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pdfVol. 79
Friday,
No. 163
August 22, 2014
Book 2 of 2 Books
Pages 49853–50536
Part II
Department of Health and Human Services
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Center for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Fiscal Year 2015 Rates; Quality Reporting
Requirements for Specific Providers; Reasonable Compensation Equivalents
for Physician Services in Excluded Hospitals and Certain Teaching
Hospitals; Provider Administrative Appeals and Judicial Review;
Enforcement Provisions for Organ Transplant Centers; and Electronic
Health Record (EHR) Incentive Program; Final Rule
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49854
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 405, 412, 413, 415, 422,
424, 485, and 488
[CMS–1607–F and CMS–1599–F3]
RINs 0938–AS11; 0938–AR12; and 0938–
AR53
Medicare Program; Hospital Inpatient
Prospective Payment Systems for
Acute Care Hospitals and the LongTerm Care Hospital Prospective
Payment System and Fiscal Year 2015
Rates; Quality Reporting Requirements
for Specific Providers; Reasonable
Compensation Equivalents for
Physician Services in Excluded
Hospitals and Certain Teaching
Hospitals; Provider Administrative
Appeals and Judicial Review;
Enforcement Provisions for Organ
Transplant Centers; and Electronic
Health Record (EHR) Incentive
Program
Centers for Medicare and
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
We are revising the Medicare
hospital inpatient prospective payment
systems (IPPS) for operating and capitalrelated costs of acute care hospitals to
implement changes arising from our
continuing experience with these
systems. Some of these changes
implement certain statutory provisions
contained in the Patient Protection and
Affordable Care Act and the Health Care
and Education Reconciliation Act of
2010 (collectively known as the
Affordable Care Act), the Protecting
Access to Medicare Act of 2014, and
other legislation. These changes are
applicable to discharges occurring on or
after October 1, 2014, unless otherwise
specified in this final rule. We also are
updating the rate-of-increase limits for
certain hospitals excluded from the
IPPS that are paid on a reasonable cost
basis subject to these limits. The
updated rate-of-increase limits are
effective for cost reporting periods
beginning on or after October 1, 2014.
We also are updating the payment
policies and the annual payment rates
for the Medicare prospective payment
system (PPS) for inpatient hospital
services provided by long-term care
hospitals (LTCHs) and implementing
certain statutory changes to the LTCH
PPS under the Affordable Care Act and
the Pathway for Sustainable Growth
Rate (SGR) Reform Act of 2013 and the
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SUMMARY:
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Protecting Access to Medicare Act of
2014. In addition, we discuss our
proposals on the interruption of stay
policy for LTCHs and on retiring the ‘‘5
percent’’ payment adjustment for colocated LTCHs. While many of the
statutory mandates of the Pathway for
SGR Reform Act apply to discharges
occurring on or after October 1, 2014,
others will not begin to apply until 2016
and beyond.
In addition, we are making a number
of changes relating to direct graduate
medical education (GME) and indirect
medical education (IME) payments. We
are establishing new requirements or
revising requirements for quality
reporting by specific providers (acute
care hospitals, PPS-exempt cancer
hospitals, and LTCHs) that are
participating in Medicare.
We are updating policies relating to
the Hospital Value-Based Purchasing
(VBP) Program, the Hospital
Readmissions Reduction Program, and
the Hospital-Acquired Condition (HAC)
Reduction Program. In addition, we are
making technical corrections to the
regulations governing provider
administrative appeals and judicial
review; updating the reasonable
compensation equivalent (RCE) limits,
and revising the methodology for
determining such limits, for services
furnished by physicians to certain
teaching hospitals and hospitals
excluded from the IPPS; making
regulatory revisions to broaden the
specified uses of Medicare Advantage
(MA) risk adjustment data and to
specify the conditions for release of
such risk adjustment data to entities
outside of CMS; and making changes to
the enforcement procedures for organ
transplant centers.
We are aligning the reporting and
submission timelines for clinical quality
measures for the Medicare EHR
Incentive Program for eligible hospitals
and critical access hospitals (CAHs)
with the reporting and submission
timelines for the Hospital IQR Program.
In addition, we provide guidance and
clarification of certain policies for
eligible hospitals and CAHs such as our
policy for reporting zero denominators
on clinical quality measures and our
policy for case threshold exemptions.
In this document, we are finalizing
two interim final rules with comment
period relating to criteria for
disproportionate share hospital
uncompensated care payments and
extensions of temporary changes to the
payment adjustment for low-volume
hospitals and of the MedicareDependent, Small Rural Hospital (MDH)
Program.
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Effective Date: These final rules
are effective on October 1, 2014.
Applicability Dates: The amendments
to 42 CFR 405.1811 and 405.1835 are
applicable to appeals based on untimely
contractor determinations that are
pending or were filed on or after August
21, 2008, subject to the rules of
administrative finality and reopening at
42 CFR 405.1807 and 405.1885. The
provisions discussed in section IV.I.4.c.
of the preamble of this final rule are
applicable on or after July 1, 2015; and
the provisions discussed in section
IV.I.5.a. of the preamble of this final rule
are applicable on or after January 1,
2015.
DATES:
FOR FURTHER INFORMATION, CONTACT:
Ing-Jye Cheng, (410) 786–4548 and
Donald Thompson, (410) 786–4487,
Operating Prospective Payment, MS–
DRGs, Hospital-Acquired Conditions
(HAC), Wage Index, New Medical
Service and Technology Add-On
Payments, Hospital Geographic
Reclassifications, Graduate Medical
Education, Capital Prospective
Payment, Excluded Hospitals, and
Medicare Disproportionate Share
Hospital (DSH) Issues.
Michele Hudson, (410) 786–4487, and
Judith Richter, (410) 786–2590, LongTerm Care Hospital Prospective
Payment System and MS–LTC–DRG
Relative Weights Issues.
Siddhartha Mazumdar, (410) 786–6673,
Rural Community Hospital
Demonstration Program Issues.
James Poyer, (410) 786–2261, Hospital
Inpatient Quality Reporting and
Hospital Value-Based Purchasing—
Program Administration, Validation,
and Reconsideration Issues.
Pierre Yong, (410) 786–8896, Hospital
Inpatient Quality Reporting—
Measures Issues Except Hospital
Consumer Assessment of Healthcare
Providers and Systems Issues; and
Readmission Measures for Hospitals
Issues.
Elizabeth Goldstein, (410) 786–6665,
Hospital Inpatient Quality
Reporting—Hospital Consumer
Assessment of Healthcare Providers
and Systems Measures Issues.
Mary Pratt, (410) 786–6867, LTCH
Quality Data Reporting Issues.
Kim Spalding Bush, (410) 786–3232,
Hospital Value-Based Purchasing
Efficiency Measures Issues.
James Poyer, (410) 786–2261, PPSExempt Cancer Hospital Quality
Reporting Issues.
Kellie Shannon, (410) 786–0416,
Administrative Appeals by Providers
and Judicial Review Issues.
Amelia Citerone, (410) 786–3901, and
Robert Kuhl (410) 786–4597,
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Reasonable Compensation Equivalent
(RCE) Limits for Physician Services
Provided in Providers.
Anne Calinger, (410) 786–3396, and
Jennifer Harlow, (410) 786–4549,
Medicare Advantage Risk Adjustment
Data Issues.
Thomas Hamilton, (410) 786–6763,
Organ Transplant Center Issues.
Jennifer Phillips, (410) 786–1023, 2Midnight Rule Benchmark Issues.
SUPPLEMENTARY INFORMATION:
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.
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Tables Available Only Through the
Internet on the CMS Web site
In the past, a majority of the tables
referred to throughout this preamble
and in the Addendum to the proposed
rule and the final rule were published
in the Federal Register as part of the
annual proposed and final rules.
However, beginning in FY 2012, some of
the IPPS tables and LTCH PPS tables are
no longer published in the Federal
Register. Instead, these tables are
available only through the Internet. The
IPPS tables for this final rule are
available only through the Internet on
the CMS Web site at: http://
www.cms.hhs.gov/Medicare/medicareFee-for-Service-Payment/
AcuteInpatientPPS/index.html. Click on
the link on the left side of the screen
titled, ‘‘FY 2015 IPPS Final Rule Home
Page’’ or ‘‘Acute Inpatient—Files for
Download’’. The LTCH PPS tables for
this FY 2015 final rule are available
only through the Internet on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/LongTermCareHospitalPPS/
index.html under the list item for
Regulation Number CMS–1607–F. For
complete details on the availability of
the tables referenced in this final rule,
we refer readers to section VI. of the
Addendum to this final rule.
Readers who experience any problems
accessing any of the tables that are
posted on the CMS Web sites identified
above should contact Michael Treitel at
(410) 786–4552.
Acronyms
3M 3M Health Information System
AAMC Association of American Medical
Colleges
ACGME Accreditation Council for Graduate
Medical Education
ACoS American College of Surgeons
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AHA American Hospital Association
AHIC American Health Information
Community
AHIMA American Health Information
Management Association
AHRQ Agency for Healthcare Research and
Quality
AJCC American Joint Committee on Cancer
ALOS Average length of stay
ALTHA Acute Long Term Hospital
Association
AMA American Medical Association
AMGA American Medical Group
Association
AMI Acute myocardial infarction
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis
Related Group System
APRN Advanced practice registered nurse
ARRA American Recovery and
Reinvestment Act of 2009, Pub. L. 111–5
ASCA Administrative Simplification
Compliance Act of 2002, Pub. L. 107–105
ASITN American Society of Interventional
and Therapeutic Neuroradiology
ATRA American Taxpayer Relief Act of
2012, Pub. L. 112–240
BBA Balanced Budget Act of 1997, Pub. L.
105–33
BBRA Medicare, Medicaid, and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement Act
of 1999, Pub. L. 106–113
BIPA Medicare, Medicaid, and SCHIP [State
Children’s Health Insurance Program]
Benefits Improvement and Protection Act
of 2000, Pub. L. 106–554
BLS Bureau of Labor Statistics
CABG Coronary artery bypass graft
[surgery]
CAH Critical access hospital
CARE [Medicare] Continuity Assessment
Record & Evaluation [Instrument]
CART CMS Abstraction & Reporting Tool
CAUTI Catheter-associated urinary tract
infection
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction
Center
CDAD Clostridium difficile-associated
disease
CDC Center for Disease Control and
Prevention
CERT Comprehensive error rate testing
CDI Clostridium difficile (C. difficile)
CFR Code of Federal Regulations
CLABSI Central line-associated
bloodstream infection
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid
Services
CMSA Consolidated Metropolitan
Statistical Area
COBRA Consolidated Omnibus
Reconciliation Act of 1985, Pub. L. 99–272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
COPD Chronis obstructive pulmonary
disease
CPI Consumer price index
CQM Clinical quality measure
CRNA Certified registered nurse anesthetist
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49855
CY Calendar year
DACA Data Accuracy and Completeness
Acknowledgement
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Pub. L.
109–171
DRG Diagnosis-related group
DSH Disproportionate share hospital
EBRT External Bean Radiotherapy
ECI Employment cost index
eCQM Electronic clinical quality measure
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
EMTALA Emergency Medical Treatment
and Labor Act of 1986, Pub. L. 99–272
EP Eligible professional
FAH Federation of American Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FPL Federal poverty line
FQHC Federally qualified health center
FR Federal Register
FTE Full-time equivalent
FY Fiscal year
GAF Geographic Adjustment Factor
GME Graduate medical education
HAC Hospital-acquired condition
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of
Healthcare Providers and Systems
HCFA Health Care Financing
Administration
HCO High-cost outlier
HCRIS Hospital Cost Report Information
System
HHA Home health agency
HHS Department of Health and Human
Services
HICAN Health Insurance Claims Account
Number
HIPAA Health Insurance Portability and
Accountability Act of 1996, Pub. L. 104–
191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring
Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost
Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value
cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
IBR Intern- and Resident-to-Bed Ratio
ICD–9–CM International Classification of
Diseases, Ninth Revision, Clinical
Modification
ICD–10–CM International Classification of
Diseases, Tenth Revision, Clinical
Modification
ICD–10–PCS International Classification of
Diseases, Tenth Revision, Procedure
Coding System
ICR Information collection requirement
IGI IHS Global Insight, Inc.
IHS Indian Health Service
IME Indirect medical education
I–O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPFQR Inpatient Psychiatric Facility
Quality Reporting [Program]
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IPPS [Acute care hospital] inpatient
prospective payment system
IRF Inpatient rehabilitation facility
IQR Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LOS Length of stay
LTC–DRG Long-term care diagnosis-related
group
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality
Reporting
MA Medicare Advantage
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
MDH Medicare-dependent, small rural
hospital
MedPAC Medicare Payment Advisory
Commission
MedPAR Medicare Provider Analysis and
Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification
Review Board
MIEA–TRHCA Medicare Improvements and
Extension Act, Division B of the Tax Relief
and Health Care Act of 2006, Pub. L. 109–
432
MIPPA Medicare Improvements for Patients
and Providers Act of 2008, Pub. L. 110–275
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003, Pub. L. 108–173
MMEA Medicare and Medicaid Extenders
Act of 2010, Pub. L. 111–309
MMSEA Medicare, Medicaid, and SCHIP
Extension Act of 2007, Pub. L. 110–173
MRHFP Medicare Rural Hospital Flexibility
Program
MRSA Methicillin-resistant Staphylococcus
aureus
MSA Metropolitan Statistical Area
MS–DRG Medicare severity diagnosisrelated group
MS–LTC–DRG Medicare severity long-term
care diagnosis-related group
MU Meaningful Use [EHR Incentive
Program]
NAICS North American Industrial
Classification System
NALTH National Association of Long Term
Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality
Assurance
NCVHS National Committee on Vital and
Health Statistics
NECMA New England County Metropolitan
Areas
NHSN National Healthcare Safety Network
NOP Notice of Participation
NQF National Quality Forum
NQS National Quality Strategy
NTIS National Technical Information
Service
NTTAA National Technology Transfer and
Advancement Act of 1991, Pub. L. 104–113
NVHRI National Voluntary Hospital
Reporting Initiative
OACT [CMS] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation
Act of 1986, Pub. L. 99–509
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OES Occupational employment statistics
OIG Office of the Inspector General
OMB [Executive] Office of Management and
Budget
OPM [U.S.] Office of Personnel
Management
OQR [Hospital] Outpatient Quality
Reporting
O.R. Operating room
OSCAR Online Survey Certification and
Reporting [System]
PAMA Protecting Access to Medicare Act of
2014, Pub. L. 113–93
PCH PPS-exempt cancer hospital
PCHQR PPS-exempt cancer hospital quality
reporting
PMSAs Primary metropolitan statistical
areas
POA Present on admission
PPI Producer price index
PPS Prospective payment system
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment
Commission
PRRB Provider Reimbursement Review
Board
PRTFs Psychiatric residential treatment
facilities
PSF Provider-Specific File
PSI Patient safety indicator
PS&R Provider Statistical and
Reimbursement [System]
PQRS Physician Quality Reporting System
QIG Quality Improvement Group [CMS]
QIO Quality Improvement Organization
QRDA Quality Reporting Data Architecture
RCE Reasonable compensation equivalent
RFA Regulatory Flexibility Act, Pub. L. 96–
354
RHC Rural health clinic
RHQDAPU Reporting hospital quality data
for annual payment update
RNHCI Religious nonmedical health care
institution
RPL Rehabilitation psychiatric long-term
care (hospital)
RRC Rural referral center
RSMR Risk-standardized mortality rate
RSRR Risk-standard readmission rate
RTI Research Triangle Institute,
International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SCIP Surgical Care Improvement Project
SFY State fiscal year
SIC Standard Industrial Classification
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSI Surgical site infection
SSI Supplemental Security Income
SSO Short-stay outlier
SUD Substance use disorder
TEFRA Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97–248
TEP Technical expert panel
THA/TKA Total hip arthroplasty/Total
knee arthroplasty
TMA TMA [Transitional Medical
Assistance], Abstinence Education, and QI
[Qualifying Individuals] Programs
Extension Act of 2007, Pub. L. 110–90
TPS Total Performance Score
UHDDS Uniform hospital discharge data set
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UMRA Unfunded Mandate Reform Act,
Pub. L. 104–4
VBP [Hospital] Value Based Purchasing
[Program]
VTE Venous thromboembolism
Table of Contents
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Summary
1. Acute Care Hospital Inpatient
Prospective Payment System (IPPS)
2. Hospitals and Hospital Units Excluded
From the IPPS
3. Long-Term Care Hospital Prospective
Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical
Education (GME)
C. Summary of Provisions of Recent
Legislation Discussed in This Final Rule
1. Patient Protection and Affordable Care
Act (Pub. L. 111–148) and the Health
Care and Education Reconciliation Act of
2010 (Pub. L. 111–152)
2. American Taxpayer Relief Act of 2012
(Pub. L. 112–240)
3. Pathway for Sustainable Growth Rate
(SGR) Reform Act of 2013 (Pub. L. 113–
67)
4. Protecting Access to Medicare Act of
2014 (Pub. L. 113–93)
D. Issuance of Notice of Proposed
Rulemaking
E. Public Comments Received in Response
to the FY 2015 IPPS/LTCH PPS Proposed
Rule
F. Finalization of Interim Final Rule With
Comment Period on Extension of
Payment Adjustment for Low-Volume
Hospitals and the MDH Program
G. Finalization of Interim Final Rule With
Comment Period Related to Changes to
Certain Cost Reporting Procedures for
Disproportionate Share Hospital
Uncompensated Care Payments
II. Changes to Medicare Severity DiagnosisRelated Group (MS–DRG) Classifications
and Relative Weights
A. Background
B. MS–DRG Reclassifications
C. Adoption of the MS–DRGs in FY 2008
D. FY 2015 MS–DRG Documentation and
Coding Adjustment
1. Background on the Prospective MS–DRG
Documentation and Coding Adjustments
for FY 2008 and FY 2009 Authorized by
Pub. L. 110–90
2. Adjustment to the Average Standardized
Amounts Required by Pub. L. 110–90
a. Prospective Adjustment Required by
Section 7(b)(1)(A) of Pub. L. 110–90
b. Recoupment or Repayment Adjustments
in FYs 2010 Through 2012 Required by
Section 7(b)(1)(B) Pub. L. 110–90
3. Retrospective Evaluation of FY 2008 and
FY 2009 Claims Data
4. Prospective Adjustments for FY 2008
and FY 2009 Authorized by Section
7(b)(1)(A) of Pub. L. 110–90
5. Recoupment or Repayment Adjustment
Authorized by Section 7(b)(1)(B) of Pub.
L. 110–90
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6. Recoupment or Repayment Adjustment
Authorized by Section 631 of the
American Taxpayer Relief Act of 2012
(ATRA)
7. Prospective Adjustment for the MS–DRG
Documentation and Coding Effect
Through FY 2010
E. Refinement of the MS–DRG Relative
Weight Calculation
1. Background
2. Discussion for FY 2015
F. Adjustment to MS–DRGs for Preventable
Hospital-Acquired Conditions (HACs),
Including Infections for FY 2015
1. Background
2. HAC Selection
3. Present on Admission (POA) Indicator
Reporting
4. HACs and POA Reporting in Preparation
for Transition to ICD–10–CM and ICD–
10–PCS
5. Current HACs and Previously
Considered Candidate HACs
6. RTI Program Evaluation
7. Current and Previously Considered
Candidate HACs—RTI Report on
Evidence-Based Guidelines
G. Changes to Specific MS–DRG
Classifications
1. Discussion of Changes to Coding System
and Basis for MS–DRG Updates
a. Conversion of MS–DRGs to the
International Classification of Diseases,
10th Edition (ICD–10)
b. Basis for FY 2015 MS–DRG Updates
2. MDC 1 (Diseases and Disorders of the
Nervous System)
a. Intracerebral Therapies: Gliadel® Wafer
b. Endovascular Embolization or Occlusion
of Head and Neck
3. MDC 4 (Diseases and Disorders of the
Ear, Nose, Mouth and Throat): Avery
Breathing Pacemaker System
4. MDC 5 (Diseases and Disorders of the
Circulatory System)
a. Exclusion of Left Atrial Appendage
b. Transcatheter Mitral Valve Repair:
MitraClip®
c. Endovascular Cardiac Valve
Replacement Procedures
d. Abdominal Aorta Graft
5. MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective
Tissue)
a. Shoulder Replacement Procedures
b. Ankle Replacement Procedures
c. Back and Neck Procedures
6. MDC 10 (Endocrine, Nutritional and
Metabolic Diseases and Disorders):
Disorders of Porphyria Metabolism
7. MDC 15 (Newborns and Other Neonates
With Conditions Originating in the
Perinatal Period)
8. Medicare Code Editor (MCE) Changes
9. Changes to Surgical Hierarchies
10. Changes to the MS–DRG Diagnosis
Codes for FY 2015
a. Major Complications or Comorbidities
(MCCs) and Complications or
Comorbidities (CCs) Severity Levels for
FY 2015
b. Coronary Atherosclerosis Due to
Calcified Coronary Lesion
11. Complications or Comorbidity (CC)
Exclusions List
a. Background of the CC List and the CC
Exclusions List
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b. CC Exclusions List for FY 2015
12. Review of Procedure Codes in MS–
DRGs 981 Through 983, 984 Through
986, and 987 Through 989
a. Moving Procedure Codes From MS–
DRGs 981 Through 983 or MS–DRGs 987
Through 989 Into MDCs
b. Reassignment of Procedures Among MS–
DRGs 981 Through 983, 984 Through
986, and 987 Through 989
c. Adding Diagnosis or Procedure Codes to
MDCs
13. Changes to the ICD–9–CM Coding
System
a. ICD–10 Coordination and Maintenance
Committee
b. Code Freeze
14. Public Comments on Issues Not
Addressed in the Proposed Rule
a. Request for Review and MS–DRG
Assignment for ICD–9–CM Diagnosis
Code 784.7 Reported with Procedure
Code 39.75
b. Coding for Extracorporeal Membrane
Oxygenation (ECMO) Procedures
c. Adding Severity Levels to MS–DRGs 245
Through 251
H. Recalibration of the FY 2015 MS–DRG
Relative Weights
1. Data Sources for Developing the Relative
Weights
2. Methodology for Calculation of the
Relative Weights
3. Development of National Average CCRs
4. Bundled Payments for Care
Improvement (BPCI) Initiative
I. Add-On Payments for New Services and
Technologies
1. Background
2. Public Input Before Publication of a
Notice of Proposed Rulemaking on AddOn Payments
3. FY 2015 Status of Technologies
Approved for FY 2014 Add-On Payments
a. Glucarpidase (Trade Brand Voraxaze®)
b. DIFICIDTM (Fidaxomicin) Tablets
c. Zenith® Fenestrated Abdominal Aortic
Aneurysm (AAA) Endovascular Graft
d. KcentraTM
e. Argus® II Retinal Prosthesis System
f. Zilver® PTX® Drug Eluting Stent
4. FY 2015 Applications for New
Technology Add-On Payments
a. Dalbavancin (Durata Therapeutics, Inc.)
b. Heli-FXTM EndoAnchor System (Aptus
Endosystems, Inc.)
c. CardioMEMSTM HF (Heart Failure)
System
d. MitraClip® System
f. Responsive Neurostimulator (RNS®)
System
III. Changes to the Hospital Wage Index for
Acute Care Hospitals
A. Background
B. Core-Based Statistical Areas for the
Hospital Wage Index
1. Background
2. Implementation of New Labor Market
Area Delineations
a. Micropolitan Statistical Areas
b. Urban Counties That Became Rural
Under the New OMB Delineations
c. Rural Counties That Became Urban
Under the New OMB Delineations
d. Urban Counties That Moved to a
Different Urban CBSA Under the New
OMB Delineations
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e. Transition Period
C. Worksheet S–3 Wage Data for the FY
2015 Wage Index
1. Included Categories of Costs
2. Excluded Categories of Costs
3. Use of Wage Index Data by Suppliers
and Providers Other Than Acute Care
Hospitals Under the IPPS
D. Verification of Worksheet S–3 Wage
Data
E. Method for Computing the FY 2015
Unadjusted Wage Index
F. Occupational Mix Adjustment to the FY
2015 Wage Index
1. Development of Data for the FY 2015
Occupational Mix Adjustment Based on
the 2010 Occupational Mix Survey
2. New 2013 Occupational Mix Survey for
the FY 2016 Wage Index
3. Calculation of the Occupational Mix
Adjustment for FY 2015
G. Analysis and Implementation of the
Occupational Mix Adjustment and the
FY 2015 Occupational Mix Adjusted
Wage Index
1. Analysis of the Occupational Mix
Adjustment and the Occupational Mix
Adjusted Wage Index
2. Application of the Rural, Imputed, and
Frontier Floors
a. Rural Floor
b. Imputed Floor and Alternative,
Temporary Methodology for Computing
the Rural Floor for FY 2015
c. Frontier Floor
3. FY 2015 Wage Index Tables
H. Revisions to the Wage Index Based on
Hospital Redesignations and
Reclassifications
1. General Policies and Effects of
Reclassification and Redesignation
2. FY 2015 MGCRB Reclassifications
a. FY 2015 Reclassification Requirements
and Approvals
b. Effects of Implementation of New OMB
Labor Market Area Delineations on
Reclassified Hospitals
c. Applications for Reclassifications for FY
2016
3. Hospitals Redesignated Under Section
1886(d)(8)(B) of the Act
a. New Lugar Areas for FY 2015
b. Hospitals Redesignated Under Section
1886(d)(8)(B) of the Act Seeking
Reclassification by the MGCRB
c. Rural Counties No Longer Meeting the
Criteria to be Redesignated as Lugar
4. Waiving Lugar Redesignation for the
Out-Migration Adjustment
5. Update of Application of Urban to Rural
Reclassification Criteria
I. FY 2015 Wage Index Adjustment Based
on Commuting Patterns of Hospital
Employees
J. Process for Requests for Wage Index Data
Corrections
K. Notice of Change to Wage Index
Development Timetable
L. Labor-Related Share for the FY 2015
Wage Index
IV. Other Decisions and Changes to the IPPS
for Operating Costs and Graduate
Medical Education (GME) Costs
A. Changes to MS–DRGs Subject to the
Postacute Care Transfer Policy (§ 412.4)
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B. Changes in the Inpatient Hospital
Updates for FY 2015 (§§ 412.64(d) and
412.211(c))
1. FY 2015 Inpatient Hospital Update
2. FY 2015 Puerto Rico Hospital Update
C. Rural Referral Centers (RRCs): Annual
Updates to Case-Mix Index (CMI) and
Discharge Criteria (§ 412.96)
1. Case-Mix Index (CMI)
2. Discharges
D. Payment Adjustment for Low-Volume
Hospitals (§ 412.101)
1. Background
2. Provisions of the Protecting Access to
Medicare Act of 2014
3. Low-Volume Hospital Definition and
Payment Adjustment for FY 2015
E. Indirect Medical Education (IME)
Payment Adjustment (§ 412.105)
1. IME Adjustment Factor for FY 2015
2. IME Add-On Payments for Medicare Part
C Discharges to Sole Community
Hospitals (SCHs) That Are Paid
According to Their Hospital-Specific
Rates and Change in Methodology in
Determining Payment to SCHs
3. Other Policy Changes Affecting IME
F. Payment Adjustment for Medicare
Disproportionate Share Hospitals (DSHs)
(§ 412.106)
1. Background
2. Impact on Medicare DSH Payment
Adjustment of Implementation of New
OMB Labor Market Area Delineations
3. Payment Adjustment Methodology for
Medicare Disproportionate Share
Hospitals (DSHs) under Section 3133 of
the Affordable Care Act (§ 412.106)
a. General Discussion
b. Eligibility for Empirically Justified
Medicare DSH Payments and
Uncompensated Care Payments
c. Empirically Justified Medicare DSH
Payments
d. Uncompensated Care Payments
e. Limitations on Review
G. Medicare-Dependent, Small Rural
Hospital (MDH) Program (§ 412.108) and
Sole Community Hospitals § 412.92)
1. Background for the MDH Program
2. PAMA of 2014 Provisions for FY 2015
3. Expiration of the MDH Program
4. Effects on MDHs of Adoption of New
OMB Delineations
5. Effects on SCHs of Adoption of New
OMB Delineations
H. Hospital Readmissions Reduction
Program: Changes for FY 2015 Through
FY 2017 (§§ 412.150 Through 412.154)
1. Statutory Basis for the Hospital
Readmissions Reduction Program
2. Regulatory Background
3. Overview of Policies for the FY 2015
Hospital Readmissions Reduction
Program
4. Refinement of the Readmissions
Measures and Related Methodology for
FY 2015 and Subsequent Years Payment
Determinations
a. Refinement of Planned Readmission
Algorithm for Acute Myocardial
Infarction (AMI), Heart Failure (HF),
Pneumonia (PN), Chronic Obstructive
Pulmonary Disease (COPD), and Total
Hip Arthroplasty and Total Knee
Arthroplasty (THA/TKA) 30-Day
Readmission Measures
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b. Refinement of Total Hip Arthroplasty
and Total Knee Arthroplasty (THA/TKA)
30-Day Readmission Measure Cohort
c. Anticipated Effect of Refinements on
Measures
5. No Expansion of the Applicable
Conditions for FY 2016
6. Expansion of the Applicable Conditions
for FY 2017 To Include Patients
Readmitted Following Coronary Artery
Bypass Graft (CABG) Surgery Measure
a. Background
b. Overview of the CABG Readmissions
Measure: Hospital-Level, 30-Day, AllCause, Unplanned Readmission
Following Coronary Artery Bypass Graft
(CABG) Surgery
c. Methodology for the CABG Measure:
Hospital-Level, 30-Day, All-Cause,
Unplanned Readmission Following
Coronary Artery Bypass Graft (CABG)
Surgery
7. Maintenance of Technical Specifications
for Quality Measures
8. Waiver From the Hospital Readmissions
Reduction Program for Hospitals
Formerly Paid under Section 1814(b)(3)
of the Act (§ 412.152 and § 412.154(d))
9. Floor Adjustment Factor for FY 2015
(§ 412.154(c)(2))
10. Applicable Period for FY 2015
11. Inclusion of THA/TKA and COPD
Readmissions Measures to Calculate
Aggregate Payments for Excess
Readmissions Beginning in FY 2015
12. Hospital Readmissions Reduction
Program Extraordinary Circumstances
Exceptions
I. Hospital Value-Based Purchasing (VBP)
Program
1. Statutory Background
2. Overview of Previous Hospital VBP
Program Rulemaking
3. FY 2015 Payment Details
a. Payment Adjustments
b. Base Operating DRG Payment Amount
Definition for Medicare-Dependent,
Small Rural Hospitals (MDHs)
4. Measures for the FY 2017 Hospital VBP
Program
a. Measures Previously Adopted
b. Changes Affecting Topped-Out Measures
c. New Measures for the FY 2017 Hospital
VBP Program
d. Adoption of the Current CLABSI
Measure (NQF #0139) for the FY 2017
Hospital VBP Program
e. Summary of Previously Adopted and
New Measures for the FY 2017 Hospital
VBP Program
5. Additional Measures for the FY 2019
Hospital VBP Program
a. Hospital-level Risk-Standardized
Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty
(THA) and Total Knee Arthroplasty
(TKA)
b. PSI–90 Measure
6. Possible Measure Topics for Future
Program Years
a. Care Transition Measure (CTM–3) Items
for HCAHPS Survey
b. Possible Future Efficiency and Cost
Reduction Domain Measure Topics
7. Previously Adopted and Final
Performance Periods and Baseline
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Periods for the FY 2017 Hospital VBP
Program
a. Background
b. Previously Adopted Baseline and
Performance Periods for the FY 2017
Hospital VBP Program
c. Clinical Care—Process Domain
Performance Period and Baseline Period
for the FY 2017 Hospital VBP Program
d. Patient and Caregiver-Centered
Experience of Care/Care Coordination
Domain Performance Period and
Baseline Period for the FY 2017 Hospital
VBP Program
e. Performance Period and Baseline Period
for NHSN Measures in the Safwety
Domain for the FY 2017 Hospital VBP
Program
f. Efficiency and Cost Reduction Domain
Performance Period and Baseline Period
for the FY 2017 Hospital VBP Program
g. Summary of Previously Adopted and
Finalized Performance Periods and
Baseline Periods for the FY 2017
Hospital VBP Program
8. Previously Adopted and Finalized
Performance Periods and Baseline
Periods for Certain Measures for the FY
2019 Hospital VBP Program
a. Previously Adopted and Finalized
Performance Period and Baseline Period
for the FY 2019 Hospital VBP Program
for Clinical Care—Outcomes Domain
Measures
b. Performance Period and Baseline Period
for the PSI–90 Safety Domain Measure
for the FY 2019 Hospital VBP Program
c. Summary of Previously Adopted and
Finalized Performance Periods and
Baseline Periods for Certain Measures for
the FY 2019 Hospital VBP Program
9. Performance Period and Baseline Period
for the Clinical Care—Outcomes Domain
for the FY 2020 Hospital VBP Program
10. Performance Standards for the Hospital
VBP Program
a. Background
b. Performance Standards for the FY 2016
Hospital VBP Program
c. Previously Adopted Performance
Standards for the FY 2017, FY 2018, and
FY 2019 Hospital VBP Programs
d. Additional Performance Standards for
the FY 2017 Hospital VBP Program
e. Performance Standards for the FY 2019
and FY 2020 Hospital VBP Programs
f. Technical Updates Policy for
Performance Standards
g. Solicitation of Public Comments on ICD–
10–CM/PCS Transition
11. FY 2017 Hospital VBP Program Scoring
Methodology
a. General Hospital VBP Program Scoring
Methodology
b. Domain Weighting for the FY 2017
Hospital VBP Program for Hospitals That
Receive a Score on All Domains
c. Domain Weighting for the FY 2017
Hospital VBP Program for Hospitals
Receiving Scores on Fewer Than Four
Domains
12. Minimum Numbers of Cases and
Measures for the FY 2016 and FY 2017
Hospital VBP Program’s Quality
Domains
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a. Previously Adopted Minimum Numbers
of Cases and FY 2016 Minimum
Numbers of Cases
b. Minimum Number of Measures—Safety
Domain
c. Minimum Number of Measures—
Clinical Care Domain
d. Minimum Number of Measures—
Efficiency and Cost Reduction Domain
e. Minimum Number of Measures—Patient
and Caregiver Centered Experience of
Care/Care Coordination (PEC/CC)
Domain
13. Applicability of the Hospital VBP
Program to Maryland Hospitals
14. Disaster/Extraordinary Circumstance
Exception under the Hospital VBP
Program
J. Hospital-Acquired Condition (HAC)
Reduction Program
1. Background
2. Statutory Basis for the HAC Reduction
Program
3. Implementation of the HAC Reduction
Program for FY 2015
a. Overview
b. Payment Adjustment Under the HAC
Reduction Program, Including
Exemptions
c. Measure Selection and Conditions,
Including Risk Adjustment Scoring
Methodology
d. Criteria for Applicable Hospitals and
Performance Scoring Policy
e. Reporting Hospital-Specific Information,
Including the Review and Correction of
Information
f. Limitation on Administrative and
Judicial Review
4. Maintenance of Technical Specifications
for Quality Measures
5. Extraordinary Circumstances
Exceptions/Exemptions
6. Implementation of the HAC Reduction
Program for FY 2016
a. Measure Selection and Conditions,
including a Risk-Adjustment Scoring
Methodology
b. Measure Risk Adjustment
c. Measure Calculation
d. Applicable Time Period
e. Criteria for Applicable Hospitals and
Performance Scoring
f. Rules To calculate the Total HAC Score
for FY 2016
7. Future Consideration for the Use of
Electronically Specified Measures
K. Payments for Indirect and Direct
Graduate Medical Education (GME)
Costs (§§ 412.105 and 413.75 through
413.83)
1. Background
2. Changes in the Effective Date of the FTE
Resident Cap, 3-Year Rolling Average,
and Intern- and Resident-to-Bed (IRB)
Ratio Cap for New Programs in Teaching
Hospitals
3. Changes to IME and Direct GME Policies
as a Result of New OMB Labor Market
Area Delineations
a. New Program FTE Cap Adjustment for
Rural Hospitals Redesignated as Urban
b. Participation of Redesignated Hospitals
in Rural Training Track
4. Clarification of Policies on Counting
Resident Time in Nonprovider Settings
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Under Section 5504 of the Affordable
Care Act
5. Changes to the Review and Award
Process for Resident Slots Under Section
5506 of the Affordable Care Act
a. Effective Date of Slots Awarded Under
Section 5506 of the Affordable Care Act
b. Removal of Seamless Requirement
c. Revisions to Ranking Criteria One,
Seven, and Eight for Applications Under
Section 5506
d. Clarification to Ranking Criterion Two
Regarding Emergency Medicare GME
Affiliation Agreements
6. Regulatory Clarification Applicable To
Direct GME Payments to Federally
Qualified Health Centers (FQHCs) and
Rural Health Clinics (RHCs) for Training
Residents in Approved Programs
L. Rural Community Hospital
Demonstration Program
1. Background
2. FY 2015 Budget Neutrality Offset
Amount
M. Requirement for Transparency of
Hospital Charges Under the Affordable
Care Act
1. Overview
2. Transparency Requirement Under the
Affordable Care Act
N. Medicare Payment for Short Inpatient
Hospital Stays
O. Suggested Exceptions to the 2-Midnight
Benchmark
P. Finalization of Interim Final Rule With
Comment Period on Extension of
Payment Adjustment for Low-Volume
Hospitals and the Medicare-Dependent,
Small Rural Hospital (MDH) Program for
FY 2014 Discharges Through March 31,
2014
1. Background
2. Summary of the Provisions of the
Interim Final Rule With Comment Period
Q. Finalization of Interim Final Rule With
Comment Period on Changes to Certain
Cost Reporting Procedures Related to
Disproportionate Share Hospital
Uncompensated Care Payments
V. Changes to the IPPS for Capital-Related
Costs
A. Overview
B. Additional Provisions
1. Exception Payments
2. New Hospitals
3. Hospitals Located in Puerto Rico
C. Annual Update for FY 2015
VI. Changes for Hospitals Excluded From the
IPPS
A. Rate-of-Increase in Payments to
Excluded Hospitals for FY 2015
B. Report on Adjustment (Exception)
Payments
C. Updates to the Reasonable
Compensation Equivalent (RCE) Limits
on Compensation for Physician Services
Provided in Providers (§ 415.70)
1. Background
2. Overview of the Current RCE Limits
a. Application of the RCE Limits
b. Exceptions to the RCE Limits
c. Methodology for Establishing the RCE
Limits
3. Changes to the RCE Limits
D. Critical Access Hospitals (CAHs
1. Background
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49859
2. Proposed and Final Policy Changes
Related to Reclassifications as Rural for
CAHs
3. Revision of the Requirements for
Physician Certification of CAH Inpatient
Services
VII. Changes to the Long-Term Care Hospital
Prospective Payment System (LTCH PPS)
for FY 2015
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification
Compliance Act (ASCA) and Health
Insurance Portability and Accountability
Act (HIPAA) Compliance
B. Medicare Severity Long-Term Care
Diagnosis-Related Group (MS–LTC–
DRG) Classifications and Relative
Weights for FY 2015
1. Background
2. Patient Classifications into MS–LTC–
DRGs
a. Background
b. Changes to the MS–LTC–DRGs for FY
2015
3. Development of the FY 2015 MS–LTC–
DRG Relative Weights
a. General Overview of the Development of
the MS–LTC–DRG Relative Weights
b. Development of the MS–LTC–DRG
Relative Weights for FY 2015
c. Data
d. Hospital-Specific Relative Value (HSRV)
Methodology
e. Treatment of Severity Levels in
Developing the MS–LTC–DRG Relative
Weights
f. Low-Volume MS–LTC–DRGs
g. Steps for Determining the FY 2015 MS–
LTC–DRG Relative Weights
C. LTCH PPS Payment Rates for FY 2015
1. Overview of Development of the LTCH
Payment Rates
2. FY 2015 LTCH PPS Annual Market
Basket Update
a. Overview
b. Revision of Certain Market Basket
Updates as Required by the Affordable
Care Act
c. Adjustment to the Annual Update to the
LTCH PPS Standard Federal Rate Under
the Long-Term Care Hospital Quality
Reporting (LTCHQR) Program
1. Background
2. Reduction to the Annual Update to the
LTCH PPS Standard Federal Rate under
the LTCHQR Program
d. Market Basket Under the LTCH PPS for
FY 2015
e. Annual Market Basket Update for LTCHs
for FY 2015
3. Adjustment for the Final Year of the
Phase-In of the One-Time Prospective
Adjustment to the Standard Federal Rate
under § 412.523(d)(3)
D. Revision of LTCH PPS Geographic
Classifications
1. Background
2. Use of New OMB Labor Market Area
Delineations (‘‘New OMB Delineations’’)
a. Micropolitan Statistical Areas
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b. Urban Counties That Became Rural
Under the New OMB Labor Market Area
Delineations
c. Rural Counties That Became Urban
Under the New OMB Labor Market Area
Delineations
d. Urban Counties That Moved to a
Different Urban CBSA Under the New
OMB Labor Market Area Delineations
e. Transition Period
E. Reinstatement and Extension of Certain
Payment Rules for LTCH Services—The
25-Percent Threshold Payment
Adjustment
1. Background
2. Implementation of Section 1206(b)(1) of
Pub. L. 113–67
F. Discussion of the ‘‘Greater Than 3-Day
Interruption of Stay’’ Policy and the
Transfer to Onsite Providers Policies
Under the LTCH PPS
G. Moratoria on the Establishment of
LTCHs and LTCH Satellite Facilities and
on the Increase in the Number of Beds
in Existing LTCHs or LTCH Satellite
Facilities
H. Evaluation and Treatment of LTCHs
Classified Under Section
1886(d)(1)(B)(iv)(II) of the Act
I. Description of Statutory Framework for
Patient-Level Criteria-Based Payment
Adjustment Under the LTCH PPS Under
Pub. L. 113–67
1. Overview
2. Additional LTCH PPS Issues
J. Technical Change
VIII. Administrative Appeals by Providers
and Judicial Review
A. Proposed and Final Changes Regarding
the Claims Required in Provider Cost
Reports and for Provider Administrative
Appeals
B. Proposed and Final Changes to Conform
Terminology From ‘‘Intermediary’’ to
‘‘Contractor’’
C. Technical Correction to § 405.1835 of
the Regulations and Corresponding
Amendment to § 405.1811 of the
Regulations
1. Background and Technical Correction to
§§ 405.1811 and 405.1835 of the
Regulations
2. Waiver of Notice of Proposed
Rulemaking
3. Effective Date and Applicability Date;
Finality and Reopening
IX. Quality Data Reporting Requirements for
Specific Providers and Suppliers
A. Hospital Inpatient Quality Reporting
(IQR) Program
1. Background
a. History of the Hospital IQR Program
b. Maintenance of Technical Specifications
for Quality Measures
c. Public Display of Quality Measures
2. Removal and Suspension of Hospital
IQR Program Measures
a. Considerations in Removing Quality
Measures From the Hospital IQR
Program
b. Removal of Hospital IQR Program
Measures for the FY 2017 Payment
Determination and Subsequent Years
3. Process for Retaining Previously
Adopted Hospital IQR Program Measures
for Subsequent Payment Determinations
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4. Additional Considerations in Expanding
and Updating Quality Measures Under
the Hospital IQR Program
5. Previously Adopted Hospital IQR
Program Measures for the FY 2016
Payment Determination and Subsequent
Years
6. Refinements and Clarification to Existing
Measures in the Hospital IQR Program
a. Refinement of Planned Readmission
Algorithm for 30-Day Readmission
Measures
b. Refinement of Total Hip Arthroplasty
and Total Knee Arthroplasty (THA/TKA)
30-Day Complication and Readmission
Measures
c. Anticipated Effect of Refinements to
Existing Measures
d. Clarification Regarding Influenza
Vaccination for Healthcare Personnel
7. Additional Hospital IQR Program
Measures for the FY 2017 Payment
Determination and Subsequent Years
a. Hospital 30-day, All-Cause, Unplanned,
Risk-Standardized Readmission Rate
(RSRR) Following Coronary Artery
Bypass Graft (CABG) Surgery
b. Hospital 30-day, All-Cause, Riskstandardized Mortality Rate (RSMR)
Following Coronary Artery Bypass Graft
(CABG) Surgery
c. Hospital-Level, Risk-Standardized 30Day Episode-of-Care Payment Measure
for Pneumonia
d. Hospital-Level, Risk-Standardized 30Day Episode-of-Care Payment Measure
for Heart Failure
e. Severe Sepsis and Septic Shock:
Management Bundle Measure (NQF
#0500)
f. Electronic Health Record-Based
Voluntary Measures
g. Readoption of Measures as Voluntarily
Reported Electronic Clinical Quality
Measures
h. Electronic Clinical Quality Measures
8. Possible New Quality Measures and
Measure Topics for Future Years
a. Mandatory Electronic Clinical Quality
Measure Reporting for FY 2018 Payment
Determination
b. Possible Future Electronic Clinical
Quality Measures
9. Form, Manner, and Timing of Quality
Data Submission
a. Background
b. Procedural Requirements for the FY
2017 Payment Determination and
Subsequent Years
c. Data Submission Requirements for
Chart-Abstracted Measures
d. Alignment of the Medicare EHR
Incentive Program Reporting and
Submission Timelines for Clinical
Quality Measures With Hospital IQR
Program Reporting and Submission
Timelines
e. Sampling and Case Thresholds for the
FY 2017 Payment Determination and
Subsequent Years
f. HCAHPS Requirements for the FY 2017
Payment Determination and Subsequent
Years
g. Data Submission Requirements for
Structural Measures for the FY 2017
Payment Determination and Subsequent
Years
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h. Data Submission and Reporting
Requirements for Healthcare-Associated
Infection (HAI) Measures Reported via
NHSN
10. Submission and Access of HAI
Measures Data Through the CDC’s NHSN
Web Site
11. Modifications to the Existing Processes
for Validation of Chart-Abstracted
Hospital IQR Program Data
a. Eligibility Criteria for Hospitals Selected
for Validation
b. Number of Charts To Be Submitted per
Hospital for Validation
c. Combining Scores for HAI and Clinical
Process of Care Topic Areas
d. Processes To Submit Patient Medical
Records for Chart-Abstracted Measures
e. Plans To Validate Electronic Clinical
Quality Measure Data
f. Data Submission Requirements for
Quality Measures That May Be
Voluntarily Electronically Reported for
the FY 2017 Payment Determination
12. Data Accuracy and Completeness
Acknowledgement Requirements for the
FY 2017 Payment Determination and
Subsequent Years
13. Public Display Requirements for the FY
2017 Payment Determination and
Subsequent Years
14. Reconsideration and Appeal
Procedures for the FY 2017 Payment
Determination and Subsequent Years
15. Hospital IQR Program Extraordinary
Circumstances Extensions or Exemptions
B. PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program
1. Statutory Authority
2. Covered Entities
3. Previously Finalized PCHQR Program
Quality Measures
4. Update to the Clinical Process/Oncology
Care Measures Beginning With the 2016
Program
5. New Quality Measures Beginning With
the FY 2017 Program
a. Considerations in the Selection of
Quality Measures
b. New Quality Measure Beginning With
the FY 2017 Program
6. Possible New Quality Measure Topics
for Future Years
7. Maintenance of Technical Specifications
for Quality Measures
8. Public Display Requirements Beginning
With the FY 2014 Program
9. Form, Manner, and Timing of Data
Submission Beginning With the FY 2017
Program
a. Background
b. Reporting Requirements for the
Proposed New Measure: External Beam
Radiotherapy for Bone Metastases (NQF
#1822) Beginning With the FY 2017
Program
c. Reporting Options for the Clinical
Process/Cancer Specific Treatment
Measures Beginning With the FY 2015
Program and the SCIP and Clinical
Process/Oncology Care Measures
Beginning With the FY 2016 Program
d. New Sampling Methodology for the
Clinical Process/Oncology Care
Measures Beginning With the FY 2016
Program
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10. Exceptions From Program
Requirements
C. Long-Term Care Hospital Quality
Reporting (LTCHQR) Program
1. Background
2. General Considerations Used for
Selection of Quality Measures for the
LTCHQR Program
3. Policy for Retention of LTCHQR Program
Measures Adopted for Previous Payment
Determinations
4. Policy for Adopting Changes to LTCHQR
Program Measures
5. Previously Adopted Quality Measures
a. Previously Adopted Quality Measures
for the FY 2015 and FY 2016 Payment
Determinations and Subsequent Years
b. Previously Adopted Quality Measures
for the FY 2017 and FY 2018 Payment
Determinations and Subsequent Years
6. Revision to Data Collection Timelines
and Submission Deadlines for Previously
Adopted Quality Measures
a. Revisions to Data Collection Timelines
and Submission Deadlines for Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680)
b. Revisions to Data Collection Timelines
and Submission Deadlines for the
Application of Percent of Residents
Experiencing One or More Falls With
Major Injury (Long Stay) (NQF #0674)
7. New LTCHQR Program Quality
Measures for the FY 2018 Payment
Determination and Subsequent Years
a. New LTCHQR Program Functional
Status Quality Measures for the FY 2018
Payment Determination and Subsequent
Years
b. Quality Measure: National Healthcare
Safety Network (NHSN) VentilatorAssociated Event (VAE) Outcome
Measure
8. LTCHQR Program Quality Measures and
Concepts Under Consideration for Future
Years
9. Form, Manner, and Timing of Quality
Data Submission for the FY 2016
Payment Determinations and Subsequent
Years
a. Background
b. Finalized Timeline for Data Submission
Under the LTCHQR Program for the FY
2016 and FY 2017 Payment
Determinations (Except NQF #0680 and
NQF #0431)
c. Revision to the Previously Adopted Data
Collection Timelines and Submission
Deadlines for Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#680) for the FY 2016 Payment
Determination and Subsequent Years
d. Data Submission Mechanisms for the FY
2018 Payment Determination and
Subsequent Years for New LTCHQR
Program Quality Measures and for
Revision to Previously Adopted Quality
Measure
e. Data Collection Timelines and
Submission Deadlines Under the
LTCHQR Program for the FY 2018
Payment Determination
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f. Data Collection Timelines and
Submission Deadlines for the
Application of Percent of Residents
Experiencing One or More Falls With
Major Injury (Long Stay) (NQF #0674)
Measure for the FY 2018 Payment
Determination and Subsequent Years
g. Data Collection Timelines and
Submission Deadlines Under the
LTCHQR Program for the FY 2019
Payment Determination
10. LTCHQR Program Data Completion
Threshold for the FY 2016 Payment
Adjustment and Subsequent Years
a. Overview
b. LTCHQR Program Data Completion
Threshold for the Required LTCH CARE
Data Set (LCDS) Data Items
c. LTCHQR Program Data Completion
Threshold for Measures Submitted Using
the Centers for Disease Control and
Prevention (CDC) National Healthcare
Safety Network (NHSN)
d. Application of the 2 Percentage Point
Reduction for LTCHs That Fail To Meet
the Data Completion Thresholds
11. Data Validation Process for the FY 2016
Payment Determination and Subsequent
Years
a. Data Validation Process
b. Application of the 2 Percentage Point
Reduction for LTCHs That Fail To Meet
the Data Accuracy Threshold
12. Public Display of Quality Measure Data
for the LTCHQR Program
13. LTCHQR Program Submission
Exception and Extension Requirements
for the FY 2017 Payment Determination
and Subsequent Years
14. LTCHQR Program Reconsideration and
Appeals Procedures for the FY 2016
Payment Determination and Subsequent
Years
a. Previously Finalized LTCHQR Program
Reconsideration and Appeals Procedures
for the FY 2014 and FY 2015 Payment
Determinations
b. LTCHQR Program Reconsideration and
Appeals Procedures for the FY 2016
Payment Determination and Subsequent
Years
15. Electronic Health Records (EHR) and
Health Information Exchange (HIE)
D. Electronic Health Record (EHR)
Incentive Program and Meaningful Use
(MU)
1. Background
2. Alignment of the Medicare EHR
Incentive Program Reporting and
Submission Timelines for Clinical
Quality Measures With Hospital IQR
Program Reporting and Submission
Timelines
3. Quality Reporting Data Architecture
Category III (QRDA–III) Option in 2015
4. Electronically Specified Clinical Quality
Measures (CQMs) Reporting for 2015
5. Clarification Regarding Reporting Zero
Denominators
X. Revision of Regulations Governing Use
and Release of Medicare Advantage Risk
Adjustment Data
A. Background
B. Regulatory Changes
1. Expansion of Uses and Reasons for
Disclosure of Risk Adjustment Data
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2. Conditions for CMS Release of Data
3. Technical Change
XI. Changes to Enforcement Provisions for
Organ Transplant Centers
A. Background
B. Basis for Changes
1. Expansion of Mitigating Factors Based
on CMS’ Experience
2. Coordination With Efforts of the Organ
Procurement and Transplantation
Network (OPTN) and Health Resources
and Services Administration
C. Provisions of the Proposed and Final
Regulations
1. Expansion of Mitigating Factors List,
Content, and Timeframe
2. Content and Timeframe for Mitigating
Factors Requests
3. System Improvement Agreements (SIAs)
a. Purpose and Intent of an SIA
b. Description and Contents of an SIA
c. Effective Period for an SIA
XII. MedPAC Recommendations
XIII. Other Required Information
A. Requests for Data from the Public
B. Collection of Information Requirements
1. Statutory Requirement for Solicitation of
Comments
2. ICRs for Add-On Payments for New
Services and Technologies
3. ICRs for the Occupational Mix
Adjustment to the FY 2015 Wage Index
(Hospital Wage Index Occupational Mix
Survey)
4. Hospital Applications for Geographic
Reclassifications by the MGCRB
5. ICRs for Application for GME Resident
Slots
6. ICRs for the Hospital Inpatient Quality
Reporting (IQR) Program
7. ICRs for PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
8. ICRs for Hospital Value-Based
Purchasing (VBP) Program
9. ICRs for the Long-Term Care Hospital
Quality Reporting (LTCHQR) Program
10. ICR Regarding Electronic Health Record
(EHR) Incentive Program and Meaningful
Use (MU)
11. ICR Regarding Revision of Regulations
Governing Use and Release of Medicare
Advantage (MA) Risk Adjustment Data
(§ 422.310(f))
Regulation Text
Addendum—Schedule of Standardized
Amounts, Update Factors, and Rate-ofIncrease Percentages Effective with Cost
Reporting Periods Beginning on or After
October 1, 2014 and Payment Rates for
LTCHs Effective With Discharges
Occurring on or After October 1, 2014
I. Summary and Background
II. Changes to the Prospective Payment Rates
for Hospital Inpatient Operating Costs for
Acute Care Hospitals for FY 2015
A. Calculation of the Adjusted
Standardized Amount
B. Adjustments for Area Wage Levels and
Cost-of-Living
C. Calculation of the Prospective Payment
Rates
III. Changes to Payment Rates for Acute Care
Hospital Inpatient Capital-Related Costs
for FY 2015
A. Determination of Federal Hospital
Inpatient Capital-Related Prospective
Payment Rate Update
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B. Calculation of the Inpatient CapitalRelated Prospective Payments for FY
2015
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded
Hospitals: Rate-of-Increase Percentages
for FY 2015
V. Updates to the Payment Rates for the
LTCH PPS for FY 2015
A. LTCH PPS Standard Federal Rate for FY
2015
1. Background
2. Development of the FY 2015 LTCH PPS
Standard Federal Rate
B. Adjustment for Area Wage Levels under
the LTCH PPS for FY 2015
1. Background
2. Geographic Classifications Based on the
New OMB Delineations
3. LTCH PPS Labor-Related Share
4. LTCH PPS Wage Index for FY 2015
5. Budget Neutrality Adjustment for
Changes to the Area Wage Level
Adjustment
C. LTCH PPS Cost-of-Living Adjustment
(COLA) for LTCHs Located in Alaska and
Hawaii
D. Adjustment for LTCH PPS High-Cost
Outlier (HCO) Cases
1. Background
2. Determining LTCH CCRs Under the
LTCH PPS
3. Establishment of the LTCH PPS FixedLoss Amount for FY 2015
4. Application of the Outlier Policy to SSO
Cases
E. Update to the IPPS Comparable/
Equivalent Amounts To Reflect the
Statutory Changes to the IPPS DSH
Payment Adjustment Methodology
F. Computing the Adjusted LTCH PPS
Federal Prospective Payments for FY
2015
VI. Tables Referenced in This Final Rule and
Available Through the Internet on the
CMS Web site
Appendix A—Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
B. Need
C. Objectives of the IPPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded
From the IPPS
F. Effects on Hospitals and Hospital Units
Excluded From the IPPS
G. Quantitative Effects of the Policy
Changes Under the IPPS for Operating
Costs
1. Basis and Methodology of Estimates
2. Analysis of Table I
3. Impact Analysis of Table II
H. Effects of Other Policy Changes
1. Effects of Policy on MS–DRGs for
Preventable HACs, Including Infections
2. Effects of Policy Relating to New
Medical Service and Technology AddOn Payments
3. Effects of Changes to List of MS–DRGs
Subject to Postacute Care Transfer and
DRG Special Pay Policy
4. Effects of Payment Adjustment for LowVolume Hospitals for FY 2015
5. Effects of Policy Changes Related to IME
Medicare Part C Add-On Payments to
SCHs Paid According to Their HospitalSpecific Rates
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6. Effects of the Extension of the MDH
Program for the First Half of FY 2015
7. Effects of Changes Under the FY 2015
Hospital Value-Based Purchasing (VBP)
Program
8. Effects of the Changes to the HAC
Reduction Program for FY 2015
9. Effects of Policy Changes Relating to
Payments for Direct GME and IME
10. Effects of Implementation of Rural
Community Hospital Demonstration
Program
11. Effects of Changes Related to
Reclassifications as Rural for CAHs
12. Effects of Revision of the Requirements
for Physician Certification of CAH
Inpatient Services
13. Effects of Changes Relating to
Administrative Appeals by Providers
and Judicial Review for Appropriate
Claims in Provider Cost Reports
I. Effects of Changes to Updates to the
Reasonable Compensation Equivalent
(RCE) Limits for Physician Services
Provided to Providers
J. Effects of Changes in the Capital IPPS
1. General Considerations
2. Results
K. Effects of Payment Rate Changes and
Policy Changes Under the LTCH PPS
1. Introduction and General Considerations
2. Impact on Rural Hospitals
3. Anticipated Effects of LTCH PPS
Payment Rate Changes and Policy
Changes
4. Effect on the Medicare Program
5. Effect on Medicare Beneficiaries
L. Effects of Requirements for Hospital
Inpatient Quality Reporting (IQR)
Program
M. Effects of Requirements for the PPSExempt Cancer Hospital Quality
Reporting (PCHQR) Program for FY 2015
N. Effects of Requirements for the LTCH
Quality Reporting (LTCHQR) Program for
FY 2015 Through FY 2019
O. Effects of Policy Changes Regarding
Electronic Health Record (EHR)
Incentive Program and Hospital IQR
Program
P. Effects of Revision of Regulations
Governing Use and Release of Medicare
Advantage Risk Adjustment Data
Q. Effects of Changes to Enforcement
Provisions for Organ Transplant Centers
II. Alternatives Considered
III. Overall Conclusion
A. Acute Care Hospitals
B. LTCHs
IV. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
V. Regulatory Flexibility Act (RFA) Analysis
VI. Impact on Small Rural Hospitals
VII. Unfunded Mandate Reform Act (UMRA)
Analysis
VIII. Executive Order 12866
Appendix B: Recommendation of Update
Factors for Operating Cost Rates of
Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2015
A. FY 2015 Inpatient Hospital Update
B. Update for SCHs for FY 2015
C. FY 2015 Puerto Rico Hospital Update
D. Update for Hospitals Excluded From the
IPPS for FY 2015
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E. Update for LTCHs for FY 2015
III. Secretary’s Recommendation
IV. MedPAC Recommendation for Assessing
Payment Adequacy and Updating
Payments in Traditional Medicare
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This final rule makes payment and
policy changes under the Medicare
inpatient prospective payment systems
(IPPS) for operating and capital-related
costs of acute care hospitals as well as
for certain hospitals and hospital units
excluded from the IPPS. In addition, it
makes payment and policy changes for
inpatient hospital services provided by
long-term care hospitals (LTCHs) under
the long-term care hospital prospective
payment system (LTCH PPS). It also
makes policy changes to programs
associated with Medicare IPPS
hospitals, IPPS-excluded hospitals, and
LTCHs.
Under various statutory authorities,
we are making changes to the Medicare
IPPS, to the LTCH PPS, and to other
related payment methodologies and
programs for FY 2015 and subsequent
fiscal years. These statutory authorities
include, but are not limited to, the
following:
• Section 1886(d) of the Social
Security Act (the Act), which sets forth
a system of payment for the operating
costs of acute care hospital inpatient
stays under Medicare Part A (Hospital
Insurance) based on prospectively set
rates. Section 1886(g) of the Act requires
that, instead of paying for capital-related
costs of inpatient hospital services on a
reasonable cost basis, the Secretary use
a prospective payment system (PPS).
• Section 1886(d)(1)(B) of the Act,
which specifies that certain hospitals
and hospital units are excluded from the
IPPS. These hospitals and units are:
rehabilitation hospitals and units;
LTCHs; psychiatric hospitals and units;
children’s hospitals; cancer hospitals;
and short-term acute care hospitals
located in the Virgin Islands, Guam, the
Northern Mariana Islands, and
American Samoa. Religious nonmedical
health care institutions (RNHCIs) are
also excluded from the IPPS.
• Sections 123(a) and (c) of Pub. L.
106–113 and section 307(b)(1) of Public
Law 106–554 (as codified under section
1886(m)(1) of the Act), which provide
for the development and
implementation of a prospective
payment system for payment for
inpatient hospital services of long-term
care hospitals (LTCHs) described in
section 1886(d)(1)(B)(iv) of the Act.
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• Sections 1814(l), 1820, and 1834(g)
of the Act, which specify that payments
are made to critical access hospitals
(CAHs) (that is, rural hospitals or
facilities that meet certain statutory
requirements) for inpatient and
outpatient services and that these
payments are generally based on 101
percent of reasonable cost.
• Section 1866(k) of the Act, as added
by section 3005 of the Affordable Care
Act, which establishes a quality
reporting program for hospitals
described in section 1886(d)(1)(B)(v) of
the Act, referred to as ‘‘PPS-Exempt
Cancer Hospitals.’’
• Section 1886(d)(4)(D) of the Act,
which addresses certain hospitalacquired conditions (HACs), including
infections. Section 1886(d)(4)(D) of the
Act specifies that, by October 1, 2007,
the Secretary was required to select, in
consultation with the Centers for
Disease Control and Prevention (CDC),
at least two conditions that: (a) are high
cost, high volume, or both; (b) are
assigned to a higher paying MS–DRG
when present as a secondary diagnosis
(that is, conditions under the MS–DRG
system that are complications or
comorbidities (CCs) or major
complications or comorbidities (MCCs);
and (c) could reasonably have been
prevented through the application of
evidence-based guidelines. Section
1886(d)(4)(D) of the Act also specifies
that the list of conditions may be
revised, again in consultation with CDC,
from time to time as long as the list
contains at least two conditions. Section
1886(d)(4)(D)(iii) of the Act requires that
hospitals, effective with discharges
occurring on or after October 1, 2007,
submit information on Medicare claims
specifying whether diagnoses were
present on admission (POA). Section
1886(d)(4)(D)(i) of the Act specifies that
effective for discharges occurring on or
after October 1, 2008, Medicare no
longer assigns an inpatient hospital
discharge to a higher paying MS–DRG if
a selected condition is not POA.
• Section 1886(a)(4) of the Act, which
specifies that costs of approved
educational activities are excluded from
the operating costs of inpatient hospital
services. Hospitals with approved
graduate medical education (GME)
programs are paid for the direct costs of
GME in accordance with section 1886(h)
of the Act. A payment for indirect
medical education (IME) is made under
section 1886(d)(5)(B) of the Act.
• Section 1886(b)(3)(B)(viii) of the
Act, which requires the Secretary to
reduce the applicable percentage
increase in payments to a subsection (d)
hospital for a fiscal year if the hospital
does not submit data on measures in a
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form and manner, and at a time,
specified by the Secretary.
• Section 1886(o) of the Act, which
requires the Secretary to establish a
Hospital Value-Based Purchasing (VBP)
Program under which value-based
incentive payments are made in a fiscal
year to hospitals meeting performance
standards established for a performance
period for such fiscal year.
• Section 1886(p) of the Act, as added
by section 3008 of the Affordable Care
Act, which establishes an adjustment to
hospital payments for hospital-acquired
conditions (HACs), or a HospitalAcquired Condition (HAC) Reduction
Program, under which payments to
applicable hospitals are adjusted to
provide an incentive to reduce hospitalacquired conditions.
• Section 1886(q) of the Act, as added
by section 3025 of the Affordable Care
Act and amended by section 10309 of
the Affordable Care Act, which
establishes the ‘‘Hospital Readmissions
Reduction Program’’ effective for
discharges from an ‘‘applicable
hospital’’ beginning on or after October
1, 2012, under which payments to those
hospitals under section 1886(d) of the
Act will be reduced to account for
certain excess readmissions.
• Section 1886(r) of the Act, as added
by section 3133 of the Affordable Care
Act, which provides for a reduction to
disproportionate share hospital
payments under section 1886(d)(5)(F) of
the Act and for a new uncompensated
care payment to eligible hospitals.
Specifically, section 1886(r) of the Act
now requires that, for ‘‘fiscal year 2014
and each subsequent fiscal year,’’
‘‘subsection (d) hospitals’’ that would
otherwise receive a ‘‘disproportionate
share hospital payment . . . made
under subsection (d)(5)(F)’’ will receive
two separate payments: (1) 25 percent of
the amount they previously would have
received under subsection (d)(5)(F) for
DSH (‘‘the empirically justified
amount’’), and (2) an additional
payment for the DSH hospital’s
proportion of uncompensated care,
determined as the product of three
factors. These three factors are: (1) 75
percent of the payments that would
otherwise be made under subsection
(d)(5)(F); (2) 1 minus the percent change
in the percent of individuals under the
age of 65 who are uninsured (minus 0.1
percentage points for FY 2014, and
minus 0.2 percentage points for FY 2015
through FY 2017); and (3) a hospital’s
uncompensated care amount relative to
the uncompensated care amount of all
DSH hospitals expressed as a
percentage.
• Section 1886(m)(6) of the Act, as
added by section 1206(a)(1) of the
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Pathway for SGR Reform Act of 2013,
which provided for the establishment of
patient criteria for payment under the
LTCH PPS for implementation
beginning in FY 2016.
• Section 1206(b)(1) of the Pathway
for SGR Reform Act of 2013, which
further amended section 114(c) of the
MMSEA, as amended by section 4302(a)
of the ARRA and sections 3106(c) and
10312(a) of the Affordable Care Act, by
retroactively reestablishing and
extending the statutory moratorium on
the full implementation of the 25percent threshold payment adjustment
policy under the LTCH PPS so that the
policy will be in effect for 9 years
(except for ‘‘grandfathered’’ hospitalwithin-hospitals (HwHs), which are
permanently exempt from this policy);
and section 1206(b)(2) (as amended by
section 112(b) of Pub. L. 113–93), which
together further amended section 114(d)
of the MMSEA, as amended by section
4302(a) of the ARRA and sections
3106(c) and 10312(a) of the Affordable
Care Act to establish a new moratoria
(subject to certain defined exceptions)
on the development of new LTCHs and
LTCH satellite facilities and a new
moratorium on increases in the number
of beds in existing LTCHs and LTCH
satellite facilities beginning January 1,
2015 and ending on September 30,
2017; and section 1206(d), which
instructs the Secretary to evaluate
payments to LTCHs classified under
section 1886(b)(1)(C)(iv)(II) of the Act
and to adjust payment rates in FY 2015
or FY 2016 under the LTCH PPS, as
appropriate, based upon the evaluation
findings.
• Section 1886(m)(5)(D)(iv) of the
Act, as added by section 1206 (c) of the
Pathway for SGR Reform Act of 2013,
which provides for the establishment,
no later than October 1, 2015, of a
functional status quality measure under
the LTCHQR Program for change in
mobility among inpatients requiring
ventilator support.
In this final rule, we are making
technical and conforming changes and
nomenclature changes to the regulations
regarding the claims required in
provider cost reports and for provider
administrative appeals to conform
terminology from ‘‘intermediary’’ to
‘‘contractor’’
We are aligning the reporting and
submission timelines for clinical quality
measures for the Medicare EHR
Incentive Program for eligible hospitals
and critical access hospitals (CAHs)
with the reporting and submission
timelines for the Hospital IQR Program.
In addition, we provide guidance and
clarification of certain policies for
eligible hospitals and CAHs such as our
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policy for reporting zero denominators
on clinical quality measures and our
policy for case threshold exemptions.
In addition, this final rule contains
several provisions that are not directly
related to these Medicare payment
systems, such as regulatory revisions to
broaden the specified uses and reasons
for disclosure of risk adjustment data
and to specify the conditions for release
of risk adjustment data to entities
outside of CMS and changes to the
enforcement procedures for organ
transplant centers. The specific
statutory authority for these other
provisions is discussed in the relevant
sections below.
2. Summary of the Major Provisions
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a. MS–DRG Documentation and Coding
Adjustment
Section 631 of the American Taxpayer
Relief Act (ATRA, Pub. L. 112–240)
amended section 7(b)(1)(B) of Public
Law 110–90 to require the Secretary to
make a recoupment adjustment to the
standardized amount of Medicare
payments to acute care hospitals to
account for changes in MS–DRG
documentation and coding that do not
reflect real changes in case-mix, totaling
$11 billion over a 4-year period of FYs
2014, 2015, 2016, and 2017. This
adjustment represents the amount of the
increase in aggregate payments as a
result of not completing the prospective
adjustment authorized under section
7(b)(1)(A) of Public Law 110–90 until
FY 2013. Prior to the ATRA, this
amount could not have been recovered
under Public Law 110–90.
While our actuaries estimated that a
–9.3 percent adjustment to the
standardized amount would be
necessary if CMS were to fully recover
the $11 billion recoupment required by
section 631 of the ATRA in FY 2014, it
is often our practice to delay or phase
in rate adjustments over more than one
year, in order to moderate the effects on
rates in any one year. Therefore,
consistent with the policies that we
have adopted in many similar cases, we
made a -0.8 percent recoupment
adjustment to the standardized amount
in FY 2014. We are making an
additional –0.8 percent recoupment
adjustment to the standardized amount
in FY 2015.
b. Reduction of Hospital Payments for
Excess Readmissions
We are making changes in policies to
the Hospital Readmissions Reduction
Program, which is established under
section 1886(q) of the Act, as added by
section 3025 of the Affordable Care Act.
The Hospital Readmissions Reduction
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Program requires a reduction to a
hospital’s base operating DRG payment
to account for excess readmissions of
selected applicable conditions. For FYs
2013 and 2014, these conditions are
acute myocardial infarction, heart
failure, and pneumonia. For FY 2014,
we established additional exclusions to
the three existing readmission measures
(that is, the excess readmission ratio) to
account for additional planned
readmissions. We also established
additional readmissions measures,
Chronic Obstructive Pulmonary Disease
(COPD), and Total Hip Arthroplasty and
Total Knee Arthroplasty (THA/TKA), to
be used in the Hospital Readmissions
Reduction Program for FY 2015 and
future years. We are expanding the
readmissions measures for FY 2017 and
future years by adding a measure of
patients readmitted following coronary
artery bypass graft (CABG) surgery. We
also are refining the readmission
measures and related methodology for
FY 2015 and subsequent years payment
determinations. In addition, we are
providing that the readmissions
payment adjustment factors for FY 2015
can be no more than a 3-percent
reduction in accordance with the
statute. We also are revising the
calculation of aggregate payments for
excess readmissions to include THA/
TKA and COPD readmissions measures
beginning in FY 2015.
c. Hospital Value-Based Purchasing
(VBP) Program
Section 1886(o) of the Act requires the
Secretary to establish a Hospital ValueBased Purchasing (VBP) Program under
which value-based incentive payments
are made in a fiscal year to hospitals
meeting performance standards
established for a performance period for
such fiscal year. Both the performance
standards and the performance period
for a fiscal year are to be established by
the Secretary.
In this final rule, we are adopting
quality measures for the FY 2017, FY
2019, and FY 2020 Hospital VBP
Program years and establishing
performance periods and performance
standards for measures we are adopting
for those fiscal years. We are also
adopting additional policies related to
performance standards and revising the
domain weighting previously adopted
for the FY 2017 Hospital VBP Program.
d. Hospital-Acquired Condition (HAC)
Reduction Program
In this final rule, we are making a
change in the scoring methodology with
the addition of a previously finalized
measure for the FY 2016 payment
adjustment under the HAC Reduction
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Program. Section 1886(p) of the Act, as
added under section 3008(a) of the
Affordable Care Act, establishes an
adjustment to hospital payments for
HACs, or a HAC Reduction program,
under which payments to applicable
hospitals are adjusted to provide an
incentive to reduce HACs, effective for
discharges beginning on October 1, 2014
and for subsequent program years. This
1-percent payment reduction applies to
a hospital whose ranking is in the top
quartile (25 percent) of all applicable
hospitals, relative to the national
average, of conditions acquired during
the applicable period and on all of the
hospital’s discharges for the specified
fiscal year. The amount of payment
shall be equal to 99 percent of the
amount of payment that would
otherwise apply to such discharges
under section 1886(d) or 1814(b)(3) of
the Act, as applicable.
e. DSH Payment Adjustment and
Additional Payment for Uncompensated
Care
Section 3133 of the Affordable Care
Act modified the Medicare
disproportionate share hospital (DSH)
payment methodology beginning in FY
2014. Under section 1886(r) of the Act,
which was added by section 3133 of the
Affordable Care Act, starting in FY
2014, DSHs will receive 25 percent of
the amount they previously would have
received under the statutory formula for
Medicare DSH payments in section
1886(d)(5)(F) of the Act. The remaining
amount, equal to 75 percent of what
otherwise would have been paid as
Medicare DSH payments, will be paid as
additional payments after the amount is
reduced for changes in the percentage of
individuals that are uninsured. Each
Medicare DSH hospital will receive its
additional amount based on its share of
the total amount of uncompensated care
for all Medicare DSH hospitals for a
given time period. In this final rule, we
are updating the uncompensated care
amount to be distributed for FY 2015,
and we are making changes to the
methodology for calculating the
uncompensated care payment amounts
such that we will combine
uncompensated care data for hospitals
that have merged in order to calculate
the relative share of uncompensated
care for the surviving hospital.
f. Hospital Inpatient Quality Reporting
(IQR) Program
Under section 1886(b)(3)(B)(viii) of
the Act, hospitals are required to report
data on measures selected by the
Secretary for the Hospital IQR Program
in order to receive the full annual
percentage increase. In past rules, we
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have established measures for reporting
and the process for submittal and
validation of the data.
We are finalizing a total of 63
measures (47 required and 16 voluntary
electronic clinical quality measures) in
the Hospital IQR Program measure set
for the FY 2017 payment determination
and subsequent years. In this final rule,
we are finalizing 11 new measures (1
chart-abstracted, 4 claims-based, and 6
voluntary electronic clinical quality
measures). We proposed to remove 20
measures, but are only finalizing the
removal of 19. The SCIP–INF–4 measure
was proposed for removal, but will be
retained as it was recently retooled for
the 2014 collection period. Ten of these
19 measures are topped-out, chartabstracted measures that are being
retained as voluntary electronic clinical
quality measures.
While we are finalizing our proposal
to align the reporting and submission
timelines of the Medicare EHR Incentive
Program with those of the Hospital IQR
Program on the calendar year for CQMs
that are reported electronically for 2015,
we are not finalizing the proposal to
require quarterly submission of CQM
data. Hospitals can voluntarily submit
one calendar year (CY) quarter of data
for Q 1, Q 2, or Q3 of 2015 by November
30, 2015, in order to partially fulfill
requirements for both programs for CY
2015. In addition, we are finalizing a
number of new policies related to the
administration of the program,
including access to specific NHSN data,
updates to validation, and an electronic
clinical quality measures validation
pilot test.
g. Changes to the LTCH PPS
Section 1206(b) of the Pathway for
SGR Reform Act provides for the
retroactive reinstatement and extension,
for an additional 4 years, of the
moratorium on the full implementation
of the 25-percent threshold payment
adjustment under the LTCH PPS
established under section 114(c) of the
MMSEA, as further amended by
subsequent legislation. In keeping with
this mandate, we are reinstating this
payment adjustment retroactively for
LTCH cost reporting periods beginning
on or after July 1, 2013, or October 1,
2013.
Section 1206(b)(2) of the Pathway for
SGR Reform Act, as amended by section
112(b) of the Protecting Access to
Medicare Act of 2014, provides for new
statutory moratoria on the establishment
of new LTCHs and LTCH satellite
facilities (subject to certain defined
exceptions) and a new statutory
moratorium on bed increases in existing
LTCHs effective for the period
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beginning April 1, 2014 and ending
September 30, 2017.
In accordance with section 1206(d) of
the Pathway for SGR Reform Act of
2013, we are applying a payment
adjustment under the LTCH PPS to
subclause (II) LTCHs beginning in FY
2015 that will result in payments to this
type of LTCH resembling reasonable
cost payments under the TEFRA
payment system model.
We also discuss our proposed changes
to the LTCH interruption of stay policy,
which is a payment adjustment that is
applied when, during the course of an
LTCH hospitalization, a patient is
discharged to an inpatient acute care
hospital, an IRF, or a SNF for treatment
or services not available at the LTCH for
a specified period followed by
readmittance to the same LTCH. In
addition, we are finalizing our proposal
to remove the 5-percent payment
threshold policy for patient transfers
between LTCHs and onsite providers.
3. Summary of Costs and Benefits
• Adjustment for MS–DRG
Documentation and Coding Changes.
We are making a ¥0.8 percent
recoupment adjustment to the
standardized amount for FY 2015 to
implement, in part, the requirement of
section 631 of the ATRA that the
Secretary make an adjustment totaling
$11 billion over a 4-year period of FYs
2014, 2015, 2016, and 2017. This
recoupment adjustment represents the
amount of the increase in aggregate
payments as a result of not completing
the prospective adjustment authorized
under section 7(b)(1)(A) of Public Law
110–90 until FY 2013. Prior to the
ATRA, this amount could not have been
recovered under Public Law 110–90.
While our actuaries estimated that a
¥9.3 percent recoupment adjustment to
the standardized amount would be
necessary if CMS were to fully recover
the $11 billion recoupment required by
section 631 of the ATRA in FY 2014, it
is often our practice to delay or phase
in rate adjustments over more than one
year, in order to moderate the effects on
rates in any one year. Therefore,
consistent with the policies that we
have adopted in many similar cases and
the adjustment we made for FY 2014,
we are making a ¥0.8 percent
recoupment adjustment to the
standardized amount in FY 2015. We
estimated that this level of adjustment,
combined with leaving the ¥0.8 percent
adjustment made for FY 2014 in place,
will recover up to $2 billion in FY 2015.
Taking into account the approximately
$1 billion recovered in FY 2014, this
will leave approximately $8 billion
remaining to be recovered by FY 2017.
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• Reduction to Hospital Payments for
Excess Readmissions. The provisions of
section 1886(q) of the Act which
establishes the Hospital Readmissions
Reduction Program are not budget
neutral. For FY 2015, a hospital’s
readmissions payment adjustment factor
is the higher of a ratio of a hospital’s
aggregate payments for excess
readmissions to its aggregate payments
for all discharges, or 0.97 (that is, or a
3-percent reduction). In this final rule,
we estimate that the reduction to a
hospital’s base operating DRG payment
amount to account for excess
readmissions of selected applicable
conditions under the Hospital
Readmissions Reduction Program will
result in a 0.2 percent decrease in
payments to hospitals for FY 2015
relative to FY 2014.
• Value-Based Incentive Payments
under the Hospital Value-Based
Purchasing (VBP) Program. We estimate
that there will be no net financial
impact to the Hospital VBP Program for
FY 2015 in the aggregate because, by
law, the amount available for valuebased incentive payments under the
program in a given fiscal year must be
equal to the total amount of base
operating DRG payment amount
reductions for that year, as estimated by
the Secretary. The estimated amount of
base operating DRG payment amount
reductions for FY 2015 and, therefore,
the estimated amount available for
value-based incentive payments for FY
2015 discharges is approximately $1.4
billion. We believe that the program’s
benefits will be seen in improved
patient outcomes, safety, and in the
patient’s experience of care. However,
we cannot estimate these benefits in
actual dollar and patient terms.
• Payment Adjustment under the
HAC Reduction Program for FY 2015.
Under section 1886(p) of the Act, (as
added by section 3008 of the Affordable
Care Act), the incentive to reduce
hospital-acquired conditions with a
payment adjustment to applicable
hospitals under the HAC Reduction
Program is made beginning FY 2015. We
estimate that, under this provision,
overall payments will decrease
approximately 0.3 percent or $369
million.
• Medicare DSH Payment Adjustment
and Additional Payment for
Uncompensated Care. Under section
1886(r) of the Act (as added by section
3313 of the Affordable Care Act),
disproportionate share hospital
payments to hospitals under section
1886(d)(5)(F) of the Act are reduced and
an additional payment is made to
eligible hospitals beginning in FY 2014.
Hospitals that receive Medicare DSH
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payments will receive 25 percent of the
amount they previously would have
received under the current statutory
formula for Medicare DSH payments in
section 1886(d)(5)(F) of the Act. The
remainder, equal to 75 percent of what
otherwise would have been paid as
Medicare DSH payments, will be the
basis for determining the additional
payments for uncompensated care after
the amount is reduced for changes in
the percentage of individuals that are
uninsured and additional statutory
adjustments. Each hospital that receives
Medicare DSH payments will receive an
additional payment based on its share of
the total uncompensated care amount
reported by Medicare DSHs. The
reduction to Medicare DSH payments is
not budget neutral.
For FY 2015, we are providing that
the 75 percent of what otherwise would
have been paid for Medicare DSH is
adjusted to approximately 76.19 percent
of the amount for changes in the
percentage of individuals that are
uninsured and additional statutory
adjustments. In other words, our
estimate of Medicare DSH payments
prior to the application of section 3133
of the Affordable Care Act is adjusted to
approximately 57.1 percent (the product
of 75 percent and 76.19 percent) and the
resulting payment amount is used to
create an additional payment to
hospitals for their relative share of the
total amount of uncompensated care.
We project that Medicare DSH payments
and additional payments for
uncompensated care made for FY 2015
will reduce payments overall by 1.3
percent as compared to the Medicare
DSH payments and uncompensated care
payments distributed in FY 2014. The
additional payments have redistributive
effects based on a hospital’s
uncompensated care amount relative to
the uncompensated care amount for all
hospitals that are estimated to receive
Medicare DSH payments, and the final
payment amount is not tied to a
hospital’s discharges.
• Hospital Inpatient Quality
Reporting (IQR) Program. In this final
rule, we are finalizing 11 new measures
(1 chart-abstracted, 4 claims-based, and
6 voluntary electronic clinical quality
measures). We proposed to remove 20
measures, but are only finalizing the
removal of 19. The SCIP–INF–4 measure
was proposed for removal, but will be
retained as it was recently retooled for
the 2014 collection period. 10 of these
19 measures are topped-out, chartabstracted measures that are being
retained as voluntary electronic clinical
quality measures. We estimate that the
adoption and removal of these measures
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will decrease hospital costs by $39.8
million.
• Update to the LTCH PPS Standard
Federal Rate and Other Payment
Factors. Based on the best available data
for the 423 LTCHs in our database, we
estimate that the changes to the
payment rates and factors we are
presenting in the preamble and
Addendum of this final rule, including
the update to the standard Federal rate
for FY 2015, the changes to the area
wage adjustment for FY 2015, and the
expected changes to short-stay outliers
and high-cost outliers, will result in an
increase in estimated payments from FY
2014 of approximately $62 million (or
1.1 percent). In addition, we estimate
that net effect of the projected impact of
certain other LTCH PPS policy changes
(that is, the reinstatement of the
moratorium on the full implementation
of the ‘‘25 percent threshold’’ payment
adjustment; the reinstatement of the
moratorium on the development of new
LTCHs and LTCH satellite facilities and
additional LTCH beds; the revocation of
onsite discharges and readmissions
policy; and the payment adjustment for
‘‘subclause (II)’’ LTCHs) is estimated to
result in an increase in LTCH PPS
payments of approximately $116
million.
The impact analysis of the payment
rates and factors presented in this final
rule under the LTCH PPS, in
conjunction with the estimated payment
impacts of certain other LTCH PPS
policy changes will result in a net
increase of $178 million to LTCH
providers. Additionally, we estimate
that the costs to LTCHs associated with
the completion of the data for the
LTCHQR Program to be approximately
$4.7 million more than FY 2014.
B. Summary
1. Acute Care Hospital Inpatient
Prospective Payment System (IPPS)
Section 1886(d) of the Social Security
Act (the Act) sets forth a system of
payment for the operating costs of acute
care hospital inpatient stays under
Medicare Part A (Hospital Insurance)
based on prospectively set rates. Section
1886(g) of the Act requires the Secretary
to use a prospective payment system
(PPS) to pay for the capital-related costs
of inpatient hospital services for these
‘‘subsection (d) hospitals.’’ Under these
PPSs, Medicare payment for hospital
inpatient operating and capital-related
costs is made at predetermined, specific
rates for each hospital discharge.
Discharges are classified according to a
list of diagnosis-related groups (DRGs).
The base payment rate is comprised of
a standardized amount that is divided
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into a labor-related share and a
nonlabor-related share. The laborrelated share is adjusted by the wage
index applicable to the area where the
hospital is located. If the hospital is
located in Alaska or Hawaii, the
nonlabor-related share is adjusted by a
cost-of-living adjustment factor. This
base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage
of certain low-income patients, it
receives a percentage add-on payment
applied to the DRG-adjusted base
payment rate. This add-on payment,
known as the disproportionate share
hospital (DSH) adjustment, provides for
a percentage increase in Medicare
payments to hospitals that qualify under
either of two statutory formulas
designed to identify hospitals that serve
a disproportionate share of low-income
patients. For qualifying hospitals, the
amount of this adjustment varies based
on the outcome of the statutory
calculations. The Affordable Care Act
revised the Medicare DSH payment
methodology and provides for a new
additional Medicare payment that
considers the amount of uncompensated
care beginning on October 1, 2013.
If the hospital is an approved teaching
hospital, it receives a percentage add-on
payment for each case paid under the
IPPS, known as the indirect medical
education (IME) adjustment. This
percentage varies, depending on the
ratio of residents to beds.
Additional payments may be made for
cases that involve new technologies or
medical services that have been
approved for special add-on payments.
To qualify, a new technology or medical
service must demonstrate that it is a
substantial clinical improvement over
technologies or services otherwise
available, and that, absent an add-on
payment, it would be inadequately paid
under the regular DRG payment.
The costs incurred by the hospital for
a case are evaluated to determine
whether the hospital is eligible for an
additional payment as an outlier case.
This additional payment is designed to
protect the hospital from large financial
losses due to unusually expensive cases.
Any eligible outlier payment is added to
the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology
or medical service add-on adjustments.
Although payments to most hospitals
under the IPPS are made on the basis of
the standardized amounts, some
categories of hospitals are paid in whole
or in part based on their hospitalspecific rate, which is determined from
their costs in a base year. For example,
sole community hospitals (SCHs)
receive the higher of a hospital-specific
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rate based on their costs in a base year
(the highest of FY 1982, FY 1987, FY
1996, or FY 2006) or the IPPS Federal
rate based on the standardized amount.
Through and including FY 2006, a
Medicare-dependent, small rural
hospital (MDH) received the higher of
the Federal rate or the Federal rate plus
50 percent of the amount by which the
Federal rate is exceeded by the higher
of its FY 1982 or FY 1987 hospitalspecific rate. As discussed below, for
discharges occurring on or after October
1, 2007, but before April 1, 2015, an
MDH will receive the higher of the
Federal rate or the Federal rate plus 75
percent of the amount by which the
Federal rate is exceeded by the highest
of its FY 1982, FY 1987, or FY 2002
hospital-specific rate. (We note that the
statutory provision for payments to
MDHs expires on March 31, 2015, under
current law.) SCHs are the sole source
of care in their areas, and MDHs are a
major source of care for Medicare
beneficiaries in their areas. Specifically,
section 1886(d)(5)(D)(iii) of the Act
defines an SCH as a hospital that is
located more than 35 road miles from
another hospital or that, by reason of
factors such as isolated location,
weather conditions, travel conditions, or
absence of other like hospitals (as
determined by the Secretary), is the sole
source of hospital inpatient services
reasonably available to Medicare
beneficiaries. In addition, certain rural
hospitals previously designated by the
Secretary as essential access community
hospitals are considered SCHs. Section
1886(d)(5)(G)(iv) of the Act defines an
MDH as a hospital that is located in a
rural area, has not more than 100 beds,
is not an SCH, and has a high
percentage of Medicare discharges (not
less than 60 percent of its inpatient days
or discharges in its cost reporting year
beginning in FY 1987 or in two of its
three most recently settled Medicare
cost reporting years). Both of these
categories of hospitals are afforded this
special payment protection in order to
maintain access to services for
beneficiaries.
Section 1886(g) of the Act requires the
Secretary to pay for the capital-related
costs of inpatient hospital services ‘‘in
accordance with a prospective payment
system established by the Secretary.’’
The basic methodology for determining
capital prospective payments is set forth
in our regulations at 42 CFR 412.308
and 412.312. Under the capital IPPS,
payments are adjusted by the same DRG
for the case as they are under the
operating IPPS. Capital IPPS payments
are also adjusted for IME and DSH,
similar to the adjustments made under
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the operating IPPS. In addition,
hospitals may receive outlier payments
for those cases that have unusually high
costs.
The existing regulations governing
payments to hospitals under the IPPS
are located in 42 CFR Part 412, Subparts
A through M.
2. Hospitals and Hospital Units
Excluded From the IPPS
Under section 1886(d)(1)(B) of the
Act, as amended, certain hospitals and
hospital units are excluded from the
IPPS. These hospitals and units are:
Rehabilitation hospitals and units; longterm care hospitals (LTCHs); psychiatric
hospitals and units; children’s hospitals;
certain cancer hospitals; and short-term
acute care hospitals located in Guam,
the U.S. Virgin Islands, the Northern
Mariana Islands, and American Samoa.
Religious nonmedical health care
institutions (RNHCIs) are also excluded
from the IPPS. Various sections of the
Balanced Budget Act of 1997 (BBA, Pub.
L. 105–33), the Medicare, Medicaid and
SCHIP [State Children’s Health
Insurance Program] Balanced Budget
Refinement Act of 1999 (BBRA, Pub. L.
106–113), and the Medicare, Medicaid,
and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA, Pub. L.
106–554) provide for the
implementation of PPSs for
rehabilitation hospitals and units
(referred to as inpatient rehabilitation
facilities (IRFs)), LTCHs, and psychiatric
hospitals and units (referred to as
inpatient psychiatric facilities (IPFs)).
(We note that the annual updates to the
LTCH PPS are now included as part of
the IPPS annual update document.
Updates to the IRF PPS and IPF PPS are
issued as separate documents.)
Children’s hospitals, certain cancer
hospitals, short-term acute care
hospitals located in Guam, the U.S.
Virgin Islands, the Northern Mariana
Islands, and American Samoa, and
RNHCIs continue to be paid solely
under a reasonable cost-based system
subject to a rate-of-increase ceiling on
inpatient operating costs, as updated
annually by the percentage increase in
the IPPS operating market basket.
The existing regulations governing
payments to excluded hospitals and
hospital units are located in 42 CFR
Parts 412 and 413.
3. Long-Term Care Hospital Prospective
Payment System (LTCH PPS)
The Medicare prospective payment
system (PPS) for LTCHs applies to
hospitals described in section
1886(d)(1)(B)(iv) of the Act effective for
cost reporting periods beginning on or
after October 1, 2002. The LTCH PPS
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49867
was established under the authority of
section 123 of the BBRA and section
307(b) of the BIPA (as codified under
section 1886(m)(1) of the Act). During
the 5-year (optional) transition period, a
LTCH’s payment under the PPS was
based on an increasing proportion of the
LTCH Federal rate with a corresponding
decreasing proportion based on
reasonable cost principles. Effective for
cost reporting periods beginning on or
after October 1, 2006, all LTCHs are
paid 100 percent of the Federal rate. The
existing regulations governing payment
under the LTCH PPS are located in 42
CFR Part 412, Subpart O. Beginning
with FY 2009, annual updates to the
LTCH PPS are published in the same
documents that update the IPPS (73 FR
26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and
1834(g) of the Act, payments made to
critical access hospitals (CAHs) (that is,
rural hospitals or facilities that meet
certain statutory requirements) for
inpatient and outpatient services are
generally based on 101 percent of
reasonable cost. Reasonable cost is
determined under the provisions of
section 1861(v)(1)(A) of the Act and
existing regulations under 42 CFR Part
413.
5. Payments for Graduate Medical
Education (GME)
Under section 1886(a)(4) of the Act,
costs of approved educational activities
are excluded from the operating costs of
inpatient hospital services. Hospitals
with approved graduate medical
education (GME) programs are paid for
the direct costs of GME in accordance
with section 1886(h) of the Act. The
amount of payment for direct GME costs
for a cost reporting period is based on
the hospital’s number of residents in
that period and the hospital’s costs per
resident in a base year. The existing
regulations governing payments to the
various types of hospitals are located in
42 CFR Part 413.
C. Summary of Provisions of Recent
Legislation Discussed in This Final Rule
The Patient Protection and Affordable
Care Act (Pub. L. 111–148), enacted on
March 23, 2010, and the Health Care
and Education Reconciliation Act of
2010 (Pub. L. 111–152), enacted on
March 30, 2010, made a number of
changes that affect the IPPS and the
LTCH PPS. (Pub. L. 111–148 and Pub.
L. 111–152 are collectively referred to as
the ‘‘Affordable Care Act.’’) A number of
the provisions of the Affordable Care
Act affect the updates to the IPPS and
the LTCH PPS and providers and
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suppliers. The provisions of the
Affordable Care Act that were
applicable to the IPPS and the LTCH
PPS for FYs 2010, 2011, and 2012 were
implemented in the June 2, 2010
Federal Register notice (75 FR 31118),
the FY 2011 IPPS/LTCH PPS final rule
(75 FR 50042) and the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51476).
The American Taxpayer Relief Act of
2012 (ATRA) (Pub. L. 112–240), enacted
on January 2, 2013, also made a number
of changes that affect the IPPS. We
announced changes related to certain
IPPS provisions for FY 2013 in
accordance with sections 605 and 606 of
Public Law 112–240 in a document that
appeared in the Federal Register on
March 7, 2013 (78 FR 14689).
The Pathway for SGR Reform Act of
2013 (Pub. L. 113–67), enacted on
December 26, 2013, also made a number
of changes that affect the IPPS and the
LTCH PPS. We implemented changes
related to the low-volume hospital
payment adjustment and MDH
provisions for FY 2014 in accordance
with sections 1105 and 1106 of Public
Law 113–67 in an interim final rule
with comment period that appeared in
the Federal Register on March 18, 2014
(79 FR 15022).
The Protecting Access to Medicare
Act of 2014 (Pub. L. 113–93), enacted on
April 1, 2014, also made a number of
changes that affect the IPPS and LTCH
PPS.
1. The Patient Protection and Affordable
Care Act (Pub. L. 111–148) and the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152)
In this final rule, we are making
policy changes to implement (or, as
applicable, continue to implement in FY
2015) the following provisions (or
portions of the following provisions) of
the Affordable Care Act that are
applicable to the IPPS, the LTCH PPS,
and PPS-exempt cancer hospitals for FY
2015:
• Section 3001(a) of Public Law 111–
148, which requires the establishment of
a hospital inpatient value-based
purchasing program under which valuebased incentive payments are made in a
fiscal year to hospitals that meet
performance standards for the
performance period for that fiscal year.
• Section 3004 of Public Law 111–
148, which provides for the submission
of quality data by LTCHs in order for
them to receive the full annual update
to the payment rates beginning with the
FY 2014 rate year.
• Section 3005 of Public Law 111–
148, which provides for the
establishment of a quality reporting
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program for PPS-exempt cancer
hospitals beginning with FY 2014, and
for subsequent program years.
• Section 3008 of Public Law 111–
148, which establishes the HospitalAcquired Condition (HAC) Reduction
Program and requires the Secretary to
make an adjustment to hospital
payments for applicable hospitals,
effective for discharges beginning on
October 1, 2014, and for subsequent
program years.
• Section 3025 of Public Law 111–
148, which establishes a hospital
readmissions reduction program and
requires the Secretary to reduce
payments to applicable hospitals with
excess readmissions effective for
discharges beginning on or after October
1, 2012.
• Section 3133 of Public Law 111–
148, as amended by section 10316 of
Public Law 111–148 and section 1104 of
Public Law 111–152, which modifies
the methodologies for determining
Medicare DSH payments and creates a
new additional payment for
uncompensated care effective for
discharges beginning on or after October
1, 2013.
• Section 3401 of Public Law 111–
148, which provides for the
incorporation of productivity
adjustments into the market basket
updates for IPPS hospitals and LTCHs.
• Section 10324 of Public Law 111–
148, which provides for a wage
adjustment for hospitals located in
frontier States.
• Sections 3401 and 10319 of Public
Law 111–148 and section 1105 of Public
Law 111–152, which revise certain
market basket update percentages for
IPPS and LTCH PPS payment rates for
FY 2015.
• Section 5506 of Public Law 111–
148, which added a provision to the Act
that instructs the Secretary to establish
a process by regulation under which, in
the event a teaching hospital closes, the
Secretary will permanently increase the
FTE resident caps for hospitals that
meet certain criteria up to the number
of the closed hospital’s FTE resident
caps.
2. American Taxpayer Relief Act of 2012
(ATRA) (Pub. L. 112–240)
In this final rule, we are making
policy changes to implement section
631 of the American Taxpayer Relief
Act of 2012, which amended section
7(b)(1)(B) of Public Law 110–90 and
requires a recoupment adjustment to the
standardized amounts under section
1886(d) of the Act based upon the
Secretary’s estimates for discharges
occurring in FY 2014 through FY 2017
to fully offset $11 billion (which
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represents the amount of the increase in
aggregate payments from FYs 2008
through 2013 for which an adjustment
was not previously applied).
3. Pathway for SGR Reform Act of 2013
(Pub. L. 113–67)
In this final rule, we are making
policy changes to implement, or discuss
the need for future policy changes, to
carry out provisions under section 1206
of the Pathway for SGR Reform Act of
2013. These include:
• Section 1206(a), which provides the
establishment of patient criteria for ‘‘site
neutral’’ payment rates under the LTCH
PPS, portions of which will begin to be
implemented in FY 2016.
• Section 1206(b)(1), which further
amended section 114(c) of the MMSEA,
as amended by section 4302(a) of the
ARRA and sections 3106(c) and
10312(a) of the Affordable Care Act by
retroactively reestablishing, and
extending, the statutory moratorium on
the full implementation of the 25percent threshold payment adjustment
policy under the LTCH PPS so that the
policy will be in effect for 9 years
(except for grandfathered hospitalswithin-hospitals (HwHs), which are
permanently exempt from this policy).
• Section 1206(b)(2), which amended
section 114(d) of the MMSEA, as
amended by section 4302(a) of the
ARRA and sections 3106(c) and
10312(a) of the Affordable Care Act to
establish new moratoria (subject to
certain defined exceptions) on the
development of new LTCHs and LTCH
satellite facilities and a new moratorium
on increases in the number of beds in
existing LTCHs and LTCH satellite
facilities.
• Section 1206(d), which instructs the
Secretary to evaluate payments to
LTCHs classified under section
1886(d)(1)(B)(iv)(II) of the Act and to
adjust payment rates in FY 2015 or 2016
under the LTCH PPS, as appropriate,
based upon the evaluation findings.
4. Protecting Access to Medicare Act of
2014 (Pub. L. 113–93)
In this final rule, we are making
policy changes to implement, or making
conforming changes to regulations in
accordance with, the following
provisions (or portions of the following
provisions) of the Protecting Access to
Medicare Act of 2014 that are applicable
to the IPPS and the LTCH PPS for FY
2015:
• Section 105, which extends the
temporary changes to the Medicare
inpatient hospital payment adjustment
for low-volume subsection (d) hospitals
through March 31, 2015.
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• Section 106, which extends the
MDH program through March 31, 2015.
• Section 112, which makes certain
changes to Medicare LTCH provisions,
including modifications to the statutory
moratoria on the establishment of new
LTCHs and LTCH satellite facilities.
• Section 212, which prohibits the
Secretary from requiring
implementation of ICD–10 code sets
before October 1, 2015.
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D. Issuance of Notice of Proposed
Rulemaking
Earlier this year, we published a
proposed rule that set forth proposed
changes to the Medicare IPPS for
operating costs and for capital-related
costs of acute care hospitals for FY
2015. The proposed rule appeared in the
Federal Register on May 15, 2014 (79
FR 27978). In the proposed rule, we also
set forth proposed changes relating to
payments for IME and GME costs and
payments to certain hospitals that
continue to be excluded from the IPPS
and paid on a reasonable cost basis. In
addition, in the proposed rule, we set
forth proposed changes to the payment
rates, factors, and other payment rate
policies under the LTCH PPS for FY
2015.
Below is a summary of the major
changes that we proposed to make:
1. Proposed Changes to MS–DRG
Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the
proposed rule, we included—
• Proposed changes to MS–DRG
classifications based on our yearly
review, including a discussion of the
conversion of MS–DRGs to ICD–10 and
the status of the implementation of the
ICD–10–CM and ICD–10–PCS systems.
• Proposed application of the
documentation and coding adjustment
for FY 2015 resulting from
implementation of the MS–DRG system.
• Proposed recalibrations of the MS–
DRG relative weights.
• Proposed changes to hospitalacquired conditions (HACs) and a
listing and discussion of HACs,
including infections, that would be
subject to the statutorily required
adjustment in MS–DRG payments for
FY 2015.
• A discussion of the FY 2015 status
of new technologies approved for addon payments for FY 2014 and a
presentation of our evaluation and
analysis of the FY 2015 applicants for
add-on payments for high-cost new
medical services and technologies
(including public input, as directed by
Pub. L. 108–173, obtained in a town hall
meeting).
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2. Proposed Changes to the Hospital
Wage Index for Acute Care Hospitals
In section III. of the preamble to the
proposed rule, we proposed revisions to
the wage index for acute care hospitals
and the annual update of the wage data.
Specific issues addressed included the
following:
• Proposed changes in CBSAs as a
result of new OMB labor market area
delineations and proposed policies
related to the proposed changes in
CBSAs.
• The proposed FY 2015 wage index
update using wage data from cost
reporting periods beginning in FY 2011.
• Analysis and implementation of the
proposed FY 2015 occupational mix
adjustment to the wage index for acute
care hospitals, including the proposed
application of the rural floor, the
proposed imputed rural floor, and the
proposed frontier State floor.
• Proposed revisions to the wage
index for acute care hospitals based on
hospital redesignations and
reclassifications.
• The proposed adjustment to the
wage index for acute care hospitals for
FY 2015 based on commuting patterns
of hospital employees who reside in a
county and work in a different area with
a higher wage index.
• The timetable for reviewing and
verifying the wage data used to compute
the proposed FY 2015 hospital wage
index and proposed revisions to that
timetable.
• Determination of the labor-related
share for the proposed FY 2015 wage
index.
3. Other Decisions and Proposed
Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble of the
proposed rule, we discussed proposed
changes or clarifications of a number of
the provisions of the regulations in 42
CFR Parts 412 and 413, including the
following:
• Proposed changes in postacute care
transfer policies as a result of proposed
new MS–DRGs.
• Proposed changes to the inpatient
hospital updates for FY 2015, including
incorporation of the adjustment for
hospitals that are not meaningful EHR
users under section 1886(b)(3)(B)(ix) of
the Act.
• The proposed updated national and
regional case-mix values and discharges
for purposes of determining RRC status.
• Proposed payment adjustment for
low-volume hospitals for FY 2015.
• The statutorily required IME
adjustment factor for FY 2015 and
proposed IME add-on payments for
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Medicare Part C discharges to SCHs that
are paid according to their hospitalspecific rates.
• Effect of expiration of the MDH
program on April 1, 2015.
• Proposed changes to the
methodologies for determining
Medicare DSH payments and the
additional payments for uncompensated
care.
• Proposed changes to the measures
and payment adjustments under the
Hospital Readmissions Reduction
Program.
• Proposed changes to the
requirements and provision of valuebased incentive payments under the
Hospital Value-Based Purchasing
Program.
• Proposed requirements for payment
adjustments to hospitals under the HAC
Reduction Program for FY 2015.
• Proposed IME and direct GME
policy changes regarding the effective
date of the FTE resident cap, 3-year
rolling average, and IRB ratio cap in
new programs in teaching hospitals;
effect of new OMB labor market area
delineations on certain teaching
hospitals training residents in rural
areas; clarification of effective date of
provisions on counting resident time in
nonprovider settings; proposed changes
to the process for reviewing applications
for and awarding slots made available
under section 5506 of the Affordable
Care Act by teaching hospitals that
close; and clarification regarding direct
GME payment to FQHCs and RHCs that
train residents in approved programs.
• Discussion of the Rural Community
Hospital Demonstration Program and a
proposal for making a budget neutrality
adjustment for the demonstration
program.
• Discussion of the requirements for
transparency of hospital charges under
the Affordable Care Act.
• Discussion of and solicitation of
comments on an alternative payment
methodology under the Medicare
program for short inpatient hospital
stays.
• Discussion of the process for
submitting suggested exceptions to the
2-midnight benchmark.
4. Proposed FY 2015 Policy Governing
the IPPS for Capital-Related Costs
In section V. of the preamble to the
proposed rule, we discussed the
proposed payment policy requirements
for capital-related costs and capital
payments to hospitals for FY 2015 and
other related proposed policy changes.
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5. Proposed Changes to the Payment
Rates for Certain Excluded Hospitals:
Rate-of-Increase Percentages
In section VI. of the preamble of the
proposed rule, we discussed—
• Proposed changes to payments to
certain excluded hospitals for FY 2015.
• Proposed updates to the RCE limits
and proposed changes to the
methodology for determining such
limits for services furnished by
physicians to IPPS-excluded hospitals
and certain teaching hospitals.
• Proposed CAH related changes
regarding reclassifications as rural.
• Proposed changes to the physician
certification requirements for services
furnished in CAHs.
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6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of the
proposed rule, we set forth—
• Proposed changes to the payment
rates, factors, and other payment rate
policies under the LTCH PPS for FY
2015.
• Proposed revisions to the LTCH
PPS geographic classifications based on
the new OMB delineations.
• Proposals to implement section
1206(b)(1) of the Pathway for SGR
Reform Act, which provides for the
retroactive reinstatement and extension,
for an additional 4 years, of the statutory
moratorium on the full implementation
of the 25-percent threshold payment
adjustment established under section
114(c) of the MMSEA, as further
amended by subsequent legislation.
• Proposals to implement section
1206(b)(2) of the Pathway for SGR
Reform Act, as amended by section
112(b) of the Protecting Access to
Medicare Act of 2014, which provides
for moratoria (subject to certain defined
exceptions) on the establishment of new
LTCHs and LTCH satellite facilities and
a moratorium on bed increases in
LTCHs effective for the period
beginning April 1, 2014, and ending
September 30, 2017.
• Proposed changes to the LTCH
interruption of stay policy by revising
the fixed-day thresholds under the
‘‘greater than 3-day interruption of stay
policy’’ to apply a uniform 30-day
threshold as an ‘‘acceptable standard’’
for determining a linkage between an
index discharge and a readmission.
• Proposal to remove the discharge
and readmission requirement, ‘‘Special
Payment Provisions for Patients Who
are Transferred to Onsite Providers and
Readmitted to an LTCH’’ (the ‘‘5 percent
payment threshold’’) beginning in FY
2015.
• Proposal to apply a payment
adjustment under the LTCH PPS to
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subclause (II) LTCHs beginning in FY
2015 that would result in payments to
this type of LTCH resembling reasonable
cost payment under the TEFRA
payment system model, consistent with
the provisions of section 1206(d) of the
Pathway for SGR Reform Act of 2013.
7. Proposed Changes to Regulations
Governing Administrative Appeals by
Providers and Judicial Review of
Provider Claims
In section VIII. of the preamble of the
proposed rule, we set forth proposals to
revise the regulations governing
administrative appeals and judicial
review of provider claims in Medicare
cost reports.
8. Proposed Changes Relating to Quality
Data Reporting for Specific Providers
and Suppliers
In section IX. of the preamble of the
proposed rule, we addressed—
• Proposed requirements for the
Hospital Inpatient Quality Reporting
(IQR) Program as a condition for
receiving the full applicable percentage
increase.
• Proposed changes to the
requirements for the quality reporting
program for PPS-exempt cancer
hospitals (PCHQR Program).
• Proposed changes to the
requirements under the LTCH Quality
Reporting (LTCHQR) Program.
9. Proposed Uses and Release of
Medicare Advantage Risk Adjustment
Data
In section X. of the preamble of the
proposed rule, we set forth proposed
regulatory revisions to broaden the
specified uses of Medicare Advantage
(MA) risk adjustment data and to
specify the conditions for release of
such risk adjustment data to entities
outside of CMS.
10. Proposed Changes to Enforcement
Provisions for Organ Transplant Centers
In section XI. of the preamble of the
proposed rule, we proposed to revise
the regulations governing organ
transplant centers that request approval,
based on mitigating factors for initial
approval and re-approval, for
participation in Medicare when the
centers have not met one or more of the
conditions of participation.
11. Determining Prospective Payment
Operating and Capital Rates and Rate-ofIncrease Limits for Acute Care Hospitals
In the Addendum to the proposed
rule, we set forth proposed changes to
the amounts and factors for determining
the proposed FY 2015 prospective
payment rates for operating costs and
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capital-related costs for acute care
hospitals. We also proposed to establish
the threshold amounts for outlier cases.
In addition, we addressed the proposed
update factors for determining the rateof-increase limits for cost reporting
periods beginning in FY 2015 for certain
hospitals excluded from the IPPS.
12. Determining Prospective Payment
Rates for LTCHs
In the Addendum to the proposed
rule, we set forth proposed changes to
the amounts and factors for determining
the proposed FY 2015 LTCH PPS
standard Federal rate. We proposed to
establish the adjustments for wage
levels (including proposed changes to
the LTCH PPS labor market area
delineations based on the new OMB
delineations), the labor-related share,
the cost-of-living adjustment, and highcost outliers, including the fixed-loss
amount, and the LTCH cost-to-charge
ratios (CCRs) under the LTCH PPS.
13. Impact Analysis
In Appendix A of the proposed rule,
we set forth an analysis of the impact
that the proposed changes would have
on affected acute care hospitals, LTCHs,
and PCHs.
14. Recommendation of Update Factors
for Operating Cost Rates of Payment for
Hospital Inpatient Services
In Appendix B of the proposed rule,
as required by sections 1886(e)(4) and
(e)(5) of the Act, we provided our
recommendations of the appropriate
percentage changes for FY 2015 for the
following:
• A single average standardized
amount for all areas for hospital
inpatient services paid under the IPPS
for operating costs of acute care
hospitals (and hospital-specific rates
applicable to SCHs).
• Target rate-of-increase limits to the
allowable operating costs of hospital
inpatient services furnished by certain
hospitals excluded from the IPPS.
• The standard Federal rate for
hospital inpatient services furnished by
LTCHs.
15. Discussion of Medicare Payment
Advisory Commission
Recommendations
Under section 1805(b) of the Act,
MedPAC is required to submit a report
to Congress, no later than March 15 of
each year, in which MedPAC reviews
and makes recommendations on
Medicare payment policies. MedPAC’s
March 2014 recommendations
concerning hospital inpatient payment
policies address the update factor for
hospital inpatient operating costs and
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capital-related costs for hospitals under
the IPPS. We addressed these
recommendations in Appendix B of the
proposed rule. For further information
relating specifically to the MedPAC
March 2014 report or to obtain a copy
of the report, contact MedPAC at (202)
220–3700 or visit MedPAC’s Web site at:
http://www.medpac.gov.
E. Public Comments Received in
Response to the FY 2015 IPPS/LTCH
PPS Proposed Rule
We received approximately 653
timely pieces of correspondence
containing multiple comments on the
FY 2015 IPPS/LTCH PPS proposed rule.
We note that some of these public
comments were outside of the scope of
the proposed rule. These out-of-scope
public comments are not addressed in
the policy responses in this final rule.
Summaries of the public comments that
are within the scope of the proposed
rule and our responses to those public
comments are set forth in the various
sections of this final rule under the
appropriate headings.
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F. Finalization of Interim Final Rule
With Comment Period on Extension of
Payment Adjustment for Low-Volume
Hospitals and the Medicare-Dependent,
Small Rural Hospital (MDH) Program
for FY 2014 Discharges Through March
31, 2014
In an interim final rule with comment
period (CMS–1599–IFC2) that appeared
in the Federal Register on March 18,
2014, we implemented the extension of
the temporary changes to the payment
adjustment for low-volume hospitals
and the MDH program under the IPPS
for FY 2014 (through March 31, 2014) in
accordance with sections 1105 and
1106, respectively, of the Pathway for
SGR Reform Act of 2013 (79 FR 15022
through 15030). We received four timely
pieces of correspondence on this
interim final rule with comment period.
In section IV.P. of the preamble of this
final rule, we summarize the provisions
of the interim final rule, summarize and
respond to the public comments
received, and finalize the provisions of
the interim final rule with comment
period.
G. Finalization of Interim Final Rule
With Comment Period on Changes to
Certain Cost Reporting Procedures
Related to Disproportionate Share
Hospital Uncompensated Care
Payments
In an interim final rule with comment
period (CMS–1599–IFC) that appeared
in the Federal Register on October 13,
2013 (78 FR 61191), we revised certain
operational considerations for hospitals
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with Medicare cost reporting periods
that span more than one Federal fiscal
year and also made chnges to the data
that will be used in the uncompensated
care payment calculation in order to
ensure that data from Indian Health
Service (IHS) hospitals are included in
Factor 1 and Factor 3 of that calculation
(78 FR 61191 through 61197). We
received 12 timely pieces of
correspondence in response to this
interim final rule with comment period.
In section IV.Q. of the preamble of this
final rule, we summarize the provisions
of the interim final rule with comment
period, summarize and respond to the
public comments received, and finalize
the provisions of the interim final rule
with comment period.
50055), the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51485 through 51487),
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53273), and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50512).
II. Changes to Medicare Severity
Diagnosis-Related Group (MS–DRG)
Classifications and Relative Weights
In the FY 2008 IPPS final rule with
comment period (72 FR 47140 through
47189), we adopted the MS–DRG
patient classification system for the
IPPS, effective October 1, 2007, to better
recognize severity of illness in Medicare
payment rates for acute care hospitals.
The adoption of the MS–DRG system
resulted in the expansion of the number
of DRGs from 538 in FY 2007 to 745 in
FY 2008. (In FY 2014, there are 751 MS–
DRGs.) By increasing the number of
MS–DRGs and more fully taking into
account patient severity of illness in
Medicare payment rates for acute care
hospitals, MS–DRGs encourage
hospitals to improve their
documentation and coding of patient
diagnoses.
In the FY 2008 IPPS final rule with
comment period (72 FR 47175 through
47186), we indicated that the adoption
of the MS–DRGs had the potential to
lead to increases in aggregate payments
without a corresponding increase in
actual patient severity of illness due to
the incentives for additional
documentation and coding. In that final
rule with comment period, we exercised
our authority under section
1886(d)(3)(A)(vi) of the Act, which
authorizes us to maintain budget
neutrality by adjusting the national
standardized amount, to eliminate the
estimated effect of changes in coding or
classification that do not reflect real
changes in case-mix. Our actuaries
estimated that maintaining budget
neutrality required an adjustment of
¥4.8 percent to the national
standardized amount. We provided for
phasing in this ¥4.8 percent adjustment
over 3 years. Specifically, we
established prospective documentation
and coding adjustments of ¥1.2 percent
for FY 2008, ¥1.8 percent for FY 2009,
and ¥1.8 percent for FY 2010.
On September 29, 2007, Congress
enacted the TMA [Transitional Medical
A. Background
Section 1886(d) of the Act specifies
that the Secretary shall establish a
classification system (referred to as
diagnosis-related groups (DRGs)) for
inpatient discharges and adjust
payments under the IPPS based on
appropriate weighting factors assigned
to each DRG. Therefore, under the IPPS,
Medicare pays for inpatient hospital
services on a rate per discharge basis
that varies according to the DRG to
which a beneficiary’s stay is assigned.
The formula used to calculate payment
for a specific case multiplies an
individual hospital’s payment rate per
case by the weight of the DRG to which
the case is assigned. Each DRG weight
represents the average resources
required to care for cases in that
particular DRG, relative to the average
resources used to treat cases in all
DRGs.
Congress recognized that it would be
necessary to recalculate the DRG
relative weights periodically to account
for changes in resource consumption.
Accordingly, section 1886(d)(4)(C) of
the Act requires that the Secretary
adjust the DRG classifications and
relative weights at least annually. These
adjustments are made to reflect changes
in treatment patterns, technology, and
any other factors that may change the
relative use of hospital resources.
B. MS–DRG Reclassifications
For general information about the
MS–DRG system, including yearly
reviews and changes to the MS–DRGs,
we refer readers to the previous
discussions in the FY 2010 IPPS/RY
2010 LTCH PPS final rule (74 FR 43764
through 43766), the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50053 through
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C. Adoption of the MS–DRGs in FY 2008
For information on the adoption of
the MS–DRGs in FY 2008, we refer
readers to the FY 2008 IPPS final rule
with comment period (72 FR 47140
through 47189).
D. FY 2015 MS–DRG Documentation
and Coding Adjustment
1. Background on the Prospective MS–
DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009
Authorized by Pub. L. 110–90
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Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs
Extension Act of 2007 (Pub. L. 110–90).
Section 7(a) of Public Law 110–90
reduced the documentation and coding
adjustment made as a result of the MS–
DRG system that we adopted in the FY
2008 IPPS final rule with comment
period to ¥0.6 percent for FY 2008 and
¥0.9 percent for FY 2009, and we
finalized the FY 2008 adjustment
through rulemaking, effective October 1,
2007 (72 FR 66886).
For FY 2009, section 7(a) of Public
Law 110–90 required a documentation
and coding adjustment of ¥0.9 percent,
and we finalized that adjustment
through rulemaking effective October 1,
2008 (73 FR 48447). The documentation
and coding adjustments established in
the FY 2008 IPPS final rule with
comment period, which reflected the
amendments made by section 7(a) of
Public Law 110–90, are cumulative. As
a result, the ¥0.9 percent
documentation and coding adjustment
for FY 2009 was in addition to the ¥0.6
percent adjustment for FY 2008,
yielding a combined effect of ¥1.5
percent.
2. Adjustment to the Average
Standardized Amounts Required by
Pub. L. 110–90
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a. Prospective Adjustment Required by
Section 7(b)(1)(A) of Pub. L. 110–90
Section 7(b)(1)(A) of Public Law 110–
90 requires that, if the Secretary
determines that implementation of the
MS–DRG system resulted in changes in
documentation and coding that did not
reflect real changes in case-mix for
discharges occurring during FY 2008 or
FY 2009 that are different than the
prospective documentation and coding
adjustments applied under section 7(a)
of Public Law 110–90, the Secretary
shall make an appropriate adjustment
under section 1886(d)(3)(A)(vi) of the
Act. Section 1886(d)(3)(A)(vi) of the Act
authorizes adjustments to the average
standardized amounts for subsequent
fiscal years in order to eliminate the
effect of such coding or classification
changes. These adjustments are
intended to ensure that future annual
aggregate IPPS payments are the same as
the payments that otherwise would have
been made had the prospective
adjustments for documentation and
coding applied in FY 2008 and FY 2009
reflected the change that occurred in
those years.
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b. Recoupment or Repayment
Adjustments in FYs 2010 Through 2012
Required by Section 7(b)(1)(B) Pub. L.
110–90
If, based on a retroactive evaluation of
claims data, the Secretary determines
that implementation of the MS–DRG
system resulted in changes in
documentation and coding that did not
reflect real changes in case-mix for
discharges occurring during FY 2008 or
FY 2009 that are different from the
prospective documentation and coding
adjustments applied under section 7(a)
of Public Law 110–90, section 7(b)(1)(B)
of Public Law 110–90 requires the
Secretary to make an additional
adjustment to the standardized amounts
under section 1886(d) of the Act. This
adjustment must offset the estimated
increase or decrease in aggregate
payments for FYs 2008 and 2009
(including interest) resulting from the
difference between the estimated actual
documentation and coding effect and
the documentation and coding
adjustment applied under section 7(a) of
Public Law 110–90. This adjustment is
in addition to making an appropriate
adjustment to the standardized amounts
under section 1886(d)(3)(A)(vi) of the
Act as required by section 7(b)(1)(A) of
Public Law 110–90. That is, these
adjustments are intended to recoup (or
repay, in the case of underpayments)
spending in excess of (or less than)
spending that would have occurred had
the prospective adjustments for changes
in documentation and coding applied in
FY 2008 and FY 2009 matched the
changes that occurred in those years.
Public Law 110–90 requires that the
Secretary only make these recoupment
or repayment adjustments for discharges
occurring during FYs 2010, 2011, and
2012.
3. Retrospective Evaluation of FY 2008
and FY 2009 Claims Data
In order to implement the
requirements of section 7 of Public Law
110–90, we performed a retrospective
evaluation of the FY 2008 data for
claims paid through December 2008
using the methodology first described in
the FY 2009 IPPS/LTCH PPS final rule
(73 FR 43768 and 43775) and later
discussed in the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43768
through 43772). We performed the same
analysis for FY 2009 claims data using
the same methodology as we did for FY
2008 claims (75 FR 50057 through
50068). The results of the analysis for
the FY 2011 IPPS/LTCH PPS proposed
and final rules, and subsequent
evaluations in FY 2012, supported that
the 5.4 percent estimate accurately
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reflected the FY 2009 increases in
documentation and coding under the
MS–DRG system. We were persuaded by
both MedPAC’s analysis (as discussed
in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50064 through 50065)) and
our own review of the methodologies
recommended by various commenters
that the methodology we employed to
determine the required documentation
and coding adjustments was sound.
As in prior years, the FY 2008, FY
2009, and FY 2010 MedPAR files are
available to the public to allow
independent analysis of the FY 2008
and FY 2009 documentation and coding
effects. Interested individuals may still
order these files through the CMS Web
site at: http://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-forOrder/LimitedDataSets/ by clicking on
MedPAR Limited Data Set (LDS)Hospital (National). This CMS Web page
describes the file and provides
directions and further detailed
instructions for how to order.
Persons placing an order must send
the following: A Letter of Request, the
LDS Data Use Agreement and Research
Protocol (refer to the Web site for further
instructions), the LDS Form, and a
check (refer to the Web site for the
required payment amount) to:
Mailing address if using the U.S.
Postal Service: Centers for Medicare &
Medicaid Services, RDDC Account,
Accounting Division, P.O. Box 7520,
Baltimore, MD 21207–0520.
Mailing address if using express mail:
Centers for Medicare & Medicaid
Services, OFM/Division of
Accounting—RDDC, 7500 Security
Boulevard, C3–07–11, Baltimore, MD
21244–1850.
4. Prospective Adjustments for FY 2008
and FY 2009 Authorized by Section
7(b)(1)(A) of Pub. L. 110–90
In the FY 2010 IPPS/RY 2010 LTCH
PPS final rule (74 FR 43767 through
43777), we opted to delay the
implementation of any documentation
and coding adjustment until a full
analysis of case-mix changes based on
FY 2009 claims data could be
completed. We refer readers to the FY
2010 IPPS/RY LTCH PPS final rule for
a detailed description of our proposal,
responses to comments, and finalized
policy. After analysis of the FY 2009
claims data for the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50057 through
50073), we found a total prospective
documentation and coding effect of 5.4
percent. After accounting for the ¥0.6
percent and the ¥0.9 percent
documentation and coding adjustments
in FYs 2008 and 2009, we found a
remaining documentation and coding
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effect of 3.9 percent. As we have
discussed, an additional cumulative
adjustment of ¥3.9 percent would be
necessary to meet the requirements of
section 7(b)(1)(A) of Public Law 110–90
to make an adjustment to the average
standardized amounts in order to
eliminate the full effect of the
documentation and coding changes that
do not reflect real changes in case-mix
on future payments. Unlike section
7(b)(1)(B) of Public Law 110–90, section
7(b)(1)(A) does not specify when we
must apply the prospective adjustment,
but merely requires us to make an
‘‘appropriate’’ adjustment. Therefore, as
we stated in the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50061), we
believed the law provided some
discretion as to the manner in which we
applied the prospective adjustment of
¥3.9 percent. As we discussed
extensively in the FY 2011 IPPS/LTCH
PPS final rule, it has been our practice
to moderate payment adjustments when
necessary to mitigate the effects of
significant downward adjustments on
hospitals, to avoid what could be
widespread, disruptive effects of such
adjustments on hospitals. Therefore, we
stated that we believed it was
appropriate to not implement the ¥3.9
percent prospective adjustment in FY
2011 because we finalized a ¥2.9
percent recoupment adjustment for that
fiscal year. Accordingly, we did not
propose a prospective adjustment under
section 7(b)(1)(A) of Public Law 110–90
for FY 2011 (75 FR 23868 through
23870). We noted that, as a result,
payments in FY 2011 (and in each
future fiscal year until we implemented
the requisite adjustment) would be
higher than they would have been if we
had implemented an adjustment under
section 7(b)(1)(A) of Public Law 110–90.
