may
result in improved access to health care
facilities and services. We believe that
our policies are necessary to conform
our regulations to the amendments to
section 1877 of the Act.
We solicited public comments on
each of the issues outlined above that
contain estimates of the costs and
benefits of the proposed rule. We
specifically solicited comments on the
potential impact on State governments,
because we proposed to define external

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data sources as data sources generated,
maintained, or under the control of a
State Medicaid agency. We did not
receive any public comments on our
estimates.
g. Effects of Policies Related to CMSIdentified Overpayments Associated
With Payment Data Submitted by
Medicare Advantage (MA)
Organizations and Medicare Part D
Sponsors
In section XVII. of this final rule with
comment period, we discuss our final
decisions to set forth in regulations a
formal process, including appeals
processes, that allows us to recoup
overpayments in the limited set of
circumstances where CMS makes a
determination that an overpayment to
an MA organization or Part D sponsor
occurred because the organization or
sponsor submitted erroneous payment
data to CMS. It is difficult to predict
how many times CMS will annually
determine an overpayment due to
erroneous payment data submitted to
CMS by an MA organization or Part D
sponsor and that, therefore, will be
subject to the offset and appeals
regulations. However, we predict that it
will be highly unlikely to exceed 10
cases a year and will probably be fewer.
Further, electing to appeal a CMS
overpayment determination under the
final regulations is completely at the
discretion of the MA organization or
Part D sponsor. The MA organization or
Part D sponsor may agree that the data
require correction and resubmit the
data; MA organizations and Part D
sponsors that receive notification of an
overpayment are under no obligation to
initiate the appeal process. If the MA
organization or Part D sponsor chooses
not to appeal, there are no costs or
burden associated with the appeal. If the
MA organization or Part D sponsor
chooses to appeal the overpayment
determination, there will be costs
associated with preparing the appeal
request.
We are establishing three levels of
appeal (reconsideration, informal
hearing, and Administrator review),
each of which the MA organization or
Part D sponsor will have to request.
Once the appeal has been filed,
however; there will be little or no cost
experienced by the MA organization or
Part D sponsor because the appeal
process is on the record and will not
involve oral testimony. The extent to
which there will be costs associated
with preparing the appeal request is
subject to preference and choice. We
estimate that it will take a plan 5 hours
to prepare and file a reconsideration
request. In terms of cost, it has been our

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experience that most appeals have been
prepared by high-level officials of the
plan or lawyers. According to the most
recent wage data provided by the
Bureau of Labor Statistics (BLS) for May
2012, the mean hourly wage for the
category of ‘‘Lawyers’’—which we
believe, considering the variety of
officials who have submitted appeals, is
the most appropriate category—is
$62.93. Multiplying this figure by 50
hours (10 submissions × 5 hours) results
in a projected annual cost burden of
$3,147. We estimate the preparation and
filing of a request for a hearing, or for
Administrator’s review will take 2
hours, at most, because the MA
organization or Part D sponsor cannot
submit new evidence. The hearing
officer or Administrator is limited to a
review of the record. Multiplying this
figure by 40 hours (10 submissions × 4
hours) results in a projected annual cost
burden of $2,517. It is estimated that if
the costs of benefits and overhead are
included, the total annual costs for
requests at the three levels will be
approximately $11,000.
B. Regulatory Flexibility Act (RFA)
Analysis
The RFA requires agencies to analyze
options for regulatory relief of small
entities, if a rule has a significant impact
on a substantial number of small
entities. For purposes of the RFA, we
estimate that most hospitals, ASCs and
CMHCs are small entities as that term is
used in the RFA. For purposes of the
RFA, most hospitals are considered
small businesses according to the Small
Business Administration’s size
standards with total revenues of $38.5
million or less in any single year. Most
ASCs and most CMHCs are considered
small businesses with total revenues of
$15 million or less in any single year.
We estimate that this final rule with
comment period may have a significant
impact on approximately 2,006
hospitals with voluntary ownership. For
details, see the Small Business
Administration’s ‘‘Table of Small
Business Size Standards’’ at http://
www.sba.gov/content/table-smallbusiness-size-standards.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 603 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical area and has
100 or fewer beds. We estimate that this
final rule with comment period may