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51489 and 51497), we
indicated that, because further delay of
this prospective adjustment would
result in a continued accrual of
unrecoverable overpayments, it was
imperative that we implement a
prospective adjustment for FY 2012,
while recognizing CMS’ continued
desire to mitigate the effects of any
significant downward adjustments to
hospitals. Therefore, we implemented a
¥2.0 percent prospective adjustment to
the standardized amount instead of the
full ¥3.9 percent.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53274 through 53276), we
completed the prospective portion of
the adjustment required under section
7(b)(1)(A) of Public Law 110–90 by
finalizing a ¥1.9 percent adjustment to
the standardized amount for FY 2013.
We stated that this adjustment would
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remove the remaining effect of the
documentation and coding changes that
do not reflect real changes in case-mix
that occurred in FY 2008 and FY 2009.
We believed that it was imperative to
implement the full remaining
adjustment, as any further delay would
result in an overstated standardized
amount in FY 2013 and any future fiscal
years until a full adjustment was made.
We noted again that delaying full
implementation of the prospective
portion of the adjustment required
under section 7(b)(1)(A) of Public Law
110–90 until FY 2013 resulted in
payments in FY 2010 through FY 2012
being overstated. These overpayments
could not be recovered by CMS as
section 7(b)(1)(B) of Public Law 110–90
limited recoupments to overpayments
made in FY 2008 and FY 2009.
5. Recoupment or Repayment
Adjustment Authorized by Section
7(b)(1)(B) of Pub. L. 110–90
Section 7(b)(1)(B) of Public Law 110–
90 requires the Secretary to make an
adjustment to the standardized amounts
under section 1886(d) of the Act to
offset the estimated increase or decrease
in aggregate payments for FY 2008 and
FY 2009 (including interest) resulting
from the difference between the
estimated actual documentation and
coding effect and the documentation
and coding adjustments applied under
section 7(a) of Public Law 110–90. This
determination must be based on a
retrospective evaluation of claims data.
Our actuaries estimated that there was
a 5.8 percentage point difference
resulting in an increase in aggregate
payments of approximately $6.9 billion.
Therefore, as discussed in the FY 2011
IPPS/LTCH PPS final rule (75 FR 50062
through 50067), we determined that an
aggregate adjustment of ¥5.8 percent in
FYs 2011 and 2012 would be necessary
in order to meet the requirements of
section 7(b)(1)(B) of Public Law 110–90
to adjust the standardized amounts for
discharges occurring in FYs 2010, 2011,
and/or 2012 to offset the estimated
amount of the increase in aggregate
payments (including interest) in FYs
2008 and 2009.
It is often our practice to phase in
payment rate adjustments over more
than one year in order to moderate the
effect on payment rates in any one year.
Therefore, consistent with the policies
that we have adopted in many similar
cases, in the FY 2011 IPPS/LTCH PPS
final rule, we made an adjustment to the
standardized amount of ¥2.9 percent,
representing approximately half of the
aggregate adjustment required under
section 7(b)(1)(B) of Public Law 110–90,
for FY 2011. An adjustment of this
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magnitude allowed us to moderate the
effects on hospitals in one year while
simultaneously making it possible to
implement the entire adjustment within
the timeframe required under section
7(b)(1)(B) of Public Law 110–90 (that is,
no later than FY 2012). For FY 2012, in
accordance with the timeframes set
forth by section 7(b)(1)(B) of Public Law
110–90, and consistent with the
discussion in the FY 2011 IPPS/LTCH
PPS final rule, we completed the
recoupment adjustment by
implementing the remaining ¥2.9
percent adjustment, in addition to
removing the effect of the ¥2.9 percent
adjustment to the standardized amount
finalized for FY 2011 (76 FR 51489 and
51498). Because these adjustments, in
effect, balanced out, there was no yearto-year change in the standardized
amount due to this recoupment
adjustment for FY 2012. In the FY 2013
IPPS/LTCH PPS final rule (77 FR
53276), we made a final +2.9 percent
adjustment to the standardized amount,
completing the recoupment portion of
section 7(b)(1)(B) of Public Law 110–90.
We note that with this positive
adjustment, according to our estimates,
all overpayments made in FY 2008 and
FY 2009 have been fully recaptured
with appropriate interest, and the
standardized amount has been returned
to the appropriate baseline.
6. Recoupment or Repayment
Adjustment Authorized by Section 631
of the American Taxpayer Relief Act of
2012 (ATRA)
Section 631 of the ATRA amended
section 7(b)(1)(B) of Public Law 110–90
to require the Secretary to make a
recoupment adjustment or adjustments
totaling $11 billion by FY 2017. This
adjustment represents the amount of the
increase in aggregate payments as a
result of not completing the prospective
adjustment authorized under section
7(b)(1)(A) of Public Law 110–90 until
FY 2013. As discussed earlier, this delay
in implementation resulted in
overstated payment rates in FYs 2010,
2011, and 2012. The resulting
overpayments could not have been
recovered under Public Law 110–90.
Similar to the adjustments authorized
under section 7(b)(1)(B) of Public Law
110–90, the adjustment required under
section 631 of the ATRA is a one-time
recoupment of a prior overpayment, not
a permanent reduction to payment rates.
Therefore, any adjustment made to
reduce payment rates in one year would
eventually be offset by a positive
adjustment, once the necessary amount
of overpayment is recovered.
As we stated in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50515
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through 50517), our actuaries estimate
that a ¥9.3 percent adjustment to the
standardized amount would be
necessary if CMS were to fully recover
the $11 billion recoupment required by
section 631 of the ATRA in FY 2014. It
is often our practice to phase in
payment rate adjustments over more
than one year, in order to moderate the
effect on payment rates in any one year.
Therefore, consistent with the policies
that we have adopted in many similar
cases, and after consideration of the
public comments we received, in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50515 through 50517), we implemented
a ¥0.8 percent recoupment adjustment
to the standardized amount in FY 2014.
We stated that if adjustments of
approximately ¥0.8 percent are
implemented in FYs 2014, 2015, 2016,
and 2017, using standard inflation
factors, we estimate that the entire $11
billion will be accounted for by the end
of the statutory 4-year timeline. As
estimates of any future adjustments are
subject to slight variations in total
savings, we did not provide for specific
adjustments for FYs 2015, 2016, or 2017
at that time. We stated that we believed
that this level of adjustment for FY 2014
was a reasonable and fair approach that
satisfies the requirements of the statute
while mitigating extreme annual
fluctuations in payment rates. In
addition, we again noted that this ¥0.8
percent recoupment adjustment, and
future adjustments under this authority,
will be eventually offset by an
equivalent positive adjustment once the
full $11 billion recoupment requirement
has been realized.
Consistent with the approach
discussed in the FY 2014 rulemaking for
recouping the $11 billion required by
section 631 of the ATRA, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
27997 through 27998), we proposed an
additional ¥0.8 percent recoupment
adjustment to the standardized amount
for FY 2015. We estimated that this
level of adjustment, combined with
leaving the ¥0.8 percent adjustment
made for FY 2014 in place, would
recover up to $2 billion in FY 2015.
Taking into account the approximately
$1 billion recovered in FY 2014, this
would leave approximately $8 billion
remaining to be recovered by FY 2017.
Comment: Several commenters
restated their previous position, as set
forth in comments submitted in
response to the FY 2014 IPPS/LTCH
PPS proposed rule and summarized in
the FY 2014 IPPS/LTCH PPS final rule,
that CMS overstated the impact of
documentation and coding effects for
prior years. Commenters cited potential
deficiencies in the CMS methodology
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and disagreed that the congressionally
mandated adjustment is warranted.
However, the majority of these
commenters conceded that CMS is
required by section 631 of the ATRA to
recover $11 billion by FY 2017, and
supported CMS’ policy to phase in the
adjustments over a 4-year period.
Response: We appreciate the
commenters’ support. We refer readers
to the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517) for
our response to the commenters’
position that CMS overstated the impact
of documentation and coding effects.
After consideration of the public
comments we received, we are
finalizing the proposal to make an
additional ¥0.8 percent adjustment to
the standardized amount for FY 2015.
Considering the ¥0.8 percent
adjustment made in FY 2014, we expect
the combined impact of these
adjustments will be to recover $2 billion
dollars in overpayments in FY 2015.
Combined with the estimated $1 billion
adjustment made in FY 2014, we
estimate that $3 billion of the $11
billion in overpayments required to be
recovered by section 631 of the ATRA
will be accounted for.
We continue to believe that if
adjustments of approximately ¥0.8
percent are implemented in FYs 2014,
2015, 2016, and 2017, using standard
inflation factors, the entire $11 billion
will be accounted for by the end of the
statutory 4-year timeline. As we
explained in the FY 2014 IPPS/LTCH
PPS final rule, estimates of any future
adjustments are subject to slight
variations in total savings. Therefore, we
have not yet addressed specific
adjustments for FY 2016 and FY 2017.
We continue to believe that the ¥0.8
percent adjustment for FY 2015 is a
reasonable and fair approach that will
help satisfy the requirements of the
statute while mitigating extreme annual
fluctuations in payment rates. In
addition, we again note that this ¥0.8
percent recoupment adjustment, and
future adjustments under this authority,
will be eventually offset by an
equivalent positive adjustment once the
full $11 billion recoupment requirement
has been realized.
7. Prospective Adjustment for the MS–
DRG Documentation and Coding Effect
Through FY 2010
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517), we
discussed the possibility of applying an
additional prospective adjustment to
account for the cumulative MS–DRG
documentation and coding effect
through FY 2010. In that final rule, we
stated that if we were to apply such an
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adjustment, we believed the most
appropriate additional adjustment was
¥0.55 percent. However, we decided
not to apply such an adjustment in FY
2014, in light of the need to make the
retrospective adjustments required by
the ATRA. We continue to believe that
if we were to apply an additional
prospective adjustment for the
cumulative MS–DRG documentation
and coding effect through FY 2010, the
most appropriate additional adjustment
is ¥0.55 percent. However, we did not
propose such an adjustment for FY
2015, in light of the ongoing
recoupment required by the ATRA. We
will consider whether such an
additional adjustment is appropriate in
future years’ rulemaking.
Comment: Commenters reiterated
their concern, as set forth in comments
submitted in response to the FY 2014
IPPS/LTCH PPS proposed rule and
summarized in the FY 2014 IPPS/LTCH
PPS final rule, that CMS overstated the
adjustment factor for documentation
and coding, including the revised ¥0.55
percent factor to adjust for
documentation and coding that
occurred in FY 2010. Commenters
believed that adjustments related to FY
2010 documentation and coding are not
required under section 631 of the
ATRA. Commenters urged CMS to not
consider additional adjustments, other
than those required by section 631 of
the ATRA.
Response: We appreciate the
commenters’ concerns. We refer readers
to the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50515 through 50517) for
our response to the commenters’
position that CMS overstated the impact
of documentation and coding effects.
We did not propose to make any
additional prospective adjustment to
address the cumulative documentation
and coding effect through FY 2010 for
FY 2015. We will consider these
comments in future years’ rulemaking.
E. Refinement of the MS–DRG Relative
Weight Calculation
1. Background
Beginning in FY 2007, we
implemented relative weights for DRGs
based on cost report data instead of
charge information. We refer readers to
the FY 2007 IPPS final rule (71 FR
47882) for a detailed discussion of our
final policy for calculating the costbased DRG relative weights and to the
FY 2008 IPPS final rule with comment
period (72 FR 47199) for information on
how we blended relative weights based
on the CMS DRGs and MS–DRGs.
As we implemented cost-based
relative weights, some public
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commenters raised concerns about
potential bias in the weights due to
‘‘charge compression,’’ which is the
practice of applying a higher percentage
charge markup over costs to lower cost
items and services, and a lower
percentage charge markup over costs to
higher cost items and services. As a
result, the cost-based weights would
undervalue high-cost items and
overvalue low-cost items if a single costto-charge ratio (CCR) is applied to items
of widely varying costs in the same cost
center. To address this concern, in
August 2006, we awarded a contract to
the Research Triangle Institute,
International (RTI) to study the effects of
charge compression in calculating the
relative weights and to consider
methods to reduce the variation in the
CCRs across services within cost
centers. For a detailed summary of RTI’s
findings, recommendations, and public
comments that we received on the
report, we refer readers to the FY 2009
IPPS/LTCH PPS final rule (73 FR 48452
through 48453). In addition, we refer
readers to RTI’s July 2008 final report
titled ‘‘Refining Cost to Charge Ratios
for Calculating APC and MS–DRG
Relative Payment Weights’’ (http://
www.rti.org/reports/cms/HHSM–500–
2005–0029I/PDF/Refining_Cost_to_
Charge_Ratios_200807_Final.pdf).
In the FY 2009 IPPS final rule (73 FR
48458 through 48467), in response to
the RTI’s recommendations concerning
cost report refinements, we discussed
our decision to pursue changes to the
cost report to split the cost center for
Medical Supplies Charged to Patients
into one line for ‘‘Medical Supplies
Charged to Patients’’ and another line
for ‘‘Implantable Devices Charged to
Patients.’’ We acknowledged, as RTI had
found, that charge compression occurs
in several cost centers that exist on the
Medicare cost report. However, as we
stated in the FY 2009 IPPS final rule, we
focused on the CCR for Medical
Supplies and Equipment because RTI
found that the largest impact on the
MS–DRG relative weights could result
from correcting charge compression for
devices and implants. In determining
the items that should be reported in
these respective cost centers, we
adopted the commenters’
recommendations that hospitals should
use revenue codes established by the
AHA’s National Uniform Billing
Committee to determine the items that
should be reported in the ‘‘Medical
Supplies Charged to Patients’’ and the
‘‘Implantable Devices Charged to
Patients’’ cost centers. Accordingly, a
new subscripted line for ‘‘Implantable
Devices Charged to Patients’’ was
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created in July 2009. This new
subscripted cost center has been
available for use for cost reporting
periods beginning on or after May 1,
2009.
As we discussed in the FY 2009 IPPS
final rule (73 FR 48458) and in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68519 through
68527), in addition to the findings
regarding implantable devices, RTI also
found that the costs and charges of
computed tomography (CT) scans,
magnetic resonance imaging (MRI), and
cardiac catheterization differ
significantly from the costs and charges
of other services included in the
standard associated cost center. RTI also
concluded that both the IPPS and the
OPPS relative weights would better
estimate the costs of those services if
CMS were to add standard cost 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
costs from charges on claims data. In the
FY 2011 IPPS/LTCH PPS final rule (75
FR 50075 through 50080), we finalized
our proposal to create standard cost
centers for CT scans, MRIs, and cardiac
catheterization, and to require that
hospitals report the costs and charges
for these services under new cost
centers on the revised Medicare cost
report Form CMS–2552–10. (We refer
readers to the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50075 through 50080)
for a detailed discussion of 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 are effective for cost
reporting periods beginning on or after
May 1, 2010, on the revised cost report
Form CMS–2552–10.
In the FY 2009 IPPS final rule (73 FR
48468), we stated that, due to what is
typically a 3-year lag between the
reporting of cost report data and the
availability for use in ratesetting, we
anticipated that we might be able to use
data from the new ‘‘Implantable Devices
Charged to Patients’’ cost center to
develop a CCR for ‘‘Implantable Devices
Charged to Patients’’ in the FY 2012 or
FY 2013 IPPS rulemaking cycle.
However, as noted in the FY 2010 IPPS/
RY 2010 LTCH PPS final rule (74 FR
43782), due to delays in the issuance of
the revised cost report Form CMS 2552–
10, we determined that a new CCR for
‘‘Implantable Devices Charged to
Patients’’ might not be available before
FY 2013. Similarly, when we finalized
the decision in the FY 2011 IPPS/LTCH
PPS final rule to add new cost centers
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49875
for CT scans, MRIs, and cardiac
catheterization, we explained that data
from any new cost centers that may be
created will not be available until at
least 3 years after they are first used (75
FR 50077). In preparation for the FY
2012 IPPS/LTCH PPS rulemaking, we
checked the availability of data in the
‘‘Implantable Devices Charged to
Patients’’ cost center on the FY 2009
cost reports, but we did not believe that
there was a sufficient amount of data
from which to generate a meaningful
analysis in this particular situation.
Therefore, we did not propose to use
data from the ‘‘Implantable Devices
Charged to Patients’’ cost center to
create a distinct CCR for ‘‘Implantable
Devices Charged to Patients’’ for use in
calculating the MS–DRG relative
weights for FY 2012. We indicated that
we would reassess the availability of
data for the ‘‘Implantable Devices
Charged to Patients’’ cost center for the
FY 2013 IPPS/LTCH PPS rulemaking
cycle and, if appropriate, we would
propose to create a distinct CCR at that
time.
During the development of the FY
2013 IPPS/LTCH PPS proposed and
final rules, hospitals were still in the
process of transitioning from the
previous cost report Form CMS–2552–
96 to the new cost report Form CMS–
2552–10. Therefore, we were able to
access only those cost reports in the FY
2010 HCRIS with fiscal year begin dates
on or after October 1, 2009, and before
May 1, 2010; that is, those cost reports
on Form CMS–2552–96. Data from the
Form CMS–2552–10 cost reports were
not available because cost reports filed
on the Form CMS–2552–10 were not
accessible in the HCRIS. Further
complicating matters was that, due to
additional unforeseen technical
difficulties, the corresponding
information regarding charges for
implantable devices on hospital claims
was not yet available to us in the
MedPAR file. Without the breakout in
the MedPAR file of charges associated
with implantable devices to correspond
to the costs of implantable devices on
the cost report, we believed that we had
no choice but to continue computing the
relative weights with the current CCR
that combines the costs and charges for
supplies and implantable devices. We
stated in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53281 through 53283)
that when we do have the necessary
data for supplies and implantable
devices on the claims in the MedPAR
file to create distinct CCRs for the
respective cost centers for supplies and
implantable devices, we hoped that we
would also have data for an analysis of
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creating distinct CCRs for CT scans,
MRIs, and cardiac catheterization,
which could then be finalized through
rulemaking. In the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53281), we stated
that, prior to proposing to create these
CCRs, we would first thoroughly
analyze and determine the impacts of
the data, and that distinct CCRs for
these new cost centers would be used in
the calculation of the relative weights
only if they were first finalized through
rulemaking.
At the time of the development of the
FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27506 through 27507), we had a
substantial number of hospitals
completing all, or some, of these new
cost centers on the FY 2011 Medicare
cost reports, compared to prior years.
We stated that we believed that the
analytic findings described using the FY
2011 cost report data and FY 2012
claims data supported our original
decision to break out and create new
cost centers for implantable devices,
MRIs, CT scans, and cardiac
catheterization, and we saw no reason to
further delay proposing to implement
the CCRs of each of these cost centers.
Therefore, beginning in FY 2014, we
proposed to calculate the MS–DRG
relative weights using 19 CCRs, creating
distinct CCRs from cost report data for
implantable devices, MRIs, CT scans,
and cardiac catheterization (78 FR
27509).
We refer readers to the FY 2014 IPPS/
LTCH PPS proposed rule (78 FR 27507
through 27509) and final rule (78 FR
50518 through 50523) in which we
presented data analyses using distinct
CCRs for implantable devices, MRIs, CT
scans, and cardiac catheterization. The
FY 2014 IPPS/LTCH PPS final rule also
set forth our responses to public
comments we received on our proposal
to implement these CCRs. As explained
in more detail in the FY 2014 IPPS/
LTCH PPS final rule, we finalized our
proposal to use 19 CCRs to calculate
MS–DRG relative weights beginning in
FY 2014—the then existing 15 cost
centers and the 4 new CCRs for
implantable devices, MRIs, CT scans,
and cardiac catheterization. Therefore,
beginning in FY 2014, we calculated the
IPPS MS–DRG relative weights using 19
CCRs, creating distinct CCRs for
implantable devices, MRIs, CT scans,
and cardiac catheterization.
2. Discussion of Policy for FY 2015
As we stated in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 27999),
to calculate the MS–DRG relative
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weights for FY 2015, we used two data
sources: the MedPAR file as the claims
data source and the HCRIS as the cost
report data source. We adjusted the
charges from the claims to costs by
applying the 19 national average CCRs
developed from the cost reports. The
description of the calculation of the 19
CCRs and the MS–DRG relative weights
for FY 2015 is included in section II.H.
of the preamble of this final rule.
Comment: One commenter supported
CMS’ plans to continue to use data from
the implantable devices cost center to
create a distinct CCR for implantable
devices in the calculation of the FY
2015 relative weights. The commenter
also urged CMS to promote
transparency by making detailed data
from the implantable device cost center
available to the public so that hospitals
could evaluate these costs in the context
of overall hospital charges.
Response: We did not propose any
changes to the methodology or data
sources for the FY 2015 CCRs and
relative weights. Regarding the
commenter’s request to make data from
the implantable devices cost center
available to the public, we note that
hospital cost report data, via HCRIS, are
available to the public. For more
information, we refer to readers to the
CMS Web site at: http://www.cms.gov/
Research-Statistics-Data-and-Systems/
Files-for-Order/CostReports/index.html?
redirect=/costReports.
F. Adjustment to MS–DRGs for
Preventable Hospital-Acquired
Conditions (HACs), Including Infections
for FY 2015
1. Background
Section 1886(d)(4)(D) of the Act
addresses certain hospital-acquired
conditions (HACs), including infections.
This provision is part of an array of
Medicare tools that we are using to
promote increased quality and
efficiency of care. Under the IPPS,
hospitals are encouraged to treat
patients efficiently because they receive
the same DRG payment for stays that
vary in length and in the services
provided, which gives hospitals an
incentive to avoid unnecessary costs in
the delivery of care. In some cases,
conditions acquired in the hospital do
not generate higher payments than the
hospital would otherwise receive for
cases without these conditions. To this
extent, the IPPS encourages hospitals to
avoid complications.
However, the treatment of these
conditions can generate higher Medicare
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payments in two ways. First, if a
hospital incurs exceptionally high costs
treating a patient, the hospital stay may
generate an outlier payment. Because
the outlier payment methodology
requires that hospitals experience large
losses on outlier cases before outlier
payments are made, hospitals have an
incentive to prevent outliers. Second,
under the MS–DRG system that took
effect in FY 2008 and that has been
refined through rulemaking in
subsequent years, certain conditions can
generate higher payments even if the
outlier payment requirements are not
met. Under the MS–DRG system, there
are currently 261 sets of MS–DRGs that
are split into 2 or 3 subgroups based on
the presence or absence of a
complication or comorbidity (CC) or a
major complication or comorbidity
(MCC). The presence of a CC or an MCC
generally results in a higher payment.
Section 1886(d)(4)(D) of the Act
specifies that, by October 1, 2007, the
Secretary was required to select, in
consultation with the Centers for
Disease Control and Prevention (CDC),
at least two conditions that: (a) Are high
cost, high volume, or both; (b) are
assigned to a higher paying MS–DRG
when present as a secondary diagnosis
(that is, conditions under the MS–DRG
system that are CCs or MCCs); and (c)
could reasonably have been prevented
through the application of evidencebased guidelines. Section 1886(d)(4)(D)
of the Act also specifies that the list of
conditions may be revised, again in
consultation with the CDC, from time to
time as long as the list contains at least
two conditions.
Effective for discharges occurring on
or after October 1, 2008, under the
authority of section 1886(d)(4)(D) of the
Act, Medicare no longer assigns an
inpatient hospital discharge to a higher
paying MS–DRG if a selected condition
is not present on admission (POA).
Thus, if a selected condition that was
not POA manifests during the hospital
stay, it is considered a HAC and the case
is paid as though the secondary
diagnosis was not present. However,
even if a HAC manifests during the
hospital stay, if any nonselected CC or
MCC appears on the claim, the claim
will be paid at the higher MS–DRG rate.
In addition, Medicare continues to
assign a discharge to a higher paying
MS–DRG if a selected condition is POA.
When a HAC is not POA, payment can
be affected in a manner shown in the
diagram below
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2. HAC Selection
Beginning in FY 2007, we have set
forth proposals, and solicited and
responded to public comments, to
implement section 1886(d)(4)(D) of the
Act through the IPPS annual rulemaking
process. For specific policies addressed
in each rulemaking cycle, including a
detailed discussion of the collaborative
interdepartmental process and public
input regarding selected and potential
candidate HACs, we refer readers to the
following rules: The FY 2007 IPPS
proposed rule (71 FR 24100) and final
rule (71 FR 48051 through 48053); the
FY 2008 IPPS proposed rule (72 FR
24716 through 24726) and final rule
with comment period (72 FR 47200
through 47218); the FY 2009 IPPS
proposed rule (73 FR 23547) and final
rule (73 FR 48471); the FY 2010 IPPS/
RY 2010 LTCH PPS proposed rule (74
FR 24106) and final rule (74 FR 43782);
the FY 2011 IPPS/LTCH PPS proposed
rule (75 FR 23880) and final rule (75 FR
50080); the FY 2012 IPPS/LTCH PPS
proposed rule (76 FR 25810 through
25816) and final rule (76 FR 51504
through 51522); the FY 2013 IPPS/LTCH
PPS proposed rule (77 FR 27892
through 27898) and final rule (77 FR
53283 through 53303); and the FY 2014
IPPS/LTCH PPS proposed rule (78 FR
27509 through 27512) and final rule (78
FR 50523 through 50527). A complete
list of the 11 current categories of HACs
is included on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalAcqCond/Hospital-Acquired_
Conditions.html.
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3. Present on Admission (POA)
Indicator Reporting
Collection of POA indicator data is
necessary to identify which conditions
were acquired during hospitalization for
the HAC payment provision as well as
for broader public health uses of
Medicare data. In previous rulemaking,
we provided both CMS and CDC Web
site resources that are available to
hospitals for assistance in this reporting
effort. For detailed information
regarding these sites and materials,
including the application and use of
POA indicators, we refer the reader to
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51506 through 51507).
Currently, as we have discussed in the
prior rulemaking cited under section
II.I.2. of the preamble of this final rule,
the POA indicator reporting
requirement only applies to IPPS
hospitals because they are subject to this
HAC provision. Non-IPPS hospitals,
including CAHs, LTCHs, IRFs, IPFs,
cancer hospitals, children’s hospitals,
RNHCIs, and the Department of
Veterans Affairs/Department of Defense
hospitals, are exempt from POA
reporting.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50524 through 50525), we
noted that hospitals in Maryland
operating under a statutory waiver were
not paid under the IPPS, but rather were
paid under the provisions of section
1814(b)(3) of the Act, and therefore prior
to FY 2014 these hospitals were exempt
from reporting POA indicators.
However, we believed it was
appropriate to require them to use POA
indicator reporting on their claims so
that we could include their data and
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have as complete a dataset as possible
when we analyze trends and make
further payment policy determinations,
such as those authorized under section
1886(p) of the Act. Therefore, in the FY
2014 IPPS/LTCH PPS final rule, we
finalized our policy that hospitals in
Maryland that formerly operated under
section 1814(b)(3) of the Act were no
longer exempted from the POA
indicator reporting requirement
beginning with claims submitted on or
after October 1, 2013, including all
claims for discharges on or after October
1, 2013. We noted that, while this
requirement was not effective until
October 1, 2013, hospitals in Maryland
could submit data with POA indicators
before that date with the expectation
that these data would be accepted by
Medicare’s claims processing systems.
(We refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50707
through 50712) for a discussion of our
FY 2014 final policies to implement
section 1886(p) of the Act that are
applicable to Maryland hospitals.)
Subsequent to our FY 2014
rulemaking, the State of Maryland
entered into an agreement with CMS,
effective January 1, 2014, to participate
in CMS’ new Maryland All-Payer
Model, a 5-year hospital payment
model. This model is being
implemented under section 1115A of
the Act, as added by section 3021 of the
Affordable Care Act, which authorizes
the testing of innovative payment and
service delivery models, including
models that allow States to ‘‘test and
evaluate systems of all-payer payment
reform for the medical care of residents
of the State, including dual eligible
individuals.’’ Section 1115A of the Act
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authorizes the Secretary to waive such
requirements of titles XI and XVIII of
the Act as may be necessary solely for
purposes of carrying out section 1115A
of the Act with respect to testing
models.
Under the agreement with CMS,
Maryland will limit per capita total
hospital cost growth for all payers,
including Medicare. In order to
implement the new model, effective
January 1, 2014, Maryland elected to no
longer have Medicare make payments to
Maryland hospitals in accordance with
section 1814(b)(3) of the Act. Maryland
also represented that it is no longer in
continuous operation of a
demonstration project reimbursement
system since July 1, 1977, as specified
under section 1814(b)(3) of the Act.
Because Maryland hospitals are no
longer paid under section 1814(b)(3) of
January 1, 2011, we also used a POA
indicator reporting option ‘‘1’’.
However, beginning on or after January
1, 2011, hospitals were required to begin
reporting POA indicators using the 5010
electronic transmittal standards format.
The 5010 format removes the need to
report a POA indicator of ‘‘1’’ for codes
that are exempt from POA reporting. We
issued CMS instructions on this
reporting change as a One-Time
Notification, Pub. No. 100–20,
Transmittal No. 756, Change Request
7024, effective on August 13, 2010,
which can be located at the following
link on the CMS Web site: http://
www.cms.gov/manuals/downloads/
Pub100_20.pdf.) The current POA
indicators and their descriptors are
shown in the chart below:
Indicator
Descriptor
Y .........................................
W ........................................
Indicates that the condition was present on admission.
Affirms that the hospital has determined that, based on data and clinical judgment, it is not possible to document
when the onset of the condition occurred.
Indicates that the condition was not present on admission.
Indicates that the documentation is insufficient to determine if the condition was present at the time of admission.
N .........................................
U .........................................
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the Act, they are no longer subject to
those provisions of the Act and related
implementing regulations that are
specific to section 1814(b)(3) hospitals.
Although CMS has waived certain
provisions of the Act for Maryland
hospitals, as set forth in the agreement
between CMS and Maryland and subject
to Maryland’s compliance with the
terms of the agreement, CMS has not
waived the POA indicator reporting
requirement. In other words, the
changes to the status of Maryland
hospitals under section 1814(b)(3) of the
Act as described above do not in any
way change the POA indicator reporting
requirement for Maryland hospitals.
There are currently four POA
indicator reporting options, ‘‘Y’’, ‘‘W’’,
‘‘N’’, and ‘‘U’’, as defined by the ICD–
9–CM Official Guidelines for Coding
and Reporting. We note that prior to
Under the HAC payment policy, we
treat HACs coded with ‘‘Y’’ and ‘‘W’’
indicators as POA and allow the
condition on its own to cause an
increased payment at the CC and MCC
level. We treat HACs coded with ‘‘N’’
and ‘‘U’’ indicators as Not Present on
Admission (NPOA) and do not allow the
condition on its own to cause an
increased payment at the CC and MCC
level. We refer readers to the following
rules for a detailed discussion of POA
indicator reporting: the FY 2009 IPPS
proposed rule (73 FR 23559) and final
rule (73 FR 48486 through 48487); the
FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule (74 FR 24106) and final
rule (74 FR 43784 through 43785); the
FY 2011 IPPS/LTCH PPS proposed rule
(75 FR 23881 through 23882) and final
rule (75 FR 50081 through 50082); the
FY 2012 IPPS/LTCH PPS proposed rule
(76 FR 25812 through 25813) and final
rule (76 FR 51506 through 51507); the
FY 2013 IPPS/LTCH PPS proposed rule
(77 FR 27893 through 27894) and final
rule (77 FR 53284 through 53285); and
the FY 2014 IPPS/LTCH PPS proposed
rule (78 FR 27510 through 27511) and
final rule (78 FR 50524 through 50525).
In addition, as discussed previously
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53324), the 5010 format
allows the reporting and, effective
January 1, 2011, the processing of up to
25 diagnoses and 25 procedure codes.
As such, it is necessary to report a valid
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POA indicator for each diagnosis code,
including the principal diagnosis and
all secondary diagnoses up to 25.
4. HACs and POA Reporting in
Preparation for Transition to ICD–10–
CM and ICD–10–PCS
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51506 and 51507), in
preparation for the transition to the
ICD–10–CM and ICD–10–PCS code sets,
we indicated that further information
regarding the use of the POA indicator
with the ICD–10–CM/ICD–10–PCS
classifications as they pertain to the
HAC policy would be discussed in
future rulemaking.
At the March 5, 2012 and the
September 19, 2012 meetings of the
ICD–9–CM Coordination and
Maintenance Committee, an
announcement was made with regard to
the availability of the ICD–9–CM HAC
list translation to ICD–10–CM and ICD–
10–PCS code sets. Participants were
informed that the list of the ICD–9–CM
selected HACs has been translated into
codes using the ICD–10–CM and ICD–
10–PCS classification system. It was
recommended that the public review
this list of ICD–10–CM/ICD–10–PCS
code translations of the selected HACs
available on the CMS Web site at: http://
www.cms.gov/Medicare/Coding/ICD10/
ICD-10-MS-DRG-ConversionProject.html. The translations can be
found under the link titled ‘‘ICD–10–
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CM/PCS MS–DRG v30 Definitions
Manual Table of Contents—Full Titles—
HTML Version in Appendix I—
Hospital-Acquired Conditions (HACs).’’
This CMS Web site regarding the ICD–
10–MS–DRG Conversion Project is also
available on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalAcqCond/
icd10_hacs.html. We encouraged the
public to submit comments on these
translations through the HACs Web page
using the CMS ICD–10–CM/PCS HAC
Translation Feedback Mailbox that was
set up for this purpose under the
Related Links section titled ‘‘CMS HAC
Feedback.’’
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50525), we stated that the
final HAC list translation from ICD–9–
CM to ICD–10–CM/ICD–10–PCS would
be subject to formal rulemaking. We
encouraged readers to review the
educational materials and draft code
sets available for ICD–10–CM/ICD–10–
PCS on the CMS Web site at: http://
www.cms.gov/ICD10/. In addition, we
stated that the draft ICD–10–CM/ICD–
10–PCS Coding Guidelines could be
viewed on the CDC Web site at:
http://www.cdc.gov/nchs/icd/
icd10cm.htm.
The HACs code translation list from
ICM–9–CM to ICD–10–CM/ICD–10–PCS
is available to the public on the CMS
Web site at: http://www.cms.gov/
Medicare/Coding/ICD10/ICD-10-MS-
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DRG-Conversion-Project.html. We note
that Appendix I of the ICD–10–CM/PCS
MS–DRG V31R Definitions Manual
Table of Contents—Full Titles files
(available in both text and HTML
formats) are posted on the Web site and
contain the DRA HACs translated to
ICD–10.
We note that section 212 of the
Protecting Access to Medicare Act of
2014 (Pub. L. 113–93), enacted on April
1, 2014, provides that the Secretary may
not adopt ICD–10 prior to October 1,
2015. This effectively delayed the
transition from ICD–9–CM to ICD–10.
The Secretary expects to release a final
rule in the near future that will include
a new compliance date for use of ICD–
10.
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5. Current HACs and Previously
Considered Candidate HACs
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28002), we did not
propose to add or remove categories of
the HACs. However, we indicated that
we continue to encourage public
dialogue about refinements to the HAC
list by written stakeholder comments
about both previously selected and
potential candidate HACs. We refer
readers to section II.F.6. of the FY 2008
IPPS final rule with comment period (72
FR 47202 through 47218) and to section
II.F.7. of the FY 2009 IPPS final rule (73
FR 48774 through 48491) for detailed
discussion supporting our
determination regarding each of these
conditions. We also refer readers to
section II.F.5. of the FY 2013 IPPS/
LTCH PPS proposed rule (77 FR 27892
through 27898), the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53285 through
53292) for the HAC policy for FY 2013,
and the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27509 through
27512) and the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50523 through 50527)
for the HAC policy for FY 2014.
Comment: Some commenters stated
they were pleased the CMS did not
propose to expand the list of categories
or conditions subject to the Deficit
Reduction Act of 2005 provisions that
would reduce payment for HACs not
present on admission. However, one
commenter suggested that CMS remove
‘‘falls and trauma’’ from the categories
of conditions to which the HAC policy
applies. Another believed that
iatrogenic pneumothorax with
thoracentesis and accidental puncture/
bleeding with paracentesis are two
conditions that meet the HAC criteria
for inclusion and urged CMS to expand
the HAC program in FY 2015 to include
them.
Response: We value and appreciate
these public comments, and we will
take the comments and suggestions into
consideration in future rulemaking.
Comment: One commenter recognized
the importance of targeting HACs, but
stated that the DRA HAC program does
not recognize that certain conditions are
not 100 percent preventable, despite
adherence to evidence-based practices.
The commenter noted that facilities that
treat patients with greater comorbidities
and complex conditions are at a greater
risk for penalties. Specifically, the
commenter reiterates concerns about the
inclusion of Surgical Site Infections
(SSI) Following Cardiac Implantable
Electronic Device (CIED) as a HAC
category. The commenter stated that
there are many variables that may
contribute to the risk of CIED-related
infections and that the implanting
physician may not be able to control all
circumstances (for example, preoperative white blood cell count, fever
within 24 hours, and timing of
perioperative antibiotic administration).
Response: In the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51510 through
51511), we addressed commenters’
concerns regarding the preventability of
DRA HACs and noted that the statute
does not require that a condition be
‘‘always preventable’’ in order to qualify
as an HAC. We stated that the statute
indicated that the condition be
‘‘reasonably preventable,’’ which
necessarily implies something less than
100 percent.
49879
Comment: One commenter
recommended that CMS address the
question that its hospital customers
have posed regarding the effect of the
DRA HAC policy when a patient is
discharged from a hospital and then
returns to a hospital to have a foreign
object removed. Specifically, the
commenter stated that hospitals need to
be better informed about how Medicare
payment changes if the hospital
removing the foreign object is the same
hospital at which the foreign object was
left or is a different hospital, and if the
foreign object is removed during an
outpatient procedure or during an
inpatient procedure.
Response: Questions related to
payment for HACs are dependent upon
how the conditions are coded and
reported with ICD–9–CM and the
corresponding POA indicator. The
American Hospital Association (AHA)
Central OfficeTM is the national
clearinghouse for medical coding
advice. Coding inquiries can be directed
to the following AHA Web site: http://
www.CodingClinicAdvisor.com.
Instructions for how to assign the
correct POA indicator can be found in
the ICD–9–CM Official Guidelines for
Coding and Reporting located at the
CDC Web site: http://www.cdc.gov/
nchs/icd/icd9cm_addenda_
guidelines.htm. Also, illustrations of
how to assign POA indicators are
included in the Present on Admission
(POA) Indicator Reporting by Acute
Inpatient Prospective Payment System
(IPPS) Hospitals Fact Sheet located on
the CMS Hospital-Acquired Conditions
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/HospitalAcqCond/
EducationalResources.html in the
‘‘Downloads’’ section. Table 1: CMS
POA Indicator Reporting Options,
Description, and Payment contains an
explanation of when payment for a
condition is made or not made, based on
the POA indicator assigned, as shown
below.
POA indicator
Description
Medicare payment
Y ..................................
Diagnosis was present at time of inpatient admission ........
N ..................................
Diagnosis was not present at time of inpatient admission ..
U ..................................
Documentation insufficient to determine if condition was
present at the time of inpatient admission.
Clinically undetermined. Provider unable to clinically determine whether the condition was present at the time of
inpatient admission.
Payment made for condition by Medicare, when an HAC
is present.
No payment made for condition by Medicare, when an
HAC is present.
No payment made for condition by Medicare, when an
HAC is present.
Payment made for condition by Medicare, when an HAC
is present.
W .................................
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6. RTI Program Evaluation
On September 30, 2009, a contract
was awarded to RTI to evaluate the
impact of the Hospital-Acquired
Condition-Present on Admission (HAC–
POA) provisions on the changes in the
incidence of selected conditions, effects
on Medicare payments, impacts on
coding accuracy, unintended
consequences, and infection and event
rates. This was an intra-agency project
with funding and technical support
from CMS, OPHS, AHRQ, and CDC. The
evaluation also examined the
implementation of the program and
evaluated additional conditions for
future selection. The contract with RTI
ended on November 30, 2012. Summary
reports of RTI’s analysis of the FYs
2009, 2010, and 2011 MedPAR data files
for the HAC–POA program evaluation
were included in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50085
through 50101), the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51512 through
51522), and the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53292 through
53302). Summary and detailed data also
were made publicly available on the
CMS Web site at: http://www.cms.gov/
HospitalAcqCond/01_Overview.asp and
the RTI Web site at: http://www.rti.org/
reports/cms/.
In addition to the evaluation of HAC
and POA MedPAR claims data, RTI also
conducted analyses on readmissions
due to HACs, the incremental costs of
HACs to the health care system, a study
of spillover effects and unintended
consequences, as well as an updated
analysis of the evidence-based
guidelines for selected and previously
considered HACs. Reports on these
analyses have been made publicly
available on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalAcqCond/
index.html.
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7. Current and Previously Considered
Candidate HACs—RTI Report on
Evidence-Based Guidelines
The RTI program evaluation includes
a report that provides references for all
evidence-based guidelines available for
each of the selected and previously
considered candidate HACs that provide
recommendations for the prevention of
the corresponding conditions.
Guidelines were primarily identified
using the AHRQ National Guidelines
Clearing House (NGCH) and the CDC,
along with relevant professional
societies. Guidelines published in the
United States were used, if available. In
the absence of U.S. guidelines for a
specific condition, international
guidelines were included.
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Evidence-based guidelines that
included specific recommendations for
the prevention of the condition were
identified for each of the selected
conditions. In addition, evidence-based
guidelines also were found for the
previously considered candidate
conditions. RTI prepared a final report
to summarize its findings regarding
evidence-based guidelines. This report
can be found on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalAcqCond/Downloads/EvidenceBased-Guidelines.pdf.
Subsequent to this final report, RTI
was awarded an FY 2014 EvidenceBased Guidelines Monitoring contract.
Under the contract, RTI was to provide
a summary report of all evidence-based
guidelines available for each of the
selected and previously considered
candidate HACs that provide
recommendations for the prevention of
the corresponding conditions. This
report is usually delivered to CMS
annually in a May/June timeframe. We
received the updated 2014 report and
have made it available to the public on
the CMS Hospital-Acquired Conditions
Web page in the ‘‘Downloads’’ section
at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
HospitalAcqCond/index.html?redirect=/
HospitalAcqCond/.
G. Changes to Specific MS–DRG
Classifications
1. Discussion of Changes to Coding
System and Basis for MS–DRG Updates
a. Conversion of MS–DRGs to the
International Classification of Diseases,
10th Revision (ICD–10)
Providers use the code sets under the
ICD–9–CM coding system to report
diagnoses and procedures for Medicare
hospital inpatient services under the
MS–DRG system. A later coding edition,
the ICD–10 coding system, includes the
International Classification of Diseases,
10th Revision, Clinical Modification
(ICD–10–CM) for diagnosis coding and
the International Classification of
Diseases, 10th Revision, Procedure
Coding System (ICD–10–PCS) for
inpatient hospital procedure coding, as
well as the Official ICD–10–CM and
ICD–10–PCS Guidelines for Coding and
Reporting. The ICD–10 coding system
was initially adopted for transactions
conducted on or after October 1, 2013,
as described in the Health Insurance
Portability and Accountability Act of
1996 (HIPAA) Administrative
Simplification: Modifications to
Medical Data Code Set Standards to
Adopt ICD–10–CM and ICD–10–PCS
Final Rule published in the Federal
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Register on January 16, 2009 (74 FR
3328 through 3362) (hereinafter referred
to as the ‘‘ICD–10–CM and ICD–10–PCS
final rule’’). However, the Secretary of
Health and Human Services issued a
final rule that delayed the compliance
date for ICD–10 from October 1, 2013,
to October 1, 2014. That final rule,
entitled ‘‘Administrative Simplification:
Adoption of a Standard for a Unique
Health Plan Identifier; Addition to the
National Provider Identifier
Requirements; and a Change to the
Compliance Date for ICD–10–CM and
ICD–10–PCS Medical Data Code Sets,’’
CMS–0040–F, was published in the
Federal Register on September 5, 2012
(77 FR 54664) and is available for
viewing on the Internet at: http://www.
gpo.gov/fdsys/pkg/FR-2012-09-05/pdf/
2012-21238.pdf. On April 1, 2014, the
Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. 113–93) was
enacted, which specified that the
Secretary may not adopt ICD–10 prior to
October 1, 2015. Section 212 of Public
Law 113–93, titled ‘‘Delay in Transition
from ICD–9 to ICD–10 Code Sets,’’
provides that ‘‘[t]he Secretary of Health
and Human Services may not, prior to
October 1, 2015, adopt ICD–10 code sets
as the standard for code sets under
section 1173(c) of Act. On May 1, 2014,
the Secretary announced plans to
release an interim final rule in the near
future that will include a new
compliance date to require the use of
ICD–10 beginning October 1, 2015. The
rule will also require HIPAA covered
entities to continue to use ICD–9–CM
through September 30, 2015.
The anticipated move to ICD–10
necessitated the development of an
ICD–10–CM/ICD–10–PCS version of the
MS–DRGs. CMS began a project to
convert the ICD–9–CM-based MS–DRGs
to ICD–10 MS–DRGs. In response to the
FY 2011 IPPS/LTCH PPS proposed rule,
we received public comments on the
creation of the ICD–10 version of the
MS–DRGs, which will be implemented
at the same time as ICD–10 (75 FR
50127 and 50128). While we did not
propose an ICD–10 version of the MS–
DRGs in the FY 2011 IPPS/LTCH PPS
proposed rule, we noted that we have
been actively involved in converting
current MS–DRGs from ICD–9–CM
codes to ICD–10 codes and sharing this
information through the ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee. We
undertook this early conversion project
to assist other payers and providers in
understanding how to implement their
own conversion projects. We posted
ICD–10 MS–DRGs based on Version
26.0 (FY 2009) of the MS–DRGs. We
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also posted a paper that describes how
CMS went about completing this project
and suggestions for other payers and
providers to follow. Information on the
ICD–10 MS–DRG conversion project can
be found on the ICD–10 MS–DRG
Conversion Project Web site at: http://
cms.hhs.gov/Medicare/Coding/ICD10/
ICD-10-MS-DRG-ConversionProject.html. We have continued to keep
the public updated on our maintenance
efforts for ICD–10–CM and ICD–10–PCS
coding systems, as well as the General
Equivalence Mappings that assist in
conversion through the ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee.
Information on these committee
meetings can be found on the CMS Web
site at: http://www.cms.hhs.gov/
Medicare/Coding/ICD9Provider
DiagnosticCodes/index.html.
During FY 2011, we developed and
posted Version 28.0 of the ICD–10 MS–
DRGs based on the FY 2011 MS–DRGs
(Version 28.0) that we finalized in the
FY 2011 IPPS/LTCH PPS final rule on
the CMS Web site. This ICD–10 MS–
DRGs Version 28.0 also included the CC
Exclusion List and the ICD–10 version
of the hospital-acquired conditions
(HACs), which was not posted with
Version 26.0. We also discussed this
update at the September 15–16, 2010
and the March 9–10, 2011 meetings of
the ICD–9–CM Coordination and
Maintenance Committee. The minutes
of these two meetings are posted on the
CMS Web site at: http://www.cms.hhs.
gov/Medicare/Coding/ICD9Provider
DiagnosticCodes/index.html.
We reviewed comments on the ICD–
10 MS–DRGs Version 28.0 and made
updates as a result of these comments.
We called the updated version the ICD–
10 MS–DRGs Version 28–R1. We posted
a Definitions Manual of ICD–10 MS–
DRGs Version 28–R1 on our ICD–10
MS–DRG Conversion Project Web site.
To make the review of Version 28–R1
updates easier for the public, we also
made available pilot software on a CD
ROM that could be ordered through the
National Technical Information Service
(NTIS). A link to the NTIS ordering page
was provided on the CMS ICD–10 MS–
DRGs Web page. We stated that we
believed that, by providing the ICD–10
MS–DRGs Version 28–R1 Pilot Software
(distributed on CD ROM), the public
would be able to more easily review and
provide feedback on updates to the ICD–
10 MS–DRGs. We discussed the updated
ICD–10 MS–DRGs Version 28–R1 at the
September 14, 2011 ICD–9–CM
Coordination and Maintenance
Committee meeting. We encouraged the
public to continue to review and
provide comments on the ICD–10 MS–
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DRGs so that CMS could continue to
update the system.
In FY 2012, we prepared the ICD–10
MS–DRGs Version 29.0, based on the FY
2012 MS–DRGs (Version 29.0) that we
finalized in the FY 2012 IPPS/LTCH
PPS final rule. We posted a Definitions
Manual of ICD–10 MS–DRGs Version
29.0 on our ICD–10 MS–DRG
Conversion Project Web site. We also
prepared a document that describes
changes made from Version 28.0 to
Version 29.0 to facilitate a review. The
ICD–10 MS–DRGs Version 29.0 was
discussed at the ICD–9–CM
Coordination and Maintenance
Committee meeting on March 5, 2012.
Information was provided on the types
of updates made. Once again the public
was encouraged to review and comment
on the most recent update to the ICD–
10 MS–DRGs.
CMS prepared the ICD–10 MS–DRGs
Version 30.0 based on the FY 2013 MS–
DRGs (Version 30.0) that we finalized in
the FY 2013 IPPS/LTCH PPS final rule.
We posted a Definitions Manual of the
ICD–10 MS–DRGs Version 30.0 on our
ICD–10 MS–DRG Conversion Project
Web site. We also prepared a document
that describes changes made from
Version 29.0 to Version 30.0 to facilitate
a review. We produced mainframe and
computer software for Version 30.0,
which was made available to the public
in February 2013. Information on
ordering the mainframe and computer
software through NTIS was posted on
the ICD–10 MS–DRG Conversion Project
Web site. The ICD–10 MS–DRGs
Version 30.0 computer software
facilitated additional review of the ICD–
10 MS–DRGs conversion.
We provided information on a study
conducted on the impact of converting
MS–DRGs to ICD–10. Information on
this study is summarized in a paper
entitled ‘‘Impact of the Transition to
ICD–10 on Medicare Inpatient Hospital
Payments.’’ This paper was posted on
the CMS ICD–10 MS–DRGs Conversion
Project Web site and was distributed
and discussed at the September 15, 2010
ICD–9–CM Coordination and
Maintenance Committee meeting. The
paper described CMS’ approach to the
conversion of the MS–DRGs from ICD–
9–CM codes to ICD–10 codes. The study
was undertaken using the ICD–9–CM
MS–DRGs Version 27.0 (FY 2010) which
was converted to the ICD–10 MS–DRGs
Version 27.0. The study estimated the
impact on aggregate payment to
hospitals and the distribution of
payments across hospitals. The impact
of the conversion from ICD–9–CM to
ICD–10 on Medicare MS–DRG hospital
payments was estimated using FY 2009
Medicare claims data. The study found
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49881
a hospital payment increase of 0.05
percent using the ICD–10 MS–DRGs
Version 27.0.
CMS provided an overview of this
hospital payment impact study at the
March 5, 2012 ICD–9–CM Coordination
and Maintenance Committee meeting.
This presentation followed
presentations on the creation of ICD–10
MS–DRGs Version 29.0. A summary
report of this meeting can be found on
the CMS Web site at: http://
www.cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/
index.html. At this March 2012 meeting,
CMS announced that it would produce
an update on this impact study based on
an updated version of the ICD–10 MS–
DRGs. This update of the impact study
was presented at the March 5, 2013
ICD–9–CM Coordination and
Maintenance Committee meeting. The
study found that moving from an ICD–
9–CM-based system to an ICD–10 MS–
DRG replicated system would lead to
DRG reassignments on only 1 percent of
the 10 million MedPAR sample records
used in the study. Ninety-nine percent
of the records did not shift to another
MS–DRG when using an ICD–10 MS–
DRG system. For the 1 percent of the
records that shifted, 45 percent of the
shifts were to a higher weighted MS–
DRG, while 55 percent of the shifts were
to lower weighted MS–DRGs. The net
impact across all MS–DRGs was a
reduction by 4/10000 or minus 4
pennies per $100. The updated paper is
posted on the CMS Web site at: http://
cms.hhs.gov/Medicare/Coding/ICD10/
ICD-10-MS-DRG-ConversionProject.html under the ‘‘Downloads’’
section. Information on the March 5,
2013 ICD–9–CM Coordination and
Maintenance Committee meeting can be
found on the CMS Web site at: http://
cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/ICD-9CM-C-and-M-Meeting-Materials.html.
This update of the impact paper and the
ICD–10 MS–DRG Version 30.0 software
provided additional information to the
public who were evaluating the
conversion of the MS–DRGs to ICD–10
MS–DRGs.
CMS prepared the ICD–10 MS–DRGs
Version 31.0 based on the FY 2014 MS–
DRGs (Version 31.0) that we finalized in
the FY 2014 IPPS/LTCH PPS final rule.
In November 2013, we posted a
Definitions Manual of the ICD–10 MS–
DRGs Version 31.0 on the ICD–10 MS–
DRG Conversion Project Web site at:
http://www.cms.hhs.gov/Medicare/
Coding/ICD10/ICD-10-MS-DRGConversion-Project.html. We also
prepared a document that described
changes made from Version 30.0 to
Version 31.0 to facilitate a review. We
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produced mainframe and computer
software for Version 31.0, which was
made available to the public in
December 2013. Information on ordering
the mainframe and computer software
through NTIS was posted on the CMS
Web site at: http://cms.hhs.gov/
Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html under the
‘‘Related Links’’ section. This ICD–10
MS–DRGs Version 31.0 computer
software facilitated additional review of
the ICD–10 MS–DRGs conversion. We
encouraged the public to submit to CMS
any comments on areas where they
believed the ICD–10 MS–DRGs did not
accurately reflect grouping logic found
in the ICD–9–CM MS–DRGs Version
31.0.
We reviewed comments received and
developed an update of ICD–10 MS–
DRGs Version 31.0, which we called
ICD–10 MS–DRGs Version 31.0–R. We
have posted a Definitions Manual of the
ICD–10 MS–DRGs Version 31.0–R on
the ICD–10 MS–DRG Conversion Project
Web site at: http://www.cms.hhs.gov/
Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html. We also
prepared a document that describes
changes made from Version 31.0 to
Version 31.0–R to facilitate a review. We
will continue to share ICD–10–MS–DRG
conversion activities with the public
through this Web site.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
b. Basis for FY 2015 MS–DRG Updates
CMS encourages input from our
stakeholders concerning the annual
IPPS updates when that input is made
available to us by December 7 of the
year prior to the next annual proposed
rule update. For example, to be
considered for any updates or changes
in FY 2016, comments and suggestions
should be submitted by December 7,
2014. The comments that were
submitted in a timely manner for FY
2015 are discussed below in this
section.
Following are the changes we
proposed to the MS–DRGs for FY 2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28004), we invited
public comment on each of the MS–
DRG classification proposed changes
described below, as well as our
proposals to maintain certain existing
MS–DRG classifications, which also are
discussed below. In some cases, we
proposed changes to the MS–DRG
classifications based on our analysis of
claims data. In other cases, we proposed
to maintain the existing MS–DRG
classification based on our analysis of
claims data. For the FY 2015 proposed
rule, our MS–DRG analysis was based
on claims data from the December 2013
update of the FY 2013 MedPAR file,
which contains hospital bills received
through September 30, 2013, for
discharges occurring through September
30, 2013. In our discussion of the
proposed MS–DRG reclassification
changes that follows, we refer to our
analysis of claims data from the
‘‘December 2013 update of the FY 2013
MedPAR file.’’
As explained in previous rulemaking
(76 FR 51487), in deciding whether to
propose to make further modification to
the MS–DRGs for particular
circumstances brought to our attention,
we considered whether the resource
consumption and clinical characteristics
of the patients with a given set of
conditions are significantly different
than the remaining patients in the MS–
DRG. We evaluated patient care costs
using average costs and lengths of stay
and relied on the judgment of our
clinical advisors to decide whether
patients are clinically distinct or similar
to other patients in the MS–DRG. In
evaluating resource costs, we
considered both the absolute and
percentage differences in average costs
between the cases we selected for
review and the remainder of cases in the
MS–DRG. We also considered variation
in costs within these groups; that is,
whether observed average differences
were consistent across patients or
attributable to cases that were extreme
in terms of costs or length of stay, or
both. Further, we considered the
number of patients who will have a
given set of characteristics and generally
preferred not to create a new MS–DRG
unless it would include a substantial
number of cases.
2. MDC 1 (Diseases and Disorders of the
Nervous System)
a. Intracerebral Therapies: Gliadel®
Wafer
During the comment period for the FY
2014 IPPS/LTCH PPS proposed rule, we
received a public comment that we
considered to be outside the scope of
that proposed rule. We stated in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50550) that we would consider this
issue in future rulemaking as part of our
annual review process. The commenter
requested that a new MS–DRG be
created for intracerebral therapies,
including implantation of
chemotherapeutic agents. Specifically,
the commenter referred to the Gliadel®
Wafer for the treatment of High-Grade
Malignant Gliomas (HGGs) defined as
aggressive tumors originating in the
brain.
The Gliadel® Wafer has been
discussed in prior rulemaking,
including the FY 2004 IPPS proposed
rule (68 FR 27187) and final rule (68 FR
45354 through 45355 and 68 FR 45391
through 45392); the FY 2005 IPPS
proposed rule (69 FR 28221 through
28222) and final rule (69 FR 48957
through 48971); and the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47252
through 47253). We refer readers to
these prior discussions for further
background information regarding the
Gliadel® Wafer.
Effective October 1, 2002, ICD–9–CM
procedure code 00.10 (Implantation of
chemotherapeutic agent) was created to
identify and describe insertion of the
Gliadel® Wafer. This procedure code is
assigned to MS–DRG 023 (Craniotomy
with Major Device Implant/Acute
Complex Central Nervous System (CNS)
PDX with MCC or Chemo Implant) in
MDC 1. According to the commenter,
this current MS–DRG assignment does
not compensate providers adequately
for the expenses incurred to perform the
surgery and implantation of the wafer
device. The commenter noted that MS–
DRG 023 has a national average
payment rate of approximately $28,016.
However, the commenter stated, ‘‘the
acquisition cost for 1 box of the Gliadel®
Wafer alone (typical utilization per
procedure is 8 wafers or 1 box) is
$29,035.’’
We conducted an analysis using
claims data from the December 2013
update of the FY 2013 MedPAR file. Our
findings are shown in the table below.
Number
of cases
MS–DRG
MS–DRG 023—All cases ............................................................................................................
MS–DRG 023—Cases with procedure code 00.10 ....................................................................
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5,383
158
22AUR2
Average
length of
stay
10.98
7.0
Average
costs
$36,982
34,027
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As shown in the table above, there
were a total of 5,383 cases in MS–DRG
023 with an average length of stay of
10.98 days and average costs of $36,982.
The number of cases reporting
procedure code 00.10 in MS–DRG 023
totaled 158, with an average length of
stay of 7.0 days and average costs of
$34,027.
The data clearly demonstrate that the
volume of cases reporting procedure
code 00.10 within MS–DRG 023 have a
shorter average length of stay and are
lower in average costs in comparison to
all the cases in the MS–DRG. As we
stated in the proposed rule, given the
low volume of cases, shorter average
length of stay, and lower average costs,
the data do not support the creation of
a new MS–DRG for cases utilizing the
Gliadel® Wafer. In addition, our clinical
advisors determined that cases reporting
procedure code 00.10 are appropriately
assigned within MS–DRG 023.
As discussed in the FY 2005 IPPS
final rule (69 FR 48959), Gliadel® Wafer
cases were assigned to a new DRG that
was clinically coherent and reflected the
resources used to treat those cases,
which appropriately addressed the
concerns of commenters who raised
questions regarding DRG assignment for
those cases at that time. Subsequently,
with the adoption of the MS–DRGs, in
the FY 2008 IPPS/LTCH PPS final rule
(72 FR 47252 through 47253), we
assigned all cases utilizing the Gliadel®
Wafer technology to MS–DRG 023, the
higher severity level, and revised the
title of this MS–DRG in recognition of
the complexity and costs associated
with the implantation. Our clinical
advisors continue to support this
assignment for these same reasons.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule, we did not propose
to create a new MS–DRG for FY 2015 for
cases where ICD–9–CM procedure code
00.10 is reported. We invited public
comments on our proposal to maintain
the current MS–DRG structure.
Comment: Several commenters
supported CMS’ proposal to maintain
cases reporting procedure code 00.10 in
MS–DRG 23, stating it was reasonable
given the data and information
provided.
Response: We appreciate the
commenters’ support.
Comment: Some commenters believed
that MS–DRG 23 does not provide
adequate payment to hospitals that
perform craniotomies with insertion of
the Gliadel® Wafer. These commenters
suggested the MedPAR data are flawed
for a number of reasons. The
commenters indicated that, upon
conducting their own analysis of FY
2012 MedPAR data, there appears to be
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confusion among providers on how to
accurately report procedure code 00.10.
The commenters reported that, during
their analysis, they encountered claims
where procedure code 00.10 was
reported for diagnoses of several other
types of cancers (small and large bowel,
pancreatic, and liver) that were
completely unrelated to the brain. One
commenter suggested that several
providers who have reported procedure
code 00.10 did not ever purchase the
Gliadel® Wafer product. This
commenter noted that it is unclear if the
product should be classified as an
implant or a drug within the revenue
codes and that this uncertainty results
in additional confusion. The same
commenter urged CMS to consider more
input from the professional community
and Medicare beneficiaries, as well as
data sources other than the MedPAR file
when evaluating MS–DRG assignments
for low volume procedures so as not to
restrict access to care for patients in
need of this intracerebral therapy.
Response: We acknowledge the
commenters’ concerns. With regard to
confusion on how to accurately report
procedure code 00.10 and concern that
the code is being reported for other
types of cancers besides brain cancer,
we point out that the AHA’s Coding
Clinic for ICD–9–CM has provided
coding instruction and examples for
how to appropriately assign and report
this code. Specifically, Coding Clinic
Fourth Quarter, 2002, explains how the
chemotherapy wafer is utilized in brain
cancer and that chemotherapy wafers
also have been used to treat the liver
and bladder as well as other sites. We
also note that the terms associated with
procedure code 00.10 within ICD–9–CM
are not restricted solely for use of the
Gliadel® Wafer product. The ICD–9–CM
coding classification system is not
device specific.
With respect to the comment that
providers are confused as to assigning
an implant or drug revenue code to the
Gliadel® Wafer product, we note that
where explicit instructions are not
provided, providers should report their
charges under the revenue code that
will result in the charges being assigned
to the same cost center to which the cost
of those services are assigned in the cost
report. We appreciate the commenter’s
suggestion to obtain additional input
from the professional community.
Comment: One commenter
recommended that a new MS–DRG be
created specifically for the Gliadel®
Wafer product. The commenter stated
that it is unacceptable for CMS to state
there are too few cases to do so.
Response: As explained in the FY
2015 IPPS/LTCH PPS proposed rule, our
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49883
analysis of the claims data and our
clinical advisors did not support
creation of a new MS–DRG.
Furthermore, the MS–DRGs are a
classification system intended to group
together those diagnoses and procedures
with similar clinical characteristics and
utilization of resources. Basing a new
MS–DRG on such a small number of
cases could lead to distortions in the
relative payment weights for the MS–
DRG because several expensive cases
could impact the overall relative
payment weight. Having larger clinical
cohesive groups within an MS–DRG
provides greater stability for annual
updates to the relative payment weights.
Moreover, our clinical advisors have
examined this issue and continue to
advise us that the procedure code 00.10
cases are appropriately classified within
MS–DRG 23 because they are clinically
similar based on both the craniotomy
and the insertion of the device, among
other reasons. Our advisors reaffirmed
their assessment that the groupings were
not overly broad or heterogeneous,
reiterating that the clinical flexibility of
both physicians and hospitals is
maximized when larger cohorts of
clinically similar patients are grouped
and the costs averaged. They note that
many factors are considered when
comparing groups of patients, including
such factors as length of stay, cost of
specific devices, type of device, type of
procedure, and anatomical location,
among others, and stated that the
commenter did not identify any factors
that would necessitate an atypical small,
separate grouping when these cases are
categorized. Our clinical advisors do not
support creating a new MS DRG for
such a small number of cases but would
not support creating a separate DRG
even if the volume of cases was large.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current structure for MS–DRG 23 for FY
2015.
b. Endovascular Embolization or
Occlusion of Head and Neck
We received a request to change the
MS–DRG assignment for the following
three ICD–9–CM procedure codes
representing endovascular embolization
or occlusion procedures of the head and
neck:
• 39.72 (Endovascular (total)
embolization or occlusion of head and
neck vessels);
• 39.75 (Endovascular embolization
or occlusion of vessel(s) of head or neck
using bare coils); and
• 39.76 (Endovascular embolization
or occlusion of vessel(s) of head or neck
using bioactive coils).
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These three procedure codes are
currently assigned to the following eight
MS–DRGs under MDC 1. Cases assigned
to MS–DRGs 020, 021, and 022 require
a principal diagnosis of hemorrhage.
Cases assigned to MS–DRGs 023 and
024 require the insertion of a major
implant or an acute complex central
nervous system (CNS) principal
diagnosis. Cases assigned to MS–DRGs
025, 026, and 027 do not have a
principal diagnosis of hemorrhage, an
acute complex CNS principal diagnosis,
or a major device implant.
• MS–DRG 020 (Intracranial Vascular
Procedures with Principal Diagnosis
of Hemorrhage with MCC)
• MS–DRG 021 (Intracranial Vascular
Procedures with Principal Diagnosis
of Hemorrhage with CC)
• MS–DRG 022 (Intracranial Vascular
Procedures with Principal Diagnosis
of Hemorrhage without CC/MCC)
• MS–DRG 023 (Craniotomy with Major
Device Implant/Acute Complex CNS
Principal Diagnosis with MCC or
Chemo Implant)
• MS–DRG 024 (Craniotomy with Major
Device Implant/Acute Complex CNS
Principal Diagnosis without MCC)
• MS–DRG 025 (Craniotomy &
Endovascular Intracranial Procedures
with MCC)
• MS–DRG 026 (Craniotomy &
Endovascular Intracranial Procedures
with CC)
• MS–DRG 027 (Craniotomy &
Endovascular Intracranial Procedures
without CC/MCC)
The requestor recommended that
cases with procedure codes 39.72,
39.75, and 39.76 be moved from MS–
DRGs 025, 026, and 027 to MS–DRGs
023 and 024, even when there is no
reported acute complex CNS principal
diagnosis or a major device implant.
The requestor stated that unruptured
aneurysms can be treated by a
minimally invasive technique utilizing
endovascular coiling. The requester
noted that a microcatheter is inserted
into a groin artery and navigated
through the vascular system to the
location of the aneurysm. The coils are
inserted through the microcatheter into
the aneurysm in order to occlude (fill)
the aneurysm from inside the blood
vessel. Once the coils are implanted, the
blood flow pattern within the aneurysm
is altered. The requestor stated that
these cases do not have a principal
diagnosis of hemorrhage because the
treatment is for an unruptured
aneurysm which has not hemorrhaged.
Furthermore, the requestor stated that
only a few of these cases without
hemorrhage have a complex CNS
principal diagnosis. Therefore, the
requester believed that most of the cases
should be assigned to MS–DRGs 025,
026, and 027.
The requestor stated that the average
costs of coil cases captured by
procedure codes 39.72, 39.75, and 39.76
are significantly higher than other cases
within MS–DRGs 025, 026, and 027
where most of the coil cases are
Number
of cases
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
23—All cases ..............................................................................................................
24—All cases ..............................................................................................................
25—All cases ..............................................................................................................
25—Cases with procedure code 39.72, 39.75, or 39.76 ............................................
26—All cases ..............................................................................................................
26—Cases with procedure code 39.72, 39.75, or 39.76 ............................................
27—All cases ..............................................................................................................
27—Cases with procedure code 39.72, 39.75, or 39.76 ............................................
Our clinical advisors reviewed the
results of our examination and
determined that the endovascular
embolization or occlusion of head and
neck procedures are appropriately
classified within MS–DRGs 025, 026,
and 027 because they do not have an
acute complex CNS principal diagnosis
or a major device implant which would
add to their clinical complexity. Cases
in MS–DRG 024 have average costs that
are $4,049 higher than cases in MS–DRG
027 with procedure code 39.72, 39.75,
or 39.76. We acknowledge that the 1,245
cases with procedure code 39.72, 39.75,
or 39.76 in MS–DRGs 025 and 026 have
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average costs that are closer to those in
MS–DRGs 023 and 024. However, these
cases are 1,245 of the total 2,976 cases
that would be involved if we moved all
MS–DRGs 025, 026, and 027 cases with
procedure code 39.72, 39.75, or 39.76 to
MS–DRGs 023 and 024, even if they did
not have an acute complex CNS
principal diagnosis or a major device
implant. Based on these findings and
the recommendations from our clinical
advisors, we determined that proposing
to move endovascular embolization or
occlusion of head and neck procedures
from MS–DRGs 025, 026, and 027 to
MS–DRGs 023 and 024 was not
PO 00000
assigned. As stated earlier, the requester
recommended that cases with procedure
codes 39.72, 39.75, and 39.76 be moved
to MS–DRGs 023 and 024, even when
there is not an acute complex CNS
principal diagnosis or a major device
implant reported.
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for cases of endovascular
embolization or occlusion of head and
neck. The table below shows our
findings. For MS–DRGs 025, 026, and
027, the cases identified by procedure
code 39.72, 39.75, or 39.76
(endovascular embolization or occlusion
of head and neck) have higher average
costs and shorter lengths of stay in
comparison to all the cases within each
of those respective MS–DRGs. The
average costs of cases in MS–DRG 024
are $4,049 higher than the average costs
of the 1,731 endovascular embolization
or occlusion of head and neck
procedures cases in MS–DRG 027
($26,250 versus $22,201). The findings
also show that the 524 cases with
procedure code 39.72, 39.75, or 39.76
with average costs of $41,030 in MS–
DRG 025 are closer to the average costs
of $36,982 for cases in MS–DRG 023.
Lastly, we found that the 721
endovascular embolization or occlusion
of head and neck procedure cases in
MS–DRG 026 have average costs of
$27,998 compared to average costs of
$26,250 for cases in MS–DRG 024.
Frm 00032
Fmt 4701
Sfmt 4700
5,383
1,745
15,937
524
8,520
721
10,326
1,731
Average
length
of stay
10.98
6.30
9.68
7.97
6.16
3.14
3.30
1.66
Average
costs
$36,982
26,250
29,722
41,030
21,194
27,998
16,389
22,201
warranted. Therefore, in the FY 2015
IPPS/LTCH PPS proposed rule, we
proposed to maintain the current MS–
DRG assignments for endovascular
embolization or occlusion of head and
neck procedures. We invited public
comments on our proposal.
Comment: A number of commenters
supported CMS’ proposal to maintain
the current MS–DRG assignment for
codes 39.72, 39.75, or 39.76 in MS–
DRGs 025, 026, and 027. The
commenters stated this was reasonable,
given the data and information
provided.
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A number of commenters objected to
the proposal to maintain the current
MS–DRG assignments for endovascular
embolizations captured in codes 39.72,
39.75 and 39.76. The commenters
recommended that CMS move the three
codes to MS–DRGs 023 and 024. The
commenters stated that the coils used in
the endovascular embolizations are
expensive and the endovascular
procedures require substantial
additional resources. The commenters
stated that their hospitals are
significantly underpaid for these cases.
The commenters recommended that
endovascular embolization codes 39.72,
39.75 and 39.76 be classified a ‘‘Major
Device Implants’’ and therefore assigned
to MS–DRGs 023 and 024.
Several commenters recommended
that CMS create new severity subgroups
within MS–DRG 024 to indicate cases
with CC and cases without CC/MCC.
The commenters recommended a threelevel severity split as follows:
• MS–DRG 023 (Craniotomy with Major
Device Implant/Acute Complex CNS
Principal Diagnosis with MCC or
Chemo Implant);
• MS–DRG 024 (Craniotomy with Major
Device Implant/Acute Complex CNS
Principal Diagnosis with CC); and
• MS–DRG XXX (Craniotomy with
Major Device Implant/Acute Complex
CNS Principal Diagnosis without CC/
MCC)
The commenters recommended that
endovascular embolizations captured in
codes 39.72, 39.75 and 39.76 be added
to these three recommended MS–DRGs
as part of the Major Device Implant
group.
One of the commenters recommended
the creation of a new set of MS–DRGs
to capture intracranial endovascular
embolization procedures if CMS
decided not to modify the current MS–
DRGs by moving codes 39.72, 39.75, and
39.76 to MS–DRGs 023 and 024. The
commenter suggested the following
titles for the recommended new MS–
DRGs:
• Recommended new MS–DRG 043
(Intracranial Endovascular
Embolization Procedures with MCC)
• Recommended new MS–DRG 044
(Intracranial Endovascular
Embolization Procedures with CC)
• Recommended new MS–DRG 045
(Intracranial Endovascular
Embolization Procedures with Device
Implant without CC/MCC).
The commenter acknowledged that
there were a limited number of other
intracranial endovascular procedures
that could also be considered for
inclusion in the new base MS–DRG with
this new option. The commenter
supported including any additional
intracranial endovascular embolization
procedures that CMS deemed to be
clinically appropriate.
49885
Response: We appreciate the
commenters’ support of our proposal to
maintain the current MS–DRG
assignment. We examined the
commenters’ recommendation of
subdividing MS–DRG 024 by adding an
additional severity level (with CC and
without CC/MCC). The findings from
the examination of the claims data in
the December 2013 update of the FY
2013 MedPAR file on endovascular
embolization or occlusion of head and
neck procedures are shown in the first
table below. We applied the following
criteria established in FY 2008 (72 FR
47169) to determine if the creation of a
new CC or MCC subgroup within a base
MS–DRG was warranted:
• A reduction in variance of costs of
at least 3 percent.
• At least 5 percent of the patients in
the MS–DRG fall within the CC or MCC
subgroup.
• At least 500 cases are in the CC or
MCC subgroup.
• There is at least a 20 percent
different in average costs between
subgroups.
• There is a $2,000 difference in
average costs between subgroups.
In order to warrant creation of a CC
or MCC subgroup within a base MS–
DRG, the subgroup must meet all five of
the criteria.
ENDOVASCULAR EMBOLIZATION OR OCCLUSION OF HEAD AND NECK PROCEDURES
Number
of cases
MS–DRG
MS–DRG 23—All cases ..............................................................................................................
MS–DRG 24—All cases ..............................................................................................................
The following table shows the number
of cases that would be within each of
the new requested three MS–DRGs,
5,383
1,745
Number
of cases
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG 23 (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis
with MCC or Chemo Implant) ..................................................................................................
Proposed MS–DRG 24 (Craniotomy with Major Device Implant/Acute Complex CNS Principal
Diagnosis with CC or Chemo Implant) ....................................................................................
Proposed MS–DRG XX (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis without CC/MCC or Chemo Implant) .............................................................
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10.98
6.30
Average
costs
$36,982
26,250
including the two proposed severity
levels.
MS–DRG
We determined that the requested
new severity subdivision of with CC and
without CC/MCC would meet only four
of the five criteria. The requested new
with CC and without CC/MCC severity
levels do not meet the criterion that
Average
length
of stay
there is at least a 20 percent difference
in average costs between subgroups.
Because the requested new severity
level does not meet all five criteria, we
are not modifying MS–DRG 024 to
create severity levels for cases with CC
and cases without CC/MCC.
PO 00000
Frm 00033
Fmt 4701
Sfmt 4700
Average
length
of stay
Average
costs
5,383
10.98
$36,982
1,211
7.65
27,360
534
3.25
23,733
We also evaluated the request to add
endovascular embolizations captured by
codes 39.72, 39.75 and 39.76 to the
group labeled ‘‘Major Device Implants’’
within MS–DRGs 023 and 024. Major
Device Implants within MS–DRGs 023
and 024 include the following three sets
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of intracranial neurostimulator
procedures. Each of the three is
composed of the implantation of an
intracranial neurostimulator pulse
generator which is implanted in the
patient, as well as the insertion of a
neurostimulator lead which is inserted
through a burr hole in the skull into the
patient’s brain.
• 01.20 (Cranial implantation or
replacement of neurostimulator pulse
generator) and 02.93 (Implantation or
replacement of intracranial
neurostimulator lead(s))
• 02.93 (Implantation or replacement of
intracranial neurostimulator lead(s))
and 86.95 (Insertion or replacement of
multiple array neurostimulator pulse
generator, not specified as
rechargeable)
• 02.93 (Implantation or replacement of
intracranial neurostimulator lead(s))
and 86.98 (Insertion or replacement of
multiple array (two or more)
rechargeable neurostimulator pulse
generator)
Our clinical advisors reviewed this
issue and advised us not to classify
endovascular embolization procedures
in the same manner as patients who
receive intracranial neurostimulators.
They advised against classifying
endovascular embolizations as Major
Device Implants for several reasons.
First, the endovascular embolization
device itself is a simple mechanical
device, such as a wire, not a complex
electronic device. The work involved in
configuring the neurostimulator device
to the patient, both before and after
insertion, is significantly different from
that of the endovascular embolizations.
Second, endovascular embolizations are
not devices implanted through an open
procedure as are intracranial
neurostimulator pulse generators and
neurostimulator leads. Our clinical
advisors stated that open procedures,
including open procedures to implant
the generator but especially including
open skull procedures, from a clinical
standpoint are significantly different
than endovascular procedures, both in
terms of the work, the facilities, the
risks, and recovery rates (length of stay).
Our clinical advisors specifically stated
that the insertion of coils through an
endovascular approach is not similar to
the insertion of a complex electronic
device. Endovascular embolizations do
not match the clinical complexity and
severity of the intracranial
neurostimulators which have greater
lengths of stay. Our clinical advisors
stated that care of patients who receive
endovascular embolizations is not at the
same severity level as for those patients
who have a major device implant such
as an intracranial neurostimulator or
those patients with an acute complex
central nervous system principal
diagnosis. Therefore, our clinical
advisors recommended not moving
endovascular embolizations to MS–
DRGs 023 or 024. They recommended
maintaining their current assignments
in MS–DRGs 025, 026, and 027.
We evaluated the request to create a
new set of MS–DRGs to capture
intracranial endovascular embolization
procedures. The requestor
recommended including codes 39.72,
39.75, and 39.76 and any other
procedures which CMS deemed
appropriate. Our clinical advisors stated
that codes 39.72, 39.75, and 39.76 were
appropriately assigned to MS–DRGs
025, 026, and 027 because they are
clinically similar to other cases in MS–
DRGs 025, 026, and 027. In addition, as
stated earlier, these cases do not match
the clinical complexity and severity of
the intracranial neurostimulators within
MS–DRGs 023 and 024. For these
reasons, our clinical advisors did not
support creating a new set of MS–DRG
for these codes and any additional
intracranial endovascular embolization
procedures.
After consideration of public
comments we received, we are
finalizing our proposal to maintain the
current MS–DRG assignments for codes
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
163—All cases ............................................................................................................
163—Cases with procedure code 34.85 ....................................................................
164—All cases ............................................................................................................
164—Cases with procedure code 34.85 ....................................................................
165—All cases ............................................................................................................
165—Cases with procedure code 34.85 ....................................................................
There were only 48 cases of
diaphragmatic pacemakers within MS–
DRGs 163, 164, and 165. The average
costs of these diaphragmatic pacemaker
cases ranged from $22,977 for the single
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case in MS–DRG 165 to $29,406 for the
cases in MS–DRG 163, compared to the
average costs for all cases in MS–DRGs
163, 164, and 165, which range from
$13,081 to $34,308. The average cost for
PO 00000
3. MDC 4 (Diseases and Disorders of the
Ear, Nose, Mouth and Throat): Avery
Breathing Pacemaker System
We received a request to create a new
MS–DRG for the Avery Breathing
Pacemaker System. This system is also
called a diaphragmatic pacemaker and
is captured by ICD–9–CM procedure
code 34.85 (Implantation of
diaphragmatic pacemaker). The
requestor stated that the diaphragmatic
pacemaker is indicated for adult and
pediatric patients with chronic
respiratory insufficiency that would
otherwise be dependent on ventilator
support. The procedure consists of
surgically implanted receivers and
electrodes mated to an external
transmitter by antennas worn over the
implanted receivers. The external
transmitter and antennas send
radiofrequency energy to the implanted
receivers under the skin. The receivers
then convert the radio waves into
stimulating pulses sent down the
electrodes to the phrenic nerves,
causing the diaphragm to contract. The
requestor stated that this normal pattern
is superior to mechanical ventilators
that force air into the chest. The
requestor also stated that the system is
expensive; the device cost is
approximately $57,000. According to
the requestor, given the cost of the
device, hospitals are reluctant to use it.
The requestor did not make a specific
MS–DRG reassignment request.
When used for a respiratory failure
patient, procedure code 34.85 is
assigned to MS–DRGs 163, 164, and 165
(Major Chest Procedures with MCC,
with CC, and without CC/MCC,
respectively).
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for diaphragmatic
pacemaker cases. The following table
shows our findings.
Number
of cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
39.72, 39.75 and 39.76 in MS–DRGs
025, 026, and 027.
Frm 00034
Fmt 4701
Sfmt 4700
11,766
13
16,087
34
9,207
1
Average
length of stay
13.13
2.23
6.58
1.71
3.91
1.00
Average
costs
$34,308
$29,406
$18,352
$23,406
$13,081
$22,977
diaphragmatic pacemaker cases in MS–
DRG 163 was lower than that for all
cases in MS–DRG 163, $29,406
compared to $34,308 for all cases. The
average cost for diaphragmatic
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
pacemaker cases was higher for MS–
DRG 164, $23,406 compared to $18,352
for all cases. While the average cost for
the single diaphragmatic pacemaker
case was significantly higher for MS–
DRG 165, $22,977 compared to $13,081,
we were unable to determine if
additional factors might have impacted
the higher cost for this single case.
We stated in the FY 2015 IPPS/LTCH
PPS proposed rule that, given the small
number of diaphragmatic pacemaker
cases that we found, we did not believe
that there was justification for creating
a new MS–DRG. Basing a new MS–DRG
on such a small number of cases could
lead to distortions in the relative
payment weights for the MS–DRG
because several expensive cases could
impact the overall relative payment
weight. Having larger clinical cohesive
groups within an MS–DRG provides
greater stability for annual updates to
the relative payment weights. We noted
that, as discussed in section II.G.4.c. of
the preamble of the proposed rule, one
of the criteria we apply in evaluating
whether to create new severity
subgroups within an MS–DRG is
whether there are at least 500 cases in
the CC or MCC subgroup. While this
criterion is used to evaluate whether to
create a severity subgroup within an
MS–DRG, applying it here suggests that
creating a new MS–DRG for only 48
cases would not be appropriate.
Although the average costs of these
diaphragmatic pacemaker cases are
higher than the average costs of all cases
in MS–DRG 164, the average costs are
lower than all cases in MS–DRG 163.
We believe the current MS–DRG
assignment is appropriate and that the
data do not support creating an MS–
DRG because there are so few cases.
Our clinical advisors reviewed this
issue and determined that the
diaphragmatic pacemaker cases are
appropriately classified within MS–
DRGs 163, 164, and 165 because they
are clinically similar to other cases of
patients with major chest procedures
within MS–DRGs 163, 164, and 165.
Our clinical advisors did not support
creating a new MS–DRG for such a
small number of cases.
Based on the results of the
examination of the claims data, the
recommendations from our clinical
advisors, and the small number of
diaphragmatic pacemaker cases, in the
FY 2015 IPPS/LTCH PPS proposed rule,
we did not propose to create a new MS–
DRG for diaphragmatic pacemaker cases
for FY 2015. We proposed to maintain
the current MS–DRG assignments for
diaphragmatic pacemaker cases. We
invited public comments on our
proposal.
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Comment: A number of commenters
supported CMS’ proposal to maintain
the current MS–DRG assignment for
diaphragmatic pacemakers. The
commenters stated that the proposal
was reasonable given the data and
information presented.
Another commenter expressed
appreciation for the analysis performed
on this issue, but disagreed with the
conclusion to leave diaphragmatic
pacemakers in MS–DRGs 163, 164, and
165. The commenter stated that,
although the number of cases identified
(48) is small, they are unique in both
their costs and their length of stay. The
commenter stated that these cases do
not represent the full universe of
Medicare beneficiaries who would be
good candidates for the diaphragmatic
pacemaker. The commenter expressed
surprise at the average cost data
presented in the table in the proposed
rule. The commenter stated that it sells
this system directly to hospitals and
does not know what insurance plan
covers the procedure. However, in
investigating systems hospitals reported
with code 34.85, the commenter stated
that it discovered that this code covers
systems provided by other
manufacturers and that the cost of
devices by other manufacturers is lower
than the Avery system and is closer to
the costs in CMS’ claims data. The
commenter stated that the Avery system
is fully implantable, whereas other
systems are not. The commenter
asserted that one other system has
percutaneous lead wires that leave the
patients; therefore, the other system is
not totally implantable. The commenter
made inquiries of hospitals and found
that a majority of those hospitals
contacted were using a lower priced
system. The commenter stated that by
grouping multiple manufacturers’
devices into the same MS–DRG, with
the same payment rate, CMS was
limiting physician and patient choice of
a device. The commenter recommended
that MS–DRG payments be made based
on the equipment provided and allow
hospitals to recoup the costs of each
system used.
The commenter stated that inadequate
payment discourages hospitals from
offering the service to patients. The
commenter also stated that these cases
are anomalies in the current MS–DRGs
to which they are assigned and should
be classified into a single, unique MS–
DRG that would be clinically and
financially coherent. The commenter
believed that such a correction could
increase the number of eligible
Medicare beneficiaries who would
benefit from use of the device, allowing
them to stop using mechanical
PO 00000
Frm 00035
Fmt 4701
Sfmt 4700
49887
ventilation, which would greatly
improve their overall health and quality
of life.
The commenter also stated that the
average costs for 35 of the cases with
procedure code 34.85 exceed the
average costs of the other cases in the
MS–DRG to which they are assigned.
The commenter stated that it found the
average length of stay for all 48 cases to
be substantially less than the average
length of stay for all of the other cases.
Therefore, the commenter stated that the
costs for the hospital are related
primarily to the device and not to the
direct hospital care provided to the
patients. The commenter stated that the
small number of diaphragmatic
pacemaker cases compared to the large
volume of other cases in each MS–DRG
means that the unique cost factors of
most of the pacemaker cases will never
be reflected in the payment for these
MS–DRGs. The commenter stated that
hospitals have no incentive to make the
service available to patients who could
use the system. The commenter stated
that the number of individuals who can
use the pacemaker is small because of
the comparatively small volume of
individuals who suffer from the
conditions that make the pacemaker
necessary, but there are more than 48
Medicare beneficiaries who could
benefit from the device.
The commenter further questioned
the rationale for not basing a new MS–
DRG on such a small number of cases.
The commenter questioned the
reference to the use of 500 cases, which
is one of the criteria for a severity level,
when the requestor did not want a
severity level, but instead was
requesting a new MS–DRG for these
Avery Diaphragmatic Pacemaker cases.
In conclusion, the commenter urged
CMS to create a new MS–DRG for
procedure code 34.85.
Response: We appreciate the
commenters’ support for our proposal
not to change the MS–DRG for
diaphragmatic pacemakers. As noted by
one commenter, the ICD–9–CM
procedure codes capture the procedure
performed, in this case the implantation
of a diaphragmatic pacemaker. The
codes are not manufacturer specific.
This is the case for all types of
implanted devices such as cardiac
pacemakers, defibrillators, and
orthopedic devices. The procedure
codes are grouped into clinically
appropriate MS–DRGs. MS–DRGs were
not created to capture a device by a
single manufacturer. It is assumed that
hospitals and their physician staff will
select the appropriate devices. CMS
makes Medicare payments to hospitals
for groups of similar patients within
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
each MS–DRG. The average costs
provided in the tables above were based
on Medicare patients reported to have
received a diaphragmatic pacemaker.
Hospitals have been receiving payments
by diagnosis-related groups for several
decades and are aware that average
payments will exceed the costs of some
cases and be less than the costs of other
cases. They are aware that the selection
of a particular manufacturer, or a
particular device made by one
manufacturer, should be consistent with
the needs of the patient. Our data do not
identify which manufacturer’s devices
the hospitals and physicians chose to
utilize.
As stated earlier, given the small
number of diaphragmatic pacemaker
cases, we do not believe there is
justification for creating a new MS–
DRG. Basing a new MS–DRG on such a
small number of cases could lead to
distortions in the relative payment
weights for the MS–DRG because
several expensive cases could impact
the overall relative payment weight.
Having larger clinical cohesive groups
within an MS DRG provides greater
stability for annual updates to the
relative payment weights.
Our clinical advisors reviewed this
issue and the public comments received
and continue to advise that that the
diaphragmatic pacemaker cases are
appropriately classified within MS–
DRGs 163, 164, and 165 because they
are clinically similar to other cases of
patients with major chest procedures
within MS–DRGs 163, 164, and 165.
They stated that the clinical flexibility
of both physicians and hospitals is
maximized when larger cohorts of
clinically similar patients are grouped
and the costs averaged. Our clinical
advisors note that many factors are
considered when comparing groups of
patients, including such factors as
length of stay, cost of specific devices,
type of device, type of procedure, and
anatomical location, among others. They
stated that the commenter did not
identify any factors that they had failed
to consider when categorizing these
cases. Our clinical advisors do not
support creating a new MS DRG for
such a small number of cases.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current MS–DRG assignments for
diaphragmatic pacemaker cases within
MS–DRGs 163, 164, and 165.
4. MDC 5 (Diseases and Disorders of the
Circulatory System)
a. Exclusion of Left Atrial Appendage
We received a request to move the
exclusion of the left atrial appendage
procedure, which is a non-O.R.
procedure and captured by ICD–9–CM
procedure code 37.36 (Excision,
destruction or exclusion of left atrial
appendage (LAA)), from MS–DRGs 250
(Percutaneous Cardiovascular without
Number of
cases
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
250—All cases ............................................................................................................
250—Cases with procedure code 37.36 ....................................................................
251—All cases ............................................................................................................
251—Cases with procedure code 37.36 ....................................................................
237—All cases ............................................................................................................
238—All cases ............................................................................................................
The data in the table above show that,
while the average costs of the atrial
appendage exclusion procedures are
higher ($29,637) than those for all cases
($21,319) within MS–DRG 250 and are
higher ($18,298) than for all cases
($14,614) within MS–DRG 251, they are
lower than those in MS–DRGs 237
($35,642) and 238 ($24,511). Our
clinical advisors reviewed this issue and
recommended not moving these standalone percutaneous cases to MS–DRGs
237 and 238 because they do not
consider them to be major
cardiovascular procedures. Our clinical
advisors stated that cases reporting ICD–
9–CM procedure code 37.36 are
appropriately assigned within MS–DRG
250 and 251 because they are
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percutaneous cardiovascular procedures
and are clinically similar to other
procedures within the MS–DRG.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule, we did not propose
to reassign exclusion of atrial appendage
procedure cases from MS–DRGs 250 and
251 to MS–DRGs 237 and 238 for FY
2015. We invited public comments on
our proposal to maintain the current
MS–DRG structure for the exclusion of
the left atrial appendage.
Comment: Several commenters
supported CMS’ proposal to maintain
the current MS–DRGs 250 and 251
assignment for exclusion of the left
atrial appendage. Several commenters
disagreed with the proposal and
recommended that CMS assign
PO 00000
Coronary Artery Stent with MCC) and
251 (Percutaneous Cardiovascular
without Coronary Artery Stent without
MCC) to MS–DRGs 237 (Major
Cardiovascular Procedures with MCC)
and 238 (Major Cardiovascular
Procedures without MCC). The
requestor stated that the exclusion of the
left atrial appendage procedure code
37.36 is not clinically coherent with the
other procedures in MS–DRGs 250 and
251 and that this current assignment to
MS–DRGs 250 and 251 does not
compensate providers adequately for the
expenses incurred to perform this
procedure and placement of the device.
The exclusion of the left atrial
appendage procedure involves a
percutaneous placement of a snare/
suture around the left atrial appendage
to close it off. The exclusion of the left
atrial appendage procedure takes place
in the cardiac catheterization laboratory
under general anesthesia and is a
catheter based closed-chest procedure
instead of an open heart surgical
technique to treat the same clinical
condition, with the same intended
results. The procedure can be performed
by either an interventional cardiologist
or an electrophysiologist.
We analyzed claims data from the
December 2013 update of the FY 2013
MedPAR file for cases assigned to MS–
DRGs 250 and 251 and MS–DRGs 237
and 238. Our findings are shown in the
table below.
Frm 00036
Fmt 4701
Sfmt 4700
9,174
61
26,331
341
17,813
33,644
Average
length of stay
6.90
7.21
3.01
3.01
9.66
3.73
Average
costs
$21,319
29,637
14,614
18,298
35,642
24,511
exclusion of the left atrial appendage to
MS–DRG 237 and 238 because the
procedure can be performed as a
standalone percutaneous procedure or
in combination with an open chest
procedure such as cardiac bypass
surgery. The commenters stated that
when the procedure is performed in
conjunction with an open chest
procedure, the procedure is performed
in a surgical suite. Therefore, the
commenters recommended that
exclusion of the left atrial appendage be
assigned to MS–DRGs 237 and 238
when it is a standalone procedure.
Response: We appreciate the
commenters’ support for our proposal to
maintain the current MS–DRG
assignment for the exclusion of atrial
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appendage procedures. We are not
accepting the commenters’
recommendation to move the cases to
MS–DRGs 237 and 238. Our clinical
advisors reviewed these public
comments and continue to maintain that
cases reporting ICD–9–CM procedure
code 37.36 are appropriately assigned
within MS–DRG 250 and 251 because
they are percutaneous cardiovascular
procedures and are clinically similar to
other procedures within the MS–DRGs.
They also stated that when performed
with an open chest procedure, these
procedures would map to a clinically
appropriate open chest MS–DRG under
the current MS–DRG logic. Our clinical
advisors confirmed that although these
are not insignificant procedures, the
procedures are not considered to be
major cardiovascular procedures on the
same scale and with similar
characteristics as cases grouped together
in MS–DRGs 237 and 238.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current MS–DRG assignment for
exclusion of atrial appendage in MS–
DRGs 250 and 251 for FY 2015.
b. Transcatheter Mitral Valve Repair:
MitraClip®
The MitraClip® System (hereafter
referred to as MitraClip®) for
transcatheter mitral valve repair has
been discussed in extensive detail in
previous rulemaking, including the FY
2012 IPPS/LTCH PPS proposed rule (76
FR 25822) and final rule (76 FR 51528
through 51529) and the FY 2013 IPPS/
LTCH PPS proposed rule (77 FR 27902
through 27903) and final rule (77 FR
53308 through 53310), in response to
requests for MS–DRG reclassification, as
well as, in the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27547 through
27552) under the new technology addon payment policy. In the FY 2014
IPPS/LTCH PPS final rule (78 FR
50575), the application for a new
technology add-on payment for
MitraClip® was unable to be considered
further due to lack of FDA approval by
the July 1, 2013 deadline.
Subsequently, on October 24, 2013,
MitraClip® received FDA approval. As a
result, the manufacturer has submitted
new requests for both an MS–DRG
reclassification and new technology
add-on payment for FY 2015. We refer
readers to section II.I. of the preamble of
the proposed rule and this final rule for
a discussion regarding the application
for MitraClip® under the new
technology add-on payment policy.
Below we discuss the MS–DRG
reclassification request.
The manufacturer’s request for MS–
DRG reclassification involves two
components. The first component
consists of reassigning cases reporting a
transcatheter mitral valve repair using
the MitraClip® from MS–DRGs 250 and
251 (Percutaneous Cardiovascular
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG
MS–DRG
MS–DRG
MS–DRG
250—All cases ............................................................................................................
250—Cases with procedure code 35.97 ....................................................................
251—All cases ............................................................................................................
251—Cases with procedure code 35.97 ....................................................................
As displayed in the table above, the
data demonstrate that, for MS–DRG 250,
there were a total of 9,174 cases with an
average length of stay of 6.90 days and
average costs of $21,319. The number of
cases reporting the ICD–9–CM
procedure code 35.97 in MS–DRG 250
totaled 67 with an average length of stay
of 8.48 days and average costs of
$39,103. For MS–DRG 251, there were a
total of 26,331 cases with an average
length of stay of 3.01 days and average
costs of $14,614. There were 127 cases
found in MS–DRG 251 reporting the
procedure code 35.97 with an average
length of stay of 3.94 days and average
costs of $25,635. We recognize that the
cases reporting procedure code 35.97
have a longer length of stay and higher
average costs in comparison to all the
cases within MS–DRGs 250 and 251.
However, as stated in prior rulemaking
(77 FR 53309), it is a fundamental
principle of an averaged payment
216—All
217—All
218—All
219—All
220—All
VerDate Mar<15>2010
cases
cases
cases
cases
cases
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
18:25 Aug 21, 2014
Jkt 232001
PO 00000
9,174
67
26,331
127
Frm 00037
Fmt 4701
Sfmt 4700
Average
length of stay
6.90
8.48
3.01
3.94
Average
costs
$21,319
39,103
14,614
25,635
system that half of the procedures in a
group will have above average costs. It
is expected that there will be higher cost
and lower cost subsets, especially when
a subset has low numbers.
We also evaluated the claims data
from the December 2013 update of the
FY 2013 MedPAR file for MS–DRGs 216
through 221. Our findings are shown in
the table below.
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
Procedure without Coronary Artery
Stent with MCC and without MCC,
respectively) to MS–DRGs 216 (Cardiac
Valve & Other Major Cardiothoracic
Procedures with Cardiac Catheterization
with MCC), 217 (Cardiac Valve & Other
Major Cardiothoracic Procedures with
Cardiac Catheterization with CC), 218
(Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac
Catheterization without CC/MCC), 219
(Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with MCC), 220
(Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with CC), and
221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization without
CC/MCC). The second component of the
manufacturer’s request was for CMS to
examine the creation of a new base MS–
DRG for transcatheter valve therapies.
Effective October 1, 2010, ICD–9–CM
procedure code 35.97 (Percutaneous
mitral valve repair with implant) was
created to identify and describe the
MitraClip® technology.
To address the first component of the
manufacturer’s request, we conducted
an analysis of claims data from the
December 2013 update of the FY 2013
MedPAR file for cases reporting
procedure code 35.97 in MS–DRGs 250
and 251. The table below shows our
findings.
Number of
cases
MS–DRG
49889
10,131
5,374
882
17,856
21,059
E:\FR\FM\22AUR2.SGM
22AUR2
Average
length of stay
15.41
9.51
6.88
11.63
7.13
Average
costs
$65,478
44,695
39,470
54,590
38,137
49890
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Number of
cases
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG 221—All cases ............................................................................................................
The data in our findings did not
warrant reassignment of cases reporting
use of the MitraClip®. We stated in the
proposed rule that if we were to propose
reassignment of cases reporting
procedure code 35.97 to MS–DRGs 216
through 221, they would be significantly
overpaid, as the average costs range
from $34,310 to $65,478 for those MS–
DRGs. In addition, our clinical advisors
did not support reassigning these cases.
They noted that the current MS–DRG
assignment is appropriate for the
reasons stated in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53309). To
reiterate, our clinical advisors noted that
the current MS–DRG assignment is
reasonable because the operating room
resource utilizations of percutaneous
procedures, such as those found in MS–
DRGs 250 and 251, tend to group
together, and are generally less costly
than open procedures, such as those
found in MS–DRGs 216 through 221.
Percutaneous procedures by organ
system represent groups that are
reasonably clinically coherent. More
significantly, our clinical advisors stated
that postoperative resource utilization is
significantly higher for open procedures
with much greater morbidity and
consequent recovery needs. Because the
equipment, technique, staff, patient
populations, and physician specialty all
tend to group by type of procedure
(percutaneous or open), separately
grouping percutaneous procedures and
open procedures is more clinically
consistent. Therefore, in the FY 2015
IPPS/LTCH PPS proposed rule, we did
not propose to modify the current MS–
DRG assignment for cases reporting
procedure code 35.97 from MS–DRGs
250 and 251 to MS–DRGs 216 through
221 for FY 2015. We invited public
comments on our proposal to not make
any modifications to the current MS–
DRG logic for these cases.
Comment: Several commenters
supported the proposal to maintain
cases reporting procedure code 35.97 in
MS–DRGs 250 and 251, stating it was
reasonable given the data and
information provided.
Response: We acknowledge and
appreciate the commenters’ support.
Comment: Some commenters
suggested that cases utilizing the
MitraClip® should be compensated
similarly to mitral valve procedures that
are performed with an open approach
due to the time, staff and resources
involved. Commenters reported that this
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18:25 Aug 21, 2014
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novel technology has improved the
quality of life for patients suffering from
congestive heart failure. However, the
commenters indicated that due to
inadequate payment, their respective
facilities are not able to offer the
MitraClip® to the entire population that
is eligible for it. The commenters also
indicated that patients do not have
access to this life-saving technology not
only due to the lack of adequate
payment to providers but also due to the
cost of the device. Another commenter
reported that ‘‘the price of the device
should be reduced to a level that is
feasible for both sponsor and hospital.’’
Commenters also suggested that
congestive heart failure readmissions
would be reduced if patients could be
treated with the MitraClip®.
Response: As explained in the FY
2015 IPPS/LTCH PPS proposed rule, our
clinical advisors believe that the current
MS–DRG assignment for the MitraClip®
is reasonable because the operating
room resource utilizations of
percutaneous procedures, such as those
found in MS–DRGs 250 and 251, tend
to group together, and are generally less
costly than open procedures. In
addition, the data do not support
reassignment. We stated in the proposed
rule that if we were to propose
reassignment of cases reporting
procedure code 35.97 to MS–DRGs 216
through 221, they would be significantly
overpaid, as the average costs range
from $34,310 to $65,478 for those MS–
DRGs and the average costs for cases
reporting procedure code 35.97 are
$30,286 for MS–DRGs 250 and 251.
Comment: One commenter suggested
an alternative option regarding MS–DRG
reassignment for the MitraClip® and
requested that CMS reassign cases
reporting procedure code 35.97 from
MS–DRGs 250 and 251 to MS–DRGs 237
and 238 (Major Cardiovascular
Procedures with MCC and without
MCC, respectively) with concurrent
approval of the new technology add-on
payment application. The commenter
stated that this would allow the
MitraClip® to be recognized in MS–
DRGs involving a major cardiovascular
procedure with an implantable device.
Response: We did not propose to
reassign cases reporting procedure code
35.97 from MS–DRGs 250 and 251 to
MS–DRGs 237 and 238. Therefore, we
consider this comment to be outside of
the scope of the FY 2015 IPPS/LTCH
PPS proposed rule. We note that, as
PO 00000
Frm 00038
Fmt 4701
Sfmt 4700
4,586
Average
length of stay
5.32
Average
costs
34,310
referenced in section II.G.1.b. of the
preamble of this final rule, we
encourage input from our stakeholders
concerning the annual IPPS updates
when that input is made available to us
by December 7 of the year prior to the
next annual proposed rule update. For
example, to be considered for any
updates or changes in FY 2016,
comments and suggestions should be
submitted by December 7, 2014.
We note that the MitraClip®
technology is discussed in section II.I. of
the preamble of this final rule under the
new technology add-on payment policy.
After consideration of the public
comments we received, we are
finalizing our proposal to not modify
the current MS–DRG assignment for
cases reporting procedure code 35.97
from MS–DRGs 250 and 251 to MS–
DRGs 216 through 221 for FY 2015.
As indicated above, the second
component of the manufacturer’s
request involved the creation of a new
base MS–DRG for transcatheter valve
therapies. We also received a similar
request from another manufacturer
recommending that CMS create a new
MS–DRG for procedures referred to as
endovascular cardiac valve replacement
procedures. We reviewed each of these
requests using the same data analysis, as
set forth below. The discussion for
endovascular cardiac valve replacement
procedures is included in section
II.G.4.c. of the preamble of this final rule
and includes findings from the analysis
and our proposals and final policies for
each of these similar, but distinct
requests.
c. Endovascular Cardiac Valve
Replacement Procedures
As noted in the previous section
related to the MitraClip® technology, we
received two requests to create a new
base MS–DRG for what was referred to
as ‘‘transcatheter valve therapies’’ by
one manufacturer and ‘‘endovascular
cardiac valve replacement’’ procedures
by another manufacturer. Below we
summarize the details of each request
and review results of the data analysis
that was performed.
Transcatheter Valve Therapies
The request related to transcatheter
valve therapies consisted of creating a
new MS–DRG that would include the
MitraClip® technology (ICD–9–CM
procedure code 35.97 (Percutaneous
mitral valve repair with implant)), along
E:\FR\FM\22AUR2.SGM
22AUR2
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with the following list of ICD–9–CM
procedure codes that identify the
various types of valve replacements
performed by an endovascular or
transcatheter technique:
• 35.05 (Endovascular replacement of
aortic valve);
• 35.06 (Transapical replacement of
aortic valve);
• 35.07 (Endovascular replacement of
pulmonary valve);
• 35.08 (Transapical replacement of
pulmonary valve); and
• 35.09 (Endovascular replacement of
unspecified valve).
We performed analysis of claims data
from the December 2013 update of the
FY 2013 MedPAR file for both the
percutaneous mitral valve repair and the
transcatheter/endovascular cardiac
valve replacement codes in their
respective MS–DRGs. The percutaneous
mitral valve repair with implant
(MitraClip®) procedure code is currently
assigned to MS–DRGs 250 and 251,
while the transcatheter/endovascular
cardiac valve replacement procedure
codes are currently assigned to MS–
DRGs 216, 217, 218, 219, 220, and 221.
As illustrated in the table below, the
data demonstrate that, for MS–DRGs 250
and 251, there were a total of 194 cases
reporting procedure code 35.97, with an
average length of stay of 5.5 days and
average costs of $30,286.
MS–DRG
Number of
cases
Average
length of stay
Average
costs
MS–DRG 250 through 251—Cases with procedure code 35.97 ................................................
194
5.5
$30,286
Upon analysis of cases in MS–DRGs
216 through 221 reporting the cardiac
valve replacement procedure codes, we
found a total of 7,287 cases with an
average length of stay of 8.1 days and
MS–DRGs 216 through 221—Cases with procedure codes 35.05, 35.06, 35.07, 35.08 and
35.09 ........................................................................................................................................
MS–DRGs 216 through 221—Cases without procedure codes 35.05, 35.06, 35.07, 35.08 and
35.09 ........................................................................................................................................
The data clearly demonstrate that the
volume of cases for the transcatheter/
endovascular cardiac valve replacement
procedures is much higher in
comparison to the volume of cases for
the percutaneous mitral valve repair
(MitraClip®) procedure (7,287 compared
to 194). In addition, the average costs of
the transcatheter/endovascular cardiac
valve replacement procedures are
significantly higher than the average
costs of the percutaneous mitral valve
repair with implant ($53,802 compared
to $30,286).
Our clinical advisors did not support
grouping a percutaneous valve repair
procedure with transcatheter/
endovascular valve replacement
procedures. They do not believe that
these procedures are clinically coherent
or similar in terms of resource
consumption because the MitraClip®
technology identified by procedure code
35.97 is utilized for a percutaneous
mitral valve repair, while the other
technologies, identified by procedure
codes 35.05 through 35.09, are utilized
for transcatheter/endovascular cardiac
valve replacements. Consequently, the
data analysis and our clinical advisors
did not support the creation of a new
MS–DRG. Therefore, for FY 2015, we
did not propose to create a new MS–
DRG to group cases reporting the
percutaneous mitral valve repair
(MitraClip®) procedure with
transcatheter/endovascular cardiac
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18:25 Aug 21, 2014
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valve replacement procedures. We
invited public comments on our
proposal.
Comment: One commenter
recommended reassignment of
procedure code 35.97 to a more
appropriate MS–DRG. However, the
commenter did not offer a specific
recommendation as to which MS–DRG
would be more appropriate.
Response: We appreciate the
commenter’s recommendation.
However, as the commenter did not
provide a specific MS–DRG to which
procedure code 35.97 should be
reassigned, we were unable to evaluate
the recommendation. As we noted
earlier, and as referenced in section
II.G.1.b. of the preamble of this final
rule, we encourage input from our
stakeholders concerning the annual
IPPS updates when that input is made
available to us by December 7 of the
year prior to the next annual proposed
rule update. For example, to be
considered for any updates or changes
in FY 2016, comments and suggestions
should be submitted by December 7,
2014.
Comment: One commenter urged
CMS to reassign procedure code 35.97
from its current assignment in MS–
DRGs 250 and 251 to a more appropriate
MS–DRG that would better recognize
case complexity as a major
cardiovascular procedure with a
permanent implant. This commenter
PO 00000
average costs of $53,802, as shown in
the table below.
Number of
cases
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
49891
Frm 00039
Fmt 4701
Sfmt 4700
Average
length of stay
Average
costs
7,287
8.1
$53,802
52,601
10.1
47,177
specifically recommended the inclusion
of transcatheter mitral valve repair
(TMVR) within the newly proposed
MS–DRGs 266 and 267, and to
subsequently retitle these MS–DRGs,
‘‘Endovascular Transcatheter Valve
Therapy with Implant.’’
Response: As stated in the FY 2015
IPPS/LTCH PPS proposed rule, our
analysis did not support including cases
reporting procedure code 35.97 for
percutaneous mitral valve repair
procedures together with transcatheter/
endovascular cardiac valve replacement
procedures in a new MS–DRG. The
average costs of the transcatheter/
endovascular cardiac valve replacement
procedures are significantly higher than
the average costs of the percutaneous
mitral valve repair procedures with
implant ($53,802 compared to $30,286).
In addition, our clinical advisors did
not support grouping a percutaneous
valve repair procedure with
transcatheter/endovascular valve
replacement procedures. They do not
believe that these procedures are
clinically coherent or similar in terms of
resource consumption because the
MitraClip® technology identified by
procedure code 35.97 is utilized for a
percutaneous mitral valve repair, while
the other technologies, identified by
procedure codes 35.05 through 35.09,
are utilized for transcatheter/
endovascular cardiac valve
replacements.
E:\FR\FM\22AUR2.SGM
22AUR2
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Comment: One commenter disagreed
with the CMS analysis that transcatheter
mitral valve repair (TMVR) is
significantly different than transcatheter
aortic valve replacement (TAVR). The
commenter asserted that ‘‘unlike
alternative open repair and replacement
procedures, a heart valve prosthesis is
being manipulated/modified from a
Transcatheter approach; whether the
prosthesis serves to ‘replace’ or ‘repair’
an existing valve is irrelevant in regards
to resource consumption.’’ The
commenter urged CMS to consider all
transcatheter valve procedures equally
with respect to DRG assignment.
Response: We disagree with the
commenter that TMVR and TAVR are
not significantly different. As explained
in the FY 2015 IPPS/LTCH PPS
proposed rule, our analysis of the claims
data and the recommendation from our
clinical advisors do not support treating
TMVR and all transcatheter valve
procedures equally with respect to MS–
DRG assignment. As noted previously,
the average costs of the transcatheter/
endovascular cardiac valve replacement
procedures are significantly higher than
the average costs of the percutaneous
mitral valve repair procedures with
implant ($53,802 compared to $30,286).
After consideration of the public
comments we received, we are
finalizing our proposal to not create a
new MS–DRG to group cases reporting
the percutaneous mitral valve repair
(MitraClip®) procedure with
transcatheter/endovascular cardiac
valve replacement procedures.
Endovascular Cardiac Valve
Replacement
The similar but separate request
relating to endovascular cardiac valve
replacement procedures consisted of
creating a new MS–DRG that would
only include the various types of
cardiac valve replacements performed
by an endovascular or transcatheter
technique. In other words, this request
specifically did not include the
MitraClip® technology (ICD–9–CM
procedure code 35.97 (Percutaneous
mitral valve repair with implant)) and
only included the list of ICD–9–CM
procedure codes that identify the
various types of valve replacements
performed by an endovascular or
transcatheter technique (ICD–9–CM
Number of
cases
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRGs 216 through 221—Cases with procedure codes 35.05, 35.06, 35.07, 35.08 and
35.09 ........................................................................................................................................
MS–DRGs 216 through 221—Cases without procedure codes 35.05, 35.06, 35.07, 35.08 and
35.09 ........................................................................................................................................
As the data appear to indicate support
for the creation of a new base MS–DRG,
based on our evaluation of resource
consumption, patient characteristics,
volume, and costs between the cardiac
valve replacements performed by an
endovascular or transcatheter technique
and the open surgical technique, we
then applied our established criteria to
determine if these cases would meet the
requirements to create subgroups. We
use five criteria established in the FY
2008 IPPS final rule (72 FR 47169) to
review requests involving the creation
of a new CC or an MCC subgroup within
a base MS–DRG. As outlined in the FY
2012 IPPS proposed rule (76 FR 25819),
the original criteria were based on
average charges but were later converted
to average costs. In order to warrant
creation of a CC or an MCC subgroup
within a base MS–DRG, this subgroup
must meet all of the following five
criteria:
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18:25 Aug 21, 2014
Jkt 232001
• A reduction in variance of costs of
at least 3 percent.
• At least 5 percent of the patients in
the MS–DRG fall within the CC or the
MCC subgroup.
• At least 500 cases are in the CC or
the MCC subgroup.
• There is at least a 20-percent
difference in average costs between
subgroups.
• There is a $2,000 difference in
average costs between subgroups.
In applying the five criteria, we found
that the data support the creation of a
new MS–DRG subdivided into two
severity levels. We also consulted with
our clinical advisors. Our clinical
advisors stated that patients receiving
endovascular cardiac valve
replacements are significantly different
from those patients who undergo an
open chest cardiac valve replacement.
They noted that patients receiving
endovascular cardiac valve
replacements are not eligible for open
chest cardiac valve procedures because
PO 00000
procedure codes 35.05 through 35.09) as
described earlier in this section.
The human heart contains four major
valves—the aortic, mitral, pulmonary,
and tricuspid valves. These valves
function to keep blood flowing through
the heart. When conditions such as
stenosis or insufficiency/regurgitation
occur in one or more of these valves,
valvular heart disease may result.
Cardiac valve replacement surgery is
performed in an effort to correct these
diseased or damaged heart valves. The
endovascular or transcatheter technique
presents a viable option for high-risk
patients who are not candidates for the
traditional open surgical approach.
We reviewed the claims data from the
December 2013 update of the FY 2013
MedPAR file for cases in MS–DRGs 216
through 221. Our findings are shown in
the chart below. The data analysis
shows that cardiac valve replacements
performed by an endovascular or
transcatheter technique represent a total
of 7,287 of the cases in MS–DRGs 216
through 221, with an average length of
stay of 8.1 days and higher average costs
($53,802 compared to $47,177) in
comparison to all of the cases in MS–
DRGs 216 through 221.
Frm 00040
Fmt 4701
Sfmt 4700
Average
length of stay
Average costs
7,287
8.1
$53,802
52,601
10.1
47,177
of a variety of health constraints. This
highlights the fact that peri-operative
complications and post-operative
morbidity have significantly different
profiles for open chest procedures
compared with endovascular
interventions. This is also substantiated
by the different average lengths of stay
demonstrated by the two cohorts. Our
clinical advisors further noted that
separately grouping these endovascular
valve replacement procedures provides
greater clinical cohesion for this subset
of high-risk patients.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we proposed to create
the following MS–DRGs for
endovascular cardiac valve
replacements:
• Proposed new MS–DRG 266
(Endovascular Cardiac Valve
Replacement with MCC); and
• Proposed new MS–DRG 267
(Endovascular Cardiac Valve
Replacement without MCC).
E:\FR\FM\22AUR2.SGM
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Number of
cases
Proposed new MS–DRGs for endovascular cardiac valve replacement
Proposed New MS–DRG 266 with MCC ....................................................................................
Proposed New MS–DRG 267 without MCC ...............................................................................
We invited public comments on our
proposal to create these new MS–DRGs
for FY 2015.
Comment: Several commenters
supported the proposal to create new
MS–DRGs for endovascular cardiac
valve replacement procedures. One
commenter noted that ‘‘the
endovascular or transcatheter approach
presents a viable option for high-risk
patients who are not candidates for the
traditional open chest surgical
approach. The proposed MS–DRGs
better align the more extensive cardiac
valve procedures based on clinical
coherence and similar resource costs.’’
Another commenter stated that, by
establishing these new MS–DRGs, ‘‘CMS
will continue to be able to collect the
necessary information that will help
assure appropriate payment in the
future as these technologies evolve.’’
Other commenters supported creation of
the new MS–DRGs, noting it was
reasonable given the data and
information provided. Another
commenter applauded CMS for
proposing the two new MS–DRGs,
noting that ‘‘this decision will allow
patients, particularly women, to have
increased access to innovative therapies
that will ease their suffering from the
debilitating effects of severe aortic
stenosis.’’
Response: We appreciate the
commenters’ support.
Comment: One commenter
commended CMS for proposing new
MS–DRGs to identify endovascular/
transcatheter valve procedures.
However, the commenter suggested that
CMS reconsider the title of the proposed
MS–DRGs. The commenter noted that
the accepted nomenclature is
‘‘transcatheter’’ and not ‘‘endovascular’’.
Response: We acknowledge that many
individuals prefer the use of the term
‘‘transcatheter’’, such as occurs in the
frequently used acronym TAVR
(transcatheter aortic valve replacement).
However, we note that this
nomenclature is by no means universal.
‘‘Endovascular’’ is also used to describe
these procedures. The current ICD–9–
CM procedure code for TAVR, for
example, is 35.05 (Endovascular
replacement of aortic valve).
Recognizing that universal agreement on
medical nomenclature is still an
unachievable goal at the present time,
we have elected to retain the term
‘‘endovascular’’ to maintain consistency
with the current ICD–9–CM
terminology.
After consideration of the public
comments we received, we are
finalizing our proposal to create new
MS–DRG 266 (Endovascular Cardiac
Valve Replacement with MCC) and MS–
DRG 267 (Endovascular Cardiac Valve
Replacement without MCC).
d. Abdominal Aorta Graft
We received a request that we change
the MS–DRG assignment for procedure
code 39.71 (Endovascular implantation
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
237—All cases ............................................................................................................
237—Cases with procedure code 39.71 ....................................................................
238—All cases ............................................................................................................
238—Cases with procedure code 39.71 ....................................................................
228—All cases ............................................................................................................
229—All cases ............................................................................................................
230—All cases ............................................................................................................
As this table shows, endovascular
abdominal aorta graft implantation cases
have higher average costs and shorter
lengths of stay than all cases within
MS–DRGs 237 and 238. The average
cost for endovascular abdominal aorta
graft implantation cases in MS–DRG 237
is $9,256 greater than that for all cases
in MS–DRG 237 ($44,898 compared to
$35,642). The average cost for
endovascular abdominal aorta graft
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implantation cases in MS–DRG 238 is
$3,973 higher than that for all cases in
MS–DRG 238 ($28,484 compared to
$24,511). Cases in MS–DRG 228 have
average costs that are $7,417 higher than
the endovascular abdominal aorta graft
implantation cases in MS–DRG 237
($52,315 compared to $44,898). MS–
DRG 228 and MS–DRG 237 both contain
cases with MCCs. Cases in MS–DRG
229, which contain a CC, have average
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10.6
5.7
Average costs
$61,891
46,259
of other graft in abdominal aorta), which
is assigned to MS–DRGs 237 and 238
(Major Cardiovascular Procedures with
MCC and without MCC, respectively).
The requestor asked that we reassign
procedure code 39.71 to MS–DRGs 228,
229, and 230 (Other Cardiothoracic
Procedures with MCC, with CC, and
without CC/MCC, respectively). The
requestor stated that the average cost of
endovascular abdominal aorta graft
implantation cases is significantly
higher than other cases in MS–DRGs
237 and 238. The requestor stated that
the average cost of endovascular
abdominal aorta graft implantation cases
is closer to those in MS–DRGs 228, 229,
and 230.
The requestor stated that the goal of
endovascular repair for abdominal
aneurysm is to isolate the diseased,
aneurismal portion of the aorta and
common iliac arteries from continued
exposure to systemic blood pressure.
The procedure involves the delivery and
deployment of endovascular prostheses,
also referred to as a graft, as required to
isolate the aneurysm above and below
the extent of the disease. The requestor
stated that this significantly reduces
patient morbidity and death caused by
leakage and/or sudden rupture of an
untreated aneurysm.
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for cases of endovascular
abdominal aorta graft implantations.
The following table shows our findings.
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
3,516
3,771
Average
length of stay
49893
17,813
2,093
33,644
15,483
1,543
2,003
493
Average
length of stay
9.66
8.30
3.73
2.30
13.48
7.47
4.95
Average costs
$35,642
44,898
24,511
28,484
52,315
32,070
29,281
costs that are $3,586 higher than average
costs of the endovascular abdominal
aorta graft implantation cases in MS–
DRG 238, which do not contain an MCC
($32,070 compared to $28,484). Cases in
MS–DRG 230, which have neither an
MCC nor a CC, have average costs that
are $797 higher than the endovascular
abdominal aorta graft implantation cases
in MS–DRG 238 ($29,281 compared to
$28,484). While the average costs were
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higher for endovascular abdominal aorta
graft implantation cases compared to all
cases within MS–DRGs 237 and 238,
each MS–DRG has some cases that are
higher and some cases that are lower
than the average costs for the entire MS–
DRG. MS–DRGs were developed to
capture cases that are clinically
consistent with similar overall average
resource requirements. This results in
some cases within an MS–DRG having
costs that are higher than the overall
average and other cases having costs
that are lower than the overall average.
This may be due to specific types of
cases included within the MS–DRGs or
to the fact that some cases will simply
require additional resources on a
specific admission. However, taken as a
whole, the hospital will be paid an
appropriate amount for the group of
cases that are assigned to the MS–DRG.
We believe the endovascular abdominal
aorta graft implantation cases are
appropriately grouped with other
procedures within MS–DRGs 237 and
238.
Our clinical advisors reviewed this
issue and determined that the
endovascular abdominal aorta graft
implantation cases are appropriately
classified within MS–DRGs 237 and 238
because they are clinically similar to the
other procedures in MS–DRGs 237 and
238, which include other procedures on
the aorta. While the endovascular
abdominal aorta graft implantation cases
have higher average costs than the
average for all cases within MS–DRGs
237 and 238, our clinical advisors do
not believe this justifies moving the
cases to MS–DRGs 228, 229 and 230,
which involve a different set of
cardiothoracic surgeries.
As we stated in the FY 2015 IPPS/
LTCH PPS proposed rule, based on the
results of examination of the claims data
and the recommendations of our clinical
advisors, we did not believe that
proposing to reclassify endovascular
abdominal aorta graft implantation cases
from MS–DRGs 237 and 238 was
warranted. We proposed to maintain the
current MS–DRG assignments for
endovascular abdominal aorta graft
implantation cases. We invited public
comments on our proposal.
Comment: A number of commenters
supported CMS’ proposal to maintain
the current MS–DRG assignments for
endovascular abdominal aorta graft
implantation cases. The commenters
stated that the proposal was reasonable
given the data and information
provided. One commenter disagreed
with the proposal and stated that
endovascular abdominal aorta graft
implantation cases should be reassigned
to MS–DRGs 228, 229, and 230. The
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commenter stated that neither MS–
DRGs 237 and 238 nor MS–DRGs 228,
229, and 230 have absolute clinical
coherence and that there are a mix of
procedures in both set of MS–DRGs. The
commenter also expressed concern that
CMS was prioritizing clinical coherence
over total resource cost in deciding not
to approve this request to assign
procedure code 39.71 to MS–DRGs 228,
229, and 230. The commenter stated
that if CMS is concerned about the
perception regarding clinical coherence
of the MS–DRG assignment for
procedures represented by code 39.71,
CMS should change the titles for these
five MS–DRGs to accommodate the
evolution of these procedures while also
allowing for new indications of various
types of grafts in the aorta and its
branches. The commenter did not
suggest specific new MS–DRG titles for
MS–DRGs 228, 229, 230, 237, and 238.
Response: We appreciate the
commenters’ support for our proposal to
maintain the current assignments for
endovascular abdominal aorta graft
implantation cases in MS–DRGs 237
and 238. We are not accepting the
commenter’s suggestion that we modify
the titles of MS–DRGs 228, 229, 230,
237, and 238 in order to justify the
reassignment of abdominal aorta graft
procedures to MS–DRGs 228, 229, and
230. Our clinical advisors reviewed this
issue and disagree with the commenters’
statement that CMS puts too high a
priority on the clinical coherence of the
MS–DRGs. MS–DRGs were developed
based on clinical similarities of groups
of medical and surgical patients. We
also consider average costs of these
patients in evaluating the need to make
modifications to the MS–DRGs.
However, for the reasons described
previously, we do not believe that the
higher average costs for the
endovascular abdominal aorta graft
implantation cases as compared to the
average for all cases within MS–DRGs
237 and 238 warrant reassigning these
cases to MS–DRGs 228, 229, and 230.
We will continue to evaluate the need
to make updates to the MS–DRGs to
better capture procedures of the aorta
and its branches. We welcome any
specific recommendations for
refinements to better capture changes in
medical treatment. Any requests for
MS–DRG updates must be received by
December 7, 2014, in order to be
considered for the FY 2016 proposed
rule.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current assignments for endovascular
abdominal aorta graft implantation cases
in MS–DRGs 237 and 238.
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5. MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective
Tissue)
a. Shoulder Replacement Procedures
We received a request to change the
MS–DRG assignment for shoulder
replacement procedures. This request
involved the following two procedure
codes:
• 81.88 (Reverse total shoulder
replacement); and
• 81.97 (Revision of joint replacement
of upper extremity).
With respect to procedure code 81.88,
the requestor asked that reverse total
shoulder replacements be reassigned
from MS–DRGs 483 and 484 (Major
Joint/Limb Reattachment Procedure of
Upper Extremities with CC/MCC and
without CC/MCC, respectively) to MS–
DRG 483 only. The reassignment of
procedure code 81.88 from MS–DRGs
483 and 484 was discussed previously
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50534 through 50536). The
result of reassigning reverse shoulder
replacements from MS–DRGs 483 and
484 to MS–DRG 483 only would be that
this procedure would be assigned to
MS–DRG 483 whether or not the case
had a CC or an MCC. The requestor
stated that reverse shoulder replacement
procedures are more clinically cohesive
with higher severity MS–DRGs due to
the complexity and resource
consumption of these procedures. We
refer readers to the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50534 through
50536) for a discussion of the reverse
total shoulder replacement.