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have a significant impact on
approximately 709 small rural hospitals.
The analysis above, together with the
remainder of this preamble, provides a
regulatory flexibility analysis and a
regulatory impact analysis.
C. Unfunded Mandates Reform Act
Analysis
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. That threshold
level is currently approximately $141
million. This final rule with comment
period does not mandate any
requirements for State, local, or tribal
governments, or for the private sector.
D. Conclusion
The changes we are making in this
final rule with comment period will
affect all classes of hospitals paid under
the OPPS and will affect both CMHCs
and ASCs. We estimate that most classes
of hospitals paid under the OPPS will
experience a modest increase or a
minimal decrease in payment for
services furnished under the OPPS in
CY 2015. Table 49 demonstrates the
estimated distributional impact of the
OPPS budget neutrality requirements
that will result in a 2.3 percent increase
in payments for all services paid under
the OPPS in CY 2015, after considering
all of the changes to APC
reconfiguration and recalibration, as
well as the OPD fee schedule increase
factor, wage index changes, including
the frontier State wage index
adjustment, estimated payment for
outliers, and changes to the passthrough payment estimate. However,
some classes of providers that are paid
under the OPPS will experience more
significant gains and others will
experience modest losses in OPPS
payments in CY 2015.
The updates to the ASC payment
system for CY 2015 will affect each of
the approximately 5,300 ASCs currently
approved for participation in the
Medicare program. The effect on an
individual ASC will depend on its mix
of patients, the proportion of the ASC’s
patients who are Medicare beneficiaries,
the degree to which the payments for
the procedures offered by the ASC are
changed under the ASC payment
system, and the extent to which the ASC
provides a different set of procedures in
the coming year. Table 50 demonstrates
the estimated distributional impact
among ASC surgical specialties of the

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
42 CFR Part 422

MFP-adjusted CPI–U update factor of
1.4 percent for CY 2015.
XXII. Federalism Analysis
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications. We have
examined the OPPS and ASC provisions
included in this final rule with
comment period in accordance with
Executive Order 13132, Federalism, and
have determined that they will not have
a substantial direct effect on State, local
or tribal governments, preempt State
law, or otherwise have a Federalism
implication. As reflected in Table 49 of
this final rule with comment period, we
estimate that OPPS payments to
governmental hospitals (including State
and local governmental hospitals) will
increase by 2.1 percent under this final
rule with comment period. While we do
not know the number of ASCs or
CMHCs with government ownership, we
anticipate that it is small. The analyses
we have provided in this section of this
final rule with comment period, in
conjunction with the remainder of this
document, demonstrate that this final
rule with comment period is consistent
with the regulatory philosophy and
principles identified in Executive Order
12866, the RFA, and section 1102(b) of
the Act.
This final rule with comment period
will affect payments to a substantial
number of small rural hospitals and a
small number of rural ASCs, as well as
other classes of hospitals, CMHCs, and
ASCs, and some effects may be
significant.
List of Subjects
42 CFR Part 411
Kidney diseases, Medicare, Physician
referral, Reporting and recordkeeping
requirements.
42 CFR Part 412
Administrative practice and
procedure, Health facilities, Medicare,
Puerto Rico, Reporting and
recordkeeping requirements.

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42 CFR Part 416
Health facilities, Health professions,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 419
Hospitals, Medicare, Reporting and
recordkeeping requirements.

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Administrative practice and
procedure, Health facilities, Health
maintenance, organizations (HMO),
Medicare, Penalties, Privacy, Reporting
and recordkeeping requirements.
42 CFR Part 423
Administrative practice and
procedure, Emergency medical services,
Health facilities, Health maintenance
organizations (HMO), Health
professionals, Medicare, Penalties,
Privacy, Reporting and recordkeeping
requirements.
42 CFR Part 424
Emergency medical services, Health
professions, Medicare.
For reasons stated in the preamble of
this document, the Centers for Medicare
& Medicaid Services is amending 42
CFR Chapter IV as set forth below:
PART 411—EXCLUSIONS FROM
MEDICARE AND LIMITATION ON
MEDICARE PAYMENT
1. The authority citation for part 411
continues to read as follows:

■

Authority: Secs. 1102, 1860D–1 through
1860D–42, 1871, and 1877 of the Social
Security Act (42 U.S.C. 1302, 1395w–101
through 1395w–152, 1395hh, and 1395nn).

2. Section 411.362 is amended by—
a. Under paragraph (a), adding a
definition of ‘‘External data source’’ in
alphabetical order.
■ b. Revising paragraphs (c)(2)(ii),
(c)(2)(iv), (c)(2)(v), (c)(3)(ii), and (c)(5).
The addition and revisions read as
follows:
■
■

§ 411.362 Additional requirements
concerning physician ownership and
investment in hospitals.