The requestor also recommended that
we reassign what it described as another
shoulder procedure involving procedure
code 81.97, which is assigned to MS–
DRGs 515, 516, and 517 (Other
Musculoskeletal System and Connective
Tissue O.R. Procedures with MCC, with
CC, and without CC/MCC, respectively),
to MS–DRG 483. We point out that MS–
DRG 483 contains upper joint
replacements, including shoulder
replacements. MS–DRG 483 does not
contain any joint revision procedures.
Similar to the request for reassignment
of procedure code 81.88, this would
mean that procedure code 81.97 would
be assigned to MS–DRG 483 whether or
not the case had a CC or an MCC. If CMS
did not support this recommendation
for moving procedure code 81.97 to
MS–DRG 483, the requestor
recommended an alternative
reassignment to MS–DRG 515 (Other
Musculoskeletal System and Connective
Tissue O.R. procedures with MCC) even
if the case had no MCC.
We point out that, while the requestor
refers to procedure code 81.97 as a
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shoulder procedure, the code
description actually includes revisions
of joint replacements of a variety of
upper extremity joints, including those
in the elbow, hand, shoulder, and wrist.
As stated earlier, reverse shoulder
replacements are assigned to MS–DRGs
483 and 484. Revisions of upper joint
replacements are assigned to MS–DRGs
515, 516, and 517. We examined claims
MS–DRG
MS–DRG
MS–DRG
MS–DRG
Proposed
483—All cases ............................................................................................................
483—Cases with procedure code 81.88 ....................................................................
484—All cases ............................................................................................................
484—Cases with procedure code 81.88 ....................................................................
Revised MS–DRG 483 with all severity levels included .............................................
As the above table shows, MS–DRG
484 reverse shoulder replacement cases
have similar average costs to those in
MS–DRG 483 ($18,719 for reverse
shoulder replacements in MS–DRG 484
compared to $18,807 for all cases in
MS–DRG 483). However, in reviewing
the data, we observed that the claims
data no longer support two severity
levels for MS–DRGs 483 and 484.
We use the five criteria established in
FY 2008 (72 FR 47169) to review
requests involving the creation of a new
CC or MCC subgroup within a base MS–
DRG. As outlined in the FY 2012 IPPS/
LTCH PPS proposed rule (76 FR 25819),
the original criteria were based on
average charges but were later converted
to average costs. In order to warrant
creation of a CC or an MCC subgroup
within a base MS–DRG, the subgroup
must meet all of the following five
criteria:
• A reduction in variance of costs of
at least 3 percent.
• At least 5 percent of the patients in
the MS–DRG fall within the CC or MCC
subgroup.
• At least 500 cases are in the CC or
MCC subgroup.
• There is at least a 20-percent
difference in average costs between
subgroups.
• There is a $2,000 difference in
average costs between subgroups.
We found through our examination of
the claims data from the December 2013
update of the FY 2013 MedPAR file that
the two severity subgroups of MS–DRG
483 and 484 no longer meet the fourth
criterion of at least a 20-percent
difference in average costs between
subgroups. We found that there is a
$2,453 difference in average costs
between MS–DRG 483 and MS–DRG
484. The difference in average costs
would need to be $3,761 to meet the
fourth criterion. Therefore, our claims
data support collapsing MS–DRGs 483
and 484 into a single MS–DRG. Our
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515—All cases ............................................................................................................
515—Cases with procedure code 81.97 ....................................................................
516—All cases ............................................................................................................
516—Cases with procedure code 81.97 ....................................................................
517—All cases ............................................................................................................
517—Cases with procedure code 81.97 ....................................................................
483—All cases ............................................................................................................
Cases identified by code 81.97 in MS–
DRGs 515, 516, and 517 have lower
average costs and shorter lengths of stay
than all cases in MS–DRG 515. The
average costs of cases in MS–DRG 515
are $3,977 higher than the average costs
of the cases with procedure code 81.97
in MS–DRG 516 ($22,191 compared to
$18,214). The average costs of cases in
MS–DRG 515 are $6,271 higher than
cases with procedure code 81.97 in MS–
DRG 517 ($22,191 compared to
$15,920).
The table above shows that the
average costs of cases in MS–DRG 483
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are $3,278 lower than the average costs
of cases with procedure code 81.97 in
MS–DRG 515 ($18,807 compared to
$22,085). The average costs of cases in
MS–DRG 483 are $593 higher than the
average costs of cases with procedure
code 81.97 in MS–DRG 516 ($18,807
compared to $18,214). The average costs
of cases in MS–DRG 483 are $2,887
higher than the average costs of cases
with procedure code 81.97 in MS–DRG
517 ($18,807 compared to $15,920).
The claims data did not support
moving all procedure code 81.97 cases
to MS–DRG 515 or MS–DRG 483,
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14,220
7,086
23,183
9,633
37,403
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Average
length of stay
3.20
3.19
1.95
2.03
2.4
Average costs
$18,807
20,699
16,354
18,719
17,287
clinical advisors reviewed this issue and
agreed that there is no longer enough
difference between the two severity
levels to justify separate severity
subgroups for MS–DRGs 483 and 484,
which include a variety of upper joint
replacements. Therefore, our clinical
advisors supported our recommendation
to collapse MS–DRGs 483 and 484 into
a single MS–DRG.
In the FY 2015 IPPS/LTCH PPS
proposed rule, based on the results of
examination of the claims data and the
advice of our clinical advisors, we
proposed to collapse MS–DRGs 483 and
484 into a single MS–DRG by deleting
MS–DRG 484 and revising the title of
MS–DRG 483 to read ‘‘Major Joint/Limb
Reattachment Procedure of Upper
Extremities’’.
The following table shows our
findings of cases of revisions of upper
joint replacement from the December
2013 update of the FY 2013 MedPAR
file.
Number of
cases
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
data from the December 2013 update of
the FY 2013 MedPAR file for MS–DRGs
483 and 484. The following table shows
our findings of cases of reverse shoulder
replacement.
Number of
cases
MS–DRG
49895
3,407
88
8,502
799
5,794
1,256
14,220
Average
length of stay
9.22
5.66
5.34
2.84
3.28
2.07
3.20
Average costs
$22,191
22,085
14,356
18,214
12,172
15,920
18,807
whether or not there is a CC or an MCC.
We also pointed out once again that
procedure code 81.97 is a nonspecific
code that captures revisions to not only
the shoulder, but also a variety of upper
extremity joints including those in the
elbow, hand, shoulder, and wrist.
Therefore, we have no way of
determining how many cases reporting
procedure code 81.97 were actually
shoulder procedures as opposed to
procedures on the elbow, hand, or wrist.
Our clinical advisors reviewed this
issue and determined that the revisions
of upper joint replacement procedures
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are appropriately classified within MS–
DRGs 515, 516, and 517, which include
other joint revision procedures. They
did not support moving revisions of
upper joint replacement procedures to
MS–DRG 515, whether or not there is an
MCC. They supported the current
classification, which bases the severity
level on the presence of a CC or an
MCC. They also did not support moving
revisions of upper joint replacement
procedures to MS–DRG 483, whether or
not there is a CC or an MCC, because
these revisions are not joint
replacements. Based on the results of
our examination and the advice of our
clinical advisors, in the FY 2015 IPPS/
LTCH PPS proposed rule, we did not
propose moving revisions of upper joint
replacement procedures to MS–DRG 515
or MS–DRG 483, whether or not there is
a CC or an MCC.
In summation, we proposed to
collapse MS–DRGs 483 and 484 into a
single MS–DRG by deleting MS–DRG
484 and revising the title of MS–DRG
483 to read ‘‘Major Joint/Limb
Reattachment Procedure of Upper
Extremities’’. We proposed to maintain
the current MS–DRG assignments for
revisions of upper joint replacement
procedures in MS DRGs 515, 516, and
517. We invited public comments on
our proposals.
Comment: A number of commenters
supported the proposal to collapse MS–
DRGs 483 and 484 into a single MS–
DRG by deleting MS–DRG 484 and
revising the title of MS–DRG 483 to read
‘‘Major Joint/Limb Reattachment
Procedure of Upper Extremities.’’ The
commenters stated that the proposal
was reasonable given the data and
information provided.
One commenter stated that collapsing
the two MS–DRGs is supported by
claims data indicating little cost
difference between cases in the current
two severity levels. Several commenters
stated that the new, single MS–DRG
represented clinically cohesive
procedures with similar complexity and
resource consumption.
Response: We appreciate the
commenters’ support for our proposal to
collapse MS–DRGs 483 and 484 into a
single MS–DRG by deleting MS–DRG
484 and revising the title of MS–DRG
483 to read ‘‘Major Joint/Limb
Reattachment Procedure of Upper
Extremities’’.
After consideration of the public
comments we received, we are adopting
as final, without modification, our
proposal to collapse MS–DRGs 483 and
484 into a single MS–DRG by deleting
MS–DRG 484 and revising the title of
MS–DRG 483 to read ‘‘Major Joint/Limb
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Reattachment Procedure of Upper
Extremities’’.
Comment: A number of commenters
supported the proposal to maintain the
MS–DRG assignment for code 81.97 in
MS–DRGs 515, 516, and 517. The
commenters stated that the
recommendation was reasonable give
the data and information provided. One
commenter disagreed with the proposal
and stated that code 81.97 would be
more accurately classified in MS–DRG
483 (Major Joint/Limb Reattachment of
Upper Extremities with CC/MCC)
because MS–DRG 483 includes upper
extremity procedures.
Response: We appreciate the
commenters’ support for our proposal to
maintain the current MS–DRG
assignment for code 81.97 in MS–DRGs
515, 516, and 517. We disagree with the
commenter that code 81.97 is similar to
other procedures currently assigned to
MS–DRG 483. MS–DRG 483 contains
replacements, not revisions, of the wrist,
shoulder, and elbow as well as
reattachments of the forearm. Revision
of the joint could include a variety of
procedures to joints of the upper
extremity. Procedure code 81.97 is a
nonspecific code that captures revisions
to not only the shoulder, but also a
variety of upper extremity joints
including those in the elbow, hand,
shoulder, and wrist. Therefore, we have
no way of determining how many cases
reporting procedure code 81.97 were
actually shoulder procedures as
opposed to procedures on the elbow,
hand, or wrist.
Our clinical advisors reviewed this
issue and continue to advise that code
81.97 not be reassigned to MS–DRG 483
because the procedure is neither a
replacement nor a reattachment
procedure as are the current procedures
within MS–DRG 483. In addition, the
code captures a variety of joint revisions
of the upper extremities and is not
clinically similar to the replacements
and reattachment procedures in MS–
DRG 483. Our clinical advisors
recommend that code 81.97 continue to
be assigned to MS–DRG 515, 516, and
517.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current assignment of code 81.97 in
MS–DRG 515, 516, and 517.
b. Ankle Replacement Procedures
We received a request to change the
MS–DRG assignment for two ankle
replacement procedures. The request
involved the following two procedure
codes:
• 81.56 (Total ankle replacement);
and
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• 81.59 (Revision of joint replacement
of lower extremity, not elsewhere
classified).
The reassignment of procedure code
81.56 from MS–DRGs 469 and 470
(Major Joint Replacement or
Reattachment of Lower Extremity with
MCC and without MCC, respectively) to
a new MS–DRG or, alternatively, to MS–
DRG 469 was discussed in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50536
through 50537). We refer readers to this
final rule for a discussion of ankle
replacement procedures. The requestor
asked that we again evaluate reassigning
total ankle replacement procedures. The
requestor also asked that we reassign
what it referred to as another ankle
replacement revision procedure
captured by procedure code 81.59
(Revision of joint replacement of lower
extremity, not elsewhere classified),
which is assigned to MS–DRGs 515,
516, and 517 (Other Musculoskeletal
System and Connective Tissue O.R.
Procedures with MCC, with CC, and
without CC/MCC, respectively).
The requestor asked that we reassign
procedure code 81.56 from MS–DRGs
469 and 470 to MS–DRG 483 (Major
Joint/Limb Reattachment Procedure of
Upper Extremities with CC/MCC) and
rename the MS–DRG to better capture
the additional lower extremity cases.
The requestor stated that the result
would be assignment of lower joint
procedures to an MS–DRG that
currently captures only upper extremity
cases and assignment to the highest
severity level even if the case did not
have a CC or an MCC. If CMS did not
find this acceptable, the requestor made
an alternative recommendation of
assigning procedure code 81.56 to MS–
DRG 469 and renaming the MS–DRG to
better capture the additional cases.
Cases would be assigned to the highest
severity level whether or not the case
had an MCC.
The requestor also recommended that
procedure code 81.59, which is assigned
to MS–DRGs 515, 516, and 517, be
reassigned to MS–DRG 483 and that the
MS–DRG be given a new title to better
capture the additional lower extremity
cases. The requestor stated that the
result would be assignment of lower
joint procedures to an MS–DRG that
currently captures only upper extremity
cases and assignment to the highest
severity level even if the patient did not
have a CC or an MCC. If CMS did not
support this recommendation, the
requestor suggested two additional
recommendations. One involves moving
procedure code 81.59 to MS–DRG 515
even when the case had no MCC. The
other recommendation was to move
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procedure code 81.59 to MS–DRG 469,
whether or not the case had a MCC.
We point out that while the requestor
refers to procedure code 81.59 as a
revision of an ankle replacement, the
code actually includes revisions of joint
replacements of a variety of lower
extremity joints including the ankle,
foot, and toe.
The following table shows the number
of total ankle replacement cases, average
length of stay, and average costs for
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MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
469—All cases ............................................................................................................
469—Cases with procedure code 81.56 ....................................................................
470—All cases ............................................................................................................
470—Cases with procedure code 81.56 ....................................................................
483 ..............................................................................................................................
In summary, the requestor asked us to
reassign procedure code 81.56 in MS–
DRGs 469 and 470 to one of the
following two options: MS–DRG 483
(highest severity level); or MS–DRG 469
(highest severity level).
As the table for total ankle
replacement above shows, the average
cost of cases with procedure code 81.56
in MS–DRG 469 is $27,419 and $19,332
in MS–DRG 470. This compares with
the average costs of all cases in MS–
DRGs 469 and 470 of $22,548 and
$15,119, respectively. While the average
cost of cases reporting procedure code
81.56 in MS–DRG 469 is $4,871 higher
than the average cost for all cases in
MS–DRG 469, we point out that there
were only 32 cases. The relatively small
number of cases may have been
impacted by other factors such as
complications or comorbidities. Several
expensive cases could impact the
average costs for a very small number of
patients. The average cost of cases
reporting procedure code 81.56 in MS–
DRG 470 is $4,213 higher than the
average cost for all cases in MS–DRG
470. While the average costs are higher,
within all MS–DRGs, some cases have
higher and some cases have lower
average costs. MS–DRGs are groups of
clinically similar cases that have similar
overall costs. Within a group of cases,
one would expect that some cases have
costs that are higher than the overall
average and some cases have costs that
are lower than the overall average.
MS–DRG 469 ankle replacement cases
have average costs that are $8,612
higher than the average costs of all cases
in MS–DRG 483 ($27,419 compared to
$18,807). Moving these cases (procedure
code 81.56) to MS–DRG 483 would
result in payment below average costs
compared to the current MS–DRG
assignment in MS–DRG 469.
Furthermore, as noted earlier, moving
total ankle replacement cases to MS–
DRG 483 would result in a lower
extremity procedure being added to
what is now an upper extremity MS–
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DRG. This would significantly disrupt
the clinical cohesion of MS–DRG 483.
The average costs of all cases in MS–
DRG 469 are $3,216 higher than the
average costs of those cases with
procedure code 81.56 in MS–DRG 470
($22,548 compared to $19,332). The
data did not support moving procedure
code 81.56 cases to MS–DRG 483 or 469
because it would not result in payments
that more accurately reflect their current
average costs. Our clinical advisors
reviewed this issue and determined that
the ankle replacement cases are
appropriately classified within MS–
DRGs 469 and 470 with the severity
level leading to the MS–DRG
assignment. They did not support
moving these cases to MS–DRG 483
because ankle replacements, which are
lower joint procedures, are not
clinically similar to upper joint
replacement procedures. Based on the
results of examination of the claims
data, the issue of clinical cohesion, and
the recommendations from our clinical
advisors, in the FY 2015 IPPS/LTCH
PPS proposed rule, we did not propose
to move total ankle procedures to MS–
DRG 483 or MS–DRG 469 when there is
no MCC. We proposed to maintain the
current MS–DRG assignments for ankle
replacement cases. We invited public
comments on our proposal.
Comment: A number of commenters
supported the proposal to maintain the
current MS–DRG assignments for ankle
replacement cases. The commenters
stated the proposal was reasonable
given the data and information
provided. Several other commenters
urged CMS to reconsider its decision
and to create a new MS–DRG for total
ankle replacements for FY 2015 that is
more appropriate both in terms of
resource utilization and clinical
cohesiveness, and reassign ICD–9–CM
procedure code 81.56 to the new MS–
DRG. The commenters stated that,
despite evidence that the current
Medicare assignment results in
payments to hospitals below the average
PO 00000
procedure code 81.56 in MS–DRGs 469
and 470 found in claims data from the
December 2013 update of the FY 2013
MedPAR file compared to all cases
within MS–DRGs 469, 470, and 483.
Number of
cases
MS–DRG
Frm 00045
Fmt 4701
Sfmt 4700
49897
25,916
32
406,344
1,379
14,220
Average
length of stay
7.22
6.19
3.25
2.13
3.20
Average costs
$22,548
27,419
15,119
19,332
18,807
costs for total ankle replacement
procedures, and the greater clinical
complexity of total ankle replacements
relative to other procedures that map to
these same MS–DRGs, CMS proposed to
maintain the current MS–DRG
assignment for total ankle replacement
procedures. The commenters stated that
total ankle replacement is a complex
surgical procedure involving the
replacement of the damaged parts of
three bones (talus, tibia, and fibula) that
make up the articulations of the ankle,
as compared to two bones in most other
total joint replacement procedures,
including hips and knees. The
commenters stated that the resources
involved with total ankle replacement
procedures are not comparable to other
procedures in the major joint MS–DRG
and that failure to establish a new MS–
DRG that more appropriately reflects the
higher cost will likely comprise patient
access to this procedure.
One commenter acknowledged that
there are a relatively small volume of
total ankle replacement procedures
compared to total hip and total knee
replacements. However, the commenter
suggested that this imbalance in case
volume of total ankle replacements
compared to total hip and knee
replacements dampens the influence of
actual hospital cost data for the total
ankle replacements. The commenter
recommended that all total ankle
replacements be assigned to MS–DRG
469 even if the case does not have a
MCC. This commenter acknowledged
that the average cost of cases with
procedure code 81.56 in MS–DRG 470 is
$19,332 compared to average cost of
$22,548 for all cases in MS–DRG of 469.
However, the commenter suggested that
moving all total ankle replacements to
MS–DRG 469 was more appropriate
than having cases assigned to MS–DRGs
469 and 470 based on the presence of
an MCC. The commenter also
acknowledged CMS’ statement that
under the MS–DRG system in general,
some cases will have average costs
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
higher than the overall average costs for
the MS–DRG, while other cases will
have lower average costs. However, the
commenter stated that this was an
insufficient rationale to apply to total
ankle replacements. The commenter
disagreed with the determination of the
CMS clinical advisors that ankle
replacement cases are appropriately
classified within MS–DRGs 469 and
470, based on severity level. The
commenter stated that total ankle
replacement is a complicated surgery
that involves the replacement of the
damaged parts of the three bones that
make up the ankle joint, as compared to
two bones in hip and knee replacement
procedures. The commenter stated that
this surgery required a specialized skill
set, operative technique, and level of
operating room resource utilization that
is vastly dissimilar from that of total hip
and total knee replacements. The
commenter recommended that CMS
create a new MS–DRG for total ankle
replacements or move all total ankle
replacements to MS–DRG 469.
Response: We appreciate the
commenters’ support for our proposal to
maintain the current MS–DRG
assignment for total ankle replacements.
We are not accepting the commenter’s
recommendation to create a new MS–
DRG for total ankle replacements or to
move all cases to MS–DRG 469. We
point out that there were only 1,411
total ankle replacements with 32 cases
in MS–DRG 469 and 1,379 cases in MS–
DRG 470. Creating a new MS–DRG for
this single procedure would not be
appropriate. MS–DRGs were created to
provide payment to hospitals for groups
of clinically similar conditions and
procedures. MS–DRGs were not created
to provide payment for each single
procedure. MS–DRGs 469 and 470
contain replacement and reattachment
procedures of the lower extremity,
including those of the hip, knee, ankle,
foot, lower leg, and thigh. Within each
MS–DRG, there will be cases with costs
higher than the average costs and others
with costs below the average costs.
Basing a new MS–DRG on a small
number of cases could lead to
distortions in the relative payment
weights for the MS DRG because several
expensive cases could impact the
overall relative payment weight. Having
larger clinically cohesive groups within
an MS–DRG provides greater stability
for annual updates to the relative
payment weights. We also point out that
combining total ankle replacements into
a single new MS–DRG would result in
the same payment for cases with an
MCC as those without an MCC. As
indicated above, total ankle
replacements with MCCs have average
costs of $27,419 and those without
MCCs have average costs of $19,332.
Combining all total ankle replacements
into a single, newly created MS–DRG
would reduce the payment accuracy of
cases with different severity levels.
We also disagree with the
recommendation to move all total ankle
replacement to MS–DRG 469. As stated
earlier, total ankle replacements with
MCCs have average costs of $27,419 and
those without MCCs have average costs
of $19,332. The average cost of all cases
in MS–DRG 469 (which includes cases
with MCCs) is $22,548. We point out
again that, under the MS–DRGs, some
cases will have average costs higher
than the overall average costs for the
MS–DRG while other cases will have
lower average costs. The total ankle
replacements are appropriately assigned
to MS–DRGs 469 and 470 based on the
presence of a MCC.
Our clinical advisors reviewed the
public comments and clinical data and
continue to support maintaining the
current MS–DRG assignment for total
ankle replacements. They advised that
total ankle replacements are
appropriately assigned to MS–DRGs 469
and 470 along with other major joint
replacement and reattachment
procedures of the lower extremities
because they are all replacement and
reattachment procedures of the lower
extremities. Our clinical advisors noted
that, whereas they consider average cost
as one element of the decision, they
Number of
cases
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
MS–DRG
515—All cases ............................................................................................................
515—Cases with procedure code 81.59 ....................................................................
516—All cases ............................................................................................................
516—Cases with procedure code 81.59 ....................................................................
517—All cases ............................................................................................................
517—Cases with procedure code 81.59 ....................................................................
483—All cases ............................................................................................................
469—All cases ............................................................................................................
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PO 00000
expect the average cost of any subset to
be different than the average cost of the
MS–DRG, as that is inherent in a system
of averages. They note that average
length of stay, another metric of
resource usage, is lower than the MS–
DRG average for this subgroup. Even
more importantly, they further noted
that leaving these procedures in a MS–
DRG with other lower extremity
procedures promotes greater clinical
consistency than could be achieved by
moving the ankle procedures into an
upper extremity DRG. They noted that,
for the inpatient prospective system,
clinical consistency includes not just
technical considerations of the surgery
or device costs but also consideration of
pre- and post-operative patient care
needs, medications, and care for
common comorbid conditions, among
other factors. Finally, our clinical
advisors also pointed out that creating a
new MS–DRG for total ankle
replacements would result in combining
cases with average length of stay of 6.19
days for cases with MCC and 2.13 days
for cases without MCC. The cases are
more appropriately assigned to MS–
DRGs 469 and 470 with the two severity
levels. Our clinical advisors do not
support creating a new MS–DRG which
would contain only total ankle
replacements.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current MS–DRG assignment for total
ankle replacements in MS–DRGs 469
and 470.
The following table shows our
findings from examination of the claims
data from the December 2013 update of
the FY 2013 MedPAR file for the
number of cases reporting procedure
code 81.59 in MS–DRGs 515, 516, and
517 (revision of joint replacement of
lower extremity) and their average
length of stay and average costs as
compared to all cases within MS–DRGs
515, 516, and 517 (where procedure
code 81.59 is currently assigned), as
well as data for MS–DRGs 469 and 483.
Frm 00046
Fmt 4701
Sfmt 4700
3,407
5
8,502
16
5,794
40
25,916
14,220
E:\FR\FM\22AUR2.SGM
22AUR2
Average
length of stay
9.22
6.00
5.34
3.00
3.28
1.80
722
3.20
Average costs
$22,191
16,988
14,356
16,998
12,172
13,704
22,548
18,807
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
The requestor asked that all cases
with procedure code 81.59 in MS–DRGs
515, 516, and 517 be assigned to one of
the following three choices:
• MS–DRG 483 (highest severity
level);
• MS–DRG 515 (highest severity
level) whether or not there is an MCC;
or
• MS–DRG 469 (highest severity
level).
Our review of data from the above
revision of joint replacement of lower
extremity table shows that cases in MS–
DRG 483 have average costs that are
$5,560 higher than the average costs of
cases with procedure code 81.59 in MS–
DRG 515; $5,550 greater than those in
MS–DRG 516; and $8,844 greater than
those in MS–DRG 517 ($22,548
compared to $16,988; $22,548 compared
to $16,998, and $22,548 compared to
$13,704, respectively). As mentioned
earlier, MS–DRG 483 is currently
composed of only upper extremity
procedures. Moving lower extremity
procedures into this MS–DRG would
disrupt the clinical cohesiveness of MS–
DRG 483.
The average costs of all cases in MS–
DRG 469 are $18,807, compared to
average costs of $16,988, $16,998, and
$13,703 for procedure code 81.59 cases
in MS–DRGs 515, 516, and 517,
respectively. The data did not support
moving all procedure code 81.59 cases
to MS–DRG 469 even when there is no
MCC. We also point out that moving
cases with procedure code 81.59 to MS–
DRG 469 would disrupt the clinical
cohesiveness of MS–DRG 469, which
currently captures major joint
replacement or reattachment procedures
of the lower extremity. Procedure code
81.59 includes revisions of joint
replacements of a variety of lower
extremity joints including the ankle,
foot, and toe. This nonspecific code
would not be considered a major joint
procedure. The code captures revisions
of an ankle replacement as well as a
more minor revision of the toe.
Our clinical advisors reviewed this
issue and determined that the revision
of joint replacement of lower extremity
cases are appropriately classified within
MS–DRGs 515, 516, and 517 where
revisions of other joint replacements are
captured. They supported the current
severity levels in MS–DRGs 515, 516,
and 517, which allow the presence of a
CC or an MCC to determine the severity
level assignment. They did not support
moving these cases to MS–DRG 483,
which is applied to upper extremity
procedures because these procedures
are not clinically consistent with
revisions of lower joint procedures.
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They also did not support moving these
cases to MS–DRG 469 when there is no
MCC because these procedures are not
joint replacement procedures. Based on
the findings of our examination of the
claims data, the issue of clinical
cohesion, and the recommendations
from our clinical advisors, in the FY
2015 IPPS/LTCH PPS proposed rule, we
did not propose to move the revision of
joint replacement of lower extremity
cases to MS–DRGs 483 or 469, whether
or not there is an MCC. We proposed to
maintain the current MS–DRG
assignments for revision of joint
replacement of lower extremity cases.
In summary, we proposed to maintain
the current MS–DRG assignment for
total ankle replacements in MS–DRGs
469 and 470 and revision of joint
replacement of lower extremity
procedures in MS–DRGs 515, 516, and
517. We invited public comments on
our proposals.
Comment: A number of commenters
supported the proposal to maintain the
current MS–DRG assignment for code
81.59. One commenter agreed with this
proposal given the lack of specificity for
this code which does not identify the
specific joint being revised. The
commenter recommended that CMS
create the following new ICD–9–CM
procedure code: 81.58 (Revision of
ankle replacement, not otherwise
specified). Once this code is created, the
commenter recommended that this new
code be assigned to MS–DRGs 466, 467,
and 468 and that these MS–DRGs be
renamed Revision of Hip, Knee or Ankle
(with MCC, with CC, and without CC/
MCC, respectively).
Response: We appreciate the
commenters’ support for our proposal
not to change the MS–DRG assignment
for code 81.59. We agree with the
commenter who pointed out that code
81.59 does not identify the joint being
revised and, therefore, code 81.59
should continue to be assigned to MS–
DRGs 515, 516, and 517. ICD–10–PCS
codes provide greater detail than do
ICD–9–CM codes and provide the ability
to identify the joint being revised. As
mentioned earlier, the Secretary
announced plans to release an interim
final rule in the near future that will
include a new compliance date to
require the use of ICD–10 beginning
October 1, 2015. The interim final rule
will also require HIPAA covered entities
to continue to use ICD–9–CM through
September 30, 2015. Given this
timeline, it will not be possible to create
a new ICD–9–CM procedure code for the
next annual update on October 1, 2015
because ICD–10 will be implemented on
PO 00000
Frm 00047
Fmt 4701
Sfmt 4700
49899
that date. However, ICD–10–PCS will
provide the necessary level of detail.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain the
current MS–DRG assignment for total
ankle replacements in MS–DRGs 469
and 470 and revision of joint
replacement of lower extremity
procedures in MS–DRGs 515, 516, and
517.
c. Back and Neck Procedures
We received a request to reassign
cases identified with a complication or
comorbidity (CC) in MS–DRG 490 (Back
& Neck Procedures Except Spinal
Fusion with CC/MCC or Disc Device/
Neurostimulator) to MS–DRG 491 (Back
& Neck Procedures Except Spinal
Fusion without CC/MCC or Disc Device/
Neurostimulator). The requester
suggested that we create a new MS–DRG
that would be subdivided based solely
on the ‘‘with MCC or Disc Device/
Neurostimulator’’ and the ‘‘without
MCC’’ (and no device) criteria.
For the FY 2008 rulemaking cycle, we
performed a comprehensive analysis of
all the spinal DRGs as we proposed (72
FR 24731 through 24735) and finalized
(72 FR 47226 through 47232) adoption
of the MS–DRGs. With the revised
spinal MS–DRGs, we were better able to
identify a patient’s level of severity,
complexity of service, and utilization of
resources. This was primarily attributed
to the new structure for the severity
level designations of ‘‘with MCC,’’
‘‘with CC,’’ and ‘‘non-CC’’ (or without
CC/MCC). Another contributing factor
was that we incorporated specific
procedures and technologies into the
GROUPER logic for some of those spinal
MS–DRGs. Specifically, as noted above,
in the title of MS–DRG 490, we
accounted for disc devices and
neurostimulators because the data
demonstrated that the procedures
utilizing those technologies were more
complex and required greater utilization
of resources.
According to the requester, since that
time, concerns have been expressed in
the provider community regarding
inadequate payment for MS–DRG 490
when these technologies are utilized.
An analysis conducted by the requester
alleged that the subset of patients
identified in the ‘‘with MCC or disc
device/neurostimulator’’ group are
different with regard to resource use
from the ‘‘without CC/MCC’’ (and no
device) patient group.
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for MS–DRGs 490 and 491.
The table below shows our findings.
E:\FR\FM\22AUR2.SGM
22AUR2
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Number of
cases
MS–DRG
MS–DRG 490—All cases ............................................................................................................
MS–DRG 491—All cases ............................................................................................................
As shown in the table above, there
were a total of 16,930 cases in MS–DRG
490 with an average length of stay of
4.53 days and average costs of $13,727.
For MS–DRG 491, there were a total of
25,778 cases with an average length of
stay of 2.20 days and average costs of
$8,151.
We then analyzed the data for MS–
DRGs 490 and 491 by subdividing cases
based on the ‘‘with MCC or Disc Device/
Neurostimulator’’ and the ‘‘without
MCC’’ (and no device) criteria. We
found a total of 3,379 cases with an
average length of stay of 6.6 days and
average costs of $21,493 in the ‘‘with
MCC or Disc Device/Neurostimulator’’
group and a total of 39,329 cases with
an average length of stay of 2.8 days and
average costs of $9,405 in the ‘‘without
MCC’’ and no device group. Due to the
wide range in the volume of cases,
Average
length of stay
16,930
25,778
4.53
2.20
Average
costs
$13,727
8,151
length of stay, and average costs
between these two subgroups, we
concluded that further analysis of the
data using a separate ‘‘with CC’’ (and no
device) subset of patients was
warranted.
Therefore, we evaluated the data
using a three-way severity level split
that consisted of the three subgroups
shown in the table below.
ADDITIONAL ANALYSIS FOR BACK & NECK PROCEDURES EXCEPT SPINAL FUSION: DISC DEVICE/NEUROSTIMULATOR
Severity level split
Number of cases
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
—With MCC or disc device/neurostimulator ...................................................................
—With CC ........................................................................................................................
—Without CC/MCC ..........................................................................................................
For the first subgroup, ‘‘with MCC or
Disc Device/Neurostimulator,’’ we
found a total of 3,379 cases with an
average length of stay of 6.6 days and
average costs of $21,493. In the second
subgroup, ‘‘with CC’’ (no device), we
found a total of 13,551 cases with an
average length of stay of 3.9 days and
average costs of $11,791. In the third
subgroup, ‘‘without CC/MCC’’ (no
device), we found a total of 25,778 cases
with an average length of stay of 2.2
days and average costs of $8,151.
The results of this additional data
analysis demonstrate a better
distribution of cases with regard to
length of stay and average costs. Our
clinical advisors agreed that a patient’s
severity of illness is captured more
appropriately with this subdivision. The
data also meet the established criteria
for creating subgroups within a base
MS–DRG as discussed earlier.
As the subdivision of the claims data
based on these subgroups better
captures a patient’s severity level and
utilization of resources and is supported
by our clinical advisors, in the FY 2015
IPPS/LTCH PPS proposed rule, we
proposed to create three new MS–DRGs
and to delete MS–DRGs 490 and 491.
We proposed that these proposed new
MS–DRGs would be titled as follows
and would be effective as of October 1,
2014:
• Proposed new MS–DRG 518 (Back
& Neck Procedures Except Spinal
Fusion with MCC or Disc Device/
Neurostimulator);
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18:25 Aug 21, 2014
Jkt 232001
• Proposed new MS–DRG 519 (Back
& Neck Procedures Except Spinal
Fusion with CC); and
• Proposed new MS–DRG 520 (Back
& Neck Procedures Except Spinal
Fusion without CC/MCC).
We invited public comments on our
proposal to create these proposed new
MS–DRGs for FY 2015.
Comment: Several commenters
supported the proposal to delete MS–
DRGs 490 and 491 and to create three
new MS–DRGs that better account for a
patient’s severity of illness and
utilization of resources when disc
devices and neurostimulators are
involved. One commenter stated that
the new MS–DRGs would enable CMS
to assess utilization of resources for
these services and ensure that
‘‘important innovation in device
dependent neurosurgical procedures is
adequately accounted for and
reimbursed appropriately.’’ Another
commenter expressed its appreciation
for CMS’ careful data analysis that
resulted in the development of the
proposal. This commenter noted ‘‘that
the data presented by CMS make a
compelling case for the proposed three
subdivisions, because it would more
appropriately compensate hospitals for
the costs associated with implantation
of a disc device or neurostimulator than
the current two-division framework.’’
Another commenter applauded CMS’
past efforts to assure MS–DRGs 490 and
491 reflect the most appropriate
payment amounts for these procedures.
This commenter stated ‘‘the proposed
PO 00000
Frm 00048
Fmt 4701
Sfmt 4700
Average length
of stay
3,379
13,551
25,778
6.6
3.9
2.2
Average costs
$21,493
11,791
8,151
three-way split of cases in current MS–
DRGs 490 and 491 demonstrates a better
distribution of cases with regard to
resource use. CMS should proceed with
its proposed change to this MS–DRG
category to improve the accuracy of the
payments, consistent with its criteria for
establishing severity levels within the
MS–DRGs.’’ Another commenter noted
that ‘‘subdividing the code set into three
distinct MS–DRGs is not only a more
accurate representation of the clinical
condition experienced by the patient,
but also better categorizes the resources
expended by the facility, as evidenced
by the supporting claims data.’’
Response: We thank the commenters
for their support. As noted in the FY
2015 IPPS/LTCH PPS proposed rule, the
additional data analysis demonstrated a
better distribution of cases with regard
to length of stay and average costs. Our
clinical advisors also agreed that a
patient’s severity of illness is captured
more appropriately with this
subdivision. Lastly, the data also meet
the established criteria for creating
subgroups within a base MS–DRG as
discussed earlier.
After consideration of the public
comments we received, for FY 2015 we
are adopting as final our proposal to
create new MS–DRG 518 (Back & Neck
Procedures Except Spinal Fusion with
MCC or Disc Device/Neurostimulator);
MS–DRG 519 (Back & Neck Procedures
Except Spinal Fusion with CC); and
MS–DRG 520 (Back & Neck Procedures
Except Spinal Fusion without CC/MCC).
E:\FR\FM\22AUR2.SGM
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
6. MDC 10 (Endocrine, Nutritional and
Metabolic Diseases and Disorders):
Disorders of Porphyrin Metabolism
We received a comment on the FY
2014 IPPS/LTCH PPS proposed rule that
we considered out of scope for the
proposed rule. We stated in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50550)
that we would consider this issue in
future rulemaking as part of our annual
review process. The request was for the
creation of a new MS–DRG to better
identify cases where patients with
disorders of porphyrin metabolism
exist, to recognize the resource
requirements in caring for these
patients, to ensure appropriate payment
for these cases, and to preserve patient
access to necessary treatments. This
issue has been discussed previously in
the FY 2013 IPPS/LTCH PPS proposed
rule (77 FR 27904 and 27905) and final
rule (77 FR 53311 through 53313).
Porphyria is defined as a group of rare
disorders (‘‘porphyrias’’) that interfere
with the production of hemoglobin that
is needed for red blood cells. While
some of these disorders are genetic
(inborn) and others can be acquired,
they all result in the abnormal
accumulation of hemoglobin building
blocks, called porphyrins, which can be
deposited in the tissues where they
particularly interfere with the
functioning of the nervous system and
the skin. Treatment for patients
suffering from disorders of porphyrin
MS–DRG
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
As shown in the table above, we
found a total of 1,486 cases in MS–DRG
642, with an average length of stay of
4.61 days and average costs of $8,151.
We then analyzed the data for cases
reporting diagnosis code 277.1 as the
principal diagnosis in this same MS–
DRG. We found a total of 299 cases,
with an average length of stay of 5.98
days and average costs of $13,303.
While the data show that the average
costs for the 299 cases reporting a
principal diagnosis code of 277.1 were
higher than the average costs for all
cases in MS–DRG 642 ($13,303
compared to $8,151), the number of
cases is small. In the FY 2015 IPPS/
LTCH PPS proposed rule, we stated
that, given the small number of
porphyria cases, we did not believe
there is justification for creating a new
MS–DRG. Basing a new MS–DRG on
such a small number of cases could lead
to distortions in the relative payment
weights for the MS–DRG because
several expensive cases could impact
the overall relative payment weight.
Having larger clinical cohesive groups
within an MS–DRG provides greater
stability for annual updates to the
relative payment weights. In addition,
as discussed earlier, one of the criteria
we apply in evaluating whether to
create new severity subgroups within an
MS–DRG is whether there are at least
500 cases in the CC or MCC subgroup.
While this criterion is used to evaluate
whether to create a severity subgroup
within an MS–DRG, applying it here
suggests that creating a new MS–DRG
for cases reporting a principal diagnosis
of code 277.1 would not be appropriate.
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metabolism consists of an intravenous
injection of Panhematin® (hemin for
injection). In 1984, this pharmaceutical
agent became the first approved drug for
a rare disease to be designated under the
Orphan Drug Act. The requestor stated
that it is the only FDA-approved
prescription treatment for acute
intermittent porphyria. ICD–9–CM
diagnosis code 277.1 (Disorders of
porphyrin metabolism) describes these
cases, which are currently assigned to
MS–DRG 642 (Inborn and Other
Disorders of Metabolism).
We analyzed claims data from the
December 2013 update of the FY 2013
MedPAR file for cases assigned to MS–
DRG 642. Our findings are shown in the
table below.
Number of cases
MS–DRG 642—All cases ................................................................................................
MS–DRG 642—Cases with principal diagnosis code 277.1 ...........................................
Our clinical advisors reviewed this
issue and recommended no MS–DRG
change for porphyria cases because they
fit clinically within MS–DRG 642.
In summary, in the FY 2015 IPPS/
LTCH PPS proposed rule, we did not
propose to create a new MS–DRG for
porphyria cases. We invited public
comments on our proposal to maintain
porphyria cases in MS–DRG 642.
Comment: Several commenters
supported the proposal to maintain
porphyria cases in MS–DRG 642 and to
not create a new MS–DRG for these
cases.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to maintain
porphyria cases in MS–DRG 642 and to
not create a new MS–DRG for these
cases.
7. MDC 15 (Newborns and Other
Neonates With Conditions Originating
in the Perinatal Period)
We received a request to evaluate the
MS–DRG assignment of seven ICD–9–
CM diagnosis codes in MS–DRG 794
(Neonate with Other Significant
Problems) under MDC 15. The requestor
stated that these codes have no bearing
on the infant, and are not representative
of a neonate with a significant problem.
The requestor recommended that we
change the MS–DRG logic so that the
following seven ICD–9–CM codes would
not lead to assignment of MS–DRG 794.
The requestor recommended that the
diagnoses be added to the ‘‘only
secondary diagnosis’’ list under MS–
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49901
Average
length of stay
1,486
299
4.61
5.98
Average
costs
$8,151
13,303
DRG 795 (Normal newborn) so that the
case would be assigned to MS–DRG 795
(Normal newborn).
• V17.0 (Family history of psychiatric
condition)
• V17.2 (Family history of other
neurological Diseases)
• V17.49 (Family history of other
cardiovascular diseases)
• V18.0 (Family history of diabetes
mellitus)
• V18.19 (Family history of other
endocrine and metabolic diseases)
• V18.8 (Family history of infectious
and parasitic diseases)
• V50.3 (Ear piercing)
In the case of a newborn with one of
these diagnosis codes reported as a
secondary diagnosis, the case would be
assigned to MS–DRG 794. The
commenter believed that any of these
seven diagnosis codes (noted above),
when reported as a secondary diagnosis
for a newborn case, should be assigned
to MS–DRG 795 instead of MS–DRG
794.
Our clinical advisors reviewed this
request and concurred with the
commenter that the seven ICD–9–CM
diagnosis codes noted above should not
continue to be assigned to MS–DRG 794,
as there is no clinically usable
information reported in those codes
identifying significant problems.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28017), we
proposed to reassign these following
seven diagnoses to the ‘‘only secondary
diagnosis list’’ under MS–DRG 795 so
that the case would be assigned to MS–
DRG 795.
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• V17.0 (Family history of psychiatric
condition)
• V17.2 (Family history of other
neurological diseases)
• V17.49 (Family history of other
cardiovascular diseases)
• V18.0 (Family history of diabetes
mellitus)
• V18.19 (Family history of other
endocrine and metabolic diseases)
• V18.8 (Family history of infectious
and parasitic diseases)
• V50.3 (Ear piercing)
We invited public comments on this
proposal.
Comment: Several commenters
supported the proposal to reassign the
identified seven diagnoses to the ‘‘only
secondary diagnosis’’ list under MS–
DRG 795 so that the case would be
assigned to MS–DRG 795.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to reassign the
following seven diagnoses to the ‘‘only
secondary diagnosis list’’ under MS–
DRG 795 so that the case would be
assigned to MS–DRG 795:
• V17.0 (Family history of psychiatric
condition)
• V17.2 (Family history of other
neurological diseases)
• V17.49 (Family history of other
cardiovascular diseases)
• V18.0 (Family history of diabetes
mellitus)
• V18.19 (Family history of other
endocrine and metabolic diseases)
• V18.8 (Family history of infectious
and parasitic diseases)
• V50.3 (Ear piercing)
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
8. Medicare Code Editor (MCE) Changes
The Medicare Code Editor (MCE) is a
software program that detects and
reports errors in the coding of Medicare
claims data. Patient diagnoses,
procedure(s), and demographic
information are entered into the
Medicare claims processing systems and
are subjected to a series of automated
screens. The MCE screens are designed
to identify cases that require further
review before classification into an MS–
DRG.
As discussed in section II.G.1.a. of the
preamble of this final rule, we
developed an ICD–10 version of the
current MS–DRGs, which are based on
ICD–9–CM codes. We refer to this
version of the MS–DRGs as the ICD–10
MS–DRGs Version 31.0–R. In November
2013, we also posted a Definitions of
Medicare Code Edits Manual of the
ICD–10 MCE Version 31.0 on the ICD–
10 MS–DRG Conversion Project Web
VerDate Mar<15>2010
18:25 Aug 21, 2014
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site at: http://www.cms.gov/Medicare/
Coding/ICD10/ICD-10-MS-DRGConversion-Project.html. We produced
mainframe and computer software for
Version 31.0 of the MS–DRG GROUPER
with Medicare Code Editor, which was
made available to the public in
December 2013. Information on ordering
the mainframe and computer software
through NTIS was posted on the CMS
Web site at: http://www.cms.hhs.gov/
Medicare/Coding/ICD10/ICD-10-MSDRG-Conversion-Project.html under the
‘‘Related Links’’ section. This ICD–10
MS–DRG GROUPER with Medicare
Code Editor Version 31.0 computer
software facilitated additional review of
the ICD–10 MS–DRGs conversion. We
encouraged the public to submit to CMS
any comments on areas where they
believed the ICD–10 MS–DRG
GROUPER and MCE did not accurately
reflect the logic and edits found in the
ICD–9–CM MS–DRG GROUPER and
MCE Version 31.0.
We also have posted an ICD–10
version of the current MCE, which is
based on ICD–9–CM codes, and refer to
that version of the MCE as the ICD–10
MCE Version 31.0–R. Both of these
documents are posted on our ICD–10
MS–DRG Conversion Project Web site
at: http://www.cms.hhs.gov/Medicare/
Coding/ICD10/ICD-10-MS-DRGConversion-Project.html. We will
continue to share ICD–10 MS–DRG and
MCE conversion activities with the
public through this Web site.
In the FY 2015 IPPS/LTCH PPS
proposed rule, for FY 2015, we
proposed to remove extracranialintracranial (EC–IC) bypass surgery from
the ‘‘Noncovered Procedure’’ edit code
list for Version 32.0 of the MCE. This
procedure is identified by ICD–9–CM
procedure code 39.28 (Extracranialintracranial (EC–IC) vascular bypass).
Because of the complexity of
appropriately classifying the
circumstances under which the EC–IC
bypass surgery may, or may not, be
considered reasonable and necessary for
certain conditions, we proposed to
remove the MCE ‘‘Noncovered
Procedure’’ edit for EC–IC bypass
surgery from the ‘‘Noncovered
Procedure’’ edit code list for Version
32.0 of the MCE. We invited public
comments on this proposal.
Comment: Several commenters
supported the proposal to remove the
MCE ‘‘Noncovered Procedure’’ edit for
EC–IC bypass surgery (procedure code
39.28) from the ‘‘Noncovered
Procedure’’ edit code list for Version
32.0 of the MCE. The commenters stated
that the proposal was reasonable given
the information that was provided.
Commenters also agreed that because of
PO 00000
Frm 00050
Fmt 4701
Sfmt 4700
the complexity of appropriately
classifying the circumstances under
which the EC–IC bypass surgery may be
considered reasonable and necessary for
certain conditions, the Medicare
noncovered procedure edit for EC–IC
bypass surgery should be removed.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal to remove
procedure code 39.28 (Extracranialintracranial (EC–IC) vascular bypass)
from the noncovered procedure edit
effective FY 2015.
9. Changes to Surgical Hierarchies
Some inpatient stays entail multiple
surgical procedures, each one of which,
occurring by itself, could result in
assignment of the case to a different
MS–DRG within the MDC to which the
principal diagnosis is assigned.
Therefore, it is necessary to have a
decision rule within the GROUPER by
which these cases are assigned to a
single MS–DRG. The surgical hierarchy,
an ordering of surgical classes from
most resource-intensive to least
resource-intensive, performs that
function. Application of this hierarchy
ensures that cases involving multiple
surgical procedures are assigned to the
MS–DRG associated with the most
resource-intensive surgical class.
Because the relative resource intensity
of surgical classes can shift as a function
of MS–DRG reclassification and
recalibrations, for FY 2015, we reviewed
the surgical hierarchy of each MDC, as
we have for previous reclassifications
and recalibrations, to determine if the
ordering of classes coincides with the
intensity of resource utilization.
A surgical class can be composed of
one or more MS–DRGs. For example, in
MDC 11, the surgical class ‘‘kidney
transplant’’ consists of a single MS–DRG
(MS–DRG 652) and the class ‘‘major
bladder procedures’’ consists of three
MS–DRGs (MS–DRGs 653, 654, and
655). Consequently, in many cases, the
surgical hierarchy has an impact on
more than one MS–DRG. The
methodology for determining the most
resource-intensive surgical class
involves weighting the average
resources for each MS–DRG by
frequency to determine the weighted
average resources for each surgical class.
For example, assume surgical class A
includes MS–DRGs 001 and 002 and
surgical class B includes MS–DRGs 003,
004, and 005. Assume also that the
average costs of MS–DRG 001 are higher
than that of MS–DRG 003, but the
average costs of MS–DRGs 004 and 005
are higher than the average costs of MS–
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DRG 002. To determine whether
surgical class A should be higher or
lower than surgical class B in the
surgical hierarchy, we would weigh the
average costs of each MS–DRG in the
class by frequency (that is, by the
number of cases in the MS–DRG) to
determine average resource
consumption for the surgical class. The
surgical classes would then be ordered
from the class with the highest average
resource utilization to that with the
lowest, with the exception of ‘‘other
O.R. procedures’’ as discussed below.
This methodology may occasionally
result in assignment of a case involving
multiple procedures to the lowerweighted MS–DRG (in the highest, most
resource-intensive surgical class) of the
available alternatives. However, given
that the logic underlying the surgical
hierarchy provides that the GROUPER
search for the procedure in the most
resource-intensive surgical class, in
cases involving multiple procedures,
this result is sometimes unavoidable.
We note that, notwithstanding the
foregoing discussion, there are a few
instances when a surgical class with a
lower average cost is ordered above a
surgical class with a higher average cost.
For example, the ‘‘other O.R.
procedures’’ surgical class is uniformly
ordered last in the surgical hierarchy of
each MDC in which it occurs, regardless
of the fact that the average costs for the
MS–DRG or MS–DRGs in that surgical
class may be higher than those for other
surgical classes in the MDC. The ‘‘other
O.R. procedures’’ class is a group of
procedures that are only infrequently
related to the diagnoses in the MDC, but
are still occasionally performed on
patients with cases assigned to the MDC
with these diagnoses. Therefore,
assignment to these surgical classes
should only occur if no other surgical
class more closely related to the
diagnoses in the MDC is appropriate.
A second example occurs when the
difference between the average costs for
two surgical classes is very small. We
have found that small differences
generally do not warrant reordering of
the hierarchy because, as a result of
reassigning cases on the basis of the
hierarchy change, the average costs are
likely to shift such that the higherordered surgical class has lower average
costs than the class ordered below it.
Code
414.4 ........
VerDate Mar<15>2010
Diagnosis description
Coronary atherosclerosis
due to calcified lesion.
18:25 Aug 21, 2014
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Based on the changes that we
proposed to make for FY 2015, as
discussed in sections II.G.4.c., II.G.5.a.,
and II.G.5.c. of the preamble of the FY
2015 IPPS/LTCH PPS proposed rule, we
proposed to revise the surgical
hierarchy for MDC 5 (Diseases and
Disorders of the Circulatory System) and
MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective
Tissue) as follows:
In MDC 5, we proposed to sequence
proposed new MS–DRG 266
(Endovascular Cardiac Valve
Replacement with MCC) and proposed
new MS–DRG 267 (Endovascular
Cardiac Valve Replacement without
MCC) above MS–DRG 222 (Cardiac
Defibrillator Implant with Cardiac
Catheterization with AMI/HF/Shock
with MCC).
In MDC 8, we proposed to delete MS–
DRGs 490 (Back & Neck Procedures
Except Spinal Fusion with CC/MCC or
Disc Device/Neurostimulator) and MS–
DRG 491 (Back & Neck Procedures
Except Spinal Fusion without CC/MCC
or Disc Device/Neurostimulator) from
the surgical hierarchy. We proposed to
sequence proposed new MS–DRG 518
(Back & Neck Procedure Except Spinal
Fusion with MCC or Disc Device/
Neurostimulator), proposed new MS–
DRG 519 (Back & Neck Procedure
Except Spinal Fusion with CC), and
proposed new MS–DRG 520 (Back &
Neck Procedure Except Spinal Fusion
without CC/MCC) above MS–DRG 492
(Lower Extremity and Humerus
Procedure Except Hip, Foot, Femur with
MCC).
We invited public comments on our
proposals.
Comment: We did not receive any
public comments opposing our
proposals for the surgical hierarchy.
Commenters expressed general support
for the proposals, noting they were
reasonable given the information that
was provided.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal for MDC 5 to
sequence new MS–DRG 266
(Endovascular Cardiac Valve
Replacement with MCC) and new MS–
DRG 267 (Endovascular Cardiac Valve
Replacement without MCC) above MS–
CC
level
Cnt 1
Non-CC
PO 00000
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1,796
Fmt 4701
Cnt 1
impact
Sfmt 4700
DRG 222 (Cardiac Defibrillator Implant
with Cardiac Catheterization with AMI/
HF/Shock with MCC). We also are
finalizing our proposal for MDC 8 to
delete MS–DRG 490 (Back & Neck
Procedures Except Spinal Fusion with
CC/MCC or Disc Device/
Neurostimulator) and MS–DRG 491
(Back & Neck Procedures Except Spinal
Fusion without CC/MCC or Disc Device/
Neurostimulator) from the surgical
hierarchy. We are sequencing new MS–
DRG 518 (Back & Neck Procedure
Except Spinal Fusion with MCC or Disc
Device/Neurostimulator), new MS–DRG
519 (Back & Neck Procedure Except
Spinal Fusion with CC), and new MS–
DRG 520 (Back & Neck Procedure
Except Spinal Fusion without CC/MCC)
above MS–DRG 492 (Lower Extremity
and Humerus Procedure Except Hip,
Foot, Femur with MCC), effective FY
2015.
10. Changes to the MS–DRG Diagnosis
Codes for FY 2015
a. Major Complications or Comorbidities
(MCCs) and Complications or
Comorbidities (CC) Severity Levels for
FY 2015
A complete updated MCC, CC, and
Non-CC Exclusion List is available via
the Internet on the CMS Web site at:
http://cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
AcuteInpatientPPS/index.html as
follows:
• Table 6I (Complete MCC list);
• Table 6J (Complete CC list); and
• Table 6K (Complete list of CC
Exclusions).
b. Coronary Atherosclerosis Due to
Calcified Coronary Lesion
We received a request that we change
the severity level for ICD–9–CM
diagnosis code 414.4 (Coronary
atherosclerosis due to calcified coronary
lesion) from a non-CC to an MCC. This
issue was previously discussed in the
FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27522) and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50541
through 50542).
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for ICD–9–CM diagnosis
code 414.4. The following chart shows
our findings.
Cnt 2
1.16
49903
3,056
E:\FR\FM\22AUR2.SGM
Cnt 2
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2.18
22AUR2
Cnt 3
2,835
Cnt 3
impact
3.01
49904
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We ran the above data as described in
the FY 2008 IPPS final rule with
comment period (72 FR 47158 through
47161). The C1 value reflects a patient
with no other secondary diagnosis or
with all other secondary diagnoses that
are non-CCs. The C2 value reflects a
patient with at least one other secondary
diagnosis that is a CC, but none that is
an MCC. The C3 value reflects a patient
with at least one other secondary
diagnosis that is an MCC.
The chart above shows that the C1
finding is 1.16. A value close to 1.0 in
the C1 field suggests that the diagnosis
produces the same expected value as a
non-CC. A value close to 2.0 suggests
the condition is more like a CC than a
non-CC, but not as significant in
resource usage as an MCC. A value close
to 3.0 suggests the condition is expected
to consume resources more similar to an
MCC than a CC or a non-CC. The C2
finding was 2.18. A C2 value close to 2.0
suggests the condition is more like a CC
than a non-CC, but not as significant in
resource usage as an MCC when there is
at least one other secondary diagnosis
that is a CC but none that is an MCC.
While the C1 value of 1.16 is above the
1.0 value for a non-CC, it does not
support reclassification to an MCC. As
stated earlier, a value close to 3.0
suggests the condition is expected to
consume resources more similar to an
MCC than a CC or a non-CC. The C2
finding of 2.18 also does not support
reclassifying this diagnosis code to an
MCC. Our clinical advisors reviewed the
data and evaluated this condition. They
Code
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
414.2 ........
CC
level
Diagnosis description
Chronic total occlusion of
coronary artery.
18:25 Aug 21, 2014
Jkt 232001
Cnt 1
Non-CC
The chart above for diagnosis code
414.2 shows that the C1 finding is 1.25.
A value close to 1.0 in the C1 field
suggests that the diagnosis produces the
same expected value as a non-CC. A
value close to 2.0 suggests the condition
is more like a CC than a non-CC, but not
as significant in resource usage as an
MCC. A value close to 3.0 suggests the
condition is expected to consume
resources more similar to an MCC than
a CC or a non-CC. The C2 finding was
2.09. A C2 value close to 2.0 suggests
the condition is more like a CC than a
non-CC, but not as significant in
resource usage as an MCC when there is
at least one other secondary diagnosis
that is a CC but none that is an MCC.
While the C1 value of 1.25 is above the
1.0 value for a non-CC, it does not
support reclassification to an MCC. As
VerDate Mar<15>2010
recommended that we not change the
severity level of diagnosis code 414.4
from a non-CC to an MCC. They did not
believe that this diagnosis would
increase the severity level of patients.
They pointed out that a similar code,
diagnosis code 414.2 (Chronic total
occlusion of coronary artery), is a nonCC. Our clinical advisors believe that
diagnosis code 414.4 represents patients
who are less severe than diagnosis code
414.2. Considering the C1 and C2
ratings of diagnosis code 414.4 and the
input from our clinical advisors, in the
FY 2015 IPPS/LTCH PPS proposed rule,
we did not propose to reclassify
diagnosis code 414.4 to an MCC; the
diagnosis code would continue to be
considered a non-CC.
Therefore, based on the data and
clinical analysis, we proposed to
maintain diagnosis code 414.4 as a nonCC. We invited public comments on our
proposal.
Comment: Several commenters
supported the proposal to keep
diagnosis code 414.4 as a non-CC. One
commenter requested that diagnosis
code 414.4, when present as a secondary
diagnosis, be included on the MCC list.
The commenter believed that treating
calcified coronary lesions with
atherectomy is underpaid by the
Medicare program for patients requiring
percutaneous coronary intervention
when calcified coronary lesions prevent
successful angioplasty and placement of
coronary stents. The commenter further
stated that treating coronary
calcification is significantly more
15,814
Cnt 1
impact
Cnt 2
1.25
Frm 00052
Fmt 4701
Sfmt 4700
Cnt 2
impact
21,483
stated earlier, a value close to 3.0
suggests the condition is expected to
consume resources more similar to an
MCC than a CC or a non-CC. The C2
finding of 2.09 also does not support
reclassifying this diagnosis code to an
MCC.
Our clinical advisors reviewed the
data and evaluated the severity level for
both diagnosis code 414.4 and 414.2.
They continue to recommend that we
not change the severity level of
diagnosis code 414.4 from a non-CC to
an MCC. Furthermore, they recommend
that we not change the severity level for
diagnosis code 414.2. They do not
believe that the diagnosis represented
by either code would increase the
severity level of patients. After
reviewing the commenter’s justification
for changing diagnosis code 414.4 from
PO 00000
difficult to treat, requires more time and
equipment, and has clinical outcomes
that are much worse compared to
treating noncalcified or mildly calcified
coronary obstructions. Consequently,
the commenter believed it costs
hospitals more to treat patients with
calcified coronary lesions and that
hospitals should be compensated for
their expense to treat coronary
atherosclerosis in Medicare
beneficiaries. The commenter
recognized the opinion of our clinical
advisors that patients with a code 414.4
diagnosis are less severe than those with
a code 414.2 diagnosis, but disagreed
with that opinion. The commenter
believed that both disease states add
substantial treatment time and costs to
the providers, health care systems, and
society and both are worthy of
classification as an MCC.
Response: We appreciate the
commenters’ support for our proposal to
maintain code 414.4 as a non-CC. We
are not accepting the commenter’s
recommendation to change this code to
an MCC because our clinical data do not
support such a change. The data
continue to support keeping diagnosis
code 414.4 as a non-CC and do not
support changing the code to an MCC,
for the reasons described above.
We examined claims data from the
December 2013 update of the FY 2013
MedPAR file for ICD–9–CM diagnosis
code 414.2. The following chart shows
our findings.
2.09
Cnt 3
19,955
Cnt 3
impact
3.04
a non-CC to an MCC, our clinical
advisors continue to recommend that
we not change the severity level of
diagnosis code 414.4 from a non-CC to
an MCC. They again pointed out that
diagnosis code 414.2 is a similar code
and is a non-CC. As noted, they also
recommend maintaining diagnosis code
414.2 as a non-CC. Our clinical advisors
continue to believe that diagnosis code
414.4 represents patients who are less
severe than diagnosis code 414.2.
After consideration of the public
comments we received, the C1 and C2
ratings in our claims data, and the input
from our clinical advisors, we are
finalizing our proposal to not reclassify
diagnosis code 414.4 from a non-CC to
an MCC; the diagnosis code will
continue to be considered a non-CC.
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11. Complications or Comorbidity (CC)
Exclusions List
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
a. Background of the CC List and the CC
Exclusions List
Under the IPPS MS–DRG
classification system, we have
developed a standard list of diagnoses
that are considered CCs. Historically, we
developed this list using physician
panels that classified each diagnosis
code based on whether the diagnosis,
when present as a secondary condition,
would be considered a substantial
complication or comorbidity. A
substantial complication or comorbidity
was defined as a condition that, because
of its presence with a specific principal
diagnosis, would cause an increase in
the length of stay by at least 1 day in
at least 75 percent of the patients.
However, depending on the principal
diagnosis of the patient, some diagnoses
on the basic list of complications and
comorbidities may be excluded if they
are closely related to the principal
diagnosis. In FY 2008, we evaluated
each diagnosis code to determine its
impact on resource use and to
determine the most appropriate CC
subclassification (non-CC, CC, or MCC)
assignment. We refer readers to sections
II.D.2. and 3. of the preamble of the FY
2008 IPPS final rule with comment
period for a discussion of the refinement
of CCs in relation to the MS–DRGs we
adopted for FY 2008 (72 FR 47152
through 47171).
b. CC Exclusions List for FY 2015
In the September 1, 1987 final notice
(52 FR 33143) concerning changes to the
DRG classification system, we modified
the GROUPER logic so that certain
diagnoses included on the standard list
of CCs would not be considered valid
CCs in combination with a particular
principal diagnosis. We created the CC
Exclusions List for the following
reasons: (1) To preclude coding of CCs
for closely related conditions; (2) to
preclude duplicative or inconsistent
coding from being treated as CCs; and
(3) to ensure that cases are appropriately
classified between the complicated and
uncomplicated DRGs in a pair. As we
indicated above, we developed a list of
diagnoses, using physician panels, to
include those diagnoses that, when
present as a secondary condition, would
be considered a substantial
complication or comorbidity. In
previous years, we have made changes
to the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice
(52 FR 18877) and the September 1,
1987 final notice (52 FR 33154), we
explained that the excluded secondary
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18:25 Aug 21, 2014
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diagnoses were established using the
following five principles:
• Chronic and acute manifestations of
the same condition should not be
considered CCs for one another;
• Specific and nonspecific (that is,
not otherwise specified (NOS))
diagnosis codes for the same condition
should not be considered CCs for one
another;
• Codes for the same condition that
cannot coexist, such as partial/total,
unilateral/bilateral, obstructed/
unobstructed, and benign/malignant,
should not be considered CCs for one
another;
• Codes for the same condition in
anatomically proximal sites should not
be considered CCs for one another; and
• Closely related conditions should
not be considered CCs for one another.
The creation of the CC Exclusions List
was a major project involving hundreds
of codes. We have continued to review
the remaining CCs to identify additional
exclusions and to remove diagnoses
from the master list that have been
shown not to meet the definition of a
CC.1
In the FY 2015 IPPS/LTCH PPS
proposed rule, for FY 2015, we did not
propose any changes to the CC
Exclusion List. Therefore, we did not
develop or publish Tables 6G
(Additions to the CC Exclusion List) or
Table 6H (Deletions from the CC
1 We refer readers to the FY 1989 final rule (53
FR 38485, September 30, 1988) for the revision
made for the discharges occurring in FY 1989; the
FY 1990 final rule (54 FR 36552, September 1,
1989) for the FY 1990 revision; the FY 1991 final
rule (55 FR 36126, September 4, 1990) for the FY
1991 revision; the FY 1992 final rule (56 FR 43209,
August 30, 1991) for the FY 1992 revision; the FY
1993 final rule (57 FR 39753, September 1, 1992)
for the FY 1993 revision; the FY 1994 final rule (58
FR 46278, September 1, 1993) for the FY 1994
revisions; the FY 1995 final rule (59 FR 45334,
September 1, 1994) for the FY 1995 revisions; the
FY 1996 final rule (60 FR 45782, September 1,
1995) for the FY 1996 revisions; the FY 1997 final
rule (61 FR 46171, August 30, 1996) for the FY 1997
revisions; the FY 1998 final rule (62 FR 45966,
August 29, 1997) for the FY 1998 revisions; the FY
1999 final rule (63 FR 40954, July 31, 1998) for the
FY 1999 revisions; the FY 2001 final rule (65 FR
47064, August 1, 2000) for the FY 2001 revisions;
the FY 2002 final rule (66 FR 39851, August 1,
2001) for the FY 2002 revisions; the FY 2003 final
rule (67 FR 49998, August 1, 2002) for the FY 2003
revisions; the FY 2004 final rule (68 FR 45364,
August 1, 2003) for the FY 2004 revisions; the FY
2005 final rule (69 FR 49848, August 11, 2004) for
the FY 2005 revisions; the FY 2006 final rule (70
FR 47640, August 12, 2005) for the FY 2006
revisions; the FY 2007 final rule (71 FR 47870) for
the FY 2007 revisions; the FY 2008 final rule (72
FR 47130) for the FY 2008 revisions; the FY 2009
final rule (73 FR 48510); the FY 2010 final rule (74
FR 43799); the FY 2011 final rule (75 FR 50114);
the FY 2012 final rule (76 FR 51542); the FY 2013
final rule (77 FR 53315); and the FY 2014 final rule
(78 FR 50541). In the FY 2000 final rule (64 FR
41490, July 30, 1999), we did not modify the CC
Exclusions List because we did not make any
changes to the ICD–9–CM codes for FY 2000.
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49905
Exclusion List). We developed Table 6K
(Complete List of CC Exclusions), which
is available only via the Internet on the
CMS Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
index.html. Because of the length of
Table 6K, we are not publishing it in the
Addendum to this final rule. Each of
these principal diagnosis codes for
which there is a CC exclusion is shown
with an asterisk and the conditions that
will not count as a CC are provided in
an indented column immediately
following the affected principal
diagnosis. Beginning with discharges on
or after October 1 of each year, the
indented diagnoses are not recognized
by the GROUPER as valid CCs for the
asterisked principal diagnoses.
A complete updated MCC, CC, and
Non-CC Exclusions List is available via
the Internet on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html.
Because there were no proposed new,
revised, or deleted diagnosis or
procedure codes for FY 2015, we have
not developed Table 6A (New Diagnosis
Codes), Table 6B (New Procedure
Codes), Table 6C (Invalid Diagnosis
Codes), Table 6D (Invalid Procedure
Codes), Table 6E (Revised Diagnosis
Code Titles), and Table 6F (Revised
Procedure Codes) to the final rule and
they are not published as part of this
final rule.
We did not propose any additions or
deletions to the MS–DRG MCC List for
FY 2015 nor any additions or deletions
to the MS–DRG CC List for FY 2015.
Therefore, as we proposed, for this final
rule, we have not developed Tables 6I.1
(Additions to the MCC List), 6I.2
(Deletions to the MCC List), 6J.1
(Additions to the CC List), and 6J.2
(Deletions to the CC List), and they are
not published as part of this final rule.
Alternatively, the complete
documentation of the GROUPER logic,
including the current CC Exclusions
List, is available from 3M/Health
Information Systems (HIS), which,
under contract with CMS, is responsible
for updating and maintaining the
GROUPER program. The current MS–
DRG Definitions Manual, Version 31.0,
is available on a CD for $225.00. This
manual may be obtained by writing
3M/HIS at the following address: 100
Barnes Road, Wallingford, CT 06492; or
by calling (203) 949–0303, or by
obtaining an order form at the Web site:
http://www.3MHIS.com. Please specify
the revision or revisions requested.
Version 32.0 of this manual, which
includes the final FY 2015 MS–DRG
changes, is available on a CD for
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$225.00. This manual may be obtained
by writing 3M/HIS at the address
provided above; or by calling (203) 949–
0303; or by obtaining an order form at
the Web site at: http://www/3MHIS.com.
Please specify the revision or revisions
requested.
12. Review of Procedure Codes in MS
DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned
to former CMS DRG 468 (Extensive O.R.
Procedure Unrelated to Principal
Diagnosis), CMS DRG 476 (Prostatic
O.R. Procedure Unrelated to Principal
Diagnosis), and CMS DRG 477
(Nonextensive O.R. Procedure Unrelated
to Principal Diagnosis) to determine
whether it would be appropriate to
change the procedures assigned among
these CMS DRGs. Under the MS–DRGs
that we adopted for FY 2008, CMS DRG
468 was split three ways and became
MS–DRGs 981, 982, and 983 (Extensive
O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and
without CC/MCC, respectively). CMS
DRG 476 became MS–DRGs 984, 985,
and 986 (Prostatic O.R. Procedure
Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC,
respectively). CMS DRG 477 became
MS–DRGs 987, 988, and 989
(Nonextensive O.R. Procedure Unrelated
to Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively).
MS–DRGs 981 through 983, 984
through 986, and 987 through 989
(formerly CMS DRGs 468, 476, and 477,
respectively) are reserved for those cases
in which none of the O.R. procedures
performed are related to the principal
diagnosis. These MS–DRGs are intended
to capture atypical cases, that is, those
cases not occurring with sufficient
frequency to represent a distinct,
recognizable clinical group. MS–DRGs
984 through 986 (previously CMS DRG
476) are assigned to those discharges in
which one or more of the following
prostatic procedures are performed and
are unrelated to the principal diagnosis:
• 60.0 (Incision of prostate);
• 60.12 (Open biopsy of prostate);
• 60.15 (Biopsy of periprostatic
tissue);
• 60.18 (Other diagnostic procedures
on prostate and periprostatic tissue);
• 60.21 (Transurethral
prostatectomy);
• 60.29 (Other transurethral
prostatectomy);
• 60.61 (Local excision of lesion of
prostate);
• 60.69 (Prostatectomy, not elsewhere
classified);
• 60.81 (Incision of periprostatic
tissue);
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• 60.82 (Excision of periprostatic
tissue);
• 60.93 (Repair of prostate);
• 60.94 (Control of (postoperative)
hemorrhage of prostate);
• 60.95 (Transurethral balloon
dilation of the prostatic urethra);
• 60.96 (Transurethral destruction of
prostate tissue by microwave
thermotherapy);
• 60.97 (Other transurethral
destruction of prostate tissue by other
thermotherapy); and
• 60.99 (Other operations on
prostate).
All remaining O.R. procedures are
assigned to MS–DRGs 981 through 983
and 987 through 989, with MS–DRGs
987 through 989 assigned to those
discharges in which the only procedures
performed are nonextensive procedures
that are unrelated to the principal
diagnosis.2
Our review of MedPAR claims data
showed that there were no cases that
merited movement or should logically
be assigned to any of the other MDCs.
Therefore, for FY 2015, we did not
propose to change the procedures
assigned among these MS–DRGs.
We did not receive any public
comments on our proposal. Therefore,
as we proposed, we are not making any
changes to the procedures assigned to
MS–DRGs 981 through 983, MS–DRGs
2 The original list of the ICD–9–CM procedure
codes for the procedures we consider nonextensive
procedures, if performed with an unrelated
principal diagnosis, was published in Table 6C in
section IV. of the Addendum to the FY 1989 final
rule (53 FR 38591). As part of the FY 1991 final rule
(55 FR 36135), the FY 1992 final rule (56 FR 43212),
the FY 1993 final rule (57 FR 23625), the FY 1994
final rule (58 FR 46279), the FY 1995 final rule (59
FR 45336), the FY 1996 final rule (60 FR 45783),
the FY 1997 final rule (61 FR 46173), and the FY
1998 final rule (62 FR 45981), we moved several
other procedures from DRG 468 to DRG 477, and
some procedures from DRG 477 to DRG 468. No
procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962), in the FY 2000 (64 FR
41496), in the FY 2001 (65 FR 47064), or in the FY
2002 (66 FR 39852). In the FY 2003 final rule (67
FR 49999), we did not move any procedures from
DRG 477. However, we did move procedure codes
from DRG 468 and placed them in more clinically
coherent DRGs. In the FY 2004 final rule (68 FR
45365), we moved several procedures from DRG
468 to DRGs 476 and 477 because the procedures
are nonextensive. In the FY 2005 final rule (69 FR
48950), we moved one procedure from DRG 468 to
477. In addition, we added several existing
procedures to DRGs 476 and 477. In FY 2006 (70
FR 47317), we moved one procedure from DRG 468
and assigned it to DRG 477. In FY 2007, we moved
one procedure from DRG 468 and assigned it to
DRGs 479, 553, and 554. In FYs 2008, 2009, 2010,
2011, 2012, 2013, and 2014, no procedures were
moved, as noted in the FY 2008 final rule with
comment period (72 FR 46241), in the FY 2009 final
rule (73 FR 48513), in the FY 2010 final rule (74
FR 43796), in the FY 2011 final rule (75 FR 50122),
in the FY 2012 final rule (76 FR 51549), in the FY
2013 final rule (77 FR 53321), and in the FY 2014
final rule (78 FR 50545).
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984 through 986, and MS–DRGs 987
through 989 for FY 2015.
a. Moving Procedure Codes From MS–
DRGs 981 Through 983 or MS–DRGs
987 Through 989 Into MDCs
We annually conduct a review of
procedures producing assignment to
MS–DRGs 981 through 983 (Extensive
O.R. procedure unrelated to principal
diagnosis with MCC, with CC, and
without CC/MCC, respectively) or MS–
DRGs 987 through 989 (Nonextensive
O.R. procedure unrelated to principal
diagnosis with MCC, with CC, and
without CC/MCC, respectively) on the
basis of volume, by procedure, to see if
it would be appropriate to move
procedure codes out of these MS–DRGs
into one of the surgical MS–DRGs for
the MDC into which the principal
diagnosis falls. The data are arrayed in
two ways for comparison purposes. We
look at a frequency count of each major
operative procedure code. We also
compare procedures across MDCs by
volume of procedure codes within each
MDC.
We identify those procedures
occurring in conjunction with certain
principal diagnoses with sufficient
frequency to justify adding them to one
of the surgical MS–DRGs for the MDC in
which the diagnosis falls. As noted
above, there were no cases that merited
movement or that should logically be
assigned to any of the other MDCs.
Therefore, for FY 2015, we did not
propose to remove any procedures from
MS–DRGs 981 through 983 or MS–DRGs
987 through 989 into one of the surgical
MS–DRGs for the MDC into which the
principal diagnosis is assigned.
We did not receive any public
comments on our proposal. Therefore,
as we proposed, we are not removing
any procedures from MS–DRGs 981
through 983 or MS–DRGs 987 through
989 into one of the surgical MS–DRGs
into which the principal diagnosis is
assigned for FY 2015.
b. Reassignment of Procedures Among
MS–DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also annually review the list of
ICD–9–CM procedures that, when in
combination with their principal
diagnosis code, result in assignment to
MS–DRGs 981 through 983, 984 through
986 (Prostatic O.R. procedure unrelated
to principal diagnosis with MCC, with
CC, or without CC/MCC, respectively),
and 987 through 989, to ascertain
whether any of those procedures should
be reassigned from one of these three
MS–DRGs to another of the three MS–
DRGs based on average costs and the
length of stay. We look at the data for
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trends such as shifts in treatment
practice or reporting practice that would
make the resulting MS–DRG assignment
illogical. If we find these shifts, we
would propose to move cases to keep
the MS–DRGs clinically similar or to
provide payment for the cases in a
similar manner. Generally, we move
only those procedures for which we
have an adequate number of discharges
to analyze the data.
There were no cases representing
shifts in treatment practice or reporting
practice that would make the resulting
MS–DRG assignment illogical, or that
merited movement so that cases should
logically be assigned to any of the other
MDCs. Therefore, for FY 2015, we did
not propose to move any procedure
codes among these MS–DRGs.
We did not receive any public
comments on our proposal. Therefore,
as we proposed, we are not moving any
procedure codes among these MS–DRGs
for FY 2015.
c. Adding Diagnosis or Procedure Codes
to MDCs
Based on the review of cases in the
MDCs, as described above in sections
II.G.2. through 7. of the preamble of this
final rule, we did not propose to add
any diagnosis or procedure codes to
MDCs for FY 2015. We did not receive
any public comments on our proposal.
Therefore, as we proposed, we are not
adding any diagnosis or procedure
codes to MDCs for FY 2015.
13. Changes to the ICD–9–CM System
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a. ICD–10 Coordination and
Maintenance Committee
In September 1985, the ICD–9–CM
Coordination and Maintenance
Committee was formed. This is a
Federal interdepartmental committee,
co-chaired by the National Center for
Health Statistics (NCHS), the Centers for
Disease Control and Prevention, and
CMS, charged with maintaining and
updating the ICD–9–CM system. The
final update to ICD–9–CM codes was to
be made on October 1, 2013. Thereafter,
the name of the Committee was changed
to the ICD–10 Coordination and
Maintenance Committee, effective with
the March 19–20, 2014 meeting. The
ICD–10 Coordination and Maintenance
Committee will address updates to the
ICD–10–CM, ICD–10–PCS, and ICD–9–
CM coding systems. The Committee is
jointly responsible for approving coding
changes, and developing errata,
addenda, and other modifications to the
coding systems to reflect newly
developed procedures and technologies
and newly identified diseases. The
Committee is also responsible for
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promoting the use of Federal and nonFederal educational programs and other
communication techniques with a view
toward standardizing coding
applications and upgrading the quality
of the classification system.
The official list of ICD–9–CM
diagnosis and procedure codes by fiscal
year can be found on the CMS Web site
at: http://cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/
codes.html. The official list of ICD–10–
CM and ICD–10–PCS codes can be
found on the CMS Web site at: http://
www.cms.gov/Medicare/Coding/ICD10/
index.html.
The NCHS has lead responsibility for
the ICD–10–CM and ICD–9–CM
diagnosis codes included in the Tabular
List and Alphabetic Index for Diseases,
while CMS has lead responsibility for
the ICD–10–PCS and ICD–9–CM
procedure codes included in the
Tabular List and Alphabetic Index for
Procedures.
The Committee encourages
participation in the above process by
health-related organizations. In this
regard, the Committee holds public
meetings for discussion of educational
issues and proposed coding changes.
These meetings provide an opportunity
for representatives of recognized
organizations in the coding field, such
as the American Health Information
Management Association (AHIMA), the
American Hospital Association (AHA),
and various physician specialty groups,
as well as individual physicians, health
information management professionals,
and other members of the public, to
contribute ideas on coding matters.
After considering the opinions
expressed at the public meetings and in
writing, the Committee formulates
recommendations, which then must be
approved by the agencies.
The Committee presented proposals
for coding changes for implementation
in FY 2015 at a public meeting held on
September 18–19, 2013, and finalized
the coding changes after consideration
of comments received at the meetings
and in writing by November 15, 2013.
The Committee held its 2014 meeting
on March 19–20, 2014. It was
announced at this meeting that any new
ICD–10–CM/PCS codes for which there
was consensus of public support and for
which complete tabular and indexing
changes would be made by May 2014
would be included in the October 1,
2014 update to ICD–10–CM/ICD–10–
PCS. For FY 2015, there are no new,
revised, or deleted ICD–10–CM
diagnosis codes or ICD–10–PCS
procedure codes, and no new, revised,
or deleted ICD–9–CM diagnosis or
procedure codes.
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49907
Copies of the minutes of the
procedure codes discussions at the
Committee’s September 18–19, 2013
meeting and March 19–20, 2014 meeting
can be obtained from the CMS Web site
at: http://cms.hhs.gov/Medicare/Coding/
ICD9ProviderDiagnosticCodes/index.
html?redirect=/icd9ProviderDiagnostic
Codes/03_meetings.asp. The minutes of
the diagnosis codes discussions at the
September 18–19, 2013 meeting and
March 19–20, 2014 meeting are found
at: http://www.cdc.gov/nchs/icd/
icd9cm.html. These Web sites also
provide detailed information about the
Committee, including information on
requesting a new code, attending a
Committee meeting, and timeline
requirements and meeting dates.
We encourage commenters to address
suggestions on coding issues involving
diagnosis codes to: Donna Pickett, CoChairperson, ICD–10 Coordination and
Maintenance Committee, NCHS, Room
2402, 3311 Toledo Road, Hyattsville,
MD 20782. Comments may be sent by
email to: [email protected].
Questions and comments concerning
the procedure codes should be
addressed to: Patricia Brooks, CoChairperson, ICD–10 Coordination and
Maintenance Committee, CMS, Center
for Medicare Management, Hospital and
Ambulatory Policy Group, Division of
Acute Care, C4–08–06, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
Comments may be sent by email to:
[email protected].
In the September 7, 2001 final rule
implementing the IPPS new technology
add-on payments (66 FR 46906), we
indicated we would attempt to include
proposals for procedure codes that
would describe new technology
discussed and approved at the Spring
meeting as part of the code revisions
effective the following October.
Section 503(a) of Public Law 108–173
included a requirement for updating
ICD–9–CM codes twice a year instead of
a single update on October 1 of each
year. This requirement was included as
part of the amendments to the Act
relating to recognition of new
technology under the IPPS. Section
503(a) amended section 1886(d)(5)(K) of
the Act by adding a clause (vii) which
states that the ‘‘Secretary shall provide
for the addition of new diagnosis and
procedure codes on April 1 of each year,
but the addition of such codes shall not
require the Secretary to adjust the
payment (or diagnosis-related group
classification) . . . until the fiscal year
that begins after such date.’’ This
requirement improves the recognition of
new technologies under the IPPS system
by providing information on these new
technologies at an earlier date. Data will
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be available 6 months earlier than
would be possible with updates
occurring only once a year on October
1.
While section 1886(d)(5)(K)(vii) of the
Act states that the addition of new
diagnosis and procedure codes on April
1 of each year shall not require the
Secretary to adjust the payment, or DRG
classification, under section 1886(d) of
the Act until the fiscal year that begins
after such date, we have to update the
DRG software and other systems in
order to recognize and accept the new
codes. We also publicize the code
changes and the need for a mid-year
systems update by providers to identify
the new codes. Hospitals also have to
obtain the new code books and encoder
updates, and make other system changes
in order to identify and report the new
codes.
The ICD–10 (previously the ICD–9–
CM) Coordination and Maintenance
Committee holds its meetings in the
spring and fall in order to update the
codes and the applicable payment and
reporting systems by October 1 of each
year. Items are placed on the agenda for
the Committee meeting if the request is
received at least 2 months prior to the
meeting. This requirement allows time
for staff to review and research the
coding issues and prepare material for
discussion at the meeting. It also allows
time for the topic to be publicized in
meeting announcements in the Federal
Register as well as on the CMS Web site.
The public decides whether or not to
attend the meeting based on the topics
listed on the agenda. Final decisions on
code title revisions are currently made
by March 1 so that these titles can be
included in the IPPS proposed rule. A
complete addendum describing details
of all diagnosis and procedure coding
changes, both tabular and index, is
published on the CMS and NCHS Web
sites in May of each year. Publishers of
coding books and software use this
information to modify their products
that are used by health care providers.
This 5-month time period has proved to
be necessary for hospitals and other
providers to update their systems.
A discussion of this timeline and the
need for changes are included in the
December 4–5, 2005 ICD–9–CM
Coordination and Maintenance
Committee Meeting minutes. The public
agreed that there was a need to hold the
fall meetings earlier, in September or
October, in order to meet the new
implementation dates. The public
provided comment that additional time
would be needed to update hospital
systems and obtain new code books and
coding software. There was considerable
concern expressed about the impact this
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new April update would have on
providers.
In the FY 2005 IPPS final rule, we
implemented section 1886(d)(5)(K)(vii)
of the Act, as added by section 503(a)
of Public Law 108–173, by developing a
mechanism for approving, in time for
the April update, diagnosis and
procedure code revisions needed to
describe new technologies and medical
services for purposes of the new
technology add-on payment process. We
also established the following process
for making these determinations. Topics
considered during the Fall ICD–10
(previously ICD–9–CM) Coordination
and Maintenance Committee meeting
are considered for an April 1 update if
a strong and convincing case is made by
the requester at the Committee’s public
meeting. The request must identify the
reason why a new code is needed in
April for purposes of the new
technology process. The participants at
the meeting and those reviewing the
Committee meeting summary report are
provided the opportunity to comment
on this expedited request. All other
topics are considered for the October 1
update. Participants at the Committee
meeting are encouraged to comment on
all such requests. There were no
requests approved for an expedited
April l, 2014 implementation of a code
at the September 18–19, 2013
Committee meeting. Therefore, there
were no new codes implemented on
April 1, 2014.
ICD–9–CM addendum and code title
information is published on the CMS
Web site at: http://www.cms.hhs.gov/
Medicare/Coding/ICD9Provider
DiagnosticCodes/index.html?redirect=/
icd9ProviderDiagnosticCodes/
01overview.asp#TopofPage. ICD–10–CM
and ICD–10–PCS addendum and code
title information is published on the
CMS Web site at http://www.cms.gov/
Medicare/Coding/ICD10/index.html.
Information on ICD–10–CM diagnosis
codes, along with the Official ICD–10–
CM Coding Guidelines, can also be
found on the CDC Web site at: http://
www.cdc.gov/nchs/icd/icd10cm.html.
Information on new, revised, and
deleted ICD–10–CM/ICD–10–PCS codes
is also provided to the AHA for
publication in the Coding Clinic for
ICD–10. AHA also distributes
information to publishers and software
vendors.
CMS also sends copies of all ICD–9–
CM coding changes to its Medicare
contractors for use in updating their
systems and providing education to
providers.
The code titles are adopted as part of
the ICD–10 (previously ICD–9–CM)
Coordination and Maintenance
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Committee process. Therefore, although
we publish the code titles in the IPPS
proposed and final rules, they are not
subject to comment in the proposed or
final rules.
b. Code Freeze
In the January 16, 2009 ICD–10–CM
and ICD–10–PCS final rule (74 FR
3340), there was a discussion of the
need for a partial or total freeze in the
annual updates to both ICD–9–CM and
ICD–10–CM and ICD–10–PCS codes.
The public comment addressed in that
final rule stated that the annual code set
updates should cease l year prior to the
implementation of ICD–10. The
commenters stated that this freeze of
code updates would allow for
instructional and/or coding software
programs to be designed and purchased
early, without concern that an upgrade
would take place immediately before
the compliance date, necessitating
additional updates and purchases.
HHS responded to comments in the
ICD–10 final rule that the ICD–9–CM
Coordination and Maintenance
Committee has jurisdiction over any
action impacting the ICD–9–CM and
ICD–10 code sets. Therefore, HHS
indicated that the issue of consideration
of a moratorium on updates to the ICD–
9–CM, ICD–10–CM, and ICD–10–PCS
code sets in anticipation of the adoption
of ICD–10–CM and ICD–10–PCS would
be addressed through the Committee at
a future public meeting.
The code freeze was discussed at
multiple meetings of the ICD–9–CM
Coordination and Maintenance
Committee and public comment was
actively solicited. The Committee
evaluated all comments from
participants attending the Committee
meetings as well as written comments
that were received. The Committee also
considered the delay in implementation
of ICD–10 until October 1, 2014. There
was an announcement at the September
19, 2012 ICD–9–CM Coordination and
Maintenance Committee meeting that a
partial freeze of both ICD–9–CM and
ICD–10 codes will be implemented as
follows:
• The last regular annual update to
both ICD–9–CM and ICD–10 code sets
was made on October 1, 2011.
• On October 1, 2012 and October 1,
2013, there will be only limited code
updates to both ICD–9–CM and ICD–10
code sets to capture new technology and
new diseases.
• On October 1, 2014, there were to
be only limited code updates to ICD–10
code sets to capture new technology and
diagnoses as required by section 503(a)
of Public Law 108–173. There were to
E:\FR\FM\22AUR2.SGM
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
be no updates to ICD–9–CM on October
1, 2014.
• On October 1, 2015, one year after
the originally scheduled
implementation of ICD–10, regular
updates to ICD–10 were to begin.
On May 15, 2014, CMS posted an
updated Partial Code Freeze schedule
on the CMS Web site at: http://www.
cms.gov/Medicare/Coding/ICD10/ICD-9CM-Coordination-and-MaintenanceCommittee-Meetings.html. This updated
schedule provided information on the
extension of the partial code freeze until
1 year after the implementation of ICD–
10. As stated earlier, on April 1, 2014,
the Protecting Access to Medicare Act of
2014 (PAMA) (Pub. L. 113–93) was
enacted, which specified that the
Secretary may not adopt ICD–10 prior to
October 1, 2015. On May 1, 2014, the
Department announced that it expects to
release a interim final rule in the near
future that will include a new
compliance date to require the use of
ICD–10 beginning October 1, 2015. The
rule will also require HIPAA covered
entities to continue to use ICD–9–CM
through September 30, 2015.
Accordingly, the updated schedule for
the partial code freeze is as follows:
• The last regular annual updates to
both ICD–9–CM and ICD–10 code sets
were made on October 1, 2011.
• On October 1, 2012, October 1,
2013, and October 1, 2014, there will be
only limited code updates to both the
ICD–9–CM and ICD–10 code sets to
capture new technologies and diseases
as required by section 1886(d)(5)(K) of
the Act.
• On October 1, 2015, there will be
only limited code updates to ICD–10
code sets to capture new technologies
and diagnoses as required by section
1886(d)(5)(K) of the Act. There will be
no updates to ICD–9–CM, as it will no
longer be used for reporting.
• On October 1, 2016 (1 year after
implementation of ICD–10), regular
updates to ICD–10 will begin.
The ICD–10 (previously ICD–9–CM)
Coordination and Maintenance
Committee announced that it would
continue to meet twice a year during the
freeze. At these meetings, the public
will be encouraged to comment on
whether or not requests for new
49909
diagnosis and procedure codes should
be created based on the need to capture
new technology and new diseases. Any
code requests that do not meet the
criteria will be evaluated for
implementation within ICD–10 one year
after the implementation of ICD–10,
once the partial freeze is ended.
Complete information on the partial
code freeze and discussions of the
issues at the Committee meetings can be
found on the ICD–10 Coordination and
Maintenance Committee Web site at:
http://www.cms.hhs.gov/Medicare/
Coding/ICD9ProviderDiagnosticCodes/
meetings.html. A summary of the
September 19, 2012 Committee meeting,
along with both written and audio
transcripts of this meeting, is posted on
the Web site at: http://www.cms.hhs.
gov/Medicare/Coding/ICD9Provider
DiagnosticCodes/ICD-9-CM-C-and-MMeeting-Materials-Items/2012-09-19MeetingMaterials.html.
This partial code freeze has
dramatically decreased the number of
codes created each year as shown by the
following information.
TOTAL NUMBER OF CODES AND CHANGES IN TOTAL NUMBER OF CODES PER FISCAL YEAR
ICD–9–CM codes
Fiscal year
No.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
FY 2009 (October 1, 2008):
Diagnoses ..........................................
Procedures ........................................
FY 2010 (October 1, 2009):
Diagnoses ..........................................
Procedures ........................................
FY 2011 (October 1, 2010):
Diagnoses ..........................................
Procedures ........................................
FY 2012 (October 1, 2011):
Diagnoses ..........................................
Procedures ........................................
FY 2013 (October 1, 2012):
Diagnoses ..........................................
Procedures ........................................
FY 2014 (October 1, 2013):
Diagnoses ..........................................
Procedures ........................................
FY 2015 (October 1, 2014):
Diagnoses ..........................................
Procedures ........................................
18:25 Aug 21, 2014
Jkt 232001
Change
Fiscal year
14,025
3,824
348
56
14,315
3,838
290
14
14,432
3,859
117
21
14,567
3,877
135
18
14,567
3,878
0
1
14,567
3,882
0
4
14,567
3,882
0
0
FY
FY
FY
ICD–10–CM ......................................
ICD–10–PCS ....................................
2012:
ICD–10–CM ......................................
ICD–10–PCS ....................................
2013:
ICD–10–CM ......................................
ICD–10–PCS ....................................
2014:
ICD–10–CM ......................................
ICD–10–PCS ....................................
2015:
ICD–10–CM ......................................
ICD–10–PCS ....................................
creating only a limited number of new
ICD–9–CM and ICD–10 codes.
At the September 18–19, 2013 and
March 19–20, 2014 Committee
meetings, we discussed any requests we
had received for new ICD–10–CM
diagnosis and ICD–10–PCS procedure
codes that were to be implemented on
October 1, 2014. We did not discuss
ICD–9–CM codes. The public was given
the opportunity to comment on whether
or not new ICD–10–CM and ICD–10–
PO 00000
Frm 00057
Fmt 4701
No.
FY 2009:
ICD–10–CM ......................................
ICD–10–PCS ....................................
FY 2010:
ICD–10–CM ......................................
ICD–10–PCS ....................................
FY
As mentioned earlier, the public is
provided the opportunity to comment
on any requests for new diagnosis or
procedure codes discussed at the ICD–
10 Coordination and Maintenance
Committee meeting. The public has
supported only a limited number of new
codes during the partial code freeze, as
can be seen by data shown above. We
have gone from creating several
hundred new codes each year to
VerDate Mar<15>2010
ICD–10–CM and ICD–10–PCS codes
Sfmt 4700
Change
68,069
72,589
+5
¥14,327
69,099
71,957
+1,030
¥632
69,368
72,081
+269
+124
69,833
71,918
+465
¥163
69,832
71,920
¥1
+2
69,823
71,924
¥9
+4
69,823
71,924
0
0
PCS codes should be created, based on
the partial code freeze criteria. The
public was to use the criteria as to
whether codes were needed to capture
new diagnoses or new technologies. If
the codes do not meet those criteria for
implementation during the partial code
freeze, consideration was to be given as
to whether the codes should be created
after the partial code freeze ends one
year after the implementation of ICD–
10–CM/PCS. We invited public
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
comments on any code requests
discussed at the September 18–19, 2013
and March 19–20, 2014 Committee
meetings for implementation as part of
the October 1, 2014 update. The
deadline for commenting on code
proposals discussed at the September
18–19, 2013 Committee meeting was
November 15, 2013. The deadline for
commenting on code proposals
discussed at the March 19–20, 2014
Committee meeting was April 18, 2014.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
14. Public Comments on Issues Not
Addressed in the Proposed Rule
We received three public comments
regarding MS–DRG issues that were
outside of the scope of the proposals
included in the FY 2014 IPPS/LTCH
PPS proposed rule. Below we
summarize these public comments.
However, because we consider these
public comments to be outside of the
scope of the proposed rule, we are not
responding to them in this final rule. As
stated in section II.G.1.b. of the
preamble of this final rule, we
encourage individuals with comments
about MS–DRG classifications to submit
these comments no later than December
7 of each year so they can be considered
for possible inclusion in the annual
proposed rule and, if included, may be
subjected to public review and
comment. We will consider these public
comments for possible proposals in
future rulemaking as part of our annual
review process.
a. Request for Review and MS–DRG
Reassignment for ICD–9–CM Diagnosis
Code 784.7 Reported With Procedure
Codes 39.75 and 39.76
One commenter expressed concern
regarding specific procedure codes that
are assigned to MS–DRGs 981 through
983; 984 through 986; and 987 through
989 in relation to our discussion of the
annual review of these MS–DRGs in
section II.G.12. of the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28020).
The commenter noted that the
endovascular embolization of the
arteries of the branches of the internal
maxillary artery is frequently performed
for intractable posterior epistaxis. The
commenter stated that, currently,
diagnosis code 784.7 (Epistaxis)
reported with procedure codes 39.75
(Endovascular embolization or
occlusion of vessel(s) of head or neck
using bare coils) and 39.76
(Endovascular embolization or
occlusion of vessel(s) of head or neck
using bioactive coils) groups to MS–
DRG 981(Extensive O.R. Procedure
Unrelated to Principal Diagnosis with
MCC), MS–DRG 982 (Extensive O.R.
Procedure Unrelated to Principal
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Diagnosis with CC), and MS–DRG 983
(Extensive O.R. Procedure Unrelated to
Principal Diagnosis without CC/MCC).
The commenter indicated that it also
found this grouping with ICD–10
diagnosis code R04.0 (Epistaxis)
reported with artery occlusion
procedure codes. The commenter
requested that CMS review these
groupings and consider the possibility
of reassigning these procedure codes
into a more specific MS–DRG.
We consider this public comment to
be outside of the scope of the FY 2015
IPPS/LTCH PPS proposed rule and
therefore are not addressing it in this
final rule. However, we will consider
this public comment for possible
proposals in future rulemaking as part
of our annual review process.
b. Coding for Extracorporeal Membrane
Oxygenation Procedures (ECMO)
Several commenters expressed
concern that hospitals may not be
correctly reporting extracorporeal
membrane oxygenation (ECMO) and
percutaneous cardiopulmonary bypass
procedures. The commenters requested
that CMS inform hospitals that they
should appropriately code each
procedure separately because each code
captures different procedures.
We consider this coding issue to be
outside of the scope of the FY 2015
IPPS/LTCH PPS proposed rule. We refer
commenters to the American Hospital
Association’s Central Office on Coding,
which has responsibility for providing
coding advice on such specific coding
issues through its publication Coding
Clinic.
c. Adding Severity Levels to MS–DRGs
245 through 251
One commenter recommended
including additional severity levels
under MS–DRG 245 (AICD Generator
Procedures); MS–DRG 246
(Percutaneous Cardiovascular Procedure
with Drug-Eluting Stent with MCC or 4+
Vessels/Stents); MS–DRG 247
(Percutaneous Cardiovascular Procedure
with Drug-Eluting Stent without MCC);
MS–DRG 248 (Percutaneous
Cardiovascular Procedure with NonDrug-Eluting Stent with MCC or 4+
Vessels/Stents); MS–DRG 249
(Percutaneous Cardiovascular Procedure
with Non-Drug-Eluting Stent without
MCC); MS–DRG 250 (Percutaneous
Cardiovascular Procedure without
Coronary Artery Stent with MCC); and
MS–DRG 251 (Percutaneous
Cardiovascular Procedure without
Coronary Artery Stent without MCC).
We consider this public comment to
be outside of the scope of the FY 2015
IPPS/LTCH PPS proposed rule, and
PO 00000
Frm 00058
Fmt 4701
Sfmt 4700
therefore are not addressing it in this
final rule. However, we will consider
the comment for possible proposals in
future rulemaking as part of our annual
review process.
H. Recalibration of the FY 2015 MS–
DRG Relative Weights
1. Data Sources for Developing the
Relative Weights
In developing the FY 2015 system of
weights, we used two data sources:
Claims data and cost report data. As in
previous years, the claims data source is
the MedPAR file. This file is based on
fully coded diagnostic and procedure
data for all Medicare inpatient hospital
bills. The FY 2013 MedPAR data used
in this final rule include discharges
occurring on October 1, 2012, through
September 30, 2013, based on bills
received by CMS through March 31,
2014, from all hospitals subject to the
IPPS and short-term, acute care
hospitals in Maryland (which at that
time were under a waiver from the IPPS
under section 1814(b)(3) of the Act). The
FY 2013 MedPAR file used in
calculating the relative weights includes
data for approximately 10,090,385
Medicare discharges from IPPS
providers. Discharges for Medicare
beneficiaries enrolled in a Medicare
Advantage managed care plan are
excluded from this analysis. These
discharges are excluded when the
MedPAR ‘‘GHO Paid’’ indicator field on
the claim record is equal to ‘‘1’’ or when
the MedPAR DRG payment field, which
represents the total payment for the
claim, is equal to the MedPAR ‘‘Indirect
Medical Education (IME)’’ payment
field, indicating that the claim was an
‘‘IME only’’ claim submitted by a
teaching hospital on behalf of a
beneficiary enrolled in a Medicare
Advantage managed care plan. In
addition, the March 31, 2014 update of
the FY 2013 MedPAR file complies with
version 5010 of the X12 HIPAA
Transaction and Code Set Standards,
and includes a variable called ‘‘claim
type.’’ Claim type ‘‘60’’ indicates that
the claim was an inpatient claim paid as
fee-for-service. Claim types ‘‘61,’’ ‘‘62,’’
‘‘63,’’ and ‘‘64’’ relate to encounter
claims, Medicare Advantage IME
claims, and HMO no-pay claims.
Therefore, the calculation of the relative
weights for FY 2015 also excludes
claims with claim type values not equal
to ‘‘60.’’ The data exclude CAHs,
including hospitals that subsequently
became CAHs after the period from
which the data were taken. We note that
the FY 2015 relative weights are based
on the ICD–9–CM diagnoses and
procedures codes from the MedPAR
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
claims data, grouped through the ICD–
9–CM version of the FY 2015 GROUPER
(Version 32). The second data source
used in the cost-based relative
weighting methodology is the Medicare
cost report data files from the HCRIS.
Normally, we use the HCRIS dataset that
is 3 years prior to the IPPS fiscal year.
Specifically, we used cost report data
from the March 31, 2014 update of the
FY 2012 HCRIS for calculating the FY
2015 cost-based relative weights.
2. Methodology for Calculation of the
Relative Weights
As we explain in section II.E.2. of the
preamble of this final rule, we are
calculating the FY 2015 relative weights
based on 19 CCRs, as we did for FY
2014. The methodology we used to
calculate the FY 2015 MS–DRG costbased relative weights based on claims
data in the FY 2013 MedPAR file and
data from the FY 2012 Medicare cost
reports is as follows:
• To the extent possible, all the
claims were regrouped using the FY
2015 MS–DRG classifications discussed
in sections II.B. and II.G. of the
preamble of this final rule.
• The transplant cases that were used
to establish the relative weights for heart
and heart-lung, liver and/or intestinal,
and lung transplants (MS–DRGs 001,
002, 005, 006, and 007, respectively)
were limited to those Medicareapproved transplant centers that have
cases in the FY 2012 MedPAR file.
(Medicare coverage for heart, heart-lung,
liver and/or intestinal, and lung
transplants is limited to those facilities
that have received approval from CMS
as transplant centers.)
• Organ acquisition costs for kidney,
heart, heart-lung, liver, lung, pancreas,
and intestinal (or multivisceral organs)
transplants continue to be paid on a
reasonable cost basis. Because these
acquisition costs are paid separately
from the prospective payment rate, it is
necessary to subtract the acquisition
charges from the total charges on each
transplant bill that showed acquisition
charges before computing the average
cost for each MS–DRG and before
eliminating statistical outliers.
• Claims with total charges or total
lengths of stay less than or equal to zero
were deleted. Claims that had an
amount in the total charge field that
differed by more than $10.00 from the
sum of the routine day charges,
intensive care charges, pharmacy
charges, special equipment charges,
therapy services charges, operating
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18:25 Aug 21, 2014
Jkt 232001
room charges, cardiology charges,
laboratory charges, radiology charges,
other service charges, labor and delivery
charges, inhalation therapy charges,
emergency room charges, blood charges,
and anesthesia charges were also
deleted.
• At least 92.2 percent of the
providers in the MedPAR file had
charges for 14 of the 19 cost centers. All
claims of providers that did not have
charges greater than zero for at least 14
of the 19 cost centers were deleted. In
other words, a provider must have no
more than five blank cost centers. If a
provider did not have charges greater
than zero in more than five cost centers,
the claims for the provider were deleted.
(We refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50551) for
the edit threshold related to FY 2014
and prior fiscal years).
• Statistical outliers were eliminated
by removing all cases that were beyond
3.0 standard deviations from the
geometric mean of the log distribution
of both the total charges per case and
the total charges per day for each MS–
DRG.
• Effective October 1, 2008, because
hospital inpatient claims include a POA
indicator field for each diagnosis
present on the claim, only for purposes
of relative weight-setting, the POA
indicator field was reset to ‘‘Y’’ for
‘‘Yes’’ for all claims that otherwise have
an ‘‘N’’ (No) or a ‘‘U’’ (documentation
insufficient to determine if the
condition was present at the time of
inpatient admission) in the POA field.
Under current payment policy, the
presence of specific HAC codes, as
indicated by the POA field values, can
generate a lower payment for the claim.
Specifically, if the particular condition
is present on admission (that is, a ‘‘Y’’
indicator is associated with the
diagnosis on the claim), it is not a HAC,
and the hospital is paid for the higher
severity (and, therefore, the higher
weighted MS–DRG). If the particular
condition is not present on admission
(that is, an ‘‘N’’ indicator is associated
with the diagnosis on the claim) and
there are no other complicating
conditions, the DRG GROUPER assigns
the claim to a lower severity (and,
therefore, the lower weighted MS–DRG)
as a penalty for allowing a Medicare
inpatient to contract a HAC. While the
POA reporting meets policy goals of
encouraging quality care and generates
program savings, it presents an issue for
the relative weight-setting process.
Because cases identified as HACs are
PO 00000
Frm 00059
Fmt 4701
Sfmt 4700
49911
likely to be more complex than similar
cases that are not identified as HACs,
the charges associated with HAC cases
are likely to be higher as well.
Therefore, if the higher charges of these
HAC claims are grouped into lower
severity MS–DRGs prior to the relative
weight-setting process, the relative
weights of these particular MS–DRGs
would become artificially inflated,
potentially skewing the relative weights.
In addition, we want to protect the
integrity of the budget neutrality process
by ensuring that, in estimating
payments, no increase to the
standardized amount occurs as a result
of lower overall payments in a previous
year that stem from using weights and
case-mix that are based on lower
severity MS–DRG assignments. If this
would occur, the anticipated cost
savings from the HAC policy would be
lost.
To avoid these problems, we reset the
POA indicator field to ‘‘Y’’ only for
relative weight-setting purposes for all
claims that otherwise have an ‘‘N’’ or a
‘‘U’’ in the POA field. This resetting
‘‘forced’’ the more costly HAC claims
into the higher severity MS–DRGs as
appropriate, and the relative weights
calculated for each MS–DRG more
closely reflect the true costs of those
cases.
Once the MedPAR data were trimmed
and the statistical outliers were
removed, the charges for each of the 19
cost groups for each claim were
standardized to remove the effects of
differences in area wage levels, IME and
DSH payments, and for hospitals
located in Alaska and Hawaii, the
applicable cost-of-living adjustment.
Because hospital charges include
charges for both operating and capital
costs, we standardized total charges to
remove the effects of differences in
geographic adjustment factors, cost-ofliving adjustments, and DSH payments
under the capital IPPS as well. Charges
were then summed by MS–DRG for each
of the 19 cost groups so that each MS–
DRG had 19 standardized charge totals.
These charges were then adjusted to
cost by applying the national average
CCRs developed from the FY 2012 cost
report data.
The 19 cost centers that we used in
the relative weight calculation are
shown in the following table. The table
shows the lines on the cost report and
the corresponding revenue codes that
we used to create the 19 national cost
center CCRs.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Cost center
group name
(19 total)
Routine Days .........
Intensive Days .......
Drugs .....................
MedPAR charge
field
Cost report
line description
Private Room
Charges.
011X and 014X ......
Semi-Private Room
Charges.
Ward Charges ........
Intensive Care
Charges.
Coronary Care
Charges.
Pharmacy Charges
Charges from
HCRIS
(Worksheet C,
Part 1,
Column 6 & 7
and line
number)
Form
CMS–2552–10
Medicare
charges from
HCRIS
(Worksheet D–3,
Column & line
number)
Form
CMS–2552–10
Adults & Pediatrics
(General Routine
Care).
C_1_C5_30 .......
C_1_C6_30
D3_HOS_C2_30
012X, 013X and
016X–019X.
015X ......................
020X ......................
Intensive Care Unit
C_1_C5_31 .......
C_1_C6_31
D3_HOS_C2_31
021X ......................
Coronary Care Unit
C_1_C5_32 .......
C_1_C6_32
D3_HOS_C2_32
C_1_C5_33 .......
C_1_C6_33
D3_HOS_C2_33
C_1_C5_34 .......
C_1_C6_34
D3_HOS_C2_34
C_1_C5_35 .......
C_1_C6_35
D3_HOS_C2_35
025X, 026X and
063X.
Burn Intensive Care
Unit.
Surgical Intensive
Care Unit.
Other Special Care
Unit.
Intravenous Therapy.
C_1_C5_64 .......
C_1_C6_64
D3_HOS_C2_64
Drugs Charged To
Patient.
C_1_C5_73 .......
C_1_C7_64
C_1_C6_73
D3_HOS_C2_73
Medical/Surgical
Supply Charges.
0270, 0271, 0272,
Medical Supplies
0273, 0274,
Charged to Pa0277, 0279, and
tients.
0621, 0622, 0623.
C_1_C5_71 .......
C_1_C7_73
C_1_C6_71
D3_HOS_C2_71
Durable Medical
Equipment
Charges.
0290, 0291, 0292
and 0294–0299.
DME-Rented ..........
C_1_C5_96 .......
C_1_C7_71
C_1_C6_96
D3_HOS_C2_96
Used Durable Medical Charges.
0293 .......................
DME-Sold ...............
C_1_C5_97 .......
C_1_C7_96
C_1_C6_97
D3_HOS_C2_97
0275, 0276, 0278,
0624.
Implantable Devices
Charged to Patients.
C_1_C5_72 .......
C_1_C7_97
C_1_C6_72
D3_HOS_C2_72
Physical Therapy
Charges.
042X ......................
Physical Therapy ...
C_1_C5_66 .......
C_1_C7_72
C_1_C6_66
D3_HOS_C2_66
Occupational Therapy Charges.
043X ......................
Occupational Therapy.
C_1_C5_67 .......
C_1_C7_66
C_1_C6_67
D3_HOS_C2_67
Speech Pathology
Charges.
044X and 047X ......
Speech Pathology
C_1_C5_68 .......
C_1_C7_67
C_1_C6_68
D3_HOS_C2_68
Inhalation Therapy
Inhalation Therapy
Charges.
041X and 046X ......
Respiratory Therapy.
C_1_C5_65 .......
C_1_C7_68
C_1_C6_65
D3_HOS_C2_65
Operating Room ....
Operating Room
Charges.
036X ......................
Operating Room ....
C_1_C5_50 .......
C_1_C7_65
C_1_C6_50
D3_HOS_C2_50
071X ......................
Recovery Room .....
C_1_C5_51 .......
Supplies and Equipment.
Implantable Devices
Therapy Services ...
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Revenue codes
contained in
MedPAR
charge field
Cost from
HCRIS
(Worksheet C,
Part 1,
Column 5
and line
number)
Form
CMS–2552–10
Labor & Delivery ....
Operating Room
Charges.
072X ......................
Delivery Room and
Labor Room.
C_1_C5_52 .......
Anesthesia .............
Anesthesia Charges
037X ......................
Anesthesiology ......
C_1_C5_53 .......
Cardiology ..............
Cardiology Charges
048X and 073X ......
Electro-cardiology ..
C_1_C5_69 .......
0481 .......................
Cardiac Catheterization.
030X, 031X, and
075X.
Laboratory ..............
Cardiac Catheterization.
Laboratory ..............
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18:25 Aug 21, 2014
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C_1_C7_50
C_1_C6_51
C_1_C7_51
C_1_C6_52
D3_HOS_C2_51
D3_HOS_C2_52
C_1_C5_59 .......
C_1_C7_52
C_1_C6_53
C_1_C7_53
C_1_C6_69
C_1_C7_69
C_1_C6_59
D3_HOS_C2_59
C_1_C5_60 .......
C_1_C7_59
C_1_C6_60
D3_HOS_C2_60
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Cost center
group name
(19 total)
Radiology ...............
MedPAR charge
field
Radiology Charges
Cost report
line description
Charges from
HCRIS
(Worksheet C,
Part 1,
Column 6 & 7
and line
number)
Form
CMS–2552–10
Medicare
charges from
HCRIS
(Worksheet D–3,
Column & line
number)
Form
CMS–2552–10
PBP Clinic Laboratory Services.
C_1_C5_61 .......
C_1_C7_60
C_1_C6_61
D3_HOS_C2_61
074X, 086X ............
Electro-Encephalography.
C_1_C5_70 .......
C_1_C7_61
C_1_C6_70
D3_HOS_C2_70
032X, 040X ............
Radiology—Diagnostic.
C_1_C5_54 .......
C_1_C7_70
C_1_C6_54
D3_HOS_C2_54
028x, 0331, 0332,
0333, 0335,
0339, 0342.
0343 and 344 ........
Radiology—Therapeutic.
C_1_C5_55 .......
C_1_C7_54
C_1_C6_55
D3_HOS_C2_55
Radioisotope ..........
C_1_C5_56 .......
Computed Tomography (CT) Scan.
CT Scan Charges ..
035X ......................
Computed Tomography (CT) Scan.
C_1_C5_57 .......
C_1_C6_56
C_1_C7_56
C_1_C6_57
Magnetic Resonance Imaging
(MRI).
MRI Charges ..........
061X ......................
Magnetic Resonance Imaging
(MRI).
C_1_C5_58 .......
C_1_C7_57
C_1_C6_58
D3_HOS_C2_58
Emergency Room ..
Emergency Room
Charges.
045x .......................
Emergency .............
C_1_C5_91 .......
C_1_C7_58
C_1_C6_91
D3_HOS_C2_91
Blood and Blood
Products.
Blood Charges .......
038x .......................
C_1_C5_62 .......
Blood Storage/Processing.
039x .......................
Whole Blood &
Packed Red
Blood Cells.
Blood Storing, Processing, &
Transfusing.
Other Service
Charge.
0002–0099, 022X,
023X, 024X,
052X, 053X.
055X–060X, 064X–
070X, 076X–
078X, 090X–
095X and 099X.
0800X ....................
080X and 082X–
088X.
Other Services .......
Renal Dialysis ........
ESRD Revenue
Setting Charges.
Outpatient Service
Charges.
Lithotripsy Charge ..
Clinic Visit Charges
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Revenue codes
contained in
MedPAR
charge field
Cost from
HCRIS
(Worksheet C,
Part 1,
Column 5
and line
number)
Form
CMS–2552–10
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049X ......................
D3_HOS_C2_57
D3_HOS_C2_62
C_1_C5_63 .......
C_1_C6_63
C_1_C7_63
D3_HOS_C2_63
Renal Dialysis ........
C_1_C5_74 .......
C_1_C6_74
C_1_C7_74
D3_HOS_C2_74
Home Program Dialysis.
C_1_C5_94 .......
C_1_C6_94
D3_HOS_C2_94
ASC (Non Distinct
Part).
C_1_C5_75 .......
C_1_C7_94
C_1_C6_75
D3_HOS_C2_75
Other Ancillary .......
C_1_C5_76 .......
Clinic ......................
C_1_C5_90 .......
Observation beds ...
C_1_C5_92.01 ..
C_1_C7_75
C_1_C6_76
C_1_C7_76
C_1_C6_90
C_1_C7_90
C_1_C6_92.01
079X ......................
051X ......................
C_1_C7_91
C_1_C6_62
C_1_C7_62
D3_HOS_C2_56
D3_HOS_C2_76
D3_HOS_C2_90
D3_HOS_C2_
92.01
Professional Fees
Charges.
096X, 097X, and
098X.
Other Outpatient
Services.
C_1_C5_93 .......
C_1_C7_92.01
C_1_C6_93
D3_HOS_C2_93
Ambulance
Charges.
054X ......................
Ambulance .............
C_1_C5_95 .......
C_1_C7_93
C_1_C6_95
D3_HOS_C2_95
Rural Health Clinic
C_1_C5_88 .......
FQHC .....................
C_1_C5_89 .......
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C_1_C6_88
C_1_C7_88
C_1_C6_89
C_1_C7_89
22AUR2
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D3_HOS_C2_89
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We refer readers to the FY 2009 IPPS/
LTCH PPS final rule (73 FR 48462) for
a discussion on the revenue codes
included in the Supplies and
Equipment and Implantable Devices
CCRs, respectively.
3. Development of National Average
CCRs
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
We developed the national average
CCRs as follows:
Using the FY 2012 cost report data,
we removed CAHs, Indian Health
Service hospitals, all-inclusive rate
hospitals, and cost reports that
represented time periods of less than 1
year (365 days). We included hospitals
located in Maryland because we include
their charges in our claims database. We
then created CCRs for each provider for
each cost center (see prior table for line
items used in the calculations) and
removed any CCRs that were greater
than 10 or less than 0.01. We
normalized the departmental CCRs by
dividing the CCR for each department
by the total CCR for the hospital for the
purpose of trimming the data. We then
took the logs of the normalized cost
center CCRs and removed any cost
center CCRs where the log of the cost
center CCR was greater or less than the
mean log plus/minus 3 times the
standard deviation for the log of that
cost center CCR. Once the cost report
data were trimmed, we calculated a
Medicare-specific CCR. The Medicarespecific CCR was determined by taking
the Medicare charges for each line item
from Worksheet D–3 and deriving the
Medicare-specific costs by applying the
hospital-specific departmental CCRs to
the Medicare-specific charges for each
line item from Worksheet D–3. Once
each hospital’s Medicare-specific costs
were established, we summed the total
Medicare-specific costs and divided by
the sum of the total Medicare-specific
charges to produce national average,
charge-weighted CCRs.
After we multiplied the total charges
for each MS–DRG in each of the 19 cost
centers by the corresponding national
average CCR, we summed the 19 ‘‘costs’’
across each MS–DRG to produce a total
standardized cost for the MS–DRG. The
average standardized cost for each MS–
DRG was then computed as the total
standardized cost for the MS–DRG
divided by the transfer-adjusted case
count for the MS–DRG. The average cost
for each MS–DRG was then divided by
the national average standardized cost
per case to determine the relative
weight.
The FY 2015 cost-based relative
weights were then normalized by an
adjustment factor of 1.645837 so that the
average case weight after recalibration
was equal to the average case weight
before recalibration. The normalization
adjustment is intended to ensure that
recalibration by itself neither increases
nor decreases total payments under the
IPPS, as required by section
1886(d)(4)(C)(iii) of the Act.
The 19 national average CCRs for FY
2015 are as follows:
reasonable weight. In the FY 2015 IPPS/
LTCH PPS proposed rule, we proposed
to use that same case threshold in
recalibrating the MS–DRG relative
weights for FY 2015. Using data from
the FY 2013 MedPAR file, there were 8
MS–DRGs that contain fewer than 10
cases. Under the MS–DRGs, we have
fewer low-volume DRGs than under the
CMS DRGs because we no longer have
separate DRGs for patients aged 0 to 17
years. With the exception of newborns,
we previously separated some DRGs
based on whether the patient was age 0
to 17 years or age 17 years and older.
Other than the age split, cases grouping
to these DRGs are identical. The DRGs
for patients aged 0 to 17 years generally
have very low volumes because children
are typically ineligible for Medicare. In
the past, we have found that the low
volume of cases for the pediatric DRGs
could lead to significant year-to-year
instability in their relative weights.
Although we have always encouraged
non-Medicare payers to develop weights
Group
CCR
applicable to their own patient
Routine Days ....................................
0.489 populations, we have received frequent
Intensive Days ..................................
0.407 complaints from providers about the use
Drugs ................................................
0.192 of the Medicare relative weights in the
Supplies & Equipment ......................
0.292 pediatric population. We believe that
Implantable Devices .........................
0.349 eliminating this age split in the MS–
Therapy Services ..............................
0.344 DRGs will provide more stable payment
Laboratory .........................................
0.128 for pediatric cases by determining their
Operating Room ...............................
0.212
Cardiology .........................................
0.123 payment using adult cases that are
Cardiac Catheterization ....................
0.133 much higher in total volume. Newborns
Radiology ..........................................
0.165 are unique and require separate MS–
MRIs .................................................
0.087 DRGs that are not mirrored in the adult
CT Scans ..........................................
0.043 population. Therefore, it remains
Emergency Room .............................
0.195 necessary to retain separate MS–DRGs
Blood and Blood Products ................
0.360 for newborns. All of the low-volume
Other Services ..................................
0.405
MS–DRGs listed below are for
Labor & Delivery ...............................
0.398
Inhalation Therapy ............................
0.181 newborns. In FY 2015, because we do
Anesthesia ........................................
0.114 not have sufficient MedPAR data to set
accurate and stable cost relative weights
for these low-volume MS–DRGs, we
Since FY 2009, the relative weights
proposed to compute relative weights
have been based on 100 percent cost
weights based on our MS–DRG grouping for the low-volume MS–DRGs by
adjusting their final FY 2014 relative
system.
When we recalibrated the DRG
weights by the percentage change in the
weights for previous years, we set a
average weight of the cases in other MS–
threshold of 10 cases as the minimum
DRGs. The crosswalk table is shown
number of cases required to compute a
below:
Low-volume
MS–DRG
MS–DRG title
768 ...............
791 ...............
Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C.
Neonates, Died or Transferred to Another
Acute Care Facility.
Extreme Immaturity or Respiratory Distress Syndrome, Neonate.
Prematurity with Major Problems ..............
792 ...............
Prematurity without Major Problems .........
793 ...............
Full-Term Neonate with Major Problems ..
789 ...............
790 ...............
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Crosswalk to MS–DRG
Final FY 2014 relative weight
cases in other MS–DRGs).
Final FY 2014 relative weight
cases in other MS–DRGs).
Final FY 2014 relative weight
cases in other MS–DRGs).
Final FY 2014 relative weight
cases in other MS–DRGs).
Final FY 2014 relative weight
cases in other MS–DRGs).
Final FY 2014 relative weight
cases in other MS–DRGs).
Frm 00062
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(adjusted by percent change in average weight of the
(adjusted by percent change in average weight of the
(adjusted by percent change in average weight of the
(adjusted by percent change in average weight of the
(adjusted by percent change in average weight of the
(adjusted by percent change in average weight of the
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Low-volume
MS–DRG
MS–DRG title
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Crosswalk to MS–DRG
794 ...............
Neonate with Other Significant Problems
795 ...............
Normal Newborn .......................................
We did not receive any public
comments on this proposal and,
therefore, are finalizing it for FY 2015 as
proposed.
4. Bundled Payments for Care
Improvement (BPCI) Initiative
The Bundled Payments for Care
Improvement (BPCI) initiative,
developed under the authority of
section 3021 of the Affordable Care Act
(codified at section 1115A of the Act),
is comprised of four broadly defined
models of care, which link payments for
multiple services beneficiaries receive
during an episode of care. Under the
BPCI initiative, organizations enter into
payment arrangements that include
financial and performance
accountability for episodes of care. On
January 31, 2013, CMS announced the
health care organizations selected to
participate in the BPCI initiative. For
additional information on the BPCI
initiative, we refer readers to the CMS’
Center for Medicare and Medicaid
Innovation’s Web site at http://
innovation.cms.gov/initiatives/BundledPayments/index.html and to section
IV.H.4. of the preamble of the FY 2013
IPPS/LTCH PPS final rule (77 FR 53341
through 53343) for a discussion on the
BPCI initiative.
In the FY 2013 IPPS/LTCH PPS final
rule, for FY 2013 and subsequent fiscal
years, we finalized a policy to treat
hospitals that participate in the BPCI
initiative the same as prior fiscal years
for the IPPS payment modeling and
ratesetting process without regard to a
hospital’s participation within these
bundled payment models (that is, as if
a hospital were not participating in
those models under the BPCI initiative).
Therefore, for FY 2015, we proposed to
continue to include all applicable data
from subsection (d) hospitals
participating in BPCI Models 1, 2, and
4 in our IPPS payment modeling and
ratesetting calculations. We refer readers
to the FY 2013 IPPS/LTCH PPS final
rule for a complete discussion on our
final policy for the treatment of
hospitals participating in the BPCI
initiative in our ratesetting process.
Comment: One commenter was
concerned about the policy to treat all
providers that participate in the BPCI
initiative the same as prior fiscal years
for the IPPS payment modeling and
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Final FY 2014 relative weight (adjusted by percent change in average weight of the
cases in other MS–DRGs).
Final FY 2014 relative weight (adjusted by percent change in average weight of the
cases in other MS–DRGs).
ratesetting process without regard to a
hospital’s participation within these
bundled payment models. The
commenter stated that while it is
unlikely to have a demonstrable effect
in FY 2015, the BPCI initiative has just
begun and has few participants
compared to the total number of PPS
hospitals. The commenter further stated
that the cohort is expected to expand
dramatically, given the additional round
of applications, and it expected
participants to focus their cost reduction
activities in select MS–DRGs, which
could skew specific weights and
inappropriately shift payments to other
MS–DRGs. The commenter added that
providers that are not part of the
initiative cannot be expected to reach
the same performance levels without the
same tools available within the BPCI.
The commenter recommended that CMS
reconsider removing BPCI participants
from the IPPS relative weight setting
process.
Response: As the commenter stated,
the BPCI initiative is unlikely to have a
demonstrable effect for FY 2015.
Accordingly, we are finalizing our
proposal to continue to include all
applicable data from subsection (d)
hospitals participating in BPCI Models
1, 2, and 4 in our IPPS payment
modeling and ratesetting calculations
for FY 2015. However, we will monitor
the possible impact that hospitals
enrolled in the BPCI initiative may have
on the MS–DRG relative weights in
future fiscal years.