(a) * * *
External data source means a data
source that—
(1) Is generated, maintained, or under
the control of a State Medicaid agency;
(2) Is reliable and transparent;
(3) Maintains data that, for purposes
of the process described in paragraph (c)
of this section, are readily available and
accessible to the requesting hospital,
comparison hospitals, and CMS; and
(4) Maintains or generates data that,
for purposes of the process described in
paragraph (c) of this section, are
accurate, complete, and objectively
verifiable.
*
*
*
*
*
(c) * * *
(2) * * *
(ii) Medicaid inpatient admissions.
Has an annual percent of total inpatient
admissions under Medicaid that is equal
to or greater than the average percent

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67029

with respect to such admissions for all
hospitals located in the county in which
the hospital is located during the most
recent 12-month period for which data
are available as of the date that the
hospital submits its request. For
purposes of this paragraph, the most
recent 12-month period for which data
are available means the most recent 12month period for which the data source
used contains all data from the
requesting hospital and each hospital
located in the same county as the
requesting hospital.
(A) Until such time that the
Healthcare Cost Report Information
System (HCRIS) contains sufficiently
complete inpatient Medicaid discharge
data, a hospital may use filed Medicare
hospital cost report data or data from an
external data source (as defined in
paragraph (a) of this section) to estimate
its annual percent of total inpatient
admissions under Medicaid and the
average percent with respect to such
admissions for all hospitals located in
the county in which the hospital is
located.
(B) On or after such date that the
Secretary determines that HCRIS
contains sufficiently complete inpatient
Medicaid discharge data, a hospital may
use only filed Medicare hospital cost
report data to estimate its annual
percent of total inpatient admissions
under Medicaid and the average percent
with respect to such admissions for all
hospitals located in the county in which
the hospital is located.
*
*
*
*
*
(iv) Average bed capacity. Is located
in a State in which the average bed
capacity in the State is less than the
national average bed capacity during the
most recent fiscal year for which HCRIS,
as of the date that the hospital submits
its request, contains data from a
sufficient number of hospitals to
determine a State’s average bed capacity
and the national average bed capacity.
CMS will provide on its Web site State
average bed capacities and the national
average bed capacity. For purposes of
this paragraph, ‘‘sufficient number’’
means the number of hospitals, as
determined by CMS, that would ensure
that the determination under this
paragraph would not materially change
after additional hospital data are
reported.
(v) Average bed occupancy. Has an
average bed occupancy rate that is
greater than the average bed occupancy
rate in the State in which the hospital
is located during the most recent fiscal
year for which HCRIS, as of the date that
the hospital submits its request,
contains data from a sufficient number

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of hospitals to determine the requesting
hospital’s average bed occupancy rate
and the relevant State’s average bed
occupancy rate. A hospital must use
filed hospital cost report data to
determine its average bed occupancy
rate. CMS will provide on its Web site
State average bed occupancy rates. For
purposes of this paragraph, ‘‘sufficient
number’’ means the number of
hospitals, as determined by CMS, that
would ensure that the determination
under this paragraph would not
materially change after additional
hospital data are reported.
(3) * * *
(ii) Medicaid inpatient admissions.
With respect to each of the 3 most
recent 12-month periods for which data
are available as of the date the hospital
submits its request, has an annual
percent of total inpatient admissions
under Medicaid that is estimated to be
greater than such percent with respect
to such admissions for any other
hospital located in the county in which
the hospital is located. For purposes of
this paragraph, the most recent 12month period for which data are
available means the most recent 12month period for which the data source
used contains all data from the
requesting hospital and every hospital
located in the same county as the
requesting hospital.
(A) Until such time that the
Healthcare Cost Report Information
System (HCRIS) contains sufficiently
complete inpatient Medicaid discharge
data, a hospital may use filed Medicare
hospital cost report data or data from an
external data source (as defined in
paragraph (a) of this section) to estimate
its annual percentage of total inpatient
admissions under Medicaid and the
annual percentages of total inpatient
admissions under Medicaid for every
other hospital located in the county in
which the hospital is located.
(B) On or after such date that the
Secretary determines that HCRIS
contains sufficiently complete inpatient
Medicaid discharge data, a hospital may
use only filed Medicare hospital cost
report data to estimate its annual
percentage of total inpatient admissions
under Medicaid and the annual
percentages of total inpatient
admissions under Medicaid for every
other hospital located in the county in
which the hospital is located.
*
*
*
*
*
(5) Community input and timing of
complete request. Upon submitting a
request for an exception and until the
hospital receives a CMS decision, the
hospital must disclose on any public
Web site for the hospital that it is