I. Add-On Payments for New Services
and Technologies
1. Background
Sections 1886(d)(5)(K) and (L) of the
Act establish a process of identifying
and ensuring adequate payment for new
medical services and technologies
(sometimes collectively referred to in
this section as ‘‘new technologies’’)
under the IPPS. Section
1886(d)(5)(K)(vi) of the Act specifies
that a medical service or technology will
be considered new if it meets criteria
established by the Secretary after notice
and opportunity for public comment.
Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or
technology may be considered for new
technology add-on payment if, ‘‘based
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Frm 00063
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on the estimated costs incurred with
respect to discharges involving such
service or technology, the DRG
prospective payment rate otherwise
applicable to such discharges under this
subsection is inadequate.’’ We note that
beginning with discharges occurring in
FY 2008, CMS transitioned from CMS–
DRGs to MS–DRGs.
The regulations at 42 CFR 412.87
implement these provisions and specify
three criteria for a new medical service
or technology to receive the additional
payment: (1) The medical service or
technology must be new; (2) the medical
service or technology must be costly
such that the DRG rate otherwise
applicable to discharges involving the
medical service or technology is
determined to be inadequate; and (3) the
service or technology must demonstrate
a substantial clinical improvement over
existing services or technologies. Below
we highlight some of the major statutory
and regulatory provisions relevant to the
new technology add-on payment criteria
as well as other information. For a
complete discussion on the new
technology add-on payment criteria, we
refer readers to the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51572 through
51574).
Under the first criterion, as reflected
in § 412.87(b)(2), a specific medical
service or technology will be considered
‘‘new’’ for purposes of new medical
service or technology add-on payments
until such time as Medicare data are
available to fully reflect the cost of the
technology in the MS–DRG weights
through recalibration. We note that we
do not consider a service or technology
to be new if it is substantially similar to
one or more existing technologies. That
is, even if a technology receives a new
FDA approval, it may not necessarily be
considered ‘‘new’’ for purposes of new
technology add-on payments if it is
‘‘substantially similar’’ to a technology
that was approved by FDA and has been
on the market for more than 2 to 3 years.
In the FY 2006 IPPS final rule (70 FR
47351) and the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43813 and
43814), we explained our policy
regarding substantial similarity in
detail.
Under the second criterion,
§ 412.87(b)(3) further provides that, to
be eligible for the add-on payment for
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new medical services or technologies,
the MS–DRG prospective payment rate
otherwise applicable to the discharge
involving the new medical services or
technologies must be assessed for
adequacy. Under the cost criterion, to
assess the adequacy of payment for a
new technology paid under the
applicable MS–DRG prospective
payment rate, we evaluate whether the
charges for cases involving the new
technology exceed certain threshold
amounts. Table 10 that was released
with the FY 2014 IPPS/LTCH PPS final
rule contains the final thresholds that
we use to evaluate applications for new
technology add-on payments for FY
2015. We refer readers to the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/FY2014-IPPS-FinalRule-Home-Page.html for a complete
viewing of Table 10 from the FY 2014
IPPS/LTCH PPS final rule.
In the September 7, 2001 final rule
that established the new technology
add-on payment regulations (66 FR
46917), we discussed the issue of
whether the Health Insurance
Portability and Accountability Act
(HIPAA) Privacy Rule at 45 CFR Parts
160 and 164 applies to claims
information that providers submit with
applications for new technology add-on
payments. We refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR
51573) for complete information on this
issue.
Under the third criterion,
§ 412.87(b)(1) of our existing regulations
provides that a new technology is an
appropriate candidate for an additional
payment when it represents ‘‘an
advance that substantially improves,
relative to technologies previously
available, the diagnosis or treatment of
Medicare beneficiaries.’’ For example, a
new technology represents a substantial
clinical improvement when it reduces
mortality, decreases the number of
hospitalizations or physician visits, or
reduces recovery time compared to the
technologies previously available. (We
refer readers to the September 7, 2001
final rule for a more detailed discussion
of this criterion (66 FR 46902).)
The new medical service or
technology add-on payment policy
under the IPPS provides additional
payments for cases with relatively high
costs involving eligible new medical
services or technologies while
preserving some of the incentives
inherent under an average-based
prospective payment system. The
payment mechanism is based on the
cost to hospitals for the new medical
service or technology. Under § 412.88, if
the costs of the discharge (determined
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by applying cost-to-charge ratios (CCRs)
as described in § 412.84(h)) exceed the
full DRG payment (including payments
for IME and DSH, but excluding outlier
payments), Medicare will make an addon payment equal to the lesser of: (1) 50
percent of the estimated costs of the
new technology (if the estimated costs
for the case including the new
technology exceed Medicare’s payment);
or (2) 50 percent of the difference
between the full DRG payment and the
hospital’s estimated cost for the case.
Unless the discharge qualifies for an
outlier payment, the additional
Medicare payment is limited to the full
MS–DRG payment plus 50 percent of
the estimated costs of the new
technology.
Section 503(d)(2) of Public Law 108–
173 provides that there shall be no
reduction or adjustment in aggregate
payments under the IPPS due to add-on
payments for new medical services and
technologies. Therefore, in accordance
with section 503(d)(2) of Public Law
108–173, add-on payments for new
medical services or technologies for FY
2005 and later years have not been
subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR
48561 through 48563), we modified our
regulations at § 412.87 to codify our
longstanding practice of how CMS
evaluates the eligibility criteria for new
medical service or technology add-on
payment applications. That is, we first
determine whether a medical service or
technology meets the newness criterion,
and only if so, do we then make a
determination as to whether the
technology meets the cost threshold and
represents a substantial clinical
improvement over existing medical
services or technologies. We also
amended § 412.87(c) to specify that all
applicants for new technology add-on
payments must have FDA approval or
clearance for their new medical service
or technology by July 1 of each year
prior to the beginning of the fiscal year
that the application is being considered.
The Council on Technology and
Innovation (CTI) at CMS oversees the
agency’s cross-cutting priority on
coordinating coverage, coding and
payment processes for Medicare with
respect to new technologies and
procedures, including new drug
therapies, as well as promoting the
exchange of information on new
technologies between CMS and other
entities. The CTI, composed of senior
CMS staff and clinicians, was
established under section 942(a) of
Public Law 108–173. The Council is cochaired by the Director of the Center for
Clinical Standards and Quality (CCSQ)
and the Director of the Center for
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Medicare (CM), who is also designated
as the CTI’s Executive Coordinator.
The specific processes for coverage,
coding, and payment are implemented
by CM, CCSQ, and the local claimspayment contractors (in the case of local
coverage and payment decisions). The
CTI supplements, rather than replaces,
these processes by working to assure
that all of these activities reflect the
agency-wide priority to promote highquality, innovative care. At the same
time, the CTI also works to streamline,
accelerate, and improve coordination of
these processes to ensure that they
remain up to date as new issues arise.
To achieve its goals, the CTI works to
streamline and create a more
transparent coding and payment
process, improve the quality of medical
decisions, and speed patient access to
effective new treatments. It is also
dedicated to supporting better decisions
by patients and doctors in using
Medicare-covered services through the
promotion of better evidence
development, which is critical for
improving the quality of care for
Medicare beneficiaries.
To improve the understanding of
CMS’ processes for coverage, coding,
and payment and how to access them,
the CTI has developed an ‘‘Innovator’s
Guide’’ to these processes. The intent is
to consolidate this information, much of
which is already available in a variety
of CMS documents and in various
places on the CMS Web site, in a userfriendly format. This guide was
published in August 2008 and is
available on the CMS Web site at:
http://www.cms.gov/CouncilonTech
Innov/Downloads/InnovatorsGuide5_
10_10.pdf.
As we indicated in the FY 2009 IPPS
final rule (73 FR 48554), we invite any
product developers or manufacturers of
new medical technologies to contact the
agency early in the process of product
development if they have questions or
concerns about the evidence that would
be needed later in the development
process for the agency’s coverage
decisions for Medicare.
The CTI aims to provide useful
information on its activities and
initiatives to stakeholders, including
Medicare beneficiaries, advocates,
medical product manufacturers,
providers, and health policy experts.
Stakeholders with further questions
about Medicare’s coverage, coding, and
payment processes, or who want further
guidance about how they can navigate
these processes, can contact the CTI at
[email protected].
We note that applicants for add-on
payments for new medical services or
technologies for FY 2016 must submit a
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formal request, including a full
description of the clinical applications
of the medical service or technology and
the results of any clinical evaluations
demonstrating that the new medical
service or technology represents a
substantial clinical improvement, along
with a significant sample of data to
demonstrate that the medical service or
technology meets the high-cost
threshold. Complete application
information, along with final deadlines
for submitting a full application, will be
posted as it becomes available on the
CMS Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
newtech.html. To allow interested
parties to identify the new medical
services or technologies under review
before the publication of the proposed
rule for FY 2016, the CMS Web site also
will post the tracking forms completed
by each applicant.
2. Public Input Before Publication of a
Notice of Proposed Rulemaking on AddOn Payments
Section 1886(d)(5)(K)(viii) of the Act,
as amended by section 503(b)(2) of
Public Law 108–173, provides for a
mechanism for public input before
publication of a notice of proposed
rulemaking regarding whether a medical
service or technology represents a
substantial clinical improvement or
advancement. The process for
evaluating new medical service and
technology applications requires the
Secretary to—
• Provide, before publication of a
proposed rule, for public input
regarding whether a new service or
technology represents an advance in
medical technology that substantially
improves the diagnosis or treatment of
Medicare beneficiaries;
• Make public and periodically
update a list of the services and
technologies for which applications for
add-on payments are pending;
• Accept comments,
recommendations, and data from the
public regarding whether a service or
technology represents a substantial
clinical improvement; and
• Provide, before publication of a
proposed rule, for a meeting at which
organizations representing hospitals,
physicians, manufacturers, and any
other interested party may present
comments, recommendations, and data
regarding whether a new medical
service or technology represents a
substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for
public input regarding add-on payments
for new medical services and
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technologies for FY 2015 prior to
publication of the FY 2015 IPPS/LTCH
PPS proposed rule, we published a
document in the Federal Register on
November 29, 2013 (78 FR 71555
through 71557), and held a town hall
meeting at the CMS Headquarters Office
in Baltimore, MD, on February 12, 2014.
In the announcement notice for the
meeting, we stated that the opinions and
alternatives provided during the
meeting would assist us in our
evaluations of applications by allowing
public discussion of the substantial
clinical improvement criterion for each
of the FY 2015 new medical service and
technology add-on payment
applications before the publication of
the FY 2015 proposed rule.
Approximately 91 individuals
registered to attend the town hall
meeting in person, while additional
individuals listened over an open
telephone line. We also live-streamed
the town hall meeting and posted the
town hall on the CMS YouTube Web
page at: http://www.youtube.com/
watch?v=WXyR_TILfKo&list=TLiu1B_
AxXsinTW6EEn4BVUdR4iEM61eV4.
We considered each applicant’s
presentation made at the town hall
meeting, as well as written comments
submitted on the applications that were
received by the due date of January 21,
2014, in our evaluation of the new
technology add-on payment
applications for FY 2015 in the
proposed rule.
In response to the published
document and the New Technology
Town Hall meeting, we received written
comments regarding the applications for
FY 2015 new technology add-on
payments. We summarized these
comments in the preamble of the
proposed rule or, if applicable,
indicated that there were no comments
received, at the end of each discussion
of the individual applications in the
proposed rule.
A number of attendees at the New
Technology Town Hall meeting
provided comments that were unrelated
to the ‘‘substantial clinical
improvement’’ criterion. As explained
above and in the Federal Register
document announcing the New
Technology Town Hall meeting (78 FR
71555 through 71557), the purpose of
the meeting was specifically to discuss
the substantial clinical improvement
criterion in regard to pending new
technology add-on payment
applications for FY 2015. Therefore, we
did not summarize those comments in
the proposed rule. Commenters were
informed that they were welcome to
resubmit these comments during the
comment period in response to
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49917
proposals presented in the proposed
rule. We summarize and respond to
these comments under the applicable
discussions within this final rule.
We also received public comments in
response to the proposed rule relating to
topics such as marginal cost factors for
new technology add-on payments,
mapping new technologies to the
appropriate MS–DRG, deeming a new
technology a substantial clinical
improvement if it receives HDE
approval from the FDA, and the use of
external data in determining the cost
threshold. Because we did not request
public comments nor propose to make
any changes to any of the issues above,
we are not summarizing these public
comments nor responding to them in
this final rule.
Another commenter asked CMS to
consider the implications of the new
technology add-on payment policy on
antibiotics that fall under the current
IPPS and, in particular, the Hospital
VBP Program for which the inclusion of
the MRSA bacteremia measure and the
C-difficile measure are proposed. The
commenter was concerned that current
payment policy will be inadequate and
place further financial pressure on
hospitals. The commenter stated that
CMS must consider the evolving
payment paradigm facing inpatient
facilities (IQR, HAC, and VBP) and
ensure that these various policies do not
have competing goals. Although we
agree with the commenter that CMS
should consider the evolving payment
paradigm facing inpatient facilities
regarding payment reductions under the
Hospital IQR Program, the HAC
Reduction Program, and the Hospital
VBP Program and ensure that these
various policies do not have competing
goals, we are not providing a detailed
response because we did not present
any policy proposals concerning these
issues.
Comment: One commenter expressed
concern that services identified as
appropriate for new technology add-on
payments do not receive the new
technology add-on payment even when
the claims for these services are
correctly submitted to the Medicare
administrative contractors (MACs). The
commenter stated that the MACs are
often unable to explain the reason for
the failure to include the new
technology add-on payment or answer
inquiries regarding this issue. The
commenter recommended that CMS
provide additional education to the
MACs regarding CMS regulations
related to services available for new
technology add-on payments.
Response: We encourage providers to
work with their MACs to ensure that the
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new technology add-on payments are
accurately and appropriately made. If
MACs are having any issues, they can
contact the CMS Central Office for
further assistance. Also, the regulations
at § 412.88 explain how the new
technology add-on payments are made.
We note that, under certain conditions,
even if an approved new technology
was billed on the claim, a new
technology add-on payment may not be
made, such as if the total payment for
the claim without the new technology
add-on payment exceeds the costs of the
case. In addition, each year after the
final rule, CMS issues a transmittal to
the MACs listing the eligibility and
maximum add-on payment for each
approved new technology.
3. FY 2015 Status of Technologies
Approved for FY 2014 Add-On
Payments
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a. Glucarpidase (Trade Brand
Voraxaze®)
BTG International, Inc. submitted an
application for new technology add-on
payments for Glucarpidase (trade brand
Voraxaze®) for FY 2013. Glucarpidase is
used in the treatment of patients who
have been diagnosed with toxic
methotrexate (MTX) concentrations as
of result of renal impairment. The
administration of Glucarpidase causes a
rapid and sustained reduction of toxic
MTX concentrations.
Voraxaze® was approved by the FDA
on January 17, 2012. Beginning in 1993,
certain patients could obtain expanded
access for treatment use to Voraxaze® as
an investigational drug. Since 2007, the
applicant has been authorized to recover
the costs of making Voraxaze® available
through its expanded access program.
We describe expanded access for
treatment use of investigational drugs
and authorization to recover certain
costs of investigational drugs in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53346 through 53350). Voraxaze® was
available on the market in the United
States as a commercial product to the
larger population as of April 30, 2012.
In the FY 2013 IPPS/LTCH PPS
proposed rule (77 FR 27936 through
27939), we expressed concerns about
whether Voraxaze® could be considered
new for FY 2013. After consideration of
all of the public comments received, in
the FY 2013 IPPS/LTCH PPS final rule,
we stated that we considered Voraxaze®
to be ‘‘new’’ as of April 30, 2012, which
is the date of market availability.
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology payments for
Voraxaze® and consideration of the
public comments we received in
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response to the FY 2013 IPPS/LTCH
PPS proposed rule, we approved
Voraxaze® for new technology add-on
payments for FY 2013. Cases of
Voraxaze® are identified with ICD–9–
CM procedure code 00.95 (Injection or
infusion of glucarpidase). The cost of
Voraxaze® is $22,500 per vial. The
applicant stated that an average of four
vials is used per Medicare beneficiary.
Therefore, the average cost per case for
Voraxaze® is $90,000 ($22,500 × 4).
Under § 412.88(a)(2), new technology
add-on payments are limited to the
lesser of 50 percent of the average cost
of the technology or 50 percent of the
costs in excess of the MS–DRG payment
for the case. As a result, the maximum
new technology add-on payment for
Voraxaze® is $45,000 per case.
As stated above, the new technology
add-on payment regulations provide
that a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology (§ 412.87(b)(2)). Our
practice has been to begin and end new
technology add-on payments on the
basis of a fiscal year, and we have
generally followed a guideline that uses
a 6-month window before and after the
start of the fiscal year to determine
whether to extend the new technology
add-on payment for an additional fiscal
year. In general, we extend add-on
payments for an additional year only if
the 3-year anniversary date of the
product’s entry on the market occurs in
the latter half of the fiscal year (70 FR
47362).
With regard to the newness criterion
for Voraxaze®, as stated above, we
consider the beginning of the newness
period to commence when Voraxaze®
was first available on the market on
April 30, 2012. Because the 3-year
anniversary date for Voraxaze® will
occur in the latter half of FY 2015 (April
30, 2015), we proposed to continue new
technology add-on payments for this
technology for FY 2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: Several public commenters
supported the proposal to continue new
technology add-on payments for
Voraxaze® for FY 2015.
Response: We appreciate the
commenters’ support. Because the 3year anniversary date for Voraxaze® will
occur in the latter half of FY 2015 (April
30, 2015), we are finalizing our proposal
to continue to make new technology
add-on payments for Voraxaze® for FY
2015.
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b. DIFICIDTM (Fidaxomicin) Tablets
Optimer Pharmaceuticals, Inc.
submitted an application for new
technology add-on payments for FY
2013 for the use of DIFICIDTM tablets.
As indicated on the labeling submitted
to the FDA, the applicant noted that
Fidaxomicin is taken twice a day as a
daily dosage (200 mg tablet twice daily
= 400 mg per day) as an oral antibiotic.
The applicant asserted that Fidaxomicin
provides potent bactericidal activity
against C. Diff., and moderate
bactericidal activity against certain
other gram-positive organisms, such as
enterococcus and staphylococcus.
Unlike other antibiotics used to treat
CDAD, the applicant noted that the
effects of Fidaxomicin preserve
bacteroides organisms in the fecal flora.
These are markers of normal anaerobic
microflora. The applicant asserted that
this helps prevent pathogen
introduction or persistence, which
potentially inhibits the re-emergence of
C. Diff., and reduces the likelihood of
overgrowths as a result of vancomycinresistant Enterococcus (VRE). Because of
this narrow spectrum of activity, the
applicant asserted that Fidaxomicin
does not alter this native intestinal
microflora.
In the FY 2013 IPPS/LTCH PPS
proposed rule (77 FR 27939 through
27941), we expressed concern that
DIFICIDTM may not be eligible for new
technology add-on payments because
eligibility is limited to new technologies
associated with procedures described by
ICD–9–CM codes. We further stated that
drugs that are only taken orally (such as
DIFICIDTM) may not be eligible for
consideration for new technology addon payments because there is no
procedure associated with these drugs
and, therefore, no ICD–9–CM code(s). In
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53350 through 53358), after
consideration of the public comments
received, we revised our policy to allow
the use of National Drug Codes (NDCs)
to identify oral medications that have no
inpatient procedure for the purposes of
new technology add-on payments. The
revised policy is effective for payments
for discharges occurring on or after
October 1, 2012. We refer readers to the
FY 2013 IPPS/LTCH PPS final rule for
a complete discussion on this issue.
With regard to the newness criterion,
Fidaxomicin was approved by the FDA
on May 27, 2011, for the treatment of
CDAD in adult patients, 18 years of age
and older. In the FY 2013 IPPS/LTCH
PPS final rule, we established that the
beginning of the newness period for this
technology is its FDA approval date of
May 27, 2011.
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After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for DIFICIDTM and
consideration of the public comments
we received in response to the FY 2013
IPPS/LTCH PPS proposed rule, we
approved DIFICIDTM for new technology
add-on payments for FY 2013. Cases of
DIFICIDTM are identified with ICD–9–
CM diagnosis code 008.45 (Intestinal
infection due to Clostridium difficile) in
combination with NDC code 52015–
0080–01. Providers must report the NDC
on the 837i Health Care Claim
Institutional form (in combination with
ICD–9–CM diagnosis code 008.45) in
order to receive the new technology
add-on payment. According to the
applicant, the cost of DIFICIDTM is
$2,800 for a 10-day dosage. The average
cost per day for DIFICIDTM is $280
($2,800/10). Cases of DIFICIDTM within
the inpatient setting typically incur an
average dosage of 6.2 days, which
results in an average cost per case for
DIFICIDTM of $1,736 ($280 × 6.2). Under
§ 412.88(a)(2), new technology add-on
payments are limited to the lesser of 50
percent of the average cost of the
technology or 50 percent of the costs in
excess of the MS–DRG payment for the
case. As a result, the maximum new
technology add-on payment for
DIFICIDTM is $868.
As stated above, the new technology
add-on payment regulations provide
that a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology (§ 412.87(b)(2)).
The manufacturer commented
through a letter to CMS, prior to the
publication of the proposed rule,
requesting that CMS extend the
eligibility for a third year of new
technology add-on payments for
DIFICIDTM in FY 2015. The
manufacturer maintained that the
technology still meets all three criteria
for new technology add-on payments.
Regarding the substantial clinical
improvement criterion, the applicant
stated that DIFICIDTM continues to
remain the only FDA-approved
treatment to demonstrate substantial
clinical improvement over existing
therapies. No new treatments for CDAD
have been approved by the FDA since
DIFICIDTM. The applicant further stated
that a third year of new technology addon payments for DIFICIDTM would
continue to reduce access barriers in the
acute care hospital inpatient setting,
which would support the appropriate
use of DIFICIDTM, a treatment that offers
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a substantial clinical improvement over
existing therapies.
With respect to the cost criterion, the
applicant stated that DIFICIDTM
continues to meet the cost criterion.
Using claims data from the FY 2012
MedPAR file, the applicant provided
updated data from the two analyses
described in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53350 through
53358), and demonstrated that the
average case-weighted standardized
charge per case exceeded the average
case-weighted thresholds under both
analyses. The applicant stated that the
new technology add-on payment is
intended to offer additional payments to
support patient access and appropriate
use of new technologies for a period of
time until the MS–DRGs are adjusted to
reflect the cost of the new technology.
The applicant believed that the analyses
conducted with the most recent
MedPAR claims data available
demonstrate that the MS–DRG
recalibrations are insufficient to
accommodate the cost associated with
CDAD and new technologies to treat
CDAD under the IPPS within the
allotted timeframe of 2 years. According
to the applicant, these payment amounts
remain an obstacle for the appropriate
use of new technologies for CDAD that
demonstrate substantial clinical
improvement over existing treatments,
such as DIFICIDTM. The applicant
concluded that a third year of new
technology add-on payments for
DIFICIDTM is needed to allow sufficient
data for future MS–DRG recalibration
analyses.
With regard to newness criterion, the
manufacturer commented that it
believed that the technology still meets
the newness criterion for the following
reason: § 412.87(b)(2) states that ‘‘A
medical service or technology may be
considered new within 2 or 3 years after
the point at which data begin to become
available reflecting the International
Classification of Diseases, Ninth
Revision, Clinical Modification (ICD–9–
CM) code assigned to the new service or
technology (depending on when a new
code is assigned and data on the new
service or technology become available
for DRG recalibration). After CMS has
recalibrated the DRGs, based on
available data, to reflect the costs of an
otherwise new medical service or
technology, the medical service or
technology will no longer be considered
‘new’ under the criterion of this
section.’’ The manufacturer noted that
DIFICIDTM was not assigned an ICD–9–
CM procedure code and DIFICIDTM is
the first product for which no inpatient
procedure is associated to receive a new
technology add-on payment since the
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49919
implementation of the new technology
add-on payment policy.
The manufacturer also cited the FY
2013 IPPS/LTCH PPS final rule (77 FR
53352), which indicated that ‘‘Hospitals
currently code and report procedures
and more invasive services such as
surgeries, infusion of drugs, and
specialized procedures such as cardiac
catheterizations. Hospitals neither code
nor report self-administered drugs.’’
Therefore, the manufacturer contended
that, as an oral therapy, neither
DIFICIDTM nor its administration was
assigned an ICD–9–CM procedure code
and, therefore, the technology should
still be eligible for the new technology
add-on payments.
The manufacturer further noted that,
in the FY 2013 IPPS/LTCH PPS final
rule, because an ICD–9–CM procedure
code for the administration of an oral
medication did not exist and hospitals
had no other mechanism to report the
use of DIFICIDTM, for FY 2013, CMS
instructed hospitals to report the
DIFICIDTM NDC on hospital inpatient
claims to receive the new technology
add-on payment for DIFICIDTM. Prior to
October 1, 2012, hospitals did not use
NDCs on hospital inpatient claims,
which prevented CMS from isolating
DIFICIDTM cases and their associated
costs. The manufacturer further stated
that the NDC methodology was a bold
change in policy and inpatient billing
processes, and it stands to reason that,
because of hospitals unfamiliarity with
reporting NDCs on inpatient claims,
hospitals’ use of the DIFICIDTM NDC
would greatly lag behind the traditional
use of ICD–9–CM procedure codes. As
such, the manufacturer reasoned that
any lag in hospital reporting would
directly impact CMS’ ability to track
and analyze the cost data associated
with DIFICIDTM cases.
The manufacturer also noted that on
August 31, 2012, CMS issued
Transmittal 2539, which is a change
request for MACs concerning updates
for the upcoming fiscal year. The
manufacturer stated that because the
new technology add-on heading was
omitted in the transmittal, this change
request did not highlight the NDC
billing approach to ensure that hospitals
recognized the important change, which
may have caused hospitals to overlook
the claim reporting instructions for
DIFICIDTM.
The manufacturer added that
Transmittal 2539 and a Medicare
Learning Network® Matters (MLN)
article were rescinded and replaced by
Transmittal 2627 on January 4, 2013.
The manufacturer noted that among
CMS’ reasons for replacing the
transmittal was to insert the omitted
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new technology add-on section heading.
The manufacturer stated that, although
the original transmittal further supports
that collection of DIFICIDTM-specific
data did not begin until at least October
1, 2012, CMS’ reissuance of the claims
processing instructions, and the missing
header in the initial instructions,
effectively delayed implementation of
the new technology add-on payments
for 3 months past the October 2012
beginning date. The manufacturer also
believed that the need to replace the
transmittal underlies hospitals’
difficulties instituting claims’ reporting
instructions to receive new technology
add-on payments for DIFICIDTM at the
hospital level.
The manufacturer noted that
anecdotal feedback from hospitals,
which was shared with CMS during a
meeting in June 2013, suggests that
some hospitals faced challenges
implementing the appropriate billing
and coding processes. The manufacturer
was concerned that that these
challenges were, in part, caused by the
missing header, and that these
challenges may have impacted whether
eligible cases were properly billed and
coded to receive the new technology
add-on payment for DIFICIDTM. The
manufacturer was further concerned
that the effects of any lag or delay
caused by unfamiliarity with reporting
NDCs and the missing header would
also impact the data available to CMS to
recalibrate the MS–DRGs and,
separately, to evaluate the impact of the
new technology add-on payment for
DIFICIDTM. The manufacturer further
explained that, while DIFICIDTM was
available to hospitals after its launch in
July 2011, hospitals had no experience
reporting NDCs until October 2012, and
may not have recognized the
opportunity to, or understood the
mechanism for doing so, until after
January 2013. For the purposes of
inpatient data collection and ratesetting,
the manufacturer believed that this
meant that 2 complete years of
DIFICIDTM costs would not be fully
reflected in the Medicare claims data for
the FY 2015 MS–DRG recalibrations.
The manufacturer also analyzed the
100 percent sample of the Standard
Analytical File (SAF) for CY 2012,
which contained first quarter claims
data for FY 2013, the first 3 months that
DIFICIDTM was eligible for the new
technology add-on payments. The
manufacturer found a total of 43,608
cases with a diagnosis of CDI. Of these
43,608 cases, the manufacturer found 38
cases across 26 hospitals that reported
new technology add-on payments for
DIFICIDTM on submitted claims. The
manufacturer stated that this
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preliminary data suggests that the
number of cases available for MS–DRG
recalibrations for FY 2015 is limited.
The manufacturer stated that it is
currently attempting to secure FY 2013
MedPAR claims data and that it will
likely provide further insights on these
issues.
In addition, the manufacturer noted
that prior new technology add-on
payment application approvals have
involved technologies with much
narrower patient populations compared
to DIFICIDTM, allowing the costs of
those technologies to influence the MS–
DRG relative payment weights for the
small number of MS–DRGs with which
they are associated. The manufacturer
explained that, unlike other
technologies approved for new
technology add on payments, the
DIFICIDTM therapeutic value, while
limited to patients with CDAD, is used
in patients across a wide range of MS–
DRGs due to it being reported as a
secondary diagnosis in two-thirds of the
cases compared to other technologies,
which are assigned to a relatively small
number of MS–DRGs. For example,
cases involving the Spiration IBV®
Valve System, which was granted
approval for new technology add-on
payments in FY 2010, primarily mapped
to three MS–DRGs: 163 (Major Chest
Procedures with MCC); 164 (Major
Chest Procedures with CC); and 165
(Major Chest Procedures without CC/
MCC). In its analysis of the FY 2012
MedPAR data for the cost criterion, the
manufacturer found cases using
DIFICIDTM mapped to 544 unique MS–
DRGs. Under the 100 percent sample of
the SAF for CY 2012, the 38 cases
mentioned above mapped to 20 different
MS–DRGs. The manufacturer
maintained that because of the diffuse
nature of the DIFICIDTM cases mapping
to many MS–DRGs, it believed an
extension of the newness period is
required for the costs to be adequately
reflected in the MS–DRG relative
payment weights. In the unique case of
DIFICIDTM for the treatment of CDAD,
the manufacturer stated that 2 years of
new technology add-on payments is
insufficient to allow the 544 MS–DRGs
to be recalibrated to sufficiently reflect
the cost of the use of DIFICIDTM, a
treatment that offers significant clinical
improvement over existing therapies.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28032 through
28033), we responded to the comments
above. Specifically, with regard to the
technology’s newness, as discussed in
the FY 2005 IPPS final rule (69 FR
49003), the timeframe that a new
technology can be eligible to receive
new technology add-on payments
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begins when data become available.
Section 412.87(b)(2) clearly states that a
medical service or technology may be
considered new within 2 or 3 years after
the point at which data begin to become
available reflecting the ICD–9–CM code
assigned to the new service or
technology (depending on when a new
code is assigned and data on the new
service or technology become available
for DRG recalibration). Section
412.87(b)(2) also states that after CMS
has recalibrated the DRGs, based on
available data, to reflect the costs of an
otherwise new medical service or
technology, the medical service or
technology will no longer be considered
‘‘new’’ under the criterion of this
section. Therefore, regardless of whether
a technology can be individually
identified by a separate ICD–9–CM code
or whether it can only be identified
using a NDC code, if the costs of the
technology are included in the charge
data, and the MS–DRGs have been
recalibrated using that data, then the
technology can no longer be considered
‘‘new’’ for the purposes of this
provision. We further stated in that final
rule that the period of newness does not
necessarily start with the approval date
for the medical service or technology,
and does not necessarily start with the
issuance of a distinct code. Instead, it
begins with availability of the product
on the U.S. market, which is when data
become available. We have consistently
applied this standard, and believe that
it is most consistent with the purpose of
new technology add-on payments.
In addition, similar to our discussion
in the FY 2006 IPPS final rule (70 FR
47349), we do not believe that case
volume is a relevant consideration for
making the determination as to whether
a product is ‘‘new.’’ Consistent with the
statute, a technology no longer qualifies
as ‘‘new’’ once it is more than 2 to 3
years old, irrespective of how frequently
it has been used in the Medicare
population. Similarly, this same
determination is applicable no matter
how many MS–DRGs the technology is
spread across. Therefore, if a product is
more than 2 to 3 years old, we consider
its costs to be included in the MS–DRG
relative weights whether its use in the
Medicare population has been frequent
or infrequent. We recognize that using
an NDC was a novel billing practice
under the IPPS. Nevertheless, even
though hospitals may not have coded all
uses of DIFICIDTM with the NDC,
hospital bills would still include
charges for all items and services
furnished to a Medicare patient,
including use of DIFICIDTM. Therefore,
even though we may be not be able to
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identify all uses of DIFICIDTM in the
Medicare charge data, hospital charges
for the MS–DRGs would continue to
reflect use of this technology.
With respect to the Transmittal 2539
omitting the header referenced above, as
noted above, CMS corrected this issue
as soon as possible by rescinding and
reissuing this transmittal. Additionally,
as noted by the manufacturer, this
transmittal was meant for MACs and not
hospitals. We believe the guidance
issued in Transmittal 2539 clearly
described to MACs how hospitals were
to report the NDC on the inpatient claim
in order to identify cases using
DIFICIDTM for purposes of new
technology add-on payments.
Additionally, the MLN article that the
manufacturer referred to above (MLN
articles are typically a summary of
transmittals for the general public)
clearly indicated that DIFICIDTM was
new for FY 2013 new technology addon payments and clearly described how
to properly code DIFICIDTM on the
inpatient bill in order to receive the new
technology add-on payment for FY
2013. The MLN article can be
downloaded from the CMS Web site at:
http://www.cms.gov/Outreach-andEducation/Medicare-Learning-NetworkMLN/MLNMattersArticles/downloads/
MM8041.pdf.
After considering the manufacturer’s
comments above, as we explained in the
FY 2015 IPPS/LTCH PPS proposed rule,
we continue to consider the beginning
of the newness period to commence
when DIFICIDTM was first approved by
the FDA on May 27, 2011. Because the
3-year anniversary date of the product’s
entry on the U.S. market occurred in the
second half of the fiscal year (after April
1, 2014), we continued new technology
add-on payments for DIFICIDTM for FY
2014. However, for FY 2015, the 3-year
anniversary date of the product’s entry
on the U.S. market occurred on May 27,
2014, which is prior to the beginning of
FY 2015. Therefore, we proposed to
discontinue new technology add-on
payments for DIFICIDTM for FY 2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: One commenter stated that
CMS has the authority to grant a third
year of new technology add-on
payments for DIFICIDTM. The
commenter stated that if Congress
intended for the Secretary to begin the
data collection period described in the
statute based on the date of FDA
approval, Congress would have done so.
The commenter added that it agrees
that, as a threshold matter, a product
must be ‘‘new.’’ Specifically, the
commenter reasoned that Congress did
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not intend to make available the new
technology add-on payment for
technologies that have been approved
for years and received a unique code
years later. The commenter believed
that once a product is deemed ‘‘new,’’
the statute requires that data are to be
collected for 2 to 3 years from the date
of the ICD–9–CM code assignment. The
commenter believed that CMS has the
authority to first deem a product new
and then collect data two to three years
from the date of the inpatient code
assignment. The commenter explained
that sections 1886(d)(5)(K)(i) and
1886(d)(5)(K)(ii) of the Act mandate two
separate legal requirements. The
commenter further stated that this
policy would mitigate the effect of older
technologies that receive ICD–9–CM
codes many years after their FDA
approval date being eligible for new
technology add-on payments. Therefore,
the commenter stated that, under this
policy, DIFICIDTM is eligible for a third
year of new technology add-on
payments.
The commenter also quoted the FY
2005 IPPS final rule (69 FR 49002
through 49003) where CMS stated the
following: ‘‘Using the ICD–9–CM code
alone is not an appropriate test of
newness because technologies that are
new to the market are automatically
placed into the closest ICD–9–CM
category when they first come on the
market, unless the manufacturer
requests the assignment of a new ICD–
9–CM code because existing codes do
not adequately reflect or describe the
medical service or device. The services
and technologies that have been placed
into existing ICD–9–CM codes have
been paid for using those descriptors.’’
The commenter believed that this policy
is not relevant to oral drugs because
hospitals do not typically code for oral
medications. Therefore, the commenter
stated that CMS must make a special
exception for oral drugs and rely on the
statutory authority to measure the
length of time for data collection for
new technology add-on payments based
on the date of the ‘‘hospital inpatient
code.’’
Response: As discussed above, and as
we stated in the FY 2005 IPPS final rule
(69 FR 49003), the timeframe that a new
technology can be eligible to receive
new technology add-on payments
begins when data become available. We
have consistently applied this standard,
and believe that it is most consistent
with the purpose of new technology
add-on payments. We refer readers to
the discussion above and the FY 2005
IPPS final rule (69 FR 49002 through
49003) for further details regarding this
issue. For these reasons, we disagree
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49921
with the commenter that DIFICIDTM is
eligible for a third year of new
technology add-on payments.
With respect to the second comment,
while oral drugs are not typically coded
by hospitals, we maintain what we
stated in the FY 2005 IPPS final rule
that the services and technologies that
have been assigned existing ICD–9–CM
codes have been paid for using those
descriptors. Although DIFICIDTM did
not receive a specific ICD–9–CM code,
it can be described or identified through
additional ICD–9–CM procedure or
diagnosis codes (such as diagnosis code
008.45, Intestinal infection due to
Clostridium difficile). Moreover, as we
noted above and in the proposed rule,
hospital charges would include charges
for all items and services furnished to a
Medicare beneficiary, including use of
DIFICIDTM. Therefore, we disagree with
the commenter and continue to believe
that DIFICIDTM is no longer new nor is
any special exception warranted.
Comment: Several commenters
reiterated the arguments made by the
manufacturer as explained above and in
the proposed rule that DIFICIDTM
should be eligible for new technology
add-on payments in FY 2015.
Response: After considering these
comments, for the reasons stated above
and in the proposed rule, we consider
the beginning of the newness period to
commence when DIFICIDTM was first
approved by the FDA on May 27, 2011.
The 3-year anniversary date of the
product’s entry on the U.S. market
occurred on May 27, 2014, which is
prior to the beginning of FY 2015.
Therefore, we are finalizing our
proposal to discontinue new technology
add-on payments for DIFICIDTM for FY
2015.
c. Zenith® Fenestrated Abdominal
Aortic Aneurysm (AAA) Endovascular
Graft
Cook® Medical submitted an
application for new technology add-on
payments for the Zenith® Fenestrated
Abdominal Aortic Aneurysm (AAA)
Endovascular Graft (Zenith® F. Graft) for
FY 2013. The applicant stated that the
current treatment for patients who have
had an AAA is an endovascular graft.
The applicant explained that the
Zenith® F. Graft is an implantable
device designed to treat patients who
have an AAA and who are anatomically
unsuitable for treatment with currently
approved AAA endovascular grafts
because of the length of the infrarenal
aortic neck. The applicant noted that,
currently, an AAA is treated through an
open surgical repair or medical
management for those patients not
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eligible for currently approved AAA
endovascular grafts.
With respect to newness, the
applicant stated that FDA approval for
the use of the Zenith® F. Graft was
granted on April 4, 2012. In the FY 2013
IPPS/LTCH PPS final rule (77 FR 53360
through 53365), we stated that because
the Zenith® F. Graft was approved by
the FDA on April 4, 2012, we believed
that the Zenith® F. Graft met the
newness criterion as of that date.
After evaluation of the newness, costs,
and substantial clinical improvement
criteria for new technology add-on
payments for the Zenith® F. Graft and
consideration of the public comments
we received in response to the FY 2013
IPPS/LTCH PPS proposed rule, we
approved the Zenith® F. Graft for new
technology add-on payments for FY
2013. Cases involving the Zenith® F.
Graft that are eligible for new
technology add-on payments are
identified by ICD–9–CM procedure code
39.78 (Endovascular implantation of
branching or fenestrated graft(s) in
aorta). In the application, the applicant
provided a breakdown of the costs of the
Zenith® F. Graft. The total cost of the
Zenith® F. Graft utilizing bare metal
(renal) alignment stents was $17,264. Of
the $17,264 in costs for the Zenith® F.
Graft, $921 is for components that are
used in a standard Zenith AAA
Endovascular Graft procedure. Because
the costs for these components are
already reflected within the MS–DRGs
(and are no longer ‘‘new’’), in the FY
2013 IPPS/LTCH PPS final rule, we
stated that we do not believe it is
appropriate to include these costs in our
calculation of the maximum cost to
determine the maximum add-on
payment for the Zenith® F. Graft.
Therefore, the total maximum cost for
the Zenith® F. Graft is $16,343
($17,264—$921). Under § 412.88(a)(2),
new technology add-on payments are
limited to the lesser of 50 percent of the
average cost of the device or 50 percent
of the costs in excess of the MS–DRG
payment for the case. As a result, the
maximum add-on payment for a case
involving the Zenith® F. Graft is
$8,171.50.
As stated above, the new technology
add-on payment regulations provide
that ‘‘a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology’’ (§ 412.87(b)(2)). With
regard to the newness criterion for the
Zenith® F. Graft, as stated above, we
consider the beginning of the newness
period to commence when the Zenith®
F. Graft was approved by the FDA on
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April 4, 2012. Because the 3-year
anniversary date of the entry of the
Zenith® F. Graft on the U.S. market will
occur in the second half of the fiscal
year (April 4, 2015), we proposed to
continue new technology add-on
payments for this technology for FY
2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: Several commenters
supported the proposal to continue new
technology add-on payments for the
Zenith® F. Graft ® for FY 2015.
Response: We appreciate the
commenters’ support. Because the 3year anniversary date for Zenith® F.
Graft will occur in the latter half of FY
2015 (April 4, 2015), we are finalizing
our proposal to continue to make new
technology add-on payments for the
Zenith® F. Graft for FY 2015.
d. KcentraTM
CSL Behring submitted an application
for new technology add-on payments for
KcentraTM for FY 2014. KcentraTM is a
replacement therapy for fresh frozen
plasma (FFP) for patients with an
acquired coagulation factor deficiency
due to warfarin and who are
experiencing a severe bleed. KcentraTM
contains the Vitamin K dependent
coagulation factors II, VII, IX and X,
together known as the prothrombin
complex, and antithrombotic proteins C
and S. Factor IX is the lead factor for the
potency of the preparation. The product
is a heat-treated, non-activated, virus
filtered and lyophilized plasma protein
concentrate made from pooled human
plasma. KcentraTM is available as a
lyophilized powder that needs to be
reconstituted with sterile water prior to
administration via intravenous infusion.
The product is dosed based on Factor IX
units. Concurrent Vitamin K treatment
is recommended to maintain blood
clotting factor levels once the effects of
KcentraTM have diminished.
KcentraTM was approved by the FDA
on April 29, 2013. In the FY 2014 IPPS/
LTCH PPS final rule, we approved new
ICD–9–CM procedure code 00.96
(Infusion of 4-Factor Prothrombrin
Complex Concentrate) which uniquely
identifies KcentraTM.
In the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27538), we noted
that we were concerned that KcentraTM
may be substantially similar to FFP and/
or Vitamin K therapy. In the FY 2014
IPPS/LTCH PPS final rule, in response
to comments submitted by the
manufacturer, we stated that we agree
that KcentraTM may be used in a patient
population that is experiencing an
acquired coagulation factor deficiency
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due to Warfarin and who are
experiencing a severe bleed currently
but are ineligible for FFP, particularly
for use by IgA deficient patients and
other patient populations that have no
other treatment option to resolve severe
bleeding in the context of an acquired
Vitamin K deficiency. In addition, FFP
is limited because it requires special
storage conditions while KcentraTM is
stable for up to 36 months at room
temperature thus allowing hospitals that
otherwise would not have access to FFP
(for example, small rural hospitals as
discussed by the applicant in its
comments) to keep a supply of
KcentraTM and treat patients who would
possibly have no access to FFP. We
noted that FFP is considered perishable
and can be scarce by nature (due to
production and other market
limitations) thus making some hospitals
unable to store FFP, which limits access
to certain patient populations in certain
locations. Therefore, we stated that we
believe that KcentraTM provides a
therapeutic option for a new patient
population and is not substantially
similar to FFP. Also, we gave credence
to the information presented by the
manufacturer that KcentraTM provides a
simple and rapid repletion relative to
FFP and reduces the risk of a
transfusion reaction relative to FFP
because it does not contain ABO
antibodies and does not require ABO
typing. As a result, we concluded that
KcentraTM is not substantially similar to
FFP, and that it meets the newness
criterion.
After evaluation of the newness, cost,
and substantial clinical improvement
criteria for new technology add-on
payments for KcentraTM and
consideration of the public comments
we received in response to the FY 2014
IPPS/LTCH PPS proposed rule, we
approved KcentraTM for new technology
add-on payments for FY 2014 (78 FR
50575 through 50580). Cases involving
KcentraTM that are eligible for new
technology add-on payments are
identified by ICD–9–CM procedure code
00.96. In the application, the applicant
estimated that the average Medicare
beneficiary would require an average
dosage of 2500 International Units (IU).
Vials contain 500 IU at a cost of $635
per vial. Therefore, cases of KcentraTM
would incur an average cost per case of
$3,175 ($635 x 5). Under § 412.88(a)(2),
new technology add-on payments are
limited to the lesser of 50 percent of the
average cost of the technology or 50
percent of the costs in excess of the MS–
DRG payment for the case. As a result,
the maximum add-on payment for a
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case of KcentraTM is $1,587.50 for FY
2014.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50579), we stated that new
technology add-on payments for
KcentraTM would not be available with
respect to discharges for which the
hospital received an add-on payment for
a blood clotting factor administered to a
Medicare beneficiary with hemophilia
who is a hospital inpatient. Under
section 1886(d)(1)(A)(iii) of the Act, the
national adjusted DRG prospective
payment rate is ‘‘the amount of the
payment with respect to the operating
costs of inpatient hospital services (as
defined in subsection (a)(4) of this
section)’’ for discharges on or after April
1, 1988. Section 1886(a)(4) of the Act
excludes from the term ‘‘operating costs
of inpatient hospital services’’ the costs
with respect to administering blood
clotting factors to individuals with
hemophilia. The costs of administering
a blood clotting factor to a Medicare
beneficiary who has hemophilia and is
a hospital inpatient are paid separately
from the IPPS. (For information on how
the blood clotting factor add-on
payment is made, we refer readers to
Section 20.7.3 of Chapter Three of the
Medicare Claims Processing Manual,
which can be downloaded from the
CMS Web site at: http://cms.gov/
Regulations-and-Guidance/Guidance/
Manuals/Downloads/clm104c03.pdf.) In
addition, we stated that if KcentraTM is
approved by the FDA as a blood clotting
factor, we believed that it may be
eligible for blood clotting factor add-on
payments when administered to
Medicare beneficiaries with hemophilia.
We make an add-on payment for
KcentraTM for such discharges in
accordance with our policy for payment
of a blood clotting factor, and the costs
would be excluded from the operating
costs of inpatient hospital services as set
forth in section 1886(a)(4) of the Act.
Section 1886(d)(5)(K)(i) of the Act
requires the Secretary to ‘‘establish a
mechanism to recognize the costs of
new medical services and technologies
under the payment system established
under this subsection’’ beginning with
discharges on or after October 1, 2001.
We believe that it is reasonable to
interpret this requirement to mean that
the payment mechanism established by
the Secretary recognizes only costs for
those items that would otherwise be
paid based on the prospective payment
system (that is, ‘‘the payment system
established under this subsection’’). As
noted above, under section
1886(d)(1)(A)(iii) of the Act, the national
adjusted DRG prospective payment rate
is the amount of payment for the
operating costs of inpatient hospital
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services, as defined in section 1886(a)(4)
of the Act, for discharges on or after
April 1, 1988. We understand this to
mean that a new medical service or
technology must be an operating cost of
inpatient hospital services paid based
on the prospective payment system, and
not excluded from such costs, in order
to be eligible for the new technology
add-on payment. We pointed out that
new technology add-on payments are
based on the operating costs per case
relative to the prospective payment rate
as described in § 412.88. Therefore, we
believe that new technology add-on
payments are appropriate only when the
new technology is an operating cost of
inpatient hospital services and are not
appropriate when the new technology is
excluded from such costs.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50579), we stated that we
believe that hospitals may only receive
new technology add-on payments for
discharges where KcentraTM is an
operating cost of inpatient hospital
services. In other words, a hospital
would not be eligible to receive the new
technology add-on payment when it is
administering KcentraTM in treating a
Medicare beneficiary who has
hemophilia. In those instances,
KcentraTM is specifically excluded from
the operating costs of inpatient hospital
services in accordance with section
1886(a)(4) of the Act and paid separately
from the IPPS. However, when a
hospital administers KcentraTM to a
Medicare beneficiary who does not have
hemophilia, the hospital would be
eligible for a new technology add-on
payment because KcentraTM would not
be excluded from the operating costs of
inpatient hospital services. Therefore,
discharges where the hospital receives a
blood clotting factor add-on payment
are not eligible for a new technology
add-on payment for the blood clotting
factor. We refer readers to Chapter
Three, Section 20.7.3 of the Medicare
Claims Processing Manual for a
complete discussion on when a blood
clotting factor add-on payment is made.
The manual can be downloaded from
the CMS Web site at: http://www.cms.
gov/Regulations-and-Guidance/
Guidance/Manuals/Downloads/
clm104c03.pdf.
As stated above, the new technology
add-on payment regulations provide
that a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology (§ 412.87(b)(2)). With
regard to the newness criterion for
KcentraTM, as stated above, we consider
the beginning of the newness period to
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commence when KcentraTM was
approved by the FDA on April 29, 2013.
Because KcentraTM is still within the 3year newness period, we proposed to
continue new technology add-on
payments for this technology for FY
2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: Several commenters
supported the proposal to continue new
technology add-on payments for
KcentraTM for FY 2015.
Response: We appreciate the
commenters’ support. Because the 3year anniversary date for KcentraTM will
occur in the second half of FY 2016
(April 29, 2016), we are finalizing our
proposal to continue to make new
technology add-on payments for
KcentraTM FY 2015.
e. Argus® II Retinal Prosthesis System
Second Sight Medical Products, Inc.
submitted an application for new
technology add-on payments for the
Argus® II Retinal Prosthesis System
(Argus® II System) for FY 2014. The
Argus® II System is an active
implantable medical device that is
intended to provide electrical
stimulation of the retina to induce
visual perception in patients who are
profoundly blind due to retinitis
pigmentosa (RP). These patients have
bare or no light perception in both eyes.
The system employs electrical signals to
bypass dead photo-receptor cells and
stimulate the overlying neurons
according to a real-time video signal
that is wirelessly transmitted from an
externally worn video camera. The
Argus® II implant is intended to be
implanted in a single eye, typically the
worse-seeing eye. Currently, bilateral
implants are not intended for this
technology. According to the applicant,
the surgical implant procedure takes
approximately 4 hours and is performed
under general anesthesia.
The Argus® II System consists of three
primary components: (1) An implant
which is an epiretinal prosthesis that is
fully implanted on and in the eye (that
is, there are no percutaneous leads); (2)
external components worn by the user;
and (3) a ‘‘fitting’’ system for the
clinician that is periodically used to
perform diagnostic tests with the system
and to custom-program the external unit
for use by the patient. We describe these
components more fully below.
• Implant: The retinal prosthesis
implant is responsible for receiving
information from the external
components of the system and
electrically stimulating the retina to
induce visual perception. The retinal
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implant consists of: (a) A receiving coil
for receiving information and power
from the external components of the
Argus® II System; (b) electronics to
drive stimulation of the electrodes; and
(c) an electrode array. The receiving coil
and electronics are secured to the
outside of the eye using a standard
scleral band and sutures, while the
electrode array is secured to the surface
of the retina inside the eye by a retinal
tack. A cable, which passes through the
eye wall, connects the electronics to the
electrode array. A pericardial graft is
placed over the extra-ocular portion on
the outside of the eye.
• External Components: The implant
receives power and data commands
wirelessly from an external unit of
components, which include the Argus II
Glasses and Video Processing Unit
(VPU). A small lightweight video
camera and transmitting coil are
mounted on the glasses. The telemetry
coils and radio-frequency system are
mounted on the temple arm of the
glasses for transmitting data from the
VPU to the implant. The glasses are
connected to the VPU by a cable. This
VPU is worn by the patient, typically on
a belt or a strap, and is used to process
the images from the video camera and
convert the images into electrical
stimulation commands, which are
transmitted wirelessly to the implant.
• ‘‘Fitting System’’: To be able to use
the Argus® II System, a patient’s VPU
needs to be custom-programmed. This
process, which the applicant called
‘‘fitting’’, occurs in the hospital/clinic
shortly after the implant surgery and
then periodically thereafter as needed.
The clinician/physician also uses the
‘‘Fitting System’’ to run diagnostic tests
(for example, to obtain electrode and
impedance waveform measurements or
to check the radio-frequency link
between the implant and external unit).
This ‘‘Fitting System’’ can also be
connected to a ‘‘Psychophysical Test
System’’ to evaluate patients’
performance with the Argus® II System
on an ongoing basis.
These three components work
together to stimulate the retina and
allow a patient to perceive phosphenes
(spots of light), which they then need to
learn to interpret. While using the
Argus® II System, the video camera on
the patient-worn glasses captures a
video image. The video camera signal is
sent to the VPU, which processes the
video camera image and transforms it
into electrical stimulation patterns. The
electrical stimulation data are then sent
to a transmitter coil mounted on the
glasses. The transmitter coil sends both
data and power via radio-frequency (RF)
telemetry to the implanted retinal
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prosthesis. The implant receives the RF
commands and delivers stimulation to
the retina via an array of electrodes that
is secured to the retina with a retinal
tack.
In patients with RP, the photoreceptor
cells in the retina, which normally
transduce incoming light into an
electro-chemical signal, have lost most
of their function. The stimulation pulses
delivered to the retina via the electrode
array of the Argus® II System are
intended to mimic the function of these
degenerated photoreceptors cells. These
pulses induce cellular responses in the
remaining, viable retinal nerve cells that
travel through the optic nerve to the
visual cortex where they are perceived
as phosphenes (spots of light). Patients
learn to interpret the visual patterns
produced by these phosphenes.
With respect to the newness criterion,
according to the applicant, the FDA
designated the Argus® II System a
Humanitarian Use Device in May 2009
(HUD designation #09–0216). The
applicant submitted a Humanitarian
Device Exemption (HDE) application
(#H110002) to the FDA in May 2011 to
obtain market approval for the Argus® II
System. The HDE was referred to the
Ophthalmic Devices Panel of the FDA’s
Medical Devices Advisory Committee
for review and recommendation. At the
Panel’s meeting held on September 28,
2012, the Panel voted 19 to 0 that the
probable benefits of the Argus® II
System outweigh the risks of the system
for the proposed indication for use. The
applicant received the HDE approval
from the FDA on February 14, 2013.
Currently there are no other approved
treatments for patients with severe to
profound RP. The Argus® II System has
an IDE number of G050001 and is a
Class III device. In the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50580
through 50583), we approved new ICD–
9–CM procedure code 14.81
(Implantation of Epiretinal Visual
Prosthesis), which uniquely identifies
the Argus® II System. The other two
codes approved by CMS are for removal,
revision, or replacement of the device.
More information on these codes can be
found on the CMS Web site at: http://
cms.gov/Medicare/Coding/ICD9Provider
DiagnosticCodes/ICD-9-CM-C-and-MMeeting-Materials-Items/2013-03-05MeetingMaterials.html.
After evaluation of the new
technology add-on payment application
and consideration of public comments
received, we concluded that the Argus®
II System met all of the new technology
add-on payment policy criteria.
Therefore, we approved the Argus® II
System for new technology add-on
payments in FY 2014 (78 FR 50580
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through 50583). Cases involving the
Argus® II System that are eligible for
new technology add-on payments are
identified by ICD–9–CM procedure code
14.81. We note that section
1886(d)(5)(K)(i) of the Act requires that
the Secretary establish a mechanism to
recognize the costs of new medical
services or technologies under the
payment system established under that
subsection, which establishes the
system for paying for the operating costs
of inpatient hospital services. The
system of payment for capital costs is
established under section 1886(g) of the
Act, which makes no mention of any
add-on payments for a new medical
service or technology. Therefore, it is
not appropriate to include capital costs
in the add-on payments for a new
medical service or technology. In the
application, the applicant provided a
breakdown of the costs of the Argus® II
System. The total operating cost of the
Argus® II System is $144,057.50. Under
§ 412.88(a)(2), new technology add-on
payments are limited to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum add-on payment
for a case involving the Argus® II
System for FY 2014 is $72,028.75.
As stated above, the new technology
add-on payment regulations provide
that a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology (§ 412.87(b)(2)). With
regard to the newness criterion for the
Argus® II System, as stated above, we
consider the beginning of the newness
period to commence when the Argus® II
System was approved by the FDA on
February 14, 2013. Because the Argus®
II System is still within the 3-year
newness period, we proposed to
continue new technology add-on
payments for this technology for FY
2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: Several commenters
supported the proposal to continue new
technology add-on payments for the
Argus® II System for FY 2015. Some
commenters noted that, while the
Argus® II System received FDA
approval on February 14, 2013, it was
not available on the U.S. market until
December 20, 2013. The commenters
explained that as part of this lengthy
process, the manufacturer first had to
submit a request to the Federal
Communications Commission (FCC) for
a waiver of section 15.209(a) of the FCC
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rules to allow the manufacturer to then
apply for FCC authorization to utilize
this specific RF band. The FCC granted
the request for a waiver of the rules on
November 30, 2011. After receiving the
FCC waiver of section 15.209(a), the
manufacturer was required to obtain a
Grant of Equipment Authorization to
utilize the specific RF band, which the
FCC issued on December 20, 2013.
Therefore, the commenters stated that
the date the Argus® II System first
became available for commercial sale in
the United States was December 20,
2013.
Response: We appreciate the
commenters’ input and support. We
agree with the commenters that due to
the delay described above, the date of
newness for the Argus® II System is
now December 20, 2013, instead of
February 14, 2013. Because the 3-year
anniversary date for the Argus® II
System will occur in the first half of FY
2017 (December 20, 2016), we are
finalizing our proposal to continue to
make new technology add-on payments
for the Argus® II System for FY 2015.
f. Zilver® PTX® Drug Eluting Peripheral
Stent
Cook® Medical submitted an
application for new technology add-on
payments for the Zilver® PTX® Drug
Eluting Peripheral Stent (Zilver® PTX®)
for FY 2014. The Zilver® PTX® is
intended for use in the treatment of
peripheral artery disease (PAD) of the
above-the-knee femoropopliteal arteries
(superficial femoral arteries). According
to the applicant, the stent is
percutaneously inserted into the
artery(s), usually by accessing the
common femoral artery in the groin. The
applicant stated that an introducer
catheter is inserted over the wire guide
and into the target vessel where the
lesion will first be treated with an
angioplasty balloon to prepare the
vessel for stenting. The applicant
indicated that the stent is selfexpanding, made of nitinol (nickel
titanium), and is coated with the drug
Paclitaxel. Paclitaxel is a drug approved
for use as an anticancer agent and for
use with coronary stents to reduce the
risk of renarrowing of the coronary
arteries after stenting procedures.
The applicant received FDA approval
on November 15, 2012, for the Zilver®
PTX®. The applicant maintains that the
Zilver® PTX® is the first drug-eluting
stent used for superficial femoral
arteries. The technology is currently
described by ICD–9–CM procedure code
00.60 (Insertion of drug-eluting stent(s)
of the superficial femoral artery).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50583 through 50585), after
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evaluation of the new technology addon payment application and
consideration of the public comments
received, we approved the Zilver® PTX®
for new technology add-on payments in
FY 2014. Cases involving the Zilver®
PTX® that are eligible for new
technology add-on payments are
identified by ICD–9–CM procedure code
00.60. As explained in the FY 2014
IPPS/LTCH PPS final rule, to determine
the amount of Zilver® PTX® stents per
case, instead of using the amount of
stents used per case based on the ICD–
9–CM codes, the applicant used an
average of 1.9 stents per case based on
the Zilver® PTX® Global Registry
Clinical Study. The applicant stated in
its application that the anticipated cost
per stent is approximately $1,795.
Therefore, cases of the Zilver® PTX®
would incur an average cost per case of
$3,410.50 ($1,795 × 1.9). Under
§ 412.88(a)(2), new technology add-on
payments are limited to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum add-on payment
for a case of the Zilver® PTX® is
$1,705.25 for FY 2014.
As stated above, the new technology
add-on payment regulations provide
that ‘‘a medical service or technology
may be considered new within 2 or 3
years after the point at which data begin
to become available reflecting the ICD–
9–CM code assigned to the new service
or technology’’ (§ 412.87(b)(2)). With
regard to the newness criterion for the
Zilver® PTX®, as stated above, we
consider the beginning of the newness
period to commence when the Zilver®
PTX® was approved by the FDA on
November 15, 2012. Because the Zilver®
PTX® is still within the 3-year newness
period, we proposed to continue new
technology add-on payments for this
technology for FY 2015.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on this proposal.
Comment: Several commenters
supported the proposal to continue new
technology add-on payments for the
Zilver® PTX® for FY 2015.
Response: We appreciate the
commenters’ support. Because the 3year anniversary date for the Zilver®
PTX® will occur in the first half of FY
2016 (November 12, 2015), we are
finalizing our proposal to continue to
make new technology add-on payments
for the Zilver® PTX® FY 2015.
4. FY 2015 Applications for New
Technology Add-On Payments
We received seven applications for
new technology add-on payments for FY
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49925
2015, three of which were applications
resubmitted from FY 2014. However,
one applicant withdrew its application
prior to the publication of the proposed
rule. In addition, the applicant for the
Watchman® System withdrew its
application prior to the publication of
this final rule. In accordance with the
regulations under § 412.87(c), applicants
for new technology add-on payments
must have FDA approval by July 1 of
each year prior to the beginning of the
fiscal year that the application is being
considered. A discussion of the five
remaining applications is presented
below.
Comment: One commenter stated that
CMS was critical of evidence presented
by the applicants to support their claims
that the new technology represents a
substantial clinical improvement. The
commenter explained that CMS finds
fault with peer-reviewed literature,
registry data, meta-analysis of clinical
trials, lack of long-term outcome data,
age of clinical trial participants below
the age of Medicare beneficiaries, single
arm studies, non-inferiority studies, and
weak primary efficacy results. The
commenter urged CMS to avoid blanket
judgments on what types of evidence
are considered adequate and to carefully
consider the totality of the
circumstances associated with a
particular product. The applicant
concluded that, given the list of
evidence cited by CMS, it would appear
that only head to head trials are
sufficient to show substantial clinical
improvement over standard of care, but
it is important to note that in the case
of first in class products, such trials are
not feasible.
Another commenter shared similar
concerns and stated that a study may be
designed to measure noninferiority
when compared to conventional
treatment, but the results of the study
may demonstrate superiority in terms of
other measures, such as reduced pain,
decreased recovery time or shorter
hospitalizations. In addition, the
commenter stated that study data that
provide information regarding patient
outcomes may be more important than
whether the study was designed as a
superiority trial or a noninferiority trial.
The commenter concluded that a policy
to require superiority studies, or at least
to question noninferiority studies, could
have negative results, including
delaying patient access to innovative
treatments, improved care outcomes,
curtailing innovation, and discouraging
competition. The commenter stated that
CMS should give great weight to the
totality of the evidence, including noninferiority studies and other
methodological approaches, as it
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considers approval of applications for
new technology add-on payments.
Some commenters stated that CMS
has a precedent of accepting
noninferiority studies to evaluate
technologies under the substantial
clinical improvement criterion. In
particular, these commenters indicated
that CMS approved new technology
add-on payments for Fidaxomicin in FY
2013 (77 FR 53350–53358) and
KcentraTM in FY 2014 (78 FR 50575–
50580) and that both of these
technologies submitted data from
clinical trials demonstrating noninferiority. One commenter stated that
CMS’ approval of Fidaxomicin for new
technology add-on payments establishes
a precedent for approval for a
technology that shows non-inferiority
for a primary end point in addition to
the acceptance of other clinically
important secondary analysis, and that
precedent should be used to approve all
technologies. Another commenter stated
that CMS’ approval of KcentraTM for
new technology add-on payments is an
example of how a technology can use
data from randomized controlled trials
demonstrating noninferiority to show
that the technology represents a
substantial clinical improvement.
One commenter stated that noninferiority trials are a well-established
and appropriately accepted standard,
and noninferiority designs are the only
affordable and ethical option for drug
developers in researching acute
bacterial skin and skin structure
infections. The commenter also stated
that primary focus for developing new
agents targeted for acute bacterial skin
and skin structure infection patients is
not to improve clinical cure rates, but to
‘‘enhance the efficiency and cost
effectiveness of achieving clinical cures,
ease therapeutic administration (and,
therefore, improve compliance) and
limit avoidable exposure to healthcare
acquired infections (which, when they
occur, significantly increase costs and
create patient safety risks).’’ The
commenter urged CMS to clarify that it
has not suggested or proposed to adopt
a blanket judgment approach against
technologies studied on a noninferiority
basis.
Response: We appreciate the
commenters’ input and support. CMS
always considers the totality of the
clinical evidence whenever it makes a
substantial clinical improvement
determination. We agree with the
commenters that we approved new
technology add-on payments for
Fidaxomicin and KcentraTM by
determining that both of these
technologies not only met the newness
and cost criteria for new technology
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add-on payments, but also represented a
substantial clinical improvement in the
treatment options available for Medicare
beneficiaries. We also appreciate that
the commenter reviewed the policies we
established in FY 2002 (66 FR 46902)
with regard to the substantial clinical
improvement criterion and clarified in
FY 2008 (72 FR 47301). We continue to
believe, as we did in FY 2008, that it is
a reasonable concern that establishing
specific data standards may make it
more difficult for an applicant to qualify
for a new technology add-on payment
because such standards cannot account
for the various types of new
technologies that may become available
in the future and the types of
requirements that those novel
technologies may or may not be able to
meet. In other words, we clarify that we
did not propose to establish nor are we
establishing a blanket judgment
approach against technologies studied
on a non-inferiority basis. As we stated
in the final rule that appeared in the
Federal Register on September 7, 2001
(referred to hereinafter as the Inpatient
New Technology Add-on Payment Final
Rule), one of the ways to determine if
a technology meets the substantial
clinical improvement criterion is for the
applicant to demonstrate that use of the
technology significantly improves
clinical outcomes for a patient
population as compared with currently
available treatments (66 FR 46914). In
that rule, we finalized the policy that we
would require applicants to submit
evidence to demonstrate this. For the
purposes of seeking additional payment
from Medicare under the IPPS, we
believe that it is preferable, when
possible, for applicants to submit
evidence that demonstrates superiority
of the applicant technology as compared
with currently available treatments. We
note that this superiority can be derived,
extrapolated, or inferred from
noninferiority studies in which the
results demonstrate a far greater delta
than proposed in the power analysis.
This belief is based on earlier
experiences, which we described in the
FY 2002 final rule: ‘‘[W]e would point
out that various new technologies
introduced over the years have been
demonstrated to have been less effective
than initially thought, or in some cases
even potentially harmful. We believe it
is in the best interest of Medicare
beneficiaries to proceed very carefully
with respect to the incentives created to
quickly adopt new technology’’ (66 FR
46913). However, we point out that in
that same rule, we provide two
additional ways for an applicant
technology to demonstrate substantial
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clinical improvement: if the device
offers a treatment option for a patient
population unresponsive to, or
ineligible for, currently available
treatments; or if the device offers the
ability to diagnose a medical condition
in a patient population where that
medical condition is currently
undetectable or offers the ability to
diagnose a medical condition earlier in
a patient population than allowed by
currently available methods. There must
also be evidence that the use of the
device to make a diagnosis affects the
management of the patient’s care. (We
refer readers to the Inpatient New
Technology Add-on Payment Final Rule
(66 FR 46914).) Similarly, for these two
additional ways to meet the substantial
clinical improvement criterion, we
continue to believe that it is appropriate
to require that applicants submit
evidence that the technology in fact
meets the criterion through one of these
two ways. We do not require an
applicant to meet the criterion in more
than one of these ways, but emphasize
that we require evidence to support an
applicant’s claim. If an applicant
chooses to demonstrate that use of its
technology significantly improves
clinical outcomes, we believe that it is
appropriate for CMS to consider all of
the evidence presented in determining
whether there is sufficient objective
clinical evidence to determine if a new
technology meets the substantial
clinical improvement criterion.
a. Dalbavancin (Durata Therapeutics,
Inc.)
Durata Therapeutics, Inc. submitted
an application for new technology addon payments for FY 2015 for the use of
Dalbavancin. Dalbavancin is an
intravenous (IV) lipoglycopeptide
antibiotic administered as a onceweekly 30-minute infusion via a
peripheral line for the treatment of
patients with acute bacterial skin and
skin structure infections, or ABSSSI.
According to the applicant,
Dalbavancin’s unique pharmacokinetic
profile demonstrates rapid bactericidal
activity that is potent and sustained
against serious gram-positive bacteria,
including methicillin-resistant
Staphylococcus aureus (MRSA).
With respect to the newness criterion,
the applicant stated that Dalbavancin’s
once-weekly dosing, a simpler regimen
than the current standard of care
(Vancomycin) of daily or multiple-times
daily intravenous dosing, allows for the
discontinuation of IV access with its
attendant risks of line-related
thrombosis and infection. The applicant
submitted a New Drug Approval
Application (NDA) on September 26,
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2013, and as stated in the FY 2015 IPPS/
LTCH PPS proposed rule, anticipated
FDA approval of Dalbavancin sometime
in May of 2014. The applicant also
applied for a new ICD–10–PCS code to
describe the administration of
Dalbavancin, which was presented at
the March 19–20, 2014 ICD–10
Coordination and Maintenance
Committee meeting. To date, no ICD–
10–PCS code specifically describes the
administration of Dalbavancin.
However, if approved, the new ICD–10–
PCS code will be effective on October 1,
2014. We also note in section II.G. of the
preamble of this final rule that, per
section 212 of the PAMA (Pub. L. 113–
93), the Secretary announced plans to
establish a new compliance date for
ICD–10. We also discuss in that section
the requests for ICD–10–PCS codes for
FY 2015. We refer readers to section
II.G. of the preamble of this final rule for
a complete discussion of these issues.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the technology
meets the newness criterion. However,
we did not receive any public comments
regarding whether the technology meets
the newness criterion. After the
publication of the FY 2015 IPPS/LTCH
PPS proposed rule, we were informed
that the applicant received FDA
approval for the use of the technology
on May 23, 2014. Therefore, for
purposes of consideration for FY 2015
IPPS new technology add-on payments,
we believe that the technology should
be considered ‘‘new’’ as of May 23,
2014, when the technology received
FDA approval.
We note that in the FY 2010 IPPS/RY
2010 LTCH PPS final rule (74 FR 43813
through 43814), we established criteria
for evaluating whether a new
technology is substantially similar to an
existing technology, specifically: (1)
whether a product uses the same or a
similar mechanism of action to achieve
a therapeutic outcome; (2) whether a
product is assigned to the same or a
different MS–DRG; and (3) whether the
new use of the technology involves the
treatment of the same or similar type of
disease and the same or similar patient
population. If a technology meets all
three of the criteria above, it would be
considered substantially similar to an
existing technology and would not be
considered ‘‘new’’ for purposes of new
technology add-on payments.
In evaluating the first criterion, the
applicant stated that Dalbavancin’s
mechanism of action is unique
compared to other antibiotics as it
involves the interruption of cell wall
synthesis resulting in bacterial cell
death. Furthermore, the applicant cited
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Dalbavancin’s long half-life as the factor
that differentiates itself from existing
antibacterial agents active against
MRSA. With respect to the second
criterion, as we stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28036), we believe that cases of ABSSSI
that use Dalbavancin or other antibiotics
for treatment would be assigned to the
same MS–DRGs. Finally, with respect to
the third criterion, we believe that
Dalbavancin and other antibiotics used
to treat cases of ABSSSI treat the same
disease and patient population. Based
on evaluation of the substantially
similarity criteria, we stated in the FY
2015 IPPS/LTCH PPS proposed rule, it
appears that Dalbavancin is not
substantially similar to other antibiotics
for the treatment of ABSSSI because it
does not use the same or a similar
mechanism of action to achieve a
therapeutic outcome.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments regarding whether
Dalbavancin is substantially similar to
existing antibiotics and whether
Dalbavancin meets the newness
criterion. However, we did not receive
any public comments discussing
whether Dalbavancin is substantially
similar to existing antibiotics in the
context of the newness criterion. After
further evaluation of the new
technology add-on payment application,
we believe that Dalbavancin is not
substantially similar to other antibiotics
for the treatment of ABSSSI because it
does not use the same or a similar
mechanism of action to achieve a
therapeutic outcome.
According to the applicant,
Dalbavancin is indicated to treat grampositive ABSSSIs, such as cellulitis or
erysipelas, and MRSA. These conditions
may be a primary diagnosis, but are
often secondary to an underlying
condition such as diabetes, heart failure,
and pressure ulcers, among others.
Therefore, the technology is eligible to
be used across all MS–DRGs. To
demonstrate that it meets the cost
criterion, the applicant searched the FY
2012 MedPAR file (across all MS–DRGs)
for cases where at least one ABSSSI
ICD–9–CM code was present on the
claim, including those where MRSA
was present on a claim with an ABSSSI
diagnosis. Specifically, the applicant
searched for cases with one of the
following diagnosis codes: 035
(Erysipelas); 681.00 (Cellulitis and
abscess of finger, unspecified); 681.01
(Felon); 681.02 (Onychia and
paronychia of finger); 681.10 (Cellulitis
and abscess of toe, unspecified); 681.11
(Onychia and paronychia of toe); 681.9
(Cellulitis and abscess of unspecified
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49927
digit); 682.0–682.9 (Other cellulitis and
abscess of face, neck, trunk, upper arm
and forearm, hand except fingers and
thumb, buttock, leg except foot, foot
except toes, specified sites, unspecified
sites); 686.00 (Pyoderma, unspecified);
686.01 (Pyoderma gangrenosum); 686.09
(Other pyoderma); 686.1 (Pyogenic
granuloma of skin and subcutaneous
tissue); 686.8 (Other specified local
infections of skin and subcutaneous
tissue); 686.9 (Unspecified local
infection of skin and subcutaneous
tissue); 958.3 (Posttraumatic wound
infection not elsewhere classified);
998.51 (Infected postoperative seroma);
and 998.59 (Other postoperative
infection). The applicant believed that
these cases represent potential cases
eligible for the administration of
Dalbavancin.
The applicant found 570,698 cases
across 682 MS–DRGs and noted that
almost 25 percent of the total number of
cases would map to MS–DRGs 603
(Cellulitis without MCC), while the top
10 MS–DRGs accounted for almost half
(or 49 percent) of the total number of
cases. Of the 682 MS–DRGs, only 90 of
these MS–DRGs accounted for 1,000
cases or more. The applicant
standardized the charges for all 570,698
cases, which equated to an average caseweighted standardized charge per case
of $46,138. We note that the applicant
did not inflate the charges nor did it
include charges for Dalbavancin in the
average case-weighted standardized
charge per case. The applicant
calculated an average case-weighted
threshold of $44,255 across all MS–
DRGs. Therefore, the applicant asserted
the average case-weighted standardized
charge per case (without inflating and
including charges for Dalbavancin)
exceeds the average case-weighted
threshold of $44,255 (as indicated in
Table 10 of the FY 2014 IPPS/LTCH PPS
final rule). Therefore, the applicant
maintained that Dalbavancin meets the
cost criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments regarding whether
Dalbavancin meets the cost criterion,
particularly with regard to the
assumptions and methodology used in
the applicant’s analysis.
Comment: The applicant submitted a
public comment maintaining that
Dalbavancin meets the cost criterion
requirement because the cost of the
target cases exceeds the average caseweighted cost threshold requirement
prior to accounting for an inflation
factor, or including the costs of
Dalbavancin. The applicant further
stated that it also included the ‘‘costs of
Dalbavancin in its analysis to further
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demonstrate that Dalbavancin exceeds
the established NTAP cost threshold.’’
Response: We appreciate the
applicant’s response. We reviewed the
applicant’s analysis. We note that, while
the applicant’s analysis included the
charges associated with Dalbavancin in
their final cost estimate, the applicant
did not remove the charges for the
current therapy for treating acute
bacterial skin and skin structure
infections. We agree that the applicant’s
analysis using data from all 570,698
cases across 682 MS–DRGs showed that
Dalbavancin exceeds the average caseweighted threshold prior to the
inclusion of inflation factors and
charges associated with Dalbavancin.
We note that it is unclear to what
degree Dalbavancin would be used in
each of these cases across the specific
MS–DRGs, in part, because a procedure
code has not been established to
identify the technology’s use in the
claims data. Therefore, we reviewed the
additional analyses using the claims
data submitted by the applicant to
substantiate that the technology meets
the cost criterion. For example, in the
data submitted by the applicant, the top
10 MS–DRGs ranked by case volume
constitute roughly half of the cases with
at least one ICD–9–CM code associated
with acute bacterial skin infections.
These 10 MS–DRGs include: MS–DRG
0603 (Cellulitics Without MCC); MS–
DRG 0602 (Cellulitics With MCC); MS–
DRG 0871 (Septicemia or Severe Sepsis
Without MV 96+ Hours With MCC);
MS–DRG 0863 (Postoperative & PostTraumatic Infections Without MCC);
MS–DRG 0872 (Septicemia or Severe
Sepsis Without MV 96+ Hours Without
MCC); MS–DRG 0300 (Peripheral
Vascular Disorders With CC); MS–DRG
0292 (Heart Failure & Shock with CC);
MS–DRG 0862 (Postoperative & PostTraumatic Infections With MCC); MS–
DRG 0857 (Postoperative or PostTraumatic Infections With O.R.
Procedure With CC); and MS–DRG 0853
(Infectious and Parasitic Diseases With
O.R. Procedure With MCC). An average
case-weighted threshold and
standardized charges could be
calculated using these MS–DRGs and
compared to determine if the
standardized charges exceed the average
case-weighted threshold for these top 10
MS–DRGs.
In summary, we agree with the
applicant that the technology meets the
cost criterion.
With regard to substantial clinical
improvement, as previously stated by
the applicant, Dalbavancin is a new
intravenous (IV) lipoglycopeptide
antibiotic administered as a onceweekly 30 minute infusion via a
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peripheral line for the treatment of
patients with acute bacterial skin and
skin structure infections, or ABSSSI.
The applicant noted that, in the setting
of continuing emergence of resistance
among gram-positive pathogens
worldwide, there is an increasing
medical need for new antibacterial
agents with enhanced gram-positive
activity. The applicant cited the
Infectious Diseases Society of America
(IDSA),3 stating the need for a multipronged approach to address the impact
of antibiotic resistance. In addition, the
applicant stated the FDA has also
designated MRSA as a pathogen of
special interest which allows an
antibiotic effective against this organism
to be designated as a ‘‘Qualified
Infectious Disease Product,’’ recognizing
the medical need for drugs to treat
infections caused by this pathogen. The
applicant believed that having a
medicinal agent with clinical efficacy
against gram-positive pathogens,
including MRSA and CA–MRSA, a
favorable benefit/risk ratio, and a
favorable pharmacokinetics profile
allowing convenient dosing in
inpatients and outpatients with the
potential for minimizing patient
noncompliance would be a valuable
addition to the antibacterial
armamentarium for the treatment of
ABSSSI. The applicant also noted that,
when taking Dalbavancin, there is no
need for oral step-down therapy.
The applicant suggested that
Dalbavancin offers treatment advantages
over other available options for therapy
for skin infections as a result of the
following:
• Improved potency against key
bacterial pathogens with the
concentration of Dalbavancin required
to kill key target pathogens lower
relative to other antibiotics commonly
used to treat such pathogens;
• Retained activity against
staphylococcus aureus resistant to other
antibiotics;
• Improved safety profile as
Dalbavancin exhibits more favorable
tolerability and safety than alternative
approved antibacterial drugs in areas
such as no evidence of
thrombocytopenia as seen with
linezolid and tedezolid, superior
infusion related tolerability relative to
other antibiotics, an absence or
reduction of drug specific toxicities, and
once a week dosing of IV Dalbavancin
avoids pitfalls of patient noncompliance
with an oral medication;
• Lack of drug interactions due to
metabolic profile which minimizes risk
of unexpected adverse events when co3 ‘‘Bad
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administered with other compounds as
seen with linezolid and quinupristin/
dalfopristin;
• Decreased requirement for
therapeutic interventions, specifically
the need for an intravenous catheter as
Dalbavancin is administered once a
week, thus reducing catheter related
infection as well;
• Reduced time to patient defined
recovery;
• Reduced mortality rate as
demonstrated in the combined phase of
the Discover 1 and Discover 2 clinical
trials;
• The potential for avoidance of
admission to the hospital as
Dalbavancin allows the utilization of a
weekly treatment regimen, thus
potentially increasing the convenience
of outpatient therapy for patients.
The applicant conducted three phase
three randomized, controlled, double
blinded clinical trials. The first was the
pivotal VER001–9 study with a total of
873 patients with ABSSSIs, which
compared the safety and efficacy of IV
Dalbavancin with possible switch to
oral placebo to IV Linezolid with
possible switch to oral Linezolid.
According to the applicant, the primary
efficacy endpoint of clinical response at
test of 14 days with a plus or minus of
2 days after completion of therapy
demonstrated comparable clinical
efficacy to linezolid and met the
requirement of statistical demonstration
of non-inferiority. In the clinically
evaluable population, 88.9 percent of
patients who received Dalbavancin
compared to 91.2 percent of patients
who received vancomycin/linezolid
were clinical successes. The applicant
also noted that Dalbavancin had an
improved safety profile compared to
Linezolid as the overall incidence and
percentage of adverse events and deaths
were lower in the Dalbavancin group,
which was statistically significant.
The second and third clinical trials
were the Discover 1 and Discover 2
trials, which enrolled a total of 1,312
patients with ABSSSI and compared IV
Dalbavancin with IV placebo every 12
hours to match Vancomycin with
possible switch to oral Vancomycin to
IV Vancomycin with IV placebo to
match IV Dalbavancin with possible
switch to oral Linezolid. The applicant
reported that in both studies, the
primary efficacy outcome measure was
clinical response in 48 to 72 hours poststudy drug initiation and a secondary
outcome measure was clinical status at
the end of treatment visit (day 14) in the
Intent to Treat (ITT) and clinically
evaluable at End of Treatment
populations. Clinical status was also
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determined at the short-term follow-up
and long-term follow-up visits.
According to the applicant, the
Discover 1 trial demonstrated that 83.3
percent of patients in the ITT
population who received Dalbavancin
were responders at 48 to 72 hours after
the start of therapy compared to 81.8
percent of patients who received
Vancomycin/Linezolid. The applicant
also noted that Dalbavancin was noninferior to Vancomycin/Linezolid
(Absolute Difference in Success Rates
(95 percent confidence interval): ¥4.6
percent; 7.9 percent).
The applicant further noted that the
Discover 2 trial showed similar results
to the Discover 1 trial. Specifically, the
trial demonstrated that 76.8 percent of
patients in the ITT population who
received Dalbavancin were responders
at 48 to 72 hours after the start of
therapy compared to 78.3 percent of
patients who received Vancomycin/
Linezolid. The applicant again noted
that Dalbavancin was non-inferior to
Vancomycin/Linezolid (Absolute
Difference in Success Rates (95 percent
confidence interval): ¥7.4 percent; 4.6
percent).
The applicant found Dalbavancin to
be effective against MRSA and other
gram-positive bacteria associated with
ABSSSI. The applicant stated that 25
percent of patients in the study were
treated without an inpatient admission.
We stated in the FY 2015 IPPS/LTCH
PPS proposed rule that we are
concerned with the details of the trial
design and the primary efficacy
endpoints used within those trials that
were used to provide the clinical data
supplied by the applicant. All of the
trials were noninferiority studies, which
prevent any determination as to
substantial clinical improvement from
the trial data. The primary efficacy
endpoint was defined as having no
increase in lesion size, and no fever 48
to 72 hours after drug initiation. The
secondary endpoint was a >20 percent
reduction in infection area at defined
points in time. At neither endpoint is
the patient oriented endpoint of
resolution of infection increased. With
these limitations in using efficacy data
to establish substantial clinical
improvement, the applicant suggested
that the outpatient treatment,
elimination of central lines and
avoidance of hospitalization all may
improve safety, avoid treatmentassociated infections and improve
patient satisfaction, and that these
factors demonstrate substantial clinical
improvement. While the factors
mentioned may be true, the applicant
did not present any evidence to support
its assertions.
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We invited public comments on
whether Dalbavancin meets the
substantial clinical improvement
criterion, including public comments in
response to our concern that the
applicant has only provided efficacy
data of noninferiority, and no data for
the other suggested benefits.
Comment: Several commenters stated
that Dalbavancin meets the substantial
clinical improvement criteria and,
therefore, CMS should approve the
application for new technology add-on
payments in FY 2015.
Response: We appreciate the
commenters’ input. We considered
these public comments in our
determination of whether this
technology represents a substantial
clinical improvement in the treatment
options currently available to Medicare
beneficiaries.
Comment: As previously summarized,
some of the commenters stated that
CMS has a precedent of accepting
noninferiority studies to evaluate
technologies under the substantial
clinical improvement criterion. In
particular, these commenters indicated
that CMS approved new technology
add-on payments for Fidaxomicin in FY
2013 (77 FR 53350 through 53358) and
KcentraTM in FY 2014 (78 FR 50575
through 50580), and both of these
technologies submitted data from
clinical trials demonstrating noninferiority. One commenter stated that
CMS’ approval of Fidaxomicin for new
technology add-on payments establishes
a precedent for approval for a
technology that shows noninferiority for
a primary end point in addition to the
acceptance of other clinically important
secondary analysis. The commenters
believed that precedent should be used
to approve the application for new
technology add-on payments for
Dalbavancin. Another commenter stated
that CMS’ approval of KcentraTM for
new technology add-on payments is an
example of how a technology can use
data from randomized controlled trials
demonstrating noninferiority to show
that technology represents a substantial
clinical improvement.
The applicant also provided
additional data from its clinical trials on
the degree to which patients who were
improving were permitted to stop their
treatment after 10 days. The data
showed that patients randomized to
Dalbavancin were more likely to stop
therapy at 10 days, and less likely to
continue treatment through 14 days.
The applicant stated that by day 10 most
patients were being treated on an
outpatient basis on oral therapy (either
with an oral placebo or oral linezolid),
and that treatment was discontinued at
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the patient’s discretion. The applicant
further stated that ‘‘the implication of
this finding is that, from the patient’s
perspective, resolution of the
underlying infection was occurring
more rapidly for those randomized to
Dalbavancin.’’
Response: We refer readers to section
II.I.4. of the preamble of this final rule
for our detailed response to
commenters’ concerns regarding
noninferiority trials.
We believe that our preliminary
assessment (and final determination
described later in this section) with
regard to Dalbavancin is consistent with
prior determinations made with regard
to other approved technologies,
including the two technologies
identified by the commenters,
Fidaxomicin and KcentraTM. With
regard to Fidaxomicin, we note that we
stated that we believed that it
represented a treatment option with the
potential to decrease utilization, reduce
the recurrence of clostridium-difficile
associated disease (CDAD), and improve
quality of life. We also note that we
considered the information the
applicant provided with regard to the
endpoints in its clinical trial, which as
the commenters point out, were indeed
to demonstrate that the effects of
administering Fidaxomicin were noninferior to administering Vancomycin.
(We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53357
through 53358).) Similarly, with regard
to KcentraTM, we note that we stated
that we believed that it provided a rapid
beneficial resolution of the patient’s
blood clotting factor deficiency,
decreases the risk of exposure to blood
borne pathogens, and reduces the rate of
transfusion-associated complications.
These conclusions also were based on
information the applicant provided with
regard to the endpoints in its clinical
trial. (We refer readers to the FY 2014
IPPS/LTCH PPS final rule (78 FR 50578
through 50579).) However, we note that
in their clinical trials, these applicants
were able to show a wider margin of
difference between the treatment and
control groups. The small margin of
difference between the groups in this
study leads us to conclude that any
additional analysis of the trial data
would be unlikely to demonstrate
superiority of the treatment group.
With regard to the additional data the
applicant provided regarding days of
therapy, it is our understanding that
most patients in both groups were on
oral therapy by day 10 and that patients
in both groups were allowed to
discontinue their therapy at their
discretion. The treatment group was
more likely to discontinue use of
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Dalbavancin by day 10. We believe that
it is difficult to assess the degree to
which this implied that resolution of the
underlying infection was occurring
more rapidly, or would meet our
definition of substantial clinical
improvement. However, in light of the
data from the applicant’s non-inferiority
trial, which did not show a wide margin
of difference between the treatment and
control groups, we do not believe that
this is sufficient objective evidence to
determine that Dalbavancin is a
substantial clinical improvement in the
treatment options available for Medicare
beneficiaries.
Comment: Many commenters
described how they believed that
Dalbavancin’s administration would
improve patient safety and reduce
adverse events, improve medication
compliance, and reduce potential
additional health care utilization.
With regard to patient safety and
adverse events, many commenters
asserted that using Dalbavancin does
not require an indwelling IV access,
unlike treatments using Vancomycin
and, therefore, it is self-evident that the
potential for catheter-associated
infections is eliminated. Some of these
commenters emphasized the importance
of reducing catheter-associated
infections, and noted that Dalbavancin
could help achieve this goal.
In addition, with regard to patient
safety and adverse events, the applicant
provided references discussing the
frequency of central venous catheter
complications nationally. The applicant
also provided data from their pivotal
clinical trial showing the number and
proportion of patients who died and
those with adverse events, including
drug-related adverse events and
treatment-related serious adverse
events. The applicant asserted that the
data showed that fewer patients
randomized to Dalbavancin died
relative to the standard of care, showing
that one patient (0.2 percent) treated
with Dalbavancin died while 7 patients
(1.1 percent) treated with Vancomycin/
Linezolid died. Notably, while these
data showed with a p value of 0.05 that
33 percent of patients treated with
Dalbavancin had an adverse event
compared to 38 percent of patients
treated with Vancomycin or Linezolid,
the data also showed that it was difficult
to distinguish between the two groups
in terms of drug-related adverse events
and treatment-related serious adverse
event. The data showed that 12 percent
of patients treated with Dalbavancin
experienced a drug-related adverse
event compared to 14 percent of
patients treated with Vancomycin/
Linezolid with a p value of 0.45. The
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data also showed that 0.3 percent of
patients treated with Dalbavancin
experienced a treatment-related serious
adverse event compared to 0.6 percent
of patients treated with Vancomycin/
Linezolid with a p value of 0.41. In
addition to these data, the applicant also
presented data collected in their clinical
program that compared the infusionrelated adverse events of patients
receiving Dalbavancin to those of
patients receiving commonly used
alternative agents. These data showed
that 2.2 percent of patients treated with
Dalbavancin experienced an infusionrelated adverse event, while 3.1 of
comparator agent patients experienced
an infusion-related adverse event.
One commenter, having reviewed the
applicant’s clinical trial data, concluded
that while the safety profile to date of
Dalbavancin appears similar to
Vancomycin, the ultimate determination
of safety must await broader clinical
use. The commenter noted that future
clinical trials are needed to define the
safety profile of Dalbavancin.
Response: We appreciate commenters’
input and the additional data submitted
by the applicant.
We disagree with commenters that it
is self-evident that the technology
eliminates the potential for catheterassociated infections, particularly with
respect to indwelling catheters. It is not
clear if these patients already would
have had indwelling catheters in place,
whether for antibiotic administration or
other purposes. Therefore, it is not
evident that simply having the option of
an antibiotic that does not require an
indwelling catheter would eliminate the
potential for catheter-associated
infections. We agree with the
commenters that the administration of
Dalbavancin could reduce the potential
for these infections in patients that
otherwise would not have an indwelling
catheter, but note that it was not
possible to discern the degree to which
this potential reduction occurs based on
the data and comments provided.
As previously stated, we appreciate
the applicant’s submission of additional
data from its trials regarding safety and
adverse events. We agree with the
applicant that Dalbavancin appears to
be associated with fewer infusionassociated adverse events and patient
deaths relative to the comparator group.
We note that the applicant’s data
showed that drug-related and treatmentrelated serious adverse events appeared
to be less frequent for patients treated
with Dalbavancin relative to the
comparator group, but that it was not
clear to what degree the groups actually
differed because the p values were in
excess of 0.4. We also agree with the
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commenter that stated that it would
appear that more clinical use and data
should be gathered to more fully
develop Dalbavancin’s safety profile.
Comment: Many commenters stated
that they believed that Dalbavancin
would improve medication compliance
and reduce potential additional health
care utilization. Some commenters
noted that patients diagnosed with acute
bacterial skin and skin structure
infections are often treated as inpatients.
One commenter noted that the rate of
these skin and skin structure infections
are higher than they have ever
historically been. One commenter
described these hospitalizations as
unnecessary. Another commenter stated
that while Dalbavancin is not more
efficacious than Vancomycin, it is easier
to administer. The commenter
concluded that Dalbavancin would
make it possible to treat patients with
complicated skin and skin structure
infections that might otherwise require
hospitalization on an outpatient basis
without compromising efficacy and
without the need for either laboratory
monitoring or an indwelling
intravenous catheter. Several
commenters noted that less pharmacist
monitoring time was required for the
administration of Dalbavancin relative
to Vancomycin. Several commenters
stated that no additional data beyond
the pivotal trials are needed to show
that a single infusion involves fewer
administrations and requires less health
care resources than a course of therapy
that lasts a week or more. One
commenter described the importance of
medication compliance in the context of
treating a patient population that faces
socioeconomic hardships. Specifically,
the commenter noted that noncompliant
patients are more likely to present to the
emergency department with worsening
infections and that Dalbavancin’s dosing
profile reduces the risk of
noncompliance that is typically
associated with oral therapy.
Response: We appreciate the
commenters’ input. We agree with the
commenters that there is the possibility
that Dalbavancin could make it possible
for certain patients to be treated on an
outpatient basis rather than as
inpatients of a hospital. We further
agree with commenters that there is the
potential for treatment benefits for
Medicare beneficiaries that would help
avoid hospitalizations, including
avoiding potential future iatrogenic
events. However, we are concerned that
neither the applicant, nor any of the
commenters, provided specific
information or data regarding the
reduced resource use that they believe
would occur. It is common that benefits
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from events that appear to be ‘‘selfevident,’’ as suggested by the
commenters, prove to not be beneficial
events when subjected to the rigors of a
clinical trial.
After consideration of the public
comments we received, we do not
believe that Dalbavancin meets the
substantial clinical improvement
criterion to qualify the technology for
new technology add-on payments under
the IPPS in FY 2015. In particular, we
do not believe there is sufficient
objective clinical evidence to determine
that Dalbavancin significantly improves
clinical outcomes for Medicare
beneficiaries in order for the technology
to qualify for new technology add-on
payments. While we recognize that
Dalbavancin has met FDA standards for
safety and effectiveness, the new
technology add-on payment application
process and approval requires a
demonstration of a substantial clinical
improvement, which is not inherent in
the FDA’s regulatory process. We
recognize that the technology is the first
drug designated as a Qualified
Infectious Disease Product (QIDP) to
receive FDA approval and was granted
QIDP designation because it is an
antibacterial or antifungal human drug
intended to treat serious or lifethreatening infections. We are equally
committed to encouraging increased
development and approval of new
antibacterial drugs, providing
physicians and patients with important
new treatment options and will support
this endeavor by providing payment for
Dalbavancin through our prospective
payment processes. However, in the
case of this application, we do not
believe that the technology meets the
substantial clinical improvement
criterion. Therefore, we are not
approving new technology add-on
payments for Dalbavancin for FY 2015.
b. Heli-FXTM EndoAnchor System
(Aptus Endosystems, Inc.)
The Heli-FXTM EndoAnchor System is
indicated for use in the treatment of
patients whose endovascular grafts
during treatment of aortic aneurysms
have exhibited migrations or endoleaks,
or in the treatment of patients who are
at risk of such complications, and in
whom augmented radial fixation and/or
sealing is required to regain or maintain
adequate aneurysm exclusion.
The Heli-FXTM EndoAnchor System is
comprised of the following three
components: (1) The EndoAnchor
Implant; (2) the Heli-FXTM Applier; and
(3) the Heli-FXTM Guide with Obturator.
The Heli-FXTM EndoAnchor System is a
mechanical fastening device that is
designed to enhance the long-term
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durability and reduce the risk of repeat
interventions in endovascular aneurysm
repair (EVAR) and thoracic
endovascular aneurysm repair (TEVAR).
By deploying a small helical screw (the
Heli-FXTM EndoAnchors) to connect the
endograft to the aorta, the Heli-FXTM
System seeks to provide a permanent
seal and fixation, similar to the stability
achieved with an open surgical
anastomosis.
The original Heli-FXTM EndoAnchor
System, designed for treating abdominal
aortic aneurysms (AAA), was cleared by
the FDA through the ‘‘de novo’’ 510(k)
process on November 21, 2011
(reference K102333). The Heli-FXTM
Thoracic System, which allows the
expanded use of the Heli-FXTM
EndoAnchor System technology to the
treatment of thoracic aortic aneurysms
(TAA), was cleared by the FDA on
August 14, 2012 (reference K121168).
The applicant submitted two
applications for approval for new
technology add-on payment in FY 2015:
one for the treatment of AAAs and the
other for the treatment of TAA repair.
We note that, as stated in the Inpatient
New Technology Add-on Payment Final
Rule (66 FR 46915), two applications are
necessary in this instance, because
patients that may be eligible for use of
the technology under the first indication
are not expected to be assigned to the
same MS–DRGs as patients receiving
treatment using the new technology
under the second indication.
Specifically, patients who have
endovascular grafts implanted for the
treatment of AAA map to MS–DRGs 237
(Major Cardiovascular Procedures with
MCC) and 238 (Major Cardiovascular
Procedures without MCC), while
patients who have endovascular grafts
implanted for the treatment of TAA map
to MS–DRGs 219 (Cardiac Valve and
Other Major Cardiothoracic Procedure
without Cardiac Catheter with MCC),
220 (Cardiac Valve and Other Major
Cardiothoracic Procedure without
Cardiac Catheter with CC), and 221
(Cardiac Valve and Other Major
Cardiothoracic Procedure without
Cardiac Catheter without CC/MCC).
Each indication/application must also
meet the cost criterion and the
substantial clinical improvement
criterion in order to be eligible for new
technology add-on payments beginning
in FY 2015. We discuss both of these
applications below.
(1) Heli-FXTM EndoAnchor System for
the Treatment of AAA (Heli-FXTM AAA)
As mentioned above, the original
Heli-FXTM EndoAnchor System,
designed for treating patients diagnosed
with AAA, was cleared by the FDA
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49931
through the ‘‘de novo’’ 510(k) process
on November 21, 2011 (reference
K102333). According to the applicant,
the device became available to Medicare
beneficiaries following the product
launch at the Society of Vascular
Surgery (SVS) Annual Meeting held on
June 7–9, 2012. Therefore, the applicant
maintained that the Heli-FXTM AAA
meets the ‘‘newness’’ criterion because
the technology was not available on the
U.S. market until June 2012. The
applicant explained that the delay in the
general market availability of the
original Heli-FXTM AAA, following
initial FDA clearance, was mainly
because of the regulatory uncertainty
inherent in the ‘‘de novo’’ 510(k)
process. This uncertainty prevented the
manufacturer from being able to secure
the venture capital funding that was
necessary to prepare for
commercialization before obtaining
market clearance. The ability to secure
venture capital through the fundraising
process was dependent upon the FDA
clearance. According to the applicant,
funding to commercially market the
technology was not obtained until June
2012. In subsequent discussions with
the applicant, the applicant confirmed
that the Heli-FXTM AAA was available
on the U.S. market as of November
2011. Further, the applicant
acknowledged that four implantations
were performed on Medicare
beneficiaries between November 2011
and June 2012. Therefore, the Heli-FXTM
AAA is considered ‘‘new’’ as of
November 2011 when the technology
was cleared by the FDA and became
available on the U.S. market.
Section 412.87(b)(2) of the regulations
state that a medical service or
technology may be considered new
within 2 or 3 years after the point at
which data begin to become available
reflecting the ICD–9–CM code assigned
to the new service or technology. Our
past practice has been to begin and end
the eligibility for new technology addon payments on a fiscal year basis. We
have generally followed a guideline that
uses a 6-month window, before and
after the beginning of the fiscal year, to
determine whether to still consider a
technology ‘‘new’’ and extend approved
new technology add-on payments for an
additional fiscal year. In general, a
technology is still considered ‘‘new’’
(and eligible to receive new technology
add-on payments) only if the 3-year
anniversary date of the product’s entry
on the market occurs in the latter half
of the fiscal year. (We refer readers to 70
FR 47362.) With regard to the newness
criterion for the Heli-FXTM AAA, as
stated above, we consider the beginning
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of the newness period for the device to
begin when the technology first became
available on the U.S. market in
November 2011. As previously stated,
the applicant acknowledged that four
implantations were performed on
Medicare beneficiaries between
November 2011 and June 2012.
Therefore, the costs of the Heli-FXTM
AAA are currently reflected in the MS–
DRGs, and the 3-year anniversary date
under the newness criterion for the
product’s entry on the U.S. market will
occur during November 2014 (the first
half of FY 2015). As such, we do not
believe that the Heli-FXTM AAA meets
the newness criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the Heli-FXTM
AAA meets the newness criterion. We
note that the applicant requested an
ICD–10–PCS code, and presented
comments at the March 2014 ICD–10
Coordination & Maintenance Committee
meeting. We also note in section II.G. of
the preamble of this final rule that, per
section 212 of the PAMA (Pub. L. 113–
93), the Secretary announced plans to
establish a new compliance date for
ICD–10–PCS. We also discuss in that
section requests for ICD–10–PCS codes
for FY 2015. We refer readers to section
II.G. of the preamble of this final rule for
a complete discussion of these issues.
Comment: The applicant submitted a
public comment in response to the
concerns that CMS presented in the FY
2015 IPPS/LTCH PPS proposed rule
regarding the newness criterion. The
applicant noted that questions raised by
CMS centered solely on whether the
Heli-FXTM AAA was charged to
Medicare prior to the product launch in
June 2012. Additionally, the applicant
asserted that CMS did not reference the
relevance of the April 1 date for
purposes of determining whether a
technology meets the newness criterion.
Based on CMS’ concerns presented in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28039), the applicant
conducted another review of the data
previously provided to CMS. As
previously submitted, there were four
cases where the applicant was able to
determine that the Heli-FX AAA was
implanted in Medicare beneficiaries,
and where charges were submitted to
Medicare, prior to the product launch.
These procedures occurred on April 24,
2012, May 7, 2012, May 23, 2012, and
June 4, 2012. The applicant stated that
because all of these cases were
completed after April 1, 2012, it
believes that the Heli-FXTM AAA meets
the newness criterion for FY2015.
Response: In a further follow-up
discussion to clarify the availability of
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the Heli-FXTM AAA, the applicant’s
representatives noted that, although not
in large quantities, the Heli-FX AAA
was available to patients prior to April
1, 2012. We appreciate the information
the applicant provided regarding the
newness criterion. As we explained in
the FY 2015 IPPS/LTCH PPS proposed
rule, in general, a new technology is still
considered ‘‘new’’ (and eligible to
receive new technology add-on
payments) only if the 3-year anniversary
date of the product’s entry on the
market occurs in the latter half of the
fiscal year. Although the applicant has
stated that the initial four implantations
were after April 1, 2012, the technology
was still available prior to April 1, 2012.
Therefore, we still consider the
beginning of the newness period for the
device to begin when the technology
first became available on the U.S.
market in November 2011, which is
prior to April 1, 2012. As stated in the
FY 2015 IPPS/LTCH PPS proposed rule,
the 3-year anniversary date under the
newness criterion for the product’s
entry on the U.S. market will occur
during November 2014 (the first half of
FY 2015). As such, the Heli-FXTM AAA
does not meet the newness criterion
and, therefore, is not eligible for new
technology add-on payments for FY
2015.
To demonstrate that the technology
meets the cost criterion, the applicant
researched claims data from the 100
percent sample of the 2012 Inpatient
Hospital Standard Analytical File (SAF)
for cases reporting either procedure
code 39.71 (Endovascular implantation
of other graft in abdominal aorta), or
procedure code 39.79 (Other
endovascular procedures on other
vessels) in the first or second procedure
position on the claim, in combination
with one of the following primary
diagnosis codes: 441.4 (Abdominal
aneurysm without mention of rupture);
996.1 (Mechanical complication of other
vascular device, implant, and graft); or
996.74 (Other complications due to
other vascular device, implant, and
graft). The applicant believed that this
combination of ICD–9–CM codes
identifies cases treated for AAA. We
note that the 2012 SAF dataset includes
all claims submitted from hospitals paid
under the IPPS for calendar year 2012.
The applicant focused its analysis on
MS–DRGs 237 and 238 because these
are the MS–DRGs that cases treated with
the implantation of endovascular grafts
for AAAs would most likely map to.
The applicant found a total of 8,142
cases, and noted that 9.35 percent of the
total number of cases would map to
MS–DRG 237, and 90.65 percent of the
total number of cases would map to
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Sfmt 4700
MS–DRG 238. The applicant
standardized the charges for all 8,142
cases. Using the inflation factor of
1.47329 published in the FY 2014 IPPS/
LTCH final rule (78 FR 50982), the
applicant inflated the standardized
charges by 14.88 percent (the applicant
multiplied 1.47329 × 1.47329 × 1.47329
in order to inflate the charges from 2012
to 2015). The applicant then added the
charges for the Heli-FXTM AAA to the
standardized charges by dividing the
cost of the Heli-FXTM AAA device by
each individual hospital specific CCR
from the FY 2012 impact file. This
equated to an average case-weighted
inflated standardized charge per case of
$111,613. The applicant noted that the
average case-weighted inflated
standardized charge per case did not
contain additional operating room
charges that relate to the Heli-FXTM
AAA. Therefore, the applicant
determined that it was necessary to add
an additional $1,440 for operating room
charges, which was based on an
additional half hour of operating room
time from one hospital, to the average
case-weighted standardized charge per
case. This resulted in an average caseweighted standardized charge per case
of $113,053. The applicant calculated an
average case-weighted threshold of
$86,278 across both MS–DRGs 237 and
238. The applicant noted that the
average case-weighted standardized
charge per case, computed without
including the additional operating room
charges that relate to the Heli-FXTM
AAA, exceeded the average caseweighted threshold of $86,278.
Therefore, the applicant maintained that
the technology meets the cost criterion.
The applicant also submitted claims
data from the ANCHOR (Aneurysm
Treatment Using the Heli-FX Aortic
Securement System Global Registry)
study to demonstrate that the
technology meets the cost criterion. A
total of 51 cases were submitted with
11.76 percent of all the cases mapping
to MS–DRG 237, and 88.24 percent of
all the cases mapping to MS–DRG 238.
The applicant standardized the charges
for all 51 cases, and determined an
average case-weighted standardized
charge per case of $128,196. The
applicant calculated an average caseweighted threshold of $87,118 across
MS–DRGs 237 and 238. Therefore,
because the average case-weighted
standardized charge per case exceeds
the average case-weighted threshold, the
applicant maintained that the
technology meets the cost criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the Heli-FXTM
AAA meets the cost criterion,
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particularly with regard to the
assumptions and methodology used in
the applicant’s analyses.
Comment: Some commenters believed
that the high cost of the Heli-FXTM
device would deter facilities from using
it.
Response: As discussed above,
because the Heli-FXTM AAA does not
meet the newness criterion, it is not
eligible for new technology add-on
payments for FY 2015. Therefore, we are
not summarizing the details of this
comment nor are we responding to the
issues presented in this discussion.
However, we do address this comment
in the later discussion of the Heli-FXTM
EndoAnchor System for the Treatment
of Thoracic Aortic Aneurysms.
We discuss whether the Heli-FXTM
EndoAnchor System (for the treatment
of AAA and TAA) represents a
substantial clinical improvement over
other treatments used for the repair of
both abdominal and thoracic aortic
aneurysms in one discussion below.
(2) Heli-FXTM EndoAnchor System for
the Treatment of Thoracic Aortic
Aneurysms (Heli-FXTM TAA)
The Heli-FXTM TAA, which allows
the expanded use of the Heli-FXTM
EndoAnchor System technology to TAA
repair, was cleared by the FDA on
August 14, 2012 (reference K121168).
The new system consists of a longer
delivery device with additional tip
configurations to allow the helical
EndoAnchor technology to treat TAA. A
line extension to the original Heli-FXTM
EndoAnchor System, allowing
improved treatment of AAA patients
with larger aortic neck diameters, was
cleared by the FDA on April 12, 2013
(reference K130677).
With regard to the newness criterion
for the Heli-FXTM TAA, we consider the
newness period for the device to begin
when the technology was approved by
the FDA on August 14, 2012. Because
the 3-year anniversary date of the
product’s entry on the U.S. market
would occur in the second half of FY
2015 (August 14, 2015), we believe that
the Heli-FXTM TAA meets the newness
criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the Heli-FXTM
TAA meets the newness criterion. As
noted above, the applicant requested an
ICD–10–PCS code, and presented
comments at the March 2014 ICD–10
Coordination & Maintenance Committee
meeting. We also note in section II.G. of
the preamble of this final rule that, per
section 212 of the PAMA (Pub. L. 113–
93), the Secretary announced plans to
establish a new compliance date for the
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ICD–10–PCS. We also discuss in that
section requests for ICD–10–PCS codes
for FY 2015. We refer readers to section
II.G. of the preamble of this final rule for
a complete discussion these issues. We
did not receive any public comments on
whether the Heli-FXTM TAA meets the
newness criterion.
To demonstrate that the Heli-FXTM
TAA meets the cost criterion, similar to
the analysis performed for the HeliFXTM AAA, the applicant researched
claims data from the 100 percent sample
of the 2012 SAF for cases reporting
procedure code 39.73 (Endovascular
implantation of graft in thoracic aorta)
in the first or second procedure position
on the claim, in combination with one
of the following primary diagnosis
codes: 404.93 (Hypertensive heart and
chronic kidney disease, unspecified,
with heart failure and chronic kidney
disease stage V or end-stage renal
disease); 441.01 (Dissection of aorta,
thoracic); 441.03 (Dissection of aorta,
thoracoabdominal); 441.2 (Thoracic
aneurysm without mention of rupture);
441.4 (Abdominal aneurysm without
mention of rupture); 441.7
(Thoracoabdominal aneurysm, without
mention of rupture); 996.1 (Mechanical
complication of other vascular device,
implant, and graft); or 996.74 (Other
complications due to other vascular
device, implant, and graft). The
applicant believed that this combination
of ICD–9–CM codes identifies cases
treated for TAA. We note that the 2012
SAF dataset includes all claims
submitted from hospitals paid under the
IPPS for CY 2012.
The applicant focused its analysis on
MS–DRGs 219, 220, and 221 because
these are the MS–DRGs to which cases
treated with the implantation of
endovascular grafts for TAA repair
would most likely map. The applicant
found a total of 642 cases, and noted
that 27.88 percent of the total number of
cases would map to MS–DRG 219, 40.50
percent of the total number of cases
would map to MS–DRG 220, and 31.62
percent of the total number of cases
would map to MS–DRG 221. The
applicant standardized the charges for
all 642 cases. Using the inflation factor
of 1.47329 published in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50982), the applicant inflated the
standardized charges by 14.88 percent
(the applicant multiplied 1.47329 ×
1.47329 × 1.47329 in order to inflate the
charges from 2012 to 2015). The
applicant then added the charges for the
Heli-FXTM TAA to the standardized
charges by dividing the cost of the HeliFXTM TAA by each individual hospital
specific CCR from the FY 2012 impact
file. This equated to an average case-
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49933
weighted inflated standardized charge
per case of $156,625. The applicant
noted that the average case-weighted
inflated standardized charge per case
did not contain additional operating
room charges related to the use of this
technology. Therefore, the applicant
determined that it was necessary to add
an additional $2,160 for operating room
charges, which was based on an
additional 45 minutes of operating room
time from one hospital, to the average
case-weighted standardized charge per
case. This resulted in an average caseweighted standardized charge per case
of $158,785. The applicant calculated an
average case-weighted threshold of
$141,194 across MS–DRGs 219, 220, and
221. The applicant noted that the
average case-weighted standardized
charge per case, without including
charges for additional operating room
time, exceeded the average caseweighted threshold of $141,194.
Therefore, the applicant maintained that
the technology meets the cost criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the Heli-FXTM
TAA meets the cost criterion,
particularly with regard to the
assumptions and methodology used in
the applicant’s analysis.
Comment: Some commenters stated
that the high cost of the Heli-FXTM
device would deter facilities from using
it. Therefore, the commenters supported
the approval of the Heli-FXTM TAA for
new technology add-on payment in
order to assist with cost coverage so that
more facilities would be willing to use
the device in the treatment of their
patients.
Response: We appreciate the
commenters’ input and support. We
agree with the commenters that the
Heli-FXTM TAA meets the cost criterion.
(3) Evaluation of the Substantial Clinical
Improvement Criterion for the HeliFXTM EndoAnchor System for the
Treatment of Abdominal and Thoracic
Aortic Aneurysms
The applicant stated that the HeliFXTM EndoAnchor System represents a
substantial clinical improvement for the
following reasons: the technology
improves overall rates of aneurysm
exclusion and long-term success after
EVAR by increasing the integrity and
long-term durability of the proximal seal
and fixation; the technology reduces the
risk and rate of secondary interventions
and readmissions due to aneurysmrelated complications (for example,
endoleaks, migration, aneurysm
enlargement) caused by failure of the
proximal seal; the technology improves
the general applicability of EVAR to
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patients with a broader spectrum of
aortoiliac anatomy, including those with
hostile proximal neck anatomy; and the
technology reduces the rigor of life-long
imaging follow-up for EVAR patients by
reducing the rate of late failure and
increasing the post-EVAR rates of
aneurysm sac regression due to
complete, endoleak-free durable
aneurysm exclusion.
While current devices and capabilities
are greatly improved over the first
generation of devices, the applicant
noted that EVAR treatments using the
first generation of devices has not
proven to be as durable, anatomically
applicable, or complication-free as open
surgery.4 5 6 7 Several critical and lifethreatening limitations continue to
require improvement to these devices
and procedures, including the need to
reduce serious early and late device and
procedure-related complications, such
as loss of stability, and integrity and
robustness of the clinical proximal
aortic landing zone, and to offer an
alternative method of EVAR to a broader
segment of the patient population.
The applicant provided literature,
analyses of data from the ‘‘STAPLE–2’’
clinical trial and the ANCHOR Registry,
and a meta-analysis of EVAR trials to
demonstrate that the Heli-FXTM
EndoAnchor System represents a
substantial clinical improvement above
current treatments available. We
summarize the information provided by
the applicant that supports the
clinically beneficial results of using the
Heli-FXTM EndoAnchor System.
The ‘‘STAPLE–2’’ clinical trial
enrolled 155 patients at 25 U.S. centers
between September 2007 and January
2009. Clinical (and imaging) data are
available for 147, 139 and 125 patients
at 1-year, 2-year, and 3-year follow-up,
respectively, representing the complete
data sets at these time points. Patients
enrolled in the clinical trial and
observed under the study will continue
to be followed per protocol for 5 years
following aneurysm repair. According to
4 Abbruzzese, T.A., Kwolek, C.J., Brewster, DC, et
al, ‘‘Outcomes following endovascular abdominal
aortic aneurysm repair (EVAR): An anatomic and
device-specific analysis,’’ Journal of Vascular
Surgery, 2008, Vol. 48, pp. 19–28.
5 Dangas, G., O’Connor, D., Firwana, B., et al,
‘‘Open Versus Endovascular Stent Graft Repair of
Abdominal Aortic Aneurysms: A Meta-Analysis of
Randomized Trials,’’ JACC, 2012, Vol. 5 (10), pp.
1072–1080.
6 De Bruin, J.L., Baas, A.F., Buth, J., et al, ‘‘LongTerm Outcome of Open or Endovascular Repair of
Abdominal Aortic Aneurysm,’’ New England
Journal of Medicine, May 2010, Vol. 362(20),
pp.1881–1889.
7 Greenhalgh, R.M., Brown, L.C., Powell, J.T., et
al, ‘‘Endovascular versus open repair of abdominal
aortic aneurysm,’’ New England Journal of
Medicine, May 2010, Vol. 362(20), pp. 1863–1871.
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the applicant, the results of the trial and
study demonstrate that the Heli-FXTM
EndoAnchor System is associated with
an extremely low rate of proximal neckrelated issues in long-term follow-up.
The applicant maintained that this
determination results in improved
outcomes for aortic aneurysm patients,
and reduced rate of re-interventions,
which are associated with hospital
admissions, procedural risks, and
reversions to increased follow-up
frequency requiring more physician
visits and radiographic imaging studies.
The data used for this analysis was
extracted from the clinical database on
February 1, 2013, and are identical to
those used to generate the most recent
Annual Progress Report (APR)
submitted to the FDA, as required under
the U.S. IDE regulations.
While the ‘‘STAPLE–2’’ clinical trial
was conducted exclusively with the
Aptus AAA endograft (which remains
investigational), the applicant believed
that the use of the Heli-FXTM
EndoAnchor System-related data is
applicable to the use of the anchor with
the compatible Cook, Gore, and
Medtronic manufactured endografts in
treatment anatomies for AAA and TAA
cases.
Through 3-year follow-up, the
applicant noted that there have been no
anchor fractures as observed by the core
lab. Further, there have been no relative
migrations of the Heli-FXTM
EndoAnchor System as compared to
other endografts reported by the core
laboratory.
In the analysis of the ‘‘STAPLE–2’’
clinical trial data at 1-year follow-up,
the applicant noted that the core lab
observed no proximal migrations, and a
single case of Type I endoleak. A single
secondary intervention was required to
address the Type I endoleak in a patient
with a circumferentially incomplete
proximal neck within the 1-year followup period.
The applicant further noted that no
additional Type I endoleaks have been
observed beyond the 1-year follow-up in
any patient enrolled in the trial. In
addition, there were no reported
instances of aneurysm rupture, vessel
perforation, vessel dissection, catheter
embolization, enteric fistula, infection,
Type III endoleak, conversion, allergic
reactions, renal emboli, or patient death
associated with the use of the Heli-FXTM
EndoAnchor System. Further, there
have been no reports of bleeding or
hematoma at the EndoAnchor
penetration locations in the aortic neck.
Beyond the 1-year follow-up, three
patients have demonstrated proximal
migrations less than 1 cm. None of these
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cases were associated with Type I
endoleaks or aneurysm sac expansions.
The applicant then compared
migrations and Type I endoleaks data
from the ‘‘STAPLE–2’’ clinical trial to
analogous data from five compatible
AAA endografts that were not anchored
(data taken from published SSE data
obtained from the FDA’s Web site). One
year of data was compared because this
timeframe is what is reported in a
standard fashion from IDE trials of
endografts. The applicant noted that the
Heli-FXTM EndoAnchor System data
compares favorably against the data
obtained in U.S. pivotal trials of devices
that did not employ discrete
independent fixation means,
particularly when viewed in light of the
shorter average neck lengths treated in
the ‘‘STAPLE–2’’ clinical trial versus
those involving the Cook, Gore, and
Medtronic manufactured endografts.
According to the applicant, the number
of proximal migrations were low across
devices as reported in the SSE data, and
an analysis using the Fisher’s exact
method demonstrated no statistically
significant differences when compared
to the anchored endografts used in the
‘‘STAPLE–2’’ clinical trial (all p=NS).
The incidence of Type I endoleaks and
the need for secondary interventions to
address them was significantly lower for
the Heli-FXTM EndoAnchor System
endografts analyzed under the
‘‘STAPLE–2’’ clinical trial versus the
Medtronic, AneuRx, and Talent
manufactured endografts (p=0.026
versus AneuRx and p=0.015 versus
Talent). The applicant stated that the
applicability of post-hoc statistical
analyses is limited. However, the
applicant believed that because the data
being compared under the analyses
were collected through similar protocols
and with the same endpoint definitions,
post-hoc comparisons were deemed
appropriate. The applicant further
believed that the comparison of this
data demonstrates that the Heli-FXTM
EndoAnchor System is associated with
very low rates of Type I endoleaks and
migrations.
The applicant also provided data from
the ANCHOR Registry, which is a postmarket, prospective, observational,
multi-center, international, dual-arm
study designed to capture real-world
data on the usage patterns and clinical
results associated with the use of the
Heli-FXTM EndoAnchor System as a
method of treatment for patients in need
of EVAR. The applicant explained that
the ANCHOR Registry represents a
growing body of data on the application
of the Heli-FXTM EndoAnchor System
used as a method of endovascular aortic
aneurysm repair. The applicant noted
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that to its knowledge, the anatomical
challenges present in the registry are
greater than those in any large scale
published series. The applicant further
noted that, although long-term results
are limited, the acute results
demonstrate a high level of device
safety, technical feasibility and acute
success in a patient population with few
viable options.
Primary safety for the ANCHOR
Registry is being measured as a
composite of freedom from device or
procedure-related serious adverse
events through 1-year follow-up
following the Heli-FXTM EndoAnchor
System implantation. Primary
effectiveness is being measured as a
composite of acute technical success
and freedom from Type Ia endoleaks
and endograft migrations through 1-year
follow-up. Inclusion and exclusion
criteria are minimal, essentially
following the IFU requirements. Patients
are being followed in the registry by
their physician’s standard of care for 5
years.
Enrollment in the ANCHOR Registry
began in March 2012. Through August
2013, a total of 258 patients were
enrolled at 40 participating centers (29
located in the United States and 11
located in the European Union), and
data are available in the registry’s
database. Of these, 195 patients (76
percent) were enrolled in the primary
arm, having the Heli-FXTM EndoAnchor
System implanted at the time of their
initial aneurysm treatment, either as a
prophylactic measure, or to address an
acute leak seen on completion
arteriography. The remaining patients
(63 or 24 percent) were enrolled in the
revision arm, having the Heli-FXTM
EndoAnchor Systems implanted at a
secondary procedure to arrest migration,
or address endoleaks discovered on
follow-up in previously implanted
endografts.
The applicant noted that physicians
are choosing to apply the Heli-FXTM
EndoAnchor System in a subset of
patients that are at a higher risk for
proximal neck-related complications
during follow-up. The large average sac
diameter in the revision arm suggested
that these patients’ initial treatments
were unsuccessful and, as such, they
have experienced continued sac
expansion post-EVAR. These patients
also represent a high-risk subset of
patients.
Acute results are measured in terms of
technical success. In the primary arm,
193 of 194 procedures were successful,
and in the revision arm, 57 of 63
procedures were successful. All
technical failures were persistence of
Type Ia endoleaks. There has been a
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single re-intervention at 69 days postEndoanchor implantation for a
persistent Type Ia endoleak in one
patient in the revision arm, in which the
Heli-FXTM EndoAnchor System
combined with a proximal cuff were
unable to completely resolve the
endoleak. There have been no devicerelated serious adverse events.
As mentioned above, because the
‘‘STAPLE–1’’,8 and ‘‘STAPLE–2’’
clinical trials were single-arm studies,
no data are available from them to
assess the impact of the Heli-FXTM
EndoAnchor System on endograft
performance. To make this assessment,
a meta-analysis was conducted. The
meta-analysis combined long-term AAA
endograft performance from endografts
marketed in the United States, and
compared these measures to those from
long-term follow-up in the ‘‘STAPLE–2’’
trial.
According to the applicant, the key
findings from the meta-analysis are as
follows:
• Heli-FXTM EndoAnchors reduced
the proportion of treated aneurysms
with enlargement greater than 5 mm at
3 years from 12.7 percent to 3.9 percent
(p=.002).
• Heli-FX EndoAnchor System
reduced the proportion of leaks
requiring treatment at 3 years from 12
percent to 1.3 percent (p.001).
• Heli-FXTM EndoAnchor System
reduced (all-cause) mortality at 3 years
from 18.8 percent to 8.4 percent
(p=.002). However, this does not appear
to have been totally mediated by AAArelated mortality, which was reduced by
the Heli-FXTM EndoAnchor System from
2.5 percent to 0.7 percent at 3 years (but
was not statistically significant, p=.372).
According to the applicant, in general,
patients in the ANCHOR Registry were
similar to the patients in the AAA
endograft studies. The applicant noted
that the results of the analysis using the
Fisher’s Exact Tests were consistent
between the All-Studies’ comparisons
and the IDE-Studies’ comparisons: AllCause Mortality, Leaks requiring
Treatment, and Enlargement were all
significantly lower at 3 years in the
endografts implanted with the HeliFXTM EndoAnchor System than in
standard endografts.
The applicant asserted that the metaanalysis shows that there is objective
evidence that the Heli-FXTM
EndoAnchor System effectively reduces
well-documented problems with
8 Deaton, D.H., Mehla, M., Kasirajan, K., et al,
‘‘The Phase I Multi-center Trial (Staple-1) of the
Aptus Endovascular Repair System: Results at 6
Months and 1 Year,’’ Journal of Vascular Surgery,
2009, Vol. 49, pp. 851–857 (discussion on pp. 857–
858.)
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endografts. By providing the endograft
with better apposition to the native
artery, the applicant noted that the HeliFXTM EndoAnchor System reduces the
rates of enlargement and endoleaks
requiring treatment. The applicant
further noted that these results were
consistent in the All-Studies’ and IDE
Studies’ meta-analyses. The applicant
believed that lower rates of leaks
requiring intervention would save
payers money over the long term.
The applicant observed that, while
there was no significant improvement in
the rate of ruptures with the Heli-FXTM
EndoAnchor System, this may be due to
the fact that leaks were treated and,
thereby, prevented any ruptures. The
applicant believed that the higher rate of
treated endoleaks in endografts
implanted without the Heli-FXTM
EndoAnchor System provides for this
hypothesis. Also, migration did not
appear to be significantly reduced by
the Heli-FXTM EndoAnchor System (3.5
percent at 3 years in both groups;
p=1.0).
Finally, the applicant concluded that,
overall, the lower complication rates
seen with the Heli-FXTM EndoAnchor
System in the meta-analysis provide
evidence of the clinical benefits and
likely economic benefits associated with
the use of the Heli-FXTM EndoAnchor
System. The applicant believed that the
technology may be especially helpful in
patients with difficult anatomy, and that
it may be reasonable to consider using
the Heli-FXTM EndoAnchor System
prophylactically in the treatment of all
such patients.
In addition to the formal study data
from the ‘‘STAPLE–2’’ trial, the Global
ANCHOR Registry, and the metaanalysis based on these, the applicant
provided published peer-reviewed
literature that represent an early state of
scientific data dissemination outside of
non-company sponsored clinical
studies, which is commensurate with
the recent market approvals of the HeliFXTM EndoAnchor System technology.
The applicant believed that these data
demonstrate strong initial physician
enthusiasm and resulting favorable
clinical results in their experience to
date. The applicant noted that the
general body of scientific literature is
considered meaningful and growing for
this early stage of market introduction.
However, the applicant asserted that the
literature supports the study and metaanalysis data above that documents that
improved clinical outcomes were
observed, including outcomes in a
broader range of patients that are often
ineligible for, or at greatest risk with,
EVAR.
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In the FY 2015 IPPS/LTCH PPS
proposed rule, we stated that we are
concerned that the three sources of data,
the ‘‘STAPLE–2’’ clinical trial, the
Anchor registry, and the literature
review that the applicant submitted to
support their application are not high
quality evidence. The ‘STAPLE–2’’
study was a single-arm study and only
used one endograft, the registry is an
observational study, and the literature
review does not provide clinical data.
Also, the meta-analysis of all the
submitted data is only as good as the
data used. While the clinical data
submitted suggests that some outcomes
such as EVAR failure are improved, we
stated that we are concerned that there
is not enough clinical evidence to
support the substantial clinical
improvement criterion.
We invited public comments on
whether the submitted data demonstrate
that the Heli-FXTM EndoAnchor System
represents a substantial clinical
improvement in the treatment of
Medicare beneficiaries, particularly in
regard to the concerns we identified.
Comment: Several commenters stated
that the Heli-FXTM System meets the
substantial clinical improvement
criterion and, therefore, CMS should
approve the Heli-FXTM System for new
technology add-on payments in FY
2015.
Response: We appreciate the
commenters’ support. We considered
these comments in our determination of
whether the Heli-FXTM System
represents a substantial clinical
improvement in the treatment options
available to Medicare beneficiaries.
Comment: The applicant commented
in response to CMS’ concerns presented
in the FY 2015 IPPS/LTCH PPS
proposed rule regarding the lack of
enough high quality evidence to support
the substantial improvement criterion
because the three sources of data
submitted by the applicant were not
considered to be ‘high quality evidence.’
Specifically, CMS stated that it believed
that the meta-analysis of submitted data
is only as good as the data used, the
STAPLE–2 Pivotal FDA Study was a
single arm study and only used one
Endograft, and the ANCHOR Registry is
an observational study and the literature
review does not provide clinical data.
The applicant first outlined some basic
background information into the EVAR
regulatory process.
With respect to the concerns
regarding the meta-analysis of submitted
data being only as good as the data used,
the applicant asserted that it has not
attempted to substantiate the finding of
substantial clinical improvement
through a single source of information.
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The applicant believed that the entirety
of evidence demonstrated that this
criterion was met as stated in its
application. Specifically, the applicant
stated that the Heli-FXTM EndoAnchor
System offers a treatment option for a
patient population unresponsive to, or
ineligible for, currently available
treatments, including the primary cases
with hostile necks and complex
revisions (refer to the ANCHOR Registry
data demonstrating 90.2 percent of
hostile necks in the population). The
technology has shown significantly
improved clinical outcomes for the
short proximal aortic neck patient
population when compared to current
available treatments (refer to STAPLE–
2 average neck length of 22.1mm,
shorter than any conventional Endograft
IDE Study), and has been shown to
reduce aneurysm related mortality (refer
to the meta-analysis results). The
applicant further stated that the HeliFXTM has also been shown to reduce
proximal neck related device
complications and reduced subsequent
therapeutic interventions (refer to
STAPLE–2 where no late Type 1
endoleaks or proximal neck related
revisions were required), and with
previously unseen aneurysm sac
regression (refer to STAPLE–2 which
showed the highest reported at 81.7
percent at 3 years), indicating more
rapid resolution of the disease process.
Based on all of the above information,
the applicant stated that it believes that
the Heli-FXTM EndoAnchor System has
met this evidentiary threshold for the
substantial clinical improvement
criterion.
The applicant also addressed CMS’
concerns about the quality of evidence
that the Aptus’ single arm STAPLE–2
study may provide, specifically, that the
STAPLE–2 Pivotal FDA Study was a
single arm study and only used one
Endograft. According to the applicant,
the STAPLE–2 Study was a two arm
study of patients treated with the Aptus
Stent Graft in conjunction with the
EndoAnchors versus an historical open
surgical control (SVS Lifeline database).
The applicant stated that this kind of
trial design is typical for U.S. premarket IDE EVAR Studies with current
Endovascular stent grafts. According to
the applicant, many of the recently
approved endografts in the United
States used a similar study design and
the FDA has no requirement for a
concurrent surgical control. The
applicant noted that in no case for the
device regulatory approval processes for
recent endografts were randomization or
blinding utilized.
The applicant also addressed CMS’
concern that the STAPLE–2 Study
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utilized a single type of Endograft.
According to the applicant, while the
STAPLE–2 Study utilized a single type
of Endograft, this may provide a
uniquely compelling indication of
substantial clinical improvement based
on two aspects relating to STAPLE–2.
While the Endograft was an entirely
conventional design utilizing Polyester
fabric supported by a Nitinol stent
structure with infrarenal fixation and an
unsupported main body (eliminating
any contribution of columnar strength to
aid in fixation), the applicant stated that
this Endograft has no other means of
fixation beyond the Aptus
EndoAnchors. Despite this, the
applicant stated that results indicated
highly favorable proximal seal related
outcomes in this most challenging
proximal neck anatomy patient
population. In this cohort, the proximal
necks in STAPLE–2 patients contained
the shortest average neck length of any
conventional (non-Fenestrated)
Endograft evaluated in a U.S. PMA trial
to date. The applicant further stated that
unlike other endografts, such as the
Medtronic Endurant or the Gore
Excluder, being utilized with Heli-FX
currently both in the ANCHOR trial and
commercially worldwide, the graft
studied in STAPLE–2 has no inherent
fixation, active or otherwise. The
applicant explained that this is because
there are no integral hooks, barbs, suprarenal fixation, ‘‘anatomical fixation’’ or
‘‘anchor pins’’ or other means to secure
the Aptus Endograft beyond the fixation
provided by the Heli-FXTM
EndoAnchors. In effect, because the
Heli-FXTM is the only source of fixation
for the graft studied, the applicant stated
that it represents a ‘‘worst case’’ and
significant performance challenge of the
clinical effectiveness of the Heli-FXTM
EndoAnchors. Despite this worst-case
aspect of no inherent fixation in the
STAPLE–2 Endograft other than HeliFXTM EndoAnchors for Endograft
fixation and sealing to the aortic wall,
the applicant reported that there were
excellent clinical and technical results
with respect to proximal neck seal and
fixation. This was observed despite the
very short proximal necks treated in the
study cohort. The applicant noted that
the aneurysm size regression is also
among the most rapid and highest
frequency seen with any Endograft U.S.
IDE study. The applicant stated that in
the setting of an Endograft with no
means of fixation beyond the Heli-FXTM
EndoAnchors, this is especially
meaningful and indicative of the
EndoAnchor capabilities with more
advanced, current generation
commercial Endografts.
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With respect to CMS’ concern that the
ANCHOR Registry is an observational
study, the applicant believed that the
Anchor Registry provides important,
highly valuable and meaningful
evidence in support of the substantial
clinical improvement criterion. The
applicant stated that the ANCHOR
Registry is a formal, Institutional
Review Board (IRB) and Ethics
Committee (EC) approved Post-Market
Study that utilizes a Core Lab and a
Safety Medical Reviewer for aneurysm
related outcomes, anatomical
adjudication for all patients at each
follow-up time-point, as well as clinical
outcomes acutely and in follow- up. The
applicant further noted that the use of
a Core Lab and a Safety Medical
Reviewer in the setting of EVAR for both
baseline and outcome data and the
associated aneurysm anatomical aspects
is extremely rare and, therefore, so far
only the ANCHOR Registry has utilized
this approach within the known EVAR
Registries. The applicant stated that this
optimizes the scientific rigor and
robustness of this real-world study. The
applicant further noted that there are
currently 417 patients enrolled (there
were 258 patients at the time of the
application), with core lab analysis
available for 311 subjects, and the data
has continued to be highly favorable in
what is now among the most hostile
proximal necks studied in any Endograft
population seen in the scientific
literature. The applicant asserted that a
key and applicable aspect where HeliFXTM is having significant patient
impact (including as seen in the
patients’ challenging proximal neck
anatomy in STAPLE–2 and ANCHOR
cohorts) is offering a treatment option
for a patient population ineligible for
currently available treatments. While
the applicant acknowledged the
important and favorable aneurysm
exclusion results and expanded patient
applicability provided by the recently
FDA-approved Cook Zenith Fenestrated
Endograft system, which expanded
proximal neck capabilities as low as
4mm in length, there are situations
affecting patients which limit access to
this advanced Endograft technology.
The applicant believed that these higher
risk situations often require physicians
to utilize Heli-FXTM EndoAnchors with
conventional Endografts in sub-optimal
proximal neck anatomy. The applicant
asserted that this is especially
applicable in patients deemed
unsuitable for open surgical repair.
With respect to CMS’ concern that the
literature review did not provide
clinical data, the applicant
acknowledged that the non-STAPLE–2
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and ANCHOR related Heli-FXTM peerreviewed scientific literature did not
constitute formal clinical data in
themselves, but nonetheless the
applicant believed that the information
provided the manuscripts to highlight
the various applicability and utility of
the Heli-FXTM in various settings,
including primary revision, in AAA and
TAA.
Response: We appreciate the
applicant’s response to our concerns
presented in the proposed rule. While
we recognize that Heli-FXTM
EndoAnchor System has received
regulatory approval for marketing,
therefore meeting FDA standards for
safety and effectiveness, the new
technology add-on payment process
requires demonstration of a substantial
clinical improvement, which is not
inherent in the FDA’s regulatory
process. As previously stated, we
believe that data used to support
substantial clinical improvement should
come from high quality evidence. For
example, well-designed studies that
compare the new technology to other
similar services that the applicant is
contending will be replaced by the new
technology. We did not suggest that the
comparative should have been an open,
surgical procedure. The substantial
clinical improvement criterion requires
that technologies demonstrate
substantial clinical improvement over
existing technologies. In this case, we
would have liked to have seen a
randomized trial comparing the use of
Heli-FXTM anchors with various
endografts such as hooks, barbs, suprarenal fixation, anatomical fixation or
anchor pins using the same brands of
endografts. That data, if positive, would
have been sufficient to demonstrate
substantial clinical improvement over
existing technologies.
Further, we also believe that the
alternatives just mentioned—hooks,
barbs, supra-renal fixation, anatomical
fixation, or anchor pins—are
alternatives to the Heli-FXTM System
and the data submitted does not support
that patients have no other alternatives.
Therefore, based on the reasoning
above, we do not believe that the HeliFXTM System meets the substantial
clinical improvement criterion.
After consideration of the public
comments we received, and as
discussed above, we conclude that the
Heli-FXTM AAA does not meet the
newness criterion and, therefore, the
technology is not eligible for new
technology add-on payments for FY
2015. The Heli-FXTM TAA meets the
newness and cost criteria. However, as
discussed above, the Heli-FXTM AAA
and TAA do not meet the substantial
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49937
clinical improvement criterion.
Therefore, we are not approving new
technology add-on payments for the
Heli-FXTM TAA because the technology
does not meet the substantial clinical
improvement criterion.
c. CardioMEMSTM HF (Heart Failure)
Monitoring System
CardioMEMS, Inc. submitted an
application for new technology add-on
payment for FY 2015 for the
CardioMEMSTM HF (Heart Failure)
Monitoring System, which is an
implantable hemodynamic monitoring
system comprised of an implantable
sensor/monitor placed in the distal
pulmonary artery. Pulmonary artery
hemodynamic monitoring is used in the
management of heart failure. The
CardioMEMSTM HF Monitoring System
measures multiple pulmonary artery
pressure parameters for an ambulatory
patient to measure and transmit data via
a wireless sensor to a secure Web site.
The CardioMEMSTM HF Monitoring
System utilizes radiofrequency (RF)
energy to power the sensor and to
measure pulmonary artery (PA) pressure
and consists of three components: an
Implantable Sensor with Delivery
Catheter, an External Electronics Unit,
and a Pulmonary Artery Pressure
Database. The system provides the
physician with the patient’s PA pressure
waveform (including systolic, diastolic,
and mean pressures) as well as heart
rate. The sensor is permanently
implanted in the distal pulmonary
artery using transcatheter techniques in
the catheterization laboratory where it is
calibrated using a Swan-Ganz catheter.
PA pressures are transmitted by the
patient at home in a supine position on
a padded antenna, pushing one button
which records an 18-second continuous
waveform. The data also can be
recorded from the hospital, physician’s
office or clinic.
The hemodynamic data, including a
detailed waveform, are transmitted to a
secure Web site that serves as the
Pulmonary Artery Pressure Database, so
that information regarding PA pressure
is available to the physician or nurse at
any time via the Internet. Interpretation
of trend data allows the clinician to
make adjustments to therapy and can be
used along with heart failure signs and
symptoms to adjust medications.
The applicant believed that a large
majority of patients receiving the sensor
would be admitted as an inpatient to a
hospital with a diagnosis of acute or
chronic heart failure, which is typically
described by ICD–9–CM diagnosis code
428.43 (Acute or chronic combine
systolic and diastolic heart failure) and
the sensor would be implanted during
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the inpatient stay. The applicant stated
that for safety considerations, a small
portion of these patients may be
discharged and the sensor would be
implanted at a future date in the
hospital outpatient setting. In addition,
there would likely be a group of patients
diagnosed with chronic heart failure
who are not currently hospitalized, but
who have been hospitalized in the past
few months for which the treating
physician believes that regular
pulmonary artery pressure readings are
necessary to optimize patient
management. Depending on the
patient’s status, the applicant stated that
these patients may have the sensor
implanted in the hospital inpatient or
outpatient setting.
The applicant received FDA approval
on May 28, 2014. The CardioMEMSTM
HF Monitoring System is currently
described by ICD–9–CM procedure code
38.26 (Insertion of implantable pressure
sensor without lead for intracardiac or
great vessel hemodynamic monitoring).
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments regarding how the
CardioMEMSTM HF System meets the
newness criterion. We did not receive
any public comments concerning how
the CardioMEMSTM HF Monitoring
System meets the newness criterion.
Therefore, after evaluation of the
information provided by the applicant,
we believe that the CardioMEMSTM HF
Monitoring System meets the newness
criterion, and we consider the
technology to be ‘‘new’’ as of May 28,
2014, when the technology received
FDA approval.
With respect to cost criterion, the
applicant submitted actual claims from
the CHAMPION 9 clinical trial. Of the
550 patients enrolled in the trial, the
applicant received 310 hospital bills.
The applicant excluded the following
claims: incomplete or missing
procedure codes, incomplete charge
information and bills that were
statistical outliers (three standard
deviations away from the geometric
mean). This resulted in a final cohort of
138 claims. The applicant noted that
cases treated with the CardioMEMSTM
HF Monitoring System would typically
map to MS–DRG 264 (Other Circulatory
System Operating Room Procedures).
Using the 138 clinical trial claims, the
applicant standardized the charges and
9 Abraham WT, Adamson PB, Bourge RC, Aaron
MF, Costanzo MR, Stevenson LW, Strickland W,
Neelagaru S, Raval N, Krueger S, Weiner S, Shavelle
D, Jeffries B, Yadav JS; for the CHAMPION Trial
Study Group. Wireless pulmonary artery
hemodynamic monitoring in chronic heart failure:
a randomized controlled trial, Lancet, February 19,
2011, Vol. 377(9766), pp:658–666.
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added charges for the CardioMEMSTM
HF Monitoring System (because the
clinical trial claims did not contain
charges for the CardioMEMSTM HF
Monitoring System). This resulted in an
average case-weighted standardized
charge per case of $79,218.
Using the FY 2014 Table 10
thresholds, the threshold for MS–DRG
264 is $60,172. Because the average
case-weighted standardized charge per
case exceeded the threshold amount, the
applicant maintained that the
CardioMEMSTM HF Monitoring System
would meet the cost criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether or not the
CardioMEMSTM HF System meets the
cost criterion. We did not receive any
public comments regarding whether or
not the CardioMEMSTM HF System
meets the cost criterion. Based on the
analysis above, we believe the
CardioMEMSTM HF System meets the
cost criterion.
With regard to substantial clinical
improvement, the applicant asserted
that elevated PA pressures occur prior
to signs and symptoms of heart failure
and changes in PA pressures provide a
sound physiologic basis for its
management. The applicant also
contended that, until the creation of the
CardioMEMS wireless PA implant,
knowledge of PA pressure was only
feasible in the hospital with the
performance of a right heart
catheterization. According to the
applicant, the CardioMEMS HF
Monitoring System provides physicians
knowledge of PA pressure while the
patient is at home, allowing proactive
management to prevent heart failure
decompensation and hospitalization.
The applicant cited clinical data from
the CHAMPION trial. The trial is a
prospective, multicenter, randomized,
single-blinded clinical trial conducted
in the United States, designed to
evaluate the safety and efficacy of the
CardioMEMSTM HF Monitoring System
in reducing heart failure-related
hospitalizations in a subset of subjects
suffering from heart failure. The
applicant shared several major findings
from the CHAMPION trial as described
below.
The primary efficacy endpoint of the
CHAMPION trial was the rate of HF
hospitalizations during the first 6
months of randomized access. There
were 84 heart failure hospitalizations in
the treatment group compared with 120
heart failure hospitalizations in the
control group. This difference between
the groups represented a 28-percent
reduction in the rate of hospitalization
for heart failure in the treatment group
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(0.32 hospitalizations per patient in the
treatment group versus 0.44
hospitalizations per patient in the
control group, p=0.0002). Although not
a primary end point, the rate of HF
hospitalizations after 18 months was 33
percent lower in the treatment group
than in the control group.
According to the applicant, secondary
endpoints of the CHAMPION trial are
changes in pulmonary artery pressures,
proportion of subjects hospitalized, days
alive outside of the hospital, quality of
life (QOL), and heart failure
management which demonstrated the
following results:
• Pulmonary Artery Pressures: At
baseline, both treatment and control
patients had similar PA mean pressures.
The change in pressure over the first 6
months was evaluated by integrating the
area under the pressure curve (AUC). At
6 months of follow-up, the treatment
group had a significantly greater
reduction in AUC of ¥155.7 mmHg
days compared to the control group
which had an increase in AUC of +33.1
mmHg-days; p=0.0077.
• Proportion of Subjects Hospitalized:
During the 6-month follow-up period,
the proportion of subjects hospitalized
for 1 or more HF hospitalizations was
significantly lower in the treatment
group (55 out of 270 patients) than in
the control group (80 out of 280
patients) (20.4 percent versus 28.6
percent; p=0.0292).
• Days Alive Outside of the Hospital:
At 6 months, treatment patients had a
nonsignificant and clinically not
meaningful increase in days alive
outside of the hospital (174.4 versus
172.1; p=0.0280) and fewer average days
in the hospital (2.2 versus 3.8;
p=0.0246) compared to control patients.
• Quality of Life: The heart failure
specific quality of life was assessed with
the MLHFQ total score at 6 months. The
average total score in the treatment
group was 45.2 ± 26.4 which was
significantly better than the average
total score in the control group 50.6 ±
24.8 (p=0.0236). The difference in total
quality of life was primarily due to the
physical domain. The average physical
score for the treatment group (19.8 ±
11.2) was significantly better than the
control group (22.4 ± 10.9) (p=0.0096).
There was also a significant difference
in the emotional domain with an
average score of 9.5 ± 8.1 for the
treatment group and 11.0 ± 7.7 for the
control group (p=0.0398).
• Heart Failure Management:
Physicians responded to treatment of
patients’ elevated PA pressures by
making medication changes to lower PA
pressures and reduce the risk for HF
hospitalization. Physicians documented
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all medication changes for all patients
and indicated whether the change was
made in response to PA pressures or
standard of care information. During the
6-month follow-up period, physicians
made approximately one additional HF
medication change per patient per
month in the treatment group when
compared to the control group.
Specifically, treatment patients had 1.55
medication changes per month on
average compared to control patients
having 0.65 medication changes per
month (p<0.0001). The difference in HF
management between the treatment and
control group was due to HF medication
changes made in response to PA
pressures.
The study met the two primary safety
endpoints: (1) freedom from device/
system related complications (DSRC);
and (2) freedom from sensor failure. The
protocol pre-specified objective
performance criterion (OPC) were that at
least 80 percent of patients were to be
free from DSRC and at least 90 percent
were to be free from pressure sensor
failure. Of the 575 patients in the safety
population, 567 (98.6 percent) were free
from DSRC at 6 months (lower
confidence limit 97.3 percent,
p<0.0001). This lower limit of 97.3
percent is greater than the pre-specified
OPC of 80 percent. There were no
sensor explants or repeat implants and
all sensors were operational at 6 months
for a freedom from sensor failure of 100
percent (lower confidence limit 99.3
percent, p<0.0001). This lower limit of
99.3 percent is greater than the prespecified OPC of 90 percent.
The applicant also noted that the
CardioMEMSTM HF System reduces the
occurrence of HF hospitalizations in
NYHA Class III heart failure patients.
According to the applicant, the device
had very few device and system related
complications occurring over the course
of the clinical trial. All primary and
secondary study endpoints were
successfully achieved. In addition, the
CHAMPION trial suggests the safety and
effectiveness of the device was
maintained during longer term followup.
After reviewing the information
provided by the applicant, we stated in
the FY 2015 IPPS/LTCH PPS proposed
rule that we have the following
concerns. The applicant did not discuss
long-term outcomes, specifically death.
We stated that we believe additional
long-term outcome information and
information regarding how the
technology changes long-term outcomes
would further assist in our
determination of whether the
technology represents a substantial
clinical improvement. With regard to
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the clinical trial, information from the
randomized access period and the open
access period did not include the total
number of deaths in each group. While
the data support a reduction in total
hospitalizations, the rate of
hospitalization in each group (0.32
versus 0.44) does not appear to be
clinically meaningful. This is supported
by total days alive out of the hospital
being virtually identical in both groups.
Finally, we stated that we are concerned
about the cause of the significant
dropouts in the Kaplan Meier curves
which further demonstrates lack of
impact on survival.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether or not the
CardioMEMSTM HF Monitoring System
technology represents a substantial
clinical improvement in the treatment
options available to Medicare
beneficiaries.
Comment: Several commenters,
including various physicians, supported
the approval of new technology add-on
payment for the CardioMEMSTM HF
Monitoring System.
Response: We appreciate the
commenters’ support. We considered
these comments in our determination of
whether the CardioMEMSTM HF
Monitoring System represents a
substantial clinical improvement.
Comment: The applicant submitted a
public comment, which included
responses to each of CMS’ concerns
presented in the proposed rule. CMS’
major concern outlined in the FY 2015
IPPS/LTCH PPS proposed rule was the
lack of mortality data to support the
improvement seen in the specified
endpoint, hospitalizations. The
applicant provided information that the
Randomized Access Period includes
approximately 800 patient-years of
follow-up, with an average patient
follow-up of 18 months. The primary
endpoint of the CHAMPION trial was
HF hospitalizations because it remains a
major clinical and public health
problem, which is inadequately
addressed by current treatment options.
Although the trial was not powered to
assess mortality, the applicant stated
that the data showed strong favorable
trends for reduced mortality, and a
highly significant reduction for HF
hospitalization or mortality. During the
first 6 months of follow-up, the
applicant stated that the proportion of
patients who died that were enrolled in
the treatment group (n=15, 5.6 percent)
was lesser than in the proportion
patients who died that were enrolled in
the control Group (n=20, 7.1 percent),
with a nonsignificant but favorable
relative risk reduction rate of 23 percent
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(HR 0.77, 95 percent CI 0.40–1.51,
p=0.4484). During the entire
Randomized Access Period, the
applicant stated that the proportion of
patients who died that were enrolled in
the treatment group (n=50, 18.5 percent)
was lesser than the proportion of
patients that were enrolled in the
control group (n=64, 22.9 percent), with
a nonsignificant but favorable relative
risk reduction rate of 20 percent (HR
0.80, 95 percent CI 0.55–1.15,
p=0.2303).
The applicant further stated that in
measuring the combined impact of
mortality and HF hospitalizations on the
study population, analysis of the time to
death or first HF hospitalization is
frequently used. During the first 6
months of the Randomized Access
Period, the applicant noted that the
proportion of patients who died or that
had at least one HF hospitalization that
were enrolled in the treatment group
(n=63, 23.3 percent) was lesser than the
proportion of patients who died or that
had at least one HF hospitalization that
were enrolled in the control group
(n=91, 32.5 percent), with a significant
relative risk reduction rate of 31 percent
(HR 0.69, 95 percent CI 0.50–0.95;
p=0.0239). During the entire
Randomized Access Period, the
applicant noted that the proportion of
patients who died or had at least one HF
hospitalization that were enrolled in the
treatment group (n=121, 44.8 percent)
was lesser than the proportion of
patients who died or had at least one HF
hospitalization that were enrolled in the
control group (n=145, 51.8 percent),
with a significant relative risk reduction
rate of 23 percent (HR 0.77, 95 percent
CI 0.60–0.98, p=0.0330). The applicant
further noted that other endpoints other
than time to event analyses are event
rate analyses for repeat events,
including HF hospitalization rates
(primary efficacy endpoint) and all
cause hospitalization rates. The
applicant also indicated that event rate
analyses for composite events also are
frequently used to assess the impact of
both mortality and HF hospitalizations
(combined deaths and HF
hospitalization rates) and total
morbidity and mortality (combined
deaths and all cause hospitalizations
rates). According to the applicant, the
large treatment effect size on long-term
outcomes and the low number needed
to treat and prevent hospitalizations and
deaths demonstrated that
CardioMEMSTM HF Monitoring System
represents a substantial clinical
improvement.
CMS also was concerned that while
the data supported a reduction in total
hospitalizations, the rate of
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hospitalization in each group (0.32
versus 0.44) does not appear to be
clinically meaningful. The applicant
stated in response that the days alive
outside of the hospital (DAOH)
endpoint was a secondary endpoint in
the CHAMPION trial. The applicant
further stated that the endpoint is used
in clinical trials as an alternative
measure for evaluating the combined
impact of mortality and hospitalizations
on the study population. Endpoints that
are traditionally used to measure this
combined effect include time to event
analyses (for example, time to death or
first HF hospitalization) and composite
event rate analyses (for example, rate of
death and repeat HF hospitalizations).
The applicant noted that, for many HF
drug and device trials, these more
traditional analyses are frequently used
as the primary or co-primary efficacy
endpoints. The applicant further stated
that the DAOH endpoint is susceptible
to many influences including variable
follow-up time (that is, patients with
longer follow-up time have the potential
for more DAOH than patients with
shorter follow-up time), the length of
the study duration interval for which
the DAOH endpoint is being analyzed,
and differences in proportion of patients
experiencing a mortality or
hospitalization event relative to the
proportion of patients not experiencing
a mortality or hospitalization event (that
is, a shorter duration interval will have
a greater proportion of patients without
any events when compared to a longer
duration interval where the proportion
of patients experiencing events
increases over time). In response to
CMS’ concerns in regard to the
numerical similarity of DAOH between
the treatment and control groups which
is based on the shorter follow-up
interval of 6 months, the applicant
stated that during this shorter follow-up
interval, approximately 70 percent of
the patients did not experience a
mortality or HF hospitalization event.
The applicant stated that indication
skews the dataset because these patients
are experiencing 100 percent in
measurement of DAOH. Despite this
fact, the applicant stated that there was
a statistically significant difference of
2.3 days in favor of the treatment group.
The applicant asserted that a treatment
effect that increases the number of
DAOH by 2.3 days over a 6-month
period is clinically meaningful to this
patient population, as evidenced by the
improved quality of life of the patients
that were enrolled in the treatment
group. DAOH rates were also analyzed
over a longer period of follow-up during
the Randomized Access Period. To
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reduce the effects of variable follow-up
time and to have a consistent study
duration interval, DAOH was analyzed
over the first 12 months of follow-up.
Patients enrolled in the treatment group
being managed using the
CardioMEMSTM HF Monitoring System
experienced 6.1 more DAOH than the
patients that were enrolled in the
control group after 12 months of followup. The applicant believed that this
increase represents a substantial clinical
improvement with respect to current
treatment options available to Medicare
beneficiaries.
In regard to CMS’ concern about the
cause of the significant dropouts in the
Kaplan Meier curves, which further
demonstrates lack of impact on survival,
the applicant provided the following
information in response. According to
the applicant, the dropout rates in the
CHAMPION trial were low; the patients
transitioning from Randomized to Open
Access are being misconstrued as
dropouts. The applicant reported that
CHAMPION enrolled 550 patients from
September 2007 to October 2009. In
addition, all of the patients remained in
their randomized groups until the last
patient enrolled in the CHAMPION trial
completed at least 6 months of followup. As result of this enrollment over
time, the applicant stated that the
average patient follow-up in the
Randomized Access Period was
significantly longer at 18 months. The
applicant further indicated that patients
with a lower enrollment number and
implanted earlier in 2008 had the
potential for longer follow-up times in
the Randomized Access Period than
patients with a higher enrollment
number and implanted later in 2009. As
a result, the applicant believed that
these patients are being construed as
dropouts on the Kaplan Meier curve, but
actually are patients being censored at
the time of their transition to the Open
Access Period. According to the
applicant, because the maximum
follow-up for the Randomized Access
Period was already achieved, patients in
this category were not eligible or ‘‘at
risk’’ for the longer follow-up periods
represented in the Kaplan Meier curve
understanding that the follow-up time is
now part of the Open Access Period.
In response to CMS’ invitation for
public comments on whether or not the
CardioMEMSTM HF Monitoring System
technology represents a substantial
clinical improvement in the Medicare
population, the applicant stated that
heart failure is a significant clinical
burden to Medicare beneficiaries, their
caregivers, and hospitals throughout the
U.S. health care system. The applicant
believed that rising HF hospitalizations
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rates and the increasing cost of care for
Medicare beneficiaries diagnosed with
HF and the detrimental effect the
condition is having on the U.S. health
care system is not sustainable.
The applicant believed that the
CardioMEMSTM HF Monitoring System
technology represents a substantial
clinical improvement treatment options
available to Medicare beneficiaries. In
the CHAMPION trial, 245 patients (45
percent) were 65 years or older at the
time of sensor implantation (120 in the
treatment group and 125 in the control
group). Patients who were enrolled in
the treatment group and managed on the
basis of PA pressure information
obtained from the CardioMEMSTM HF
Monitoring System had a significantly
reduced HF hospitalization rate (0.34
events/patient-year) compared to
patients who were enrolled in the
control group (0.67 events/patient-year)
and managed according to best available
practices (HR 0.51, 95 percent CI 0.37–
0.70, p<0.0001).
Response: We appreciate the
applicant’s response to each of CMS’
concerns and the additional data
provided. Other than data indicating
that the primary endpoint of reduced
hospitalizations was met, additional
longer term data demonstrated
improved mortality. Therefore, we
believe that the data indicates that the
CardioMEMSTM Monitoring System
meets the substantial clinical
improvement criterion.
After consideration of the public
comments we received, we believe that
the CardioMEMSTM HF Monitoring
System meets all of the new technology
add-on payment policy criteria.
Therefore, we are approving the
CardioMEMSTM HF Monitoring System
for new technology add-on payments in
FY 2015. Cases involving the
CardioMEMSTM HF Monitoring System
that are eligible for new technology addon payments will be identified by ICD–
9–CM procedure code 38.26 (Insertion
of implantable wireless pressure sensor
for intracardiac or great vessel
hemodynamic monitoring), which was
effective October 1, 2011. With the new
technology add-on payment application,
the applicant stated that the total
operating cost of the CardioMEMSTM HF
Monitoring System is $17,750. Under
§ 412.88(a)(2), new technology add-on
payments are limited to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum payment for a
case involving the CardioMEMSTM HF
Monitoring System is $8,875 for FY
2015.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
d. MitraClip® System
Abbott Vascular submitted an
application for new technology add-on
payments for the MitraClip® System for
FY 2015. (We note that the applicant
submitted an application for new
technology add-on payments for FY
2014 but failed to receive FDA approval
by the July 1 deadline.) The MitraClip®
System is a transcatheter mitral valve
repair system that includes a MitraClip®
device implant, a Steerable Guide
Catheter, and a Clip Delivery System. It
is designed to perform reconstruction of
the insufficient mitral valve for highrisk patients who are not candidates for
conventional open mitral valve repair
surgery.
Mitral regurgitation (MR), also
referred to as mitral insufficiency or
mitral incompetence, occurs when the
mitral valve fails to close completely
causing the blood to leak or flow
backwards (regurgitate) into the left
ventricle. If the amount of blood that
leaks backwards into the left ventricle is
minimal, then intervention is usually
not necessary. However, if the amount
of blood that is regurgitated becomes
significant, this can cause the left
ventricle to work harder to meet the
body’s need for oxygenated blood.
Severity levels of MR can range from
grade 1+ through grade 4+. If left
untreated, severe MR can lead to heart
failure and death. The American College
of Cardiology (ACC) and the American
Heart Association (AHA) issued practice
guidelines in 2006 that recommended
intervention for moderate/severe or
severe MR (grade 3+ to 4+). The
applicant stated that the MitraClip®
System is ‘‘indicated for percutaneous
reduction of significant mitral
regurgitation . . . in patients who have
been determined to be at prohibitive
risk for mitral value surgery by a heart
team, which includes a cardiac surgeon
experienced in mitral valve surgery and
a cardiologist experienced in mitral
valve disease and in whom existing
comorbidities would not preclude the
expected benefit from correction of the
mitral regurgitation.’’
The MitraClip® System mitral valve
repair procedure is based on the doubleorifice surgical repair technique that has
been used as a surgical technique in
open chest, arrested-heart surgery for
the treatment of MR since the early
1990s. According to the applicant, in
utilizing ‘‘the double-orifice technique,
a portion of the anterior leaflet is
sutured to the corresponding portion of
the posterior leaflet using standard
techniques and forceps and suture,
creating a point of permanent
cooptation (‘‘approximation’’) of the two
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leaflets. When the suture is placed in
the middle of the valve, the valve will
have a functional double orifice during
diastole.’’
With regard to the newness criterion,
the MitraClip® System received a
premarket approval from the FDA on
October 24, 2013. The MitraClip®
System is indicated ‘‘for the
percutaneous reduction of significant
symptomatic mitral regurgitation (MR ≥
3+) due to primary abnormality of the
mitral apparatus (degenerative MR) in
patients who have been determined to
be at prohibitive risk for mitral valve
surgery by a heart team, which includes
a cardiac surgeon experienced in mitral
valve surgery and a cardiologist
experienced in mitral valve disease, and
in whom existing comorbidities would
not preclude the expected benefit from
reduction of the mitral regurgitation.’’
The MitraClip® System became
immediately available on the U.S.
market following FDA approval. The
MitraClip® System is a Class III device,
and has an investigational device
exemption (IDE) for the EVEREST study
(Endovascular Valve Edge-to-Edge
Repair Study)—IDE G030061, and for
the COAPT study (Cardiovascular
Outcomes Assessment of the MitraClip
Percutaneous Therapy for Health
Failure Patients with Functional Mitral
Regurgitation)—IDE G120024. Effective
October 1, 2010, ICD–9–CM procedure
code 35.97 (Percutaneous mitral valve
repair with implant) was created to
identify and describe the MitraClip®
System technology.
CMS received a formal National
Coverage Decision (NCD) request from
the Society of Thoracic Surgeons (STS),
the American College of Cardiology
Foundation (ACCF), the Society for
Cardiovascular Angiography and
Interventions (SCAI), and the American
Association for Thoracic Surgery
(AATS) jointly asking that CMS cover
Transcatheter Mitral Valve Repair
procedures using a system that has
received FDA premarket approval
(PMA) for the treatment of MR when
performed according to an FDAapproved indication. We refer readers to
the CMS Web site at: http://
www.cms.gov/medicare-coveragedatabase/details/nca-trackingsheet.aspx?NCAId=273 for information
related to this ongoing NCD. The
tracking sheet for this National Coverage
Analysis (NCA) indicates an expected
NCA completion date of August 13,
2014, which is after the FY 2015 IPPS/
LTCH PPS final rule is scheduled to be
published. The processes for evaluation
and determination of an NCD, and the
processes for evaluation and approval of
an application for new technology add-
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49941
on payments are made independent of
each other. However, any payment
made under the Medicare program for
services provided to a beneficiary would
be contingent on CMS’ coverage of the
item, and any restrictions on the
coverage would apply.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on how the MitraClip®
System meets the newness criterion for
purposes of new technology add-on
payments and the issues that may arise
from concurrent NCD requests and new
technology add-on payment application
review and approval processes.
Comment: The applicant stated that
the technology is a first in kind and is
not substantially similar to any FDA
approved technology on the market.
Therefore, the applicant believed that
the technology meets the newness
criterion. Several other public
comments believed that the MitraClip®
System meets the newness criterion.
Response: We appreciate the
commenters’ input. After consideration
of the application, we agree with the
commenters that the MitraClip® System
meets the newness criterion. Therefore,
for purposes of determining eligibility
for FY 2015 IPPS new technology addon payments, we consider the
technology to be ‘‘new’’ as of October
24, 2013, and will use ICD–9–CM
procedure code 35.97 (Percutaneous
mitral valve repair with implant) to
identify the technology for new
technology add-on payments.
Comment: One commenter noted that
the application to request a NCD was
not made by the applicant, as stated in
the proposed rule. Rather, the
commenter stated that this request was
made by a coalition of four national
physician specialty societies that
specialize in treating patients diagnosed
with valve disease.
Response: We appreciate the
commenter’s input concerning this
clarification.
With regard to the cost criterion, the
applicant conducted two analyses. The
applicant noted that, while ICD–9–CM
procedure code 35.97 maps to MS–
DRGs 246 (Percutaneous Cardiovascular
Procedure with Drug-Eluting Stent with
Major Complication or Comorbidity
(MCC) or 4+ Vessels/Stents), 247
(Percutaneous Cardiovascular Procedure
with Drug-Eluting Stent without MCC),
248 (Percutaneous Cardiovascular
Procedure with Non-Drug-Eluting Stent
with MCC or 4+ Vessels/Stents), 249
(Percutaneous Cardiovascular Procedure
with Non-Drug-Eluting Stent without
MCC), 250 (Percutaneous
Cardiovascular Procedure without
Coronary Artery Stent or AMI with
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MCC), and 251 (Percutaneous
Cardiovascular Procedure without
Coronary Artery Stent or AMI without
MCC), clinical experience with the
MitraClip® System device has
demonstrated that it is extremely rare
for a patient to receive stents
concurrently during procedures using
the MitraClip® System device. The
applicant further cited the FY 2013
IPPS/LTCH PPS final rule (77 FR 53308)
which stated, ‘‘According to the Food
and Drug Administration’s (FDA’s)
terms of the clinical trial for MitraClip®
System, the device is to be implanted in
patients without any additional
surgeries performed. Therefore, based
on these terms, we stated that while the
procedure code is assigned to MS–DRGs
246 through 251, the most likely MS–
DRG assignments would be MS–DRGs
250 and 251.’’ As a result, the applicant
stated that it conducted its analyses
solely for MS–DRGs 250 and 251 to
demonstrate that the cases involving the
MitraClip® System device meet the
incremental cost thresholds provided in
Table 10 for those MS–DRGs.
The applicant researched the FY 2012
MedPAR file for claims for cases
reporting ICD–9–CM procedure code
35.97. Under the first analysis and
methodology, the applicant noted that
this search yielded actual claims for
cases in which the MitraClip® System
device was used in procedures
performed in an IDE study type setting,
and hospitals obtained the MitraClip®
System device at a reduced
investigational price. The applicant
further stated that it is likely that
hospitals did not report the charges for
the investigational device, or submitted
claims for charges that were
significantly less than the actual device
acquisition costs (we refer readers to the
explanation below). The applicant
found 57 cases in MS–DRG 250 (29.38
percent of the total number of cases),
and 137 cases in MS–DRG 251 (70.61
percent of the total number of cases),
which resulted in an average caseweighted standardized charge per case
of $232,670.
The applicant standardized the
charges using the FY 2014 IPPS final
rule impact file, and inflated the result
using three different inflation factors.
We note that, since the applicant used
FY 2012 MedPAR data, we believe it is
appropriate to use comparable data for
standardization. Therefore, we believe
use of the FY 2012 final rule impact file
is more appropriate rather than the FY
2014 final rule impact file. The first
analysis and methodology used an
inflation factor of 4.57 percent, which
was based on data from the BLS’ nonseasonally adjusted CPI for all urban
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consumers between January 2011 and
January 2013. This resulted in an
average case-weighted standardized
charge per case of $94,517. The second
methodology under the first analysis
used an inflation factor of 9.92 percent,
which was based on the 2-year charge
inflation factor listed in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50982). This resulted in an average caseweighted standardized charge per case
of $96,199. The third methodology used
under the first analysis used an inflation
factor of 4.63 percent, which was based
on the Medicare Economic Index (MEI)
from the IPPS market basket update
between the third quarter of 2012
projected through the third quarter of
2014. This resulted in an average caseweighted standardized charge per case
of $91,570. The applicant noted that all
three methodologies used under the first
analysis to determine each respective
average case-weighted standardized
charge per case were calculated without
any adjustments to reflect the reduced
investigational price, or inadequate
hospital claim reporting and billing.
Using the FY 2014 IPPS Table 10
thresholds, the average case-weighted
threshold for MS–DRGs 250 and 251 is
$71,467 (all calculations above were
performed using unrounded numbers).
Because the average case-weighted
standardized charge per case for the
applicable MS–DRGs calculated under
each methodology under the first
analysis discussed above exceeds the
average case-weighted threshold
amount, the applicant maintained that
the technology meets the cost criterion.
Under the second analysis, which
used the same premise as the first
analysis, the applicant researched the
FY 2012 MedPAR file for claims for
cases reporting procedure code 35.97
that mapped to MS–DRGs 250 and 251,
except that the applicant excluded
charges related to the MitraClip®
System by removing all charges from the
claim that would map to the
implantable cost center on the cost
report. The applicant then standardized
the charges, inflated the result using the
three inflation factors above, and added
a fixed amount of commercial charges
based on post-FDA approval pricing.
This resulted in an average case
weighted standardized charge per case
of $139,536 under the first inflation
factor (4.57 percent), $142,364 under the
second inflation factor (9.2 percent), and
$139,568 under the third inflation factor
(4.63 percent).
Using the FY 2014 IPPS Table 10
thresholds, the average case-weighted
threshold for MS–DRGs 250 and 251 is
$71,467 (all calculations above were
performed using unrounded numbers).
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Because the average case-weighted
standardized charge per case for the
applicable MS–DRGs calculated under
all three methodologies discussed above
exceeds the average case-weighted
threshold amount, the applicant
maintained that the MitraClip® System
meets the cost criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether or not the
MitraClip® System meets the cost
criterion. In addition, we invited public
comments on the methodologies used
by the applicant in its two analyses.
Comment: In response to CMS’
statement in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28049) that it
believed use of the FY 2012 final rule
impact file is more appropriate rather
than the FY 2014 final rule impact file
for standardization, the applicant
submitted the following supplemental
data updating its cost analyses.
With regard to the second analysis,
the applicant submitted revised data
using the FY 2012 MedPAR file and the
FY 2012 impact file to standardize the
charges. We note that in the proposed
rule we inadvertently listed $232,670 as
the average case-weighted standardized
charge per case. This amount is the
average case-weighted non-standardized
charge per case. Based on the revised
data, the corrected average caseweighted standardized charge per case
is $151,111.
Using the same methodology
described above and the FY 2012 impact
file, under the second analysis, the
applicant determined an inflated
average case-weighted standardized
charge per case of $136,479 under the
first inflation factor (4.57 percent),
$139,151 under the second inflation
factor (9.2 percent), and $139,509 under
the third inflation factor (4.63 percent).
The applicant compared these amounts
to the average case-weighted threshold
of $71,467 for MS–DRGs 250 and 251
(all calculations above were performed
using unrounded numbers). Because the
inflated average case-weighted
standardized charge per case for the
applicable MS–DRGs calculated under
all three methodologies discussed above
exceeds the average case-weighted
threshold amount of $71,467, the
applicant maintained that the
MitraClip® System meets the cost
criterion.
The applicant also revised the second
analysis using FY 2013 MedPAR and
the FY 2013 impact file. Based on this
data, similar to above, the applicant
searched the FY 2013 MedPAR file for
claims for cases reporting ICD–9–CM
procedure code 35.97. The applicant
found 43 cases in MS–DRG 250 (28.66
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percent of the total number of cases),
and 107 cases in MS–DRG 251 (71.33
percent of the total number of cases),
which resulted in an average caseweighted standardized charge per case
of $149,725.
The first methodology used an
inflation factor of 3.20 percent, which
was based on data from the BLS’ nonseasonally adjusted CPI for all urban
consumers between January 2012 and
January 2013. This resulted in an
inflated average case-weighted
standardized charge per case of
$152,945 (which included a fixed
amount of commercial charges based on
post-FDA approval pricing). The second
methodology used an inflation factor of
11.46 percent (second quarter of FY
2012 through first quarter of FY 2014),
which was based on the outlier inflation
factor in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28321). This
resulted in an inflated average caseweighted standardized charge per case
of $158,425 (which included a fixed
amount of commercial charges based on
post-FDA approval pricing). The third
methodology used an inflation factor of
4.53 percent, which was based on the
MEI from the IPPS market basket update
between the third quarter of 2013
projected through the third quarter of
2015. This resulted in an average caseweighted standardized charge per case
of $153,827 (which included a fixed
amount of commercial charges based on
post-FDA approval pricing).
Using the FY 2014 IPPS Table 10
thresholds, the average case-weighted
threshold for MS–DRGs 250 and 251 is
$75,772 (all calculations above were
performed using unrounded numbers).
Because the inflated average caseweighted standardized charge per case
for the applicable MS–DRGs calculated
under each methodology under this
analysis discussed above exceeds the
average case-weighted threshold
amount, the applicant maintained that
the technology meets the cost criterion.
Several other commenters believed
that the MitraClip® System meets the
cost criterion.
Response: We appreciate the
applicant’s submission of the
supplemental data. We agree with the
commenters that the MitraClip® System
meets the cost criterion. We note that in
section II.I.4.b. of the preamble of this
final rule, we denied the applicant’s
request to reassign cases reporting a
TMVR using the MitraClip® System
from MS–DRGs 250 and 251 to MS–
DRGs 216 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac
Catheterization with MCC), 217 (Cardiac
Valve & Other Major Cardiothoracic
Procedures with Cardiac Catheterization
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with CC), 218 (Cardiac Valve & Other
Major Cardiothoracic Procedures with
Cardiac Catheterization without CC/
MCC), 219 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with MCC), 220
(Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with CC), and
221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization without CC/
MCC). We also denied the applicant’s
request to create a new base MS–DRG
for transcatheter valve therapies. We
refer readers to section II.G. for a
complete discussion on these requests.
The applicant asserted that the
MitraClip® System meets the substantial
clinical improvement criterion. Severe
MR is associated with significant
morbidity and mortality rates, and is a
progressive condition. For symptomatic
patients diagnosed with significant MR,
surgical repair or replacement is
considered the gold standard—offering
improvements in symptoms and longer
survival rates. However, the applicant
explained that studies have indicated
that a significant proportion of patients
are not eligible for mitral valve repair
and/or replacement surgery because of
risk factors, including reduced left
ventricular function, significant
comorbidities, and advanced age. As a
result, the applicant stated that there is
a significant unmet clinical need for
patients diagnosed with severe MR who
are too high-risk for surgery, who are
receiving palliative medical
management.
The applicant also stated that the
MitraClip® System meets the substantial
clinical improvement criterion based on
clinical studies 10 11 12 13 14 15 16 17 18 that
10 Feldman, et al., ‘‘Percutaneous Repair or
Surgery for Mitral Regurgitation,’’ New England
Journal of Medicine, 2011, Vol. 364, pp. 1395–1406.
11 Foster, et al., ‘‘Percutaneous Mitral Valve
Repair in the Initial EVEREST Cohort: Evidence of
Reverse Left Ventricular Remodeling,’’ Circulation
in Cardiovascular Imaging, July 2013, Vol. 6(4), pp.
522–530.
12 Grayburn, et al., ‘‘The Relationship between the
Magnitude of Reduction in Mitral Regurgitation
Severity and Left Ventricular and Left Atrial
Reverse Remodeling after MitraClip Therapy,’’
Circulation in Cardiovascular Imaging, September
2013, epub, September 6, 2013.
13 Lim, et al., ‘‘Improved Functional Status and
Quality of Life in Prohibitive Surgical Risk Patients
With Degenerative Mitral Regurgitation Following
Transcatheter Mitral Valve Repair with the
MitraClip® System,’’ Journal of American College of
Cardiology, 2013, In Press, Accepted Manuscript,
Available online, October 31, 2013.
14 Maisano, F., et al., ‘‘Percutaneous Mitral Valve
Interventions in the Real World: Early and One Year
Results From the ACCESS–EU, a Prospective,
Multicenter, Non-Randomized Post-Approval Study
of the MitraClip Therapy in Europe,’’ Journal of
American College of Cardiology, 2013, doi: 10.1016/
j.jacc.2013.02.094.
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49943
have consistently shown that
procedures performed using the
MitraClip® System device lead to a
significant reduction of MR;
improvements in left ventricular (LV)
function including LV volumes and
dimensions; improved patient outcomes
as measured by improvements in New
York Heart Association (NYHA)
functional class, improvement in healthrelated quality of life measures, and
reductions in heart-failure related
hospitalizations; and significantly lower
mortality rates than predicted surgical
mortality rates.
The applicant cited clinical data from
the EVEREST II High-Risk Study and
the EVEREST II (REALISM) Continued
Access Study/Registry. The applicant
also cited clinical data from a high-risk
cohort of patients (the EVEREST II HighRisk Cohort), which is an integrated
analysis of the following: (1) patients
within the EVEREST II High-Risk Study
who met eligibility criteria for being too
high-risk to undergo mitral valve repair
surgery; and (2) patients within the
EVEREST II (REALISM) Continued
Access Study/Registry who were too
high-risk for surgery using identical
eligibility inclusion criteria. The
applicant also cited data from the
Prohibitive Risk Degenerative Mitral
Regurgitation (DMR) Cohort, which is
an analysis of retrospectively evaluated
high-risk patients diagnosed with DMR
enrolled in the EVEREST II studies that
had 1-year follow-up available.
In addition to the published clinical
experience from the EVEREST studies,
the applicant cited data on the use of
the MitraClip® System device in a ‘‘realworld’’ setting published recently by a
select number of European centers as
part of their individual and/or multicenter commercial experience or
enrollment in the MitraClip® System
device group of the ACCESS–EU postapproval clinical trial in Europe. The
European use of the MitraClip® System
device is focused on patients who are
15 Mauri, et al., ‘‘4-Year Results of a Randomized
Controlled Trial of Percutaneous Repair Versus
Surgery for Mitral Regurgitation,’’ Journal of
American College of Cardiology, Volume 62, Issue
4, 2013, p. 317–328.
16 Munkholm, et al., ‘‘Asystemic Review on the
Safety and Efficacy of Percutaneousedge-to-edge
Mitral Valve Repair with the MitraClip System for
high surgical risk candidates,’’ Heart, June 27, 2013.
17 Reichenspurner, H., et al., ‘‘Clinical Outcomes
Through 12 Months in Patients With Degenerative
Mitral Regurgitation Treated With the MitraClip
Device in the ACCESS-Europe Phase I Trial,’’
European Journal of Cardiology-and Thoracic
Surgy, 2013, Vol. 15, pp. 919–927.
18 Whitlow, et al,. ‘‘Acute And 12-Month Results
With Catheter-Based Mitral Valve Leaflet Repair:
The EVEREST II (Endovascular Valve Edge-to-Edge
Repair) High Risk Study,’’ Journal of American
College of Cardiology, 2012, Vol. 59, pp. 130–139.
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too high-risk for surgery, and patients
who are selected for therapy using a
multi-disciplinary ‘‘heart team’’
approach.
The applicant stated that published
reports on the MitraClip® System device
and the procedures in which the device
was used have consistently
demonstrated a significant reduction in
MR incidents that have been durable out
to 1, 2, 3, and 4 years. The applicant
cited the EVEREST II High-Risk Study
(an analysis of 78 patients diagnosed
with degenerative or functional MR
enrolled in the trial), which stated that
‘‘objective measures of MR grade
improved in the MitraClipTM group,
including MR grade of ≤2+ in 78 percent
of surviving patients at 1 year. These
patients also experienced clinically
significant improvements in left
ventricular volume measurements. The
clinical significance of these
improvements is reflected in the NYHA
class improvements. At baseline, 89
percent of patients were NYHA III/IV,
improving to Class I/II in 74 percent of
surviving patients at 12 months. Quality
of life scores also improved
significantly. Finally, the number of
admissions for heart failure was
significantly reduced compared to the
year prior to MitraClipTM therapy.’’
The applicant cited clinical outcomes
from the Prohibitive Risk DMR cohort.
These results are the basis of the FDA
premarket approval. Major effectiveness
endpoints evaluated at 12 months
demonstrated clinically important
improvements in MR severity, with MR
severity grades of 3+/4+ decreasing from
90.4 percent at baseline to 16.7 percent
at 1 year; NYHA Class III/IV decreasing
from 86.6 percent at baseline to 13.1
percent at 1 year; and the SF–36
Physical/Mental scale measuring 33.4/
46.6 at baseline increasing to 39.4/52.2
at 1 year.
The applicant stated in its new
technology add-on payment application
that, ‘‘Heart failure hospitalizations
were reduced by 73 percent in the 12
months post MitraClipTM procedure
from the 12 month pre-MitraClipTM
procedure . . .,’’ and ‘‘the primary
safety analysis indicated low procedural
(30-day) mortality (6.3 percent) after
MitraClipTM in comparison with the
STS predicted surgical mortality risk
score for these patients (13.2 percent).’’
The applicant discussed published
results 19 ‘‘assessing the relationship
between the magnitude of reduction in
19 Grayburn, et al., ‘‘The Relationship between the
Magnitude of Reduction in Mitral Regurgitation
Severity and Left Ventricular and Left Atrial
Reverse Remodeling after MitraClip Therapy,’’
Circulation in Cardiovascular Imaging, September
2013, epub, September 6, 2013.
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Jkt 232001
MR and left ventricular (LV) and left
atrial (LA) remodeling after the
MitraClipTM therapy.’’ In this study of
patients diagnosed with significant
(grade 3+ or 4+) DMR or functional MR
(FMR), the authors found that, ‘‘even
reduction of MR severity to moderate
(2+) is associated with LV and LA
reverse remodeling. In both DMR and
FMR, reduction in left ventricular enddiastolic volume (LVEDV) and LA
volumes were improved proportionally
to the degree of MR reduction at one
year.’’
In conclusion, the applicant cited data
from the ACCESS–EU study, which
noted improvement in disease-specific
quality of life measures, including the
Minnesota Living with Heart Failure
Questionnaire and Six-Minute Walk
Test. The applicant also provided data
supporting the overall safety and
effectiveness of the MitraClip® System
device in European ‘‘real-world’’
outcome studies.
We stated in the FY 2015 IPPS/LTCH
PPS proposed rule that, as noted in the
FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27547 through 27552), we are
concerned that the applicant revised its
initial FDA request for the use of the
MitraClip® System device in all patients
diagnosed with significant MR, after
learning that the FDA expressed
concern that the initial study, EVEREST
II, demonstrated that, while the
MitraClip® System device had clinically
meaningful improvements in LV volume
and QOL, the surgical option had better
outcomes than the MitraClip® System
device in surgical candidates. The FDA
then required a second trial focused on
high surgical risk patients. We noted
that the data evaluated by the FDA and
presented by the applicant in its
application for new technology add-on
payments included information from
the following:
D EVEREST I feasibility trial;
enrollment 2003–2006; 55 patients.
D EVEREST II RCT; enrollment 2005–
2008; 279 patients.
D EVEREST II High-Risk Study;
enrollment 2007–2008; 78 patients. (A
comparator group of 36 patients was
identified from patients who were
screened for the study, but did not meet
the mitral valve anatomic criteria for
placement of the device.)
D EVEREST (REALISM) Continued
Access Study and compassionate use;
enrollment 2009–2013; 49 patients.
The applicant provided comparisons
of various outcomes prior to the
procedure using the MitraClip® System
device and outcomes 12 months later.
MR severity, LV end diastolic volume,
NYHA Class, SF36 Physical/Mental
scale, and heart failure hospitalization
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rates all had clinically meaningful
improvements. For the EVEREST II
HRS, the applicant provided analysis
demonstrating a significant survival
benefit (76 percent versus 55 percent/
p<0.047) over the comparator group.
We stated in the FY 2015 IPPS/LTCH
PPS proposed rule that in our review of
the clinical trials’ data, we have the
following key points of concern:
• Post-hoc analyses of pooled data
sets retain all of the individual
shortcomings of the individual data sets;
• Pooling does not enhance the utility
and scientific value of uncontrolled
single-arm registries with no
comparators; and
• Inappropriate pooling introduces
additional confounders.
We stated that it is also unclear if the
appropriate target population for the
MitraClip® System device has been
identified because the clinical trials
conducted by the applicant included
patients diagnosed with both DMR and
FMR. This makes it difficult to
determine which group of patients may
benefit more, or less, from the new
technology. For example, in a subgroup
analysis of the EVEREST II RCT, the
authors concluded that, older patients
and those patients diagnosed with FMR
or abnormal left ventricular function
had results more comparable to surgical
repair. Data results from 2 years of the
EVEREST II RCT also demonstrated that
surgery reduced incidents of MR more
than the procedures performed using
the percutaneous MitraClip® System
device. However, both the surgical
patients and the patients who were
treated using the MitraClip® System
device showed comparable results for
improved left ventricular function,
NYHA functional class, and quality of
life.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether this technology
meets the substantial clinical
improvement criterion, particularly in
comparison to other surgical therapies,
such as mitral valve repair or
replacement, and the appropriate target
population for this technology.
Comment: A number of commenters
agreed with the applicant that the
MitraClip® System meets the substantial
clinical improvement criterion. The
commenters also recommended the
approval of the MitraClip® System for
new technology add-on payments in FY
2015. One commenter, an association of
thoracic surgeons, expressed support for
the approval of the MitraClip® System
for new technology add-on payments.
The commenter explained that the
MitraClip® System provides a treatment
option to Medicare beneficiaries that
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represents a substantial clinical
improvement for patients who are too
high risk for surgical mitral valve repair
or replacement. Other commenters
indicated that they had experience
using the MitraClip® System.
Response: We appreciate the
commenters’ support. Many of the
commenters described their positive
experiences using the MitraClip®
System, which improved the clinical
outcome of the patients treated.
Furthermore, the commenters believed
that most, if not all, of the cases treated
using the MitraClip® System would
have had no other treatment option
available. In addition, the commenters
asserted that the MitraClip® System
helped to provide improvements to the
quality of life of the patients treated
with the technology. We considered the
commenters’ positive experiences using
the MitraClip® System in our
determination of whether the
MitraClip® System represents a
substantial clinical improvement in the
treatment options available to Medicare
beneficiaries.
Comment: The applicant submitted a
public comment that stated peerreviewed evidence supported the belief
that the MitraClip® System meets the
substantial clinical improvement
criterion. The applicant further noted
that in previous rulemaking, CMS has
indicated that new technologies
represent a substantial clinical
improvement if ‘‘the device offers a
treatment option for a patient
population unresponsive to, or
ineligible for, currently available
treatment.’’ The commenter believed
that the MitraClip® System meets this
criterion when used in accordance with
the FDA-approved indication for the
treatment of prohibitive risk
degenerative mitral regurgitation (DMR).
Specifically, the applicant stated that for
those patients who are ineligible for
surgery due to prohibitive surgical risk,
the MitraClip® System offers the first
available option to mechanically correct
their mitral valve disease and, therefore,
improve cardiac functioning and
functional status and quality of life,
while decreasing heart failure related
hospitalizations and potentially
reducing mortality.
The applicant reiterated the opinion
that the clinical evidence 20 21
demonstrated that the technology
20 Lim et al. Improved Functional Status and
Quality of Life in Prohibitive Surgical Risk Patients
With Degenerative Mitral Regurgitation Following
Transcatheter Mitral Valve Repair with the
MitraClip® System, JACC (2013), In Press, Accepted
Manuscript, Available online 31 October 2013.
21 MitraClip® Clip Delivery System Instructions
for Use, at abbottvascular.com/ifu.
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Jkt 232001
represents a substantial clinical
improvement in the treatment options
available to Medicare beneficiaries for
the following reasons:
• A majority of patients experience
MR reduction from 3+/4+ to ≤2+ after
the procedure. This improvement is
sustained in 83 percent of patients at 12
months. Results at 2 years demonstrated
that 82.5 percent of surviving patients
remained at ≤2+, which demonstrated
that there is no evidence of deterioration
of MR severity between 1-year and 2year follow up.
• Reduction in MR with the MitraClip
therapy to ≤2+ has been shown to
provide significant symptomatic DMR
patients with meaningful clinical
benefits including reduction of left
ventricular volumes.
• Patients experienced clinically
important improvement in NYHA
Functional Class at 12 months; roughly
87 percent of patients experienced
NYHA Class III or Class IV symptoms at
baseline, which improved to less than
15 percent at 12 months.
• Despite the elderly and highly
comorbid nature of the population,
quality of life scores improved. The
improvements in both the Physical
Component Summary and Mental
Component Summary scores exceeded
the 2–3 point threshold generally
considered to represent a minimum
clinically important difference.
• Heart failure hospitalizations were
reduced by 73 percent in the 12 months
post-MitraClip procedure from the 12
months pre-MitraClip procedure.
The commenter concluded that, in
recognition of these benefits, the 2014
AHA/ACC Guidelines for the
Management of Patients with Valvular
Heart Disease recommended the
MitraClip therapy as a treatment option
for the FDA-approved indication. The
commenter noted that the guidelines
state that TMVR may be considered for
severely symptomatic patients (NYHA
Class III to Class IV) with chronic severe
primary MR (stage D) who have
favorable anatomy for the repair
procedure and a reasonable life
expectancy, but who have a prohibitive
surgical risk because of severe
comorbidities and remain severely
symptomatic despite optimal GDMT for
HF.
The applicant also addressed CMS’
concerns presented in the proposed
rule. Specifically, with respect to the
concern regarding the appropriate target
population for this technology, the
commenter believed that the target
population has been clearly defined in
the FDA approval indication and
associated labeling for the MitraClip®
System. The applicant noted that since
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49945
the publication of the proposed rule, as
stated above, the AHA/ACC has
reviewed the MitraClip® System
evidence and updated their guidelines
to recommend consideration for the use
of the MitraClip® System for patients
meeting the FDA-approved indication.
In addition, the applicant indicated that
the CMS Coverage and Analysis Group
has also reviewed the MitraClip®
evidence and issued a proposed
decision memorandum to extend
coverage for the FDA-approved
indication at highly experienced centers
of excellence meeting specific criteria.
Further, the applicant noted that
detailed multi-society requirements
have been published specifying operator
and institutional criteria for performing
the MitraClip® System procedure, and
these have been incorporated by CMS
into the proposed decision
memorandum. Finally, the applicant
stated that it has worked together with
national societies and CMS to establish
a new mitral module of the national
TVT registry to systematically track
adherence to these requirements by all
health care centers using the MitraClip®
System and to collect data on patient
outcomes with linkage to the CMS
claims database.
With respect to CMS’ concerns
regarding how the MitraClip® system
compares to other surgical therapies,
such as mitral valve repair or
replacement, the applicant stated that
clinical outcomes from the prohibitive
risk DMR Cohort were determined by
the FDA to adequately establish the
safety, effectiveness, and positive
benefit-risk profile of the MitraClip®
System for the indicated population,
and these data are the basis for
Premarket Approval Application (PMA)
approval. In conclusion of thought, the
applicant stated that the FDA concluded
that the totality of clinical evidence
demonstrated the reasonable assurance
of safety and effectiveness of the
MitraClip® System to reduce MR and
provide patient benefit in this discrete
and specific patient population.
The applicant also commented that
the prohibitive risk DMR Cohort, on
which FDA approval was granted,
included 127 consecutively-enrolled
patients who completed 12 months of
follow-up after treatment with the
MitraClip® System device. The
applicant explained that this Cohort
included 25 patients from the EVEREST
II High Risk Registry (HRR) study, 98
patients from the high risk arm of the
REALISM Continued Access study, and
4 Compassionate Use patients. The
applicant further explained that the four
Compassionate Use patients are
included for analysis in the Prohibitive
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Risk DMR Cohort because they meet the
definition of prohibitive risk and all
valve anatomic criteria for eligibility.
For inclusion in this Cohort, three
physicians (two experienced mitral
valve surgeons and one experienced
mitral valve cardiologist) had to concur
that the patient met the definition of
prohibitive risk.
The applicant further stated that
patients in the prohibitive risk DMR
Cohort were all enrolled under a highlyrigorous IDE clinical trial protocol that
included pre-specified eligibility criteria
and adjudicated endpoints. The
applicant stated that pooling of the
EVEREST II Continued Access Study
(REALISM) data with EVEREST II HRR
was intended and pre-specified in the
REALISM protocol. The applicant noted
that one of the REALISM protocol’s
stated objectives was to gather
additional safety and effectiveness data
to support the PMA. The applicant
further stated that the same device
design was used, and care was taken to
ensure the two studies had identical
entry criteria, data collection,
monitoring, and analysis methods. In
addition, the applicant stated that the
REALISM protocol defined the
evaluation of poolability and specified
clinically important baseline variables
to be compared. The applicant stated
that the majority (10/13) of these
baseline characteristics, especially highrisk characteristics/comorbidities, was
similar in REALISM and HRR, resulting
in comparable average STS predicted
mortality risk scores.
The applicant stated that the findings
from the prohibitive risk DMR Cohort
were highly consistent with real-world
evidence from a large number of
published European studies that
included similar groups of high-risk
patients.
The applicant concluded that despite
some limitations in evaluating evidence
from pooled datasets, it should be noted
that all available evidence on the
MitraClip® System consistently indicate
that the use of this technology provides
both mechanistic and clinical benefit for
these high surgical risk patients.
Response: We appreciate the
applicant’s subsequent analysis of data.
With respect to the substantial clinical
improvement represented by this
technology, we considered all the case
specific clinical information presented
by the applicant and the public to
determine whether there is evidence to
support a conclusion that the use of the
MitraClip® System represents a
substantial clinical improvement in the
treatment options available to Medicare
beneficiaries. Specifically, we
considered the peer-reviewed medical
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literature, clinical studies, and the
clinically accepted use of the device.
We believe that it is important that the
MitraClip® System be used in the
treatment of the appropriate target
population and that the NCD will
establish the appropriate Medicare
patient population for this procedure.
We agree with the applicant that the
MitraClip® System offers a treatment
option for a patient population
unresponsive to, or ineligible for,
currently available treatment;
specifically those patients that have
been determined to be at prohibitive
risk for mitral valve surgery (per the
FDA indications). In addition, we
received positive comments from a
major cardiovascular and a major
thoracic society and from many
physicians who indicated that the
MitraClip® System helped to produce
positive clinical outcomes by providing
a treatment option for patients with no
other available options, as well as
resolving MR. Furthermore, the
MitraClip® System is the only device
currently available to mechanically
correct mitral valve disease. Without the
availability of this device, patients with
DMR might otherwise receive general
treatment to maintain their condition,
which would eventually result in death
rather than a treatment to resolve their
condition. Also, the MitraClip® System
can be an effective treatment option that
improves quality of life and reduces
heart failure symptoms and
hospitalizations. Therefore, after
reviewing the totality of the evidence,
we believe that the MitraClip® System
represents a substantial clinical
improvement over existing therapies.
We remain interested in seeing whether
the clinical evidence will continue to
find that the MitraClip® System will be
effective. We will continue to monitor
the clinical data as the data become
available.
After consideration of the public
comments we received, we are
approving the MitraClip® System for
new technology add-on payments in FY
2015. As noted above, any payment
made under the Medicare program for
services provided to a beneficiary is
contingent upon CMS’ coverage of the
item, and any restrictions on the
coverage apply. This approval is on the
basis of using the MitraClip® consistent
with any coverage decision that will be
issued by CMS after the publication of
this final rule. Subject to any coverage
determinations made by CMS regarding
the MitraClip® System, cases involving
the MitraClip® System that are eligible
for the new technology add-on
payments will be identified by ICD–9–
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CM procedure code 35.97. The average
cost of the MitraClip® System is
reported as $30,000. Under section
412.88(a)(2), new technology add-on
payments are limited to the lesser of 50
percent of the average cost of the device
or 50 percent of the costs in excess of
the MS–DRG payment for the case. As
a result, the maximum add-on payment
for a case involving the MitraClip®
System is $15,000 for FY 2015.
e. Responsive Neurostimulator (RNS®)
System
NeuroPace, Inc. submitted an
application for new technology add-on
payments for FY 2015 for the use of the
RNS® System. (We note that the
applicant submitted an application for
new technology add-on payments for FY
2014, but failed to receive FDA approval
prior to the July 1 deadline.) Seizures
occur when brain function is disrupted
by abnormal electrical activity. Epilepsy
is a brain disorder characterized by
recurrent, unprovoked seizures.
According to the applicant, the RNS®
System is the first implantable medical
device (developed by NeuroPace, Inc.)
for treating persons diagnosed with
epilepsy whose partial onset seizures
have not been adequately controlled
with antiepileptic medications. The
applicant further stated that, the RNS®
System is the first closed-loop,
responsive system to treat partial onset
seizures. Responsive electrical
stimulation is delivered directly to the
seizure focus in the brain when
abnormal brain activity is detected. A
cranially implanted programmable
neurostimulator senses and records
brain activity through one or two
electrode-containing leads that are
placed at the patient’s seizure focus/
foci. The neurostimulator detects
electrographic patterns previously
identified by the physician as abnormal,
and then provides brief pulses of
electrical stimulation through the leads
to interrupt those patterns. Stimulation
is delivered only when abnormal
electrocorticographic activity is
detected. The typical patient is treated
with a total of 5 minutes of stimulation
a day. The RNS® System incorporates
remote monitoring, which allows
patients to share information with their
physicians remotely.
With respect to the newness criterion,
the applicant stated that some patients
diagnosed with partial onset seizures
that cannot be controlled with
antiepileptic medications may be
candidates for the vagus nerve
stimulator (VNS) or for surgical removal
of the seizure focus. According to the
applicant, these treatments are not
appropriate for, or helpful to, all
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patients. Therefore, the applicant
believed that there is an unmet clinical
need for additional therapies for partial
onset seizures. The applicant further
stated that the RNS® System addresses
this unmet clinical need by providing a
novel treatment option for treating
persons diagnosed with medically
intractable partial onset seizures. The
applicant received FDA premarket
approval in November 2013. The
following ICD–9–CM procedure codes
are used to identify this technology:
01.20 (Cranial implantation or
replacement of neurostimulator pulse
generator); 01.29 (Removal of cranial
neurostimulator pulse generator); and
02.93 (Implantation or replacement of
intracranial neurostimulator lead(s)).
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the technology
meets the newness criterion. However,
we did not receive any public comments
in response to the proposed rule
regarding whether the technology meets
the newness criterion. The applicant
received FDA premarket approval on
November 14, 2013. Therefore, for the
purpose of evaluation for determinng
eligibility for FY 2015 IPPS new
technology add-on payments, we
consider this technology to be ‘‘new’’ as
of November 14, 2013, and we will use
the following ICD–9–CM procedure
codes to identify the technology for
purposes of new technology add-on
payments: 01.20 (Cranial implantation
or replacement of neurostimulator pulse
generator); 01.29 (Removal of cranial
neurostimulator pulse generator); and
02.93 (Implantation or replacement of
intracranial neurostimulator lead(s)).
With regard to the cost criterion, the
applicant stated that substantially all
cases eligible for the RNS® System
would map to MS–DRG 024
(Craniotomy with Major Device
Implant/Acute Complex Central
Nervous System Principal Diagnosis
without MCC). The applicant further
stated that, while it is possible for some
cases to occur in MS–DRG 023
(Craniotomy with Major Device
Implant/Acute Complex Central
Nervous System Principal Diagnosis
with MCC or Chemotherapy Implant), it
would be extremely rare because the
applicant believed that these major
complications and/or comorbidities
would probably preclude a patient from
receiving treatment using the RNS®
System because the technology is an
elective procedure.
The applicant submitted two analyses
to demonstrate that the technology
meets the cost criterion. For the first
analysis, the applicant used clinical trial
claims data collected in the RNS®
System Pivotal Clinical Investigation to
calculate the anticipated average caseweighted standardized charge per case.
The applicant maintained that this
analysis best represents the anticipated
FY 2012 calendar quarter
charges for the technology because it is
based on actual cases treated using this
technology. The applicant analyzed 163
claims from 28 hospitals participating in
the clinical trial. Five claims from one
hospital were excluded because no
hospital-specific information regarding
standardization was available. The
resulting 158 claims included dates of
service ranging from May 2006 through
May 2009. The average case-weighted
standardized charge per case for these
158 claims was $54,691.
The applicant then standardized the
charges for each claim. The applicant
noted that it was not necessary to
remove any charges from these claims
because the technology was provided at
no charge in the trial. After
standardizing the charges for each
claim, the applicant inflated the charges
reported on each claim using the BLS’
CPI–IP data covering the same period.
Specifically, because the publicly
available FY 2012 MedPAR data do not
identify the month of the discharge on
inpatient claims, but do identify the
calendar quarter, the applicant used a
mid-month convention to determine the
relevant monthly CPI–IP for each
calendar quarter. The applicant then
calculated the percentage change from
the relevant quarter to the quarter of the
most recently available CPI–IP, which
was the August 2013 CPI–IP.
Specifically, the applicant used the
following assumptions:
Midpoint of quarter
Q4 2011 ........................................................................
Q1 2012 ........................................................................
Q2 2012 ........................................................................
Q3 2012 ........................................................................
Most recent as of application .......................................
Nov-11
Feb-11
May-11
Aug-11
Aug-13
CPI IP
..........................................................................
..........................................................................
..........................................................................
..........................................................................
..........................................................................
Percent
change to
August 2013
242.672
245.721
247.646
248.856
261.915
7.93
6.59
5.76
5.25
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Source as cited by applicant: Bureau of Labor Statistics’ Web site, accessed October 13, 2013; Base Period: December 1996 = 100.
After inflating the charges, the
applicant estimated charges for the
RNS® System by multiplying the device
cost to the hospital by an anticipated
hospital markup of 100 percent, or
conversely by dividing the device cost
by a CCR of 0.50. The applicant based
its estimated CCR on four analyses.
First, the applicant reviewed the 2007
and 2008 reports prepared by RTI for
CMS on charge compression, which
found that the national aggregate CCR
for devices and implants was 0.43 and
0.467, as presented in the respective
reports. Second, the applicant queried
hospitals participating in the RNS®
System Pivotal trial, and these queries
yielded a mean and median CCR for
implantable devices of 0.37 and 0.36,
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respectively. Third, the applicant
reviewed data from the (All Payor)
Premier database for cases performed
during 2000 through 2010 that reported
ICD–9 CM procedure codes 02.93 and/
or 86.95 on a claim, and calculated a
mean and median CCR for implanted
leads and neurostimulators of 0.50 and
0.44, respectively. The applicant then
reviewed other discussions of past new
technology add-on payment
applications published in the Federal
Register, and noted that other
applicants used lower CCRs (higher
markups) for implanted devices than the
CCR of 0.50 used in the applicant’s
analyses.
Using this approach, the applicant
added the anticipated hospital charge
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for the implantable RNS® System to the
average case-weighted standardized
charge per case, and determined a final
average case-weighted standardized
charge per case of $128,723. The
anticipated hospital charge for the
implantable RNS® System is $73,900.
Using the FY 2014 IPPS Table 10
thresholds, the threshold for MS–DRG
024 is $91,197. Because the final
average case-weighted standardized
charge per case of $128,723 for MS–DRG
024 exceeds the average case-weighted
threshold amount, the applicant
maintained that the RNS® System meets
the cost criterion.
In the second analysis, which the
applicant characterizes as
supplementary, the applicant
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researched the FY 2012 MedPAR file for
cases reporting the following
combinations of ICD–9–CM procedures
codes: 02.93 and 86.95, or procedures
codes 02.93 and 01.20 that mapped to
MS–DRG 024. The applicant found 383
claims for cases reporting the
combination of ICD–9–CM procedures
codes 02.93 and 01.20, and pointed out
that these cases were coded with
procedure code 01.20 in error because
no new RNS® System implantations
occurred after May 2009. The applicant
analyzed these 383 claims, and found
that more than 90 percent of these cases
had a primary or secondary diagnosis of
Parkinson’s disease, essential tremor, or
dystonia. These diagnoses are FDAapproved indications for deep brain
stimulation (DBS). In addition, the
applicant noted that the total covered
charges for these cases were less than
the estimated charges for a full DBS
system, and hypothesized that these
cases did not represent implantation of
a full DBS system, but did represent the
implantation of leads only. The
applicant contacted two hospitals that
reported claims for cases where total
covered charges were less than the
charges for a full DBS system, and the
hospitals confirmed that their claims
represented lead implantations only.
Therefore, for the second analysis, the
applicant included all of the cases
assigned to MS–DRG 024 reporting a
combination of ICD–9–CM procedures
codes 02.93 and 86.95, and all of the
cases assigned to MS–DRG 024
reporting a combination of ICD–9–CM
procedures codes 02.93 and 01.20 where
the covered charges were greater than,
or equal to, the estimated charges of a
full DBS system. The applicant
maintained that 374 claims from 106
providers met this criterion, and data
represented claims from the fourth
calendar quarter of 2011 through the
third calendar quarter of 2012. Based on
this assumption, the applicant
calculated an average case-weighted
standardized charge per case of $65,555.
The applicant then removed DBS
charges from the average case-weighted
standardized charge per case. The
applicant estimated charges for a full
DBS system, and maintained that the
average cost for a full DBS system is
$25,979. Similar to its first analysis, the
applicant assumed a CCR of 0.50, or 100
percent markup, which resulted in
estimated charges for a full DBS system
of $51,958. After removing the DBS
system charges, the applicant inflated
the charges to the current period using
the same methodology in the first
analysis, added charges for the RNS®
System, and determined a final average
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case-weighted standardized charge per
case of $130,233. As noted above, the
anticipated hospital charge for the
implantable RNS® System is $73,900.
Using the FY 2014 IPPS Table 10
thresholds, the average case-weighted
threshold for MS–DRG 024 is $91,197.
Because the final average standardized
charge per case of $130,233 for MS–DRG
024 exceeds the threshold amount, the
applicant maintained that the RNS®
System meets the cost criterion.
Under either analysis, the applicant
maintained that the final average caseweighted standardized charge per case
would exceed the average case-weighted
threshold.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we invited public
comments on whether the RNS® System
meets the cost criterion, particularly
based on the assumptions and
methodology used in the applicant’s
analyses. However, we did not receive
any public comments in response to the
proposed rule regarding whether this
technology meets the cost criterion.
After further evaluation of the new
technology add-on payment application,
we believe that the technology meets the
cost criterion.
With regard to substantial clinical
improvement, as previously stated,
some patients diagnosed with partial
onset seizures may not be able to control
their seizures with antiepileptic
medications, VNS, or with surgical
removal of the seizure focus. The
applicant stated that the RNS® System
provides treatment for those patients
diagnosed with partial onset seizures
who fail treatment with antiepileptic
medications, or VNS therapy, and who
are ineligible for respective surgery
because of the extent and/or location of
the seizure focus, or patients who do not
elect surgery. According to the
applicant, the RNS® System clinical
trials provide Class I evidence that
treatment using the RNS® System
substantially reduces disabling seizures
in patients diagnosed with severe
epilepsy, who have tried and failed
treatment with antiepileptic
medications, and in many cases, VNS or
epilepsy surgery. The applicant
maintained that the results from their
clinical trials demonstrate significant
and sustained improvements in health
outcomes over the controlled period and
over the long term. The applicant
conducted a feasibility trial, which was
designed to demonstrate adequate safety
of its treatment, and provide evidence of
effectiveness to support commencement
of a randomized double-blinded pivotal
trial. In addition, the applicant has an
ongoing long-term treatment clinical
investigation trial (LTT trial) to assess
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the long-term safety and effectiveness of
the treatment on patients who have
completed either the Feasibility trial, or
the RNS® System Pivotal trial for an
additional seven years. The LTT trial
started in April 2006, and the final
patient is expected to complete the trial
in 2018. The applicant noted that
patients enrolled in the LTT trial
continued to experience a reduction in
seizures over several years of follow-up,
further demonstrating the positive effect
of responsive stimulation from the
RNS® System is durable.
The applicant stated that their pivotal
trial met its primary effectiveness
endpoint by proving that there was a
statistically significant greater reduction
in seizures in the treatment group
compared to the control group (p =
0.012). Significant improvements at 1
and 2 years post-implant included:
• A significant reduction in disabling
seizures of 44 percent and 53 percent at
1 and 2 years, respectively;
• Fifty-five percent of patients who
reached 2 years post-implant
experienced a 50 percent or greater
reduction in seizures; and
• Significant improvements in overall
quality of life, as well as individual
quality of life measures including
memory, language, attention,
concentration and medication effects.
The applicant asserted that there was
no negative effect of treatment using the
RNS® System on neuropsychological
function (including verbal functioning,
visual spatial processing, and memory)
or mood. The applicant concluded that
the RNS® System Pivotal trial provides
Class I evidence that responsive cortical
stimulation is effective in significantly
reducing seizure frequency in adults
with one or two seizure foci who have
failed two or more antiepileptic
medication trials. The applicant stated
that experience across all of the RNS®
System trials demonstrates the
reduction in seizure frequency of
disabling partial onset seizures
improves over time. In addition, the
applicant noted that sustained
improvements were also seen in quality
of life. Finally, the applicant noted that
safety and tolerability measures
compare favorably to alternative
treatments, such as antiepileptic
medications, VNS, and epilepsy surgery.
With regard to the substantial clinical
improvement criterion, we stated in the
proposed rule that we are concerned
that the average age of the patients
enrolled in the applicant’s trials was 35
years. Although the applicant
maintained that 31 percent of the
patients enrolled in the pivotal trial
were Medicare beneficiaries, we are
unsure of the extent to which this
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technology would be used by Medicare
beneficiaries because of the relatively
young age of the majority of the patients
enrolled in the pivotal trial. We also are
concerned that further clarification on
how the RNS® System compares to
other neurostimulation treatments was
not provided by the applicant.
Because the applicant included
claims with DBS charges in one of its
cost analyses, we believe that the
similarities and differences between
DBS and the RNS® System may also be
relevant under the substantial clinical
improvement criterion. In addition, we
stated in the proposed rule that we are
concerned that the time period in the
clinical trial may not be sufficient to
confirm durability. In the RNS® System
Pivotal Clinical Investigation, the
primary effectiveness endpoint
considered seizure frequency over the
last 3 months of the blinded period of
the trial. We note that the applicant is
currently conducting a 5-year study.
We invited public comments on
whether the RNS® System meets the
substantial clinical improvement
criterion, particularly in regard to the
degree in which the technology would
be used by Medicare beneficiaries, the
comparison to other neurostimulation
treatments, and its durability.
Comment: Commenters stated that the
technology is currently used and will
continue to be used in the treatment of
Medicare beneficiaries who have been
diagnosed with epilepsy. One
commenter noted that 31 percent of
individuals in the RNS® System clinical
trial were Medicare beneficiaries, and
all of these individuals were enrolled in
the Medicare program because of a
disability as opposed to being enrolled
in the Medicare program because of
their age. In addition, the commenter
provided an analysis of data obtained
from publicly available databases,
specifically using the Premier
Perspective all payor database for the
time period from 2008 through 2013 and
the CMS MedPAR database for FY 2012
and FY 2013. This analysis showed that,
for Medicare beneficiaries who have
been diagnosed with medically
intractable partial epilepsy, 72 to 77
percent of the Medicare claims were
submitted for payment of services
provided to patients who were under
the age of 65. The commenter also
queried the public Web sites of the
healthcare centers that participated in
the RNS® System Pivotal trial, which
included data on patients who have
participated in specific programs
directed by 120 adult comprehensive
epilepsy centers, and found that these
centers reported that 33 percent of their
patients who have been diagnosed with
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epilepsy were enrolled in the Medicare
program and 76 percent of these
Medicare beneficiaries were under the
age of 65. Several other commenters
asserted that patients who have been
diagnosed with epilepsy and receive
treatment using this technology would
be eligible for Medicare based on a
disabling condition. The commenter
provided examples of the types of
patients that they have treated who are
younger than the age of 65, but who are
insured through the Medicare program
based on a disabling condition.
Response: We appreciate the
information detailed within the
commenter’s analysis. We agree with
the commenters that this technology
will be available for use by Medicare
beneficiaries.
Comment: Commenters provided
comparison analyses for this technology
and VNS therapy, DBS, surgical
resection, and other medications, and
also conducted assessments of the
durability of the RNS® System. (We
further discuss the results of the
comparison analyses and assessments
conducted by these commenters below.)
Many of these commenters pointed out
that this technology is capable of
capturing and storing information
regarding seizure activity, which could
enable the use of this technology to
initiate possible changes in medical
management of patients treated with an
implant over time.
In comparison to VNS therapy,
commenters stated that the RNS®
System is a closed loop system that
provides electrical stimulation in
response to brain activity, while VNS
therapy is an open loop system that
provides electrical stimulation
continuously or intermittently at
programmed intervals. In addition,
commenters stated that the RNS®
System can be applied directly to the
seizure focus or foci in the brain, while
VNS therapy provides stimulation to the
vagus nerve. The commenters noted that
this distinction represents an
improvement relative to VNS therapy
because patients receive less stimulation
using the RNS® System. The
commenters also pointed out that the
side effects of VNS therapy, such as
hoarseness, coughing, and throat pain,
are distressing and uncomfortable for
patients and can make VNS therapy
difficult to tolerate. These commenters
also noted that these side effects do not
emerge with the use of the RNS®
System. One commenter provided data
from the clinical trials for VNS therapy,
which showed that more than half of the
patients treated with VNS therapy
‘‘perceived’’ stimulation. The
commenter also provided data from
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clinical trials for VNS therapy that
showed that the side effects for VNS
therapy included voice alternation,
increased coughing, pharyngitis,
dyspnea, dyspepsia, nausea, and
laryngismus. The commenter compared
the indications from the clinical trial
data with data from the RNS® System
trials, which indicate that there were no
patients with ongoing complaints
related to ‘‘perception of stimulation,’’
although some patients experienced
symptoms such as flashing lights or
focal muscle twitching. The commenter
stated that stimulation with the RNS®
System was adjusted for patients
experiencing these symptoms, such that
the symptoms became imperceptible.
Many commenters stated that they were
able to use the RNS® System to reduce
the frequency of seizures in patients
who have been diagnosed with epilepsy
for whom VNS therapy did not reduce
seizures. One commenter provided
clinical trial data regarding VNS therapy
that showed that in two studies in
blinded periods VNS therapy reduced
median seizures per day by 6 to 23
percent, and that over 3 years VNS
therapy reduced median seizures per
day by 31 to 41 percent. The commenter
also provided clinical trial data
regarding the RNS® System that showed
in the blinded period a 28 percent
reduction of median seizures per day
compared to 19 percent for the control
group. In addition, the commenter also
provided clinical trial data regarding the
RNS® System that showed that over 3
years the RNS® System reduced median
seizures by 44 to 60 percent. The
commenter also pointed out that 34
percent of patients enrolled in the RNS®
System trial were previously treated
with VNS therapy, but experienced
positive outcomes with the RNS®
System.
In comparison to DBS, commenters
stated that the RNS® System was not
approved by the FDA for treatment of
epilepsy, and DBS is not considered to
be the standard of care for the treatment
of epilepsy by the American Academy
of Neurology or the American Epilepsy
Society. The commenters stated that
they did not have experience with the
RNS® System to compare with DBS to
because it is not typically used, or
approved for, treating patients
diagnosed with epilepsy. One
commenter noted that DBS is only
available to patients on an experimental
or investigational basis for the treatment
of epilepsy. Another commenter stated
that no direct comparison trial has been
conducted between DBS and the RNS®
System. The commenter reviewed data
from a clinical trial that studied the use
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of DBS treatment of the anterior nucleus
of the thalamus in subjects with
medically intractable partial seizures.
While the commenter stated that some
of the data appeared to be comparable
to the results of the RNS® System trials
in terms of seizure reduction and
quality of life, differences existed in the
construction of the trials, including
inclusion and exclusion criteria and
primary efficacy endpoints. The
commenter also stated that, similar to
VNS therapy, DBS provides continuous
or intermittent stimulation at program
intervals, resulting in more stimulation
being delivered than delivered using the
RNS® System.
In comparison to surgical resection,
commenters noted that the RNS®
System can be used when surgical
resection is not available as a treatment
option. Commenters stated that some
patients who have been diagnosed with
epilepsy have seizure focus or foci
area(s) in regions of the brain that
should not be removed because removal
would result in serious neurological
defects. Therefore, commenters stated
that the RNS® System represents a
treatment option for patients who have
been diagnosed with epilepsy for whom
surgery is not an option. In addition,
commenters stated that they were able
to use the RNS® System to reduce the
frequency of seizures in patients who
had been treated with surgical resection
and did not experience a reduction in
seizures after surgery.
In comparison to antiepileptic
medications used to treat patients who
have been diagnosed with epilepsy,
commenters stated that the RNS®
System offers a treatment option that
does not have the unpleasant side
effects associated with some of these
medications. The commenters stated
that these side effects include problems
with cognition or coordination,
depression, and fatigue.
With regard to durability, one
commenter provided data from the
RNS® System clinical trial for 6 years.
The results of the trial indicate that the
median percent reduction in seizures
compared to the baseline year was
sustained or improved at 60 percent 3
years after implantation and 66 percent
6 years after implantation. The median
follow-up time for this group of patients
based on the trial’s data was 5.4 years.
The commenter indicated that these
results are comparable, or better, for the
subset of patients who were enrolled in
the RNS® System clinical trial and that
were Medicare beneficiaries. The
commenter further stated that the
updated data showed that the
proportion of patients who were
enrolled in the RNS® System clinical
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trial that experienced extended periods
of seizure freedom of 3 or 6 months was
slightly larger than previously shared in
the November 1, 2012 new technology
add-on payment application for the
RNS® System.
Response: We appreciate the
commenters’ input. We agree with the
commenters that the RNS® System
offers a treatment option for a patient
population that is unresponsive to
currently available treatments.
Specifically, we agree with the
commenters that the RNS® System
clinical trial data showed that the
technology reduces seizure frequency in
patients who have received treatment
with VNS therapy or surgical resection
and continued to have seizures
subsequent to those treatments. We also
agree with the commenters that the
technology could be a treatment option
for patients for whom surgical resection
is not appropriate due to the location of
the seizure focus or foci area(s). In
addition, we agree with the commenters
that use of the device improves clinical
outcomes compared to currently
available treatments. For example, it
appears that seizure reduction over time
using the RNS® System appears to be at
least comparable with documented
seizure reductions using VNS therapy,
although no direct comparison of the
two systems has been completed, and
the RNS® System appears not to have
the side effects that have been
associated with VNS therapy. We agree
with the commenters that it is
inappropriate to compare the RNS®
System to a technology that is not FDA
approved for the same treatment.
After consideration of the public
comments we received, we believe that
the RNS® System meets all of the new
technology add-on payment criteria.
Therefore, we are approving new
technology add-on payments for the
RNS® System for FY 2015. Cases
involving the RNS® System that are
eligible for new technology add-on
payments will be identified using the
following ICD–9–CM procedure codes:
01.20 (Cranial implantation or
replacement of neurostimulator pulse
generator) in combination with 02.93
(Implantation or replacement of
intracranial neurostimulator lead(s)).
According to the applicant, cases using
the RNS® System would incur an
anticipated cost per case of $36,950.
Under § 412.88(a)(2) of the regulations,
new technology add-on payments are
limited to the lesser of 50 percent of the
average costs of the device or 50 percent
of the costs in excess of the MS–DRG
payment rate for the case. As a result,
the maximum add-on payment for cases
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involving the RNS® System is $18,475
for FY 2015.
III. Changes to the Hospital Wage Index
for Acute Care Hospitals
A. Background
Section 1886(d)(3)(E) of the Act
requires that, as part of the methodology
for determining prospective payments to
hospitals, the Secretary adjust the
standardized amounts ‘‘for area
differences in hospital wage levels by a
factor (established by the Secretary)
reflecting the relative hospital wage
level in the geographic area of the
hospital compared to the national
average hospital wage level.’’ We
currently define hospital labor market
areas based on the delineations of
statistical areas established by the Office
of Management and Budget (OMB). A
discussion of the FY 2015 hospital wage
index based on the statistical areas
appears under section III.B. of the
preamble of this final rule.
Section 1886(d)(3)(E) of the Act
requires the Secretary to update the
wage index annually and to base the
update on a survey of wages and wagerelated costs of short-term, acute care
hospitals. This provision also requires
that any updates or adjustments to the
wage index be made in a manner that
ensures that aggregate payments to
hospitals are not affected by the change
in the wage index. The adjustment for
FY 2015 is discussed in section II.B. of
the Addendum to this final rule.
As discussed in section III.H. of the
preamble of this final rule, we also take
into account the geographic
reclassification of hospitals in
accordance with sections 1886(d)(8)(B)
and 1886(d)(10) of the Act when
calculating IPPS payment amounts.
Under section 1886(d)(8)(D) of the Act,
the Secretary is required to adjust the
standardized amounts so as to ensure
that aggregate payments under the IPPS
after implementation of the provisions
of sections 1886(d)(8)(B), 1886(d)(8)(C),
and 1886(d)(10) of the Act are equal to
the aggregate prospective payments that
would have been made absent these
provisions. The budget neutrality
adjustment for FY 2015 is discussed in
section II.A.4.b. of the Addendum to
this final rule.
Section 1886(d)(3)(E) of the Act also
provides for the collection of data every
3 years on the occupational mix of
employees for short-term, acute care
hospitals participating in the Medicare
program, in order to construct an
occupational mix adjustment to the
wage index. A discussion of the
occupational mix adjustment that we
are applying to the FY 2015 wage index
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appears under section III.F. of the
preamble of this final rule.
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B. Core-Based Statistical Areas for the
Hospital Wage Index
1. Background
The wage index is calculated and
assigned to hospitals on the basis of the
labor market area in which the hospital
is located. Under section 1886(d)(3)(E)
of the Act, beginning with FY 2005, we
delineate hospital labor market areas
based on the Core-Based Statistical
Areas (CBSAs) established by the Office
of Management and Budget (OMB). The
statistical areas used in FY 2014 are
based on OMB standards published on
December 27, 2000 (65 FR 82228) and
Census 2000 data and Census Bureau
population estimates for 2007 and 2008
(OMB Bulletin No. 10–02). For a
discussion of OMB’s delineations of
CBSAs and our implementation of the
CBSA definitions, we refer readers to
the preamble of the FY 2005 IPPS final
rule (69 FR 49026 through 49032). We
also discussed in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51582) and
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53365) that, in 2013, OMB
planned to announce new labor market
area delineations based on new
standards adopted in 2010 (75 FR
37246) and the 2010 Census of
Population and Housing data. As stated
in the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27552) and final
rule (78 FR 50586), on February 28,
2013, OMB issued OMB Bulletin No.
13–01, which established revised
delineations for Metropolitan Statistical
Areas, Micropolitan Statistical Areas,
and Combined Statistical Areas, and
provided guidance on the use of the
delineations of these statistical areas. A
copy of this bulletin may be obtained at
http://www.whitehouse.gov/sites/
default/files/omb/bulletins/2013/b-1301.pdf. According to OMB, ‘‘[t]his
bulletin 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 Census Bureau data.’’ In this FY
2015 IPPS/LTCH PPS final rule, when
referencing the new OMB geographic
boundaries of statistical areas, we are
using the term ‘‘delineations’’ rather
than the term ’’ definitions’’ that we
have used in the past, consistent with
OMB’s use of the terms (75 FR 37249).
In order to implement these changes
for the IPPS, it is necessary to identify
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the new labor market area delineation
for each county and hospital in the
country. While the revisions OMB
published on February 28, 2013 are not
as sweeping as the changes OMB
announced in 2003, the February 28,
2013 bulletin does contain a number of
significant changes. For example, under
the new OMB delineations, there would
be new CBSAs, urban counties that
would become rural, rural counties that
would become urban, and existing
CBSAs would be split apart. In addition,
the effect of the new OMB delineations
on various hospital reclassifications, the
out-migration adjustment (established
by section 505 of Pub. L. 108–173), and
treatment of hospitals located in certain
rural counties (that is, ‘‘Lugar’’
hospitals) provided for under section
1886(d)(8)(B) of the Act must be
considered. These are just a few of the
many issues that need to be reviewed
regarding the effects of the new OMB
labor market area delineations prior to
proposing and establishing policies.
However, because the bulletin was
not issued until February 28, 2013, with
supporting data not available until later,
and because the changes made by the
bulletin and their ramifications needed
to be extensively reviewed and verified,
we were unable to undertake such a
lengthy process before publication of
the FY 2014 IPPS/LTCH PPS proposed
rule and, thus, did not implement
changes to the wage index for FY 2014
based on these new OMB delineations.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50586), we stated that we
intended to propose changes to the wage
index based on the new OMB
delineations in the FY 2015 IPPS/LTCH
PPS proposed rule. As discussed below,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28054 through
28064, we proposed to implement the
new OMB delineations as described in
the February 28, 2013 OMB Bulletin No.
13–01, effective for the FY 2015 IPPS
wage index.
2. Implementation of New Labor Market
Area Delineations
As discussed previously, CMS did not
implement the new OMB labor market
area delineations for FY 2014 because
we needed sufficient time to assess the
new changes. We believe it is important
for the IPPS to use the latest labor
market area delineations available as
soon as is reasonably possible in order
to maintain a more accurate and up-todate payment system that reflects the
reality of population shifts and labor
market conditions. While CMS and
other stakeholders have explored
potential alternatives to the current
CBSA-based labor market system (we
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49951
refer readers to the CMS Web site at:
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Wage-Index-Reform.html), no
consensus has been achieved regarding
how best to implement a replacement
system. As discussed in the FY 2005
IPPS final rule (69 FR 49027), ‘‘While
we recognize that MSAs are not
designed specifically to define labor
market areas, we believe they do
represent a useful proxy for this
purpose.’’ We further believe that using
the most current delineations will
increase the integrity of the IPPS wage
index system by creating a more
accurate representation of geographic
variations in wage levels. We have
reviewed our findings and impacts
relating to the new OMB delineations,
and find no compelling reason to delay
implementation. Therefore, we
proposed to implement the new OMB
delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, effective for the FY 2015 IPPS
wage index. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28055), we
also proposed to use these new
delineations to calculate area wage
indexes in a manner that is generally
consistent with the CBSA-based
methodologies finalized in the FY 2005
IPPS final rule, and refined in
subsequent rulemaking. We also
proposed a wage index transition period
applicable to all hospitals that
experience negative impacts due to the
proposed implementation of the new
OMB delineations. This transition is
discussed in more detail below.
Comment: Commenters were
supportive of the proposal to adopt the
new OMB delineations. One
commenter, while supportive of CMS’
proposal to adopt the new OMB
delineations, effective for FY 2015,
recommended that CMS adopt an
alternative hospital wage index system
in future rulemaking. Another
commenter suggested that CMS
implement new labor market area
definitions to distinguish ‘‘core’’ urban
areas from surrounding areas within a
CBSA.
Response: We appreciate the support
for our proposal to adopt the new OMB
delineations. For FY 2015, we did not
propose any modification to the current
CBSA-based labor market area
methodology, aside from proposing to
adopt the new OMB labor market area
delineations. However, we thank the
commenters for their continued interest
in examining alternative means for
defining labor market areas. CMS
presented an alternative wage index
methodology in a Report to Congress on
April 11, 2012 (http://www.cms.gov/
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Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
Downloads/Wage-Index-Reform-Reportto-Congress-2012.zip). As discussed in
the report, implementation of such a
reform would require revisions to
several statutory provisions that provide
various forms of wage index
reclassification and redesignation. Until
a consensus on wage index reform is
achieved, we believe that implementing
the most recent OMB delineations is
critical in maintaining the efficacy and
integrity of the Medicare hospital wage
index system. We did not propose, nor
will we finalize, any additional changes
to the CBSA-based labor market area
delineations, including the concept of
defining core and noncore portions of a
CBSA.
After consideration of the public
comments we received, we are
finalizing the implementation of the
new OMB delineations as described in
the February 28, 2013 OMB Bulletin No.
13–01, effective beginning with the FY
2015 IPPS wage index. We received
public comments on our proposals with
respect to the use of these new OMB
delineations to calculate the area wage
indexes and the transition periods,
which we address in sections III.B.2.a.
through d. of the preamble of this final
rule. We also finalize our policies in
those sections.
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a. Micropolitan Statistical Areas
As discussed in the FY 2005 IPPS
final rule (69 FR 49029 through 49032),
CMS considered whether to use
Micropolitan Statistical Areas to define
the labor market areas for the purpose
of the IPPS wage index. OMB defines a
‘‘Micropolitan Statistical Area’’ as a
CBSA ‘‘associated with at least one
urban cluster that has a population of at
least 10,000, but less than 50,000’’ (75
FR 37252). We refer to these areas as
Micropolitan Areas. After extensive
impact analysis, CMS determined the
best course of action would be to treat
all hospitals located in Micropolitan
Areas as ‘‘rural’’ and include them in
the calculation of each State’s rural
wage index. Because Micropolitan areas
tend to encompass smaller population
centers and contain fewer hospitals than
MSAs, we determined that if
Micropolitan Areas were to be treated as
separate labor market areas, the IPPS
wage index would have included
drastically more single-provider labor
market areas. This larger number of
labor market areas with fewer hospitals
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Jkt 232001
could create instability in year-to-year
wage index values for a large number of
hospitals; could reduce the averaging
effect of the wage index, thus lessening
some of the efficiency incentive
inherent in a system based on the
average hourly wages for a large number
of hospitals; and could arguably create
an inequitable system when so many
hospitals have wage indexes based
solely on their own wage data while
other hospitals’ wage indexes are based
on an average hourly wage across many
hospitals. For these reasons, we adopted
a policy to include Micropolitan Areas
in the State’s rural wage area, and have
continued this policy through the
present.
Based upon the new 2010 Decennial
Census data, a number of urban counties
have switched status and have joined or
became Micropolitan Areas, and some
counties that once were part of a
Micropolitan Area, under current OMB
delineations, have become urban.
Overall, there are fewer Micropolitan
Areas (541) under the new OMB
delineations based on the 2010 Census
than existed under the latest data from
the 2000 Census (581). We believe that
the best course of action would be to
continue the policy established in the
FY 2005 IPPS final rule and include
hospitals located in Micropolitan Areas
in each State’s rural wage index. These
areas continue to be defined as having
relatively small urban cores
(populations of 10,000–49,999). We do
not believe it would be appropriate to
calculate a separate wage index for areas
that typically may include only a few
hospitals for the reasons set forth in the
FY 2005 IPPS/LTCH PPS final rule, as
discussed above. Therefore, in
conjunction with our proposal to
implement the new OMB labor market
area delineations beginning in FY 2015,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28055), we
proposed to continue to treat
Micropolitan Areas as ‘‘rural’’ and to
include the Micropolitan Areas in the
calculation of each State’s rural wage
index.
Comment: A number of commenters
supported CMS’ proposal to continue to
treat Micropolitan Areas as rural for
hospital wage index purposes.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, in conjunction
with our policy to implement the new
OMB labor market area delineations
PO 00000
Frm 00100
Fmt 4701
Sfmt 4700
beginning in FY 2015, we are
continuing to treat Micropolitan Areas
as ‘‘rural’’ and to include the
Micropolitan Areas in the calculation of
each State’s rural wage index.
b. Urban Counties That Became Rural
Under the New OMB Delineations
As previously discussed, we proposed
to implement the new OMB labor
market area delineations (based upon
the 2010 Decennial Census data)
beginning in FY 2015. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28055 through 28056), we stated that
our analysis shows that a total of 37
counties (and county equivalents) and
12 hospitals that were once considered
part of an urban CBSA would be
considered to be located in a rural area,
beginning in FY 2015, under these new
OMB delineations. In the proposed rule,
we included a listing of the 37 urban
counties that would be rural if we
finalized our proposal to implement the
new OMB delineations.
We proposed that the wage data for all
hospitals currently located in the 37
urban counties listed in the proposed
rule would be considered rural under
the new OMB delineations when
calculating their respective State’s rural
wage index. We stated that we recognize
that rural areas typically have lower
area wage index values than urban
areas, and hospitals located in these
counties may experience a negative
impact in their IPPS payment due to the
proposed adoption of the new OMB
delineations. We refer readers to section
III.B.2.e. of the preamble of this final
rule for a discussion of the proposed
and finalized wage index transition
period, in particular, the discussion
regarding the 3-year transition for
hospitals located in these specific
counties.
Comment: Commenters were
supportive of the proposal to adopt the
new OMB delineations, including the
proposed reassignment of counties from
urban areas to rural areas.
Response: We appreciate the
commenters’ support.
As discussed above, we are finalizing
our proposal to adopt the new OMB
delineations. After consideration of the
public comments we received, we also
are finalizing our proposed
reassignment of counties from urban
areas to rural areas based on these new
OMB delineations. The following chart
lists the 37 urban counties that are
considered to be rural under this policy.
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49953
COUNTIES THAT WILL LOSE URBAN STATUS AND BECOME RURAL
County
State
Greene County ...........................................................................
Anson County .............................................................................
Franklin County ..........................................................................
Stewart County ...........................................................................
Howard County ...........................................................................
Delta County ...............................................................................
Pittsylvania County .....................................................................
Danville City ................................................................................
Preble County .............................................................................
Gibson County ............................................................................
Webster County ..........................................................................
Franklin County ..........................................................................
Ionia County ...............................................................................
Newaygo County ........................................................................
Greene County ...........................................................................
Stone County ..............................................................................
Morgan County ...........................................................................
San Jacinto County ....................................................................
Franklin County ..........................................................................
Tipton County .............................................................................
Nelson County ............................................................................
Geary County .............................................................................
Washington County ....................................................................
Pleasants County .......................................................................
George County ...........................................................................
Power County .............................................................................
Cumberland County ....................................................................
King and Queen County .............................................................
Louisa County .............................................................................
Washington County ....................................................................
Summit County ...........................................................................
Erie County .................................................................................
Franklin County ..........................................................................
Ottawa County ............................................................................
Greene County ...........................................................................
Calhoun County ..........................................................................
Surry County ...............................................................................
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c. Rural Counties That Became Urban
Under the New OMB Delineations
As previously discussed, we proposed
to implement the new OMB labor
market area delineations (based upon
the 2010 Decennial Census data)
beginning in FY 2015. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28056 through 28058), we indicated that
analysis of these OMB labor market area
delineations shows that a total of 105
counties (and county equivalents) and
81 hospitals that were located in rural
areas would be located in urban areas
under the new OMB delineations. In the
proposed rule, we included a listing of
the 105 rural counties that would be
urban if we finalized our proposal to
implement the new OMB delineations.
IN
NC
IN
TN
MO
TX
VA
VA
OH
IN
KY
AR
MI
MI
NC
MS
WV
TX
KS
IN
KY
KS
OH
WV
MS
ID
VA
VA
VA
MO
UT
OH
MA
OH
AL
TX
VA
Previous
CBSA No.
14020
16740
17140
17300
17860
19124
19260
19260
19380
21780
21780
22900
24340
24340
24780
25060
25180
26420
28140
29020
31140
31740
37620
37620
37700
38540
40060
40060
40060
41180
41620
41780
44140
45780
46220
47020
47260
CBSA
Bloomington, IN.
Charlotte-Gastonia-Rock Hill, NC–SC.
Cincinnati-Middletown, OH–KY–IN.
Clarksville, TN–KY.
Columbia, MO.
Dallas-Fort Worth-Arlington, TX.
Danville, VA.
Danville, VA.
Dayton, OH.
Evansville, IN–KY.
Evansville, IN–KY.
Fort Smith, AR–OK.
Grand Rapids-Wyoming, MI.
Grand Rapids-Wyoming, MI.
Greenville, NC.
Gulfport-Biloxi, MS.
Hagerstown-Martinsburg, MD–WV.
Houston-Sugar Land-Baytown, TX.
Kansas City, MO–KS.
Kokomo, IN.
Louisville/Jefferson County, KY–IN.
Manhattan, KS.
Parkersburg-Marietta-Vienna, WV–OH.
Parkersburg-Marietta-Vienna, WV–OH.
Pascagoula, MS.
Pocatello, ID.
Richmond, VA.
Richmond, VA.
Richmond, VA.
St. Louis, MO–IL.
Salt Lake City, UT.
Sandusky, OH.
Springfield, MA.
Toledo, OH.
Tuscaloosa, AL.
Victoria, TX.
Virginia Beach-Norfolk-Newport News, VA–NC.
We proposed that when calculating
the area wage index, the wage data for
hospitals located in these 105 rural
counties would be included in their
new respective urban CBSAs. Typically,
hospitals located in an urban area
would receive a higher wage index
value than hospitals located in their
State’s rural area. However, with regard
to the wage index applicable to
individual hospitals, we proposed to
implement a transitional wage index
adjustment for any hospital that would
receive a lower wage index under the
new OMB delineations than it would
have received under the current CBSA
definitions. We refer readers to section
III.B.2.e. of the preamble of this final
rule for further discussion of this
transition.
Comment: Commenters were
supportive of the proposal to adopt the
new OMB delineations, including the
proposed reassignments of counties
from rural areas to urban areas for
purposes of the wage index.
Response: We appreciate the
commenters’ support.
As discussed above, we are finalizing
our proposal to adopt the new OMB
delineations. After consideration of the
public comments we received, we also
are finalizing our proposed
reassignment of counties from rural to
urban for purposes of the wage index
based on these new OMB delineations.
The following chart lists the 105 rural
counties that will be urban for purposes
of the wage index for FY 2015 under
this policy.
COUNTIES THAT WILL LOSE RURAL STATUS AND BECOME URBAN
County
State
Utuado Municipio ........................................................................
Linn County ................................................................................
Oldham County ...........................................................................
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Frm 00101
PR
OR
TX
Fmt 4701
New
CBSA No.
10380
10540
11100
Sfmt 4700
CBSA
Aguadilla-Isabela, PR.
Albany, OR.
Amarillo, TX.
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COUNTIES THAT WILL LOSE RURAL STATUS AND BECOME URBAN—Continued
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County
State
Morgan County ...........................................................................
Lincoln County ............................................................................
Newton County ...........................................................................
Fayette County ...........................................................................
Raleigh County ...........................................................................
Golden Valley County .................................................................
Oliver County ..............................................................................
Sioux County ..............................................................................
Floyd County ..............................................................................
De Witt County ...........................................................................
Columbia County ........................................................................
Montour County ..........................................................................
Allen County ...............................................................................
Butler County ..............................................................................
St. Mary’s County .......................................................................
Jackson County ..........................................................................
Williamson County ......................................................................
Franklin County ..........................................................................
Iredell County .............................................................................
Lincoln County ............................................................................
Rowan County ............................................................................
Chester County ...........................................................................
Lancaster County .......................................................................
Buckingham County ...................................................................
Union County ..............................................................................
Hocking County ..........................................................................
Perry County ...............................................................................
Walton County ............................................................................
Hood County ...............................................................................
Somervell County .......................................................................
Baldwin County ...........................................................................
Monroe County ...........................................................................
Hudspeth County ........................................................................
Adams County ............................................................................
Hall County .................................................................................
Hamilton County .........................................................................
Howard County ...........................................................................
Merrick County ...........................................................................
Montcalm County ........................................................................
Josephine County .......................................................................
Tangipahoa Parish .....................................................................
Beaufort County ..........................................................................
Jasper County ............................................................................
Citrus County ..............................................................................
Butte County ...............................................................................
Yazoo County .............................................................................
Crockett County ..........................................................................
Kalawao County .........................................................................
Maui County ...............................................................................
Campbell County ........................................................................
Morgan County ...........................................................................
Roane County .............................................................................
Acadia Parish .............................................................................
Iberia Parish ...............................................................................
Vermilion Parish .........................................................................
Cotton County .............................................................................
Scott County ...............................................................................
Lynn County ...............................................................................
Green County .............................................................................
Benton County ............................................................................
Midland County ...........................................................................
Martin County .............................................................................
Le Sueur County ........................................................................
Mille Lacs County .......................................................................
Sibley County .............................................................................
Maury County .............................................................................
Craven County ............................................................................
Jones County ..............................................................................
Pamlico County ..........................................................................
St. James Parish ........................................................................
Box Elder County .......................................................................
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Frm 00102
GA
GA
TX
WV
WV
MT
ND
ND
VI
IL
PA
PA
KY
KY
MD
IL
IL
PA
NC
NC
NC
SC
SC
VA
IN
OH
OH
FL
TX
TX
AL
PA
TX
PA
NE
NE
NE
NE
MI
OR
LA
SC
SC
FL
ID
MS
TN
HI
HI
TN
TN
TN
LA
LA
LA
OK
IN
TX
WI
MS
MI
TX
MN
MN
MN
TN
NC
NC
NC
LA
UT
Fmt 4701
New
CBSA No.
12060
12260
13140
13220
13220
13740
13900
13900
13980
14010
14100
14100
14540
14540
15680
16060
16060
16540
16740
16740
16740
16740
16740
16820
17140
18140
18140
18880
23104
23104
19300
20700
21340
23900
24260
24260
24260
24260
24340
24420
25220
25940
25940
26140
26820
27140
27180
27980
27980
28940
28940
28940
29180
29180
29180
30020
31140
31180
31540
32820
33220
33260
33460
33460
33460
34980
35100
35100
35100
35380
36260
Sfmt 4700
CBSA
Atlanta-Sandy Springs-Roswell, GA.
Augusta-Richmond County, GA–SC.
Beaumont-Port Arthur, TX.
Beckley, WV.
Beckley, WV.
Billings, MT.
Bismarck, ND.
Bismarck, ND.
Blacksburg-Christiansburg-Radford, VA.
Bloomington, IL.
Bloomsburg-Berwick, PA.
Bloomsburg-Berwick, PA.
Bowling Green, KY.
Bowling Green, KY.
California-Lexington Park, MD.
Carbondale-Marion, IL.
Carbondale-Marion, IL.
Chambersburg-Waynesboro, PA.
Charlotte-Concord-Gastonia, NC–SC.
Charlotte-Concord-Gastonia, NC–SC.
Charlotte-Concord-Gastonia, NC–SC.
Charlotte-Concord-Gastonia, NC–SC.
Charlotte-Concord-Gastonia, NC–SC.
Charlottesville, VA.
Cincinnati, OH–KY–IN.
Columbus, OH.
Columbus, OH.
Crestview-Fort Walton Beach-Destin, FL.
Dallas-Fort Worth-Arlington, TX.
Dallas-Fort Worth-Arlington, TX.
Daphne-Fairhope-Foley, AL.
East Stroudsburg, PA.
El Paso, TX.
Gettysburg, PA.
Grand Island, NE.
Grand Island, NE.
Grand Island, NE.
Grand Island, NE.
Grand Rapids-Wyoming, MI.
Grants Pass, OR.
Hammond, LA.
Hilton Head Island-Bluffton-Beaufort, SC.
Hilton Head Island-Bluffton-Beaufort, SC.
Homosassa Springs, FL.
Idaho Falls, ID.
Jackson, MS.
Jackson, TN.
Kahului-Wailuku-Lahaina, HI.
Kahului-Wailuku-Lahaina, HI.
Knoxville, TN.
Knoxville, TN.
Knoxville, TN.
Lafayette, LA.
Lafayette, LA.
Lafayette, LA.
Lawton, OK.
Louisville/Jefferson County, KY–IN.
Lubbock, TX.
Madison, WI.
Memphis, TN–MS–AR.
Midland, MI.
Midland, TX.
Minneapolis-St. Paul-Bloomington, MN–WI.
Minneapolis-St. Paul-Bloomington, MN–WI.
Minneapolis-St. Paul-Bloomington, MN–WI.
Nashville-Davidson—Murfreesboro—Franklin, TN.
New Bern, NC.
New Bern, NC.
New Bern, NC.
New Orleans-Metairie, LA.
Ogden-Clearfield, UT.
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49955
COUNTIES THAT WILL LOSE RURAL STATUS AND BECOME URBAN—Continued
County
State
Gulf County .................................................................................
Custer County .............................................................................
Fillmore County ..........................................................................
Yates County ..............................................................................
Sussex County ...........................................................................
Worcester County .......................................................................
Highlands County .......................................................................
Webster Parish ...........................................................................
Cochise County ..........................................................................
Plymouth County ........................................................................
Union County ..............................................................................
Pend Oreille County ...................................................................
Stevens County ..........................................................................
Augusta County ..........................................................................
Staunton City ..............................................................................
Waynesboro City ........................................................................
Little River County ......................................................................
Sumter County ............................................................................
Pickens County ...........................................................................
Gates County ..............................................................................
Falls County ................................................................................
Columbia County ........................................................................
Walla Walla County ....................................................................
Peach County .............................................................................
Pulaski County ............................................................................
Culpeper County .........................................................................
Rappahannock County ...............................................................
Jefferson County ........................................................................
Kingman County .........................................................................
Davidson County ........................................................................
Windham County ........................................................................
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d. Urban Counties That Moved to a
Different Urban CBSA Under the New
OMB Delineations
As we stated in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28058
through 28060), in addition to rural
counties becoming urban and urban
counties becoming rural, several urban
counties would shift from one urban
CBSA to another urban CBSA under our
proposal to adopt the new OMB
delineations. In certain cases, adopting
the new OMB delineations would
involve a change only in CBSA name or
number, while the CBSA continues to
encompass the same constituent
counties. For example, CBSA 29140
(Lafayette, IN) would experience both a
change to its number and its name, and
become CBSA 29200 (Lafayette-West
Lafayette, IN), while all of its three
constituent counties would remain the
same. For the proposed rule, we
identified 19 counties that would
remain in a CBSA that experienced a
change in name or number under the
new delineations, but would retain the
same constituent counties. In the
proposed rule, we included a table
listing those 19 counties.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28059), we did not
discuss further in this section the above
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FL
SD
MN
NY
DE
MD
FL
LA
AZ
IA
SC
WA
WA
VA
VA
VA
AR
FL
AL
NC
TX
WA
WA
GA
GA
VA
VA
NY
KS
NC
CT
New
CBSA No.
37460
39660
40340
40380
41540
41540
42700
43340
43420
43580
43900
44060
44060
44420
44420
44420
45500
45540
46220
47260
47380
47460
47460
47580
47580
47894
47894
48060
48620
49180
49340
CBSA
Panama City, FL.
Rapid City, SD.
Rochester, MN.
Rochester, NY.
Salisbury, MD–DE.
Salisbury, MD–DE.
Sebring, FL.
Shreveport-Bossier City, LA.
Sierra Vista-Douglas, AZ.
Sioux City, IA–NE–SD.
Spartanburg, SC.
Spokane-Spokane Valley, WA.
Spokane-Spokane Valley, WA.
Staunton-Waynesboro, VA.
Staunton-Waynesboro, VA.
Staunton-Waynesboro, VA.
Texarkana, TX–AR.
The Villages, FL.
Tuscaloosa, AL.
Virginia Beach-Norfolk-Newport News, VA–NC.
Waco, TX.
Walla Walla, WA.
Walla Walla, WA.
Warner Robins, GA.
Warner Robins, GA.
Washington-Arlington-Alexandria, DC–VA–MD–WV.
Washington-Arlington-Alexandria, DC–VA–MD–WV.
Watertown-Fort Drum, NY.
Wichita, KS.
Winston-Salem, NC.
Worcester, MA–CT.
proposed changes because they are
inconsequential changes with respect to
the IPPS wage index. However, we did
discuss that, in other cases, which if we
adopted the new OMB delineations,
counties would shift between existing
and new CBSAs, changing the
constituent makeup of the CBSAs.
In one type of change, an entire CBSA
would be subsumed by another CBSA.
For example, CBSA 37380 (Palm Coast,
FL) currently is a single county (Flagler,
FL) CBSA. Flagler County would
become a part of CBSA 19660 (DeltonaDaytona Beach-Ormond Beach, FL)
under the new OMB delineations.
In another type of change, some
CBSAs have counties that would split
off to become part of or to form entirely
new labor market areas. For example,
CBSA 37964 (Philadelphia Metropolitan
Division) currently is comprised of five
Pennsylvania counties (Bucks, Chester,
Delaware, Montgomery, and
Philadelphia). We stated that if we
adopted the new OMB delineations,
Montgomery, Bucks, and Chester
counties would split off and form the
new CBSA 33874 (Montgomery CountyBucks County-Chester County, PA
Metropolitan Division), while Delaware
and Philadelphia counties would
remain in CBSA 37964.
PO 00000
Frm 00103
Fmt 4701
Sfmt 4700
Finally, in some cases, a CBSA would
lose counties to another existing CBSA
if we adopted the new OMB
delineations. For example, Lincoln
County and Putnam County, WV would
move from CBSA 16620 (Charleston,
WV) to CBSA 26580 (HuntingtonAshland, WV–KY–OH). CBSA 16620
still would exist in the new labor market
delineations with fewer constituent
counties.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28059 through
28060), we included a listing of the
urban counties that would move from
one urban CBSA to another urban CBSA
if we adopted the new OMB
delineations. If hospitals located in
these counties move from one CBSA to
another under the new OMB
delineations, there may be impacts, both
negative and positive, upon their
specific wage index values. We referred
readers to section III.B.2.e. of the
preamble of the proposed rule for a
discussion of our proposals to moderate
the impact of our proposed adoption of
the new OMB delineations.
Comment: Commenters were
supportive of the proposal to adopt the
new OMB delineations, including the
proposed reassignments of counties
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
from one urban area to another urban
area.
Response: We appreciate the
commenters’ support.
As discussed above, we are finalizing
our proposal to adopt the new OMB
delineations. After consideration of the
public comments we received, we also
are finalizing our proposed
reassignment of counties from one
urban area to another urban area for
purposes of the wage index based on
these new OMB delineations. The
following chart identifies the 19
counties that remain in a CBSA that
experienced a change in name or
number under this policy, but will
retain the same constituent counties for
purposes of the FY 2015 wage index.
COUNTIES THAT WILL REMAIN IN CBSA THAT CHANGED NUMBER
Prior CBSA No.
14484
14484
14484
47644
47644
47644
47644
47644
26180
29140
29140
29140
42044
42060
44600
44600
44600
13644
13644
New CBSA No.
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
14454
14454
14454
47664
47664
47664
47664
47664
46520
29200
29200
29200
11244
42200
48260
48260
48260
43524
43524
The following chart lists the urban
counties that will move from one urban
CBSA to another urban CBSA under our
County
State
Norfolk County ...............................................................................................
Plymouth County ...........................................................................................
Suffolk County ...............................................................................................
Lapeer County ...............................................................................................
Livingston County ..........................................................................................
Macomb County .............................................................................................
Oakland County .............................................................................................
St. Clair County .............................................................................................
Honolulu County ............................................................................................
Benton County ...............................................................................................
Carroll County ................................................................................................
Tippecanoe County ........................................................................................
Orange County ..............................................................................................
Santa Barbara County ...................................................................................
Jefferson County ............................................................................................
Brooke County ...............................................................................................
Hancock County ............................................................................................
Frederick County ...........................................................................................
Montgomery County ......................................................................................
MA
MA
MA
MI
MI
MI
MI
MI
HI
IN
IN
IN
CA
CA
OH
WV
WV
MD
MD
adoption of the new OMB delineations
for purposes of the FY 2015 wage index.
COUNTIES THAT WILL CHANGE TO ANOTHER CBSA
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Prior CBSA
11300
11340
14060
37764
16620
16620
16974
16974
21940
21940
21940
26100
31140
34100
35644
35644
20764
20764
20764
35644
20764
35644
35644
35644
35644
35644
35644
35644
35644
37380
37700
37964
37964
37964
New CBSA
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
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26900
24860
14010
15764
26580
26580
20994
20994
41980
41980
41980
24340
21060
28940
35614
35614
35614
35614
35614
35614
35084
35614
35614
35614
20524
35614
35614
35614
35614
19660
25060
33874
33874
33874
PO 00000
County
State
Madison County .............................................................................................
Anderson County ...........................................................................................
McLean County ..............................................................................................
Essex County .................................................................................................
Lincoln County ...............................................................................................
Putnam County ..............................................................................................
DeKalb County ...............................................................................................
Kane County ..................................................................................................
Ceiba Municipio .............................................................................................
Fajardo Municipio ..........................................................................................
Luquillo Municipio ..........................................................................................
Ottawa County ...............................................................................................
Meade County ...............................................................................................
Grainger County ............................................................................................
Bergen County ...............................................................................................
Hudson County ..............................................................................................
Middlesex County ..........................................................................................
Monmouth County .........................................................................................
Ocean County ................................................................................................
Passaic County ..............................................................................................