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requesting an exception and must also
provide actual notification that it is
requesting an exception, in either
electronic or hard copy form, directly to
hospitals whose data are part of the
comparisons in paragraphs (c)(2)(ii) and
(c)(3)(ii) of this section. Individuals and
entities in the hospital’s community
may provide input with respect to the
hospital’s request no later than 30 days
after CMS publishes notice of the
hospital’s request in the Federal
Register. Such input must take the form
of written comments. The written
comments must be either mailed or
submitted electronically to CMS. If CMS
receives written comments from the
community, the hospital has 30 days
after CMS notifies the hospital of the
written comments to submit a rebuttal
statement.
(i) If only filed Medicare hospital cost
report data are used in the hospital’s
request, the written comments, and the
hospital’s rebuttal statement—
(A) A request will be deemed
complete at the end of the 30-day
comment period if CMS does not
receive written comments from the
community.
(B) A request will be deemed
complete at the end of the 30-day
rebuttal period, regardless of whether
the hospital submits a rebuttal
statement, if CMS receives written
comments from the community.
(ii) If data from an external data
source are used in the hospital’s request,
the written comments, or the hospital’s
rebuttal statement—
(A) A request will be deemed
complete no later than 180 days after
the end of the 30-day comment period
if CMS does not receive written
comments from the community.
(B) A request will be deemed
complete no later than 180 days after
the end of the 30-day rebuttal period,
regardless of whether the hospital
submits a rebuttal statement, if CMS
receives written comments from the
community.
*
*
*
*
*
PART 412—PROSPECTIVE PAYMENT
SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
3. The authority citation for Part 412
continues to read as follows:

■

Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh), sec. 124 of Pub. L. 106–113 (113
Stat. 1501A–332), sec. 1206 of Pub. L. 113–
67, and sec 112 of Pub. L. 113–93.
§ 412.3
■
■

[Amended]

4. Section 412.3 is amended by—
a. Removing paragraph (c).

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b. Redesignating paragraphs (d) and
(e) as paragraphs (c) and (d),
respectively.
■ c. In redesignated paragraph (d)(1),
removing the cross-reference ‘‘paragraph
(e)(2)’’ and adding in its place the crossreference ‘‘paragraph (d)(2)’’.
■

PART 416—AMBULATORY SURGICAL
SERVICES
5. The authority citation for Part 416
continues to read as follows:

■

Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).

6. Section 416.164 is amended by
revising paragraphs (a)(11) and (b)(5) to
read as follows:

■

§ 416.164

Scope of ASC services.

(a) * * *
(11) Radiology services for which
separate payment is not allowed under
the OPPS and other diagnostic tests or
interpretive services that are integral to
a surgical procedure, except certain
diagnostic tests for which separate
payment is allowed under the OPPS;
*
*
*
*
*
(b) * * *
(5) Certain radiology services and
certain diagnostic tests for which
separate payment is allowed under the
OPPS.
*
*
*
*
*
■ 7. Section 416.171 is amended by
revising paragraphs (b)(1), (b)(2), and (d)
introductory text to read as follows:
§ 416.171 Determination of payment rates
for ASC services.

*

*
*
*
*
(b) * * *
(1) Covered ancillary services
specified in § 416.164(b), with the
exception of radiology services and
certain diagnostic tests as provided in
§ 416.164(b)(5);
(2) The device portion of deviceintensive procedures, which are
procedures assigned to an APC with a
device cost greater than 40 percent of
the APC costs when calculated
according to the standard OPPS APC
ratesetting methodology.
*
*
*
*
*
(d) Limitation on payment rates for
office-based surgical procedures and
covered ancillary radiology services and
certain diagnostic tests.
Notwithstanding the provisions of
paragraph (a) of this section, for any
covered surgical procedure under
§ 416.166 that CMS determines is
commonly performed in physicians’
offices or for any covered ancillary
radiology service or diagnostic test

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under § 416.164(b)(5), excluding those
listed in paragraphs (d)(1) and (d)(2) of
this section, the national unadjusted
ASC payment rates for these procedures
and services will be the lesser of the
amount determined under paragraph (a)
of this section or the amount calculated
at the nonfacility practice expense
relative value units under
§ 414.22(b)(5)(i)(B) of this chapter
multiplied by the conversion factor
described in § 414.20(a)(3) of this
chapter.
*
*
*
*
*
PART 419—PROSPECTIVE PAYMENT
SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
8. The authority citation for Part 419
continues to read as follows:

■

*

9. Section 419.2 is amended by
revising paragraphs (b)(7) and (b)(16) to
read as follows:

■

Basis of payment.