Somerset County ...........................................................................................
Bronx County .................................................................................................
Kings County .................................................................................................
New York County ...........................................................................................
Putnam County ..............................................................................................
Queens County ..............................................................................................
Richmond County ..........................................................................................
Rockland County ...........................................................................................
Westchester County ......................................................................................
Flagler County ...............................................................................................
Jackson County .............................................................................................
Bucks County .................................................................................................
Chester County ..............................................................................................
Montgomery County ......................................................................................
Frm 00104
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22AUR2
IN
SC
IL
MA
WV
WV
IL
IL
PR
PR
PR
MI
KY
TN
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NY
NY
NY
NY
NY
NY
NY
NY
FL
MS
PA
PA
PA
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
49957
COUNTIES THAT WILL CHANGE TO ANOTHER CBSA—Continued
Prior CBSA
39100
39100
41884
41980
41980
41980
41980
48900
49500
49500
49500
49500
New CBSA
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
.................................................
20524
35614
42034
11640
11640
11640
11640
34820
38660
38660
38660
38660
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e. Transition Period
(1) Background
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28060), we stated
that, overall, we believe implementing
the new OMB labor market area
delineations would result in wage index
values being more representative of the
actual costs of labor in a given area.
However, we recognized that some
hospitals would experience decreases in
wage index values as a result of the
implementation of the new labor market
area delineations. We also realize that
some hospitals would have higher wage
index values due to the implementation
of the new labor market area
delineations.
We explained that, in the past, we
have provided for transition periods
when adopting changes that have
significant payment implications,
particularly large negative impacts. For
example, when implementing the new
OMB definitions after the 2000 Census
in the FY 2005 IPPS final rule (69 FR
49032 through 49034) for FY 2005, we
evaluated several options to ease the
transition to the new CBSA system.
As discussed in that FY 2005 IPPS
final rule, we determined that the
transition to the current wage index
system would have the largest negative
impacts upon hospitals that were
originally considered urban, but would
be considered rural under the new labor
market area definitions. To alleviate the
decreased payments associated with
having a rural wage index, in
calculating the area wage index, in the
FY 2005 IPPS final rule, we allowed
urban hospitals that became rural under
new definitions to maintain their
assignment to the labor market area
where they were located for FY 2004.
This adjustment was granted for a
period of 3 fiscal years.
In the FY 2005 IPPS final rule, for all
hospitals that experienced negative
payment impacts due to adoption of
new labor market area definitions (for
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County
Dutchess County ...........................................................................................
Orange County ..............................................................................................
Marin County .................................................................................................
Arecibo Municipio ..........................................................................................
Camuy Municipio ...........................................................................................
Hatillo Municipio .............................................................................................
Quebradillas Municipio ..................................................................................
Brunswick County ..........................................................................................
Gua´nica Municipio .........................................................................................
Guayanilla Municipio ......................................................................................
Pen˜uelas Municipio ........................................................................................
Yauco Municipio ............................................................................................
example, they were moved to an urban
CBSA with a lower wage index value
than their previous rural or urban labor
market area), we implemented a 1-year
blended adjustment. We calculated
wage indexes for all hospitals using
both old and new labor market
definitions. Hospitals received 50
percent of their wage index based on the
new OMB delineations, and 50 percent
of their wage index based on their
current labor market area. This
adjustment only applied to hospitals
that would have experienced a drop in
wage index values due to a change in
labor market area definitions. Hospitals
that benefitted from the labor market
area transition received their new wage
index at the time the new labor market
area definitions became effective.
We continue to have the same
concerns expressed in the FY 2005 IPPS
final rulemaking. Therefore, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28060 through 28064), we proposed
a similar transition methodology to
mitigate any negative financial impacts
experienced by hospitals due to our
proposal to implement the new OMB
labor market area delineations for FY
2015.
(2) Transition for Hospitals in Urban
Areas That Would Become Rural
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28060 through
28061), for hospitals that are currently
located in an urban county that would
become rural under the new OMB
delineations, and would have no form of
wage index reclassification or
redesignation in place for FY 2015 (that
is, MGCRB reclassifications under
section 1886(d)(10) of the Act,
redesignations under section
1886(d)(8)(B) of the Act, or rural
reclassifications under section
1886(d)(8)(E) of the Act), we proposed a
policy to assign 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 (with the rural
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NY
NY
CA
PR
PR
PR
PR
NC
PR
PR
PR
PR
and imputed floors applied and with the
rural floor budget neutrality adjustment
applied to the area wage index). As
stated in the FY 2005 IPPS proposed
rule (69 FR 28252), we have in the past
provided transitions when adopting
changes that have significant payment
implications, particularly large negative
impacts. We believe it is appropriate to
apply a 3-year transition period for
hospitals located in urban counties that
would become rural under the new
OMB delineations, given the potentially
significant payment impacts for these
hospitals. This is consistent with the
transition policy adopted in FY 2005 (69
FR 49032 through 49034). We continue
to believe, as we stated in the FY 2005
IPPS final rule (69 FR 49033), that the
longer transition period is appropriate
because, as a group, we expect these
hospitals would experience a steeper
and more abrupt reduction in their wage
index due to the labor market revisions
compared to other hospitals. Assigning
these hospitals the urban wage index
value of the CBSA in which they are
physically located for FY 2014 for a
period of 3 fiscal years (with the rural
and imputed floors applied and with the
rural floor budget neutrality adjustment
applied to the area wage index) would
be the most similar to the actual
payment wage index that these hospitals
received in FY 2014, thereby
minimizing the negative impact of
adopting the new OMB delineations for
these hospitals. Accordingly, for FYs
2015, 2016, and 2017, assuming no
other form of wage index
reclassification or redesignation is
granted, we proposed to assign these
hospitals the area wage index value of
the urban CBSA in which they were
geographically located in FY 2014 (with
the rural and imputed floors applied
and with the rural floor budget
neutrality adjustment applied to the
area wage index). For example, if urban
CBSA 12345 consisted of three counties
in FY 2014, and, under the new OMB
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delineations, one of those counties,
County X, would no longer be part of
CBSA 12345 and would become rural
for FY 2015, we proposed that hospitals
in County X would be assigned the FY
2015 wage index of CBSA 12345,
computed using the remaining two
counties, with the rural and imputed
floors applied and with the rural floor
budget neutrality adjustment applied to
the area wage index. We believe that
assigning the wage index of the
hospitals’ current area is the simplest
and most effective method for mitigating
negative payment impacts due to the
proposed adoption of the new OMB
delineations. We have identified
relatively few hospitals that are located
in urban counties that would become
rural, and fewer yet that do not have a
reclassification or redesignation in effect
for FY 2015. Because we believe that
these urban to rural transitions would
be the most likely to cause significant
negative payment impacts, we believe
that these hospitals should be granted a
longer transition period than hospitals
that may be switching between urban
labor market areas, which as discussed
later, we proposed to apply a 1-year
blended wage index.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28061), we noted
that there are situations where a
hospital cannot be assigned the wage
index value of the CBSA to which it
geographically belonged in FY 2014
because that CBSA would be split and
no longer exist and some or all of the
constituent counties would be added to
another urban labor market area under
the new OMB delineations. If the
hospital cannot be assigned the wage
index value of the CBSA to which it is
geographically located in FY 2014
because that CBSA would be split apart
and no longer exist, and some or all of
its constituent counties would be added
to another urban labor market area
under the new OMB delineations, we
proposed that hospitals located in such
counties that would become rural under
the new OMB delineations would be
assigned the wage index of the FY 2015
urban labor market area that contains
the urban county in their FY 2014 CBSA
to which they are closest (with the rural
and imputed floors applied and with the
rural floor budget neutrality adjustment
applied) for a period of 3 fiscal years.
We believe this approach of assigning
the wage index of the FY 2015 urban
labor market area that contains the
urban county in their FY 2014 CBSA to
which they are closest (with the rural
and imputed floors applied and with the
rural floor budget neutrality adjustment
applied) would most closely
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approximate the hospitals’ FY 2014
actual payment wage index, thereby
minimizing the negative effects of the
proposed change in the OMB
delineations. For example, George
County, MS and Jackson County, MS,
together, in FY 2014, comprise the
urban CBSA 37700 (Pascagoula, MS).
Under the new OMB delineations,
George County would be considered
rural and Jackson County, MS would
become part of the urban labor market
area of Gulfport-Biloxi-Pascagoula, MS
(CBSA 25060). In this instance, we
proposed that hospitals in George
County, MS would be assigned the FY
2015 wage index for CBSA 25060
(Gulfport-Biloxi-Pascagoula, MS), with
the rural and imputed floors applied
and with the rural floor budget
neutrality adjustment applied.
Furthermore, we proposed that any
hospital that is currently located in an
urban county that would become rural
for FY 2015 under the new OMB
delineations, but also has a
reclassification or redesignation in effect
for FY 2015 (from a pre-existing
reclassification or redesignation granted
prior to FY 2015), would not be eligible
for the 3-year transition wage index.
This is because if the hospital is
reclassified or redesignated in some
manner, it would instead receive a wage
index that reflects its own choice to
obtain its reclassified or redesignated
status. Accordingly, if a hospital is
currently located in an urban county
that would become rural for FY 2015
under the new OMB delineations and
such hospital sought and was granted
reclassification or redesignation for FY
2015 or such hospital seeks and is
granted any reclassification or
redesignation for FY 2016 or FY 2017,
we proposed that the hospital would
permanently lose its 3-year transitional
assigned wage index status, and would
not be eligible to reinstate it. For
example, if a hospital that is currently
urban but would become rural under the
new OMB delineations received a 3-year
transition wage index in FY 2015 based
on the wage index of the urban CBSA
to which it was geographically located
in FY 2014 and then by its own choice,
reclassifies to obtain a different area
wage index in FY 2016, the hospital
would not be eligible to reinstate the
transition wage index, even if it opts to
cancel its reclassification for FY 2017.
We proposed the transition adjustment
to assist hospitals if they experience a
negative payment impact specifically
due to the proposed adoption of the new
OMB delineations in FY 2015. If a
hospital chooses in a future fiscal year
to forego this transition adjustment by
PO 00000
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Fmt 4701
Sfmt 4700
obtaining some form of reclassification
or redesignation, we do not believe
reinstatement of this transition
adjustment would be appropriate. The
purpose of the adjustment is to assist
hospitals that may be negatively
impacted by the new OMB delineations
in transitioning to a wage index based
on these delineations. By obtaining a
reclassification or redesignation, we
believe that the hospital has made the
determination that the transition
adjustment is not necessary because it
has other viable options for mitigating
the impact of the transition to the new
OMB delineations.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28061), with
respect to the wage index computation,
we proposed to follow our existing
policy regarding the inclusion of a
hospital’s wage index data in the CBSA
in which it is geographically located (we
refer readers to Step 6 of the method for
computing the unadjusted wage index
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51592)). Accordingly,
beginning with FY 2015, we proposed
that the wage data of all hospitals
receiving this type of 3-year transition
adjustment would be included in the
statewide rural area in which they are
geographically located under the new
OMB labor market area delineations.
After the 3-year transition period,
beginning in FY 2018, we proposed that
these formerly urban hospitals
discussed above would receive their
statewide rural wage index, absent any
reclassification or redesignation.
In addition, we proposed that the
hospitals receiving this 3-year transition
because they are in counties that were
urban under the current CBSA
definitions, but would be rural under
the new OMB delineations, would not
be considered urban hospitals. Rather,
they would maintain their status as
rural hospitals for other payment
considerations. This is because our
proposal to apply a 3-year transitional
wage index for these newly rural
hospitals only applies for the purpose of
calculating the wage index under our
proposal to adopt the new CBSA
delineations. We did not propose
transitions for other IPPS payment
policies that may be impacted by the
proposed adoption of the new CBSA
delineations. However, we will continue
to apply the existing regulations at
§ 412.102 with respect to determining
DSH payments in the first year after a
hospital loses urban status (we refer
readers to section II.B.2.e.(7) of the
preambles of the proposed rule and this
final rule).
Comment: Commenters were
supportive of CMS’ proposals to provide
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
a 3-year transition adjustment for
hospitals that are shifting from urban to
rural areas. Commenters appreciated
CMS’ attempt to mitigate the negative
effects of the application of the new
OMB labor market delineations. Some
commenters questioned why hospitals
that switch from urban to rural could
benefit from a longer 3-year transition
adjustment, while other hospitals that
would also be negatively affected by the
transition could only benefit from a
single year of a blended transition
adjustment. They suggested a similar 3year transition adjustment for all
hospital experiencing a negative impact,
including hospitals that are moving
from urban to urban, or are not moving
at all, but are being impacted by other
hospitals moving in or out of the labor
market area.
Response: We appreciate the
commenters’ support for our proposals.
We address comments pertaining to the
difference between the 3-year urban to
rural transition adjustment and the 1year 50/50 blended wage index
transition adjustment, as well as the
requested 3-year transition period for all
hospitals experiencing a negative
impact in section III.B.2.e.(4) of the
preamble of this final rule.
After consideration of the public
comments we received, we are
finalizing our proposals without
modification. We will provide hospitals
that are changing from an urban to a
rural labor market area a 3-year wage
index adjustment. Specifically, for
hospitals that are currently located in an
urban county that became rural under
the new OMB delineations, and have no
form of wage index reclassification or
redesignation in place for FY 2015 (that
is, MGCRB reclassifications under
section 1886(d)(10) of the Act,
redesignations under section
1886(d)(8)(B) of the Act, or rural
reclassifications under section
1886(d)(8)(E) of the Act), we will assign
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 (with the rural and imputed
floors applied and with the rural floor
budget neutrality adjustment applied to
the area wage index). If the hospital
cannot be assigned the wage index value
of the CBSA to which it is
geographically located in FY 2014
because that CBSA is split apart and no
longer exists, and some or all of its
constituent counties are added to
another urban labor market area under
the new OMB delineations, hospitals
located in such counties that became
rural under the new OMB delineations
will be assigned the wage index of the
FY 2015 urban labor market area that
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contains the urban county in their FY
2014 CBSA to which they are closest
(with the rural and imputed floors
applied and with the rural floor budget
neutrality adjustment applied) for a
period of 3 fiscal years. Any hospital
that is currently located in an urban
county that would become rural for FY
2015 under the new OMB delineations,
but also has a reclassification or
redesignation in effect for FY 2015 (from
a preexisting reclassification or
redesignation granted prior to FY 2015),
will not be eligible for the 3-year
transition wage index. Accordingly, if a
hospital is currently located in an urban
county that would become rural for FY
2015 under the new OMB delineations
and such hospital sought and was
granted reclassification or redesignation
for FY 2015 or such hospital seeks and
is granted any reclassification or
redesignation for FY 2016 or FY 2017,
the hospital will permanently lose its 3year transitional assigned wage index
status, and will not be eligible to
reinstate it.
With respect to the wage index
computation, we will follow our
existing policy regarding the inclusion
of a hospital’s wage index data in the
CBSA in which it is geographically
located (we refer readers to Step 6 of the
method for computing the unadjusted
wage index in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51592)). Beginning
with FY 2015, the wage data of all
hospitals receiving this type of 3-year
transition adjustment will be included
in the statewide rural area in which they
are geographically located under the
new OMB delineations. After the 3-year
transition period, beginning in FY 2018,
these formerly urban hospitals
discussed above will receive their
statewide rural wage index, absent any
reclassification or redesignation. In
addition, the hospitals receiving this 3year transition because they are in
counties that are urban under the
current CBSA definitions, but become
rural under the new OMB delineations,
will not be considered urban hospitals.
Rather, they will maintain their status as
rural hospitals for other payment
considerations.
(3) Transition for Hospitals Deemed
Urban Under Section 1886(d)(8)(B) of
the Act Where the Urban Area Became
Rural Under the New OMB Delineations
As discussed in section II.H.3. of the
preamble of the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28061
through 28062) and this final rule, there
are some hospitals that are currently
geographically located in rural areas but
are deemed to be urban under section
1886(d)(8)(B) of the Act. For FY 2015,
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49959
some of these hospitals currently
redesignated under section
1886(d)(8)(B) of the Act would no longer
be eligible for deemed urban status
under the new OMB delineations, as
discussed in detail in section III.H.3. of
the preamble of this final rule. Similar
to the policy implemented in the FY
2005 IPPS final rule (69 FR 49059), and
consistent with the policy we proposed
for other hospitals in counties that were
urban and would become rural under
the new OMB delineations, we
proposed to apply the 3-year transition
to these hospitals currently redesignated
to urban areas under section
1886(d)(8)(B) of the Act that would no
longer be deemed urban under the new
OMB delineations and would revert to
being rural. That is, for FYs 2015, 2016,
and 2017, assuming no other form of
wage index reclassification or
redesignation is granted, we proposed to
assign these hospitals the FY 2015 area
wage index value of hospitals
reclassified to the urban CBSA (that is,
the attaching wage index) to which they
were redesignated in FY 2014 (with the
rural and imputed floors applied and
with the rural floor budget neutrality
adjustment applied). If the hospital
cannot be assigned the reclassified wage
index value of the CBSA to which it was
redesignated in FY 2014 because that
CBSA would split apart and no longer
exist, and some or all of its constituent
counties would be added to another
urban labor market area under the new
OMB delineations, we proposed that
such hospitals would be assigned the
wage index of the hospitals reclassified
to the FY 2015 urban labor market area
that contains the urban county in their
FY 2014 redesignated CBSA to which
they are closest for a period of 3 fiscal
years. We proposed to assign these
hospitals the area wage index of
hospitals reclassified to a CBSA because
hospitals deemed urban under section
1886(d)(8)(B) of the Act are treated as
reclassified under current policy, under
which such hospitals receive an area
wage index that includes wage data of
all hospitals reclassified to the area.
We did not receive any specific public
comment addressing these proposals. In
general, commenters were supportive of
CMS’ proposal to implement the new
OMB labor market delineations,
including the policy to mitigate the
negative effects of the transition to a
new labor market area. We are finalizing
our proposal to provide a 3-year
adjustment to hospitals that were
deemed urban under 1886(d)(8)(B) of
the Act under the current labor market
delineations, but are considered rural
under the new delineations. We will
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apply the 3-year transition to these
hospitals currently redesignated to
urban areas under section 1886(d)(8)(B)
of the Act that are no longer be deemed
urban under the new OMB delineations
and will revert to being rural. That is,
for FYs 2015, 2016, and 2017, assuming
no other form of wage index
reclassification or redesignation is
granted, we will assign these hospitals
the FY 2015 area wage index value of
hospitals reclassified to the urban CBSA
(that is, the attaching wage index) to
which they were redesignated in FY
2014 (with the rural and imputed floors
applied and with the rural floor budget
neutrality adjustment applied). If the
hospital cannot be assigned the
reclassified wage index value of the
CBSA to which it was redesignated in
FY 2014 because that CBSA was split
apart and no longer exists, and some or
all of its constituent counties were
added to another urban labor market
area under the new OMB delineations,
such hospitals will be assigned the wage
index of the hospitals reclassified to the
FY 2015 urban labor market area that
contains the urban county in their FY
2014 redesignated CBSA to which they
are closest for a period of 3 fiscal years.
We will assign these hospitals the area
wage index of hospitals reclassified to a
CBSA because hospitals deemed urban
under section 1886(d)(8)(B) of the Act
are treated as reclassified under current
policy, under which such hospitals
receive an area wage index that includes
wage data of all hospitals reclassified to
the area. Beginning in FY 2015, affected
hospitals will be assigned the
reclassified wage index of an urban area
(as described above) for a period of up
to 3 years. This wage index assignment
will be forfeited if the hospital obtains
any form of wage index reclassification
or redesignation.
(4) Transition for Hospitals That Will
Experience a Decrease in Wage Index
Under the New OMB Delineations
While we believe that instituting the
latest OMB labor market area
delineations would create a more
accurate wage index system, we also
recognize that implementing the new
OMB delineations may cause some
short-term instability in hospital
payments. Therefore, in addition to the
3-year transition adjustment for
hospitals being transitioned from urban
to rural status as discussed above, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28062), we proposed a 1-year
blended wage index for all hospitals
that would experience any decrease in
their actual payment wage index (that
is, a hospital’s actual wage index used
for payment, which accounts for all
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applicable effects of reclassification and
redesignation) exclusively due to the
proposed implementation of the new
OMB delineations. Similar to the policy
adopted in the FY 2005 IPPS final rule
(69 FR 49033), we proposed that a postreclassified wage index with the rural
and imputed floor applied would be
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 floor
applied would be computed based on
the hospital’s new FY 2015 CBSA (that
is, the FY 2015 constituent county/ies).
We proposed to compare these two
wage indexes. If the proposed FY 2015
wage index with FY 2015 CBSAs would
be lower than the proposed FY 2015
wage index with FY 2014 CBSAs, we
proposed that a blended wage index
would be computed, consisting of 50
percent of each of the two wage indexes
added together. We proposed that this
blended wage index would be the
hospital’s wage index for FY 2015. We
stated our belief that a 1-year, 50/50
blend would mitigate the short-term
instability and negative payment
impacts due to the proposed
implementation of the new OMB
delineations, providing hospitals with a
transition period during which they
may adjust to their new geographic
CBSA or may assess any reclassification
options that would be available to them
starting in FY 2016. We proposed a
longer 3-year transition adjustment for
hospitals losing urban status because
there are significantly fewer affected
urban-to-rural hospitals, and we believe
the negative impacts to a hospital
shifting from urban to rural status
would typically be greater than other
types of transitions. We believe that a
transition period longer than 1 year to
address other impacts of the proposed
adoption of new OMB delineations
would reduce the accuracy of the
overall labor market area wage index
system because far more hospitals
would be affected.
In addition, for FY 2015, for hospitals
that would receive the proposed 3-year
transition, it is possible that receiving
the FY 2015 wage index (with the rural
and imputed floors applied and with the
rural floor budget neutrality adjustment
applied) of the CBSA where the hospital
is geographically located for FY 2014
might still be less than the FY 2015
wage index that the hospital would have
received in the absence of the adoption
of the new OMB delineations
(particularly in States where the rural
floor is historically very high).
Therefore, such a hospital may
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additionally benefit from application of
the 50/50 blended wage indexes.
Accordingly, we proposed to include
the assignment of the 3-year transitional
wage index in our calculation of the FY
2015 portion of the 50/50 blended wage
index for that hospital. After FY 2015,
such a hospital may revert to the second
year of the 3-year transition. For
example, if Hospital X (formerly part of
CBSA 12345, now rural) is assigned
CBSA 12345’s FY 2015 wage index
value of 1.0000 as part of the 3-year
transition, but that FY 2015 wage index
value would have been 1.1000 under the
previous OMB delineations, that
hospital would receive a 50/50 blended
wage index of 1.0500 for FY 2015. In FY
2016 and FY 2017, Hospital X would
still be eligible to receive the remaining
2 years of the 3-year transition wage
index of CBSA 12345 (that is, in FY
2016, Hospital X would receive the FY
2016 wage index of CBSA 12345 (with
the rural and imputed floors applied
and with the rural floor budget
neutrality adjustment applied)), and in
FY 2017, Hospital X would receive the
FY 2017 wage index of CBSA 12345
(with the rural and imputed floors
applied and with the rural floor budget
neutrality adjustment applied).
Comment: Commenters were
generally supportive of CMS’ efforts to
mitigate the negative impacts from the
transition to the new OMB delineations.
A number of commenters requested that
CMS expand the 1-year 50/50 blended
wage index adjustment for a longer
period of time. One commenter
suggested the adjustment be phased in
over multiple years, with a first year
adjustment equal to the hospital’s wage
index under the current CBSA
definitions. Several of these commenters
stated that because hospitals cannot
obtain an MGCRB reclassification under
the new OMB delineations until FY
2016, the adjustment for FY 2015
should negate any negative impacts
from the transition to the new OMB
delineations. These commenters
explained that the MGCRB timetable
would not allow them to benefit from
newly available reclassification
opportunities until at least 1 year
following the implementation of new
OMB delineations. Other commenters
questioned why hospitals that switch
from urban to rural could benefit from
a longer 3-year transition adjustment,
while other hospitals that also would be
negatively affected by the transition
could only benefit from a single year of
a blended transition adjustment, and
requested a 3-year transition period for
all hospitals experiencing a negative
impact. They suggested a similar 3-year
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transition adjustment for affected
hospitals experiencing a negative
impact, including the hospitals that are
moving from urban to urban, or are not
moving at all, but are being impacted by
other hospitals moving in or out of the
labor market area.
Response: We appreciate the
commenters’ support. We explored
multiple alternatives to the proposed 1year 50/50 blended wage index
adjustment. While we acknowledge that
some providers will see negative
impacts based upon the adoption of the
new OMB delineations, we also point
out that some providers will experience
increases in their wage index values
from the new OMB delineations. It is
CMS’ longstanding policy to provide
temporary adjustments to mitigate
negative impacts from the adoption of
new policies or procedures. However,
these adjustments must be made in a
budget-neutral manner, and all wage
index values would be reduced to
provide for any such transition benefit.
We continue to believe that, in
general, rural labor markets tend to have
lower area wage index values than
nearby urban areas. We proposed a
longer 3-year transition adjustment for
hospitals losing urban status because
there are significantly fewer affected
urban-to-rural hospitals, and we believe
the negative impacts on a hospital
shifting from urban to rural status
would typically be greater than other
types of transitions. We believe that a
transition period longer than 1 year to
address other impacts of the proposed
adoption of new OMB delineations
would reduce the accuracy of the
overall labor market area wage index
system because far more hospitals
would be affected. We identified nine
hospitals that could be negatively
affected by their transition from urban
to rural status under the new OMB
delineations. Based on our experience
regarding the impact of the policy
established in FY 2005, we believe it is
necessary to provide up to a 3-year
transition adjustment for these hospitals
to prevent the potential for drastic
reductions in wage index values. The
relatively small number of affected
providers causes little concern for
potential budget neutrality adjustment
distortions in overall wage index values.
However, significantly more providers
will be negatively affected by other
impacts from adopting the new labor
market area delineations. Moving away
from a 1-year 50/50 blend to an
adjustment value that more closely
approximates the hospital’s previous
labor market assignment, or providing
for a longer transition period, would
result in a significantly larger national
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budget neutrality adjustment. We
believe the implementation of the new
labor market area delineations will
create more accurate representations of
a hospital’s labor market areas, and we
do not believe it is appropriate to
expand or extend the 50/50 blended
wage index adjustment further than
what was proposed, because doing so
would only further delay what we
believe are the more refined and
accurate labor market areas, based on
the recent 2010 Census. Because the
wage index is a relative measure of the
value of labor in prescribed labor market
areas, we believe it is important to
implement the new delineations with as
minimal a transition as is reasonable.
Hospitals currently must wait more
than a year for an MGCRB
reclassification application to become
effective. We do not believe the
implementation of new OMB
delineations requires any modification
to this policy. We believe the 1-year 50/
50 blended wage index adjustment
provides an adequate safeguard against
significant hospital payment reductions,
and provides hospitals time to assess
their reclassification options for future
fiscal years.
Comment: One group of commenters
suggested CMS made an error in
calculating the Connecticut rural wage
index value under the old FY 2014 OMB
definitions. Commenters claimed that
CMS incorrectly assigned a hospital as
being reclassified under section
1886(d)(8)(B) of the Act (that is, a
‘‘Lugar’’ hospital) when calculating the
wage index under the old delineations.
This hospital is located in a county that
became urban under the new OMB
delineations. Commenters claimed that
the hospital opted to waive its ‘‘Lugar’’
status effective for FYs 2013, 2014, and
FY 2015 in order to receive its
outmigration adjustment. However,
when CMS calculated the FY 2014 rural
wage index for the purpose of applying
the proposed transition blend, CMS
calculated the rural wage index with
this hospital being reclassified. By
including this hospital as reclassified to
an urban area, the commenters claimed
that the wage index based on the ‘‘old’’
labor market area definitions, and
therefore, the proposed FY 2015
payment wage index was significantly
lower than it would be if this provider
was properly identified as rural under
the old definitions.
Response: In prior fiscal years, the
Connecticut rural wage index was set by
a single hospital. While there were
multiple hospitals located in rural areas
in the State, all but one obtained or was
granted some form of reclassification to
another area. The wage data of rural
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49961
hospitals that reclassify elsewhere may
only be included in their State’s rural
wage index if doing so would increase
the wage index value (section
1886(d)(8)(C)(ii) of the Act). Because
including the reclassified rural
Connecticut hospitals would have
lowered the State’s rural area wage
index value, the wage index was instead
based on that single hospital’s data.
That hospital was designated urban
under section 1886(d)(8)(B) of the Act
but waived this status to receive an outmigration adjustment. As discussed in
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51599 through 51600), a hospital
may submit a request to waive its
‘‘Lugar’’ status for a period of 3 years.
By doing so, we would no longer
consider the hospital to be reclassified
and would always use that hospital’s
data in the calculation the State’s rural
wage index. (We note that while we
agree that the hospital waived its
reclassification status for FY 2014 by
accepting the out-migration adjustment,
we disagree that the hospital in question
waived its reclassified status for FY
2015. According to our records, the
hospital sent a letter to CMS dated July
15, 2011, requesting to accept the outmigration adjustment and waive its
Lugar redesignation for FYs 2012, 2013,
and 2014.) When calculating the wage
index based on the ‘‘old’’ labor market
area definitions, CMS considered this
hospital as being reclassified under
section 1886(d)(8)(B) of the Act. Because
all the rural Connecticut hospitals were
now considered reclassified, the wage
index was based upon their combined
data because the baseline rural wage
index did not include any hospitals.
The result of including all reclassified
hospitals was a rural wage index value
that was significantly lower than in
previous years. Considering that several
hospitals in Connecticut benefited from
the State’s rural floor, this reduction in
the rural wage index affected multiple
hospitals in the State.
After further consideration of the
commenters’ concerns, we agree with
the commenters that this hospital
should be treated as rural for the portion
of the 1-year blended wage index under
the FY 2014 delineations because this
hospital had waived it Lugar status by
accepting the out-migration adjustment
in FY 2014. Therefore, we are revising
this hospital’s wage index and the wage
index of the hospitals affected by this
change for FY 2015, as reflected in
Tables 2–2, 4A–2 and 4B–2, 4C–2, and
4D–2.
After consideration of the public
comments we received, we are
finalizing the transition policy as
proposed. We will apply a 1-year
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
blended wage index for all hospitals
that would experience any decrease in
their actual payment wage index (that
is, a hospital’s actual wage index used
for payment, which accounts for all
applicable effects of reclassification and
redesignation) exclusively due to the
proposed implementation of the new
OMB delineations. In FY 2015, a postreclassified wage index with the rural
and imputed floor applied will be
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 floor
applied will be computed based on the
hospital’s new FY 2015 CBSA (that is,
the FY 2015 constituent county/ies). We
will 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, a blended
wage index will be computed,
consisting of 50 percent of each of the
two wage indexes added together. This
blended wage index will be the
hospital’s wage index for FY 2015.
For FY 2015, for hospitals that would
receive the proposed 3-year transition, it
is possible that receiving the FY 2015
wage index (with the rural and imputed
floors applied and with the rural floor
budget neutrality adjustment applied) of
the CBSA where the hospital is
geographically located for FY 2014
might still be less than the FY 2015
wage index that the hospital would have
received in the absence of the adoption
of the new OMB delineations
(particularly in States where the rural
floor is historically very high). In this
situation, we will include the
assignment of the 3-year transitional
wage index in our calculation of the FY
2015 portion of the 50/50 blended wage
index for that hospital. After FY 2015,
such a hospital may revert to the second
year of the 3-year transition.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
(5) Impact of Adoption of New OMB
Labor Market Area Delineations
As we did for the proposed rule (79
FR 28062 through 28063), for this final
rule, to illustrate how the adoption of
the new OMB labor market area
delineations will impact hospitals’ FY
2015 wage indexes, we compared the
final FY 2015 occupational mix adjusted
post-reclassified wage indexes with
rural floor budget neutrality applied
under the FY 2014 CBSAs and under
the FY 2015 CBSAs using the new OMB
delineations. (This analysis does not
include the effects of the out-migration
adjustment, the frontier floor, the 3-year
hold harmless transition wage indexes,
or the 1-year transition blended wage
indexes). As a result of applying the
new OMB delineations to the wage data,
the wage index values for 2,409 urban
hospitals (85.6 percent) and 412 (65.2
percent) rural hospitals will increase.
The wage index values of 2,372 (84.3
percent) urban hospitals will increase
by less than 5 percent, and the wage
index values of 14 (0.5 percent) urban
hospitals will increase by at least 5
percent but less than 10 percent. The
wage index values of 23 (0.8 percent)
urban hospitals will increase by greater
than or equal to 10 percent. The wage
index values of 383 (60.6 percent) rural
hospitals will increase by less than 5
percent, 18 rural hospitals (2.8 percent)
will increase by at least 5 percent but
less than 10 percent, and 11 rural
hospitals (1.7 percent) will increase by
greater than or equal to 10 percent.
However, the wage index values for 397
urban hospitals (14.1 percent) and 220
(34.8 percent) rural hospitals will
decrease. The wage index values of 341
(12.1 percent) urban hospitals will
decrease by less than 5 percent, 50
urban hospitals (1.8 percent) will
decrease by at least 5 percent but less
than 10 percent, and 6 urban hospitals
(0.2 percent) will decrease by greater
than or equal to 10 percent. The wage
index values of 191 (30.2 percent) rural
hospitals will decrease by less than 5
percent, 28 rural hospitals (4.4 percent)
will decrease by 5 percent and less than
10 percent, and 1 rural hospital (0.2
percent) will decrease by greater than or
equal to 10 percent. The wage index
values of 8 (0.3 percent) urban hospitals
and zero rural hospitals will remain
unchanged by the adoption of the new
OMB delineations. The largest positive
impacts are for 8 hospitals in 5 States
(Texas, Michigan, Minnesota, Louisiana,
and Alabama) that will be moving from
a rural to an urban area under the new
OMB delineations (ranging from a 17.23
percent increase in Texas to a 24.02
percent increase in wage index in
Number of
post-reclassified
rural hospitals
based on
FY 2014 CBSA
Percent change in FY 2015 wage index
Decrease greater than or equal to 10.0 ..........................................................................
Decrease greater than or equal to 5.0 but less than 10.0 ..............................................
Decrease greater than or equal to 2.0 but less than 5.0 ................................................
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Frm 00110
Alabama), and for 14 hospitals that will
be moving from one urban CBSA (FY
2014 CBSA 20764, Edison-New
Brunswick, NJ) to new urban CBSA
35614 (New York-Jersey City-White
Plains, NY–NJ) under the new OMB
delineations, representing a 15.13
percent increase in wage index. The
largest negative impacts will be for 5
hospitals in 4 States (New York,
Alabama, Idaho, and North Carolina)
that will be moving from an urban to a
rural area under the new OMB
delineations (ranging from a 12.18
percent decrease in North Carolina to a
27.06 percent decrease in wage index in
New York). One hospital in Delaware is
moving from a rural to an urban area
under the new OMB delineations and
will experience an 11.38 percent
decrease in wage index. Another
hospital in Texas is moving from one
urban area to another urban area under
the new OMB delineations and will
experience a 10.19 percent decrease in
wage index. These results illustrate that
hospitals that move from rural CBSAs to
urban CBSAs under the new OMB
delineations generally will benefit
significantly, while hospitals that move
from urban to rural CBSAs generally
will have negative impacts. For all
hospitals combined, the wage index
values of 2,821 hospitals (81.9 percent)
overall will increase, and 617 hospitals
(17.9 percent) overall will decrease,
indicating that most hospitals will be
positively affected by the adoption of
the new OMB delineations.
Furthermore, the magnitude of the
changes will be relatively small overall,
with only 151 hospitals (4.4 percent)
experiencing either an increase or
decrease of at least 5 percent.
The following table shows the impact
of the adoption of the new OMB
delineations on hospitals’ FY 2015 wage
indexes, comparing the FY 2015
occupational mix adjusted postreclassified wage indexes with rural
floor budget neutrality applied under
the FY 2014 CBSAs and the FY 2015
CBSAs using the new OMB
delineations. (This analysis does not
include the effects of the out-migration
adjustment, the frontier floor, the 3-year
hold harmless transition wage indexes,
or the 1-year transition blended wage
indexes.)
Fmt 4701
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Number of
post-reclassified
urban hospitals
based on
FY 2014 CBSA
1
28
33
E:\FR\FM\22AUR2.SGM
6
50
88
22AUR2
Total number of
hospitals
7
78
121
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Number of
post-reclassified
rural hospitals
based on
FY 2014 CBSA
Percent change in FY 2015 wage index
Total number of
hospitals
Decrease greater than 0.0 but less than 2.0 ..................................................................
No change .......................................................................................................................
Increase greater than 0.0 but less than 2.0 ....................................................................
Increase greater than or equal to 2.0 but less than 5.0 .................................................
Increase greater than or equal to 5.0 but less than 10.0 ...............................................
Increase greater than or equal to 10.0 ............................................................................
158
0
376
7
18
11
253
8
2,331
41
14
23
411
8
2,707
48
32
34
Total ..........................................................................................................................
632
2,814
3,446
We did not receive any public
comments on the analysis in the
proposed rule showing the effects of
adopting the new CBSA delineations.
(6) Budget Neutrality
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28063), for FY
2015, we proposed to apply both the 3year transition and 50/50 blended wage
index adjustments in a budget neutral
manner. We proposed to make an
adjustment to the standardized amount
to ensure that the total payments,
including the effect of the transition
provisions, would equal what payments
would have been if we would not be
providing for any transitional wage
indexes under the new OMB
delineations.
We did not receive any public
comments specific to our proposal to
implement the 3-year transition and the
50/50 blended wage index adjustments
in a budget neutral manner. We are
finalizing the policy as proposed. For a
complete discussion on this budget
neutrality adjustment for FY 2015, we
refer readers to section II.A.4.b. of the
Addendum to this final rule.
We note that, consistent with past
practice (69 FR 49034), we are not
adopting the new OMB delineations
themselves in a budget neutral manner.
We do not believe that the revision to
the labor market areas in and of itself
constitutes an ‘‘adjustment or update’’
to the adjustment for area wage
differences, as provided under section
1886(d)(3)(E) of the Act.
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Number of
post-reclassified
urban hospitals
based on
FY 2014 CBSA
(7) Determining Disproportionate Share
Hospital (DSH) Payments Under the
New OMB Delineations
As noted in the FY 2005 IPPS final
rule (69 FR 49033), the provisions of
§ 412.102 of the regulations continue to
apply with respect to determining DSH
payments for hospitals affected by our
adoption of the new OMB delineations.
Specifically, in the first year after a
hospital loses urban status, the hospital
would receive an additional payment
that equals two-thirds of the difference
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between the urban DSH payments
applicable to the hospital before its
redesignation from urban to rural and
the rural DSH payments applicable to
the hospital subsequent to its
redesignation from urban to rural. In the
second year after a hospital loses urban
status, the hospital would receive an
additional payment that equals onethird of the difference between the
urban DSH payments applicable to the
hospital before its redesignation from
urban to rural and the rural DSH
payments applicable to the hospital
subsequent to its redesignation from
urban to rural.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28063 through
28064), we proposed to make changes to
the regulations to delete
§ 412.64(b)(1)(ii)(D). In this provision,
we currently define a ‘‘hospital
reclassified as rural’’ as a hospital
located in a county that, in FY 2004,
was urban but was redesignated as rural
after September 30, 2004, as a result of
the most recent census data and
implementation of the new MSA
definitions announced by OMB on June
6, 2003. Because the term ‘‘hospital
reclassified as rural’’ is not used in
§ 412.64, but is used in § 412.102, we
proposed to delete § 412.64(b)(1)(ii)(D)
and revise the language at § 412.102 to
address the circumstances set forth in
§ 412.64(b)(1)(ii)(D). The regulation at
§ 412.102, which addresses special
treatment of hospitals located in areas
that are changing from urban to rural as
a result of a geographic redesignation, is
the only location that currently
references a ‘‘hospital reclassified as
rural’’, as defined at § 412.64(b)(1)(ii)(D).
To avoid confusion with urban hospitals
that choose to reclassify as rural under
§ 412.103, we proposed to revise the
regulation text at § 412.102 so that it no
longer refers to the defined term
‘‘hospital reclassified as rural,’’ and
instead specifically states the
circumstances in which § 412.102
applies. In addition, we proposed to
modify the regulation text so that it
would apply to all transitions from
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Fmt 4701
Sfmt 4700
urban to rural status that occur as a
result of any future adoption of new or
revised OMB standards for delineating
statistical areas adopted by CMS.
Specifically, we proposed to revise the
regulations at § 412.102 to state that an
urban hospital that was part of an MSA,
but was redesignated as rural as a result
of the most recent OMB standards for
delineating statistical areas adopted by
CMS, may receive an adjustment to its
rural Federal payment amount for
operating costs for 2 successive fiscal
years as provided in paragraphs (a) and
(b) of the section.
We did not receive any public
comments regarding either of these
proposals. We are finalizing the changes
to § 412.102 and § 412.64(b)(1)(ii)(D) as
proposed, effective for FY 2015.
C. Worksheet S–3 Wage Data for the FY
2015 Wage Index
The FY 2015 wage index values are
based on the data collected from the
Medicare cost reports submitted by
hospitals for cost reporting periods
beginning in FY 2011 (the FY 2014 wage
indexes were based on data from cost
reporting periods beginning during FY
2010).
1. Included Categories of Costs
The FY 2015 wage index includes the
following categories of data associated
with costs paid under the IPPS (as well
as outpatient costs):
• Salaries and hours from short-term,
acute care hospitals (including paid
lunch hours and hours associated with
military leave and jury duty);
• Home office costs and hours;
• Certain contract labor costs and
hours (which includes direct patient
care, certain top management,
pharmacy, laboratory, and nonteaching
physician Part A services, and certain
contract indirect patient care services
(as discussed in the FY 2008 final rule
with comment period (72 FR 47315
through 47318)); and
• Wage-related costs, including
pension costs (based on policies
adopted in the FY 2012 IPPS/LTCH PPS
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final rule (76 FR 51586 through 51590))
and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index
methodology for FY 2014, the wage
index for FY 2015 also excludes the
direct and overhead salaries and hours
for services not subject to IPPS payment,
such as skilled nursing facility (SNF)
services, home health services, costs
related to GME (teaching physicians and
residents) and certified registered nurse
anesthetists (CRNAs), and other
subprovider components that are not
paid under the IPPS. The FY 2015 wage
index also excludes the salaries, hours,
and wage-related costs of hospital-based
rural health clinics (RHCs), and
Federally qualified health centers
(FQHCs) because Medicare pays for
these costs outside of the IPPS (68 FR
45395). In addition, salaries, hours, and
wage-related costs of CAHs are excluded
from the wage index, for the reasons
explained in the FY 2004 IPPS final rule
(68 FR 45397 through 45398).
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3. Use of Wage Index Data by Suppliers
and Providers Other Than Acute Care
Hospitals Under the IPPS
Data collected for the IPPS wage
index also are currently used to
calculate wage indexes applicable to
suppliers and other providers, such as
SNFs, home health agencies (HHAs),
ambulatory surgical centers (ASCs), and
hospices. In addition, they are used for
prospective payments to IRFs, IPFs, and
LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules,
we do not address comments pertaining
to the wage indexes of any supplier or
provider except IPPS providers and
LTCHs. Such comments should be made
in response to separate proposed rules
for those suppliers and providers.
D. Verification of Worksheet S–3 Wage
Data
The wage data for the FY 2015 wage
index were obtained from Worksheet S–
3, Parts II and III of the Medicare cost
report for cost reporting periods
beginning on or after October 1, 2010,
and before October 1, 2011. For wage
index purposes, we refer to cost reports
during this period as the ‘‘FY 2011 cost
report,’’ the ‘‘FY 2011 wage data,’’ or the
‘‘FY 2011 data.’’ Instructions for
completing the wage index sections of
Worksheet S–3 are included in the
Provider Reimbursement Manual (PRM),
Part 2 (Pub. No. 15–2), Chapter 40,
Sections 4005.2 through 4005.4 for
Form CMS–2552–10. The data file used
to construct the FY 2015 wage index
includes FY 2011 data submitted to us
as of June 25, 2014. As in past years, we
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performed an extensive review of the
wage data, mostly through the use of
edits designed to identify aberrant data.
We asked our MACs to revise or verify
data elements that result in specific edit
failures. For the proposed FY 2015 wage
index, we stated that we identified and
excluded 50 providers with aberrant
data that should not be included in the
wage index, although we stated that if
data elements are corrected, we
intended to include data from those
providers in the final FY 2015 wage
index (79 FR 28064). We have since
determined that we had only removed
49, not 50, providers with aberrant data
from the proposed wage index. We have
received corrected data from 19
providers and data from an additional
provider, and therefore, we are
including the data for these 20 providers
in the final FY 2015 wage index.
However, since issuance of the
proposed rule, we have determined that
the data from 4 other providers (not
included in the original 49 providers)
were aberrant and should not be
included in the final FY 2015 wage
index. Therefore, in total, we are
excluding the data of 34 providers from
the final FY 2015 wage index.
In constructing the FY 2015 wage
index, we included the wage data for
facilities that were IPPS hospitals in FY
2011, inclusive of those facilities that
have since terminated their
participation in the program as
hospitals, as long as those data did not
fail any of our edits for reasonableness.
We believe that including the wage data
for these hospitals is, in general,
appropriate to reflect the economic
conditions in the various labor market
areas during the relevant past period
and to ensure that the current wage
index represents the labor market area’s
current wages as compared to the
national average of wages. However, we
excluded the wage data for CAHs as
discussed in the FY 2004 IPPS final rule
(68 FR 45397 through 45398). For the
proposed rule, we removed 6 hospitals
that converted to CAH status on or after
February 14, 2013, the cut-off date for
CAH exclusion from the FY 2014 wage
index, and through and including
February 13, 2014, the cut-off date for
CAH exclusion from the FY 2015 wage
index. After removing hospitals with
aberrant data and hospitals that
converted to CAH status, the final FY
2015 wage index is calculated based on
3,416 hospitals.
For the final FY 2015 wage index, we
allotted the wages and hours data for a
multicampus hospital among the
different labor market areas where its
campuses are located in the same
manner that we allotted such hospitals’
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data in the FY 2014 wage index (78 FR
50587). Table 2 containing the final FY
2015 wage index associated with this
final rule (available via the Internet on
the CMS Web site) includes separate
wage data for the campuses of 6
multicampus hospitals.
Comment: Commenters representing
hospitals located in CBSA 46140
disagreed with the removal of the wage
data of one hospital in that CBSA from
the FY 2015 wage index. They argued
that CMS’s removal of the hospital’s
data is arbitrary and capricious, based
only on the fact that the hospital’s
average hourly wage is higher than
those of the other hospitals in the CBSA.
The commenters noted that the
hospital’s data were included in the
wage index in previous years, and CMS
has provided ‘‘no rational explanation
for its inconsistent treatment now.’’ The
commenters further stated that ‘‘if CMS
were to adopt a policy of excluding the
hospital with the highest wage data
from each CBSA, fairness would require
that CMS also exclude the hospital with
the lowest wage data from each CBSA.’’
The commenters stated that if CMS is
employing a ‘‘bright-line cut off,’’ CMS
must publish such ‘‘bright-line tests.’’
Response: Section 1886(d)(3)(E) of the
Act requires the Secretary to adjust the
proportion of hospitals’ costs
attributable to wages and wage-related
costs for area differences reflecting the
relative hospital wage level in the
geographic area of the hospital
compared to the national average
hospital wage level. We also refer
readers to section 1886(d)(9)(C)(iv)(I) of
the Act. Since the origin of the IPPS, the
wage index has been subject to its own
annual review process, first by the
MACs, and then by CMS. Hospitals are
aware that both the MACs (via
instructions issued by CMS) and CMS
evaluate the accuracy and
reasonableness of hospitals’ wage index
data. Each year, in every IPPS proposed
rule, we discuss the process wherein
CMS asks the MACs to ‘‘revise or verify
data elements that result in specific edit
failures’’ (most recently, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28064)). We state that, in constructing
the wage index, we include the wage
data for facilities that were IPPS
hospitals in the relevant cost reporting
year (that is, FY 2011 for the FY 2015
wage index), and that we include ‘‘those
facilities that have since terminated
their participation in the program as
hospitals, as long as those data did not
fail any of our edits for reasonableness.
We believe that including the wage data
for these hospitals is, in general,
appropriate to reflect the economic
conditions in the various labor market
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areas during the relevant past period
and to ensure that the current wage
index represents the labor market area’s
current wages as compared to the
national average of wages’’ (emphasis
added; 79 FR 28064). CMS has
historically exercised its discretion in
developing a wage index that reflects a
relative measure of the value of the
labor provided to a typical hospital in
a particular labor market area. We
applied these same procedures, as
discussed below, to the hospital at
issue, and we disagree with the
commenters that we have arbitrarily and
capriciously removed the wage data of
the cited hospital from the FY 2015
wage index.
In the instance of the particular
hospital to which the commenters refer,
while the hospital’s wage data was
properly documented, it did not merely
have the highest average hourly wage in
the CBSA; its average hourly wage was
extremely and unusually high,
significantly higher than the next
highest average hourly wage in that
CBSA and in the surrounding areas. We
do not believe that the average hourly
wage of this particular hospital
accurately reflects the economic
conditions in its labor market area
during the FY 2011 cost reporting
period, and, therefore, its inclusion in
the wage index would not ensure that
the FY 2015 wage index represents the
labor market area’s current wages as
compared to the national average of
wages. Accordingly, we have exercised
our discretion to remove this hospital’s
wage data from the February 20, 2014
PUF, and from the May 2, 2014 PUF as
well. Similarly, we have exercised our
discretion by removing from the wage
index (in FY 2015 and in prior years)
the data of hospitals with average
hourly wages that are unusually and
uncharacteristically low for their
respective CBSAs because we believe
that the wage data of those hospitals
also do not accurately reflect the
economic conditions in their labor
market area. We included the hospital’s
data in the wage index in previous years
because the hospital’s average hourly
wage was lower and more reasonable
relative to its labor market area in the
prior years and, thus, we did not remove
the hospital’s wage data from the prior
years’ wage index.
Questions have been raised recently
regarding the reporting of contract
housekeeping and dietary services on
Worksheet S–3, Part II, lines 33 and 35
of the Medicare cost report. CMS
finalized its proposal to begin collecting
contract labor costs and hours for
housekeeping, and dietary (along with
management services and the overhead
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services of administrative and general)
in the FY 2003 IPPS final rule (67 FR
50022 through 50023). At that time, we
stated, ‘‘We continue to consider
whether to expand our contract labor
definition to include more types of
contract services in the wage index. In
particular, we have examined whether
to include the costs for acquired dietary
and housekeeping services, as many
hospitals now provide these services
through contracts. Costs for these
services tend to be below the average
wages for all hospital employees.
Therefore, excluding the costs and
hours for these services if they are
provided under contract, while
including them if the services are
provided directly by the hospital,
creates an incentive for hospitals to
contract for these services in order to
increase their average hourly wage for
wage index purposes’’ (67 FR 50022). In
the FY 2003 IPPS proposed rule, we
explained that we selected the three
overhead services of administrative and
general, housekeeping, and dietary
because they are provided at all
hospitals, either directly or through
contracts, and together they comprise
about 60 percent of a hospital’s
overhead hours (67 FR 31433). In the FY
2003 IPPS final rule, we stated that we
‘‘will monitor the hospital industry for
information regarding the hospitals’
ability to provide the data. Further, we
will work with hospitals and
intermediaries [MACs] to develop
acceptable methods for tracking the
costs and hours. Finally, before
including these additional costs in the
wage index, we will provide a detailed
analysis of the impact of including these
additional costs in the wage index
values in the Federal Register and
provide for public comment. Our final
decision on whether to include contract
indirect patient care labor costs in our
calculation of the wage index will
depend on the outcome of our analyses
and public comments’’ (67 FR 50023).
Subsequent to the issuance of the FY
2003 IPPS final rule, we revised
Worksheet S–3, Part II of the Medicare
cost report (CMS Form 2552–96) to add
four lines for the reporting of contract
labor salaries, wages, and hours. The
lines added for contract housekeeping
and dietary services were lines 26.01
and 27.01, respectively. (Line 9.03 for
contract management and line 22.01 for
contract administrative and general
(A&G) services were also added at that
time). These lines were effective with
cost reporting periods beginning on or
after October 1, 2003 (that is, FY 2004).
Because the cost report data used for the
wage index are on a 4-year lag, data
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49965
from these new contract labor lines
would first be available for the FY 2008
wage index.
In the FY 2008 rulemaking process,
we provided an analysis of the effect on
the inclusion in the wage index of the
wages and hours related to the new
contract labor lines. At that time, 56
hospitals (1.6 percent) failed edits for
contract housekeeping line 26.01; and
99 hospitals (2.8 percent) failed edits for
contract dietary line 27.01 (72 FR 24680
and 24782). We also noted that ‘‘many
of these edit failures are for wage data
that are not to be included in the wage
index and will be excluded through the
wage index calculation. . . . In
addition, some of the aberrant data will
be resolved by the final rule through the
correction process’’ (72 FR 24680 and
24782). The small percentage of
hospitals that failed edits for these
contract labor lines indicates that the
vast majority of hospitals completing
these contract labor lines were able to
obtain and report reasonable salaries,
wages, and hours associated with
contract housekeeping and dietary
services. In the FY 2008 IPPS final rule,
we stated that we believe that ‘‘the
impact of this policy is generally very
minor, and we do not believe the
additional complexity of a transition
wage index is warranted for an impact
this small. Further, we continue to
believe it is prudent policy to include in
the wage index the costs for these
contract indirect patient care services’’
(72 FR 47316). Therefore, we adopted
the policy to include the new contract
labor lines in the wage index, beginning
with the FY 2008 wage index.
The questions that have recently come
to our attention involve hospitals that
consistently do not provide
documentable salaries, wages, and
hours for their contracted housekeeping
and/or dietary services. (On the
Medicare cost report (CMS Form 2552–
10), contract housekeeping is on
Worksheet S–3, Part II, line 33 and
contract dietary is on line 35). When
this situation occurs, CMS has
instructed the MACs to use reasonable
estimates, such as regional average
hourly rates, as a substitute for actual
wages and hours, and to report the
estimates on the hospital’s Worksheet
S–3, Part II, line 33 or line 35,
respectively. Our policy has been to use
reasonable estimates for these
housekeeping and dietary lines, rather
than report zeroes for wages and hours,
because, as discussed above and as
stated in the FY 2003 IPPS final rule,
‘‘{c}osts for these services tend to be
below the average wages for all hospital
employees. Therefore, excluding the
costs and hours for these services if they
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are provided under contract, while
including them if the services are
provided directly by the hospital,
creates an incentive for hospitals to
contract for these services in order to
increase their average hourly wage for
wage index purposes’’ (57 FR 50022).
We understand that the reason many
hospitals provide for failing to report
such contract wages and hours is that
their contracts do not clearly specify
this information, often because they use
a single vendor to provide several
different contract labor services. We
believe that allowing hospitals to
routinely use contracts that do not
clearly break out the salaries, wages,
and hours associated with these services
as a reason for not being able to report
proper salaries, wages, and hours for
these cost report lines undermines the
purpose of instituting these lines in the
first place. Furthermore, because every
hospital must provide housekeeping
and dietary services, and because the
wage index is a relative measure of the
value of the labor provided to a hospital
in a particular labor market area, to
report zeroes for salaries, wages, and
hours for housekeeping and dietary
services is not only unrealistic (in that
every hospital provides for these
services), but also misrepresents the
labor costs in that area and undermines
our policy. Consequently, CMS has
instructed the MACs not to zero out
these line items when a hospital cannot
document the housekeeping or dietary
salaries, wages, and hours, but instead
to use a reasonable estimation of these
wages and hours.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28065 through
28066) rule, we reiterated our
requirement that all hospitals must
document salaries, wages, and hours for
the purpose of reporting this
information on Worksheet S–3, Part II,
lines 32, 33, 34, and/or 35 (for either
directly employed housekeeping and
dietary employees on lines 32 and 34,
and contract labor on lines 33 and 35).
It is not acceptable for a hospital to
request that the MACs zero out these
line items if the hospital’s contract does
not specifically break out the actual
wages and hours. As indicated above,
and stated in the FY 2008 IPPS
proposed rule (72 FR 24680 and 24782),
a small percentage of hospitals failed
edits associated with the contract
housekeeping and dietary lines,
showing that the vast majority of
hospitals reporting data on these lines
were able to obtain and report
reasonable salaries, wages, and hours
associated with contract housekeeping
and dietary services. We encourage
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hospitals to ensure that their contracts
clearly specify the salaries, wages, and
hours related to all of their contract
labor. Because these line items have
been included in the cost report since
FY 2004, we believe that hospitals have
had adequate notice and time to
structure their contracts so that the
wages and hours of contract employees
can be determined and included in the
cost reports. We expect hospitals to
provide accurate data on their cost
reports.
We understand that there may be rare
situations where a hospital would not
have documentable salaries, wages, and
hours for contract housekeeping and
dietary services. In these situations, we
believe that it is appropriate and
necessary to use reasonable estimates
for these numbers in order to
determinate the best, most realistic,
wage index that we can. As discussed
previously, housekeeping and dietary
services are unique in that the costs for
housekeeping and dietary services tend
to be below the average wages for all
hospital employees. Thus, an incentive
is created for hospitals to avoid
reporting these contract labor salaries,
wages, and hours on the cost report in
order to increase their average hourly
wage for wage index purposes. To deter
hospitals from not reporting this
information and to ensure that the wage
index more accurately reflects the labor
costs in an area, we believe that it is
both necessary and appropriate for the
MACs to estimate such salaries, wages,
and hours in the rare instance where a
hospital cannot provide such
information. Therefore, in the absence
of documentable wages and hours for
contract housekeeping and dietary
services, MACs would continue to use
reasonable estimates for these services.
Examples of reasonable estimates are
regional average hourly rates, including
an average of the wages and hours for
dietary and housekeeping services of
other hospitals in the same CBSA as the
hospital in question. Hospitals also may
conduct time studies to determine hours
worked. If, for whatever reason, regional
averages or time studies cannot be used,
MACs may use data from the Bureau of
Labor Statistics to obtain average wages
and hours for housekeeping and dietary
services. Commenters may also suggest
alternatives for imputing reasonable
estimates for possible consideration by
CMS. In all cases, MACs must
determine that the data used are
reasonable.
Comment: One commenter
encouraged CMS to instruct the MACs
to be consistent across their entire
jurisdiction in how the MACs estimate
wages and hours for contract dietary
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and housekeeping services, in the
instances where there is a lack of
documentable wages and hours for these
services. Another commenter noted that
CMS stated that commenters may
suggest alternatives for imputing
reasonable estimates for possible
consideration by CMS. This commenter
asked that CMS consider eliminating
entirely all wages and hours associated
with dietary and housekeeping services,
both for hospital employees and
contract labor, based on the belief that
these services represent an ‘‘immaterial’’
3.27 percent of total Worksheet S–3,
Part II, line 1 wages, and their removal
from the wage index would remove a
time-consuming burden for both
providers and MACs. The commenter
asserted that if all wages and hours
associated with dietary and
housekeeping services were eliminated
from the wage index, the ‘‘comparison
among hospitals would remain
meaningful and would remove any
disparity among hospitals related to the
issue.’’
Response: We agree with the first
commenter that it is important for CMS’
policies and instructions to be
implemented uniformly by the MACs
across all jurisdictions. We provide
updated and uniform instructions to the
MACs each year prior to the start of the
annual wage index desk review process,
and also communicate with the MACs
through various media throughout each
annual wage index cycle, including
instructions on how to estimate wages
and hours for contract dietary and
housekeeping services in the absence of
documentable wages and hours for these
categories. We do not agree with the
second commenter’s request that CMS
eliminate entirely all wages and hours
associated with dietary and
housekeeping services, both for hospital
employees and contract labor. The IPPS
wage index is a relative measure of the
value of all types of labor provided to
a typical hospital in a particular labor
market area, not just the labor with high
average hourly wages. We believe it
would be inappropriate to agree to
selectively include, or exclude, certain
categories of labor from the wage index
because doing so would result in a less
accurate measure of labor costs and
would undermine the relativity of the
wage index as whole. We believe that
hospitals have had adequate notice and
time to structure their contracts so that
the wages and hours of contract
employees can be determined and
included in the cost reports. We expect
hospitals to provide accurate data on
their cost reports, and the accuracy of
the wages and hours of contract labor
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will continue to be reviewed by the
MACs as part of the annual desk review
process. As we stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28065 through 28066), to deter hospitals
from not reporting this information and
to ensure that the wage index more
accurately reflects the labor costs in an
area, we believe that it is both necessary
and appropriate for MACs to estimate
such salaries, wages, and hours in the
rare instance where a hospital cannot
provide such information for its dietary
and housekeeping services under
contract. We will continue to instruct
the MACs to use reasonable estimates
for these services, in the absence of
documentable wages and hours for
contract housekeeping and dietary
services.
E. Method for Computing the FY 2015
Unadjusted Wage Index
The method used to compute the FY
2015 wage index without an
occupational mix adjustment follows
the same methodology that we used to
compute the FY 2012, FY 2013, and FY
2014 final wage indexes without an
occupational mix adjustment (76 FR
51591 through 51593, 77 FR 53366
through 53367, and 78 FR 50587
through 50588, respectively).
As discussed in the FY 2012 final
rule, in ‘‘Step 5,’’ for each hospital, we
adjust the total salaries plus wagerelated costs to a common period to
determine total adjusted salaries plus
wage-related costs. To make the wage
adjustment, we estimate the percentage
change in the employment cost index
(ECI) for compensation for each 30-day
increment from October 14, 2010,
through April 15, 2012, for private
industry hospital workers from the BLS’
Compensation and Working Conditions.
We have consistently used the ECI as
the data source for our wages and
salaries and other price proxies in the
IPPS market basket, and we did not
propose any changes to the usage for FY
2015 (79 FR 28066). The factors used to
adjust the hospital’s data were based on
the midpoint of the cost reporting
period, as indicated in the following
table.
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MIDPOINT OF COST REPORTING
PERIOD
MIDPOINT OF COST REPORTING
PERIOD—Continued
After
Before
Adjustment
factor
05/14/2011
06/14/2011
07/14/2011
08/14/2011
09/14/2011
10/14/2011
11/14/2011
12/14/2011
01/14/2012
02/14/2012
03/14/2012
06/15/2011
07/15/2011
08/15/2011
09/15/2011
10/15/2011
11/15/2011
12/15/2011
01/15/2012
02/15/2012
03/15/2012
04/15/2012
1.01219
1.01084
1.00948
1.00811
1.00674
1.00538
1.00403
1.00269
1.00134
1.00000
0.99866
For example, the midpoint of a cost
reporting period beginning January 1,
2011, and ending December 31, 2011, is
June 30, 2011. An adjustment factor of
1.01084 would be applied to the wages
of a hospital with such a cost reporting
period.
Using the data as described above and
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50587 through 50588), the
FY 2015 national average hourly wage
(unadjusted for occupational mix) is
$39.2971. The FY 2015 Puerto Rico
overall average hourly wage (unadjusted
for occupational mix) is $16.9893.
F. Occupational Mix Adjustment to the
FY 2015 Wage Index
As stated earlier, section 1886(d)(3)(E)
of the Act provides for the collection of
data every 3 years on the occupational
mix of employees for each short-term,
acute care hospital participating in the
Medicare program, in order to construct
an occupational mix adjustment to the
wage index, for application beginning
October 1, 2004 (the FY 2005 wage
index). The purpose of the occupational
mix adjustment is to control for the
effect of hospitals’ employment choices
on the wage index. For example,
hospitals may choose to employ
different combinations of registered
nurses, licensed practical nurses,
nursing aides, and medical assistants for
the purpose of providing nursing care to
their patients. The varying labor costs
associated with these choices reflect
hospital management decisions rather
than geographic differences in the costs
of labor.
After
Before
Adjustment
factor
1. Development of Data for the FY 2015
Occupational Mix Adjustment Based on
the 2010 Occupational Mix Survey
10/14/2010
11/14/2010
12/14/2010
01/14/2011
02/14/2011
03/14/2011
04/14/2011
11/15/2010
12/15/2010
01/15/2011
02/15/2011
03/15/2011
04/15/2011
05/15/2011
1.02230
1.02078
1.01929
1.01782
1.01637
1.01494
1.01355
As provided for under section
1886(d)(3)(E) of the Act, we collect data
every 3 years on the occupational mix
of employees for each short-term, acute
care hospital participating in the
Medicare program.
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49967
As discussed in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50588), the
occupational mix adjustment to the FY
2014 wage index was based on data
collected on the 2010 Medicare Wage
Index Occupational Mix Survey (Form
CMS–10079 (2010)). For the FY 2015
wage index, we proposed to use the
occupational mix data collected on the
2010 survey to compute the
occupational mix adjustment for FY
2015. We did not receive any public
comments on this proposal; therefore,
we are finalizing our policy to use the
occupational mix data collected on the
2010 survey to compute the
occupational mix adjustment for FY
2015. We are including data for 3,183
hospitals that also have wage data
included in the FY 2015 wage index.
2. New 2013 Occupational Mix Survey
for the FY 2016 Wage Index
As stated earlier, section 304(c) of
Public Law 106–554 amended section
1886(d)(3)(E) of the Act to require CMS
to collect data every 3 years on the
occupational mix of employees for each
short-term, acute care hospital
participating in the Medicare program.
We used occupational mix data
collected on the 2010 survey to compute
the occupational mix adjustment for FY
2013, FY 2014, and the FY 2015 wage
index associated with this final rule.
Therefore, a new measurement of
occupational mix is required for FY
2016.
On December 7, 2012, we published
in the Federal Register a notice
soliciting comments on the proposed
2013 Medicare Wage Index
Occupational Mix Survey (77 FR 73032
through 73033). The new 2013 survey,
which will be applied to the FY 2016
wage index, includes the same data
elements and definitions as the 2010
survey and provides for the collection of
hospital-specific wages and hours data
for nursing employees for calendar year
2013 (that is, payroll periods ending
between January 1, 2013 and December
31, 2013). The comment period for the
notice ended on February 5, 2013. After
considering the public comments that
we received on the December 2012
notice, we made a few minor editorial
changes and published the 2013 survey
in the Federal Register on February 28,
2013 (78 FR 13679). This survey was
approved by OMB on May 14, 2013, and
is available on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Downloads/WAGEINDEX-OCCUPATIONAL-MIX-SURVEY
2013.pdf.
The 2013 Occupational Mix Survey
Hospital Reporting Form CMS–10079
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for the Wage Index Beginning FY 2016
(in excel format) is available on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Files-Items/Medicare-WageIndex-Occupational-MixSurvey2013.html?DLPage=1&DLSort=1&
DLSortDir=descending. Hospitals were
required to submit their completed 2013
surveys to their MACs by July 1, 2014.
The preliminary, unaudited 2013 survey
data was posted on the CMS Web site
afterward, on July 11, 2014. The FY
2012 Worksheet S–3 wage data for the
FY 2016 wage index review and
correction process was posted on the
CMS Web site in May 2014. Both the
preliminary FY 2016 wage data and
occupational mix survey data can be
found on the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatient
PPS/Wage-Index-Files-Items/FY-2016Wage-Index-Home-Page.html?DLPage=
1&DLSort=1&DLSortDir=descending.
3. Calculation of the Occupational Mix
Adjustment for FY 2015
For FY 2015, we proposed to calculate
the occupational mix adjustment factor
using the same methodology that we
used for the FY 2012, FY 2013, and FY
2014 wage indexes (76 FR 51582
through 51586, 77 FR 53367 through
53368, and 78 FR 50588 through 50589,
respectively). As a result of applying
this methodology, the proposed FY 2015
occupational mix adjusted national
average hourly wage (based on the
proposed new OMB labor market area
delineations) was $39.1177. The
proposed FY 2015 occupational mix
adjusted Puerto Rico-specific average
hourly wage (based on the proposed
new OMB labor market area
delineations) was $17.0526.
Because the occupational mix
adjustment is required by statute, all
hospitals that are subject to payments
under the IPPS, or any hospital that
would be subject to the IPPS if not
granted a waiver, must complete the
occupational mix survey, unless the
hospital has no associated cost report
wage data that are included in the FY
2015 wage index. For the proposed FY
2015 wage index, because we are using
the Worksheet S–3, Parts II and III wage
data of 3,400 hospitals, and we are using
the occupational mix surveys of 3,165
hospitals for which we also have
Worksheet S–3 wage data, that
represents a ‘‘response’’ rate of 93.1
percent (3,165/3,400). In the proposed
FY 2015 wage index established in the
FY 2015 IPPS/LTCH PPS proposed rule,
we applied proxy data for noncompliant
hospitals, new hospitals, or hospitals
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that submitted erroneous or aberrant
data in the same manner that we
applied proxy data for such hospitals in
the FY 2012 wage index occupational
mix adjustment (76 FR 51586).
In the FY 2011 IPPS/LTCH PPS
proposed rule and final rule (75 FR
23943 and 75 FR 50167, respectively),
we stated that, in order to gain a better
understanding of why some hospitals
are not submitting the occupational mix
data, we will require hospitals that do
not submit occupational mix data to
provide an explanation for not
complying. This requirement was
effective beginning with the 2010
occupational mix survey. We instructed
MACs to continue gathering this
information as part of the FY 2014 and
FY 2015 wage index desk review
process. We stated that we would
review these data for future analysis and
consideration of potential penalties for
noncompliant hospitals.
Comment: One commenter stated that
all hospitals should be obligated to
submit the occupational mix survey
because failure to complete the survey
jeopardizes the accuracy of the wage
index. The commenter added that a
penalty should be instituted for
nonsubmitters. The commenter also
stated that pending CMS’ analysis of the
Commuting Based Wage Index and the
Institute of Medicine’s study on
geographic variation in hospital wage
costs, CMS should eliminate the
occupational mix survey and the
significant reporting burden it creates.
Response: We appreciate the
commenter’s concern for the accuracy of
the wage index, and we have
continually exhorted all hospitals to
complete and submit the occupational
mix surveys. We did not propose a
particular penalty for hospitals that do
not submit the CY 2013 occupational
mix survey, but we are continuing to
consider for future rulemaking various
options for ensuring full compliance.
Examples include applying a hospital’s
occupational mix survey data from a
previous survey period to the current
wage index of a given fiscal year;
including the occupational mix survey
as part of the cost report, and if not
completed, the cost report would be
rejected by the MAC; or application of
a State-specific minimum or reduced
occupational mix adjustment. Regarding
the commenter’s request that CMS
should eliminate the survey due to the
burden it creates, section 1886(d)(3)(E)
of the Act requires us to measure the
earnings and paid hours of employment
by occupational category. As long as the
requirement to apply an occupational
mix adjustment to the wage index
remains in place in the statute, there
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may be some amount of administrative
burden involved in reporting that data.
After consideration of the public
comments we received, for FY 2015, we
are finalizing our proposal to calculate
the occupational mix adjustment factor
using the same methodology that we
used for the FY 2012, FY 2013, and FY
2014 wage indexes (76 FR 51582
through 51586, 77 FR 53367 through
53368, and 78 FR 50588 through 50589,
respectively). As a result of applying
this methodology, the FY 2015
occupational mix adjusted national
average hourly wage (based on the new
OMB labor market area delineations) is
$39.2591. The FY 2015 occupational
mix adjusted Puerto Rico-specific
average hourly wage (based on the new
OMB labor market area delineations) is
$17.0410. For the FY 2015 wage index,
because we are using the Worksheet S–
3, Parts II and III wage data of 3,416
hospitals, and we are using the
occupational mix surveys of 3,183
hospitals for which we also have
Worksheet S–3 wage data, that
represents a ‘‘response’’ rate of 93.2
percent (3,183/3,416).
G. Analysis and Implementation of the
Occupational Mix Adjustment and the
FY 2015 Occupational Mix Adjusted
Wage Index
1. Analysis of the Occupational Mix
Adjustment and the Occupational Mix
Adjusted Wage Index
As discussed in section III.F. of the
preamble of this final rule, for FY 2015,
we apply the occupational mix
adjustment to 100 percent of the FY
2015 wage index. We calculated the
occupational mix adjustment using data
from the 2010 occupational mix survey
data, using the methodology described
in the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51582 through 51586).
Using the occupational mix survey
data and applying the occupational mix
adjustment to 100 percent of the FY
2015 wage index results in a national
average hourly wage (based on the new
OMB labor market area delineations) of
$39.2591 and a Puerto-Rico specific
average hourly wage of $17.0410. After
excluding data of hospitals that either
submitted aberrant data that failed
critical edits, or that do not have FY
2011 Worksheet S–3, Parts II and III,
cost report data for use in calculating
the FY 2015 wage index, we calculated
the FY 2015 wage index using the
occupational mix survey data from
3,183 hospitals. For the FY 2015 wage
index, because we are using the
Worksheet S–3, Parts II and III wage
data of 3,416 hospitals, and we are using
the occupational mix survey data of
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3,183 hospitals for which we also have
Worksheet S–3 wage data, those data
represent a ‘‘response’’ rate of 93.2
percent (3,183/3,416). The FY 2015
national average hourly wages for each
occupational mix nursing subcategory
as calculated in Step 2 of the
occupational mix calculation are as
follows:
Occupational mix nursing
subcategory
Average
hourly wage
National RN ..........................
National LPN and Surgical
Technician .........................
National Nurse Aide, Orderly,
and Attendant ....................
National Medical Assistant ...
National Nurse Category ......
37.420970136
21.78229118
15.31107725
17.251053917
31.769556957
The national average hourly wage for
the entire nurse category as computed in
Step 5 of the occupational mix
calculation is $31.769556957. Hospitals
with a nurse category average hourly
wage (as calculated in Step 4) of greater
than the national nurse category average
hourly wage receive an occupational
mix adjustment factor (as calculated in
Step 6) of less than 1.0. Hospitals with
a nurse category average hourly wage (as
calculated in Step 4) of less than the
national nurse category average hourly
wage receive an occupational mix
adjustment factor (as calculated in Step
6) of greater than 1.0.
Based on the 2010 occupational mix
survey data, we determined (in Step 7
of the occupational mix calculation) that
the national percentage of hospital
employees in the nurse category is 43.46
percent, and the national percentage of
hospital employees in the all other
occupations category is 56.54 percent.
At the CBSA level, using the new OMB
delineations for FY 2015, the percentage
of hospital employees in the nurse
category ranged from a low of 21.88
percent in one CBSA to a high of 62.04
percent in another CBSA.
We compared the FY 2015
occupational mix adjusted wage indexes
for each CBSA to the unadjusted wage
indexes for each CBSA. We used the FY
2015 new OMB delineations for this
analysis. As a result of applying the
occupational mix adjustment to the
wage data, the wage index values for
219 (53.8 percent) urban areas and 29
(61.7 percent) rural areas increased. One
hundred and nineteen (29.2 percent)
urban areas will increase by 1 percent
but less than 5 percent, and 4 (1.0
percent) urban areas will increase by 5
percent or more. Fourteen (29.8 percent)
rural areas will increase by 1 percent
but less than 5 percent, and no rural
areas will increase by 5 percent or more.
However, the wage index values for 186
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(45.7 percent) urban areas and 18 (38.3
percent) rural areas decreased. Seventy
nine (19.4 percent) urban areas will
decrease by 1 percent but less than 5
percent, and 1 (0.2 percent) urban area
will decrease by 5 percent or more.
Seven (14.9 percent) rural areas will
decrease by 1 percent and less than 5
percent, and no rural areas will decrease
by 5 percent or more. The largest
positive impacts will be 6.58 percent for
an urban area and 3.36 percent for a
rural area. The largest negative impacts
will be 5.32 percent for an urban area
and 1.73 percent for a rural area. Two
urban areas’ wage indexes, but no rural
area wage indexes, will remain
unchanged by application of the
occupational mix adjustment. These
results indicate that a larger percentage
of rural areas (61.7 percent) will benefit
from the occupational mix adjustment
than will urban areas (53.8 percent).
However, approximately one-third (38.3
percent) of rural CBSAs will still
experience a decrease in their wage
indexes as a result of the occupational
mix adjustment.
2. Application of the Rural, Imputed,
and Frontier Floors
a. Rural Floor
Section 4410(a) of Public Law 105–33
provides that, for discharges on or after
October 1, 1997, the area wage index
applicable to any hospital that is located
in an urban area of a State may not be
less than the area wage index applicable
to hospitals located in rural areas in that
State. This provision is referred to as the
‘‘rural floor.’’ Section 3141 of Public
Law 111–148 also requires that a
national budget neutrality adjustment be
applied in implementing the rural floor.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28068), based on
the proposed FY 2015 wage index
associated with the proposed rule and
based on the proposed implementation
of the new OMB delineations discussed
in section III.B. of the preamble of the
proposed rule, we estimated that 441
hospitals would receive an increase in
their FY 2015 proposed wage index due
to the application of the rural floor.
Based on the final FY 2015 wage
index associated with this final rule and
available on the CMS Web site and
based on the implementation of the new
OMB delineations, 422 hospitals are
receiving an increase in their FY 2015
wage index due to application of the
rural floor.
We received some public comments
concerning the application of the rural
floor. We respond to these public
comments in Appendix A of this final
rule.
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49969
b. Imputed Floor for FY 2015
In the FY 2005 IPPS final rule (69 FR
49109 through 49111), we adopted the
‘‘imputed floor’’ policy as a temporary
3-year regulatory measure to address
concerns from hospitals in all-urban
States that have argued that they are
disadvantaged by the absence of rural
hospitals to set a wage index floor for
those States. Since its initial
implementation, we have extended the
imputed floor policy four times, the last
of which was adopted in the FY 2014
IPPS/LTCH PPS final rule and is set to
expire on September 30, 2014. (We refer
readers to further discussion of the
imputed floor in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50589
through 50590) and to our regulations at
42 CFR 412.64(h)(4).) Currently, there
are two all-urban States, New Jersey and
Rhode Island, that have a range of wage
indexes assigned to hospitals in these
States, including through
reclassification or redesignation (we
refer readers to discussions of
geographic reclassifications and
redesignations in section III.H. of the
preamble of the proposed rule and this
final rule). However, as we explain
below, the method as of FY 2012 for
computing the imputed floor (the
original methodology) benefitted only
New Jersey, and not Rhode Island.
In computing the imputed floor for an
all-urban State under the original
methodology, we calculated the ratio of
the lowest-to-highest CBSA wage index
for each all-urban State as well as the
average of the ratios of lowest-to-highest
CBSA wage indexes of those all-urban
States. We then compared the State’s
own ratio to the average ratio for allurban States and whichever is higher is
multiplied by the highest CBSA wage
index value in the State—the product of
which established the imputed floor for
the State. Under the current OMB labor
market area delineations that we used
for the FY 2014 wage index, Rhode
Island has only one CBSA (ProvidenceNew Bedford-Fall River, RI–MA) and
New Jersey has 10 CBSAs. Therefore,
under the original methodology, Rhode
Island’s own ratio equaled 1.0, and its
imputed floor was equal to its original
CBSA wage index value. However,
because the average ratio of New Jersey
and Rhode Island was higher than New
Jersey’s own ratio, this methodology
provided a benefit for New Jersey, but
not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53368 through 53369), we
retained the imputed floor calculated
under the original methodology as
discussed above, and established an
alternative methodology for computing
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the imputed floor wage index to address
the concern that the original imputed
floor methodology guaranteed a benefit
for one all-urban State with multiple
wage indexes (New Jersey) but could not
benefit the other all-urban State (Rhode
Island). The alternative methodology for
calculating the imputed floor was
established using data from the
application of the rural floor policy for
FY 2013. Under the alternative
methodology, we first determined the
average percentage difference between
the post-reclassified, pre-floor area wage
index and the post-reclassified, rural
floor wage index (without rural floor
budget neutrality applied) for all CBSAs
receiving the rural floor. (Table 4D
associated with the FY 2013 IPPS/LTCH
PPS final rule (which is available on the
CMS Web site) included the CBSAs
receiving a State’s rural floor wage
index.) The lowest post-reclassified
wage index assigned to a hospital in an
all-urban State having a range of such
values then is increased by this factor,
the result of which establishes the
State’s alternative imputed floor. We
amended § 412.64(h)(4) of the
regulations to add new paragraphs to
incorporate the finalized alternative
methodology, and to make reference and
date changes.
In summary, for the FY 2013 wage
index, we did not make any changes to
the original imputed floor methodology
at § 412.64(h)(4) and, therefore, made no
changes to the New Jersey imputed floor
computation for FY 2013. Instead, for
FY 2013, we adopted a second,
alternative methodology for use in cases
where an all-urban State has a range of
wage indexes assigned to its hospitals,
but the State cannot benefit from the
methodology in existing § 412.64(h)(4).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50589 through 50590), we
extended the imputed floor policy (both
the original methodology and the
alternative methodology) for 1
additional year, through September 30,
2014, while we continued to explore
potential wage index reforms.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28068 through
28069), for FY 2015, we proposed to
continue the extension of the imputed
floor policy (both the original
methodology and alternative
methodology) for another year, through
September 30, 2015, as we continue to
explore potential wage index reforms.
As discussed in section III.B. of the
preamble of the proposed rule, we
proposed to adopt the new OMB labor
market area delineations beginning in
FY 2015. Under OMB’s new labor
market area delineations based on
Census 2010 data, Delaware would
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become an all-urban State, along with
New Jersey and Rhode Island. Under the
new OMB delineations, Delaware would
have three CBSAs, New Jersey would
have seven CBSAs, and Rhode Island
would continue to have only one CBSA
(Providence-Warwick, RI–MA). We
referred readers to a detailed discussion
of our proposal to adopt the new OMB
labor market area delineations in section
III.B. of the preamble of the proposed
rule. We proposed to revise the
regulations at § 412.64(h)(4) and
(h)(4)(vi) to reflect the proposed 1-year
extension of the imputed floor. We
invited public comments on our
proposal regarding the 1-year extension
of the imputed floor.
Comment: Several commenters
supported the CMS proposal to extend
the imputed floor for 1 year, stating that
it establishes an approach to remedy the
competitive disadvantage suffered by
all-urban States in the absence of an
imputed wage index floor; and that the
imputed wage index floor policy creates
a climate of symmetry, equity and
consistency in the Medicare
reimbursement process. One commenter
suggested that the industry have an
opportunity to provide input to CMS
prior to finalizing any decisions
regarding the imputed floor policy. The
commenter also suggested that if CMS
decides to finalize a policy that would
result in the expiration of the imputed
floor, CMS afford hospitals a multiyear
phase-out in order to offset their lost
revenue.
One commenter stated that CMS
should reconsider the extension of the
imputed floor policy, and questioned
what statutory authority CMS has to
extend the imputed floor policy and
declare new States eligible. Another
commenter objected to the proposal and
stated that it does not support the policy
behind the imputed floor. The
commenter recommended that CMS not
finalize the proposal to extend the
imputed floor, and stated it agreed with
the rationale that CMS previously
provided in the FY 2012 IPPS/LTCH
PPS proposed rule (76 FR 25878
through 25879) for not proposing to
extend the imputed floor policy, and
urged CMS to let the policy expire.
Response: We appreciate the
commenters’ support for our proposal to
extend the imputed floor for 1 year and
are finalizing this proposal. In response
to the commenters who objected to the
proposed policy and made other
recommendations, we will give further
consideration to those comments as we
continue to explore potential wage
index reforms. As we have done every
year since the proposal of the imputed
floor, we provide and will continue to
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provide the industry with the
opportunity to provide input on our
proposals prior to finalizing any
decisions regarding the imputed floor
policy. We will take the commenters’
recommendation to afford hospitals a
multiyear phase-out into consideration
should we propose not to extend the
imputed floor policy in future years.
In response to the commenter who
questioned what statutory authority
CMS has to extend the imputed floor
policy and declare new States eligible,
as we stated in the FY 2005 IPPS final
rule (69 FR 49110), we note that the
Secretary has broad authority under
section 1886(d)(3)(E) of the Act to
‘‘adjust the proportion (as estimated by
the Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs of the
DRG prospective payment rates . . . for
area differences in hospital wage levels
by a factor (established by the Secretary)
. . .’’ Therefore, we believe that we do
have the discretion to adopt a policy
that would adjust area wage indexes in
the stated manner. We adopted the
imputed floor policy and subsequently
extended it through notice-andcomment rulemaking to address
concerns from hospitals in all-urban
states. Under the new OMB delineations
discussed in section III.B. of the
preamble of this final rule, Delaware
becomes an all-urban State and,
therefore, is subject to an imputed floor
as well.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification to extend the imputed
floor policy under both the original
methodology and the alternative
methodology for an additional year,
through September 30, 2015, while we
continue to explore potential wage
index reform. We also are adopting as
final the proposed revisions to
§ 412.64(h)(4) and (h)(4)(vi) to reflect the
1-year extension of the imputed floor.
The wage index and impact tables
associated with this FY 2015 IPPS/
LTCH PPS final rule that are available
on the CMS Web site reflect the
continued application of the imputed
floor policy at § 412.64(h)(4) and a
national budget neutrality adjustment
for the imputed floor for FY 2015. There
are 15 providers in New Jersey, and no
providers in Delaware that will receive
an increase in their FY 2015 wage index
due to the continued application of the
imputed floor policy under the original
methodology. The wage index and
impact tables for this FY 2015 final rule
also reflect the application of the
alternative methodology for computing
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four hospitals in Rhode Island.
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c. State Frontier Floor
Section 10324 of Public Law 111–148
requires that hospitals in frontier States
cannot be assigned a wage index of less
than 1.0000 (we refer readers to
regulations at 42 CFR 412.64(m) and to
a discussion of the implementation of
this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160
through 50161)). Based on the
implementation of the new OMB
delineations discussed in section III.B.
of the preamble of this final rule, 46
hospitals will receive the frontier floor
value of 1.0000 for their FY 2015 wage
index in this final rule. These hospitals
are located in Montana, North Dakota,
South Dakota, and Wyoming. Although
Nevada also is defined as a frontier
State, its FY 2015 rural floor value of
1.1373 is greater than 1.0000, and
therefore, no Nevada hospitals will
receive a frontier floor value for their FY
2015 wage index.
We did not propose any changes to
the frontier floor policy for FY 2015,
and we did not receive any public
comments on the issue.
The areas affected by the rural,
imputed, and frontier floor policies for
the FY 2015 wage index are identified
in Table 4D associated with this final
rule, which is available via the Internet
on the CMS Web site.
3. FY 2015 Wage Index Tables
The wage index values for FY 2015
(except those for hospitals receiving
wage index adjustments under section
1886(d)(13) of the Act), included in
Tables 4A, 4B, 4C, and 4F, available on
the CMS Web site, include the
occupational mix adjustment,
geographic reclassification or
redesignation as discussed in section
III.H. of the preamble of this final rule,
and the application of the rural,
imputed, and frontier State floors as
discussed in section III.G.2. of the
preamble of this final rule. We note that
because we are adopting the new OMB
labor market area delineations for FY
2015, these tables have additional
tabulations to account for wage index
calculations computed under the
previous and the new OMB
delineations.
Tables 3A and 3B, available on the
CMS Web site, list the 3-year average
hourly wage for each labor market area
before the redesignation or
reclassification of hospitals based on
FYs 2009, 2010, and 2011 cost reporting
periods. Table 3A lists these data for
urban areas, and Table 3B lists these
data for rural areas. In addition, Table
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2, which is available on the CMS Web
site, includes the adjusted average
hourly wage for each hospital from the
FY 2009 and FY 2010 cost reporting
periods, as well as the FY 2011 period
used to calculate the FY 2015 wage
index. The 3-year averages are
calculated by dividing the sum of the
dollars (adjusted to a common reporting
period using the method described in
Step 5 in section III.G. of the preamble
of this final rule) across all 3 years, by
the sum of the hours. If a hospital is
missing data for any of the previous
years, its average hourly wage for the 3year period is calculated based on the
data available during that period. The
average hourly wages in Tables 2, 3A,
and 3B, which are available on the CMS
Web site, include the occupational mix
adjustment. The wage index values in
Tables 4A, 4B, 4C, and 4D also include
the national rural floor budget neutrality
adjustment (which includes the
imputed floor). The wage index values
in Table 2 also include the outmigration adjustment for eligible
hospitals. As stated above, because we
are adopting the new OMB labor market
area delineations for FY 2015, these
tables have additional tabulations to
account for wage index calculations
computed under the current labor
market area definitions and the new
OMB labor market area delineations. In
addition, for certain applicable
hospitals, the wage index values
included in Table 2 are computed to
reflect the transitional wage index or the
50/50 blended wage index discussed in
detail in section III.B.2.e. of the
preamble of this final rule.
H. Revisions to the Wage Index Based
on Hospital Redesignations and
Reclassifications
1. General Policies and Effects of
Reclassification and Redesignation
Under section 1886(d)(10) of the Act,
the MGCRB considers applications by
hospitals for geographic reclassification
for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to
reclassify not later than 13 months prior
to the start of the fiscal year for which
reclassification is sought (generally by
September 1). Generally, hospitals must
be proximate to the labor market area to
which they are seeking reclassification
and must demonstrate characteristics
similar to hospitals located in that area.
The MGCRB issues its decisions by the
end of February for reclassifications that
become effective for the following fiscal
year (beginning October 1). The
regulations applicable to
reclassifications by the MGCRB are
located in 42 CFR 412.230 through
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412.280. (We refer readers to a
discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding
how the MGCRB defines mileage for
purposes of the proximity
requirements.) The general policies for
reclassifications and redesignations that
we proposed for FY 2015, and the
policies for the effects of hospitals’
reclassifications and redesignations on
the wage index, are the same as those
discussed in the FY 2012 IPPS/LTCH
PPS final rule for the FY 2012 final
wage index (76 FR 51595 and 51596).
Also, in the FY 2012 IPPS/LTCH PPS
final rule, we discussed the effects on
the wage index of urban hospitals
reclassifying to rural areas under 42 CFR
412.103. Hospitals that are
geographically located in States without
any rural areas are ineligible to apply for
rural reclassification in accordance with
the provisions of 42 CFR 412.103. While
our general policies on geographic
reclassification, redesignations under
section 1886(d)(8)(B) of the Act, and
urban hospitals reclassifying to rural
under 42 CFR 412.103 will remain
unchanged for FY 2015, we note that,
due to our adoption of the new OMB
labor market area delineations for FY
2015, there are numerous unique
classification considerations for FY
2015 that are discussed in more detail
in section III.H. of the preamble of this
final rule. For a discussion of the new
CBSA changes based on the new OMB
labor market area delineations and our
implementation of those changes, we
refer readers to sections III.B. and VI.C.
of the preamble of this final rule.
Comment: One commenter stated that
because the new OMB labor market area
delineations will be effective October 1,
2014, for FY 2015, hospitals should
have been given an opportunity to apply
for reclassification to these new labor
market areas a year ago. The commenter
suggested that CMS provide a one-time
expedited MGCRB application and
approval process to be effective October
1, 2014.
Similarly, another commenter stated
that a hospital would not have had an
adequate opportunity to assess
reclassification options for FY 2015
because CMS did not publish 3-year
average hourly wage data based on the
new OMB labor market area
delineations with the FY 2014 IPPS/
LTCH PPS final rule. The commenter
therefore suggested that either the
effective date of the implementation of
the new OMB labor market areas
delineations be postponed until FY
2016, or a new period be opened to
allow hospitals to reclassify for FY
2015.
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Response: We do not agree with these
comments. We did not propose to adopt
the new OMB labor market area
delineations in the FY 2014 IPPS/LTCH
PPS proposed rule and, therefore, did
not finalize the new OMB delineations
in the FY 2014 IPPS/LTCH PPS final
rule. Instead, we notified hospitals of
our intention to propose changes to the
wage index based on the new OMB
delineations in the FY 2015 IPPS/LTCH
proposed and final rules (78 FR 27552
through 27553; 78 FR 50586). Therefore,
hospitals could not apply for
reclassification on the basis of the new
OMB labor market area delineations a
year ago because they had not yet been
implemented. Because we had not
implemented the new OMB
delineations, we were unable to release
data, including average hourly wage
data, based on these new delineations
last year.
Section 1886(d)(10)(C) of the Act
mandates that hospitals must apply to
the MGCRB to reclassify not later than
13 months prior to the start of the fiscal
year for which reclassification is sought
(generally by September 1), and the
MGCRB must issue its decision within
180 days after the first day of the 13month period preceding the fiscal year
for which a hospital has filed its
application. Therefore, we believe we
have balanced our obligation to
implement the reclassification decisions
of the MGCRB with our responsibility to
implement the most accurate labor
market areas through the new OMB
delineations in as uniform a manner as
possible.
However, we recognized that the new
OMB delineations could affect
reclassification decisions. Therefore, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28073), we stated that
hospitals that wished to be reassigned to
an alternate CBSA (other than the CBSA
to which their reclassification would be
reassigned in this proposed rule) for
which they meet the applicable
proximity criteria could request
reassignment within 45 days from the
publication of the proposed rule. We
also stated that if, for whatever reason,
a hospital still finds itself assigned to a
labor market area that would provide a
wage index for FY 2015 that is lower
than the wage index the hospital would
have received under the FY 2014 CBSA
delineations, we proposed a 50/50
blended wage index adjustment in FY
2015 for all hospitals that would
experience a decrease in their FY 2015
wage index value due to the
implementation of the new OMB
delineations and are finalizing this
transition adjustment in this rule. This
transitional adjustment will mitigate
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negative payment impacts for FY 2015,
while providing hospitals additional
time to fully assess any additional
reclassification options available to
them under the new OMB delineations
for FY 2016. Therefore, we do not
believe it is necessary to implement a
one-time expedited MGCRB application
and approval process, postpone the
effective date of the implementation of
the new OMB delineations until FY
2016, or open a new period to allow
hospitals to reclassify for FY 2015.
Comment: A few commenters stated
that, in cases where a countywide
(group) reclassification had been
previously approved by the MGCRB, a
new hospital is not able to obtain the
same reclassified wage index until the
first year that individual hospital’s wage
index data match one of the 3 years’
data used by the MGCRB and a new 3year countywide reclassification is
requested by the county’s hospitals
(which can be a 4-year delay). The
commenters stated that the hospital will
have a wage index lower than the
hospitals with which it competes for
skilled labor. The commenter suggested
that CMS change its policy to allow for
a timelier competitive wage index for
new hospitals.
Two commenters suggested that the
proximity rule for countywide
reclassifications for hospitals in an
urban county be modified to permit
adjacent county reclassifications,
regardless of whether they are in the
same CSA or CBSA, or at a minimum,
create an exception that would allow
this in the event that half of the
hospitals in the county are seeking to
reclassify.
Another commenter suggested that a
county be permitted to apply for
designation as a ‘‘core county’’ if its 3year average hourly wage is at least 108
percent of the 3-year average hourly
wage of its CBSA, excluding the core
county. The commenter also suggested
that other counties within the same
CBSA that are either adjacent to or
within the same city as the core county,
and whose 3-year average hourly wage
is at least 85 percent of the core county’s
average hourly wage, be permitted to
join the core county to form a ‘‘core
area’’ if the resulting wage index is
beneficial to all hospitals in the core
area.
Response: We thank the commenters
for their comments. We already have
established criteria and processes for
MGCRB reclassification, which are
specified in 42 CFR 412.230 et. seq, and
we did not propose any changes to these
provisions for FY 2015. Consequently,
we are not making any changes to
address the commenter’s concerns at
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this time. We refer the commenters to
these regulations for complete details on
wage index reclassifications.
2. FY 2015 MGCRB Reclassifications
a. FY 2015 Reclassification
Requirements and Approvals
Under section 1886(d)(10) of the Act,
the MGCRB considers applications by
hospitals for geographic reclassification
for purposes of payment under the IPPS.
The specific procedures and rules that
apply to the geographic reclassification
process are outlined in regulations
under 42 CFR 412.230 through 412.280.
At the time this final rule was
constructed, the MGCRB had completed
its review of FY 2015 reclassification
requests. Based on such reviews, there
were 309 hospitals approved for wage
index reclassifications by the MGCRB
starting in FY 2015 that did not
withdraw or terminate their
reclassifications within 45 days of the
publication of the proposed rule.
Because MGCRB wage index
reclassifications are effective for 3 years,
for FY 2015, hospitals reclassified
beginning during FY 2013 or FY 2014
are eligible to continue to be reclassified
to a particular labor market area based
on such prior reclassifications for the
remainder of their 3-year period. There
were 155 hospitals approved for wage
index reclassifications in FY 2013 that
continue for FY 2015, and 270 hospitals
approved for wage index
reclassifications in FY 2014 that
continue for FY 2015. Of all the
hospitals approved for reclassification
for FY 2013, FY 2014, and FY 2015,
based upon the review at the time of
this final rule, 734 hospitals are in a
reclassification status for FY 2015.
Under the regulations at 42 CFR
412.273, hospitals that have been
reclassified by the MGCRB are
permitted to withdraw their
applications within 45 days of the
publication of a proposed rule. For
information about withdrawing,
terminating, or canceling a previous
withdrawal or termination of a 3-year
reclassification for wage index
purposes, we refer readers to 42 CFR
412.273, as well as the FY 2002 IPPS
final rule (66 FR 39887 through 39888)
and the FY 2003 IPPS final rule (67 FR
50065 through 50066). Additional
discussion on withdrawals and
terminations, and clarifications
regarding reinstating reclassifications
and ‘‘fallback’’ reclassifications, were
included in the FY 2008 IPPS final rule
(72 FR 47333).
Changes to the wage index that result
from withdrawals of requests for
reclassification, terminations, wage
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index corrections, appeals, and the
Administrator’s review process for FY
2015 are incorporated into the wage
index values published in this FY 2015
IPPS/LTCH PPS final rule. These
changes affect not only the wage index
value for specific geographic areas, but
also the wage index value redesignated/
reclassified hospitals receive; that is,
whether they receive the wage index
that includes the data for both the
hospitals already in the area and the
redesignated/reclassified hospitals.
Further, the wage index value for the
area from which the hospitals are
redesignated/reclassified may be
affected.
Comment: One commenter stated that
CMS’ policy that hospitals must request
to withdraw or terminate MGCRB
reclassifications within 45 days of the
proposed rule is problematic because a
hospital could terminate a
reclassification based on information in
the proposed rule, and with the
publication of the final rule, discover
that its original reclassified status was
more desirable. The commenter stated
that hospitals cannot make informed
decisions concerning their
reclassification status based on values in
a proposed rule that are likely to change
and, therefore, recommended that CMS
revise its existing policy to permit
hospitals to withdraw or terminate their
reclassification status within 45 days of
the publication of the final rule.
Similarly, another commenter stated
that the requirement for withdrawal of
an existing reclassification is
unnecessary and unfair because it
requires that a hospital give up the
certain benefit of the existing
reclassification for the uncertain benefit
of a proposal. The commenter stated
that it is possible that CMS could
modify the reclassification rules, and
suggested that hospitals be allowed 30
days after the publication of the final
rule to withdraw their reclassification
requests or to reverse a withdrawal that
was made based on the proposed rule in
situations where data corrections could
result in the hospital no longer
benefiting by the alternative they
selected.
Response: We did not make any
proposals to change any of the
reclassification processes or criteria for
FY 2015. Any changes to the
reclassification processes or criteria
would first need to be proposed in a
separate rulemaking. Consequently, we
are not making any changes to address
the commenters’ concerns at this time.
We maintain that information provided
in the proposed rule constitutes the best
available data to assist hospitals in
making reclassification decisions. The
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values published in the final rule
represent the final wage index values
reflective of reclassification decisions.
b. Effects of Implementation of New
OMB Labor Market Area Delineations
on Reclassified Hospitals
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28070 through
28074), we indicated that because
hospitals that have been reclassified
beginning in FY 2013, 2014, or 2015
were reclassified based on the current
labor market delineations, if we adopted
the new OMB labor market area
delineations beginning in FY 2015, the
areas to which they have been
reclassified, or the areas where they are
located, may change. Under the new
OMB delineations, we stated that many
existing CBSAs would be reconfigured.
We encouraged hospitals with current
reclassifications to verify area wage
indexes on Tables 4A–2 and 4B–2
associated with the proposed rule
(which are available via the Internet on
the CMS Web site), and confirm that the
areas to which they have been
reclassified for FY 2015 would continue
to provide a higher wage index than
their geographic area wage index. We
stated that hospitals may withdraw their
FY 2015 reclassifications by contacting
the MGCRB within 45 days from the
publication of the proposed rule.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28070), we stated
that, in some cases, adopting the new
OMB delineations would result in
counties splitting apart from CBSAs to
form new CBSAs, or counties shifting
from one CBSA designation to another
CBSA. Reclassifications granted under
section 1886(d)(10) of the Act are
effective for 3 fiscal years so that a
hospital or county group of hospitals
would be assigned a wage index based
upon the wage data of hospitals in a
nearby labor market area for a 3-year
period. If CBSAs are split apart, or if
counties shift from one CBSA to another
under the new OMB delineations, it
raises the question of how to continue
a hospital’s reclassification for the
remainder of its 3-year reclassification
period, if that area to which the hospital
reclassified no longer exists, in whole or
in part. We dealt with this question in
FY 2005 as well when CMS adopted the
current OMB labor market area
definitions. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28071), we
indicated that, consistent with the
policy CMS implemented in the FY
2005 IPPS final rule (69 FR 49054
through 49056), if a CBSA would be
reconfigured due to the new OMB
delineations and it would not be
possible for the reclassification to
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49973
continue seamlessly to the reconfigured
CBSA, we believe it is appropriate for us
to determine the best alternative
location to reassign current
reclassifications for the remaining 3
years. Therefore, to maintain the
integrity of a hospital’s 3-year
reclassification period, we proposed a
policy to assure that current geographic
reclassifications (applications approved
for FY 2013, FY 2014, or FY 2015) that
would be affected by CBSAs that are
split apart or counties that shift to
another CBSA under the new OMB
delineations, would ultimately be
assigned to a CBSA under the new OMB
delineations that contains at least one
county from the reclassified CBSA
under the current FY 2014 OMB
definitions, and would be generally
consistent with rules that govern
geographic reclassification. That is,
consistent with the policy finalized in
FY 2005 (69 FR 49054 and 49055), we
proposed a general policy that affected
reclassified hospitals would be assigned
to a CBSA that (1) would contain the
most proximate county that is located
outside of the hospital’s proposed FY
2015 geographic labor market area, and
(2) is part of the original FY 2014 CBSA
to which the hospital is reclassified. We
stated our belief that by assigning
reclassifications to the CBSA that
contains the nearest eligible county (as
described above) satisfies the statutory
requirement at section 1886(d)(10)(v) of
the Act by maintaining reclassification
status for a period of 3 fiscal years,
while generally respecting the
longstanding principle of geographic
proximity in the labor market
reclassification process. The hospitals
that we proposed to reassign to a
different CBSA based on our proposed
policy above were listed in a special
Table 9A–2 for the proposed rule, which
is available via the Internet on the CMS
Web site. In addition, we proposed to
allow a hospital, or county group of
hospitals, to request reassignment to
another CBSA that would contain a
county that is part of the current FY
2014 CBSA to which they are
reclassified, if the hospital or county
group of hospitals can demonstrate
compliance with applicable
reclassification proximity rules, as
described later in this section.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28071), we stated
that we recognize that this proposed
reclassification reassignment described
for hospitals that are reclassified to
CBSAs that would split apart or to
counties that would shift to another
CBSA under the new OMB delineations
may result in the reassignment of the
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hospital for the remainder of its 3-year
reclassification period to a CBSA having
a lower wage index than the wage index
that would have been assigned for the
reclassified hospital in the absence of
the proposed adoption of the new OMB
delineations. Therefore, as discussed in
section III.B.2.e.(4) of the preamble of
the proposed rule, we proposed (and are
finalizing in this final rule) that all
hospitals that would experience a
decrease in their FY 2015 wage index
value due to the proposed
implementation of the new OMB
delineations would receive a 50/50
blended wage index adjustment in FY
2015. For FY 2015, we proposed to
calculate a wage index value based on
the current FY 2014 OMB definitions,
and a wage index value based upon the
proposed new OMB delineations
(including reclassification assignments
discussed in this section). If the wage
index under the proposed new OMB
delineations would be lower than the
wage index calculated with the current
(FY 2014) OMB definitions, we
proposed that the hospital would be
assigned a blended wage index (50
percent of the current; 50 percent of the
proposed). We stated our belief that this
proposed transitional adjustment would
mitigate negative payment impacts for
FY 2015, and would afford hospitals
additional time to fully assess any
additional reclassification options
available to them under the new OMB
delineations.
We are including the following
descriptions of specific situations where
we have determined that reassignment
of reclassification areas is appropriate.
(1) Reclassifications to CBSAs That Are
Subsumed by Other CBSAs
For the proposed rule (79 FR 28070),
we identified 66 counties that are
currently located in CBSAs that would
be subsumed by another CBSA under
the new OMB labor market area
delineations. As a result, hospitals
reclassifying to those CBSAs would now
find that their reclassifications are to a
CBSA that no longer exists. For these
hospitals, we proposed to reassign
reclassifications to the newly configured
CBSA to which all of the original
constituent counties in the FY 2014
CBSA are transferred. For example,
CBSA 11300 (Anderson, IN) would no
longer exist under the proposed FY
2015 delineations. The only constituent
county in CBSA 11300, Madison
County, IN, would be moving to CBSA
26900 (Indianapolis-Carmel-Anderson,
IN). Because the original Anderson, IN
labor market area no longer exists, we
proposed to reassign reclassifications
from the original Anderson, IN labor
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market area to a newly configured CBSA
where the original constituent county or
counties are transferred, which is
Indianapolis-Carmel-Anderson, IN. For
hospitals reclassified to a CBSA that
would be subsumed by another CBSA,
we included a table in the proposed rule
that reflected the hospitals’ current
reclassified CBSA, and the CBSA to
which we proposed to assign them for
FY 2015 (79 FR 28071).
We did not receive any public
comments regarding this proposal to
reassign hospitals reclassified to CBSAs
that were subsumed by another CBSA.
Therefore, we are finalizing this
provision as proposed. For any hospital
that is reclassified to a CBSA that no
longer exists, and all of the CBSA’s
constituent counties moved to another
CBSA under the new OMB delineations,
we assigned that hospital’s
reclassification to the subsuming CBSA
to which all of the original constituent
counties in the FY 2014 CBSA are
transferred.
The following table lists 63 hospitals
that are currently located in CBSAs that
will be subsumed by another CBSA
under the new OMB labor market area
delineations and reflects the hospitals’
current reclassified CBSA and the CBSA
to which we are assigning them for FY
2015. We note that three hospitals have
terminated their reclassification since
publication of the proposed rule and
have been omitted.
HOSPITAL RECLASSIFICATION REASSIGNMENTS FOR HOSPITALS RECLASSIFIED TO A CBSA THAT IS
SUBSUMED BY ANOTHER CBSA
CMS Certification Number (CCN)
Current
reclassified
CBSA
New CBSA
050022
050054
050102
050243
050292
050329
050390
050423
050534
050573
050684
050686
050701
050765
050770
140067
150089
220001
220002
220008
220011
220019
220020
220049
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
42044
14060
11300
14484
14484
14484
14484
14484
14484
14484
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
11244
14010
26900
14454
14454
14454
14454
14454
14454
14454
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HOSPITAL RECLASSIFICATION REASSIGNMENTS FOR HOSPITALS RECLASSIFIED TO A CBSA THAT IS
SUBSUMED BY ANOTHER CBSA—
Continued
CMS Certification Number (CCN)
Current
reclassified
CBSA
New CBSA
220058
220062
220063
220070
220073
220074
220082
220084
220090
220095
220098
220101
220105
220163
220171
220175
220176
230002
230020
230024
230053
230089
230104
230142
230146
230165
230176
230244
230270
230273
230297
390151
410001
410004
410005
410007
410010
410011
410012
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
14484
47644
47644
47644
47644
47644
47644
47644
47644
47644
47644
47644
47644
47644
47644
13644
14484
14484
14484
14484
14484
14484
14484
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
14454
47664
47664
47664
47664
47664
47664
47664
47664
47664
47664
47664
47664
47664
47664
43524
14454
14454
14454
14454
14454
14454
14454
(2) Reclassification to CBSAs Where the
CBSA Number or Name Changed or to
CBSAs Containing Counties That Moved
to Another CBSA
For the proposed rule (79 FR 28072),
we identified six CBSAs with current
reclassifications that would maintain
the same constituent counties, but the
CBSA number or name would change if
we adopted the new OMB delineations.
For example, CBSA 29140 (Lafayette,
IN) currently contains three counties
(Benton, Carroll, and Tippecanoe
Counties). The CBSA name and number
for these counties would change to
CBSA 29200 (Lafayette-West Lafayette,
IN) under the new OMB delineations.
Because the constituent counties in
these CBSAs would not change under
the new delineations, we would
consider these CBSAs to be unchanged,
and we did not propose any
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reassignment for hospitals reclassified
to those labor market areas.
In the proposed rule, we identified
eight CBSAs with current
reclassifications that have one or more
counties that would split off and move
to a new CBSA or to a different existing
CBSA under the new OMB delineations.
These CBSAs are shown in the
following table.
Current
FY 2014
CBSA
16620
16974
20764
31140
35644
...
...
...
...
...
37964 ...
39100 ...
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48900 ...
Current FY 2014 CBSA name
Charleston, WV.
Chicago-Joliet-Naperville, IL.
Edison-New Brunswick, NJ.
Louisville/Jefferson County, KY–IN.
New York-White Plains-Wayne,
NY–NJ.
Philadelphia, PA.
Poughkeepsie-Newburgh-Middletown, NY.
Wilmington, NC.
In the proposed rule, we determined
that 69 hospitals had current
reclassifications to one of these CBSAs.
Similar to the methodology finalized in
the FY 2005 IPPS final rule (69 FR
49054 through 49055), we proposed to
follow the general policy discussed in
section III.H.2.b. of the preamble of the
proposed rule. Specifically, we
proposed that affected reclassified
hospitals would be assigned to a CBSA
(under the new OMB delineations) that
would contain the most proximate
county that is (1) located outside of the
hospital’s proposed FY 2015 geographic
labor market area; and (2) is included in
the current CBSA to which they are
reclassified. For each of the 69
hospitals, we conducted a mapping
analysis and determined driving
distances from their geographic location
to the borders of each county that is in
the reclassified CBSA under the FY
2014 delineations and is also included
in a CBSA under the new OMB
delineations, excluding any counties
that would be located in the hospital’s
proposed FY 2015 geographic labor
market area. Following the general
reassignment principle that we
proposed, we proposed to reassign those
reclassified hospitals to the CBSA
which contains the geographically
closest county. For example, there are
hospitals that currently are reclassified
to CBSA 39100 (PoughkeepsieNewburgh-Middletown, NY) under the
FY 2014 delineations, which is
comprised of Dutchess County and
Orange County, NY. Under the new
OMB delineations, Dutchess County
would become part of new CBSA 20524
(Dutchess County-Putnam County, NY),
while Orange County would join CBSA
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35614 (New York-Jersey City-White
Plains, NY–NJ Metropolitan Division).
Therefore, we mapped the distances
from one reclassified hospital to the
border of Dutchess County and Orange
County, NY (the two counties that were
part of CBSA 39100 under the FY 2014
delineations). Our analysis showed that
the hospital is 2.2 miles from Dutchess
County, and 25.9 miles from Orange
County. Therefore, we proposed to
reassign this hospital’s reclassification
from the FY 2014 CBSA 39100 to the
new CBSA 20524.
For the proposed rule, we also
identified affected county group
reclassifications. For these
reclassifications, we proposed that we
would follow our proposed policy
discussed above, except that, for county
group reclassifications, we proposed to
reassign hospitals in a county group
reclassification to the CBSA under the
new OMB delineations to which the
majority of hospitals in the group
reclassification are geographically
closest. Because hospitals in a county
group applied as a group, we believe the
reassignment should also be applied to
the whole group. For example, the
hospitals of Fairfield County, CT are
reclassified as a group to CBSA 35644
under the FY 2014 delineations. Under
the new OMB delineations, CBSA 35644
would no longer exist and would be
split into the following two new CBSAs:
20524 (Dutchess County-Putnam
County, NY) and 35614 (New YorkJersey City-White Plains, NY–NJ). Of the
six hospitals in the group
reclassification, all but one would be
closer to an eligible county
(Westchester, NY) in CBSA 35614 than
to an eligible county (Putnam, NY) in
CBSA 20524. Because these hospitals in
Fairfield, CT applied as a group, we
believe the reassignment should also be
applied to the whole group. Therefore,
we proposed to assign the hospitals in
this group reclassification to CBSA
35614, the reconfigured CBSA to which
the majority of the hospitals in the
group reclassification are geographically
closest.
To summarize, of the 69 hospitals
identified in the proposed rule as
reclassified to 1 of the 8 CBSAs in the
preceding table that have counties that
would split off and move to a new
CBSA or a different existing CBSA
under the new OMB delineations, there
are 27 hospitals that would maintain the
same reclassified CBSA number under
our proposals. Another 28 hospitals
would be reassigned to a reconfigured
CBSA that would contain a similar
number of counties from their current
reclassified CBSA. For the remaining 14
reclassified hospitals, we proposed to
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49975
assign them to a CBSA (under the new
OMB delineations) that would have a
different CBSA number from the labor
market area to which they are currently
reclassified (under the current FY 2014
delineations). This is because if the
original CBSA to which the hospitals
are reclassified is losing counties to
another urban CBSA, it may be that the
original reclassification determination
would not be reflective of the new
delineations. In addition, because
proximity to a CBSA is a requirement of
reclassifications approved under section
1886(d)(10) of the Act, we stated our
belief that it is appropriate to propose to
reassign reclassification status to an
urban CBSA that contains the county
(from the hospital’s current CBSA
reclassification) that is closest to the
hospital. We stated our belief that this
would more accurately reflect the
geographic labor market area of the
reclassified hospital.
Consistent with refinements
implemented in the FY 2005 IPPS final
rule (69 FR 49055), we proposed to
allow hospitals that reclassified under
section 1886(d)(10) of the Act to one of
the eight CBSAs that split (that is,
current FY 2014 CBSAs 16620, 16974,
20764, 31140, 35644, 37964, 39100,
48900) to be reclassified to any CBSA
containing a county from their original
reclassification labor market area,
provided that the hospital demonstrates
that it meets the applicable proximity
requirements under 42 CFR 412.230(b)
and (c) (for individual hospitals), 42
CFR 412.232(a)(1) (for a rural group),
and 42 CFR 412.234(a)(2) and (a)(3) (for
an urban group) to that CBSA. We stated
that hospitals that wished to be
reassigned to an alternate CBSA (other
than the CBSA to which their
reclassification would be reassigned in
this proposed rule) for which they meet
the applicable proximity criteria could
request reassignment within 45 days
from the publication of the proposed
rule. Hospitals had to send a request to
[email protected] and provide
documentation certifying that they meet
the requisite proximity criteria for
reassignment to an alternate CBSA, as
described above. We stated our belief
that this option of allowing hospitals to
submit a request to CMS would provide
hospitals with greater flexibility with
respect to their reclassification
reassignment, while ensuring that the
proximity requirements are met. We
believe that where the proximity
requirements are met, the reclassified
wage index would be consistent with
the labor market area to which the
hospitals were originally approved for
reclassification. Under this proposed
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policy, a hospital could request to be
assigned a reclassification to any CBSA
that contains any county from the CBSA
to which it is currently reclassified.
However, to be reassigned to an area
that is not the most proximate to the
hospital (or the majority of hospitals in
a county group), we believe it is
necessary that the hospital demonstrates
that it complies with the applicable
proximity criteria. If a hospital cannot
demonstrate proximity to an alternate
CBSA, the hospital would not be
considered for reclassification to that
labor market area, and reassignment
would remain with the closest eligible
(new) CBSA.
In the proposed rule (79 FR 28073),
we included a table showing proposed
hospital reclassification assignments for
hospitals reclassified to CBSAs from
which counties would be split off and
moved to a different CBSA under the
new OMB delineations. The table
showed the current reclassified CBSA
and the CBSA to which CMS proposed
reassignment.
We proposed that hospitals that
disagreed with our determination of the
most proximate county had to provide
an alternative method for determining
proximity to CMS within 45 days from
the publication of the proposed rule. We
stated that changes to a hospital’s CBSA
assignment on the basis of a hospital’s
disagreement with our determination of
closest county, or on the basis of being
granted a reassignment due to meeting
applicable proximity criteria to an
eligible CBSA would be announced in
this FY 2015 IPPS/LTCH PPS final rule.
Comment: Commenters were
generally supportive of our proposal to
adopt the new OMB delineations.
Commenters did not specifically
address the proposed assignment of
reclassification status for hospitals that
are reclassified to labor market areas
where the CBSA number or name
changed or to CBSAs containing
counties that moved to another CBSA.
Response: We thank the commenters
for their support of our proposal to
implement the new OMB delineations
for the hospital wage index.
After consideration of the public
comments we received, we are
finalizing the reassignment
methodology as proposed. Hospitals
that were reclassified to a CBSA that
had one or more counties that split off
and moved to another CBSA under the
new OMB delineations are reclassified
to a CBSA that will contain the most
proximate county that (1) is located
outside of the hospital’s FY 2015
geographic labor market area; and (2) is
included in the current CBSA to which
they are reclassified. Group
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reclassifications are assigned to the
CBSA under the new OMB delineations
to which the majority of hospitals in
that group reclassification are
geographically closest and that (1) is
located outside of the hospital’s FY
2015 geographic labor market area; and
(2) is included in the current CBSA to
which they are reclassified.
We also allowed hospitals that
reclassified under section 1886(d)(10) of
the Act to one of the eight CBSAs that
split (that is, current FY 2014 CBSAs
16620, 16974, 20764, 31140, 35644,
37964, 39100, 48900) to be reclassified
to any CBSA containing a county from
their original reclassification labor
market area, provided that the hospital
demonstrates that it meets the
applicable proximity requirements
under 42 CFR 412.230(b) and (c) (for
individual hospitals), 42 CFR
412.232(a)(1) (for a rural group), and 42
CFR 412.234(a)(2) and (a)(3) (for an
urban group) to that CBSA. Hospitals
that wished to be reassigned to an
alternate CBSA (other than the CBSA to
which their reclassification would be
reassigned in this proposed rule) for
which they meet the applicable
proximity criteria needed to request
reassignment within 45 days from the
publication of the proposed rule. We
received one request in the WageIndex@
cms.hhs.gov mailbox to request
reassignment to another eligible labor
market area. A rural hospital in North
Carolina was originally reclassified to
CBSA 48900 (Wilmington, NC). This
CBSA had more than one county that
was split off and moved to another
CBSA under the new OMB delineations.
Thus, under our proposed policy (which
we are finalizing in this final rule), we
reclassified this hospital to a CBSA that
contained the most proximate county
that is located outside of the hospital’s
FY 2015 geographic labor market area
and is included in the current CBSA to
which it is reclassified. Of all the former
constituent counties of CBSA 48900, the
hospital is geographically closest to
Brunswick County, NC, which is
outside of the hospital’s FY 2015
geographic labor market area and is
included in the current CBSA to which
the hospital is reclassified. However,
under the new OMB delineations,
Brunswick County is moved from CBSA
48900 to CBSA 34820 (Myrtle BeachConway-North Myrtle Beach, SC–NC).
Therefore, we assigned this hospital’s
reclassification to CBSA 34820 in the
proposed rule. The hospital provided
adequate evidence to demonstrate that it
is located within 35-miles from Pender
County, NC, which remains part of
CBSA 48900. Because the proximity
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Sfmt 4700
criteria limit for MGCRB reclassification
of an individual rural hospital is 35
miles (§ 412.230(b)(1)), we are
approving the hospital’s request for
reassignment back to CBSA 48900. The
change is reflected in the proceeding
table.
The following table shows hospital
reclassification assignments for
hospitals reclassified to CBSAs from
which counties were split off and
moved to a different CBSA under the
new OMB delineations. The following
table shows the current reclassified
CBSA and the CBSA to which CMS is
making reassignments. We note that 23
hospitals terminated their
reclassification status since the
proposed rule was published and have
been omitted.
HOSPITAL RECLASSIFICATION REASSIGNMENTS FOR HOSPITALS THAT
ARE RECLASSIFIED TO CBSAS
FROM WHICH COUNTIES ARE SPLIT
OFF AND MOVED TO A DIFFERENT
CBSA
CMS Certification Number (CCN)
Current
reclassified
CBSA
FY 2015
reassigned
CBSA
140012
140110
140155
140161
140186
150002
150004
150008
150034
150090
150125
150126
150165
150166
180012
180048
310002
310009
310014
310015
310017
310031
310050
310054
310076
310083
310096
310119
330027
330106
330167
330181
330182
330198
330224
330225
330259
330331
330332
330372
340042
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
31140
31140
35644
35644
37964
35644
35644
20764
35644
35644
35644
35644
35644
35644
35644
35644
35644
35644
35644
35644
39100
35644
35644
35644
35644
35644
48900
20994
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
16974
31140
31140
35614
35614
37964
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
35614
20524
35614
35614
35614
35614
35614
48900
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HOSPITAL RECLASSIFICATION REASSIGNMENTS FOR HOSPITALS THAT
ARE RECLASSIFIED TO CBSAS
FROM WHICH COUNTIES ARE SPLIT
OFF AND MOVED TO A DIFFERENT
CBSA—Continued
CMS Certification Number (CCN)
Current
reclassified
CBSA
FY 2015
reassigned
CBSA
340068
390044
390096
390316
420085
48900
37964
37964
37964
48900
48900
33874
33874
33874
48900
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Table 9A–2 for this final rule (which
is available via the Internet on the CMS
Web site) reflects all reassignments of
hospital reclassifications for FY 2015.
(3) Reclassifications to CBSAs That
Contain Hospital’s Geographic County
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28074), we
identified 14 reclassified hospitals that
would be geographically located in their
reclassified labor market area under the
new OMB delineations. For example,
hospital 34–0015 is located in Rowan
County, NC. Rowan County is currently
a Micropolitan Statistical Area in NC,
and treated as rural. The hospital is
reclassified to CBSA 16740 (CharlotteConcord-Rock Hill, NC–SC). Under the
new OMB delineations, CBSA 16740
(Charlotte-Concord-Gastonia, NC–SC)
would include Rowan County.
Therefore, the current reclassification
would become redundant. CBSA 16740
did not lose any counties to another
labor market area; therefore, assignment
to another alternate CBSA would not be
an option under our proposed
methodology. Because, by definition, a
hospital would not be ‘‘reclassified’’ to
its own geographic labor market area,
and maintaining that ‘‘reclassified’’
status to its own geographic labor
market area would serve no beneficial
purpose for a hospital, we expected that
all such affected hospitals would wish
to terminate their reclassification status.
Therefore, we assumed, for purposes of
the proposed rule, that the affected
hospitals would be terminating their
reclassification status for the remaining
years of their 3-year reclassification
period, and for FY 2015, we proposed
to assign them the wage index of the
CBSA in which they are geographically
located. We stated that affected
hospitals should inform CMS if they
wish to retain their current
reclassification by sending notice to
CMS within 45 days from the
publication of the proposed rule. If an
affected hospital did not inform us that
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they wished to retain their current
reclassification, we assumed that the
hospital had elected to terminate the
reclassification. For purposes of the
proposed rule, we presented tables
under the presumption that all 14
hospitals would opt to cancel their
reclassification status. We proposed to
assign these hospitals the wage index
value of their home area from Table 4A–
2 for the proposed rule (which is
available via the Internet on the CMS
Web site), and not include them as
reclassified hospitals in Table 9A–2 for
the proposed rule (which is available
via the Internet on the CMS Web site).
We did not receive any public
comments on this proposal, nor did any
hospital contact CMS through the
[email protected] mailbox.
Therefore, we are finalizing the proposal
without any modifications. The
following hospitals’ reclassifications are
terminated, and they are assigned the
wage index of the CBSA to which they
are geographically located under the
new OMB delineations.
HOSPITALS RECLASSIFIED TO HOME
LABOR MARKET AREA
CMS Certification Number (CCN)
Current
geographic
CBSA
Reclassified
geographic
CBSA
340015
340129
340144
420036
450596
420027
150088
150113
190003
440073
460017
460039
190144
490019
34
34
34
42
45
11340
11300
11300
19
44
46
46
19
49
16740
16740
16740
16740
23104
24860
26900
26900
29180
34980
36260
36260
43340
47894
c. Applications for Reclassifications for
FY 2016
Applications for FY 2016
reclassifications are due to the MGCRB
by September 2, 2014 (the first working
day of September 2014). We note that
this is also the deadline for canceling a
previous wage index reclassification
withdrawal or termination under 42
CFR 412.273(d). As discussed in section
III.B. of the preamble of this final rule,
we are adopting the new OMB labor
market area delineations announced on
February 28, 2013. Therefore, hospitals
should apply for reclassifications based
on the new OMB delineations we are
using for FY 2015. Applications and
other information about MGCRB
reclassifications may be obtained via the
Internet on the CMS Web site at:
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49977
http://www.cms.gov/Regulations-andGuidance/Review-Boards/MGCRB/
index.html, or by calling the MGCRB at
(410) 786–1174. The mailing address of
the MGCRB is: 2520 Lord Baltimore
Drive, Suite L, Baltimore, MD 21244–
2670.3.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28074, 28075, and
28304), we proposed changes to the
regulations at § 412.232(b)(2) and
§ 412.234(a)(3)(iv) to include reference
to the most recent OMB standards for
delineating statistical areas (using the
most recent Census Bureau data and
estimates) that were adopted by CMS.
For rural groups, the group of hospitals
must demonstrate that the county in
which the hospitals are located meets
the standards for redesignation to an
MSA as an ‘‘outlying county.’’ For urban
groups, hospitals located in counties
that are in the same combined statistical
area or CBSA as the urban area to which
they seek redesignation qualify as
meeting the proximity requirements for
reclassification to the urban area to
which they seek redesignation. We did
not propose any changes to the
reclassification policy, but included
language in the regulations to reflect use
of the most recent OMB standards for
delineating statistical areas (using the
most recent Census Bureau data and
estimates) that are adopted by CMS in
consideration of group reclassification
applications submitted for review in FY
2015 (that is submitted by September 2,
2014 (this date was erroneously stated
in the proposed rule as September 30,
2014), reviewed by the MGCRB in FY
2015, to be effective in FY 2016) and
future years.
We did not receive any public
comments on our proposed changes to
the regulations at § 412.232(b)(2) and
§ 412.234(a)(3)(iv) to include a reference
to the most recent OMB standards for
delineating statistical areas (using the
most recent Census Bureau data and
estimates) that are adopted by CMS.
Therefore, we are adopting as final the
proposed changes to § 412.232(b)(2) and
§ 412.234(a)(3)(iv).
3. Redesignation of Hospitals Under
Section 1886(d)(8)(B) of the Act
Section 1886(d)(8)(B)(i) of the Act
requires the Secretary to ‘‘treat a
hospital located in a rural county
adjacent to one or more urban areas as
being located in the urban metropolitan
statistical area to which the greatest
number of workers in the county
commute’’ if certain adjacency and
commuting criteria are met. The criteria
utilize standards for designating
Metropolitan Statistical Areas published
in the Federal Register by the Director
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of the Office of Management and Budget
(OMB) based on the most recently
available decennial population data.
Effective beginning FY 2005, we used
OMB’s CBSA standards based on the
2000 Census and the 2000 Census data
to identify counties in which hospitals
qualify under section 1886(d)(8)(B) of
the Act to receive the wage index of the
urban area. Hospitals located in these
counties have been known as ‘‘Lugar’’
hospitals and the counties themselves
are often referred to as ‘‘Lugar’’
counties.
As discussed in section III.B. of the
preamble to the proposed rule, we
proposed to implement OMB’s revised
labor market area delineations based on
the Census 2010 data for purposes of
determining applicable wage indexes for
acute care hospitals beginning in FY
2015. As we have done in the past, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28075 through 28078), we
also proposed to use the new OMB
delineations to identify rural counties
that would qualify as ‘‘Lugar’’ under
section 1886(d)(8)(B) of the Act and,
therefore, would be redesignated to
urban areas for FY 2015. We proposed
to revise the regulations at
§ 412.64(b)(3)(i) to reflect the most
recent OMB standards for delineating
statistical areas adopted by CMS. In the
FY 2015 IPPS/LTCH PPS proposed rule,
we stated that, by applying the new
OMB delineations, the number of
qualifying counties would increase from
98 in FY 2014 to 127 in FY 2015, as
reflected in a chart published in the
proposed rule. Since publication of the
proposed rule, we have discovered a
mistake where we inadvertently did not
account for Davidson County, NC
(which was a Lugar county in FY 2014
but is in a rural county no longer
qualifying to be Lugar under the new
OMB delineations, as discussed in
section III.H.3.c. of the preamble of this
final rule). Therefore, the number of
qualifying counties increases from 99 in
FY 2014 to 127 in FY 2015, and we are
correcting this oversight in the preamble
of this final rule. After evaluating and
analyzing the 2010 Census commuting
data, we proposed that, effective for
discharges on or after October 1, 2014,
in accordance with section 1886(d)(8)(B)
of the Act, hospitals located in the rural
counties listed in the first column of the
table in the proposed rule would be
designated as part of the urban area
listed in the second column based on
the criteria discussed above.
Comment: One commenter suggested
that Lugar hospitals be considered rural
for all Medicare IPPS purposes other
than receiving the urban wage index.
Response: Lugar status is a deemed
status, and there are only two provisions
under the Medicare statute that would
allow a Lugar hospital to be treated as
a rural provider: (1) if the hospital is
eligible for an out-migration adjustment
under section 1886(d)(13) of the Act; or
(2) if the hospital applies for an urban
to rural reclassification under section
1886(d)(8)(E) of the Act. In either case,
the hospital would be treated as rural
for all IPPS purposes, which includes
the wage index.
We did not receive any other specific
comments with regard to our proposal
to use the new OMB delineations to
identify rural counties that would
qualify as ‘‘Lugar’’ under section
1886(d)(8)(B) of the Act. Therefore, we
are finalizing the policy as proposed.
We also are finalizing our proposed
revision of the regulations at
§ 412.64(b)(3)(i) to reflect the most
recent OMB standards for delineating
statistical areas adopted by CMS.
In addition, since publication of the
proposed rule we discovered that, in the
FY 2015 IPPS/LTCH proposed rule, for
five of the Lugar counties, we had
erroneously printed the names and
codes of the entire Metropolitan
Statistical Areas rather than the
Metropolitan Division names and codes.
Because we recognize Metropolitan
Divisions as CBSAs, we should have
printed the division names and codes
for the following counties: Starke
County, IN; Fannin County, TX; Hill
County, TX; Van Zandt County, TX; and
Island County, WA. The table below
contains the corrected listing of the
rural counties designated as urban
under section 1886(d)(8)(B) of the Act.
We note that this error was made only
in the chart; that is, the wage index
tables and data associated the FY 2015
IPPS/LTCH PPS proposed rule
(available via the Internet on the CMS
Web site) properly captured the
Metropolitan Divisions for hospitals in
these five counties. We are finalizing
that, effective for discharges on or after
October 1, 2014, in accordance with
section 1886(d)(8)(B) of the Act,
hospitals located in the rural counties
listed in the first column of the chart
below will be designated as part of the
urban area listed in the second column
based on the finalized criteria discussed
above.
We note that rural counties that no
longer meet the qualifying criteria to be
Lugar are discussed in section III.H.3.c.
of the preamble of this final rule.
RURAL COUNTIES CONTAINING HOSPITALS REDESIGNATED AS URBAN UNDER SECTION 1886(d)(8)(B) OF THE ACT
[Based on new OMB delineations and census 2010 data]
Rural county
Lugar designated CBSA
NEW
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County name
State
Chambers County ...............................
Cherokee County ................................
Cleburne County .................................
Macon County .....................................
Talladega County ................................
Denali Borough ...................................
Hot Spring County ..............................
Litchfield County .................................
Bradford County ..................................
Levy County ........................................
Washington County .............................
Chattooga County ...............................
Jackson County ..................................
Lumpkin County ..................................
Polk County .........................................
Talbot County ......................................
Oneida County ....................................
Christian County .................................
Iroquois County ...................................
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AL
AL
AL
AL
AL
AK
AR
CT
FL
FL
FL
GA
GA
GA
GA
GA
ID
IL
IL
Jkt 232001
CBSA
12220
40660
11500
12220
11500
21820
26300
35300
27260
23540
37460
40660
12060
12060
40660
17980
36260
44100
28100
PO 00000
CBSA name
Auburn-Opelika, AL .........................................................................................
Rome, GA ........................................................................................................
Anniston-Oxford-Jacksonville, AL ....................................................................
Auburn-Opelika, AL .........................................................................................
Anniston-Oxford-Jacksonville, AL ....................................................................
Fairbanks, AK ..................................................................................................
Hot Springs, AR ...............................................................................................
New Haven-Milford, CT ...................................................................................
Jacksonville, FL ...............................................................................................
Gainesville, FL .................................................................................................
Panama City, FL ..............................................................................................
Rome, GA ........................................................................................................
Atlanta-Sandy Springs-Roswell, GA ................................................................
Atlanta-Sandy Springs-Roswell, GA ................................................................
Rome, GA ........................................................................................................
Columbus, GA-AL ............................................................................................
Ogden-Clearfield, UT .......................................................................................
Springfield, IL ...................................................................................................
Kankakee, IL ....................................................................................................
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49979
RURAL COUNTIES CONTAINING HOSPITALS REDESIGNATED AS URBAN UNDER SECTION 1886(d)(8)(B) OF THE ACT—
Continued
[Based on new OMB delineations and census 2010 data]
Rural county
Lugar designated CBSA
NEW
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
County name
State
Logan County ......................................
Mason County .....................................
Ogle County ........................................
Union County ......................................
Clinton County ....................................
Greene County ....................................
Henry County ......................................
Marshall County ..................................
Parke County ......................................
Spencer County ..................................
Starke County .....................................
Tipton County ......................................
Warren County ....................................
Boone County .....................................
Buchanan County ...............................
Cedar County ......................................
Delaware County ................................
Iowa County ........................................
Jasper County .....................................
Franklin County ...................................
Nelson County ....................................
Assumption Parish ..............................
Jefferson Davis Parish ........................
St. Landry Parish ................................
Oxford County .....................................
Caroline County ..................................
Franklin County ...................................
Allegan County ....................................
Ionia County ........................................
Lenawee County .................................
New.aygo County ................................
Shiawassee County ............................
Tuscola County ...................................
Goodhue County .................................
Meeker County ....................................
Rice County ........................................
Pearl River County ..............................
Stone County ......................................
Dade County .......................................
Otoe County ........................................
Douglas County ..................................
Lyon County ........................................
Los Alamos County .............................
Cayuga County ...................................
Cortland County ..................................
Genesee County .................................
Greene County ....................................
Lewis County ......................................
Montgomery County ............................
Schuyler County ..................................
Seneca County ...................................
Camden County ..................................
Caswell County ...................................
Granville County .................................
Greene County ....................................
Harnett County ....................................
Polk County .........................................
Wilson County .....................................
Traill County ........................................
Ashtabula County ................................
Champaign County .............................
Columbiana County ............................
Harrison County ..................................
Preble County .....................................
Clinton County ....................................
Fulton County ......................................
Greene County ....................................
Lawrence County ................................
VerDate Mar<15>2010
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IL
IL
IL
IL
IN
IN
IN
IN
IN
IN
IN
IN
IN
IA
IA
IA
IA
IA
IA
KS
KY
LA
LA
LA
ME
MD
MA
MI
MI
MI
MI
MI
MI
MN
MN
MN
MS
MS
MO
NE
NV
NV
NM
NY
NY
NY
NY
NY
NY
NY
NY
NC
NC
NC
NC
NC
NC
NC
ND
OH
OH
OH
OH
OH
PA
PA
PA
PA
Jkt 232001
CBSA
44100
37900
40420
16060
29200
14020
26900
43780
45460
21780
23844
26900
29200
11180
47940
26980
20220
26980
19780
28140
31140
12940
29340
29180
30340
12580
44140
24340
24340
11460
24340
29620
40980
33460
33460
33460
25060
25060
44180
30700
16180
16180
42140
45060
27060
40380
10580
48060
10580
27060
40380
47260
15500
20500
24780
39580
43900
40580
24220
17460
44220
49660
48260
19380
48700
25180
38300
38300
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CBSA name
Springfield, IL ...................................................................................................
Peoria, IL .........................................................................................................
Rockford, IL .....................................................................................................
Carbondale-Marion, IL .....................................................................................
Lafayette-West Lafayette, IN ...........................................................................
Bloomington, IN ...............................................................................................
Indianapolis-Carmel-Anderson, IN ..................................................................
South Bend-Mishawaka, IN-MI ........................................................................
Terre Haute, IN ................................................................................................
Evansville, IN-KY .............................................................................................
Gary, IN ...........................................................................................................
Indianapolis-Carmel-Anderson, IN ..................................................................
Lafayette-West Lafayette, IN ...........................................................................
Ames, IA ..........................................................................................................
Waterloo-Cedar Falls, IA .................................................................................
Iowa City, IA ....................................................................................................
Dubuque, IA .....................................................................................................
Iowa City, IA ....................................................................................................
Des Moines-West Des Moines, IA ..................................................................
Kansas City, MO-KS .......................................................................................
Louisville/Jefferson County, KY-IN ..................................................................
Baton Rouge, LA .............................................................................................
Lake Charles, LA .............................................................................................
Lafayette, LA ...................................................................................................
Lewiston-Auburn, ME ......................................................................................
Baltimore-Columbia-Towson, MD ....................................................................
Springfield, MA ................................................................................................
Grand Rapids-Wyoming, MI ............................................................................
Grand Rapids-Wyoming, MI ............................................................................
Ann Arbor, MI ..................................................................................................
Grand Rapids-Wyoming, MI ............................................................................
Lansing-East Lansing, MI ................................................................................
Saginaw, MI .....................................................................................................
Minneapolis-St. Paul-Bloomington, MN-WI .....................................................
Minneapolis-St. Paul-Bloomington, MN-WI .....................................................
Minneapolis-St. Paul-Bloomington, MN-WI .....................................................
Gulfport-Biloxi-Pascagoula, MS .......................................................................
Gulfport-Biloxi-Pascagoula, MS .......................................................................
Springfield, MO ................................................................................................
Lincoln, NE ......................................................................................................
Carson City, NV ...............................................................................................
Carson City, NV ...............................................................................................
Santa Fe, NM ..................................................................................................
Syracuse, NY ...................................................................................................
Ithaca, NY ........................................................................................................
Rochester, NY .................................................................................................
Albany-Schenectady-Troy, NY ........................................................................
Watertown-Fort Drum, NY ...............................................................................
Albany-Schenectady-Troy, NY ........................................................................
Ithaca, NY ........................................................................................................
Rochester, NY .................................................................................................
Virginia Beach-Norfolk-Newport News, VA-NC ...............................................
Burlington, NC .................................................................................................
Durham-Chapel Hill, NC ..................................................................................
Greenville, NC .................................................................................................
Raleigh, NC .....................................................................................................
Spartanburg, SC ..............................................................................................
Rocky Mount, NC ............................................................................................
Grand Forks, ND-MN ......................................................................................
Cleveland-Elyria, OH .......................................................................................
Springfield, OH ................................................................................................
Youngstown-Warren-Boardman, OH-PA .........................................................
Weirton-Steubenville, WV-OH .........................................................................
Dayton, OH ......................................................................................................
Williamsport, PA ..............................................................................................
Hagerstown-Martinsburg, MD-WV ...................................................................
Pittsburgh, PA ..................................................................................................
Pittsburgh, PA ..................................................................................................
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49980
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
RURAL COUNTIES CONTAINING HOSPITALS REDESIGNATED AS URBAN UNDER SECTION 1886(d)(8)(B) OF THE ACT—
Continued
[Based on new OMB delineations and census 2010 data]
Rural county
Lugar designated CBSA
NEW
County name
State
Schuylkill County .................................
Susquehanna County .........................
Adjuntas Municipio ..............................
Coamo Municipio ................................
Las Marı´as Municipio ..........................
Maricao Municipio ...............................
Salinas Municipio ................................
Clarendon County ...............................
Colleton County ..................................
Lee County ..........................................
Marion County .....................................
New berry County ...............................
Meigs County ......................................
Blanco County .....................................
Bosque County ...................................
Calhoun County ..................................
Fannin County .....................................
Grimes County ....................................
Harrison County ..................................
Henderson County ..............................
Hill County ...........................................
Milam County ......................................
Van Zandt County ...............................
Willacy County ....................................
King and Queen County .....................
Louisa County .....................................
Madison County ..................................
Orange County ....................................
Page County .......................................
Shenandoah County ...........................
Southampton County ..........................
Surry County .......................................
Island County ......................................
Mason County .....................................
Jackson County ..................................
Morgan County ...................................
Roane County .....................................
Green Lake County .............................
Jefferson County .................................
Walworth County .................................
PA
PA
PR
PR
PR
PR
PR
SC
SC
SC
SC
SC
TN
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
VA
VA
VA
VA
VA
VA
VA
VA
WA
WA
WV
WV
WV
WI
WI
WI
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
a. New Lugar Areas for FY 2015
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28077), we stated
that of the 127 qualifying counties
identified as Lugar counties based on
the new OMB delineations, 58 counties
would be newly designated as Lugar for
FY 2015 if we finalize our proposed
adoption of the new OMB delineations.
Hospitals in these counties, with at least
25 percent of their workers commuting
to a higher wage area, effective October
1, 2014, would be deemed to be located
in the CBSA to which the highest
number of their workers commute
(which is identified in the column titled
‘‘Lugar Designated CBSA’’ in the table
above). Hospitals in these counties
would receive the reclassified urban
wage index of the corresponding Lugar
Designated CBSA, unless they choose to
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Jkt 232001
CBSA
39740
13780
38660
41980
32420
32420
25020
44940
16700
44940
22500
17900
17420
12420
47380
47020
19124
17780
30980
46340
23104
12420
19124
15180
40060
40060
16820
47900
25500
49020
47260
47260
42644
36500
16620
25180
16620
22540
33340
33340
CBSA name
Reading, PA ....................................................................................................
Binghamton, NY ..............................................................................................
Ponce, PR .......................................................................................................
San Juan-Carolina-Caguas, PR ......................................................................
Mayagu¨ez, PR .................................................................................................
Mayagu¨ez, PR .................................................................................................
Guayama, PR ..................................................................................................
Sumter, SC ......................................................................................................
Charleston-North Charleston, SC ....................................................................
Sumter, SC ......................................................................................................
Florence, SC ....................................................................................................
Columbia, SC ..................................................................................................
Cleveland, TN ..................................................................................................
Austin-Round Rock, TX ...................................................................................
Waco, TX .........................................................................................................
Victoria, TX ......................................................................................................
Dallas-Plano-Irving, TX ....................................................................................
College Station-Bryan, TX ...............................................................................
Longview, TX ...................................................................................................
Tyler, TX ..........................................................................................................
Fort Worth-Arlington, TX .................................................................................
Austin-Round Rock, TX ...................................................................................
Dallas-Plano-Irving, TX ....................................................................................
Brownsville-Harlingen, TX ...............................................................................
Richmond, VA ..................................................................................................
Richmond, VA ..................................................................................................
Charlottesville, VA ...........................................................................................
Washington-Arlington-Alexandria, DC-VA-MD-WV .........................................
Harrisonburg, VA .............................................................................................
Winchester, VA-WV .........................................................................................
Virginia Beach-Norfolk-Newport News, VA-NC ...............................................
Virginia Beach-Norfolk-Newport News, VA-NC ...............................................
Seattle-Bellevue-Everett, WA ..........................................................................
Olympia-Tumwater, WA ..................................................................................
Charleston, WV ...............................................................................................
Hagerstown-Martinsburg, MD-WV ...................................................................
Charleston, WV ...............................................................................................
Fond du Lac, WI ..............................................................................................
Milwaukee-Waukesha-West Allis, WI ..............................................................
Milwaukee-Waukesha-West Allis, WI ..............................................................
waive their Lugar status, as discussed
later in this section.
In the proposed rule (79 FR 28077),
we stated that some areas that are
currently urban counties would be
geographically rural if we adopted the
new OMB delineations and would meet
the requirements for redesignation as
Lugar areas. As described in section
III.B.2.e.(2) of the preamble of the
proposed rule, we proposed a 3-year
hold harmless transitional wage index
adjustment for hospitals located in
urban counties that become rural under
the new OMB delineations. Because
Lugar status is a form of redesignation,
hospitals that currently are located in
urban counties that would become rural
under the new OMB delineations and
are also considered Lugar areas under
the new OMB delineations would not be
eligible for the 3-year transition wage
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index adjustment unless they chose to
waive Lugar status for FY 2015 (as
discussed later in this section) and
sought no other form of wage index
reclassification.
As discussed above, we did not
receive any public comments with
regard to our proposal to use the new
OMB delineations to identify rural
counties that would qualify as ‘‘Lugar’’
under section 1886(d)(8)(B) of the Act,
and we are finalizing the policy as
proposed. We refer readers to the
summary of public comments and our
responses regarding the proposed
transition policies for the wage index as
a result of adoption of the OMB
delineations for FY 2015 in section
III.B.2.e. of the preamble of this final
rule.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
b. Hospitals Redesignated Under
Section 1886(d)(8)(B) of the Act Seeking
Reclassification by the MGCRB
As in the past, hospitals redesignated
under section 1886(d)(8)(B) of the Act
are also eligible to be reclassified to a
different area by the MGCRB. In the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28077), we stated that by using Table
4C associated with the proposed rule
(which is available via the Internet on
the CMS Web site), affected hospitals
could compare the reclassified wage
index for the labor market area into
which they would be reclassified by the
MGCRB to the reclassified wage index
for the area to which they are
redesignated under section
1886(d)(8)(B) of the Act. We stated that
hospitals may withdraw from an
MGCRB reclassification within 45 days
of the publication of the FY 2015
proposed rule. (We refer readers to the
FY 2012 IPPS/LTCH PPS final rule (76
FR 51598 through 51599) for the
procedural rules and requirements for a
hospital that is redesignated under
section 1886(d)(8)(B) of the Act and
seeking reclassification under the
MGCRB, as well as our policy of
measuring the urban area, exclusive of
the Lugar County, for purposes of
meeting proximity requirements.)
We treat New England deemed
counties in a manner consistent with
how we treat Lugar counties. (We refer
readers to the FY 2008 IPPS final rule
with comment period (72 FR 47337
through 47338) for a discussion of this
policy.)
Since publication of the proposed
rule, we discovered that there are four
hospitals in rural counties that are
newly deemed Lugar areas for FY 2015
that also have MGCRB reclassifications
to the same CBSAs to which they are
redesignated as Lugar. Lugar hospitals
are treated like reclassified hospitals for
purposes of determining their
applicable wage index and receive the
reclassified wage index for the urban
area to which they have been
redesignated. Because the Lugar
redesignated CBSA is now the same as
the MGCRB reclassified CBSA, the
MGCRB reclassification becomes
redundant. We note that hospitals with
Lugar redesignations and hospitals with
MGCRB reclassifications receive the
wage index for hospitals that are
reclassified as provided in Table 4C–2
associated with this final rule (which is
available via the Internet on the CMS
Web site). Table 9A–2 associated with
this final rule (which is available via the
Internet on the CMS Web site) reflects
the reclassified and redesignated
hospitals. Hospitals that are
redesignated as Lugar are indicated as
such when the ‘‘Lugar’’ column is
populated. Although we did indicate in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28077) that hospitals
redesignated as Lugar that also had an
MGCRB reclassification may compare
the reclassified wage index for the labor
market area into which they would be
reclassified by the MGCRB to the
reclassified wage index for the area to
which they are redesignated under
section 1886(d)(8)(B) of the Act, and
49981
terminate or withdraw from an MGCRB
reclassification within 45 days of the
publication of the proposed rule, we
acknowledge that we did not highlight
these four hospitals that also are Lugar
that would have redundant
reclassifications. We also note that these
hospitals did not send requests to the
MGCRB to terminate their
reclassifications. Because the new Lugar
status would deem these hospitals
redesignated to the same area to which
they have an approved MGCRB
reclassification, the reclassified wage
index would be the same for these four
hospitals in either scenario. We realize
that, for this reason, the hospitals may
not have seen a need to withdraw the
MGCRB reclassification. Because we did
not state in the proposed rule that we
would expect that these affected
hospitals would be terminating the
remaining years of their 3-year
reclassification period, for FY 2015 we
are not updating the Lugar column on
Table 9A–2 for this final rule. However,
we have indicated in a footnote that,
under the new OMB delineations, these
providers are now redesignated as Lugar
to the same area to which they have an
existing MGCRB reclassification that
they did not terminate. We emphasize
that the effect on the wage index of
these four hospitals is immaterial
because hospitals redesignated as Lugar
as well as hospitals with approved
MGCRB reclassifications both receive
the reclassified wage index for the urban
area to which they have been
redesignated or reclassified.
HOSPITALS REDESIGNATED AS LUGAR TO AN AREA WHERE THEY HAVE AN APPROVED MGCRB RECLASSIFICATION FOR
FY 2015
CMS Certification No.
(CCN)
150076
190017
390016
420030
.......................
.......................
.......................
.......................
Rural county name
Marshall County, IN .................................................................................................
St. Landry Parish, LA ..............................................................................................
Lawrence County, PA ..............................................................................................
Colleton County, SC ................................................................................................
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
c. Rural Counties No Longer Meeting the
Criteria To Be Redesignated as Lugar
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28077 through
28078), we discussed that if we adopted
the new OMB delineations, 29 rural
counties would no longer meet the
qualifying criteria to be redesignated as
Lugar effective October 1, 2014, either
because they would be geographically
located in an urban area, or they would
fail to meet the 25 percent cumulative
out-migration threshold with
application of the new 2010 Census
VerDate Mar<15>2010
Lugar CBSA
18:25 Aug 21, 2014
Jkt 232001
commuting data. Since the publication
of the proposed rule, we have
discovered a mistake where we
inadvertently did not account for
Davidson County, NC. Therefore, the
number of rural counties that will no
longer meet the qualifying criteria to be
redesignated as Lugar effective October
1, 2014, as indicated above, is 30 as
opposed to 29. We are correcting this
oversight in the preamble of this final
rule.
Counties that were deemed urban
under section 1886(d)(8)(B) of the Act in
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43780
29180
38300
16700
MGCRB
reclassification
CBSA
43780
29180
38300
16700
FY 2014, but would be geographically
located in an urban area under the new
OMB delineations for FY 2015 are:
Windham County, CT
Flagler County, FL
Walton County, FL
Morgan County, GA
Peach County, GA
De Witt County, IL
Allen County, KY
St. James Parrish, LA
Montcalm County, MI
Fillmore County, MN
Davidson County, NC
Lincoln County, NC
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
49982
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Cotton County, OK
Linn County, OR
Adams County, PA
Monroe County, PA
Falls County, TX
Buckingham County, VA
Floyd County, VA
Green County, WI
Counties that would fail to meet the
25-percent threshold in FY 2015 are:
Banks County, GA
Hendry County, FL
Bingham County, ID
Oceana County, MI
Columbia County, NY
Sullivan County, NY
Wyoming County, NY
Oconee County, SC
Middlesex County, VA
Wahkiakum County, WA
In section III.B.2.e.(2) of the preamble
of the proposed rule, to help ease
dramatic negative impacts in payment
for hospitals designated as urban under
the current FY 2014 OMB delineations,
but would be classified as rural under
the new OMB delineations, for FYs
2015, 2016, and 2017, assuming no
other form of wage index
reclassification or redesignation is
granted, we proposed to assign these
hospitals the FY 2015 area wage index
value of the urban CBSA to which they
geographically belonged in FY 2014
(with the rural and imputed floors
applied and with the rural floor budget
neutrality adjustment applied to the
area wage index). (For purposes of the
wage index computation, the wage data
of these hospitals would remain
assigned to the statewide rural area in
which they are located.) Similarly, we
proposed that the same 3-year transition
apply to hospitals located in those
counties that would lose their deemed
urban designation under section
1886(d)(8)(B) of the Act and would
become rural if we adopt the new OMB
delineations. Because these hospitals
would, in fact, lose their designated
urban status, we proposed to extend the
3-year hold harmless transitional wage
index adjustment to these hospitals
located in counties formerly designated
as urban under section 1886(d)(8)(B) of
the Act. That is, for FYs 2015, 2016, and
2017, assuming no other form of wage
index reclassification or redesignation is
granted, we proposed to assign these
hospitals the FY 2015 area wage index
value of the urban CBSA to which they
were designated as urban in FY 2014
(with the rural and imputed floors
applied and with the rural floor budget
neutrality adjustment applied). We
proposed to use the wage data from
these hospitals as part of computing the
rural wage index. In addition, during
VerDate Mar<15>2010
18:25 Aug 21, 2014
Jkt 232001
this 3-year transition period, these
hospitals would be eligible to apply for
reclassification by the MGCRB. As
discussed in section III.B.2.e.(3) of the
preamble of the proposed rule, we
proposed that if a hospital is currently
located in an urban county that would
become rural for FY 2015 under the new
OMB delineations, and such hospital
seeks and is granted any reclassification
or redesignation during FYs 2015, 2016,
or 2017, the hospital would
permanently lose its 3-year transitional
assigned wage index, and would not be
able to reinstate it. Similarly, we
proposed that this policy also apply to
hospitals located in those counties that
would lose their deemed urban
designation under section 1886(d)(8)(B)
of the Act and would become rural if we
adopt the new OMB delineations. In FY
2018, we proposed that these hospitals
would receive their statewide rural
wage index.
As indicated earlier, we did not
receive any public comments with
regard to our proposal to use the new
OMB delineations to identify rural
counties that would qualify as ‘‘Lugar’’
under section 1886(d)(8)(B) of the Act.
Therefore, we are finalizing the policy
and designations as proposed. As
discussed previously, for FYs 2015,
2016, and 2017, assuming no other form
of wage index reclassification or
redesignation is granted, we are
assigning hospitals that are in urban
counties that will become rural under
the new OMB delineations to the FY
2015 area wage index value of the urban
CBSA to which they geographically
belonged in FY 2014 (with the rural and
imputed floors applied and with the
rural floor budget neutrality adjustment
applied to the area wage index). (For
purposes of the wage index
computation, the wage data of these
hospitals will remain assigned to the
statewide rural area in which they are
located.) Similarly, the same 3-year
transition will apply to hospitals located
in those counties that will lose their
deemed urban designation under
section 1886(d)(8)(B) of the Act and will
become rural under the new OMB
delineations. We will use the wage data
from these hospitals as part of
computing the rural wage index. In FY
2018, these hospitals will receive their
statewide rural wage index.
Furthermore, if any such hospital seeks
and is granted any reclassification or
redesignation during FYs 2015, 2016, or
2017, the hospital will permanently lose
its 3-year transitional assigned wage
index and will not be able to reinstate
it. We refer readers to summaries of
public comments and our responses
PO 00000
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Fmt 4701
Sfmt 4700
regarding proposed transition policies
for the wage index in section III.B.2.e.
of the preamble of this final rule.
4. Waiving Lugar Redesignation for the
Out-Migration Adjustment
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51599 through 51600), we
adopted the policy that, beginning with
FY 2012, an eligible hospital that waives
its Lugar status in order to receive the
out-migration adjustment has effectively
waived its deemed urban status and,
thus, is rural for all purposes under the
IPPS, including being considered rural
for the DSH payment adjustment,
effective for the fiscal year in which the
hospital receives the out-migration
adjustment. (We refer readers to a
discussion of DSH payment adjustment
under section IV.F. of the preamble of
this final rule.)
In addition, we adopted a minor
procedural change in that rule that
would allow a Lugar hospital that
qualifies for and accepts the outmigration adjustment (through written
notification to CMS within 45 days from
the publication of the proposed rule) to
waive its urban status for the full 3-year
period for which its out-migration
adjustment is effective. By doing so,
such a Lugar hospital would no longer
be required during the second and third
years of eligibility for the out-migration
adjustment to advise us annually that it
prefers to continue being treated as rural
and receive the out-migration
adjustment. Therefore, under the
procedural change, a Lugar hospital that
requests to waive its urban status in
order to receive the rural wage index in
addition to the out-migration
adjustment would be deemed to have
accepted the out-migration adjustment
and agrees to be treated as rural for the
duration of its 3-year eligibility period,
unless, prior to its second or third year
of eligibility, the hospital explicitly
notifies CMS in writing, within the
required period (generally 45 days from
the publication of the proposed rule),
that it instead elects to return to its
deemed urban status and no longer
wishes to accept the out-migration
adjustment. If the hospital does notify
CMS that it is electing to return to its
deemed urban status, it would again be
treated as urban for all IPPS payment
purposes.
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51599
through 51600) for a detailed discussion
of the policy and process for waiving
Lugar status for the out-migration
adjustment.
Comment: One commenter sought
clarification about whether a hospital
can waive Lugar status in other
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instances, such as to retain a special
rural status such as CAH, SCH, or MDH,
and not just when a hospital is eligible
for the out-migration adjustment.
Response: As stated in the FY 2012
IPPS/LTCH PPS final rule (76 FR 51599
through 51600, the statute provides two
methods for a Lugar hospital to be
treated as rural for Medicare payment
purposes: (1) If the hospital is eligible
for an out-migration adjustment under
section 1886(d)(13) of the Act; or (2) if
the hospital applies for an urban to rural
reclassification under section
1886(d)(8)(E) of the Act. There are no
other provisions under the Medicare
statute that would allow a Lugar
hospital to be treated as a rural provider.
5. Update of Application of Urban to
Rural Reclassification Criteria
Section 401(a) of the Medicare,
Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (Pub. L. 106–
113), which amended section 1886(d)(8)
of the Act by adding a new paragraph
(E), directed the Secretary to treat any
subsection (d) hospital located in an
urban area as being located in the rural
area of the State in which the hospital
is located, providing that the hospital
applied for reclassification in a manner
determined by the Secretary and met
certain criteria. As discussed in the FY
2001 interim final rule (65 FR 47029
through 47031), we codified in
regulation at § 412.103 the application
process and the qualifying criteria for
any hospital seeking rural
reclassification.
In order to be approved for a rural
reclassification, a hospital that is
located in an urban area must meet one
of the following four criteria under
section 1886(d)(8)(E)(ii) of the Act
(codified at § 412.103): (1) The hospital
is located in a rural census tract of an
MSA, as determined under the most
recent version of the Goldsmith
Modification, the Rural-Urban
Commuting Area (RUCA) codes; (2) the
hospital is located in an area designated
by any law or regulation of such State
as a rural area or is designated by such
State as a rural hospital; (3) the hospital
would qualify as a RRC or SCH if the
hospital were located in an urban area;
and (4) the hospital meets such other
criteria as the Secretary may specify.
On February 28, 2013, OMB issued
OMB Bulletin No. 13–01, which
established revised delineations for
Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and
Combined Statistical Areas, and
provided guidance on the use of the
delineations of these statistical areas.
These delineations are based on 2010
decennial Census data. Several
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modifications of RUCA codes were
necessary to take into account updated
commuting data and revised OMB
delineations. We refer readers to the
U.S. Department of Agriculture’s
Economic Research Service Web site for
a detailed listing of updated RUCA
codes found at: http://
www.ers.usda.gov/data-products/ruralurban-commuting-area-codes.aspx. The
updated RUCA code definitions were
introduced in late 2013.
As discussed at § 412.103(f), the
duration of an approved rural
reclassification remains in effect
without need for reapproval unless
there is a change in the circumstances
under which the classification was
approved. If a hospital located in an
urban area was approved for a rural
reclassification under § 412.103(a)(1),
that reclassification would no longer be
valid if the hospital is no longer located
within a rural census tract of an MSA
defined as an RUCA. Therefore, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28078), we encouraged all
hospitals with active rural
reclassifications under section
1886(d)(8)(E) of the Act to review their
original reclassification application and
determine whether the reclassification
status would still apply. As discussed in
section VI.C.2. of the preamble of the
proposed rule, we proposed a 2-year
grace period allowing affected CAHs
additional time to seek a new rural
reclassification without the threat of
losing its CAH status. As discussed in
section VI.C.2. of the preamble of the
proposed rule, we did not propose a
grace period for other types of hospitals
to seek a new rural reclassification. We
noted that rural reclassification status
under § 412.103 is effective as of the
filing date of the application. Therefore,
if the change in RUCA codes invalidates
any hospital’s rural reclassification
status, we believe hospitals will have
adequate time to apply for a new
reclassification using an alternative
qualification criterion specified at either
§ 412.103(a)(2) or § 412.103(a)(3). A
rural referral center (RRC) or a sole
community hospital (SCH) that
continues to meet the appropriate
qualification criteria would, in itself,
qualify for a rural reclassification. If a
complete application is received before
October 1, 2014, and is approved by the
CMS Regional Office, the hospital
would experience no interruption in its
rural status.
Comment: Several commenters
requested that additional provider types
(SCHs and MDHs) be afforded the 2-year
transition period of deemed rural status
that was granted to CAHs. Commenters
stated the critical role these hospitals
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serve in their communities, and cited
the administrative burden that would be
required to obtain rural status in order
to maintain their provider type.
Commenters asserted that hospitals that
obtain an urban to rural reclassification
are not entitled to receive an
outmigration adjustment and would
require additional time to assess their
appropriate options.
Response: We thank commenters for
sharing their concerns. However, we do
not believe that extending a 2-year
transition period of deemed rural status
is necessary for additional provider
types. While it is true that there are
potential payment consequences for a
CAH, SCH, or MDH currently located in
a rural area that becomes urban under
the new OMB delineations, the payment
consequences for CAHs are generally
greater, because, unlike SCHs and
MDHs, CAHs are entirely excluded from
the IPPS and would face an end to
payments based on 101 percent of their
reasonable costs. In addition, given the
different Conditions of Participation
(CoPs) for CAHs, and that it would be
generally more difficult for a CAH to
have to meet the hospital CoPs instead
of the CAH CoPs, only a CAH also faces
the potential loss of its ability to
continue to participate in the Medicare
and Medicaid programs. Specifically, to
avoid termination not only of its CAH
status (and associated cost-based
reimbursement), but of its Medicare
agreement in its entirety, the CAH
would have to convert back to a
hospital, including demonstrating via a
survey that it complies with the hospital
CoPs, which are generally more
stringent than those for CAHs. We
believe that the combination of the
generally greater payment consequences
for CAHs relative to other provider
types combined with the unique
consequences for CAHs with respect to
the CoPs make it appropriate for CAHs
to be afforded a 2-year transition period
in which to reclassify not afforded to
other provider types.
SCHs and MDHs that were located in
rural areas that became urban under the
new OMB delineations could have
known of the upcoming change since
February 2013 (when OMB published
the new delineations); thus, these
hospitals have had adequate time to
assess options. SCHs and MDHs still can
seek approval for rural reclassification
for FY 2015 under § 412.103 if they
meet the requirements of this section,
provided that they apply before the
beginning of FY 2015. This approval of
rural status would be effective as of the
date of the application. If any hospital’s
wage index is negatively affected due to
the adoption of the new OMB
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delineations, the hospital will receive a
50/50 blended wage index for FY 2015
(as discussed previously).
With respect to the out-migration
adjustment, commenters noted correctly
that hospitals reclassified rural under
section 412.103 are not eligible to
receive an out-migration adjustment.
Section 1886(d)(13)(G) of the Act
specifies that a hospital is not eligible to
receive an out-migration adjustment if it
is granted any form of wage index
reclassification, including urban to rural
reclassification. We believe that a
hospital that chooses to reclassify to a
particular labor market area should not
also receive an additional payment
benefit to reflect commuting patterns
within its home area.
After consideration of the public
comments we received, we are not
implementing any additional changes to
grant other provider types a transition
period during which to reclassify as
rural similar to that being adopted for
CAHs. We refer readers to section
VI.C.2. of the preamble of this final rule
for a discussion of the CAH transition
period policy.
I. FY 2015 Wage Index Adjustment
Based on Commuting Patterns of
Hospital Employees
In accordance with section
1886(d)(13) of the Act, as added by
section 505 of Public Law 108–173,
beginning with FY 2005, we established
a process to make adjustments to the
hospital wage index based on
commuting patterns of hospital
employees (the ‘‘out-migration’’
adjustment). The process, outlined in
the FY 2005 IPPS final rule (69 FR
49061), provides for an increase in the
wage index for hospitals located in
certain counties that have a relatively
high percentage of hospital employees
who reside in the county but work in a
different county (or counties) with a
higher wage index.
When this provision was
implemented for the FY 2005 wage
index, we analyzed commuting data
compiled by the U.S. Census Bureau
which was derived from a special
tabulation of the 2000 Census journeyto-work data for all industries (CMS
extracted data applicable to hospitals).
These data were compiled from
responses to the ‘‘long-form’’ survey,
which the Census Bureau used at the
time, and it contained questions on
where residents in each county worked
(69 FR 49062). However, the 2010
Census was ‘‘short form’’ only;
therefore, this information was not
collected as part of the 2010 Census.
The Census Bureau is working with
CMS to provide an alternative dataset
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based on the latest available data that is
expected to meet our needs for
developing a new out-migration
adjustment. We believe we will have the
necessary time to obtain, review and
analyze the data in order to propose
new out-migration adjustments based on
new commuting patterns developed
from the 2010 Census data beginning
with FY 2016. Section 1886(d)(13)(B) of
the Act requires the Secretary to use
data the Secretary determines to be
appropriate to establish the qualifying
counties. The data used for the FY 2014
out-migration adjustment are the most
recent data that have been analyzed, and
we believe that these data are
appropriate to establish the qualifying
counties. Therefore, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28079 through 28080), we proposed that
the FY 2015 out-migration adjustments
continue to be based on the 2000 Census
data. We also proposed that the FY 2015
out-migration adjustments continue to
be based on the policies, procedures,
and computation that were used for the
FY 2014 out-migration adjustment.
We did not receive any public
comments with regard to the outmigration adjustment for FY 2015.
Therefore, for FY 2015, we are finalizing
our proposal that the FY 2015 outmigration adjustment continue to be
based on the 2000 Census data used for
the FY 2014 out-migration adjustment.
We also are finalizing our proposal that
the out-migration adjustment be based
on the policies, procedures, and
computation that were used for the FY
2014 out-migration adjustment. (We
refer readers to a full discussion of the
adjustment, including rules on deeming
hospitals reclassified under section
1886(d)(8) or section 1886(d)(10) of the
Act to have waived the out-migration
adjustment, in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51601 through
51602)). Table 4J, which is available via
the Internet on the CMS Web site, lists
the out-migration adjustments for the
FY 2015 wage index.
Section 1886(d)(13)(F) of the Act
states that ‘‘[a] wage index increase
under this paragraph shall be effective
for a period of 3 fiscal years, except that
the Secretary shall establish procedures
under which a subsection (d) hospital
may elect to waive the application of
such wage index increase.’’ Therefore,
for FY 2015, because we are continuing
to use the out-migration adjustment data
used for FY 2014, consistent with the
statute, we also proposed to allow
hospitals that qualified in FY 2013 or
FY 2014 to receive the out-migration
adjustment based on the commuting
data and the CBSA delineations used for
FY 2014 to continue to receive the same
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out-migration adjustment for the
remainder of their 3-year qualification
period. Similarly, if a hospital qualifies
for and opts to receive the out-migration
adjustment for the first time in FY 2015,
we also proposed to allow that hospital
to receive the out-migration adjustment
based on the data used for FY 2014 for
FYs 2015, 2016, and 2017. Accordingly,
even if we propose to adopt new outmigration adjustment data for FY 2016,
as we believe we will be able to do,
hospitals that are already receiving an
out-migration adjustment beginning
with a fiscal year prior to FY 2016
would still receive their out-migration
adjustment based on the data used for
FY 2014 for the years that remain of
their 3-year qualification period in FY
2016 and after.
We did not receive any public
comments with regard to our proposals.
Therefore, we are finalizing our
proposal that hospitals that qualified in
FY 2013 or FY 2014 to receive the outmigration adjustment based on the
commuting data and the CBSA
delineations used for FY 2014 will
continue to receive the same outmigration adjustment for the remainder
of their 3-year qualification period. If a
hospital qualifies for and opts to receive
the out-migration adjustment for the
first time in FY 2015, we will allow that
hospital to receive the out-migration
adjustment based on the data used for
FY 2014 for FYs 2015, 2016, and 2017.
We intend to address application of
the FY 2016 out-migration adjustment
in greater detail in the FY 2016
proposed rule. However, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28079), we solicited public comments
on how to implement the new outmigration adjustment data for FY 2016,
given the statutory requirement at
section 1886(d)(13)(F) of the Act that an
out-migration adjustment be effective
for 3 fiscal years. We did not receive any
public comments on how to implement
the new out-migration adjustment data
for FY 2016.
As discussed in section III.B. of the
preamble of this final rule, we are using
OMB’s new labor market area
delineations based on the 2010 Census
data to identify counties qualifying as
Lugar counties for FY 2015. In section
III.H.3 of the preamble of this final rule,
we discuss hospitals located in rural
counties that are deemed to be urban
under section 1886(d)(8)(B) of the Act.
These rural counties are known as
‘‘Lugar’’ counties. Under the new OMB
delineations, there are counties newly
qualifying as Lugar as well as counties
that were previously Lugar counties that
will no longer meet the criteria to be
redesignated as Lugar. As discussed in
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section III.H.4. of the preamble of this
final rule, if a Lugar hospital qualifies
for and accepts the out-migration
adjustment, it must waive its deemed
urban status and can do so for the 3-year
period for which the out-migration
adjustment is effective. Therefore,
hospitals located in counties newly
designated as Lugar due to the new
OMB delineations will have the choice
to either maintain their Lugar status or
waive it in order to receive the outmigration adjustment in FY 2015 based
on the out-migration adjustment data
used for FY 2014.
On the other hand, there are hospitals
in counties deemed to be Lugar under
the current OMB delineations that
waived their Lugar status for the outmigration adjustment, but are not Lugar
under the new OMB delineations. These
hospitals will continue to receive the
out-migration adjustment for the 3-year
eligibility period through FY 2015 or FY
2016. However, these hospitals that are
located in urban counties under the new
OMB delineations, and wish to continue
to maintain their rural status effective
October 1, 2014, must do so by
reclassifying from urban to rural under
§ 412.103. Section 1886(d)(13)(G) of the
Act states that a hospital cannot
simultaneously receive the outmigration adjustment and be subject to
a reclassification under section
1886(d)(8) or 1886(d)(10) of the Act.
Therefore, if such hospital is not located
in a geographically rural area under the
new OMB delineations, and reclassifies
under § 412.103 of the regulations in
order to be treated as rural for IPPS
purposes, the hospital is ineligible to
receive an out-migration adjustment,
even if the 3-year eligibility period has
not expired.
As discussed in section III.B.5. of the
preamble of this final rule, we are
finalizing our proposal to apply a 1-year
blended wage index for any provider
that experiences a decrease in wage
index value due to the implementation
of the new OMB labor market area
delineations. This policy creates a wage
index that is 50 percent of the wage
index derived using the current FY 2014
OMB delineations, and 50 percent of the
wage index based on the new OMB
delineations. As discussed in section
III.B.2.e.(4) of the preamble of this final
rule, as we proposed, we are applying
this blended wage index value to any
affected hospital in a budget neutral
manner. However, we proposed that
hospitals receiving the out-migration
adjustment would have it added to the
result of the 50/50 blended wage index,
after budget neutrality is applied. We
established the blended wage index
transition adjustment specifically to
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address any negative impact that may be
caused by the adoption of the new OMB
delineations in FY 2015. To specifically
identify and address any such negative
payment impact, we proposed to apply
the out-migration adjustment
independent of the blended wage index
and other wage index adjustments (for
example, the rural floor) and related
budget neutrality adjustments. This is
consistent with our current policy to
apply the out-migration adjustment after
all other wage index adjustments and
related budget neutrality adjustments
have been applied. Therefore, we
believe the out-migration adjustment
would be properly applied as a
supplemental addition to a hospital’s
final wage index value, similar to our
treatment of hospitals receiving the
frontier State floor value of 1.00, as
described under 42 CFR 412.64(m), that
also qualify for an out-migration
adjustment and would receive that
adjustment.
One group of commenters suggested
CMS made an error in calculating the
rural wage index for Connecticut under
the old OMB delineations (as discussed
in section III.B.2.e.(4) of the preamble of
this final rule) for the purpose of
applying the proposed transition blend.
We respond to this comment in section
III.B.2.e.(4) of the preamble of this final
rule, and we refer readers to this section
for further discussion.
After consideration of the public
comments we received, we are
finalizing our proposal without
modification that we will add the outmigration adjustment for hospitals
receiving such adjustment to the result
of the 50/50 blended wage index, after
budget neutrality is applied. Therefore,
we will apply the out-migration
adjustment independent of the blended
wage index and other wage index
adjustments (for example, the rural
floor) and related budget neutrality
adjustments.
J. Process for Requests for Wage Index
Data Corrections
The preliminary, unaudited
Worksheet S–3 wage data and
occupational mix survey data files for
the proposed FY 2015 wage index were
made available on September 13, 2013,
through the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/FY-2015-Wage-Index-HomePage.html.
In the interest of meeting the data
needs of the public, beginning with the
proposed FY 2009 wage index, we post
an additional public use file on our Web
site that reflects the actual data that are
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49985
used in computing the proposed wage
index. The release of this file does not
alter the current wage index process or
schedule. We notify the hospital
community of the availability of these
data as we do with the current public
use wage data files through our Hospital
Open Door forum. We encourage
hospitals to sign up for automatic
notifications of information about
hospital issues and the scheduling of
the Hospital Open Door forums at the
CMS Web site at: http://www.cms.gov/
Outreach-and-Education/Outreach/
OpenDoorForums/index.html.
In a memorandum dated September
16, 2013, we instructed all MACs to
inform the IPPS hospitals they service of
the availability of the wage index data
files and the process and timeframe for
requesting revisions (including the
specific deadlines listed below). We also
instructed the MACs to advise hospitals
that these data were also made available
directly through their representative
hospital organizations.
If a hospital wished to request a
change to its data as shown in the
September 13, 2013 wage and
occupational mix data files, the hospital
was to submit corrections along with
complete, detailed supporting
documentation to its MAC by November
21, 2013. Hospitals were notified of this
deadline and of all other deadlines and
requirements, including the requirement
to review and verify their data as posted
in the preliminary wage index data files
on the Internet, through the September
16, 2013 memorandum referenced
above.
In the September 16, 2013
memorandum, we also specified that a
hospital requesting revisions to its
occupational mix survey data was to
copy its record(s) from the CY 2010
occupational mix preliminary files
posted to the CMS Web site in
September, highlight the revised cells
on its spreadsheet, and submit its
spreadsheet(s) and complete
documentation to its MAC no later than
November 21, 2013.
The MACs notified the hospitals by
early-February 2014 of any changes to
the wage index data as a result of the
desk reviews and the resolution of the
hospitals’ late-November revision
requests. The MACs also submitted the
revised data to CMS by late January
2014. CMS published the proposed
wage index public use files that
included hospitals’ revised wage index
data on February 20, 2014. Hospitals
had until March 3, 2014, to submit
requests to the MACs for
reconsideration of adjustments made by
the MACs as a result of the desk review,
and to correct errors due to CMS’ or the
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MAC’s mishandling of the wage index
data. Hospitals also were required to
submit sufficient documentation to
support their requests.
After reviewing requested changes
submitted by hospitals, MACs were
required to transmit to CMS any
additional revisions resulting from the
hospitals’ reconsideration requests by
April 9, 2014. The deadline for a
hospital to request CMS intervention in
cases where the hospital disagreed with
the MAC’s policy interpretations was
April 16, 2014. We note that, beginning
with the FY 2015 wage index, in
accordance with the FY 2015 wage
index timeline posted on the CMS Web
site at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Downloads/FY2015WI-Timeline.pdf, the April appeals had
to be sent via mail and email. We refer
readers to the wage index timeline for
complete details.
Hospitals were given the opportunity
to examine Table 2, which was listed in
section VI. of the Addendum to the
proposed rule and available via the
Internet on the CMS Web site at:
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Wage-Index-FilesItems/FY-2015-Wage-Index-HomePage.html. Table 2 contained each
hospital’s proposed adjusted average
hourly wage used to construct the wage
index values for the past 3 years,
including the FY 2011 data used to
construct the proposed FY 2015 wage
index. We noted that the proposed
hospital average hourly wages shown in
Table 2 only reflected changes made to
a hospital’s data that were transmitted
to CMS by February 26, 2014.
The final wage index data public use
files were posted on May 2, 2014 on the
Internet at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Files-Items/FY-2015-Wage-IndexHome-Page.html. The May 2014 public
use files are made available solely for
the limited purpose of identifying any
potential errors made by CMS or the
MAC in the entry of the final wage
index data that resulted from the
correction process described above
(revisions submitted to CMS by the
MACs by April 9, 2014).
After the release of the May 2014
wage index data files, changes to the
wage and occupational mix data could
only be made in those very limited
situations involving an error by the
MAC or CMS that the hospital could not
have known about before its review of
the final wage index data files.
Specifically, neither the MAC nor CMS
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will approve the following types of
requests:
• Requests for wage index data
corrections that were submitted too late
to be included in the data transmitted to
CMS by the MACs on or before April 9,
2014.
• Requests for correction of errors
that were not, but could have been,
identified during the hospital’s review
of the February 20, 2014 wage index
public use files.
• Requests to revisit factual
determinations or policy interpretations
made by the MAC or CMS during the
wage index data correction process.
If, after reviewing the May 2014 final
public use files, a hospital believed that
its wage or occupational mix data were
incorrect due to a MAC or CMS error in
the entry or tabulation of the final data,
the hospital was given the opportunity
to notify both its MAC and CMS
regarding why the hospital believes an
error exists and provide all supporting
information, including relevant dates
(for example, when it first became aware
of the error). The hospital was required
to send its request to CMS and to the
MAC no later than June 2, 2014. Similar
to the April appeals, beginning with the
FY 2015 wage index, in accordance with
the FY 2015 wage index timeline posted
on the CMS Web site at http://www.cms.
gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
Downloads/FY2015-WI-Timeline.pdf,
the June appeals were required to be
sent via mail and email to CMS and the
MACs. We refer readers to the wage
index timeline for complete details. (We
refer readers to section II.K. of the
preamble to this final rule where we are
making revisions to the wage index
timetable.)
Verified corrections to the wage index
data received timely by CMS and the
MACs (that is, by June 2, 2014) were
incorporated into the final wage index
in this FY 2015 IPPS/LTCH PPS final
rule, which will be effective October 1,
2014.
We created the processes described
above to resolve all substantive wage
index data correction disputes before we
finalize the wage and occupational mix
data for the FY 2015 payment rates.
Accordingly, hospitals that did not meet
the procedural deadlines set forth above
will not be afforded a later opportunity
to submit wage index data corrections or
to dispute the MAC’s decision with
respect to requested changes.
Specifically, our policy is that hospitals
that do not meet the procedural
deadlines set forth above will not be
permitted to challenge later, before the
PRRB, the failure of CMS to make a
requested data revision. We refer
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readers also to the FY 2000 IPPS final
rule (64 FR 41513) for a discussion of
the parameters for appeals to the PRRB
for wage index data corrections.
Again, we believe the wage index data
correction process described above
provides hospitals with sufficient
opportunity to bring errors in their wage
and occupational mix data to the MAC’s
attention. Moreover, because hospitals
had access to the final wage index data
by early May 2014, they had the
opportunity to detect any data entry or
tabulation errors made by the MAC or
CMS before the development and
publication of the final FY 2015 wage
index by August 2014, and the
implementation of the FY 2015 wage
index on October 1, 2014. Given these
processes, the wage index implemented
on October 1 should be accurate.
Nevertheless, in the event that errors are
identified by hospitals and brought to
our attention after June 2, 2014, we
retain the right to make midyear
changes to the wage index under very
limited circumstances.
Specifically, in accordance with 42
CFR 412.64(k)(1) of our existing
regulations, we make midyear
corrections to the wage index for an area
only if a hospital can show that: (1) the
MAC or CMS made an error in
tabulating its data; and (2) the
requesting hospital could not have
known about the error or did not have
an opportunity to correct the error,
before the beginning of the fiscal year.
For purposes of this provision, ‘‘before
the beginning of the fiscal year’’ means
by the June deadline for making
corrections to the wage data for the
following fiscal year’s wage index (for
example, June 2, 2014, for the FY 2015
wage index). This provision is not
available to a hospital seeking to revise
another hospital’s data that may be
affecting the requesting hospital’s wage
index for the labor market area. As
indicated earlier, because CMS makes
the wage index data available to
hospitals on the CMS Web site prior to
publishing both the proposed and final
IPPS rules, and the MACs notify
hospitals directly of any wage index
data changes after completing their desk
reviews, we do not expect that midyear
corrections will be necessary. However,
under our current policy, if the
correction of a data error changes the
wage index value for an area, the
revised wage index value will be
effective prospectively from the date the
correction is made.
In the FY 2006 IPPS final rule (70 FR
47385 through 47387 and 47485), we
revised 42 CFR 412.64(k)(2) to specify
that, effective on October 1, 2005, that
is, beginning with the FY 2006 wage
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index, a change to the wage index can
be made retroactive to the beginning of
the Federal fiscal year only when CMS
determines all of the following: (1) the
MAC or CMS made an error in
tabulating data used for the wage index
calculation; (2) the hospital knew about
the error and requested that the MAC
and CMS correct the error using the
established process and within the
established schedule for requesting
corrections to the wage index data,
before the beginning of the fiscal year
for the applicable IPPS update (that is,
by the June 2, 2014 deadline for the FY
2015 wage index); and (3) CMS agreed
before October 1 that the MAC or CMS
made an error in tabulating the
hospital’s wage index data and the wage
index should be corrected.
In those circumstances where a
hospital requested a correction to its
wage index data before CMS calculated
the final wage index (that is, by the June
2, 2014 deadline for the FY 2015 wage
index), and CMS acknowledges that the
error in the hospital’s wage index data
was caused by CMS’ or the MAC’s
mishandling of the data, we believe that
the hospital should not be penalized by
our delay in publishing or
implementing the correction. As with
our current policy, we indicated that the
provision is not available to a hospital
seeking to revise another hospital’s data.
In addition, the provision cannot be
used to correct prior years’ wage index
data; and it can only be used for the
current Federal fiscal year. In situations
where our policies would allow midyear
corrections other than those specified in
42 CFR 412.64(k)(2)(ii), we continue to
believe that it is appropriate to make
prospective-only corrections to the wage
index.
We note that, as with prospective
changes to the wage index, the final
retroactive correction will be made
irrespective of whether the change
increases or decreases a hospital’s
payment rate. In addition, we note that
the policy of retroactive adjustment will
still apply in those instances where a
final judicial decision reverses a CMS
denial of a hospital’s wage index data
revision request.
K. Notice of Change to Wage Index
Development Timetable
As explained in section III.J. of the
preamble of this final rule, the
preliminary, unaudited Worksheet S–3
wage data and occupational mix survey
data files for the proposed FY 2015
wage index were made available on
September 13, 2013, through the
Internet on the CMS Web site. The
posting of these preliminary files
initiates what is virtually a year-long
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cycle for developing the wage index
associated with the following IPPS fiscal
year. This lengthy, almost year-long
cycle is unique to the development of
the IPPS wage index, and occurs
independently from the development of
the IPPS proposed and final rules,
which typically are published in the
spring and summer each year. In
addition, the wage index, which is
based on hospitals’ wage data reported
on Worksheets S–3, Parts II and III of
Form CMS–2552–10 of the Medicare
cost report and occupational mix data,
is the only portion of the IPPS that
historically has been subject to its own
annual review process, first by the
MACs, and then by CMS, followed by
distinct opportunities for hospitals to
appeal decisions made by the MACs or
CMS. This process is separate and
independent from the standard cost
report settlement and appeals processes
established under the regulations at 42
CFR 405.1800 through 405.1889.
Although this unique wage index
development timetable has been in
place since the early days of the IPPS,
the current timetable is rooted in
changes adopted in the FY 1998 IPPS
final rule with comment period (62 FR
45990 through 45993). However, with
numerous legislative and regulatory
changes made to the IPPS since FY
1998, the demands on hospitals, MACs,
and CMS have increased substantially.
As a result, it has become increasingly
challenging for wage index stakeholders
to manage the wage index timetable
with competing priorities. For the FY
2015 wage index, CMS made slight
changes to the wage index development
timetable, by posting the preliminary
public use file (PUF) in September 2013
rather than in October 2013, which, in
turn, moved back the deadline for
hospitals to request revisions to the data
displayed in that preliminary PUF to
November 2013, instead of December
2013. In addition, the date for the MACs
to complete desk reviews on that data
was similarly moved to a slightly earlier
deadline in early CY 2014. The FY 2015
Wage Index Development Timetable,
which is posted on the CMS Web site at
http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/Downloads/FY2015WI-Timeline.pdf, shows that hospitals
have a little more than 2 months to
request revisions to their data displayed
in the September 13, 2013 preliminary
PUF, until the commencement of the
desk review process by the MACs on
November 21, 2013. The MACs also
have a little more than 2 months to
complete the desk reviews and submit
revised cost report data to CMS by
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January 29, 2014. Less than a month
later, on February 20, 2014, the revised
FY 2015 wage index and occupational
mix PUFs were posted on the CMS Web
site. Ensuring the accuracy of the
February PUF is extremely important
and beneficial to hospitals because, as
the timetable shows, it is the basis for
hospitals to appeal data that are
incorrect, with March 3, 2014 being the
last date that hospitals can request
revisions to errors in the February 20,
2014 PUF.
Therefore, we want to take steps to
improve the accuracy of the February
PUF, most importantly by proposing
changes to the wage index timetables for
future IPPS fiscal years that are much
more significant and fundamental than
the slight revisions to the timetable
implemented for FY 2015. In the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28082), we stated that we believe
that the changes we proposed in that
proposed rule would not only improve
the accuracy of the February PUF, but
also would reduce the number of
hospital appeals based on the February
PUF. For example, as specified below,
instead of the current timetable which
only provides CMS with less than a
month to review the MACs’ desk
reviews and prepare the February PUF,
we proposed approximately 3 months
between the date that the MACs’ desk
reviews would end and the date that
CMS would post the subsequent PUF.
To allow hospitals and MACs adequate
time to prepare for the changes to the
wage index development timetable, we
proposed to make significant changes
beginning with the FY 2017 wage index
cycle. We listed the proposed changes
for FY 2017 in a table in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28082) shown below side by side with
the existing timetable so that
commenters could read the proposed
changes in the context of the existing
timetable. Under the proposed changes
for FY 2017, although we did not
provide exact dates for the FY 2017
wage index timetable, we noted that,
with every change listed, we intend to
provide hospitals and MACs with the
same or somewhat more time than
under the current timetable to complete
reviews and request revisions. We stated
that the proposed revisions would not
reduce the amount of time that either
hospitals or MACs have to review wage
data. Therefore, the proposed changes
would not result in additional work on
the part of the hospitals or MACs; in
fact, in shifting the various dates, we
expect that more time would be
provided to hospitals, MACs, and CMS
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to ensure an even more accurate wage
index.
Deadlines
FY 2015 timetable
Posting of Preliminary PUF on CMS Web site .............................................................
Deadline for Hospitals to Request Revisions to Preliminary PUF ................................
Deadline for MACs to Complete Desk Reviews ...........................................................
Posting of February PUF on CMS Web site .................................................................
Deadline Following Posting of February PUF for Hospitals to Request Revisions ......
Completion of Appeals by MACs and Transmission of Final Wage Data to CMS .......
Deadline for Hospitals to Appeal in April ......................................................................
Posting of Final Rule PUF .............................................................................................
Deadline for Hospitals to Appeal in June ......................................................................
Expected Issuance of IPPS final rule ............................................................................
September 13, 2013 ..........
November 21, 2013 ...........
January 29, 2014 ...............
February 20, 2014 ..............
March 3, 2014 ....................
April 9, 2014 .......................
April 16, 2014 .....................
May 2, 2014 .......................
June 2, 2014 ......................
August 1, 2014 ...................
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With regard to the FY 2016 wage
index cycle, we believe it can serve as
a transition to the more significant
changes we proposed for the FY 2017
wage index cycle. We believe that there
are steps we can take to improve the
accuracy of the February 2016 PUF by
building in more time to the FY 2016
wage index review process as well.
Specifically, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28083), we
stated that we were notifying hospitals
of changes to the deadlines only in the
beginning of the FY 2016 wage index
timetable, as a transition to the more
significant proposed changes for the
entire FY 2017 wage index timetable.
That is, for FY 2016, we were only
changing the following four dates: The
posting of the preliminary wage index
PUF; the posting of the CY 2013
occupational mix survey data
preliminary PUF; the deadline for
hospitals to request revisions to the
wage data and occupational mix data
preliminary PUFs; and the deadline for
MACs to complete the desk reviews. We
stated that we were not changing the
remainder of the FY 2016 timetable at
this time. We stated that we expect that
making these changes for the FY 2016
timetable will improve the accuracy of
Proposed FY 2017
timetable
Mid-May 2015.
Early August 2015.
Mid-October 2015.
Late January 2016.
Mid-February 2016.
Mid- to Late March 2016.
Early April 2016.
Late April 2016.
Late May 2016.
August 1, 2016.
the February 2016 PUF, and also
mitigate the number of hospital appeals
based on the February 2016 PUF. In
addition, we believe these changes will
help hospitals, MACs, and CMS adjust
to the more significant timeline changes
proposed for FY 2017. We listed only
the changes for FY 2016 in the table
shown below side by side with the
existing FY 2015 timetable so that
commenters could read the FY 2016
changes in the context of the existing
timetable. We stated that we were not
listing dates that would remain
unchanged for FY 2016.
Deadlines
FY 2015 timetable
Adjusted
FY 2016 timetable
Posting of Preliminary Wage Data PUF on CMS Web site ............................................................
Posting of Preliminary CY 2013 Occupational Mix Data PUF on CMS Web site ..........................
Deadline for Hospitals to Request Revisions to Preliminary PUF ..................................................
Deadline for MACs to Complete Desk Reviews .............................................................................
September 13, 2013 ..
September 13, 2013
November 21, 2013 ...
January 29, 2014 ......
Late May 2014
Early to Mid-July 2014
Early October 2014
Mid-December 2014
Typically, the preliminary PUF
initiating the start of an IPPS wage
index fiscal year contains one
spreadsheet with the Worksheet S–3
wage data for the applicable fiscal year
on one tab, and another tab with the
preliminary occupational mix data for
that fiscal year. For the FY 2016 wage
index, new occupational mix survey
data will be available for use, based on
the CY 2013 occupational mix survey.
Hospitals were required to submit their
CY 2013 occupational mix surveys to
their MACs no later than July 1, 2014.
Therefore, we did not have the
preliminary CY 2013 occupational mix
survey data in time to post it
simultaneously in late May 2014 with
the preliminary FY 2016 wage data.
Accordingly, as the table above
indicates, we posted the preliminary FY
2016 wage data by itself first in late May
2014, followed by a separate posting of
the preliminary CY 2013 occupational
mix survey data when the data became
available, in mid-July 2014.
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We invited public comments on our
proposals set forth above to make
revisions to the wage index timetables
for FY 2017.
Comment: Numerous commenters
were supportive of the general concept
of changing the wage index timeline,
and that the overall accuracy of the
wage index could be improved by
altering the timing of the process.
Commenters generally agreed with
CMS’ adjusted FY 2016 timetable,
which specified that the preliminary
PUF would be posted in May 2014, and
hospitals would request revisions to the
preliminary PUF by early October, 2014.
Commenters believed the extra time
between the posting of the preliminary
PUF and the desk review program
would allow hospitals more time to
‘‘scrub’’ their data. However,
commenters also asked that CMS work
with its MACs to ensure that the MACs
also are meeting their respective
deadlines, as some hospitals have
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noticed that their MACs missed
deadlines to submit revisions to CMS.
With respect to the adjustments to the
FY 2017 timetable, the commenters
believed that an early August 2015
deadline for hospitals to request
revisions to the May 2015 preliminary
PUFs was too ambitious because it
would not provide sufficient time for
hospitals to review their data,
particularly when key personnel may be
on vacation during the summer months.
The commenters added that an August
deadline would leave less time to
compare the preliminary wage index
information to the prior year’s wage
index data, given that the prior year’s
data are not even finalized and available
to the public before August 1. Some
commenters recommended an early
October deadline, while others stated
that an early September, midSeptember, or a late September deadline
would be feasible. One commenter
believed that a December deadline
would be best for hospitals with June 30
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fiscal year ends, while another
commenter stated that a late September
or early October deadline would be
acceptable for such hospitals. One
commenter stated that the proposed FY
2017 deadline does not provide enough
time for hospitals to incorporate their
pension data into the desk review
process because the Internal Revenue
Service (IRS) Form 5500 (used as the
basis for reporting pension
contributions for defined benefit plans)
is due 7 months after the end of the plan
year (July 31), with possible extensions
through mid-September. The
commenter recommended that CMS
either move the proposed deadline to
October, or allow hospitals to submit
their revisions for pension data during
the MAC desk review process.
Response: We appreciate the
commenters’ general support for our
proposed revisions to the wage index
timetable. We listed general timeframes
in the FY 2016 timetable but will
communicate the exact dates for the FY
2016 timetable to hospitals through
their MACs after issuance of this FY
2015 final rule. Regarding the FY 2017
Wage Index Timetable, we understand
the commenters’ concerns that an
August deadline for hospitals to submit
revisions to their preliminary wage data
may be too challenging to meet.
However, while almost all of the
commenters believed that an August
deadline was too ambitious, there was
no consensus from the commenters
regarding when the deadline should be,
with recommendations ranging from
early September to December. We also
partially agree with the commenter who
raised the point that hospitals may not
be able to provide their pension data
until October, as further discussed
below. In addition, we noted that
commenters requested that CMS work
with the MACs to ensure that the MACs
are meeting their respective deadlines.
We understand that the MACs have also
faced pressure to accurately complete
desk reviews and submit to CMS the
appropriate revisions on behalf of
hospitals in a timely fashion. The longer
the time that hospitals have to submit
revisions to their preliminary wage data,
the less time the MACs have to conduct
their desk reviews. Therefore, we
believe that it is important to
accommodate both the hospitals’ and
MACs’ need for more time to adequately
review the wage and occupational mix
data. Because the earliest deadline that
commenters stated would be feasible is
early September, we are finalizing a date
within the first week of September 2015
(rather than early August) as the
deadline for hospitals to request
revisions to their FY 2017 preliminary
wage and occupational mix data. A
deadline in early September would be
manageable for hospitals, yet also
provide the MACs with the most
amount of time possible to complete
49989
their desk reviews. In addition to a
general deadline of early September, we
are providing a limited exception for
submission of a certain hospital’s
pension data. Specifically, we are only
providing an extension for hospitals that
have a fiscal year begin date on or after
August 15 of a year to submit their
pension data by mid-October because
hospitals with fiscal year begin dates
prior to August 15 would have already
made their 3-year pension contributions
by the end of September. We believe
that the majority of hospitals, which do
have fiscal year begin dates prior to
August 15 of a year, would be able to
submit their pension data, along with
the remainder of their wage index
documentation, to their MACs by the
beginning of September each year. In
this final rule, we are changing our wage
index timetable for FY 2016 and after so
that hospitals with fiscal years that
begin on or after August 15 may submit
their pension data to their MACs by
mid-October. However, in future
rulemaking, we may consider revisions
to the 3-year average pension policy,
which would allow all hospitals to
submit their pension data at the same
time. For FY 2017, the MACs would
work on the desk reviews until midNovember 2015 (instead of mid October,
as proposed). Following are the revised
FY 2016 and FY 2017 Wage Index
Timetables that we are finalizing:
FY 2016 WAGE INDEX TIMETABLE
Deadlines
FY 2015 timetable
Posting of Preliminary Wage Data PUF on CMS Web site ............................................................
Posting of Preliminary CY 2013 Occupational Mix Data PUF on CMS Web site ..........................
Deadline for Hospitals to Request Revisions to Preliminary PUF ..................................................
Deadline for Hospitals with FYBs on or after August 15 to Submit Pension Data to MACs ..........
Deadline for MACs to Complete Desk Reviews .............................................................................
September 13, 2013 ..
September 13, 2013
November 21, 2013 ...
November 21, 2013 ..
January 29, 2014 ......
Adjusted
FY 2016 timetable
May 23, 2014.
July 11, 2014.
Early October 2014.
Mid October 2014.
Mid-December 2014.
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FY 2017 WAGE INDEX TIMETABLE
Deadlines
FY 2015 timetable
Posting of Preliminary PUF on CMS Web site ...............................................................................
Deadline for Hospitals to Request Revisions to Preliminary PUF ..................................................
September 13, 2013 ..
November 21, 2013 ...
Deadline for Hospitals with FYBs on or after August 15 to Submit Pension Data to MACs ..........
Deadline for MACs to Complete Desk Reviews .............................................................................
Posting of February PUF on CMS Web site ...................................................................................
Deadline Following Posting of February PUF for Hospitals to Request Revisions ........................
Completion of Appeals by MACs and Transmission of Final Wage Data to CMS .........................
November 21, 2013 ..
January 29, 2014 ......
February 20, 2014 .....
March 3, 2014 ...........
April 9, 2014 ..............
Deadline for Hospitals to Appeal in April ........................................................................................
Posting of Final Rule PUF ...............................................................................................................
Deadline for Hospitals to Appeal in June ........................................................................................
Expected Issuance of IPPS final rule ..............................................................................................
April 16, 2014 ............
May 2, 2014 ..............
June 2, 2014 .............
August 1, 2014 ..........
Comment: Commenters asked that
CMS instruct MACs to notify State
notifying State hospital associations
about hospitals that do not respond to
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hospital associations of aberrant data, in
addition to the current practice of
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FY 2017 timetable
Mid-May 2015.
First week of September 2015.
Mid-October 2015.
Mid-November 2015.
Late January 2016
Mid-February 2016.
Mid- to Late March
2016.
Early April 2016.
Late April 2016.
Late May 2016.
August 1, 2016.
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requests for data. In addition,
commenters recommended that CMS
provide more instructions to MACs and
hospitals regarding how to correct errors
and the timeframe for correcting errors.
They believed that this action is
necessary because the notification to
hospital associations would be after the
deadline for hospitals to request data
adjustments. Another commenter
suggested that accuracy and consistency
in wage index verification would be
improved if CMS would assign a single
MAC to review all wage index data.
Response: We will take these
comments into consideration as we
develop the details of the Wage Index
Timetables and the desk review
instructions that we provide to the
MACs.
L. Labor-Related Share for the FY 2015
Wage Index
Section 1886(d)(3)(E) of the Act
directs the Secretary to adjust the
proportion of the national prospective
payment system base payment rates that
are attributable to wages and wagerelated costs by a factor that reflects the
relative differences in labor costs among
geographic areas. It also directs the
Secretary to estimate from time to time
the proportion of hospital costs that are
labor-related: ‘‘The Secretary shall
adjust the proportion (as estimated by
the Secretary from time to time) of
hospitals’ costs which are attributable to
wages and wage-related costs of the
DRG prospective payment rates. . . .’’
We refer to the portion of hospital costs
attributable to wages and wage-related
costs as the labor-related share. The
labor-related share of the prospective
payment rate is adjusted by an index of
relative labor costs, which is referred to
as the wage index.
Section 403 of Public Law 108–173
amended section 1886(d)(3)(E) of the
Act to provide that the Secretary must
employ 62 percent as the labor-related
share unless this ‘‘would result in lower
payments to a hospital than would
otherwise be made.’’ However, this
provision of Public Law 108–173 did
not change the legal requirement that
the Secretary estimate ‘‘from time to
time’’ the proportion of hospitals’ costs
that are ‘‘attributable to wages and
wage-related costs.’’ Thus, hospitals
receive payment based on either a 62percent labor-related share, or the laborrelated share estimated from time to
time by the Secretary, depending on
which labor-related share resulted in a
higher payment.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50596 through 50607), we
rebased and revised the hospital market
basket. We established a FY 2010-based
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IPPS hospital market basket to replace
the FY 2006-based IPPS hospital market
basket, effective October 1, 2013. In that
final rule, we presented our analysis
and conclusions regarding the frequency
and methodology for updating the laborrelated share for FY 2014. Using the FY
2010-based IPPS market basket, we
finalized a labor-related share for FY
2014 of 69.6 percent. In addition, we
implemented this revised and rebased
labor-related share in a budget neutral
manner. However, consistent with
section 1886(d)(3)(E) of the Act, we did
not take into account the additional
payments that would be made as a
result of hospitals with a wage index
less than or equal to 1.0000 being paid
using a labor-related share lower than
the labor-related share of hospitals with
a wage index greater than 1.0000.
The labor-related share is used to
determine the proportion of the national
IPPS base payment rate to which the
area wage index is applied. In the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28083), for FY 2015, we did not
propose to not make any further changes
to the national average proportion of
operating costs that are attributable to
wages and salaries, employee benefits,
contract labor, the labor-related portion
of professional fees, administrative and
facilities support services, and all other
labor-related services. Therefore, for FY
2015, we proposed to continue to use a
labor-related share of 69.6 percent for
discharges occurring on or after October
1, 2014.
Tables 1A and 1B, which were
published in section VI. of the
Addendum to the FY 2015 IPPS/LTCH
PPS proposed rule and available via the
Internet on the CMS Web site, reflected
this proposed labor-related share. For
FY 2015, for all IPPS hospitals whose
wage indexes are less than or equal to
1.0000, we proposed to apply the wage
index to a labor-related share of 62
percent of the national standardized
amount. For all IPPS hospitals whose
wage indexes are greater than 1.0000,
for FY 2015, we proposed to apply the
wage index to a proposed labor-related
share of 69.6 percent of the national
standardized amount. We note that, for
Puerto Rico hospitals, the national
labor-related share is 62 percent because
the national wage index for all Puerto
Rico hospitals is less than 1.0000.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50601 through 50603), we
also rebased and revised the laborrelated share for the Puerto Rico-specific
standardized amounts using FY 2010 as
a base year. We finalized a labor-related
share for the Puerto Rico-specific
standardized amounts for FY 2014 of
63.2 percent. In the FY 2015 IPPS/LTCH
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PPS proposed rule (79 FR 28084), for FY
2015, we did not propose to make any
further changes to the Puerto Rico
specific average proportion of operating
costs that are attributable to wages and
salaries, employee benefits, contract
labor, the labor-related portion of
professional fees, administrative and
facilities support services, and all other
labor-related services. For FY 2015, we
proposed to continue to use a laborrelated share for the Puerto Rico-specific
standardized amounts of 63.2 percent
for discharges occurring on or after
October 1, 2014. Puerto Rico hospitals
are paid based on 75 percent of the
national standardized amounts and 25
percent of the Puerto Rico-specific
standardized amounts. For FY 2015, we
proposed that the labor-related share of
a hospital’s Puerto Rico-specific rate
would be either the Puerto Rico-specific
labor-related share of 63.2 percent or 62
percent, depending on which results in
higher payments to the hospital. If the
hospital has a Puerto Rico-specific wage
index greater than 1.000 for FY 2015, we
proposed to set the hospital’s rates using
a labor-related share of 63.2 percent for
the 25 percent portion of the hospital’s
payment determined by the Puerto Rico
standardized amounts because this
amount would result in higher
payments. Conversely, a hospital with a
Puerto Rico-specific wage index of less
than or equal to 1.000 for FY 2015
would be paid using the Puerto Ricospecific labor-related share of 62 percent
of the Puerto Rico-specific rates because
the lower labor-related share would
result in higher payments. The proposed
Puerto Rico labor-related share of 63.2
percent for FY 2015 is reflected in Table
1C, which was published in section VI.
of the Addendum to the FY 2015 IPPS/
LTCH PPS proposed rule and available
via the Internet on the CMS Web site.
Comment: One commenter believed
that CMS has provided incentives for
hospitals to reduce costs through a
declining wage index. The commenter
stated that CMS has not kept pace by
adjusting the labor-related share of 62
percent for hospitals with a wage index
below 1.0000. The commenter noted
that current law requires a labor-related
share of 62 percent for hospitals with a
wage index less than or equal to 1.0000.
However, the commenter requested that,
despite current law, in consideration of
its comments, CMS lower the laborrelated share from 62 percent to 42
percent for hospitals with a wage index
below 1.0000.
One commenter recommended that
CMS compute an alternative labor and
nonlabor-related share percentage under
the national standardized amount for
hospitals in Puerto Rico. The
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commenter explained that the current
labor-related share percentage of 62
percent under the national standardized
amounts meets the statutory definition
in section 1886(d)(3)(E) of the Act,
resulting in lower payments for
providers in Puerto Rico. Therefore, the
commenter believed that CMS should
calculate an alternative national laborrelated share percentage for hospitals in
Puerto Rico that is lower than 62
percent.
Response: As mentioned by the
commenter, current law requires that
the labor-related share be set at 62
percent for hospitals with a wage index
less than or equal to 1.0000.
Specifically, as discussed above, section
403 of Public Law 108–173 amended
section 1886(d)(3)(E) of the Act to
provide that the Secretary must employ
62 percent as the labor-related share
unless this ‘‘would result in lower
payments to a hospital than would
otherwise be made.’’ Therefore, we are
unable to change the labor-related share
of 62 percent. In addition, the
commenters did not provide any
empirical data to demonstrate why a
lower labor-related share percentage is
justified. Therefore, we are unable to
verify the commenters’ statement.
After consideration of public
comments received, we are finalizing
our proposals without modification. For
FY 2015, we are continuing to use a
labor-related share of 69.6 percent for
discharges occurring on or after October
1, 2014. Tables 1A and 1B, which are
published in section VI. of the
Addendum to this final rule and
available via the Internet on the CMS
Web site, reflect this labor-related share.
For FY 2015, for all IPPS hospitals
whose wage indexes are less than or
equal to 1.0000, we are applying the
wage index to a labor-related share of 62
percent of the national standardized
amount. For all IPPS hospitals whose
wage indexes are greater than 1.0000,
for FY 2015, we are applying the wage
index to a labor-related share of 69.6
percent of the national standardized
amount. For Puerto Rico hospitals, the
national labor-related share is 62
percent because the national wage index
for all Puerto Rico hospitals is less than
1.0000. For FY 2015, we also are
continuing to use a labor-related share
for the Puerto Rico-specific
standardized amounts of 63.2 percent
for discharges occurring on or after
October 1, 2014. Puerto Rico hospitals
are paid based on 75 percent of the
national standardized amounts and 25
percent of the Puerto Rico-specific
standardized amounts. For FY 2015, the
labor-related share of a hospital’s Puerto
Rico-specific rate will be either the
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Puerto Rico-specific labor-related share
of 63.2 percent or 62 percent, depending
on which results in higher payments to
the hospital. If the hospital has a Puerto
Rico-specific wage index greater than
1.000 for FY 2015, we will set the
hospital’s rates using a labor-related
share of 63.2 percent for the 25-percent
portion of the hospital’s payment
determined by the Puerto Rico
standardized amounts because this
amount will result in higher payments.
The Puerto Rico labor-related share of
63.2 percent for FY 2015 is reflected in
Table 1C, which is published in section
VI. of the Addendum to this final rule
and available via the Internet on the
CMS Web site.
IV. Other Decisions and Changes to the
IPPS for Operating Costs and Graduate
Medical Education (GME) Costs
A. Changes to MS–DRGs Subject to the
Postacute Care Transfer Policy (§ 412.4)
1. Background
Existing regulations at § 412.4(a)
define discharges under the IPPS as
situations in which a patient is formally
released from an acute care hospital or
dies in the hospital. Section 412.4(b)
defines acute care transfers, and
§ 412.4(c) defines postacute care
transfers. Our policy, set forth in
§ 412.4(f), provides that when a patient
is transferred and his or her length of
stay is less than the geometric mean
length of stay for the MS–DRG to which
the case is assigned, the transferring
hospital is generally paid based on a
graduated per diem rate for each day of
stay, not to exceed the full MS–DRG
payment that would have been made if
the patient had been discharged without
being transferred.
The per diem rate paid to a
transferring hospital is calculated by
dividing the full DRG payment by the
geometric mean length of stay for the
MS–DRG. Based on an analysis that
showed that the first day of
hospitalization is the most expensive
(60 FR 45804), our policy generally
provides for payment that is twice the
per diem amount for the first day, with
each subsequent day paid at the per
diem amount up to the full MS–DRG
payment (§ 412.4(f)(1)). Transfer cases
are also eligible for outlier payments. In
general, the outlier threshold for transfer
cases, as described in § 412.80(b), is
equal to the fixed-loss outlier threshold
for nontransfer cases (adjusted for
geographic variations in costs), divided
by the geometric mean length of stay for
the MS–DRG, and multiplied by the
length of stay for the case, plus one day.
We established the criteria set forth in
§ 412.4(d) for determining which DRGs
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qualify for postacute care transfer
payments in the FY 2006 IPPS final rule
(70 FR 47419 through 47420). The
determination of whether a DRG is
subject to the postacute care transfer
policy was initially based on the
Medicare Version 23.0 GROUPER (FY
2006) and data from the FY 2004
MedPAR file. However, if a DRG did not
exist in Version 23.0 or a DRG included
in Version 23.0 is revised, we use the
current version of the Medicare
GROUPER and the most recent complete
year of MedPAR data to determine if the
DRG is subject to the postacute care
transfer policy. Specifically, if the MS–
DRG’s total number of discharges to
postacute care equals or exceeds the
55th percentile for all MS–DRGs and the
proportion of short-stay discharges to
postacute care to total discharges in the
MS–DRG exceeds the 55th percentile for
all MS–DRGs, CMS will apply the
postacute care transfer policy to that
MS–DRG and to any other MS–DRG that
shares the same base MS–DRG. In the
preamble to the FY 2006 IPPS final rule
(70 FR 47419), we stated that ‘‘we will
not revise the list of DRGs subject to the
postacute care transfer policy annually
unless we are making a change to a
specific DRG.’’
To account for MS–DRGs subject to
the postacute care transfer policy that
exhibit exceptionally higher shares of
costs very early in the hospital stay,
§ 412.4(f) also includes a special
payment methodology. For these MS–
DRGs, hospitals receive 50 percent of
the full MS–DRG payment, plus the
single per diem payment, for the first
day of the stay, as well as a per diem
payment for subsequent days (up to the
full MS–DRG payment (§ 412.4(f)(6)).
For an MS–DRG to qualify for the
special payment methodology, the
geometric mean length of stay must be
greater than 4 days, and the average
charges of 1-day discharge cases in the
MS–DRG must be at least 50 percent of
the average charges for all cases within
the MS–DRG. MS–DRGs that are part of
an MS–DRG group will qualify under
the DRG special payment policy if any
one of the MS–DRGs that share that
same base MS–DRG qualifies
(§ 412.4(f)(6)).
2. Changes to the Postacute Care
Transfer MS–DRGs
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28084 through
28086), we discussed that, based on our
annual review of MS–DRGs, we had
identified a number of MS–DRGs that
should be included on the list of MS–
DRGs subject to the postacute care
transfer policy. In response to public
comments and based on our analysis of
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FY 2013 MedPAR claims data, we
proposed to make several changes to
MS–DRGs to better capture certain
severity of illness levels, to be effective
for FY 2015. Specifically, we proposed
to modify the assignment of
endovascular cardiac valve
replacements currently assigned to MS–
DRGs 216 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac
Catheterization with MCC), 217 (Cardiac
Valve & Other Major Cardiothoracic
Procedures with Cardiac Catheterization
with CC), 218 (Cardiac Valve & Other
Major Cardiothoracic Procedures with
Cardiac Catheterization without CC/
MCC), 219 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with MCC), 220
(Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization with CC), and
221 (Cardiac Valve & Other Major
Cardiothoracic Procedures without
Cardiac Catheterization without CC/
MCC) to MS–DRGs 266 and 267
(Endovascular Cardiac Valve
Replacement with and without MCC,
respectively) to better reflect the
differences in patients receiving
endovascular cardiac valve
replacements from patients who
undergo an open chest cardiac valve
replacement. We also proposed to
further refine back and neck procedures
currently assigned to MS–DRGs 490 and
491 (Back & Neck Procedure Except
Spinal Fusion with CC/MCC or Disc
Device/Neurostimulator and without
CC/MCC or Disc Device/
Neurostimulator, respectively) into
additional severity levels, now
identified as MS–DRGs 518, 519, and
520 (Back & Neck Procedure Except
Spinal Fusion with MCC or Disc Device/
Neurostimulator, with CC, and without
MCC/CC, respectively). Finally, we
proposed to remove the severity levels
for reverse shoulder replacements,
merging MS–DRGs 483 and 484 (Major
Joint & Limb Reattachment Procedure of
Upper Extremity with CC/MCC and
without CC/MCC, respectively) into
MS–DRG 483 (Major Joint/Limb
Reattachment Procedure of Upper
Extremities). A discussion of these
proposed changes can be found in
section II.G.4.c., II.G.5.c. and II.G.5.a.,
respectively, of the preamble of the
proposed rule.
In light of these proposed changes to
the MS–DRGs according to the
regulations under § 412.4(c), we
evaluated these proposed FY 2015 MS–
DRGs against the general postacute care
transfer policy criteria using the FY
2013 MedPAR data. If an MS–DRG
qualified for the postacute care transfer
policy, we also evaluated that MS–DRG
under the special payment methodology
criteria according to regulations at
§ 412.4(f)(6). We continue believe it is
appropriate to reassess MS–DRGs when
proposing reassignment of diagnostic
codes that would result in material
changes to an MS–DRG. As a result of
our review, we found that MS–DRGs
216 through 221 would require no
revisions in postacute care transfer or
special payment policy status. However,
we proposed to update the list of MS–
DRGs that are subject to the postacute
care transfer policy to include the
proposed new MS–DRGs 266, 267, 518,
519, and 520. (These MS–DRGs are
reflected in Table 5, which is listed in
section VI. of the Addendum to this
final rule and available via the Internet
on the CMS Web site, and also are listed
in the charts at the end of this section.)
In addition, based on our evaluation
of the proposed FY 2015 MS–DRGs
using the FY 2013 Med PAR data, we
determined that proposed revised MS–
DRG 483 would no longer meet the
postacute care transfer criteria.
Therefore, we proposed that it be
removed from the list of MS–DRGs
subject to the postacute care transfer
policy, effective FY 2015. We refer
readers to the asterisk (*) bolded text in
the following table for which criterion
was not met in our analysis for each
MS–DRG removed from the postacute
care transfer policy list.
LIST OF MS–DRGS THAT WOULD CHANGE POSTACUTE CARE TRANSFER POLICY STATUS IN FY 2015
MS–DRG
MS–DRG title
266 ....................
Endovascular Cardiac Valve Replacement with MCC.
Endovascular Cardiac Valve Replacement w/o MCC.
Major Joint/Limb Reattachment Procedure of Upper Extremities.
Back & Neck Procedure Except Spinal
Fusion with MCC or Disc Device/
Neurostimulator.
Back & Neck Procedure Except Spinal
Fusion with CC.
Back & Neck Procedure Except Spinal
Fusion without CC/MCC).
267 ....................
483 ....................
518 ....................
519 ....................
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520 ....................
Postacute care
transfers (55th
percentile:
1,471)
Short-stay
postacute care
transfers
Percent of
short-stay
postacute care
transfers to all
cases (55th
percentile:
7.9060%)
4,086
2,851
1,030
25.21
YES.
4,476
2,800
835
18.66
YES.
41,372
17,289
2,271
* 5.49
NO.
3,844
2,136
412
10.72
YES.
15,238
7,405
1,126
* 7.39
YES.**
31,792
7,859
0
* 0.00
YES.**
Total cases
Postacute
transfer policy
status
* Indicates a current postacute care transfer policy criterion that the MS–DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS–DRGs that share the same base MS–DRG will all qualify under the postacute
care transfer policy if any one of the MS–DRGs that share that same base MS–DRG qualifies.
Finally, we determined that MS–
DRGs 266, 267, 518, 519, and 520 also
would meet the criteria for the special
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payment methodology. Therefore, we
proposed that they would be subject to
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the MS–DRG special payment
methodology, effective FY 2015.
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LIST OF MS–DRGS THAT CHANGED DRG SPECIAL PAYMENT POLICY STATUS IN FY 2015
Geometric
mean length
of stay
MS–DRG
MS–DRG title
266 ....................
267 ....................
518 ....................
Endovascular Cardiac Valve Replacement with MCC ...
Endovascular Cardiac Valve Replacement without MCC
Back & Neck Procedure Except Spinal Fusion with
MCC or Disc Device/Neurostimulator.
Back & Neck Procedure Except Spinal Fusion with CC
Back & Neck Procedure Except Spinal Fusion without
CC/MCC).
519 ....................
520 ....................
50% of
average
charges for all
cases within
MS–DRG
Average
charges of
1-day
discharges
Special pay
policy status
8.3643
5.0271
4.2882
$42,081
128,013
68,515
$126,326
95,141
43,514
YES.*
YES.
YES.
3.0507
1.7315
0
0
0
0
YES.*
YES.*
*As described in the policy at 42 CFR 412.4(d)(6)(iv), MS–DRGs that share the same base MS–DRG will all qualify under the DRG special
payment policy if any one of the MS–DRGs that share that same base MS–DRG qualifies.
We did not receive any public
comments regarding our proposals to
change the postacute care transfer and
the special payment policy status for the
identified MS–DRGs. Therefore, we are
adopting the proposed changes as final
for FY 2015.
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B. Changes in the Inpatient Hospital
Update for FY 2015 (§ 412.64(d))
1. FY 2015 Inpatient Hospital Update
In accordance with section
1886(b)(3)(B)(i) of the Act, each year we
update the national standardized
amount for inpatient operating costs by
a factor called the ‘‘applicable
percentage increase.’’ In FY 2014,
consistent with section 1886(b)(3)(B) of
the Act, as amended by sections 3401(a)
and 10319(a) of the Affordable Care Act,
we set the applicable percentage
increase under the IPPS by applying the
following adjustments in the following
sequence. Specifically, the applicable
percentage increase under the IPPS is
equal to the rate-of-increase in the
hospital market basket for IPPS
hospitals in all areas, subject to a
reduction of 2.0 percentage points if the
hospital fails to submit quality
information under rules established by
the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act, and then
subject to an adjustment based on
changes in economy-wide productivity
(the multifactor productivity (MFP)
adjustment), and an additional
reduction of 0.3 percentage point as
required by section 1886(b)(3)(B)(xii) of
the Act. Sections 1886(b)(3)(B)(xi) and
(b)(3)(B)(xii) of the Act, as added by
section 3401(a) of the Affordable Care
Act, state that application of the MFP
adjustment and the additional FY 2014
adjustment of 0.3 percentage point may
result in the applicable percentage
increase being less than zero.
For FY 2015, there are three statutory
changes to the applicable percentage
increase compared to FY 2014. First,
under section 1886(b)(3)(B)(viii) of the
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Act, beginning with FY 2015, the
reduction in the applicable percentage
increase for hospitals that fail to submit
quality information under rules
established by the Secretary is onequarter of the applicable percentage
increase (prior to the application of
statutory adjustments under sections
1886(b)(3)(B)(ix), 1886(b)(3)(B)(xi), and
1886(b)(3)(B)(xii) of the Act) or onequarter of the applicable market basket
update. For FY 2014, the reduction to
the applicable percentage increase for
hospitals that failed to submit quality
information under rules established by
the Secretary was 2.0 percentage points.
Second, beginning with FY 2015,
section 1886(b)(3)(B)(ix) of the Act
requires that any hospital that is not a
meaningful electronic health record
(EHR) user (as defined in section
1886(n)(3) of the Act and not subject to
an exception under section
1886(b)(3)(B)(ix) of the Act)) will have
‘‘three-quarters’’ of the applicable
percentage increase (prior to the
application of statutory adjustments
under sections 1886(b)(3)(B)(viii),
1886(b)(3)(B)(xi), and 1886(b)(3)(B)(xii)
of the Act), or three-quarters of the
applicable market basket update,
reduced by 331⁄3 percent. The reduction
to three-quarters of the applicable
percentage increase for those hospitals
that are not meaningful EHR users
increases to 662⁄3 percent for FY 2016,
and, for FY 2017 and subsequent fiscal
years, to 100 percent. Third, for FY
2015, section 1886(b)(3)(B)(xii) of the
Act applies an additional reduction of
0.2 percentage point compared to 0.3
percentage point for FY 2014.
To summarize, for FY 2015,
consistent with section 1886(b)(3)(B) of
the Act, as amended by sections 3401(a)
and 10319(a) of the Affordable Care Act,
we are setting the applicable percentage
increase by applying the following
adjustments in the following sequence.
Specifically, the applicable percentage
increase under the IPPS is equal to the
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rate-of-increase in the hospital market
basket for IPPS hospitals in all areas,
subject to a reduction of one-quarter of
the applicable percentage increase (prior
to the application of other statutory
adjustments; also referred to as the
market basket update or rate-of-increase
(with no adjustments)) for hospitals that
fail to submit quality information under
rules established by the Secretary in
accordance with section
1886(b)(3)(B)(viii) of the Act and a 331⁄3
percent reduction to three-fourths of the
applicable percentage increase (prior to
the application of other statutory
adjustments; also referred to as the
market basket update or rate-of-increase
(with no adjustments)) for hospitals not
considered to be meaningful EHR users
in accordance with section
1886(b)(3)(B)(ix) of the Act, and then
subject to an adjustment based on
changes in economy-wide productivity
(the multifactor productivity (MFP)
adjustment), and an additional
reduction of 0.2 percentage point as
required by section 1886(b)(3)(B)(xii) of
the Act. As noted previously, sections
1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the
Act, as added by section 3401(a) of the
Affordable Care Act, state that
application of the MFP adjustment and
the additional FY 2015 adjustment of
0.2 percentage point may result in the
applicable percentage increase being
less than zero.
We note that, in compliance with
section 404 of the MMA, in the FY 2014
IPPS/LTCH PPS final rule, we replaced
the FY 2006-based IPPS operating and
capital market baskets with the revised
and rebased FY 2010-based IPPS
operating and capital market baskets for
FY 2014. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28086), we
proposed to continue to use the FY
2010-based IPPS operating and capital
market baskets for FY 2015. We also
proposed to continue to use a laborrelated share that is reflective of the FY
2010 base year. For FY 2015, we
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proposed to continue using the laborrelated share of 69.6 percent, which is
based on the FY 2010-based IPPS
market basket. We did not receive any
public comments on this proposal and,
therefore, for FY 2015, we will continue
to use the FY 2010-based IPPS operating
and capital market baskets and the
labor-related share of 69.6 percent.
Based on the most recent data
available for the FY 2015 proposed rule,
in accordance with section 1886(b)(3)(B)
of the Act, we proposed in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28087) to base the proposed FY 2015
market basket update used to determine
the applicable percentage increase for
the IPPS on IHS Global Insight, Inc.’s
(IGI’s) first quarter 2014 forecast of the
FY 2010-based IPPS market basket rateof-increase with historical data through
fourth quarter 2013, which was
estimated to be 2.7 percent. We
proposed that if more recent data
became subsequently available (for
example, a more recent estimate of the
market basket and the MFP adjustment),
we would use such data, if appropriate,
to determine the FY 2015 market basket
update and MFP adjustment in the final
rule.
Based on updated data for this FY
2015 IPPS/LTCH PPS final rule, that is,
the IGI’s second quarter 2014 forecast of
the FY 2010-based IPPS market basket
rate-of-increase with historical data
through first quarter 2014, we estimate
that the FY 2015 market basket update
used to determine the applicable
percentage increase for the IPPS is 2.9
percent.
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. For FY 2015, we did not
propose to make any change in our
methodology for calculating and
applying the MFP adjustment. For FY
2015, we proposed a MFP adjustment of
¥0.4 percentage point. Similar to the
market basket adjustment, for the
proposed rule, we used the most recent
data available to compute the MFP
adjustment.
Based on updated data for this final
rule, we computed an MFP adjustment
is 0.5 percentage point for FY 2015.
Comment: One commenter stated that
the FY 2015 update factor is
understated, as the productivity
adjustment should be 0.4 (as projected
in the proposed rule), not 0.5. The
commenter stated that, as a result,
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instead of a 1.2 percent update factor,
the projection should use a 1.3 percent
update factor.
Response: As stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28087), the proposed productivity
adjustment for FY 2015 was 0.4 percent.
Furthermore, we proposed to make a 1.3
percent update to the national
standardized amount (79 FR 28355),
which reflects a proposed 2.7 percent
market basket update, the proposed
reduction of 0.4 percentage point for the
multifactor productivity adjustment, the
0.2 percentage point reduction in
accordance with the Affordable Care Act
and the proposed FY 2015
documentation and coding recoupment
adjustment of ¥0.8 percent on the
national standardized amount as part of
the recoupment required by section 631
of the ATRA.
As stated in the proposed rule, we
proposed to use more recently available
data to determine the final market
basket and multifactor productivity
adjustment. We did not receive any
public comments on this proposal.
Therefore, for this final rule, we are
finalizing a market basket update of 2.9
percent and an MFP adjustment of 0.5
percent based on more recently
available data.
For FY 2015, depending on whether
a hospital submits quality data under
the rules established in accordance with
section 1886(b)(3)(B)(viii) of the Act
(hereafter referred to as a hospital that
submits quality data) and is a
meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act (hereafter
referred to as a hospital that is a
meaningful EHR user), we discussed in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28087) that there are four
possible applicable percentage increases
that can be applied to the standardized
amount. As noted above, we proposed
that if more recent data became
subsequently available (for example, a
more recent estimate of the market
basket and the MFP adjustment), we
would use such data, if appropriate, to
determine the FY 2015 market basket
update and MFP adjustment in the final
rule.
We did not receive any public
comments on the four applicable
percentage increases and our finalizing
our proposal. Based on the more recent
data described earlier, we have
determined final applicable percentage
increases to the standardized amount for
FY 2015, as specified below.
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• For a hospital that submits quality
data and is a meaningful EHR user, we
are finalizing an applicable percentage
increase to the FY 2015 operating
standardized amount of 2.2 percent (that
is, the FY 2015 estimate of the market
basket rate-of-increase of 2.9 percent
less an adjustment of 0.5 percentage
point for economy-wide productivity
(that is, the MFP adjustment) and less
0.2 percentage point).
• For a hospital that submits quality
data and is not a meaningful EHR user,
we are finalizing an applicable
percentage increase to the operating
standardized amount of 1.475 percent
(that is, the FY 2015 estimate of the
market basket rate-of-increase of 2.9
percent, less an adjustment of 0.725
percentage point (the market basket rateof-increase of 2.9 percent × 0.75)/3) for
failure to be a meaningful EHR user, less
an adjustment of 0.5 percentage point
for the MFP adjustment, and less an
additional adjustment of 0.2 percentage
point).
• For a hospital that does not submit
quality data and is a meaningful EHR
user, we are finalizing an applicable
percentage increase to the operating
standardized amount of 1.475 percent
(that is, the FY 2015 estimate of the
market basket rate-of-increase of 2.9
percent, less an adjustment of 0.725
percentage point (the market basket rateof-increase of 2.9 percent/4) for failure
to submit quality data, less an
adjustment of 0.5 percentage point for
the MFP adjustment, and less an
additional adjustment of 0.2 percentage
point).
• For a hospital that does not submit
quality data and is not a meaningful
EHR user, we are finalizing an
applicable percentage increase to the
operating standardized amount of 0.75
percent (that is, the FY 2015 estimate of
the market basket rate-of-increase of 2.9
percent, less an adjustment of 0.725
percentage point (the market basket rateof-increase of 2.9 percent/4) for failure
to submit quality data, less an
adjustment of 0.725 percentage point
(the market basket rate-of-increase of 2.9
percent × 0.75)/3) for failure to be a
meaningful EHR user, less an
adjustment of 0.5 percentage point for
the MFP adjustment, and less an
additional adjustment of 0.2 percentage
point). Below we provide a table
summarizing the four final applicable
percentage increases.
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49995
FINAL FY 2015 APPLICABLE PERCENTAGE INCREASES FOR THE IPPS
Hospital submitted quality
data and is a
meaningful
EHR user
FY 2015
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Market Basket Rate-of-Increase ................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act.
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act.
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ....................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act .............
Final Applicable Percentage Increase Applied to Standardized Amount ..
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28087), we
proposed to revise the existing
regulations at 42 CFR 412.64(d) to
reflect the current law for the FY 2015
update. Specifically, in accordance with
section 1886(b)(3)(B) of the Act, we
proposed to add a new paragraph (vi) to
§ 412.64(d)(1) to reflect the applicable
percentage increase to the FY 2015
operating standardized amount as the
percentage increase in the market basket
index, subject to a reduction of onefourth of the applicable percentage
increase (prior to the application of
other statutory adjustments) if the
hospital fails to submit quality
information (under rules established by
the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act) and a 331⁄3
percent reduction to three-fourths of the
applicable percentage increase (prior to
the application of other statutory
adjustments) for a hospital that is not a
meaningful EHR user in accordance
with section 1886(b)(3)(B)(ix) of the Act,
less an MFP adjustment and less an
additional reduction of 0.2 percentage
point.
In addition, we proposed to make
technical changes to §§ 412.64(d)(1),
(d)(1)(i) through (d)(1)(v), (d)(2)(i),
(d)(2)(ii), and (d)(3) introductory text to
reflect the order in which CMS applies
the statutory adjustments to the
applicable percentage increase under
section 1886(b)(3)(B) of the Act. As
mentioned above, consistent with
section 1886(b)(3)(B) of the Act, CMS
sets the applicable percentage increase
under the IPPS by applying the
following adjustments in the following
sequence. Specifically, we set the
applicable percentage increase under
the IPPS equal to the rate-of-increase in
the hospital market basket for IPPS
hospitals in all areas subject to a
reduction for hospitals that fail to
submit quality information under rules
established by the Secretary in
accordance with section
1886(b)(3)(B)(viii) of the Act and,
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Hospital submitted quality
data and is
NOT a meaningful EHR user
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2.9
2.9
2.9
0.0
0.0
¥0.725
¥0.725
¥0.725
¥0.5
¥0.2
1.475
0.0
¥0.5
¥0.2
1.475
¥0.725
¥0.5
¥0.2
0.75
0.0
¥0.5
¥0.2
2.2
Sfmt 4700
Hospital did
NOT submit
quality data and
is NOT a meaningful EHR user
2.9
beginning in FY 2015, a reduction for
hospitals not considered to be
meaningful EHR users in accordance
with section 1886(b)(3)(B)(ix) of the Act;
and then subject to an adjustment based
on changes in economy-wide
productivity (the MFP adjustment), and
an additional reduction as required by
section 1886(b)(3)(B)(xii) of the Act.
The existing regulation text at
§ 412.64(d)(2) and (d)(3) describes the
reductions for hospitals that fail to
submit quality information under rules
established by the Secretary in
accordance with section
1886(b)(3)(B)(viii) of the Act and
hospitals not considered to be
meaningful EHR users in accordance
with section 1886(b)(3)(B)(ix) of the Act
as reductions to ‘‘the applicable
percentage change specified in
paragraph (d)(1) of this section.’’ Section
412.64(d)(1) describes the applicable
percentage change for the applicable
fiscal year as the percentage increase in
the market basket index less the MFP
adjustment and less the additional
reduction required by section
1886(b)(3)(B)(xii) of the Act. This text
suggests that CMS applies the reduction
for hospitals that fail to submit quality
information and, beginning in FY 2015,
the reduction for hospitals not
considered to be meaningful EHR users,
after it applies the MFP adjustment and
the additional reduction under section
1886(b)(3)(B)(xii) of the Act. Therefore,
we proposed to revise the regulations in
§ 412.64(d) to reflect the order in which
CMS applies the adjustments to the
applicable percentage increase under
section 1886(b)(3)(B) of the Act. We note
that we also proposed clarifying
amendments to the regulatory text for
prior fiscal years under
§§ 412.64(d)(1)(i) through (d)(1)(v) to
reflect the determination of the
applicable percentage change for those
prior years as well as other technical
changes for readability.
We did not receive any public
comments on our proposed changes to
PO 00000
Hospital did
NOT submit
quality data and
is a meaningful
EHR user
the regulations at §§ 412.64(d)(1),
(d)(1)(i) through (d)(1)(v), (d)(2)(i),
(d)(2)(ii), and (d)(3) introductory text
and therefore are finalizing these
proposed changes without modification.
Section 1886(b)(3)(B)(iv) of the Act
provides that the applicable percentage
increase to the hospital-specific rates for
SCHs and MDHs equals the applicable
percentage increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the
same update factor as for all other
hospitals subject to the IPPS). Therefore,
the update to the hospital-specific rates
for SCHs and MDHs is also subject to
section 1886(b)(3)(B)(i) of the Act, as
amended by sections 3401(a) and
10319(a) of the Affordable Care Act.
Accordingly, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28088), for FY
2015, we proposed the following
updates to the hospital-specific rates
applicable to SCHs and MDHs: An
update of 2.1 percent for a hospital that
submits quality data and is a meaningful
EHR user; an update of 1.425 percent for
a hospital that fails to submit quality
data and is a meaningful EHR user; an
update of 1.425 percent for a hospital
that submits quality data and is not a
meaningful EHR user; an update of 0.75
percent for a hospital that fails to submit
quality data and is not a meaningful
EHR user. (As noted below, under
current law, the MDH program is
effective for discharges occurring on or
before March 31, 2015.) For FY 2015,
the existing regulations in
§§ 412.73(c)(16), 412.75(d), 412.77(e),
412.78(e), and 412.79(d) contain
provisions that set the update factor for
SCHs and MDHs equal to the update
factor applied to the national
standardized amount for all IPPS
hospitals. Therefore, we did not propose
to make any further changes to these
five regulatory provisions to reflect the
FY 2015 update factor for the hospitalspecific rates of SCHs and MDHs. As
mentioned above, for the proposed rule,
we used IGI’s first quarter 2014 forecast
of the FY 2010-based IPPS market
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
basket update with historical data
through fourth quarter 2013. Similarly,
we used IGI’s first quarter 2014 forecast
of the MFP adjustment. For the final
rule, we proposed to use the most recent
data available. We did not receive any
public comments on these proposals
and therefore our finalizing them as
proposed to set the update for SCHs and
MDHs in this final rule using the most
recent data available.
As discussed above, based on the
more recent data for IGI’s second quarter
2014 forecast of the FY 2010-based IPPS
market basket update with historical
data through first quarter 2014, we
estimate that the FY 2015 market basket
update used to determine the update
factor for this final rule for the hospitalspecific rates of SCHs and MDHs is 2.9
percent. Similarly, for this final rule, we
used IGI’s second quarter 2014 forecast
of the MFP adjustment, which is
estimated at 0.5 percentage point for FY
2015. Accordingly, we are finalizing the
following updates to the hospitalspecific rates applicable to SCHs and
MDHs: An update of 2.2 percent for a
hospital that submits quality data and is
a meaningful EHR user; an update of
1.475 percent for a hospital that fails to
submit quality data and is a meaningful
EHR user; an update of 1.475 percent for
a hospital that submits quality data and
is not a meaningful EHR user; an update
of 0.75 percent for a hospital that fails
to submit quality data and is not a
meaningful EHR user.
We note that, as discussed in section
IV.G. of the preamble of this final rule,
section 1106 of the Pathway for SGR
Reform Act of 2013 (Pub. L. 113–67),
enacted on December 26, 2013,
extended the MDH program from the
end of FY 2013 through the first half of
FY 2014 (that is, for discharges
occurring before April 1, 2014).
Subsequently, section 106 of the
Protecting Access to Medicare Act of
2014, Public Law 113–93, enacted on
April 1, 2014, further extended the
MDH program through the first half of
FY 2015 (that is, for discharges
occurring before April l, 2015). Prior to
the enactment of Public Law 113–67,
the MDH program was to be in effect
through the end of FY 2013 only. The
MDH program expires for discharges
beginning on April 1, 2015 under
current law. Accordingly, the update of
the hospital-specific rates for FY 2015
for MDHs will apply in determining
payments for FY 2015 discharges
occurring before April 1, 2015.
2. FY 2015 Puerto Rico Hospital Update
Puerto Rico hospitals are paid a
blended rate for their inpatient
operating costs based on 75 percent of
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the national standardized amount and
25 percent of the Puerto Rico-specific
standardized amount. Section
1886(d)(9)(C)(i) of the Act is the basis
for determining the applicable
percentage increase applied to the
Puerto Rico-specific standardized
amount. Section 401(c) of Public Law
108–173 amended section
1886(d)(9)(C)(i) of the Act, which states
that, for discharges occurring in a fiscal
year (beginning with FY 2004), the
Secretary shall compute an average
standardized amount for hospitals
located in any area of Puerto Rico that
is equal to the average standardized
amount computed under subclause (I)
for fiscal year 2003 for hospitals in a
large urban area (or, beginning with FY
2005, for all hospitals in the previous
fiscal year) increased by the applicable
percentage increase under subsection
(b)(3)(B) for the fiscal year involved.
Therefore, the update to the Puerto
Rico-specific operating standardized
amount equals the applicable
percentage increase set forth in section
1886(b)(3)(B)(i) of the Act, as amended
by sections 3401(a) and 10319(a) of the
Affordable Care Act (that is, the same
update factor as for all other hospitals
subject to the IPPS). Accordingly, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28088), we proposed an
applicable percentage increase to the
Puerto Rico-specific operating
standardized amount of 2.1 percent for
FY 2015. We also proposed, for the final
rule, to use the most recent data
available to determine the FY 2015
applicable percentage increase. We note
that the provisions of section
1886(b)(3)(B)(viii) of the Act, which
specify the adjustments to the
applicable percentage increase for
‘‘subsection (d)’’ hospitals that do not
submit quality data under the rules
established by the Secretary, and the
provisions of section 1886(b)(3)(B)(ix) of
the Act, which specify the adjustments
to the applicable percentage increase for
‘‘subsection (d)’’ hospitals that are not
meaningful EHR users, are not
applicable to hospitals located in Puerto
Rico.
We did not receive any public
comments concerning our proposal.
Therefore, using the most recent data
available, we are finalizing an
applicable percentage increase to the
Puerto Rico-specific operating amount
of 2.2 percent for FY 2015. As we noted
above, for the proposed rule, we used
the first quarter 2014 forecast of the FY
2010-based IPPS market basket update
with historical data through fourth
quarter 2013. For this final rule, we
used the most recent data available,
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Sfmt 4700
which is IGI’s second quarter 2014
forecast of the FY 2010-based IPPS
market basket update with historical
data through first quarter 2014.
Similarly, for the proposed rule, we
used IGI’s first quarter 2014 forecast of
the MFP adjustment. For this final rule,
we used the most recent data available,
which was IGI’s second quarter 2014
forecast of the MFP adjustment.
For FY 2015, the existing regulations
in § 412.211(c) set the update factor for
Puerto Rico-specific standardized
amount equal to the update factor
applied to the national standardized
amount for all IPPS hospitals. Therefore,
we are not making any further changes
to this regulatory provision to reflect the
FY 2015 update factor for the Puerto
Rico-specific standardized amount.
Comment: One commenter indicated
that the nonlabor costs in Puerto Rico
are closer or equal to those in the United
States. It is unclear what the commenter
was requesting. Based on our
interpretation of the comment, it
appears that the commenter may be
requesting that CMS make equal the
nonlabor payment amount of the Puerto
Rico-specific standardized amount to
the nonlabor payment amount of the
national standardized amount.
Response: The commenter did not
provide any empirical data to
demonstrate how the nonlabor costs in
Puerto Rico are equal to those in the
United States. Therefore, we are unable
to verify the commenter’s statement. In
addition, we did not propose to make
any updates to the national or Puerto
Rico-specific standardized amounts
aside from applying the statutory
updates as discussed earlier. We will
continue to work with Puerto Rico and
other stakeholders to ensure we are
using appropriate data for ratesettting.
C. Rural Referral Centers (RRCs):
Annual Updates to Case-Mix Index and
Discharge Criteria (§ 412.96)
Under the authority of section
1886(d)(5)(C)(i) of the Act, the
regulations at § 412.96 set forth the
criteria that a hospital must meet in
order to qualify under the IPPS as a
rural referral center (RRC). RRCs receive
some special treatment under both the
DSH payment adjustment and the
criteria for geographic reclassification.
Section 402 of Public Law 108–173
raised the DSH payment adjustment for
RRCs such that they are not subject to
the 12-percent cap on DSH payments
that is applicable to other rural
hospitals. RRCs are also not subject to
the proximity criteria when applying for
geographic reclassification. In addition,
they do not have to meet the
requirement that a hospital’s average
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hourly wage must exceed, by a certain
percentage, the average hourly wage of
the labor market area where the hospital
is located.
Section 4202(b) of Public Law 105–33
states, in part, ‘‘[a]ny hospital classified
as an RRC by the Secretary . . . for
fiscal year 1991 shall be classified as
such an RRC for fiscal year 1998 and
each subsequent year.’’ In the August
29, 1997 IPPS final rule with comment
period (62 FR 45999), CMS reinstated
RRC status for all hospitals that lost the
status due to triennial review or MGCRB
reclassification. However, CMS did not
reinstate the status of hospitals that lost
RRC status because they were now
urban for all purposes because of the
OMB designation of their geographic
area as urban. Subsequently, in the
August 1, 2000 IPPS final rule (65 FR
47089), we indicated that we were
revisiting that decision. Specifically, we
stated that we would permit hospitals
that previously qualified as an RRC and
lost their status due to OMB
redesignation of the county in which
they are located from rural to urban, to
be reinstated as an RRC. Otherwise, a
hospital seeking RRC status must satisfy
all of the other applicable criteria. We
use the definitions of ‘‘urban’’ and
‘‘rural’’ specified in Subpart D of 42 CFR
Part 412. One of the criteria under
which a hospital may qualify as an RRC
is to have 275 or more beds available for
use (§ 412.96(b)(1)(ii)). A rural hospital
that does not meet the bed size
requirement can qualify as an RRC if the
hospital meets two mandatory
prerequisites (a minimum CMI and a
minimum number of discharges), and at
least one of three optional criteria
(relating to specialty composition of
medical staff, source of inpatients, or
referral volume). (We refer readers to
§ 412.96(c)(1) through (c)(5) and the
September 30, 1988 Federal Register (53
FR 38513).) With respect to the two
mandatory prerequisites, a hospital may
be classified as an RRC if—
• The hospital’s CMI is at least equal
to the lower of the median CMI for
urban hospitals in its census region,
excluding hospitals with approved
teaching programs, or the median CMI
for all urban hospitals nationally; and
• The hospital’s number of discharges
is at least 5,000 per year, or, if fewer, the
median number of discharges for urban
hospitals in the census region in which
the hospital is located. (The number of
discharges criterion for an osteopathic
hospital is at least 3,000 discharges per
year, as specified in section
1886(d)(5)(C)(i) of the Act.)
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that
CMS establish updated national and
regional CMI values in each year’s
annual notice of prospective payment
rates for purposes of determining RRC
status. The methodology we used to
determine the national and regional CMI
values is set forth in the regulations at
§ 412.96(c)(1)(ii). The national median
CMI value for FY 2015 is based on the
CMI values of all urban hospitals
nationwide, and the regional median
CMI values for FY 2015 are based on the
CMI values of all urban hospitals within
each census region, excluding those
hospitals with approved teaching
programs (that is, those hospitals that
train residents in an approved GME
program as provided in § 413.75). These
values are based on discharges
occurring during FY 2013 (October 1,
2012 through September 30, 2013), and
include bills posted to CMS’ records
through March 2014.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28089), we
proposed that, in addition to meeting
other criteria, if rural hospitals with
fewer than 275 beds are to qualify for
initial RRC status for cost reporting
periods beginning on or after October 1,
2014, they must have a CMI value for
FY 2013 that is at least—
• 1.5730; or
• The median CMI value (not
transfer-adjusted) for urban hospitals
(excluding hospitals with approved
teaching programs as identified in
§ 413.75) calculated by CMS for the
census region in which the hospital is
located. (We refer readers to the table set
forth in the FY 2015 IPPS/LTCH PPS
proposed rule at 79 FR 28089.)
The final CMI values for FY 2015 are
based on the latest available data (FY
2013 bills received through March
2014). In addition to meeting other
criteria, if rural hospitals with fewer
than 275 beds are to qualify for initial
RRC status for cost reporting periods
beginning on or after October 1, 2014,
they must have a CMI value for FY 2013
that is at least—
• 1.5723; or
• The median CMI value (not
transfer-adjusted) for urban hospitals
(excluding hospitals with approved
teaching programs as identified in
§ 413.75) calculated by CMS for the
census region in which the hospital is
located.
The final CMI values by region are set
forth in the following table:
Case-mix
index value
Region
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1.
2.
3.
4.
5.
6.
7.
8.
9.
New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................
Middle Atlantic (PA, NJ, NY) ...........................................................................................................................................................
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ...............................................................................................................
East North Central (IL, IN, MI, OH, WI) ..........................................................................................................................................
East South Central (AL, KY, MS, TN) .............................................................................................................................................
West North Central (IA, KS, MN, MO, NE, ND, SD) ......................................................................................................................
West South Central (AR, LA, OK, TX) ............................................................................................................................................
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ...............................................................................................................................
Pacific (AK, CA, HI, OR, WA) .........................................................................................................................................................
A hospital seeking to qualify as an
RRC should obtain its hospital-specific
CMI value (not transfer-adjusted) from
its fiscal intermediary or MAC. Data are
available on the Provider Statistical and
Reimbursement (PS&R) System. In
keeping with our policy on discharges,
the CMI values are computed based on
all Medicare patient discharges subject
to the IPPS MS–DRG-based payment.
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2. Discharges
Section 412.96(c)(2)(i) provides that
CMS set forth the national and regional
numbers of discharges in each year’s
annual notice of prospective payment
rates for purposes of determining RRC
status. As specified in section
1886(d)(5)(C)(ii) of the Act, the national
standard is set at 5,000 discharges. In
the FY 2015 IPPS/LTCH PPS proposed
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1.3587
1.4318
1.4807
1.4938
1.4107
1.5459
1.6039
1.6586
1.5658
rule (79 FR 28090), we proposed to
update the regional standards based on
discharges for urban hospitals’ cost
reporting periods that began during FY
2012 (that is October 1, 2011 through
September 30, 2012), which are the
latest cost report data available at the
time the proposed rule was developed.
We proposed that, in addition to
meeting other criteria, a hospital, if it is
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
to qualify for initial RRC status for cost
reporting periods beginning on or after
October 1, 2014, must have, as the
number of discharges for its cost
reporting period that began during FY
2012, at least—
• 5,000 (3,000 for an osteopathic
hospital); or
• The median number of discharges
for urban hospitals in the census region
in which the hospital is located. (We
refer readers to the table set forth in the
FY 2015 IPPS/LTCH PPS proposed rule
at 79 FR 28090.)
Based on the latest discharge data
available at this time (that is, based on
FY 2012 cost report data), the final
median number of discharges for urban
hospitals by census region are set forth
in the following table:
Number of discharges
Region
1.
2.
3.
4.
5.
6.
7.
8.
9.
New England (CT, ME, MA, NH, RI, VT) ........................................................................................................................................
Middle Atlantic (PA, NJ, NY) ...........................................................................................................................................................
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) ...............................................................................................................
East North Central (IL, IN, MI, OH, WI) ..........................................................................................................................................
East South Central (AL, KY, MS, TN) .............................................................................................................................................
West North Central (IA, KS, MN, MO, NE, ND, SD) ......................................................................................................................
West South Central (AR, LA, OK, TX) ............................................................................................................................................
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) ...............................................................................................................................
Pacific (AK, CA, HI, OR, WA) .........................................................................................................................................................
We reiterate that, if an osteopathic
hospital is to qualify for RRC status for
cost reporting periods beginning on or
after October 1, 2014, the hospital
would be required to have at least 3,000
discharges for its cost reporting period
that began during FY 2012.
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D. Payment Adjustment for Low-Volume
Hospitals (§ 412.101)
1. Background
Section 1886(d)(12) of the Act
provides for an additional payment to
each qualifying low-volume hospital
that is paid under IPPS beginning in FY
2005. Sections 3125 and 10314 of the
Affordable Care Act provided for a
temporary change in the low-volume
hospital payment policy for FYs 2011
and 2012. Section 605 of the American
Taxpayer Relief Act of 2012 (ATRA)
extended, for FY 2013, the temporary
changes in the low-volume hospital
payment policy provided for in FYs
2011 and 2012 by the Affordable Care
Act. Prior to the enactment of the
Pathway for SGR Reform Act of 2013
(Pub. L. 113–67) on December 26, 2013,
and section 106 of the Protecting Access
to Medicare Act of 2014 (Pub. L. 113–
93) on April l, 2014, for FY 2014 (and
subsequent years), the low-volume
hospital qualifying criteria and payment
adjustment returned to the statutory
requirements under section 1886(d)(12)
of the Act that were in effect prior to the
amendments made by the Affordable
Care Act and the ATRA. (For additional
information on the expiration of the
temporary changes in the low-volume
hospital payment policy for FYs 2011
through 2013 provided for by the
Affordable Care Act and the ATRA, we
refer readers to the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50610 through
50613).)
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Section 1105 of the Pathway for SGR
Reform Act extended, for the first 6
months of FY 2014 (that is, through
March 31, 2014), the temporary changes
in the low-volume hospital payment
policy provided for in FYs 2011 and
2012 by the Affordable Care Act and
extended through FY 2013 by the
ATRA. We addressed the extension of
the temporary changes to the lowvolume hospital payment policy
through March 31, 2014 under the
Pathway for SGR Reform Act in an
interim final rule with comment period
that appeared in the Federal Register on
March 18, 2014 (79 FR 15022 through
15025) (hereafter referred to as the
‘‘March 2014 IFC’’). In that March 2014
IFC, we also amended the regulations at
42 CFR 412.101 to reflect the extension
of the temporary changes to the
qualifying criteria and the payment
adjustment for low-volume hospitals
through March 31, 2014. (In section
IV.P. of the preamble of this final rule,
we are responding to the public
comments we received on the March
2014 IFC and are stating our finalized
policy for the extension of the
temporary changes to the low-volume
hospital payment policy through March
31, 2014, under the Pathway for SGR
Reform Act.)
2. Provisions of the Protecting Access to
Medicare Act of 2014
Section 105 of the Protecting Access
to Medicare Act of 2014 (PAMA) (Pub.
L. 113–93) extends, for an additional
year (that is, through March 31, 2015),
the temporary changes in the lowvolume hospital payment policy
provided for in FYs 2011 and 2012 by
the Affordable Care Act and extended
through FY 2013 by the ATRA and the
first half of FY 2014 by the Pathway for
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7,635
10,841
10,642
8,530
7,975
7,925
4,960
8,525
8,504
SGR Reform Act. We addressed the
extension of the temporary changes to
the low-volume hospital payment policy
for the second half of FY 2014 (that is,
from April 1, 2014 through September
30, 2014) under the PAMA in a notice
that appeared in the Federal Register on
June 17, 2014 (79 FR 34444). However,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28090), we
proposed to make conforming changes
to the existing regulations text at
§ 412.101 to reflect the extension of the
changes to the qualifying criteria and
the payment adjustment methodology
for low-volume hospitals through the
first half of FY 2015 (that is, through
March 31, 2015) in accordance with
section 105 of the PAMA. Specifically,
we proposed to revise paragraphs
(b)(2)(i), (b)(2)(ii), (c)(1), (c)(2), and (d) of
§ 412.101. Under these proposed
changes to § 412.101, beginning with FY
2015 discharges occurring on or after
April 1, 2015, consistent with section
1886(d)(12) of the Act, as amended, the
low-volume hospital qualifying criteria
and payment adjustment methodology
would revert to that which was in effect
prior to the amendments made by the
Affordable Care Act and subsequent
legislation (that is, the low-volume
hospital payment adjustment policy in
effect for FYs 2005 through 2010).