*

*
*
*
*
(b) * * *
(7) Ancillary services;
*
*
*
*
*
(16) Drugs and biologicals that
function as supplies when used in a
surgical procedure (including, but not
limited to, skin substitutes and similar
products that aid wound healing and
implantable biologicals);
*
*
*
*
*
■ 10. Section 419.22 is amended by
revising paragraph (j) to read as follows:
§ 419.22 Hospital services excluded from
payment under the hospital outpatient
prospective payment system.

*

*
*
*
*
(j) Except as provided in
§ 419.2(b)(11), prosthetic devices and
orthotic devices.
*
*
*
*
*
■ 11. Section 419.32 is amended by
adding paragraph (b)(1)(iv)(B)(6) to read
as follows:

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§ 419.66 Transitional pass-through
payments: Medical devices.

*

*
*
*
*
(b) * * *
(3) The device is an integral part of
the service furnished, is used for one
patient only, comes in contact with
human tissue, and is surgically
implanted or inserted (either
permanently or temporarily) or applied
in or on a wound or other skin lesion.
*
*
*
*
*
PART 422—MEDICARE ADVANTAGE
PROGRAM
15. The authority citation for Part 422
continues to read as follows:

■

Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).

16. A new § 422.330 is added to
subpart G to read as follows:

*
*
*
*
(b) * * *
(1) * * *
(iv) * * *
(B) * * *
(6) For calendar year 2015, a
multifactor productivity adjustment (as
determined by CMS) and 0.2 percentage
point.
*
*
*
*
*

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*
*
*
*
(a) * * *
(4) * * *
(iv) A biological that is not a skin
substitute or similar product that aids
wound healing.
*
*
*
*
*
■ 14. Section 419.66 is amended by
revising paragraph (b)(3) and removing
paragraph (b)(4)(iii) to read as follows:

■

§ 419.32 Calculation of prospective
payment rates for hospital outpatient
services.

*

[Amended]

12. Section 419.46 is amended by—
a. In paragraph (c)(1), removing the
phrase ‘‘section 1833(17)(C)’’ and
adding in its place the phrase ‘‘section
1833(t)(17)(C)’’.
■ b. In paragraph (d) introductory text
and paragraph (d)(1), removing the term
‘‘waiver’’ and adding in its place the
term ‘‘exception’’ each time it appears.
■ c. In paragraph (d)(2), removing the
term ‘‘waivers’’ and adding in its place
the term ‘‘exceptions’’.
■ d. In paragraph (e) introductory text,
removing the phrase ‘‘section
1833(17)(C)’’ and adding in its place the
phrase ‘‘section 1833(t)(17)(C)’’.
■ 13. Section 419.64 is amended by
revising paragraph (a)(4)(iv) to read as
follows:
■
■

§ 419.64 Transitional pass-through
payments: Drugs and biologicals.

Authority: Secs. 1102, 1833(t), and 1871
of the Social Security Act (42 U.S.C. 1302,
1395l(t), and 1395hh).

§ 419.2

§ 419.46

§ 422.330 CMS-identified overpayments
associated with payment data submitted by
MA organizations.

(a) Definitions. For purposes of this
section—
Applicable reconciliation date occurs
on the date of the annual final deadline
for risk adjustment data submission
described at § 422.310(g)(2)(ii).
Erroneous payment data means
payment data that should not have been

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67031

submitted either because the data
submitted are inaccurate or because the
data are inconsistent with Medicare Part
C requirements.
Payment data means data submitted
by an MA organization to CMS and used
for payment purposes, including
enrollment data and data submitted
under § 422.310.
(b) Request to correct payment data.
(1) When CMS identifies erroneous
payment data submitted by an MA
organization (other than an error
identified through the process described
in § 422.311), CMS may send a data
correction notice to the MA organization
requesting that the MA organization
correct the payment data.
(2) The notice will include or make
reference to the specific payment data
that need to be corrected, the reason
why CMS believes that the payment
data are erroneous, and the timeframe
for correcting the payment data.
(c) Payment offset. (1) If the MA
organization fails to submit the
corrected payment data within the
timeframe as requested in accordance
with paragraph (b) of this section, CMS
will conduct a payment offset against
payments made to the MA organization
if—
(i) The payment error affects
payments for any of the 6 most recently
completed payment years; and
(ii) The payment error for a particular
payment year is identified after the
applicable reconciliation date for that
payment year.
(2) CMS will calculate the payment
offset amount using the correct payment
data and a payment algorithm that
applies the payment rules for the
applicable year.
(d) Payment offset notification. CMS
will issue a payment offset notice to the
MA organization that includes at least
the following:
(1) The dollar amount of the offset
from plan payments.
(2) An explanation of how the
erroneous data were identified and used
to calculate the payment offset amount.
(3) An explanation that, if the MA
organization disagrees with the payment
offset, it may request an appeal within
30 days of issuance of the payment
offset notification.
(e) Appeals process. If an MA
organization does not agree with the
payment offset described in paragraph
(c) of this section, it may appeal under
the following three-level appeal process:
(1) Reconsideration. An MA
organization may request
reconsideration of the payment offset
described in paragraph (c) of this
section, according to the following
process:

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(i) Manner and timing of request. A
written request for reconsideration must
be filed within 30 days from the date
that CMS issued the payment offset
notice to the MA organization.
(ii) Content of request. The written
request for reconsideration must specify
the findings or issues with which the
MA organization disagrees and the
reasons for its disagreement. As part of
its request for reconsideration, the MA
organization may include any additional
documentary evidence in support of its
position. Any additional evidence must
be submitted with the request for
reconsideration. Additional information
submitted after this time will be rejected
as untimely.
(iii) Conduct of reconsideration. In
conducting the reconsideration, the
CMS reconsideration official reviews
the underlying data that were used to
determine the amount of the payment
offset and any additional documentary
evidence timely submitted by the MA
organization.
(iv) Reconsideration decision. The
CMS reconsideration official informs
the MA organization of its decision on
the reconsideration request.
(v) Effect of reconsideration decision.
The decision of the CMS
reconsideration official is final and
binding unless a timely request for an
informal hearing is filed in accordance
with paragraph (e)(2) of this section.
(2) Informal hearing. An MA
organization dissatisfied with CMS’
reconsideration decision made under
paragraph (e)(1) of this section is
entitled to an informal hearing as
provided for under paragraphs (e)(2)(i)
through (e)(2)(v) of this section.
(i) Manner and timing for request. A
request for an informal hearing must be
made in writing and filed with CMS
within 30 days of the date of CMS’
reconsideration decision.
(ii) Content of request. The request for
an informal hearing must include a copy
of the reconsideration decision and
must specify the findings or issues in
the decision with which the MA
organization disagrees and the reasons
for its disagreement.
(iii) Informal hearing procedures. The
informal hearing will be conducted in
accordance with the following:
(A) CMS provides written notice of
the time and place of the informal
hearing at least 30 days before the
scheduled date.
(B) The informal hearing is conducted
by a CMS hearing officer who neither
receives testimony nor accepts any new
evidence that was not timely presented
with the reconsideration request. The
CMS hearing officer is limited to the
review of the record that was before the

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CMS reconsideration official when CMS
made its reconsideration determination.
(C) The CMS hearing officer will
review the proceeding before the CMS
reconsideration official on the record
made before the CMS reconsideration
official using the clearly erroneous
standard of review.
(iv) Decision of the CMS hearing
officer. The CMS hearing officer decides
the case and sends a written decision to
the MA organization explaining the
basis for the decision.
(v) Effect of hearing officer’s decision.
The hearing officer’s decision is final
and binding, unless the decision is
reversed or modified by the
Administrator in accordance with
paragraph (e)(3) of this section.
(3) Review by the Administrator. The
Administrator review will be conducted
in the following manner:
(i) An MA organization that has
received a hearing officer’s decision
may request review by the
Administrator within 30 days of the
date of issuance of the hearing officer’s
decision under paragraph (e)(2)(iv) of
this section. The MA organization may
submit written arguments to the
Administrator for review.
(ii) After receiving a request for
review, the Administrator has the
discretion to elect to review the hearing
officer’s determination in accordance
with paragraph (e)(3)(iv) of this section
or to decline to review the hearing
officer’s decision.
(iii) If the Administrator declines to
review the hearing officer’s decision, the
hearing officer’s decision is final and
binding.
(iv) If the Administrator elects to
review the hearing officer’s decision, the
Administrator will review the hearing
officer’s decision, as well as any
information included in the record of
the hearing officer’s decision and any
written argument submitted by the MA
organization, and determine whether to
uphold, reverse, or modify the hearing
officer’s decision.
(v) The Administrator’s determination
is final and binding.
(f) Matters subject to appeal and
burden of proof. (1) The MA
organization’s appeal is limited to CMS’
finding that the payment data submitted
by the MA organization are erroneous.
(2) The MA organization bears the
burden of proof by a preponderance of
the evidence in demonstrating that
CMS’ finding that the payment data
were erroneous was incorrect or
otherwise inconsistent with applicable
program requirements.
(g) Applicability of appeals process.
The appeals process under paragraph (e)
of this section applies only to payment

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offsets under paragraph (c) of this
section.
PART 423—VOLUNTARY MEDICARE
PRESCRIPTION DRUG BENEFIT
17. The authority citation for Part 423
continues to read as follows:

■

Authority: Secs. 1102, 1106, 1860D–1
through 1860D–42, and 1871 of the Social
Security Act (42 U.S.C. 1302, 1306, 1395w–
101 through 1395w–152, and 1395hh).

18. A new § 423.352 is added to read
as follows:

■

§ 423.352 CMS-identified overpayments
associated with payment data submitted by
Part D sponsors.

(a) Definitions. For purposes of this
section—
Applicable reconciliation date occurs
on the later of either the annual
deadline for submitting—
(1) Prescription drug event (PDE) data
for the annual Part D payment
reconciliations referred to in
§ 423.343(c) and (d); or
(2) Direct and indirect remuneration
data.
Erroneous payment data means
payment data that should not have been
submitted either because the data
submitted are inaccurate or because the
data are inconsistent with Medicare Part
D requirements.
Payment data means data submitted
by a Part D sponsor to CMS and used
for payment purposes, including
enrollment data and data submitted
under § 423.329(b)(3), § 423.336(c)(1),
and § 423.343, and data provided for
purposes of supporting allowable
reinsurance costs and allowable risk
corridor costs as defined in § 423.308,
including data submitted to CMS
regarding direct and indirect
remuneration.
(b) Request to correct payment data.
(1) When CMS identifies erroneous
payment data submitted by a Part D
sponsor, CMS may send a data
correction notice to the Part D sponsor
requesting that the Part D sponsor
correct the payment data.
(2) The notice will include or make
reference to the specific payment data
that need to be corrected, the reason
why CMS believes that the payment
data are erroneous, and the timeframe
for correcting the payment data.
(c) Payment offset. (1) If the Part D
sponsor fails to submit the corrected
payment data within the timeframe as
requested in accordance with paragraph
(b) of this section, CMS will conduct a
payment offset against payments made
to the Part D sponsor if—

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(i) The payment error affects
payments for any of the 6 most recently
completed payment years; and
(ii) The payment error for a particular
payment year is identified after the
applicable reconciliation date for that
payment year.
(2) CMS will calculate the payment
offset amount using the correct payment
data and a payment algorithm that
applies the payment rules for the
applicable year.
(d) Payment offset notification. CMS
will issue a payment offset notice to the
Part D sponsor that includes at least the
following:
(1) The dollar amount of the offset
from plan payments.
(2) An explanation of how the
erroneous data were identified and used
to calculate the payment offset amount.
(3) An explanation that, if the Part D
sponsor disagrees with the payment
offset, it may request an appeal within
30 days of issuance of the payment
offset notification.
(e) Appeals process. If a Part D
sponsor does not agree with the
payment offset described in paragraph
(c) of this section, it may appeal under
the following three-level appeal process:
(1) Reconsideration. A Part D sponsor
may request reconsideration of the
payment offset described in paragraph
(c) of this section, according to the
following process:
(i) Manner and timing of request. A
written request for reconsideration must
be filed within 30 days from the date
that CMS issued the payment offset
notice to the Part D sponsor.
(ii) Content of request. The written
request for reconsideration must specify
the findings or issues with which the
Part D sponsor disagrees and the reasons
for its disagreement. As part of its
request for reconsideration, the Part D
sponsor may include any additional
documentary evidence in support of its
position. Any additional evidence must
be submitted with the request for
reconsideration. Additional information
submitted after this time will be rejected
as untimely.
(iii) Conduct of reconsideration. In
conducting the reconsideration, the
CMS reconsideration official reviews
the underlying data that were used to
determine the amount of the payment
offset and any additional documentary
evidence timely submitted by the Part D
sponsor.
(iv) Reconsideration decision. The
CMS reconsideration official informs
the Part D sponsor of its decision on the
reconsideration request.
(v) Effect of reconsideration decision.
The decision of the CMS
reconsideration official is final and

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binding unless a timely request for an
informal hearing is filed in accordance
with paragraph (e)(2) of this section.
(2) Informal hearing. A Part D sponsor
dissatisfied with CMS’ reconsideration
decision made under paragraph (e)(1) of
this section is entitled to an informal
hearing as provided for under
paragraphs (e)(2)(i) through (e)(2)(v) of
this section.
(i) Manner and timing for request. A
request for an informal hearing must be
made in writing and filed with CMS
within 30 days of the date of CMS’
reconsideration decision.
(ii) Content of request. The request for
an informal hearing must include a copy
of the reconsideration decision and
must specify the findings or issues in
the decision with which the Part D
sponsor disagrees and the reasons for its
disagreement.
(iii) Informal hearing procedures. The
informal hearing will be conducted in
accordance with the following:
(A) CMS provides written notice of
the time and place of the informal
hearing at least 30 days before the
scheduled date.
(B) The informal hearing is conducted
by a CMS hearing officer who neither
receives testimony nor accepts any new
evidence that was not timely presented
with the reconsideration request. The
CMS hearing officer is limited to the
review of the record that was before the
CMS reconsideration official when CMS
made its reconsideration determination.
(C) The CMS hearing officer will
review the proceeding before the CMS
reconsideration official on the record
made before the CMS reconsideration
official using the clearly erroneous
standard of review.
(iv) Decision of the CMS hearing
officer. The CMS hearing officer decides
the case and sends a written decision to
the Part D sponsor explaining the basis
for the decision.
(v) Effect of hearing officer’s decision.
The hearing officer’s decision is final
and binding, unless the decision is
reversed or modified by the
Administrator in accordance with
paragraph (e)(3) of this section.
(3) Review by the Administrator. The
Administrator review will be conducted
in the following manner:
(i) A Part D sponsor that has received
a hearing officer’s decision may request
review by the Administrator within 30
days of the date of issuance of the
hearing officer’s decision under
paragraph (e)(2)(iv) of this section. The
Part D sponsor may submit written
arguments to the Administrator for
review.
(ii) After receiving a request for
review, the Administrator has the

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discretion to elect to review the hearing
officer’s determination in accordance
with paragraph (e)(3)(iv) of this section
or to decline to review the hearing
officer’s decision.
(iii) If the Administrator declines to
review the hearing officer’s decision, the
hearing officer’s decision is final and
binding.
(iv) If the Administrator elects to
review the hearing officer’s decision, the
Administrator will review the hearing
officer’s decision, as well as any
information included in the record of
the hearing officer’s decision and any
written argument submitted by the Part
D sponsor, and determine whether to
uphold, reverse, or modify the hearing
officer’s decision.
(v) The Administrator’s determination
is final and binding.
(f) Matters subject to appeal and
burden of proof. (1) The Part D
sponsor’s appeal is limited to CMS’
finding that the payment data submitted
by the Part D sponsor are erroneous.
(2) The Part D sponsor bears the
burden of proof by a preponderance of
the evidence in demonstrating that
CMS’ finding that the payment data
were erroneous was incorrect or
otherwise inconsistent with applicable
program requirements.
(g) Applicability of appeals process.
The appeals process under paragraph (e)
of this section applies only to payment
offsets under paragraph (c) of this
section.
PART 424—CONDITIONS FOR
MEDICARE PAYMENT
19. The authority citation for Part 424
continues to read as follows:

■

Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).

20. Section 424.13 is amended by—
a. Revising paragraph (a) introductory
text.
■ b. Removing paragraph (a)(1).
■ c. Redesignating paragraphs (a)(2), (3),
and (4) as paragraphs (a)(1), (2), and (3),
respectively.
■ d. Revising redesignated paragraph
(a)(1)(i).
■ e. Revising paragraph (b).
The revisions read as follows:
■
■

§ 424.13 Requirements for inpatient
services of hospitals other than inpatient
psychiatric facilities.

(a) Content of certification and
recertification. Medicare Part A pays for
inpatient hospital services (other than
inpatient psychiatric facility services)
for cases that are 20 inpatient days or
more, or are outlier cases under subpart
F of part 412 of this chapter, only if a

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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations

physician certifies or recertifies the
following:
(1) * * *
(i) Continued hospitalization of the
patient for medical treatment or
medically required diagnostic study; or
*
*
*
*
*
(b) Timing of certification. For outlier
cases under subpart F of Part 412 of this

chapter, the certification must be signed
and documented in the medical record
and as specified in paragraphs (e)
through (h) of this section. For all other
cases, the certification must be signed
and documented no later than 20 days
into the hospital stay.
*
*
*
*
*

Dated: October 22, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: October 26, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
[FR Doc. 2014–26146 Filed 10–31–14; 4:15 pm]

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