We did not receive any public
comments on our proposed conforming
changes to the existing regulations text
at § 412.101 to reflect the extension of
the changes to the qualifying criteria
and the payment adjustment
methodology for low-volume hospitals
through the first half of FY 2015 (that is,
through March 31, 2015) in accordance
with section 105 of the PAMA.
Therefore, in this final rule, we are
adopting our proposed revisions to
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paragraphs (b)(2)(i), (b)(2)(ii), (c)(1),
(c)(2), and (d) of § 412.101 as final
without modification. We note that
these revisions supersede the
conforming changes to these same
regulatory provisions made in the
March 2014 IFC to reflect the extension
of the changes to the qualifying criteria
and the payment adjustment
methodology for low-volume hospitals
through March 31, 2014, under the
Pathway for SGR Reform Act, as
discussed in section IV.P. of the
preamble of this final rule. The public
comments we received on our proposals
related to the low-volume hospital
payment policy for FY 2015 and our
responses are presented in section
IV.D.3. of the preamble of this final rule.
3. Low-Volume Hospital Definition and
Payment Adjustment for FY 2015
As discussed above, under section
1886(d)(12) of the Act, as amended, the
temporary changes in the low-volume
hospital payment policy originally
provided by the Affordable Care Act and
extended through subsequent
legislation, are effective for FY 2015
discharges occurring before April 1,
2015. To implement the extension of the
temporary change in the low-volume
hospital payment policy through the
first half of FY 2015 (that is, for
discharges occurring through March 31,
2015) provided for by the PAMA, in
accordance with proposed
§ 412.101(b)(2)(ii) and consistent with
our historical approach, we proposed to
update the discharge data source used to
identify qualifying low-volume
hospitals and calculate the payment
adjustment (percentage increase) for FY
2015 discharges occurring before April
1, 2015. Under existing
§ 412.101(b)(2)(ii), for the applicable
fiscal years, a hospital’s Medicare
discharges from the most recently
available MedPAR data, as determined
by CMS, are used to determine if the
hospital meets the discharge criteria to
receive the low-volume payment
adjustment in the current year. The
applicable low-volume percentage
increase, as originally provided for by
the Affordable Care Act, is determined
using a continuous linear sliding scale
equation that results in a low-volume
hospital payment adjustment ranging
from an additional 25 percent for
hospitals with 200 or fewer Medicare
discharges to a zero percent additional
payment adjustment for hospitals with
1,600 or more Medicare discharges. For
FY 2015 discharges occurring before
April 1, 2015, consistent with our
historical policy, we proposed that
qualifying low-volume hospitals and
their payment adjustment would be
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determined using the most recently
available Medicare discharge data from
the FY 2013 MedPAR file, as these data
are the most recent data available. Table
14 listed in the Addendum of the
proposed rule (which is available only
through the Internet on the CMS Web
site at http://www.cms.hhs.gov/Acute
InpatientPPS/01_overview.asp) lists the
‘‘subsection (d)’’ hospitals with fewer
than 1,600 Medicare discharges based
on the December 2013 update of the FY
2013 MedPAR file and their proposed
low-volume payment adjustment for FY
2015 discharges occurring before April
1, 2015 (if eligible). We noted that the
list of hospitals with fewer than 1,600
Medicare discharges in Table 14 did not
reflect whether or not the hospital meets
the mileage criterion. Eligibility for the
low-volume hospital payment
adjustment for the first 6 months of FY
2015 would also be dependent upon
meeting the mileage criterion specified
at proposed § 412.101(b)(2)(ii); that is,
the hospital is located more than 15
road miles from any other IPPS hospital.
In addition, we indicated that if more
recent Medicare discharge data become
available, we intended to use updated
data to determine the list of ‘‘subsection
(d)’’ hospitals with fewer than 1,600
Medicare discharges based on the March
2014 update of the FY 2013 MedPAR
file and their potential low-volume
payment adjustment for FY 2015
discharges occurring before April 1,
2015 (if eligible) in Table 14 of the final
rule.
We did not receive any public
comments on our proposal that
qualifying low-volume hospitals and
their payment adjustment for FY 2015
discharges occurring before April 1,
2015 would be determined using the
most recently available Medicare
discharge data from the FY 2013
MedPAR file, as these data are the most
recent data available. Therefore, in this
final rule, as we proposed, we are
establishing that qualifying low-volume
hospitals (that is, the list of ‘‘subsection
(d)’’ hospitals with fewer than 1,600
Medicare discharges) and their potential
low-volume payment adjustment for FY
2015 discharges occurring before April
1, 2015 (if eligible) will be based on
Medicare discharge data from the March
2014 update of the FY 2013 MedPAR
file. Table 14 listed in the Addendum of
this final rule (which is available only
through the Internet on the CMS Web
site at http://www.cms.hhs.gov/Acute
InpatientPPS/01_overview.asp) lists the
‘‘subsection (d)’’ hospitals with fewer
than 1,600 Medicare discharges based
on the March 2014 update of the FY
2013 MedPAR file and their low-volume
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49999
payment adjustment for FY 2015
discharges occurring before April 1,
2015 (if eligible). We note that the list
of hospitals with fewer than 1,600
Medicare discharges in Table 14 does
not reflect whether or not the hospital
meets the mileage criterion. Eligibility
for the low-volume hospital payment
adjustment for FY 2015 discharges
occurring before April 1, 2015, is also
dependent upon meeting (in the case of
a hospital that did not qualify for the
low-volume hospital payment
adjustment in FY 2014) or continuing to
meet (in the case of a hospital that did
qualify for the low-volume hospital
payment adjustment in FY 2014) the
mileage criterion specified at revised
§ 412.101(b)(2)(ii) (that is, the hospital is
located more than 15 road miles from
any other subsection (d) hospital).
In accordance with section
1886(d)(12) of the Act, as amended,
beginning with FY 2015 discharges
occurring on or after April 1, 2015, the
low-volume hospital definition and
payment adjustment methodology will
revert back to the statutory requirements
that were in effect prior to the
amendments made by the Affordable
Care Act and subsequent legislation
(including the PAMA). Therefore, as we
stated in the proposed rule, consistent
with section 1886(d)(12) of the Act, as
amended, effective for FY 2015
discharges occurring on or after April 1,
2015 and subsequent years, in order to
qualify as a low-volume hospital, a
subsection (d) hospital must be more
than 25 road miles from another
subsection (d) hospital and have less
than 200 discharges (that is, less than
200 discharges total, including both
Medicare and non-Medicare discharges)
during the fiscal year. Consistent with
our existing policy for FYs 2005 through
2010, we stated that, effective for FY
2015 discharges occurring on or after
April 1, 2015 and subsequent years,
qualifying hospitals would receive the
low-volume hospital payment
adjustment of an additional 25 percent
for discharges occurring during the
fiscal year (or portion of the fiscal year).
Also consistent with our existing policy
for FYs 2005 through 2010, for FY 2015
discharges occurring on or after April 1,
2015 (and subsequent years), we stated
that the discharge determination for the
low-volume hospital payment
adjustment would be made based on the
hospital’s number of total discharges,
that is, Medicare and non-Medicare
discharges based on the hospital’s most
recently submitted cost report. We use
cost report data to determine if a
hospital meets the discharge criterion
because these data are the best available
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data source that includes information on
both Medicare and non-Medicare
discharges. In addition to a discharge
criterion, eligibility for the low-volume
hospital payment adjustment also
depends on the hospital meeting a
mileage criterion. As specified at
§ 412.101(b)(2)(i), to meet the mileage
criterion to qualify for the low-volume
hospital payment adjustment for FY
2015 discharges occurring on or after
April 1, 2015 (and subsequent years), a
hospital must be located more than 25
road miles from the nearest subsection
(d) hospital.
Comment: A few commenters
expressed concern about the financial
impact of the expiration of the
temporary changes in the low-volume
hospital adjustment originally provided
for by the Affordable Care Act. Some of
these commenters requested that CMS
permanently adopt the temporary
changes in the low-volume hospital
adjustment, while other commenters
urged CMS to support legislative efforts
to permanently extend these provisions
beyond the current March 31, 2015
statutory expiration date. (These
comments are similar to comments we
received previously, prior to the
statutory extensions of the temporary
changes in the low-volume hospital
adjustment for FYs 2013 and 2014
provided by subsequent legislation.)
Response: While we appreciate the
commenters’ concerns about the change
to the low-volume hospital policy that
will occur for discharges occurring on or
after April 1, 2015 under current law,
we are unable to extend the temporary
changes to the low-volume hospital
adjustment originally provided for by
the Affordable Care Act beyond the
current March 31, 2015 statutory
expiration date. As discussed in
response to similar comment in both the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53408 through 53409) and the FY
2014 IPPS/LTCH PPS final rule (78 FR
50612 through 50613), to implement the
original low-volume hospital payment
adjustment provision, and as mandated
by statute, we developed an empirically
justified adjustment based on the
relationship between costs and total
discharges of hospitals. (For more
information on this analysis, we refer
readers to the FY 2005 IPPS final rule
(69 FR 49101 through 49102).) Under
current law, the low-volume hospital
definition and payment adjustment
methodology will revert back to the
policy established under statutory
requirements that were in effect prior to
the amendments made by the Affordable
Care Act and subsequent legislation
(include the PAMA) beginning with
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discharges occurring on after April 1,
2015.
Therefore, consistent with section
1886(d)(12) of the Act, as amended,
under the conforming changes to
§ 412.101(b)(2), effective for FY 2015
discharges occurring on or after April 1,
2015, and subsequent years, in order to
qualify as a low-volume hospital, a
subsection (d) hospital must be more
than 25 road miles from another
subsection (d) hospital and have less
than 200 discharges (that is, less than
200 discharges total, including both
Medicare and non-Medicare discharges)
during the fiscal year. Consistent with
our existing policy for FYs 2005 through
2010, effective for FY 2015 discharges
occurring on or after April 1, 2015, and
subsequent years, qualifying hospitals
will receive the low-volume hospital
payment adjustment of an additional 25
percent for discharges occurring during
the fiscal year (or portion of the fiscal
year). The discharge determination for
the low-volume hospital payment
adjustment will be made based on the
hospital’s number of total discharges,
that is, Medicare and non-Medicare
discharges, as specified at
§ 412.101(b)(2)(i). The hospital’s most
recently submitted cost report is used to
determine if the hospital meets the
discharge criterion to receive the lowvolume hospital payment adjustment in
the current fiscal year. We use cost
report data to determine if a hospital
meets the discharge criterion because
these data are the best available data
source that includes information on
both Medicare and non-Medicare
discharges. In addition to a discharge
criterion, eligibility for the low-volume
hospital payment adjustment also
depends on the hospital meeting a
mileage criterion. As specified at
§ 412.101(b)(2)(i), to meet the mileage
criterion to qualify for the low-volume
hospital payment adjustment for FY
2015 discharges occurring on or after
April 1, 2015 (and subsequent years), a
hospital must be located more than 25
road miles from the nearest subsection
(d) hospital.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28091 through
28092), for FY 2015, we proposed a
process for requesting and obtaining the
low-volume hospital payment
adjustment that was consistent with our
previously established procedure. We
proposed that in order to receive a lowvolume hospital payment adjustment
under § 412.101, a hospital must notify
and provide documentation to its MAC
that it meets the discharge and distance
requirements under proposed
§ 412.101(b)(2)(ii) for FY 2015
discharges occurring before April 1,
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2015, and under proposed
§ 412.101(b)(2)(i) for FY 2015 discharges
occurring on or after April 1, 2015, if
also applicable. Specifically, for FY
2015, we proposed that a hospital must
make a written request for low-volume
hospital status that is received by its
MAC no later than September 1, 2014,
in order for the applicable low-volume
hospital payment adjustment to be
applied to payments for its discharges
occurring on or after October 1, 2014,
and through March 31, 2015, or through
September 30, 2015, for hospitals that
also meet the low-volume hospital
payment adjustment qualifying criteria
for discharges occurring during the
second half of FY 2015. Under this
proposal, a hospital that qualified for
the low-volume payment adjustment in
FY 2014 may continue to receive a lowvolume payment adjustment for FY
2015 discharges occurring before April
1, 2015, without reapplying if it
continues to meet the Medicare
discharge criterion established for FY
2015 and the distance criterion.
However, the hospital must send
written verification that is received by
its MAC no later than September 1,
2014, stating that it continues to be
more than 15 miles from any other
‘‘subsection (d)’’ hospital. We also
proposed that if a hospital’s written
request for low-volume hospital status
for FY 2015 is received after September
1, 2014, and if the MAC determines that
the hospital meets the criteria to qualify
as a low-volume hospital, the MAC
would apply the applicable low-volume
hospital payment adjustment to
determine the payment for the hospital’s
FY 2015 discharges, effective
prospectively within 30 days of the date
of its low-volume hospital status
determination.
Comment: One commenter requested
that CMS not impose a notification
requirement for hospitals that qualified
for the low-volume hospital payment
adjustment in FY 2014. The commenter
stated that eliminating this verification
would reduce the administrative burden
for those hospitals and their MACs.
Response: We appreciate the
commenter’s suggestion to reduce the
administrative burden for hospitals and
MACs by not having a notification
requirement under the FY 2015 lowvolume hospital policy for hospitals that
qualified for the low-volume hospital
payment adjustment in FY 2014.
However, as we explained in the
proposed rule, under our proposal a
hospital that qualified for the lowvolume payment adjustment in FY 2014
does not need to reapply for FY 2015 if
it continues to meet the applicable
discharge and distance criteria (that is,
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such a hospital would not have to
resubmit a low-volume hospital request
with supporting documentation to
demonstrate that it meets the mileage
criterion). Rather, such a hospital would
only be required to send written
verification that it continues to meet the
distance criterion that is received by the
MAC by the proposed notification
deadline. This written verification could
be a brief letter to the MAC stating that
the hospital continues to meet the lowvolume hospital distance criterion as
documented in a prior low-volume
hospital status request. We proposed
this abridged notification requirement
for hospitals that qualified for the lowvolume payment adjustment in FY 2014
because we believe compliance with the
statutory low-volume hospital criteria
should be monitored while recognizing
that it is not necessary to have such
hospitals resubmit a low-volume
hospital request with the necessary
documentation. In addition, if we were
to consider no longer requiring
verification for hospitals that qualified
for the low-volume hospital payment
adjustment in the prior year, we may
also want to develop alternative policies
for monitoring compliance with the
statutory low-volume hospital
qualifying criteria. Therefore, we are not
adopting the commenter’s suggestion
regarding hospitals that qualified for the
low-volume hospital payment
adjustment in FY 2014. However,
should the temporary changes to the
low-volume hospital adjustment be
extended beyond March 31, 2015, by
subsequent legislation, we may consider
modifying the verification process in
conjunction with developing an
alternative compliance policy.
In this final rule, we are adopting our
policy as proposed without
modification. Therefore, in order to
receive a low-volume hospital payment
adjustment under § 412.101, a hospital
must notify and provide documentation
to its MAC that it meets the discharge
and distance requirements under
revised § 412.101(b)(2)(ii) for FY 2015
discharges occurring before April 1,
2015, and under revised
§ 412.101(b)(2)(i) for FY 2015 discharges
occurring on or after April 1, 2015, if
also applicable. The MAC will
determine, based on the most recent
data available, if the hospital qualifies
as a low-volume hospital, so that the
hospital would know in advance
whether or not it will receive a payment
adjustment. The MAC and CMS may
review available data, in addition to the
data the hospital submits with its
request for low-volume hospital status,
in order to determine whether or not the
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hospital meets the qualifying criteria.
Consistent with our previously
established procedure, for FY 2015, a
hospital must make a written request for
low-volume hospital status that is
received by its MAC no later than
September 1, 2014, in order for the
applicable low-volume hospital
payment adjustment to be applied to
payments for its discharges occurring on
or after October 1, 2014, and through
March 31, 2015, under revised
§ 412.101(b)(2)(ii) or through September
30, 2015, for hospitals that also qualify
under revised § 412.101(b)(2)(i). A
hospital that qualified for the lowvolume payment adjustment in FY 2014
may continue to receive a low-volume
payment adjustment for FY 2015
discharges occurring before April l,
2015, without reapplying if it continues
to meet the Medicare discharge criterion
established for FY 2015 (shown in Table
14 of this final rule, which is available
via the Internet on the CMS Web site)
and the distance criterion. However, the
hospital must send written verification
that is received by its MAC no later than
September 1, 2014, that it continues to
be more than 15 miles from any other
‘‘subsection (d)’’ hospital. This written
verification could be a brief letter to the
MAC stating that the hospital continues
to meet the low-volume hospital
distance criterion as documented in a
prior low-volume hospital status
request.
If a hospital’s written request for lowvolume hospital status for FY 2015 is
received after September 1, 2014, and if
the MAC determines that the hospital
meets the criteria to qualify as a lowvolume hospital under revised
§ 412.101(b)(2)(ii), the MAC will apply
the applicable low-volume hospital
payment adjustment to determine the
payment for the hospital’s FY 2015
discharges, effective prospectively
within 30 days of the date of its lowvolume hospital status determination
through discharges occurring on or
before March 31, 2015. If the hospital
also qualifies under revised
§ 412.101(b)(2)(i), the MAC will apply
the 25-percent low-volume hospital
payment adjustment to determine the
payment for the hospital’s FY 2015
discharges occurring on or after April 1,
2015. If a hospital’s written request for
low-volume hospital status for FY 2015
is received on a later date such that the
prospective effective date would be on
or after April 1, 2015, and the hospital
qualifies under revised
§ 412.101(b)(2)(i), the MAC will apply
the 25-percent low-volume hospital
payment adjustment to determine the
payment for the hospital’s FY 2015
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discharges occurring from the
prospective effective date through
September 30, 2015. (For additional
details on our established process for
the low-volume hospital payment
adjustment, we refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR
53408).)
E. Indirect Medical Education (IME)
Payment Adjustment (§ 412.105)
1. IME Adjustment Factor for FY 2015
Under the IPPS, an additional
payment amount is made to hospitals
with residents in an approved graduate
medical education (GME) program in
order to reflect the higher indirect
patient care costs of teaching hospitals
relative to nonteaching hospitals. The
payment amount is determined by use
of a statutorily specified adjustment
factor. The regulations regarding the
calculation of this additional payment,
known as the IME adjustment, are
located at § 412.105. We refer readers to
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51680) for a full discussion of the
IME adjustment and IME adjustment
factor. Section 1886(d)(5)(B) of the Act
states that, for discharges occurring
during FY 2008 and fiscal years
thereafter, the IME formula multiplier is
1.35. Accordingly, for discharges
occurring during FY 2015, the formula
multiplier is 1.35. We estimate that
application of this formula multiplier
for the FY 2015 IME adjustment will
result in an increase in IPPS payment of
5.5 percent for every approximately 10
percent increase in the hospital’s
resident to bed ratio.
Comment: One commenter stated it
has a longstanding commitment to
graduate medical education, the practice
of academic medicine, and successful
training of surgical residents. The
commenter expressed appreciation of
Federal support of IME payments. The
commenter stated these payments are an
important part of ensuring a strong
general surgery workforce, which is
currently experiencing a growing
shortage.
Response: We acknowledge the
commenter’s support. We note that the
IME formula multiplier is set by
Congress. We are specifying in this final
rule that the IME formula multiplier for
FY 2015 is set at 1.35.
2. IME Medicare Part C Add-On
Payments to Sole Community Hospitals
(SCHs) That Are Paid According to
Their Hospital-Specific Rates and
Change in Methodology in Determining
Payment to SCHs
Section 1886(d)(11) of the Act
provides for an additional payment
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amount to a subsection (d) teaching
hospital that has an approved medical
residency training program for each
applicable discharge of any individual
who is enrolled under Medicare
Managed Care under Part C. The amount
of such payment is specified in section
1886(d)(11)(C) of the Act and ‘‘shall be
equal to the applicable percentage (as
defined in subsection (h)(3)(D)(ii)) of the
estimated average per discharge amount
that would otherwise have been paid
under paragraph (5)(B) if the individuals
had not been enrolled as described in
subparagraph (B).’’
Under section 1886(d)(5)(D) of the
Act, sole community hospitals (SCHs)
are paid based on their hospital-specific
rate from specified base years or the
IPPS Federal rate, whichever yields the
greatest aggregate payment for the
hospital’s cost reporting period.
Payments based on the Federal rate are
based on the IPPS standardized amount
and include all applicable IPPS add-on
payments, such as outliers, DSH, and
IME, while payments based on the
hospital-specific rate include no add-on
payments. Under CMS’ current payment
system, both the IME add-on payment
for Medicare Part A patient discharges
under section 1886(d)(5)(B) of the Act
and the IME add-on payment for
Medicare Part C patient discharges
under section 1886(d)(11) of the Act are
included as part of the Federal rate
payment, whereas neither of these addon payments are included as part of the
hospital-specific rate payment. We note
that SCHs that are paid based on their
hospital-specific rate do not receive a
separate IME add-on payment for
Medicare Part A patient discharges
because, generally, the hospital-specific
rate already reflects the additional costs
that a teaching hospital incurs for its
Medicare Part A patients. In the case of
Medicare Part C patients, there is no
component of the hospital-specific rate
that already accounts for the additional
costs that SCHs incur for their Medicare
Part C patients, and there is currently no
payment mechanism for SCHs paid
based on their hospital-specific rate to
receive the IME add-on payment for
Medicare Part C patients.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28092), for the
reasons specified below, effective for
discharges occurring in cost reporting
periods beginning on or after October 1,
2014, we proposed: (1) To provide all
SCHs that are subsection (d) teaching
hospitals IME add-on payments for
applicable discharges of Medicare Part C
patients in accordance with section
1886(d)(11) of the Act, regardless of
whether the SCH is paid based on the
Federal rate or its hospital-specific rate;
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and (2) that, for purposes of the
comparison of payments based on the
Federal rate (hereinafter also referred to
as the ‘‘Federal rate payment’’) and
payments based on the hospital-specific
rate (hereinafter also referred to as the
‘‘hospital-specific rate payment’’) under
section 1886(d)(5)(D) of the Act, IME
payments under section 1886(d)(11) of
the Act for Medicare Part C patients will
no longer be included as part of the
Federal rate payment. After the higher
of the Federal rate payment amount or
the hospital-specific rate payment
amount is determined, any IME add-on
payments under section 1886(d)(11) of
the Act for Medicare Part C patient
discharges would be added to that
payment for purposes of determining
the hospital’s total payment amount.
As noted above, under section
1886(d)(5)(D) of the Act, SCHs are paid
based on their hospital-specific rate or
the Federal rate, whichever yields the
higher payment for the hospital’s cost
reporting period. For each cost reporting
period, the MAC determines which of
the payment options will yield the
higher aggregate payment. Interim
payments are automatically made on a
claim-by-claim basis at the higher rate
using the best data available at the time
the MAC makes the payment
determination for each discharge.
However, it may not be possible for the
MAC to determine in advance precisely
which of the rates will yield the higher
aggregate payment by year’s end. In
many cases, it is not possible to forecast
outlier payments or the final amount of
the DSH payment adjustment or the IME
adjustment until cost report settlement.
As noted above, these adjustment
amounts are included only as part of the
payments based on the Federal rate but
not payments based on the hospitalspecific rate. The MAC makes a final
adjustment at cost report settlement
after it determines precisely which of
the two payment rates would yield the
higher aggregate payment to the hospital
for its cost reporting period. This
payment methodology makes SCHs
unique because SCH payments can
change on a yearly basis from payments
based on the hospital-specific rate to
payments based on the Federal rate, or
vice versa.
As we stated earlier, section
1886(d)(11) of the Act provides for an
additional payment for each applicable
discharge of any subsection (d) teaching
hospital for treating Medicare Part C
patients. Section 1886(d)(11)(C) of the
Act specifies that the amount of the
payment ‘‘shall be equal to the
applicable percentage (as defined in
subsection (h)(3)(D)(ii)) of the estimated
average per discharge amount that
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would otherwise have been paid under
paragraph (5)(B) if the individuals had
not been enrolled as described in
subparagraph (B)’’ (emphasis added).
Because an SCH that is paid based on
its hospital-specific rate does not
receive any IME add-on payment for
Medicare Part A patients as provided
under section 1886(d)(5)(B) of the Act,
CMS has interpreted section
1886(d)(11)(C) of the Act to mean that
an SCH that is paid based on its
hospital-specific rate also is not entitled
to receive payment for discharges of
Medicare Part C patients under section
1886(d)(11) of the Act.
After further consideration of the
language at section 1886(d)(11) of the
Act, we believe that the statute would
allow an SCH that is paid based on its
hospital-specific rate to receive IME
add-on payments for its Medicare Part C
patient discharges. Section
1886(d)(11)(A) of the Act provides for
an additional payment amount for each
applicable discharge of a Medicare Part
C patient of a subsection (d) hospital
that has an approved medical residency
training program. Section 1886(d)(11)(C)
of the Act sets forth the amount of this
additional payment, by reference to the
amount that would otherwise have been
paid under section 1886(d)(5)(B) of the
Act. We believe that section
1886(d)(11)(C) of the Act can be
interpreted as simply establishing the
methodology for calculating the amount
of the add-on payment, without limiting
the applicability of the add-on payment
to those SCHs that are paid based on the
Federal rate.
As noted earlier, currently, in making
the comparison of SCH payments under
the Federal rate and the hospitalspecific rate under section 1886(d)(5)(D)
of the Act, the aggregate Federal rate
payments are based on the IPPS
standardized amount and include IME
add-on payments for both Medicare Part
A and Medicare Part C patient
discharges. Payments based on the
hospital-specific rate do not include the
Medicare Part A IME add-on payment
under section 1886(d)(5)(B) of the Act,
under the rationale that, generally, the
hospital-specific rate already reflects the
additional costs that a teaching hospital
incurs for its Medicare Part A patients.
Payments based on the hospital-specific
rate do not include the IME add-on
payment for Medicare Part C patient
discharges under section 1886(d)(11) of
the Act. As a result, under the current
methodology, if an SCH that is a
teaching hospital is paid based on its
hospital-specific rate, it receives no
IPPS payment that reflects or accounts
for the additional costs that a teaching
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hospital incurs for its Medicare Part C
patients.
In conjunction with our proposal to
provide IME add-on payments under
section 1886(d)(11) of the Act to SCHs,
regardless of whether the SCH is paid
based on the Federal rate or its hospitalspecific rate, we also believe that, for
purposes of the comparison of payments
based on the Federal rate and the
hospital-specific rate, it would be
appropriate for IME add-on payments
under section 1886(d)(11) of the Act to
no longer be included as part of the
Federal rate payment. Therefore, we
proposed to no longer include these
payments in the comparison in order to
more accurately reflect comparable
payments for Medicare Part A patient
discharges. In addition, because the IME
add-on payment for Medicare Part C
patient discharges for a given provider
would be the same, regardless of
whether it is paid based on the Federal
rate or its hospital-specific rate, there
would be no need to include the IME
add-on payment for Medicare Part C
patient discharges in the comparison.
This is because the Part C IME
adjustment is always multiplied by the
Federal rate that is used under section
1886(d)(5)(B) of the Act, regardless of
whether the hospital-specific rate is
higher, in accordance with section
1886(d)(11) of the Act, which states that
the IME Part C add-on amount ‘‘shall be
equal to the applicable percentage . . .
of the estimated average per discharge
amount that would otherwise have been
paid under paragraph (5)(B).’’
We invited public comments on both
of these proposals and any alternatives
that we should consider.
Comment: Several commenters
supported CMS’ proposal to make IME
add-on payments for Medicare Part C
discharges to SCHs paid based on the
hospital-specific rate. Some of these
commenters also supported the proposal
to change the methodology in
determining whether an SCH is paid
based on the Federal rate or the
hospital-specific rate by excluding the
IME add-on amount for Medicare Part C
discharges from the comparison.
Although commenters supported the
proposal to make IME add-on payments
for Medicare Part C discharges to SCHs
that are paid based on the hospitalspecific rate, several commenters
objected to the proposal to make a
corresponding change to the
methodology for determining whether
an SCH is paid based on the Federal rate
or the hospital-specific rate by
excluding the IME add-on amount for
Medicare Part C discharges from the
comparison. The commenters claimed
that this change would have the
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unintended consequence of precluding
hospitals from receiving DSH and
uncompensated care payments, which
would disadvantage a subset of SCHs
that receive payment based on the
hospital-specific rate. They
recommended making no changes to the
comparison.
Response: We appreciate the
commenters’ support of our proposal to
make IME add-on payments for
Medicare Part C discharges to SCHs that
are paid based on the hospital-specific
rate. While we agree that a provider that
receives payment based on the hospitalspecific rate would not be eligible for
DSH or uncompensated care payments,
we do not agree that exclusion of the
IME add-on payment for Medicare Part
C discharges from the comparison of the
Federal rate payments to the hospitalspecific rate payments would
disadvantage a given hospital. Our
proposal does not preclude a provider
from receiving payment based on the
Federal rate (which includes DSH and
uncompensated care payments as
applicable), if the Federal rate payment
is higher than the hospital-specific rate
payment. However, it is true that a
provider that receives payment based on
the hospital-specific rate would not be
eligible for DSH or uncompensated care
payments.
As we stated in the proposed rule, we
believe that the proposed methodology
more accurately reflects the comparable
payments for Medicare Part A
discharges for SCHs. Generally the
hospital-specific rate payment already
reflects the additional costs that a
teaching hospital incurs for its Medicare
Part A patients. However, because the
costs associated with Medicare Part C
patient discharges are not reflected in
the hospital-specific rate, we believe
that excluding these amounts from the
Federal rate payment provides for a
more accurate comparison of payments
for Medicare Part A discharges. The
commenters did not provide any
explanation in support of maintaining
our current methodology of comparing
the Federal rate payment with the IME
add-on amount for Medicare Part C
discharges to the hospital-specific rate
payment. Moreover, these commenters
did not include any explanation of how
our proposal to exclude the IME add-on
payments for Medicare Part C
discharges from both sides of the
comparison would specifically
disadvantage a given provider by
precluding it from receiving DSH and
uncompensated care payments. For
these reasons, we are not adopting the
commenters’ suggestion to maintain the
current comparison methodology.
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Comment: One commenter urged
CMS to extend the same payment IME
add-on for Part C patients to MDHs
because they also are paid the higher of
the Federal rate payment or ‘‘the
blended rate incorporating a hospitalspecific rate.’’
Response: Unlike SCHs, an MDH
receives the higher of the Federal rate or
the Federal rate payment plus 75
percent of the amount by which the
Federal rate payment is exceeded by its
hospital-specific rate payments (that is,
payment based on the highest of its
hospital-specific rates based on costs in
one of its base years). Because payment,
whether in whole or in part to an MDH,
is always based on the Federal rate, an
MDH that is a teaching hospital receives
IME add-on payments for Medicare Part
A patient discharges under section
1886(d)(5)(B) of the Act, and, therefore,
under our historical interpretation of
section 1886(d)(11)(C) of the Act, is
entitled to receive IME add-on payments
for Medicare Part C patient discharges.
Consequently, there is no need to
‘‘extend’’ this payment add-on to MDHs
that are teaching hospitals because they
are already receiving IME add-on
payments for Medicare Part C
discharges. We also note that, as
explained elsewhere, the Federal rate
payment used in the MDH payment
methodology is the same Federal rate
payment that is used in the SCH
payment methodology (79 FR 28096).
This means that, under the proposed
change to the comparison methodology
to exclude IME add-on payments for
Medicare Part C discharges from the
Federal rate payment, the Federal rate
payment used for the purpose of the
MDH payment methodology, that is, to
calculate the 75 percent of the amount
by which the Federal rate payment is
exceeded by the highest of its hospitalspecific rate payments based on costs in
one of the MDH’s base years, would
likewise exclude the IME add-on
payment for Medicare Part C discharges.
After determining the higher of the
Federal rate payment or the Federal rate
payment plus 75 percent of the amount
by which the Federal rate payment is
exceeded by the hospital-specific rate
payment, any add-on payments under
section 1886(d)(11) of the Act for
Medicare Part C patient discharges will
be added to that payment for purposes
of determining the hospital’s total
payment amount.
Comment: One commenter addressed
the general payment methodology for
SCHs and the limited number of
specified years upon which the
hospital-specific rate is based. The
commenter stated that the proposal to
make additional IME Part C add-on
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payments to SCHs does not cover IME
costs for SCHs that did not have a
teaching program during or prior to FY
2006. The commenter suggested
allowing rural hospitals to rebase their
hospital-specific rate in the fiscal year
following the start of a new residency
program.
Response: We consider this comment
to be outside of the scope of the
proposals described above. We also note
that the fiscal years upon which the
hospital-specific rates are based are
specified in the statute. CMS does not
have authority to authorize a rebasing of
hospital-specific rates absent additional
legislation.
After consideration of the public
comments we received, we are adopting
our proposals without modification. In
summary, effective with discharges
occurring in cost reporting periods
beginning on or after October 1, 2014,
our final policies are: (1) To provide all
SCHs that are subsection (d) teaching
hospitals IME add-on payments for
Medicare Part C patient discharges in
accordance with section 1886(d)(11) of
the Act; and (2) for purposes of the
comparison of payments based on the
Federal rate and the hospital-specific
rate for SCHs under section
1886(d)(5)(D) of the Act, IME add-on
payments under section 1886(d)(11) of
the Act for Medicare Part C patient
discharges will no longer be included in
the aggregate payment based on the
Federal rate. After the higher of the
Federal rate payment or the hospitalspecific rate payment under section
1886(d)(5)(D) of the Act is determined,
the Part C IME adjustment factor is
multiplied by the Federal rate to
determine the add-on payment amount
under section 1886(d)(11) of the Act,
and then any IME add-on payments
under section 1886(d)(11) of the Act are
added to the payment amount under
section 1886(d)(5)(D) of the Act for
purposes of determining the hospital’s
total payment amount.
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3. Other Policy Changes Affecting IME
In section IV.K. of the preamble of
this final rule, we present other policy
changes relating to GME payments,
which may also apply to IME payments.
We refer readers to that section of the
preamble of this proposed rule where
we present these policies.
F. Payment Adjustment for Medicare
Disproportionate Share Hospitals
(DSHs) (§ 412.106)
1. Background
Section 1886(d)(5)(F) of the Act
provides for additional Medicare
payments to subsection (d) hospitals
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that serve a significantly
disproportionate number of low-income
patients. The Act specifies two methods
by which a hospital may qualify for the
Medicare disproportionate share
hospital (DSH) adjustment. Under the
first method, hospitals that are located
in an urban area and have 100 or more
beds may receive a Medicare DSH
payment adjustment if the hospital can
demonstrate that, during its cost
reporting period, more than 30 percent
of its net inpatient care revenues are
derived from State and local
government payments for care furnished
to needy patients with low incomes.
This method is commonly referred to as
the ‘‘Pickle method.’’ The second
method for qualifying for the DSH
payment adjustment, which is the most
common, is based on a complex
statutory formula under which the DSH
payment adjustment is based on the
hospital’s geographic designation, the
number of beds in the hospital, and the
level of the hospital’s disproportionate
patient percentage (DPP). A hospital’s
DPP is the sum of two fractions: The
‘‘Medicare fraction’’ and the ‘‘Medicaid
fraction.’’ The Medicare fraction (also
known as the ‘‘SSI fraction’’ or ‘‘SSI
ratio’’) is computed by dividing the
number of the hospital’s inpatient days
that are furnished to patients who were
entitled to both Medicare Part A and
Supplemental Security Income (SSI)
benefits by the hospital’s total number
of patient days furnished to patients
entitled to benefits under Medicare Part
A. The Medicaid fraction is computed
by dividing the hospital’s number of
inpatient days furnished to patients
who, for such days, were eligible for
Medicaid, but were not entitled to
benefits under Medicare Part A, by the
hospital’s total number of inpatient days
in the same period.
Because the DSH payment adjustment
is part of the IPPS, the DSH statutory
references (under section 1886(d)(5)(F)
of the Act) to ‘‘days’’ apply only to
hospital acute care inpatient days.
Regulations located at § 412.106 govern
the Medicare DSH payment adjustment
and specify how the DPP is calculated
as well as how beds and patient days are
counted in determining the Medicare
DSH payment adjustment. Under
§ 412.106(a)(1)(i), the number of beds for
the Medicare DSH payment adjustment
is determined in accordance with bed
counting rules for the IME adjustment
under § 412.105(b).
2. Impact on Medicare DSH Payment
Adjustment of Implementation of New
OMB Labor Market Delineations
As discussed in section III.B. of the
preamble of this final rule, in the FY
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2015 IPPS/LTCH PPS proposed rule, we
proposed to implement the new OMB
labor market area delineations (which
are based on 2010 Decennial Census
data) for the FY 2015 wage index. We
stated that this proposal also would
have an impact on the calculation of
Medicare DSH payments to certain
hospitals. Hospitals that are designated
as rural with less than 500 beds and that
are not rural referral centers (RRCs) are
subject to a maximum DSH payment
adjustment of 12 percent. Accordingly,
hospitals with less than 500 beds that
are currently in urban counties that
would become rural if we adopt the new
OMB delineations, and that do not
become RRCs, would be subject to a
maximum DSH payment adjustment of
12 percent. (We note that urban
hospitals are only subject to a maximum
DSH payment adjustment of 12 percent
if they have less than 100 beds.)
Under existing regulations at 42 CFR
412.102, a hospital located in an area
that is reclassified from urban to rural,
as defined in the regulations, may
receive an adjustment to its rural
Federal payment amount for operating
costs for two successive fiscal years.
Specifically, the regulations state that,
in the first year after a hospital loses
urban status, the hospital will receive an
additional payment that equals twothirds of the difference between the
urban standardized amount and
disproportionate share payments as
applicable to the hospital before its
redesignation from urban to rural and
the rural standardized amount and
disproportionate share payments
otherwise applicable to the hospital
subsequent to its redesignation from
urban to rural. In the second year after
a hospital loses urban status, the
hospital will receive an additional
payment that equals one-third of the
difference between the urban
standardized amount and
disproportionate share payments
applicable to the hospital before its
redesignation from urban to rural and
the rural standardized amount and
disproportionate share payments
otherwise applicable to the hospital
subsequent to its redesignation from
urban to rural.
We note that we no longer make a
distinction between the urban
standardized amount and the rural
standardized amount. Rather, hospitals
receive the same standardized amount
regardless of their geographic
designation. Accordingly, we proposed
to revise the regulation at § 412.102 to
remove references to the urban and rural
standardized amounts.
We did not receive any public
comments on this proposal and we are
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adopting the revisions to the regulation
at § 412.102 to remove references to the
urban and rural standardized amounts.
The provisions of § 412.102 will
continue to apply with respect to the
calculation of the DSH payments to
hospitals that are currently located in
urban counties that will become rural
under our adoption of the new OMB
delineations as described in section
III.B.2. of the preamble to this final rule.
Specifically, the regulations state that,
in the first year after a hospital loses
urban status, the hospital will receive an
additional payment that equals twothirds of the difference between
disproportionate share payments as
applicable to the hospital before its
redesignation from urban to rural and
the disproportionate share payments
otherwise applicable to the hospital
subsequent to its redesignation from
urban to rural. In the second year after
a hospital loses urban status, the
hospital will receive an additional
payment that equals one-third of the
difference between the disproportionate
share payments applicable to the
hospital before its redesignation from
urban to rural and the disproportionate
share payments otherwise applicable to
the hospital subsequent to its
redesignation from urban to rural.
For the purposes of ratesetting,
calculating budget neutrality, and
modeling payment impacts for this final
rule, any hospital that was previously
urban but will change to rural status in
FY 2015 as a result of the adoption of
the new OMB labor market area
delineations will have its DSH
payments modeled such that the
payment equals the amount of the rural
disproportionate share payments plus
two-thirds of the difference between the
urban disproportionate share payments
and the rural disproportionate share
payments.
3. Payment Adjustment Methodology for
Medicare Disproportionate Share
Hospitals (DSHs) Under Section 3133 of
the Affordable Care Act (§ 412.106)
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a. General Discussion
Section 3133 of the Patient Protection
and Affordable Care Act, as amended by
section 10316 of the same act and
section 1104 of the Health Care and
Education Reconciliation Act (Pub. L.
111–152), added a new section 1886(r)
to the Act that modifies the
methodology for computing the
Medicare DSH payment adjustment
beginning in FY 2014. For purposes of
this proposed rule, we refer to these
provisions collectively as section 3133
of the Affordable Care Act.
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Medicare DSH adjustment payments
are calculated under a statutory formula
that considers the hospital’s Medicare
utilization attributable to beneficiaries
who also receive Supplemental Security
Income (SSI) benefits and the hospital’s
Medicaid utilization. Beginning with
discharges in FY 2014, hospitals that
qualify for Medicare DSH payments
under section 1886(d)(5)(F) of the Act
receive 25 percent of the amount they
previously would have received under
the statutory formula for Medicare DSH
payments. This provision applies
equally to hospitals that qualify for DSH
payments under section
1886(d)(5)(F)(i)(I) of the Act and those
hospitals that qualify under the Pickle
method under section 1886(d)(5)(F)(i)(II)
of the Act.
The remaining amount, equal to an
estimate of 75 percent of what otherwise
would have been paid as Medicare DSH
payments, reduced to reflect changes in
the percentage of individuals under age
65 who are uninsured, is available to
make additional payments to each
hospital that qualifies for Medicare DSH
payments and that has uncompensated
care. The payments to each hospital for
a fiscal year are based on the hospital’s
amount of uncompensated care for a
given time period relative to the total
amount of uncompensated care for that
same time period reported by all
hospitals that receive Medicare DSH
payments for that fiscal year.
As provided by section 3133 of the
Affordable Care Act, section 1886(r) of
the Act requires that, for FY 2014 and
each subsequent fiscal year, a
‘‘subsection (d) hospital’’ that would
otherwise receive a ‘‘disproportionate
share hospital payment . . . made
under subsection (d)(5)(F)’’ receives two
separately calculated payments.
Specifically, section 1886(r)(1) of the
Act provides that the Secretary shall pay
to such a subsection (d) hospital
(including a Pickle hospital) 25 percent
of the amount the hospital would have
received under section 1886(d)(5)(F) of
the Act for disproportionate share
hospital payments, which represents
‘‘the empirically justified amount for
such payment, as determined by the
Medicare Payment Advisory
Commission in its March 2007 Report to
the Congress.’’ We refer to this payment
as the ‘‘empirically justified Medicare
DSH payment.’’
In addition to this payment, section
1886(r)(2) of the Act provides that, for
FY 2014 and each subsequent fiscal
year, the Secretary shall pay to ‘‘such
subsection (d) hospital an additional
amount equal to the product of’’ three
factors. The first factor is the difference
between ‘‘the aggregate amount of
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50005
payments that would be made to
subsection (d) hospitals under
subsection (d)(5)(F) if this subsection
did not apply’’ and ‘‘the aggregate
amount of payments that are made to
subsection (d) hospitals under
paragraph (1)’’ for each fiscal year.
Therefore, this factor amounts to 75
percent of the payments that would
otherwise be made under section
1886(d)(5)(F) of the Act.
The second factor is, for FYs 2014
through 2017, 1 minus the percent
change in the percent of individuals
under the age of 65 who are uninsured,
determined by comparing the percent of
such individuals who are uninsured in
2013, the last year before coverage
expansion under the Affordable Care
Act (as calculated by the Secretary
based on the most recent estimates
available from the Director of the
Congressional Budget Office before a
vote in either House on the Health Care
and Education Reconciliation Act of
2010 that, if determined in the
affirmative, would clear such Act for
enrollment), minus 0.1 percentage
points for FY 2014, and minus 0.2
percentage points for FYs 2015 through
2017. For FYs 2014 through 2017, the
baseline for the estimate of the change
in uninsurance is fixed by the most
recent estimate of the Congressional
Budget Office before the final vote on
the Health Care and Education
Reconciliation Act of 2010, which is
contained in a March 20, 2010 letter
from the Director of the Congressional
Budget Office to the Speaker of the
House. (A link to this letter is included
in section IV.F.3.d.(2) of the preamble of
this final rule.)
For FY 2018 and subsequent years,
the second factor is 1 minus the percent
change in the percent of individuals
who are uninsured, as determined by
comparing the percent of individuals
‘‘who are uninsured in 2013 (as
estimated by the Secretary, based on
data from the Census Bureau or other
sources the Secretary determines
appropriate, and certified by the Chief
Actuary’’ of CMS, and the percent of
individuals ‘‘who are uninsured in the
most recent period for which data is
available (as so estimated and certified),
minus 0.2 percentage points for FYs
2018 and 2019.’’ Therefore, for FY 2018
and subsequent years, the statute
provides some greater flexibility in the
choice of the data sources to be used for
the estimate of the change in the percent
of uninsured individuals.
The third factor is a percent that, for
each subsection (d) hospital, ‘‘represents
the quotient of . . . the amount of
uncompensated care for such hospital
for a period selected by the Secretary (as
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estimated by the Secretary, based on
appropriate data . . .),’’ including the
use of alternative data ‘‘where the
Secretary determines that alternative
data is available which is a better proxy
for the costs of subsection (d) hospitals
for . . . treating the uninsured,’’ and
‘‘the aggregate amount of
uncompensated care for all subsection
(d) hospitals that receive a payment
under this subsection.’’ Therefore, this
third factor represents a hospital’s
uncompensated care amount for a given
time period relative to the
uncompensated care amount for that
same time period for all hospitals that
receive Medicare DSH payments in that
fiscal year, expressed as a percent. For
each hospital, the product of these three
factors represents its additional
payment for uncompensated care for the
applicable fiscal year. We refer to the
additional payment determined by these
factors as the ‘‘uncompensated care
payment.’’
Section 1886(r) of the Act applies to
FY 2014 and each subsequent fiscal
year. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50620 through 50647)
and the FY 2014 IPPS interim final rule
with comment period (78 FR 61191
through 61197), we set forth our policies
for implementing the required changes
to the DSH payment methodology made
by section 3133 of the Affordable Care
Act for FY 2014. In those rules, we
noted that, because section 1886(r) of
the Act modifies the payment required
under section 1886(d)(5)(F) of the Act,
it affects only the DSH payment under
the operating IPPS. It does not revise or
replace the capital IPPS DSH payment
provided under the regulations at 42
CFR Part 412, Subpart M, which were
established through the exercise of the
Secretary’s discretion in implementing
the capital IPPS under section
1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act
provides that there shall be ‘‘no
administrative or judicial review under
section 1869, section 1878, or
otherwise’’ of ‘‘any estimate of the
Secretary for purposes of determining
the factors described in paragraph (2),’’
or of ‘‘any period selected by the
Secretary’’ for the purpose of
determining those factors. Therefore,
there is no administrative or judicial
review of the estimates developed for
purposes of applying the three factors
used to determine uncompensated care
payments, or the periods selected in
order to develop such estimates.
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b. Eligibility for Empirically Justified
Medicare DSH Payments and
Uncompensated Care Payments
As indicated earlier, the payment
methodology under section 3133 of the
Affordable Care Act applies to
‘‘subsection (d) hospitals’’ that would
otherwise receive a ‘‘disproportionate
share hospital payment . . . made
under subsection (d)(5)(F).’’ Therefore,
eligibility for empirically justified
Medicare DSH payments is unchanged
under section 3133 of the Affordable
Care Act. Consistent with the law,
hospitals must receive empirically
justified Medicare DSH payments in a
fiscal year to receive an additional
Medicare uncompensated care payment
for that year. Specifically, section
1886(r)(2) of the Act states that ‘‘[i]n
addition to the payment made to a
subsection (d) hospital under paragraph
(1) . . . the Secretary shall pay to such
subsection (d) hospital an additional
amount . . .’’ (emphasis supplied).
Because paragraph (1) refers to
empirically justified Medicare DSH
payments, the additional payment
under section 1886(r)(2) of the Act
therefore, is limited to hospitals that
receive empirically justified Medicare
DSH payments in accordance with
section 1886(r)(1) of the Act for the
applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50622) and the FY 2014
IPPS interim final rule with comment
period (78 FR 61193), we provided that
hospitals that are not eligible to receive
empirically justified Medicare DSH
payments in a fiscal year will not
receive uncompensated care payments
for that year. We also specified that we
would make a determination concerning
eligibility for interim uncompensated
care payments based on each hospital’s
estimated DSH status for the applicable
fiscal year (using the most recent data
that are available). We indicated that
our final determination on the hospital’s
eligibility for uncompensated care
payments would be based on the
hospital’s actual DSH status on the cost
report for that payment year.
In the FY 2014 IPPS/LTCH PPS final
rule, we also considered whether
several specific classes of hospitals are
included within the scope of section
1886(r) of the Act. As we specified in
that final rule (78 FR 50623), subsection
(d) Puerto Rico hospitals that are
eligible for DSH payments also are
eligible to receive empirically justified
Medicare DSH payments and
uncompensated care payments under
the new payment methodology.
Comment: Several commenters
representing the hospital community of
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Puerto Rico stated that the DSH
payment methodology has historically
disadvantaged hospitals in Puerto Rico
because U.S. citizens residing in Puerto
Rico are not entitled to SSI benefits.
Because the formula prior to the
enactment section 3133 of the
Affordable Care Act relied so heavily on
SSI and because SSI is statutorily
excluded for citizens residing on Puerto
Rico, these commenters asserted that
DSH payments to Puerto Rico hospitals
were disproportionately depressed in
comparison to payments to hospitals in
the 50 States. The commenters
acknowledged that the new DSH
payment formula implemented in FY
2014 represents an improvement
because it significantly reduces the
value of SSI enrollment in calculating
DSH payments. However, the
commenters also contended that the
continued reliance under the new
formula upon SSI enrollment means
that payments remain unintentionally
and unfairly lowered for hospitals in
Puerto Rico. In particular, the
commenters noted that one of the three
factors in determining the
uncompensated care payment is
intended to account for a hospital’s
specific portion of uncompensated care
as a percent of uncompensated care by
all hospitals. They stated that although
CMS has adopted a policy of measuring
uncompensated care as the sum of
insured low-income Medicaid patient
days and SSI days, the use SSI days in
determining uncompensated care is not
required by statute. Rather, they noted
that the statute (section1886(r)(2)(C) of
the Act) states only that the Secretary
determine uncompensated care ‘‘as
estimated by the Secretary, based on
appropriate data.’’ Therefore, the
commenters pointed out that CMS has
the discretion to consider other data in
place of SSI days to determine
uncompensated care. The commenters
maintained that the Secretary is
obligated to identify a substitute data
source for Puerto Rico because section
1886(d)(9)(D) requires the Secretary to
ensure that Medicare DSH payments
made to Puerto Rico hospitals are made
‘‘in the same manner and to the extent
as they apply’’ to PPS hospitals in the
United States. The commenters believed
that the revised DSH formula fails to
make payments to Puerto Rico hospitals
‘‘in the same manner’’ because it factors
in and is based upon an indicator that
is not even available in Puerto Rico.
Therefore, the commenters believed that
DSH payments are applied in a
disproportionately reduced manner to
Puerto Rico hospitals based upon the
inclusion of SSI data. The commenters
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believed that this outcome is illogical
because the main purpose of the DSH
payment is to compensate hospitals for
the higher costs of treating low-income
Medicare patients.
Response: As we discussed in the
proposed rule, we believe that SSI data
combined with Medicaid data are the
best data currently available for
estimating hospitals’ uncompensated
care burdens. Accordingly, we proposed
to use both SSI and Medicaid data in
our estimates of uncompensated care for
all hospitals. We employ the same
payment methodology for hospitals in
Puerto Rico and the 50 States, and
therefore, consistent with section
1886(d)(9)(D) of the Act, Medicare DSH
payments are made to subsection (d)
Puerto Rico hospitals ‘‘in the same
manner and to the extent as they apply’’
elsewhere. Accordingly, we do not agree
with the commenters that the statute
requires us to develop an alternative
methodology for making
uncompensated care payments to
hospitals in Puerto Rico. Nevertheless,
we will consider the issues posed by the
commenters for future rulemaking. We
would also point out that hospitals in
Puerto Rico experienced a significant
increase in Medicare DSH payments
under the new uncompensated care
provision. For example, the impact
statement in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 51009) showed
that Puerto Rico hospitals were
expected to experience a 41.3 percent
increase in payments from the
implementation of the new Medicare
DSH payment methodology under
section 3133 of the Affordable Care Act.
In addition, in the FY 2014 IPPS/
LTCH PPS final rule, we considered
whether Maryland hospitals that were
paid under section 1814(b)(3) of the Act
would be eligible to receive
uncompensated care payments. We
explained that, under section 1814(b) of
the Act, hospitals in the State of
Maryland were subject to a waiver from
the Medicare payment methodologies
under which they would otherwise be
paid. Because Maryland waiver
hospitals were not paid under the IPPS
(section 1886(d) of the Act), in the FY
2014 IPPS/LTCH PPS final rule, we
determined that Maryland hospitals that
operated under a waiver under section
1814(b)(3) of the Act were not eligible
to receive empirically justified Medicare
DSH payments and uncompensated care
payments under the payment
methodology of section 1886(r) of the
Act (78 FR 50623). As stated in section
IV.H. of the preamble of this final rule,
effective January 1, 2014, the State of
Maryland elected to no longer have
Medicare pay Maryland hospitals in
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accordance with section 1814(b)(3) of
the Act and entered into an agreement
with CMS that Maryland hospitals will
be paid under the Maryland All-Payer
Model. However, under the Maryland
All-Payer Model, Maryland hospitals
still are not paid under the IPPS.
Therefore, they remain ineligible to
receive empirically justified Medicare
DSH payments or the uncompensated
care payments under section 1886(r) of
the Act.
SCHs are paid based on their hospitalspecific rate from certain specified base
years or the IPPS Federal rate,
whichever yields the greater aggregate
payment for the hospital’s cost reporting
period. If an SCH is paid under its
hospital-specific rate, it is not eligible
for Medicare DSH payments. In order to
implement the provisions of section
1886(r) of the Act, in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50624), we
specified that we will continue to
determine interim payments for SCHs
based on what we estimate and project
their DSH status to be prior to the
beginning of the Federal fiscal year
(based on the best available data at that
time), subject to settlement through the
cost report. We also specified that SCHs
that receive interim empirically justified
Medicare DSH payments in a fiscal year
would receive interim uncompensated
care payments for that fiscal year on a
per discharge basis, subject as well to
settlement through the cost report. Final
eligibility determinations will be made
at the end of the cost reporting period
at settlement, and both interim
empirically justified Medicare DSH
payments and uncompensated care
payments will be adjusted accordingly.
Therefore, we follow the same processes
of interim and final payments for SCHs
that we follow for eligible IPPS DSH
hospitals generally.
Comment: One commenter stated that
the uncompensated care payment
amount should be excluded from the
payment under the Federal rate when
being compared to payments under the
hospital-specific rate in order to
determine which payment rate an SCH
receives. The commenter stated that the
hospital-specific rate does not include
the cost of care for indigent patients
and, therefore, the uncompensated care
payment amount should not be part of
the comparison of the Federal payment
and the hospital-specific payment. The
commenter also stated that the
uncompensated care payment should be
given to a qualifying SCH, regardless of
whether the SCH is paid under the
hospital-specific rate or the Federal rate.
Response: We addressed a similar
comment in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50624) where we
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50007
stated that we did not agree that an SCH
that is paid under the hospital-specific
rate should also receive an
uncompensated care payment. We
found that section 1886(r)(2) of the Act
specifies that the uncompensated care
payment amount is made in addition to
the empirically justified Medicare DSH
payment under section 1886(r)(1) of the
Act. Therefore, in order to receive an
uncompensated care payment, a
hospital must receive an empirically
justified Medicare DSH payment and if
an SCH is paid under the hospitalspecific rate, it does not receive an
empirically justified Medicare DSH
payment. Furthermore, for the reasons
that we discussed in the FY 2014 IPPS/
LTCH PPS final rule, we believe it is
appropriate to include the
uncompensated care payment amount
in the payment under the Federal rate
for purposes of making the comparison
to the hospital-specific payment rate.
MDHs are paid based on the IPPS
Federal rate or, if higher, the IPPS
Federal rate plus 75 percent of the
amount by which the Federal rate is
exceeded by the updated hospitalspecific rate from certain specified base
years (76 FR 51684). The IPPS Federal
rate used in the MDH payment
methodology is the same IPPS Federal
rate that is used in the SCH payment
methodology. Uncompensated care
payments to MDHs were not explicitly
addressed in the FY 2014 IPPS/LTCH
PPS final rule because, at the time of the
publication of the final rule, the MDH
program was set to expire at the end of
FY 2013. Since the publication of the
FY 2014 IPPS/LTCH PPS final rule, the
MDH program was extended from
October 1, 2013, to March 31, 2014,
under the Pathway for SGR Reform Act
(Pub. L. 113–67) and was further
extended an additional year from April
1, 2014, to March 31, 2015, by the
Protecting Access to Medicare Act of
2014 (Pub. L. 113–93). Because MDHs
are paid under the IPPS Federal rate
and, therefore, are eligible to receive
Medicare DSH payments if their
disproportionate patient percentage is at
least 15 percent, we apply the same
process to determine eligibility for
Medicare DSH and the uncompensated
care payment as we do for all other IPPS
hospitals. That is, we make a
determination concerning eligibility for
interim uncompensated care payments
based on each hospital’s estimated DSH
status for the applicable fiscal year
(using the most recent data that are
available) and our final determination
on the hospital’s eligibility for
uncompensated care payments would
be based on the hospital’s actual DSH
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status on the cost report for that
payment year. In addition, as we do for
all IPPS hospitals, we would calculate a
numerator for Factor 3 for all MDHs,
regardless of whether they are projected
to be eligible for DSH during the fiscal
year, but the denominator for Factor 3
would be based on the uncompensated
care data from the hospitals that we
have projected to be eligible for DSH
during the fiscal year.
Furthermore, in the FY 2014 IPPS
interim final rule with comment period
(79 FR 15027), which addressed MDH
payments for the first 6 months of FY
2014, we established a policy of
including a pro rata share of the
uncompensated care payment amount
for that period as part of the Federal rate
payment in the comparison of payments
under the hospital-specific rate and the
Federal rate. Consistent with that
policy, for MDH payments for the first
6 months of FY 2015, a pro rata share
of the uncompensated care payment
amount for that period will be included
as part of the Federal rate payment in
the comparison of payments under the
hospital-specific rate and the Federal
rate. That is, in making this comparison
at cost report settlement, we will
include the pro rata share of the
uncompensated care payment amount
that reflects the period of time the
hospital was paid under the MDH
program for its discharges occurring on
or after October 1, 2014, and before
April 1, 2015. Consistent with the
policy for hospitals with Medicare cost
reporting periods that span more than 1
Federal fiscal year, this pro rata share
will be determined based on the
proportion of the applicable Federal
fiscal year that is included in that cost
reporting period (78 FR 61192 through
61194). As noted previously, section
106 of Public Law 113–93 provides for
an extension of the MDH program
through March 31, 2015, only.
Therefore, beginning April 1, 2015, all
hospitals that previously qualified for
MDH status will no longer have MDH
status under current law.
IPPS hospitals that have elected to
participate in the Bundled Payments for
Care Improvement initiative receive a
payment that links multiple services
furnished to a patient during an episode
of care. We have stated in previous
rulemaking that those hospitals
continue to be paid under the IPPS (77
FR 53342). Hospitals that elect to
participate in the initiative can still
receive DSH payments while
participating in the initiative, if they
otherwise meet the requirements for
receiving such payments. In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50625), we specified that we will apply
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the new DSH payment methodology to
the hospitals participating in this
initiative, so that eligible hospitals will
receive empirically justified Medicare
DSH payments and uncompensated care
payments.
Section 410A of the Medicare
Modernization Act established the Rural
Community Hospital Demonstration
Program. After the initial 5-year period,
the demonstration was extended for an
additional 5-year period by sections
3123 and 10313 of the Affordable Care
Act. There are 23 hospitals currently
participating in the demonstration.
Under the payment methodology
provided in section 410A, participating
hospitals receive payment for Medicare
inpatient services on the basis of a cost
methodology. Specifically, for
discharges occurring in the hospitals’
first cost reporting period of the initial
5-year demonstration or the first cost
reporting period of the 5-year extension,
the hospitals participating in the
demonstration receive payments for the
reasonable cost of providing such
services. For discharges occurring in
subsequent cost reporting periods
during the applicable 5-year period,
hospitals receive the lesser of the
current year’s reasonable cost-based
amount, or the previous year’s amount
updated by the percentage increase in
the IPPS market basket (the target
amount). The instructions (Change
Request 5020 (April 14, 2006) and
Change Request 7505 (July 22, 2011)) for
the demonstration require that the MAC
not pay Medicare DSH payments in
addition to the amount received under
the reasonable cost-based payment
methodology. Because hospitals
participating in the demonstration do
not receive DSH payments, we
determined in the FY 2014 IPPS/LTCH
PPS final rule that these hospitals also
are excluded from receiving empirically
justified Medicare DSH payments and
uncompensated care payments under
the new payment methodology (78 FR
50625).
c. Empirically Justified Medicare DSH
Payments
As we have discussed earlier, section
1886(r)(1) of the Act requires the
Secretary to pay 25 percent of the
amount of the DSH payment that would
otherwise be made under subsection
(d)(5)(F) to a subsection (d) hospital.
Because section 1886(r)(1) of the Act
merely requires the program to pay a
designated percentage of these
payments, without revising the criteria
governing eligibility for DSH payments
or the underlying payment
methodology, we stated in the FY 2014
IPPS/LTCH PPS final rule that we did
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not believe that it is necessary to
develop any new operational
mechanisms for making such payments.
Therefore, in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50626), we
implemented this provision simply by
revising the claims payment
methodologies to adjust the interim
claim payments to the requisite 25
percent of what would have otherwise
been paid. We also made corresponding
changes to the hospital cost report so
that these empirically justified Medicare
DSH payments can be settled at the
appropriate level at the time of cost
report settlement. We provided more
detailed operational instructions and
cost report instructions following
issuance of the final rule that can be
found on the CMS Web site at: http://
www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2014Transmittals-Items/R5P240.html.
d. Uncompensated Care Payments
As we have discussed earlier, section
1886(r)(2) of the Act provides that, for
each eligible hospital in FY 2014 and
subsequent years, the new
uncompensated care payment is the
product of three factors. These three
factors represent our estimate of 75
percent of the amount of Medicare DSH
payments that would otherwise have
been paid, an adjustment to this amount
for the percent change in the national
rate of uninsurance compared to the rate
of uninsurance in 2013, and each
eligible hospital’s estimated
uncompensated care amount relative to
the estimated uncompensated care
amount for all eligible hospitals. Below
we review the data sources and
methodologies for computing each of
these factors, our final policies for FY
2014, and our proposed and final
policies for FY 2015.
(1) Calculation of Factor 1 for FY 2015
Section 1886(r)(2)(A) of the Act
establishes Factor 1 in the calculation of
the uncompensated care payment.
Section 1886(r)(2)(A) of the Act states
that it is a factor ‘‘equal to the difference
between (i) the aggregate amount of
payments that would be made to
subsection (d) hospitals under
subsection (d)(5)(F) if this subsection
did not apply for such fiscal year (as
estimated by the Secretary); and (ii) the
aggregate amount of payments that are
made to subsection (d) hospitals under
paragraph (1) for such fiscal year (as so
estimated).’’ Therefore, section
1886(r)(2)(A)(i) of the Act represents the
estimated Medicare DSH payment that
would have been made under section
1886(d)(5)(F) if section 1886(r) of the
Act did not apply for such fiscal year.
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Under a prospective payment system,
we would not know the precise
aggregate Medicare DSH payment
amount that would be paid for a Federal
fiscal year until cost report settlement
for all IPPS hospitals is completed,
which occurs several years after the end
of the Federal fiscal year. Therefore,
section 1886(r)(2)(A)(i) of the Act
provides authority to estimate this
amount, by specifying that, for each
fiscal year to which the provision
applies, such amount is to be ‘‘estimated
by the Secretary.’’ Similarly, section
1886(r)(2)(A)(ii) of the Act represents
the estimated empirically justified
Medicare DSH payments to be made in
a fiscal year, as prescribed under section
1886(r)(1) of the Act. Again, section
1886(r)(2)(A)(ii) of the Act provides
authority to estimate this amount.
Therefore, Factor 1 is the difference
between our estimates of: (1) The
amount that would have been paid in
Medicare DSH payments for the fiscal
year, in the absence of the new payment
provision; and (2) the amount of
empirically justified Medicare DSH
payments that are made for the fiscal
year, which takes into account the
requirement to pay 25 percent of what
would have otherwise been paid under
section 1886(d)(5)(F) of the Act. In other
words, this factor represents our
estimate of 75 percent (100 percent
minus 25 percent) of our estimate of
Medicare DSH payments that would
otherwise be made, in the absence of
section 1886(r) of the Act, for the fiscal
year.
In order to determine Factor 1 in the
uncompensated care payment formula,
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50628 through 50630) and
in the FY 2014 IPPS interim final rule
with comment period (78 FR 61194), we
adopted a policy under which we
develop final estimates of both the
aggregate amount of Medicare DSH
payments that would be made in the
absence of section 1886(r)(1) of the Act
and the aggregate amount of empirically
justified Medicare DSH payments to
hospitals under section 1886(r)(1) of the
Act prior to each fiscal year to which
the new provision applies. These
estimates are not revised or updated
after we know the final Medicare DSH
payments for the fiscal year.
Specifically, in order to determine the
two elements of Factor 1 (Medicare DSH
payments prior to the application of
section 1886(r)(1) of the Act, and
empirically justified Medicare DSH
payments after application of section
1886(r)(1) of the Act), we use the most
recently available projections of
Medicare DSH payments for the fiscal
year, as calculated by CMS’ Office of the
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Actuary. The Office of the Actuary
projects Medicare DSH payments on a
biannual basis, typically in February of
each year (based on data from December
of the previous year) as part of the
President’s Budget, and in July (based
on data from June) as part of the
Midsession Review. The estimates are
based on the most recently filed
Medicare hospital cost report with
Medicare DSH payment information,
cost report data provided by Indian
Health Service (IHS) hospitals to CMS,
and the most recent Medicare DSH
patient percentages and Medicare DSH
payment adjustments provided in the
IPPS Impact File.
Therefore, for the Office of the
Actuary’s February 2014 estimate, the
data were based on the December 2013
update of the Medicare Hospital Cost
Report Information System (HCRIS),
cost report data provided by IHS
hospitals to CMS as of December 2013
and the FY 2014 IPPS/LTCH PPS final
rule IPPS Impact file, published in
conjunction with the publication of the
FY 2014 IPPS/LTCH PPS final rule. For
the July 2014 estimate, the data are
based on the March 2014 update of the
HCRIS data, cost report data provided
by IHS hospitals to CMS as of March
2014, and the FY 2015 IPPS Proposed
Rule Impact File, published in
conjunction with the FY 2015 IPPS/
LTCH PPS proposed rule (and which is
available via the Internet on the CMS
Web site). For purposes of the proposed
rule, we used the February 2014
Medicare DSH estimates to calculate
Factor 1 and to model the proposed
impact of this provision. For this final
rule, we use the July 2014 Medicare
DSH estimates to determine Factor 1
and to model the impact of this
provision. In addition, because SCHs
paid under their hospital-specific
payment rate are excluded from the
application of section 1886(r) of the Act,
we also exclude SCHs that are projected
to be paid under their hospital-specific
rate from our Medicare DSH estimates.
Similarly, because Maryland hospitals
participating in the Maryland All-Payer
Model and hospitals participating in the
Rural Community Hospital
Demonstration do not receive DSH
payments, we also exclude these
hospitals from our Medicare DSH
estimates.
Using the data sources discussed
above, the Office of the Actuary uses the
most recently submitted Medicare cost
report data to identify current Medicare
DSH payments, cost report data
provided by IHS hospitals to CMS, and
the most recent DSH payment
adjustments provided in the IPPS
Impact File, and applies inflation
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50009
updates and assumptions for future
changes in utilization and case-mix to
estimate Medicare DSH payments for
the upcoming fiscal year. The February
2014 Office of the Actuary estimate for
Medicare DSH payments for FY 2015,
without regard to the application of
section 1886(r)(1) of the Act, was
$14.205 billion. This estimate excludes
Maryland hospitals participating in the
Maryland All-Payer Model, SCHs paid
under their hospital-specific payment
rate, and hospitals participating in the
Rural Community Hospital
Demonstration as discussed above.
Therefore, based on this estimate, the
estimate for empirically justified
Medicare DSH payments for FY 2015,
with the application of section
1886(r)(1) of the Act, was $14.205
billion (25 percent of the total amount
estimated). Under § 412.l06(g)(1)(i) of
the regulations, Factor 1 is the
difference between these two estimates
of the Office of the Actuary. Therefore,
for the purpose of modeling Factor 1, we
proposed that Factor 1 for FY 2015
would be $10.654 billion ($14.205
billion minus $3.551 billion). We
invited public comment on our
proposed calculation of Factor 1 for FY
2015.
Comment: A number of commenters
supported CMS’ methodology for
determining Factor 1 and/or the
proposed Factor 1 for FY 2015.
However, other commenters complained
that CMS did not provide enough
information in the proposed rule
regarding the methodologies,
calculations, and data sources used to
develop this and other estimates to
provide a sufficient basis for comment.
With regard to the estimate of Factor 1
in particular, these commenters
contend:
• The estimated DSH payments do
not account for the impact of Allina v.
Sebelius, by excluding Medicare
Advantage days from the SSI ratio and
including dual-eligible Medicare
Advantage days in the Medicaid
fraction, thus understating Factor 1 DSH
estimate.
• The 2012 estimated DSH payments
of $11.720 billion figure is understated
because the 2012 ‘‘update’’ factor
(provided for in the FY 2015 IPPS
Proposed Rule DSH Supplemental Data
File that displays the Office of the
Actuary’s assumptions in determining
the Medicare DSH estimate) is
understated. Specifically, a 1.1 percent
increase in light of the Cape Cod
litigation result was not applied. As a
result, instead of a ¥0.1 percent update
factor, the projection should use a +1.0
percent update factor. Therefore the
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2012 estimated DSH amount should be
$11.732 billion.
• The estimate of DSH payments for
FY 2015 of $14.205 billion is
understated because the 2015 update
factor is understated. Specifically, the
productivity adjustment should be 0.4
percent (as projected in the FY 2015
IPPS/LTCH PPS proposed rule), not 0.5
percent. As a result, instead of a 1.2
percent update factor, the projection
should use a 1.3 percent update factor.
Therefore, including the 2012 correction
and the cumulative impact, the 2015
estimated DSH amount should be
$14.234 billion.
• The summary analysis of the DSH
estimate includes an adjustment factor
for discharges. However, CMS has not
provided the detail supporting the
discharge factor used. In addition, the
footnote to the discharge column states
that all inpatient hospitals were used,
not just IPPS hospitals. Because the
purpose of the projection is to estimate
the amount of DSH that will go to a
subset of all inpatient hospitals, it
would seem appropriate that factors that
drive the estimate likewise would
include only the hospitals projected to
share in the payments.
• The DSH estimate is subject to 100
percent of any documentation and
coding adjustments due to MS–DRGs.
The FY 2015 IPPS/LTCH PPS proposed
rule refers to a recoupment adjustment
of ‘‘$11 billion over a 4-year period of
FYs 2014, 2015, 2016, and 2017.’’ CMS
should model the impact of such
adjustments to the DSH and
uncompensated care payments before
subjecting the DSH estimate to dramatic
adjustments.
• The ‘‘Other’’ column from the
Factor 1 source file is supposed to
contain the DSH payment impact factor:
The ‘‘Other’’ column includes impact of
only IPPS discharges and impact of DSH
payments increasing or decreasing at a
different rate than other IPPS payments.
This single input should at least reflect
the changes in DSH payments, which
will be significantly impacted by the
effects of Medicaid/CHIP expansion.
According to the February 2014 CBO
report, an additional 12 million people
are projected to enroll in Medicaid/
CHIP during 2014 and 2015. That
represents a 35-percent increase in
Medicaid/CHIP population. Yet, the
latest FY 2014 and 2015 ‘‘Other’’ factor
only applied a 3.28 percent and a 2.92
percent increase, respectively. Even the
pre-Affordable Care Act FY 2012 and
2013 ‘‘Other’’ factor reflected 4.45
percent and 1.56 percent increases, and
that was prior to widespread Medicaid
expansion.
In the light of these and other
concerns about data sources and
methods, the commenters insisted that
CMS adopt a process of reconciling the
initial estimates of Factor 1 with actual
data for the payment year in
conjunction with the final settlement of
hospital cost reports.
Response: Below we present the
Office of the Actuary’s updated estimate
of Factor 1. In order to satisfy the
commenters’ request for additional
information, we also provide additional
information regarding the data sources,
assumptions, and methods employed by
the actuaries. We acknowledge that
commenters have requested that we
establish a reconciliation procedure for
Factor 1. However, we continue to
believe that applying our best estimates
prospectively would be most conducive
to administrative efficiency, finality,
and predictability in payments (78 FR
50628). As we noted in the FY 2014
IPPS/LTCH PPS final rule, we do not
know the aggregate Medicare DSH
payment amount that would be paid for
each Federal fiscal year until the time of
cost report settlements, which occur
several years after the end of the fiscal
year. Furthermore, because the statute
provides that Factor 1 shall be
determined based on estimates of the
aggregate amount of DSH payments that
would be made in the absence of section
1886(r) of the Act and the aggregate
amount of empirically justified DSH
payments that are made under section
1886(r)(1) of the Act, we do not agree
with commenters that we should
establish such a reconciliation process
at this time. However, we note the
following about the Office of the
Actuary’s estimates. Factor 1 is an
estimate of the expected DSH payments
under the previous DSH payment
methodology under section
1886(d)(5)(F) of the Act. We believe it is
reasonable that an estimate should
represent a 50-percent chance of being
too high and a 50-percent chance being
too low in comparison to actual
experience. In reviewing, the Office of
the Actuary’s prior estimates for DSH
payments compared to actual
experience, from FY 2005 to FY 2015,
the original estimates have been higher
than actual experience for 7 of the 11
years, and lower than actual experience
in only 4 years. This result is reasonably
consistent with the expectation that an
estimate has a 50-percent chance of
being too high and a 50-percent chance
of being too low.
As indicated above, using the data
sources discussed above, the Office of
the Actuary uses the most recently
submitted Medicare cost report data to
identify current Medicare DSH
payments, cost report data provided by
IHS hospitals to CMS, and the most
recent DSH payment adjustments
provided in the IPPS Impact File, and
applies inflation updates and
assumptions for future changes in
utilization and case-mix to estimate
Medicare DSH payments for the
upcoming fiscal year. The July 2014
Medicare DSH estimate for FY 2015,
without regard to the application of
section 1886(r)(1) of the Act, is
$13,383,462,195.71. This estimate
excludes Maryland hospitals
participating in the Maryland All-Payer
Model, SCHs paid under their hospitalspecific payment rate, and hospitals
participating in the Rural Community
Hospital Demonstration as discussed
above. Therefore, based on this estimate,
the estimate for empirically justified
Medicare DSH payments for FY 2015,
with the application of section
1886(r)(1) of the Act, is
$3,345,865,548.93 (25 percent of the
total amount estimated). Under
§ 412.l06(g)(1)(i) of the regulations,
Factor 1 is the difference between these
two estimates of the Office of the
Actuary. Therefore, in this final rule, we
are providing that Factor 1 for FY 2015
is $10,037,596,646.78
($13,383,462,195.71 minus
$3,345,865,548.93). Below we provide
additional detail regarding the
development of this estimate in
response to the commenters.
The Office of the Actuary’s estimates
begins with a baseline of $11.499 billion
in Medicare DSH expenditures for FY
2011. The following table shows the
factors applied to update this baseline
through the current estimate for FY
2015:
INCREASES FROM 2011
FY
Update
2012 .........................................................
2013 .........................................................
2014 .........................................................
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0.999
1.028
1.009
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Discharge
Case-mix
0.9701
0.9799
0.9855
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1.007
1.014
1.005
Other
Total
1.0447
1.0132
1.0355
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1.019537
1.034923
1.034818
DSH
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50011
INCREASES FROM 2011—Continued
FY
Update
2015 .........................................................
Discharge
1.014
In this table, the discharge column
shows the increase in the number of
Medicare inpatient hospital discharges.
The figures for FYs 2012 and 2013 are
based on Medicare claims data which
have been adjusted by a completion
factor. The discharge figure for FY 2014
is based on preliminary data for 2014.
The discharge figure for FY 2015 is an
assumption based on recent trends
recovering back to the long-term trend
and assumptions related to how many
beneficiaries will be enrolled in
Medicare Advantage (MA) plans. The
case-mix column shows the increase in
case-mix for IPPS hospitals. The case-
Case-mix
1.0116
Other
1.005
mix figures for FYs 2012 and 2013 are
based on actual data adjusted by a
completion factor. The FY 2014 and FY
2015 increases are based on the
recommendation of the 2010–2011
Medicare Technical Review Panel. The
‘‘other’’ column shows the increase in
other factors which contribute to the
Medicare DSH estimates. These factors
include the difference between the total
inpatient hospital discharges and the
IPPS discharges, various adjustments to
the payment rates which have been
included over the years but are not
reflected in the other columns (such as
the increase in rates for the Cape Cod
Total
1.034
1.065942
Medicaid enrollment pre-ACA (in millions) ..............................................................................................................
Medicaid enrollment post-ACA (in millions) ............................................................................................................
Under 65 pre-ACA enrollment (in millions) .............................................................................................................
Under 65 post-ACA enrollment (in millions) ............................................................................................................
Increase in Medicare DSH ......................................................................................................................................
increase due to the Medicaid expansion
by FY 2015. This estimate is lower than
the commenters may have expected due
to the assumption that the expansion
population is healthier than the rest of
the Medicaid population and will
utilize fewer hospital services. This
FY
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2012
2013
2014
2015
Market basket
...............................................................................
...............................................................................
...............................................................................
...............................................................................
In this table, all numbers are based on
mid-session review of FY 2015 Budget
projections.
With regard to the assumed update
factor for FY 2012, the commenters are
correct that the update to the Federal
standardized amount due to the Cape
Cod litigation should be reflected in our
DSH estimate. However, we have
included it in the DSH estimate and the
1.1 percent increase is reflected in the
‘‘other ‘‘column. We consider it not to
be part of the update and that is
consistent with our treatment of the 0.2
percent reduction to the rate in FY 2014
for the 2-midnight policy finalized in
the FY 2014 IPPS/LTCH PPS final rule,
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Affordable
Care Act
payment
reductions
3
2.6
2.5
2.9
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56.0
64.7
50.6
59.3
4.9%
FY 2015
55.9
69.8
50.4
64.3
3.4%
factor in the estimate is included in the
‘‘other’’ column of the breakdown.
The next table below shows the
factors that are included in the ‘‘update’’
column of the above table:
Productivity
0.1
0.1
0.3
0.2
which is also included in the ‘‘other’’
column.
We agree with the commenters that
the update for FY 2015 should include
the productivity adjustment finalized
for FY 2015 in our FY 2015 Medicare
DSH estimates. Accordingly, we have
revised our FY 2015 Medicare DSH
estimates to reflect this final
productivity adjustment. We also agree
with the commenters that the DSH
estimates are only affected by IPPS
discharges. However, the discharge
figures reflect all inpatient hospitals,
and we adjust the Medicare DSH
estimates to take into account the
difference between the increase in
13383
litigation and the reduction in rates for
the 2-midnight policy). In addition, this
column includes a factor for the
Medicaid expansion due to the
Affordable Care Act. However, the
increase due to the Medicaid expansion
is not as large as commenters contended
due to the actuarial assumption that the
new enrollees are healthier than the
average Medicaid recipient and,
therefore, use fewer hospital services.
We have included the impact of the
Medicaid expansion in the FY 2015
DSH estimate and note that it was also
included in the FY 2014 DSH estimate.
Our estimates are as follows:
FY 2014
As can be seen in the table above,
there is assumed to be a 4.9 percent
increase in Medicare DSH due to the
Medicaid expansion in FY 2014, and an
additional 3.4 percent increase in
Medicare DSH in FY 2015. This results
in approximately an 8.5 percent
DSH
Documentation
and coding
1
0.7
0.5
0.5
¥2
1
¥0.8
¥0.8
Total
¥0.1
2.8
0.9
1.4
discharges for all inpatient hospitals
and the IPPS hospital discharge increase
in the ‘‘other’’ column. If the
‘‘discharge’’ column was limited to IPPS
hospitals, the ‘‘discharge’’ column
would be lower and the ‘‘other’’ column
would be higher, and the increase
reflected in the ‘‘total’’ column would
be the same.
The commenters also are correct that
the documentation and coding numbers
for future years could be more than a 0.8
percent reduction to comply with the
$11 billion requirement, but those
figures have not yet been determined.
The reason for the higher possibility is
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that the number of discharges has
decreased significantly.
Lastly, we do not believe that the
decision in Allina v. Sebelius is relevant
to our estimate of Factor 1 for FY 2015.
The decision in Allina did not address
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50614 through 50620) in which
we readopted the policy of counting
Medicare Advantage days in the SSI
ratio for FY 2014 and all subsequent
fiscal years. Accordingly, consistent
with that policy, our estimate of Factor
1 for FY 2015 appropriately accounts for
Medicare Advantage days by including
them in the SSI ratio.
(2) Calculation of Factor 2 for FY 2015
Section 1886(r)(2)(B) of the Act
establishes Factor 2 in the calculation of
the uncompensated care payment.
Specifically, section 1886(r)(2)(B)(i) of
the Act provides: ‘‘For each of fiscal
years 2014, 2015, 2016, and 2017, a
factor equal to 1 minus the percent
change in the percent of individuals
under the age of 65 who are uninsured,
as determined by comparing the percent
of such individuals (I) who are
uninsured in 2013, the last year before
coverage expansion under the Patient
Protection and Affordable Care Act (as
calculated by the Secretary based on the
most recent estimates available from the
Director of the Congressional Budget
Office before a vote in either House on
the Health Care and Education
Reconciliation Act of 2010 that, if
determined in the affirmative, would
clear such Act for enrollment); and (II)
who are uninsured in the most recent
period for which data is available (as so
calculated), minus 0.1 percentage points
for fiscal year 2014 and minus 0.2
percentage points for each of fiscal years
2015, 2016, and 2017.’’
Section 1886(r)(2)(B)(i)(I) of the Act
further indicates that the percent of
individuals under 65 without insurance
in 2013 must be the percent of such
individuals ‘‘who are uninsured in
2013, the last year before coverage
expansion under the Patient Protection
and Affordable Care Act (as calculated
by the Secretary based on the most
recent estimates available from the
Director of the Congressional Budget
Office before a vote in either House on
the Health Care and Education
Reconciliation Act of 2010 that, if
determined in the affirmative, would
clear such Act for enrollment).’’ The
Health Care and Education
Reconciliation Act (Pub. L. 111–152)
was enacted on March 30, 2010. It was
passed in the House of Representatives
on March 21, 2010, and by the Senate
on March 25, 2010. Because the House
of Representatives was the first House to
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18:25 Aug 21, 2014
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vote on the Health Care and Education
Reconciliation Act of 2010 on March 21,
2010, we have determined that the most
recent estimate available from the
Director of the Congressional Budget
Office ‘‘before a vote in either House on
the Health Care and Education
Reconciliation Act of 2010 . . .’’
(emphasis added) appeared in a March
20, 2010 letter from the director of the
CBO to the Speaker of the House.
Therefore, we believe that only the
estimates in this March 20, 2010 letter
meet the statutory requirement under
section 1886(r)(2)(B)(i)(I) of the Act. (To
view the March 20, 2010 letter, we refer
readers to the Web site at: http://
www.cbo.gov/sites/default/files/
cbofiles/ftpdocs/113xx/doc11379/
amendreconprop.pdf.)
In its March 20, 2010 letter to the
Speaker of the House of Representatives,
the CBO provided two estimates of the
‘‘post-policy uninsured population.’’
The first estimate is of the ‘‘Insured
Share of the Nonelderly Population
Including All Residents’’ (82 percent)
and the second estimate is of the
‘‘Insured Share of the Nonelderly
Population Excluding Unauthorized
Immigrants’’ (83 percent). In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50631), we used the first estimate that
includes all residents, including
unauthorized immigrants. We stated
that we believe this estimate is most
consistent with the statute which
requires us to measure ‘‘the percent of
individuals under the age of 65 who are
uninsured,’’ and provides no exclusions
except for individuals over the age of
65. In addition, we stated that we
believe that this estimate more fully
reflects the levels of uninsurance in the
United States that influence
uncompensated care for hospitals than
the estimate that reflects only legal
residents. The March 20, 2010 CBO
letter reports these figures as the
estimated percentage of individuals
with insurance. However, because
section 1886(r)(2)(B)(i) of the Act
requires that we compare the percent of
individuals who are uninsured in the
applicable year with the percent of
individuals who were uninsured in
2013, in the FY 2014 IPPS/LTCH PPS
final rule, we used the CBO insurance
rate figure and subtracted that amount
from 100 percent (that is the total
population without regard to insurance
status) to estimate the 2013 baseline
percent of individuals without
insurance. Therefore, for FYs 2014
through 2017, our estimate of the
uninsurance percentage for 2013 is 18
percent.
Section 1886(r)(2)(B)(i) of the Act
requires that we compare the baseline
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Sfmt 4700
uninsurance rate to the percent of such
individuals ‘‘who are uninsured in the
most recent period for which data is
available (as so calculated).’’ In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50634), we used the same data source,
CBO estimates, to calculate this percent
of individuals without insurance. In
response to public comments, we also
agreed that we should normalize the
CBO estimates, which are based on the
calendar year, for the Federal fiscal
years for which each calculation of
Factor 2 is made (78 FR 50633).
Therefore, in the FY 2014 IPPS/LTCH
PPS final rule, we employed the most
recently available estimate, specifically
CBO’s May 2013 estimates of the effects
of the Affordable Care Act on health
insurance coverage (which are available
at: http://www.cbo.gov/sites/default/
files/cbofiles/attachments/44190_Effects
AffordableCareActHealthInsurance
Coverage_2.pdf) as amended by CBO’s
July 2013 estimates of changes in
estimates of the effects of insurance
coverage provisions in the Affordable
Care Act issued in conjunction with a
memo regarding ‘‘Analysis of the
Administration’s Announced Delay of
Certain Requirements Under the
Affordable Care Act,’’ which are
available at: http://www.cbo.gov/sites/
default/files/cbofiles/attachments/
44465-ACA.pdf. The CBO’s May 2013
estimate of the rate of insurance for CY
2013 was 80 percent, and for CY 2014
was 84 percent. Therefore, the
calculation of Factor 2 for FY 2014,
employing a weighted average of the
CBO projections for CY 2013 and CY
2014, was as follows:
• CY 2013 rate of insurance coverage
(May 2013 CBO estimate): 80 percent.
• CY 2014 rate of insurance coverage
(May 2013 CBO estimate, updated with
July 2013 CBO estimate): 84 percent.
• FY 2014 rate of insurance coverage:
(80 percent * .25) + (84 percent * .75)
= 83 percent.
• Percent of individuals without
insurance for 2013 (March 2010 CBO
estimate): 18 percent.
• Percent of individuals without
insurance for FY 2014 (weighted
average): 17 percent.
1 ¥ [(0.17 ¥ 0.18)/0.18]| = 1 ¥ 0.056
= 0.944 (94.4 percent).
0.944 (94.4 percent) ¥ 0.001 (0.1
percentage points) = 0.943 (94.3
percent).
0.943 = Factor 2
Therefore, in the FY 2014 IPPS/LTCH
PPS final rule, we adopted 0.943 as the
final determination of Factor 2 for FY
2014. In conjunction with this
determination, we also determined in
the FY 2014 IPPS/LTCH PPS final rule
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and later revised in the FY 2014 IPPS
interim final rule with comment period
(78 FR 61195) that the amount available
for uncompensated care payments for
FY 2014 would be approximately $9.046
billion (0.943 times our Factor 1
estimate of $9.593 billion).
For the FY 2015 proposed rule, we
used CBO’s February 2014 estimates of
the effects of the Affordable Care Act on
health insurance coverage (which are
available at http://www.cbo.gov/
publication/43900?utm_source=feed
blitz&utm_medium=FeedBlitzEmail&
utm_content=812526&utm_
campaign=0). The CBO’s February 2014
estimate of individuals under the age of
65 with insurance in CY 2014 was 84
percent. Therefore, the CBO’s most
recent estimate of the rate of
uninsurance in CY 2014 at the time of
the FY 2015 IPPS/LTCH PPS proposed
rule was 16 percent (that is, 100 percent
minus 84 percent.) Similarly, the CBO’s
February 2014 estimate of individuals
under the age of 65 with insurance in
CY 2015 was 86 percent. Therefore, the
CBO’s most recent estimate of the rate
of uninsurance in CY 2015 available at
the time of the FY 2015 IPPS/LTCH PPS
proposed rule was 14 percent (that is,
100 percent minus 86 percent.)
The calculation of the proposed
Factor 2 for FY 2015, employing a
weighted average of the CBO projections
for CY 2014 and CY 2015, was as
follows:
• CY 2014 rate of insurance coverage
(February 2014 CBO estimate): 84
percent.
• CY 2015 rate of insurance coverage
(February 2014 CBO estimate): 86
percent.
• FY 2015 rate of insurance coverage:
(84 percent * .25) + (86 percent * .75)
= 85.5 percent.
• Percent of individuals without
insurance for 2013 (March 2010 CBO
estimate): 18 percent.
• Percent of individuals without
insurance for FY 2015 (weighted
average): 14.5 percent.
1 ¥ [(0.145 ¥ 0.18)/0.18] = 1 ¥ 0.19444
= 0.80556 (80.556 percent)
0.80556 (80.556 percent) ¥ 0.002 (0.2
percentage points for FY 2015
under section 1886(r)(2)(B)(i) of the
Act) = 0.8036 (80.36 percent)
0.8036 = Factor 2
Therefore, we proposed that Factor 2
for FY 2015 would be 0.8036. We
indicated that our proposal for Factor 2
was subject to change if more recent
CBO estimates of the insurance rate
became available at the time of the
preparation of the final rule. We invited
public comments on our proposed
calculation of Factor 2 for FY 2015.
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18:25 Aug 21, 2014
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50013
Comment: A number of commenters
supported the use of the CBO estimates
for determining Factor 2. However,
other commenters objected to CMS’
proposed calculation of Factor 2. Some
commenters found that the calculation
of Factor 2 appeared arbitrary. For
example, some of the commenters
complained that a 2-percent decrease in
the percentage of uninsured does not
seem reasonable based on current
economic conditions. Other commenters
asserted that, in their views, the
Affordable Care Act was not
implemented until January 1, 2014, so
that such a large decrease in uninsured
is very speculative and without
historical data. Commenters requested
additional information on how the CBO
calculates its insurance estimates,
including the assumptions in its
estimates. Commenters also requested
reconciliation of the Factor 2 estimates
with actual data at the time of cost
report settlements. While these
commenters understood that estimates
must be used for interim payments, they
believed that more accurate numbers
based on actual experience should be
available for purposes of determining
final payments at the time of cost report
settlement.
Response: We note that, in the FY
2014 IPPS/LTCH PPS final rule, we
finalized a policy to employ the most
recent CBO estimates of the rates of
uninsurance in the calculation of Factor
2 for FY 2014 and subsequent years, and
did not adopt any policy for reconciling
those estimates. In the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50632), we
stated that we believe that employing
actual data as the basis for reconciling
the projections employed to determine
Factor 2 would impose an unacceptable
delay in the final determination of
uncompensated care payments. Actual
data on the rates of insurance and
uninsurance would not become
available until several years after the
payment year, and the initial data for
the year would continue to be adjusted
for several years after that as further
data become available.
In its April 2014 report,22 the CBO
and the Joint Committee on Taxation
(JCT) estimated that the Affordable Care
Act would result in insurance coverage
for 12 million more nonelderly
individuals in FY 2014 than in the
absence of the Affordable Care Act. The
coverage projections included the
changes arising from participation in the
health insurance exchanges, Medicaid
and CHIP enrollment, and changes in
employer-sponsored, nongroup and
other insurance coverage. Included in
the uninsured population are
undocumented immigrants who are not
eligible for Medicaid and exchange
coverage and low-income residents of
States not participating in the Medicaid
expansion. In addition, other
individuals will choose to remain
uninsured, despite being eligible for
Medicaid or having access through an
employer, the exchange, or from an
insurer.
The CBO and JCT estimate of the
increase in insurance coverage
represents the number of people who
are expected to be insured this year
under current law minus the number
who would have been insured this year
in the absence of the Affordable Care
Act. More people are expected to obtain
insurance through the exchanges over
time due to subsidies and penalties for
noncoverage. CBO and JCT expected
more people to obtain insurance
through Medicaid and CHIP because of
increased eligibility due to the Medicaid
expansion and more enrollments among
those who were previously eligible for
Medicaid or CHIP but would not have
enrolled in the absence of the
Affordable Care Act. Overall, the net
coverage effect is a large decrease in the
uninsured population.
Because not all States have expanded
their Medicaid programs, the CBO and
JCT revised their estimates for changes
in the insured population due to
Medicaid expansion. The table below
presents the updated estimates of the
change in insurance coverage under
Medicaid and CHIP under the
Affordable Care Act. The CBO and JCT
revised their estimates to indicate a
decrease in the number of insured
individuals in CYs 2014 and 2015. In
addition, CBO and JCT did not rely on
State predictions about the Medicaid
expansion under the Affordable Care
Act.23 Instead, they projected the
approximate shares of the affected
population residing in States that will
fall into different broad categories. The
broad categories range from States that
did not expand their Medicaid program
to States that choose Medicaid
expansion. Due to the uncertainty of
States’ actions, estimates by the CBO
and JCT reflected an assessment of the
different outcome probabilities and the
middle of the distribution of all possible
22 Congressional Budget Office. Updated
Estimates of the Insurance Coverage Provisions of
the Affordable Care Act, April 2014 (April 2014).
http://www.cbo.gov/sites/default/files/cbofiles/
attachments/45231-ACA_Estimates
_OneColumn.pdf.
23 Congressional Budget Office. Estimates for the
Insurance Coverage Provisions of the Affordable
Care Act Updated for the Recent Supreme Court
Decision (July 2012). http://www.cbo.gov/sites/
default/files/cbofiles/attachments/43472-07-242012-CoverageEstimates.pdf.
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outcomes. For instance, the CBO’s and
JCT’s estimates considered multiple
factors that are associated with a State’s
choice on whether to expand Medicaid
eligibility: Overall budgetary situation;
current thresholds for Medicaid
eligibility; the amounts that States and
local governments spend to provide
health care to the uninsured or to pay
providers for uncompensated care; the
number of people likely to enroll in the
program after expansion; the Federal
contributions toward the cost of their
care, and other factors.
ESTIMATES OF THE INCREASE IN INSURANCE COVERAGE DUE TO MEDICAID AND CHIP UNDER THE AFFORDABLE CARE
ACT *
Last updated date
2013
2014
July 2012 ..................
February 2013 ..........
May 2013 .................
February 2014 ..........
April 2014 .................
1
1
1
................
................
2015
7
8
9
8
7
2016
9
11
12
12
11
2017
10
11
12
12
12
2018
10
11
12
12
12
2019
11
11
12
12
13
2020
11
11
12
12
13
2021
11
12
13
13
13
2022
11
12
13
13
13
11
12
13
13
13
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Source: CBO reports on effects of the Affordable Care Act on health insurance coverage (July 2012–April 2014) http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2014-04-ACAtables2.pdf.
* Millions of nonelderly people, by calendar year.
In their April 2014 report, CBO and
JCT estimated that an average of 6
million people will be covered by
insurance obtained through the
exchanges by the end of CY 2014. The
estimate was determined at the national
level instead of at the level of individual
States. Although CBO and JCT did not
account for the variations of success in
obtaining health insurance through the
exchanges by State, they did account for
the possibility of individuals moving in
and out of insurance coverage over time
due to changes in employment, family
circumstances, and other factors.
The CBO and JCT estimates therefore
do take into account some uncertainties
and risks under the Affordable Care Act,
including the probabilities of different
outcomes of Medicaid expansions and
changes in insurance coverage status
over time.
For the FY 2015 final rule, we use the
CBO’s April 2014 estimates of the
effects of the Affordable Care Act on
health insurance coverage (which are
available at http://www.cbo.gov/sites/
default/files/cbofiles/attachments/
43900-2014-04-ACAtables2.pdf). The
CBO’s April 2014 estimate of
individuals under the age of 65 with
insurance in CY 2014 is 84 percent.
Therefore, the CBO’s most recent
estimate of the rate of uninsurance in
CY 2014 is 16 percent (that is, 100
percent minus 84 percent.) Similarly,
the CBO’s April 2014 estimate of
individuals under the age of 65 with
insurance in CY 2015 is 87 percent.
Therefore, the CBO’s most recent
estimate of the rate of uninsurance in
CY 2015 available for this final rule is
13 percent (that is, 100 percent minus
87 percent.)
The calculation of the final Factor 2
for FY 2015, employing a weighted
average of the CBO projections for CY
2014 and CY 2015, is as follows:
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• CY 2014 rate of insurance coverage
(April 2014 CBO estimate): 84 percent.
• CY 2015 rate of insurance coverage
(April 2014 CBO estimate): 87 percent.
• FY 2015 rate of insurance coverage:
(84 percent * .25) + (87 percent * .75)
= 86.25 percent.
• Percent of individuals without
insurance for 2013 (March 2010 CBO
estimate): 18 percent.
• Percent of individuals without
insurance for FY 2015 (weighted
average): 13.75 percent.
1 ¥ |((0.1375 ¥ 0.18)/0.18)| = 1 ¥
0.2361 = .7639 (76.39 percent)
0.7639 (76.39 percent) ¥ .002 (0.2
percentage points for FY 2015
under section 1886(r)(2)(B)(i) of the
Act) = 0.7619 or 76.19 percent
0.7619 = Factor 2
Therefore, the final Factor 2 for FY
2015 is 76.19 percent.
The FY 2015 Final Uncompensated
Care Amount is: $10,037,596,646.78 ×
0.7619 = $7,647,644,885.18.
FY 2015 Final Uncompensated Care
Total Available—$7,647,644,885.18.
(3) Calculation of Factor 3 for FY 2015
Section 1886(r)(2)(C) of the Act
defines Factor 3 in the calculation of the
uncompensated care payment. As we
have discussed earlier, section
1886(r)(2)(C) of the Act states that Factor
3 is ‘‘equal to the percent, for each
subsection (d) hospital, that represents
the quotient of (i) the amount of
uncompensated care for such hospital
for a period selected by the Secretary (as
estimated by the Secretary, based on
appropriate data (including, in the case
where the Secretary determines
alternative data is available which is a
better proxy for the costs of subsection
(d) hospitals for treating the uninsured,
the use of such alternative data)); and
(ii) the aggregate amount of
uncompensated care for all subsection
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(d) hospitals that receive a payment
under this subsection for such period
(as so estimated, based on such data).’’
Therefore, Factor 3 is a hospitalspecific value that expresses the
proportion of the estimated
uncompensated care amount for each
subsection (d) hospital and each
subsection (d) Puerto Rico hospital with
the potential to receive DSH payments
relative to the estimated uncompensated
care amount for all hospitals estimated
to receive DSH payments in the fiscal
year for which the uncompensated care
payment is to be made. Factor 3 is
applied to the product of Factor 1 and
Factor 2 to determine the amount of the
uncompensated care payment that each
eligible hospital will receive for FY
2014 and subsequent fiscal years. In
order to implement the statutory
requirements for this factor of the
uncompensated care payment formula,
it was necessary to determine: (1) The
definition of uncompensated care or, in
other words, the specific items that are
to be included in the numerator (that is,
the estimated uncompensated care
amount for an individual hospital) and
denominator (that is, the estimated
uncompensated care amount for all
hospitals estimated to receive DSH
payments in the applicable fiscal year);
(2) the data source(s) for the estimated
uncompensated care amount; and (3)
the timing and manner of computing the
quotient for each hospital estimated to
receive DSH payments. The statute
instructs the Secretary to estimate the
amounts of uncompensated care for a
period ‘‘based on appropriate data.’’ In
addition, we note that the statute
permits the Secretary to use alternative
data ‘‘in the case where the Secretary
determines that alternative data is
available,’’ which is a better proxy for
the costs of subsection (d) hospitals for
treating uninsured individuals.
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In the course of considering how to
determine Factor 3 during the
rulemaking process for FY 2014, we
considered defining the amount
uncompensated care for a hospital as
the uncompensated care costs of each
hospital and considered potential data
sources for those costs. For purposes of
selecting an appropriate data source for
this possible definition of
uncompensated care costs, we reviewed
the literature and available data sources
and determined that Worksheet S–10 of
the Medicare cost report could
potentially provide the most complete
data for Medicare hospitals. (We refer
readers to the report ‘‘Improvements to
Medicare Disproportionate Share (DSH)
Payments’’ for a full discussion and
evaluation of the available data sources.
The report is available on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/dsh.html.) However,
we noted that Worksheet S–10 is a
relatively new data source that has been
used for specific payment purposes only
in relatively restricted ways (for
example, to provide a source of charity
care charges in the computation of EHR
incentive payments (75 FR 44456)). We
also noted that some stakeholders have
expressed concern that hospitals have
not had enough time to learn how to
submit accurate and consistent data
through this reporting mechanism.
Other stakeholders have maintained that
some instructions for Worksheet S–10
still require clarification in order to
ensure standardized and consistent
reporting by hospitals. At the same time,
we noted that Worksheet S–10 is the
only national data source that includes
data for all Medicare hospitals and is
designed to elicit data on
uncompensated care costs. We
discussed the possible use of data
reported on Worksheet S–10 to
determine uncompensated care costs in
more detail in the FY 2014 IPPS/LTCH
PPS proposed rule (78 FR 27586).
Because of concerns regarding
variations in the data reported on
Worksheet S–10 of the Medicare cost
report and the completeness of these
data, we did not propose to use data
from the Worksheet S–10 to determine
the amount of uncompensated care.
However, we stated our belief that
Worksheet S–10 of the Medicare cost
report would otherwise be an
appropriate data source to determine
uncompensated care costs. In particular,
we noted that Worksheet S–10 was
developed specifically to collect
information on uncompensated care
costs in response to interest by MedPAC
and other stakeholders regarding the
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topic (for example, MedPAC’s March
2007 Report to Congress) and that it is
not unreasonable to expect information
on the cost report to be used for
payment purposes. Furthermore,
hospitals attest to the accuracy and
completeness of the information
reported in the cost report at the time of
submission. We indicated that we
expect reporting on Worksheet S–10 to
improve over time, particularly in the
area of charity care which is already
being used and audited for payment
determinations related to the EHR
Incentive Program, and that we will
continue to monitor these data.
Accordingly, we stated that we may
proceed with a proposal to use data on
the Worksheet S–10 to determine
uncompensated care costs in the future,
once hospitals are submitting accurate
and consistent data through this
reporting mechanism.
As a result of our concerns regarding
the data reported on Worksheet S–10 of
the Medicare cost report, we believed it
was appropriate to consider the use of
alternative data, at least in FY 2014, the
first year that this provision is in effect,
and possibly for additional years until
hospitals have adequate experience
reporting all of the data elements on
Worksheet S–10. We noted that this
approach is consistent with input we
received from some stakeholders in
response to the CMS National Provider
Call in January 2013, who stated their
belief that existing FY 2010 and FY
2011 data from the Worksheet S–10
should not be used for implementation
of section 1886(r) of the Act and who
requested the opportunity to resubmit
the data once more specific instructions
were issued by CMS. Accordingly, we
examined alternative data sources that
could be used to allow time for
hospitals to gain experience with and to
improve the accuracy of their reporting
on Worksheet S–10 of the Medicare cost
report. We stated in the FY 2014 IPPS/
LTCH PPS final rule that we believe that
data on utilization for insured lowincome patients can be a reasonable
proxy for the treatment costs of
uninsured patients. Moreover, due to
the concerns regarding the accuracy and
consistency of the data reported on the
Worksheet S–10, we also determined
that these alternative data, which are
currently reported on the Medicare cost
report, would be a better proxy for the
amount of uncompensated care
provided by hospitals. Accordingly, in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50639), we adopted the policy of
employing the utilization of insured
low-income patients defined as
inpatient days of Medicaid patients plus
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inpatient days of Medicare SSI patients
as defined in 42 CFR 412.106(b)(4) and
412.106(b)(2)(i), respectively, to
determine Factor 3. We also indicated
that we remained convinced that the
Worksheet S–10 could ultimately serve
as an appropriate source of more direct
data regarding uncompensated care
costs for purposes of determining Factor
3 once hospitals are submitting more
accurate and consistent data through
this reporting mechanism. In the
interim, we indicated that we would
take steps such as revising and
clarifying cost report instructions, as
appropriate. We stated that it is our
intention to propose introducing the use
of the Worksheet S–10 data for purposes
of determining Factor 3 within a
reasonable amount of time.
Since the publication of the FY 2014
IPPS/LTCH PPS final rule, we have
continued to evaluate and assess the
comments we have received from
stakeholders about Worksheet S–10 as
well as to evaluate what changes might
need to be made to the instructions to
make the data hospitals submit more
accurate and consistent across hospitals.
Although we have not yet developed
revisions to the Worksheet S–10
instructions at this time, we remain
committed to making improvements to
Worksheet S–10. For that reason, we
believe it would be premature to
propose the use of Worksheet S–10 data
for purposes of determining Factor 3 for
FY 2015. Therefore, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28101), we proposed to continue to
employ the utilization of insured lowincome patients defined as inpatient
days of Medicaid patients plus inpatient
days of Medicare SSI patients, as
defined in § 412.106(b)(4) and
§ 412.106(b)(2)(i), respectively, to
determine Factor 3 for FY 2015.
Accordingly, we proposed to revise the
regulations at 42 CFR
412.106(g)(1)(iii)(C) to state that, for FY
2015, CMS will base its estimates of the
amount of hospital uncompensated care
on the most recent available data on
utilization for Medicaid and Medicare
SSI patients, as determined by CMS in
accordance with paragraphs (b)(2)(i) and
(b)(4) of that section of the regulations.
We invited public comments on this
proposal and indicated that we will
continue to work with the hospital
community and others to develop the
appropriate clarifications and revisions
to Worksheet S–10 of the Medicare cost
report for reporting uncompensated care
data. In particular, we invited public
comments on what would be a
reasonable timeline for adopting
Worksheet S–10 of the Medicare cost
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report as the data source for determining
Factor 3.
As we did for the FY 2014 IPPS/LTCH
PPS proposed rule, for the FY 2015
IPPS/LTCH PPS proposed rule, we
published on the CMS Web site a table
listing Factor 3 for all hospitals that we
estimate would receive empirically
justified Medicare DSH payments in a
fiscal year (that is, hospitals that we
project would receive interim
uncompensated care payments during
the fiscal year), and for the remaining
subsection (d) and subsection (d) Puerto
Rico hospitals that have the potential of
receiving a DSH payment in the event
that they receive an empirically justified
Medicare DSH payment for the fiscal
year as determined at cost report
settlement. Hospitals had 60 days from
the date of public display of the FY
2015 IPPS/LTCH PPS proposed rule to
review these tables and notify CMS in
writing of a change in a hospital’s
subsection (d) hospital status, such as if
a hospital has closed or converted to a
CAH.
Comment: Most commenters agreed
that the Worksheet S–10 data are not yet
sufficiently consistent and reliable to be
employed for purposes of determining
each hospital’s share of uncompensated
care payments. The commenters
therefore supported the proposal to
continue employing SSI days and
Medicaid days for this purpose in FY
2015. Some of these commenters did
express support for eventually
employing the Worksheet S–10 data for
this purpose, once cost reporting
instructions have been appropriately
revised and the hospital community has
been adequately instructed to render
those data sufficiently consistent and
reliable. Some commenters also
requested a more specific timetable for
adopting the Worksheet S–10 data.
However, MedPAC and a few other
commenters supported the use of the
Worksheet S–10 data for FY 2015.
MedPAC expressed disagreement with
CMS’ statement that the data on
utilization for insured low-income
patients can serve as a reasonable proxy
for the treatment costs of uninsured
patients. MedPAC specifically cited its
2007 analysis of data from the GAO and
data from the American Hospital
Association (AHA), which suggests that
Medicaid days and low-income
Medicare days are not a good proxy for
uncompensated care costs. Given its
prior findings that the Medicaid and SSI
shares were poor predictors of
uncompensated care costs, MedPAC
argued that there is a need to transition
to new measures. MedPAC therefore
supported Worksheet S–10 in the
Medicare cost report as an appropriate
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measure of uncompensated care that
could begin to replace the reliance on
Medicaid and SSI shares. Specifically, it
recommended employing charity care
for the uninsured, which is reported on
the Worksheet S–10 (line 23, column 1)
as a reasonable proxy for the costs of
treating the uninsured. In response to
concerns about whether the quality of
the data reported on Worksheet S–10 is
adequate for use in distributing
uncompensated care payments,
MedPAC argued that it is already better
than using Medicaid and SSI days as a
proxy for uncompensated care costs,
and that the data on Worksheet S–10
will improve over time as they are
actually used in making payments.
MedPAC also expressed its view that
the Worksheet S–10 data currently
available should only establish an
interim allocation of uncompensated
care payments; the final allocation of
payments to each hospital should be
determined based on the Worksheet S–
10 data available at year-end settlement.
To prevent financial shocks to hospitals,
some commenters suggested that CMS
could transition to use of the Worksheet
S–10 data over 3 years.
Response: As we stated in the FY
2014 IPPS/LTCH PPS final rule, we
believe that data on utilization for
insured low-income patients can be a
reasonable proxy for the treatment costs
of uninsured patients. Moreover, due to
the concerns that continue to be
expressed by a large majority of
commenters regarding the accuracy and
consistency of the data reported on the
Worksheet S–10, we continue to believe
that these alternative data on utilization
for insured low-income patients, which
are currently reported on the Medicare
cost report, remain a better proxy for the
amount of uncompensated care
provided by hospitals. Accordingly, in
this final rule, we are finalizing for FY
2015 the policy that we originally
adopted in the FY 2014 IPPS/LTCH PPS
final rule, of employing the utilization
of insured low-income patients defined
as inpatient days of Medicaid patients
plus inpatient days of Medicare SSI
patients as defined in 42 CFR
412.106(b)(4) and 412.106(b)(2)(i),
respectively, to determine Factor 3.
However, we also remain convinced
that Worksheet S–10 could ultimately
serve as an appropriate source of more
direct data regarding uncompensated
care costs for purposes of determining
Factor 3 once hospitals are submitting
more accurate and consistent data
through this reporting mechanism. In
the interim, we will continue to take
steps to revise and clarify cost report
instructions, as appropriate. We also are
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undertaking benchmarking analyses to
compare available Worksheet S–10 data
to other data sources on uncompensated
care, such as on uncompensated care
costs reported to the IRS on Form 990
by not-for-profit hospitals. Because the
data submitted through Form 990 are
audited and come from an external
source, they represent a suitable
standard of comparison. It remains our
intention to propose introducing the use
of the Worksheet S–10 data for purposes
of determining Factor 3 within a
reasonable amount of time.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50639), we considered
public comments which recommended
that we use the wage index to adjust
insured low-income days in
determining Factor 3 in order to account
for the differences in ‘‘purchasing
power’’ in different regions of the
country. With respect to these public
comments, we agreed that there may be
regional variation in uncompensated
care costs due to regional variations in
the costs of care generally. However, we
stated that we did not believe that there
was sufficient basis for believing that
the wage index reflects the variations in
uncompensated care costs well enough
to adopt it as the basis for adjusting
Factor 3. The wage index reflects the
relative hospital wage level in the
geographic area of the hospital
compared to the national average
hospital wage level. In computing the
wage index, we derive an average
hourly wage for each labor market area
(total wage costs divided by total hours
for all hospitals in the geographic area)
and a national average hourly wage
(total wage costs divided by total hours
for all hospitals surveyed in the nation).
A labor market area’s wage index value
is the ratio of the area’s average hourly
wage to the national average hourly
wage. We note that, for FY 2014, 69.6
percent of the standardized amount is
considered to be the labor-related share
and, therefore, adjusted by the wage
index. However, in addition to the
labor-related share of the standardized
amount being adjusted by the wage
index, the entire standardized amount is
also adjusted for the relative weight of
the MS–DRG for each individual
patient. In other words, the wage index
only adjusts for a portion of the
variation in costs, and does not address
variations in resource use and patient
severity. Therefore, we stated that we
did not believe that there was sufficient
basis for believing that adjusting lowincome patient days by the wage index
would better reflect variations in
uncompensated care costs.
Since the publication of the FY 2014
IPPS/LTCH PPS final rule, we have
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continued to consider whether to
propose employing the wage index to
adjust insured low-income days in
determining Factor 3. After this
consideration, we continue to believe
that a wage index adjustment to insured
low-income days is not an appropriate
measure to account for variations in the
costs of uncompensated care among
hospitals. The intensity of such care,
and therefore the costs, may vary by
hospital, but we still lack convincing
evidence that the wage index data are an
accurate measure of that intensity.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule, we did not propose
to adopt such an adjustment to lowincome days for purposes of calculating
Factor 3 in FY 2015.
Comment: Several commenters agreed
that applying the wage index to Factor
3 is not an appropriate measure of
variations in uncompensated care costs.
One commenter stated that CMS should
apply a wage and case-mix adjustment
to the Medicaid and SSI days using the
hospital area wage index and hospitalspecific case mix index. The commenter
believed that this information is readily
available, well-understood, and is
appropriate for measuring cost variation
among hospitals.
Response: We appreciate the
comments and continue to believe it is
not appropriate to adopt a wage index
adjustment to low-income days to
calculate Factor 3 for FY 2015. Although
wage index information is readily
available, for the reasons discussed in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50639), we continue to believe
that is it not an accurate measure of the
intensity of uncompensated care costs
and would not serve as an appropriate
basis for making adjustments to Factor
3.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50639), we also considered
public comments that requested that we
include insured low-income days from
exempt units (specifically, inpatient
rehabilitation units paid under the IRF
PPS and inpatient psychiatric units paid
under the IPF PPS) of the hospital in the
computation of Factor 3, in order to
better capture the treatment costs of the
uninsured by the hospital. In response
to those public comments, we stated our
belief that there may be some merit to
including insured low-income days
from exempt units of the hospital in
order to better capture the full costs of
the treatment of the uninsured by the
hospital insofar as those data may be
publicly available, subject to audit, and
used for payment purposes. We also
indicated that we believed it would be
prudent to consider the degree to which
these data meet these conditions before
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adopting this recommendation.
Therefore, we stated that we would
consider including this
recommendation among our proposals
in future rulemaking.
Since the publication of the FY 2014
IPPS/LTCH PPS final rule, we have
conducted an analysis of the impact of
adopting this recommendation. That
analysis has indicated that the inclusion
of Medicaid and Medicare-SSI days for
exempt inpatient units does not
significantly change the distribution of
uncompensated care payments to
hospitals, with the exception of a few
hospitals with high utilization
associated with those exempt units that
would see increases in their
uncompensated care payments.
Furthermore, Medicaid and SSI days for
inpatient rehabilitation units have been
audited and are used for payment
purposes under the IRF PPS;
specifically, these data are used to
calculate the low-income payment (LIP)
adjustment under the IRF PPS.
However, the data for inpatient
psychiatric units are not generally
audited and have not been used
previously for payment purposes.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule, we did not propose
to include those days in the calculation
of a hospital’s share of uncompensated
care payments for FY 2015. As we
indicated earlier, we believe it would be
appropriate to include such data in the
calculation of uncompensated care
payments only insofar as those data may
be publicly available, subject to audit,
and used for payment purposes. The use
of data for inpatient psychiatric units
would fail the second and third
conditions. At the same time, we do not
believe that including only inpatient
rehabilitation unit days without
inpatient psychiatric unit days would
improve the accuracy of the
uncompensated care payment
calculation. We also observe, as we have
previously noted, that the statutory
references under section 1886(d)(5)(F) of
the Act to ‘‘days’’ apply only to hospital
acute care inpatient days. Section
412.106(a)(1)(ii) of the regulations
therefore provides that, for purposes of
DSH payments, ‘‘the number of patient
days in the hospital includes only those
days attributable to units or wards of the
hospital providing acute care services
generally payable under the prospective
payment system and excludes’’ other
days. In the absence of compelling
reasons to do otherwise, we believe it is
preferable to maintain consistency with
this longstanding precedent in the
context of this temporary method for
determining uncompensated care
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50017
payments. However, we invited public
comments on this issue.
Comment: Several commenters
supported the proposal to not include
Medicaid and SSI days from excluded
units in the calculation. One commenter
believed it would be inconsistent to
distribute uncompensated care
payments based on non-IPPS days and
unfair to providers that do not have
exempt units. Some commenters
supported including Medicaid and SSI
days from excluded units in our
calculation of Factor 3. One commenter
stated that the inclusion of days for
psychiatric and rehabilitation units that
are exempt from IPPS would improve
the accuracy of these data, as IPPS days
and exempt unit days combined would
function as a proxy for total hospital
uncompensated care services.
Response: We thank the commenters
for their feedback and continue to
believe that we should finalize our
proposal to calculate Factor 3 based on
a DSH hospital’s share of their Medicaid
and SSI days associated with their acute
care units. We believe that it would be
inappropriate to include Medicaid and
SSI days from psychiatric units, as those
days are not audited for payment
purposes, and we do not believe that
including only inpatient rehabilitation
unit days without inpatient psychiatric
unit days would improve the accuracy
of the uncompensated care payment
calculation.
The statute also allows the Secretary
the discretion to determine the time
periods from which we will derive the
data to estimate the numerator and the
denominator of the Factor 3 quotient.
Specifically, section 1886(r)(2)(C)(i) of
the Act defines the numerator of the
quotient as ‘‘the amount of
uncompensated care for such hospital
for a period selected by the Secretary.
. . .’’ (emphasis added). Section
1886(r)(2)(C)(ii) of the Act defines the
denominator as ‘‘the aggregate amount
of uncompensated care for all
subsection (d) hospitals that receive a
payment under this subsection for such
period’’ (emphasis added). In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50638), we adopted a process of making
interim payments with final cost report
settlement for both the empirically
justified Medicare DSH payments and
the uncompensated care payments
required by section 3133 of the
Affordable Care Act. Consistent with
that process, we also determined the
time period from which to calculate the
numerator and denominator of the
Factor 3 quotient in a way that would
be consistent with making interim and
final payments. Specifically, we must
have Factor 3 values available for
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hospitals that we estimate will qualify
for Medicare DSH payments using the
most recently available historical data
and for those hospitals that we do not
estimate will qualify for Medicare DSH
payments but that may ultimately
qualify for Medicare DSH payments at
the time of cost report settlement.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50638), therefore, we
adopted the policy to calculate the
numerator and the denominator of
Factor 3 for hospitals based on the most
recently available full year of Medicare
cost report data (including the most
recently available data that may be used
to update the SSI ratios) with respect to
a Federal fiscal year. In other words, we
use data from the most recently
available full year cost report for the
Medicaid days and the most recently
available SSI ratios (that is, latest
available SSI ratios before the beginning
of the Federal fiscal year) for the
Medicare SSI days. We noted that these
data are publicly available, subject to
audit, and used for payment purposes.
While we recognized that older data
also meet these criteria, we often use the
most recently available data for payment
determinations. The data used are
located in the HCRIS database for most
hospitals, but the data for IHS hospitals
are not included in that database.
Accordingly, in the FY 2014 IPPS
interim final rule with comment period
(78 FR 61195), we revised our policy to
also include cost report data submitted
to CMS by IHS hospitals in order allow
their Medicaid days to be used to
calculate Factor 3.
Therefore, for FY 2014, we used data
from the most recently available full
year cost report for the Medicaid days
and the most recently available SSI
ratios, which meant data from the 2010/
2011 cost reports (that is, cost reports
that have cost reporting periods that
begin in either FY 2010 or FY 2011) for
the Medicaid days taken from the March
2013 update of the HCRIS database,
2011 cost report data submitted to CMS
by IHS hospitals by March 2013, and the
FY 2011 SSI ratios for the Medicare SSI
days to estimate Factor 3 for FY 2014.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28102), for FY
2015, we again proposed to use data
from the most recently available full
year cost report for the Medicaid days
(that is, we proposed to use the 2012
cost report, unless that cost report is
unavailable or reflects less than a full
12-month year; in the event the 2012
cost report is for less than 12 months,
we proposed to use the cost report from
2012 or 2011 that is closest to being a
full 12-month cost report), cost report
data submitted to CMS by IHS hospitals
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and the most recently available SSI
ratios. For purposes of the proposed
rule, we used data from the 2011/2012
Medicare cost reports (that is, from cost
reports that have cost reporting periods
that begin in either FY 2011 or FY 2012)
taken from the December 2013 update of
the HCRIS database for the Medicaid
days and the FY 2011 SSI ratios for the
Medicare SSI days. Consistent with our
FY 2014 IPPS interim final rule with
comment period (78 FR 61195), for FY
2015, we also used supplemental cost
report data provided by IHS hospitals to
CMS as of December 2013 in order to
calculate the proposed Factor 3. We
indicated that, for the FY 2015 IPPS/
LTCH PPS final rule, we intended to use
the March 2014 update of the HCRIS
database for the 2011/2012 Medicare
cost reports, cost report data submitted
to CMS by IHS hospitals as of March
2014, and the most recently available
SSI ratios (FY 2012 SSI ratios and, if not
available, the FY 2011 SSI ratios) to
calculate Factor 3. We stated that we
believed the March update to the
Medicare cost reports would be the most
recently available data to calculate
Factor 3 at the time of publication of the
FY 2015 IPPS final rule. We also
indicated that this proposal is consistent
with CMS’ historical policy to use the
best available data when setting the
payment rates and factors in both the
proposed and final rules. Furthermore,
we noted that this approach is
consistent with our approach in other
areas of IPPS, where we historically use
the March update of cost report data and
MedPAR claims data to calculate IPPS
relative weights, budget neutrality
factors, the outlier threshold, and the
standardized amount for the IPPS final
rule. If we were to wait for a later update
of the cost report data to become
available, this would cause delay of the
publication of the IPPS final rule.
Comment: Several commenters
questioned the data used to calculate
the hospitals’ Factor 3. Several
commenters stated that their Medicaid
days were understated. Furthermore,
commenters stated that they submitted
their updated cost report to be included
in the March 2014 update of the
Medicare cost report data but the
contractor had not yet uploaded the
information in the HCRIS database. In
addition, some commenters indicated
that they had updated Medicaid days
and had submitted their cost report to
their contractors after the March 2014
update of the Medicare hospital cost
report data and wanted their updated
data included. Some commenters
requested use of the June update of cost
report data to obtain Medicaid days to
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calculate Factor 3. Some commenters
sought clarification of why some
hospitals have their Medicaid days
based on Worksheet S–2 and some
hospitals have their Medicaid days
based on Worksheet S–3. Some
commenters stated that their Medicaid
days were based on a 6-month cost
report and they should be based on a 12month cost report either by combining
cost reports or annualizing the data.
Some commenters questioned their DSH
eligibility, stating that their hospitals
had been listed as not being eligible for
DSH for FY 2015, when they had
previously received DSH on their cost
report. Other commenters submitted
corrections because their hospitals had
been identified as SCHs, but were
actually operating as MDHs. Finally,
several commenters requested
additional time after the publication of
the final rule to review the data used to
calculate Factor 3 and submit
corrections.
Response: We are finalizing our
proposal to use the most recently
available full year cost report for the
Medicaid days (that is, our proposal to
use the 2012 cost report, unless that cost
report is unavailable or reflects less than
a full 12-month year; in the event the
2012 cost report is for less than 12
months, we will use the cost report from
2012 or 2011 that is closest to being a
full 12-month cost report) and the most
recently available SSI ratios. For this FY
2015 final rule, we are using the March
2014 update of the hospital cost report
data in the HCRIS database and cost
report data submitted to CMS by IHS
hospitals as of March 2014 to obtain the
Medicaid days to calculate Factor 3. In
addition, we are using the FY 2012 SSI
ratios published on the CMS Web site to
calculate Factor 3 (http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/dsh.html).
We note that we are unable to use a
later update of the cost report data, like
the June update, and still calculate the
final Factor 3 in time for publication of
the IPPS final rule. Any delay in the
publication of the final rule would
prevent changes and updates to
payments under the IPPS from taking
effect on October 1, the first day of the
fiscal year. We are not able to accept
supplemental data for hospitals, as we
are not able to validate the information
included in that supplemental data. We
note that hospitals have ample time
after the close of their fiscal year to
submit the data that are used in this
calculation. Specifically, Chapter I,
section 104 of the Provider
Reimbursement Manual, Part 2,
generally allows a hospital 5 months
after the close of its cost reporting
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period to file its cost report. In addition,
CMS allows hospitals to request
amendments of their cost report
submissions before CMS issues a Notice
of Program Reimbursement. In response
to the commenters that indicated they
had submitted their updated cost
reports, but that the MAC had not yet
uploaded the information, we note that
MACs follow guidelines to upload
revised cost report information. In
accordance with Medicare Financial
Management Manual, Chapter 8, Section
10.4—Submission of Cost Report Data to
CMS, the MACs are required to submit
an extract of the following Medicare
cost reports to CMS in accordance with
the HCRIS specifications within 210
days of the cost reporting period ending
date or 60 days after receipt of the cost
report, whichever is later.
With respect to the comments
requesting clarification on whether
Worksheet S–2 or Worksheet S–3 is
used to obtain Medicaid days, we
addressed this concern in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50642)
and reiterate that we use the Medicaid
days reported on Worksheet S–2 of the
Medicare Hospital Cost Report version
2552–10 for hospitals projected to
receive Medicare DSH because the
Medicaid days reported on Worksheet
S–2 are used in the computation of the
Medicaid fraction for Medicare DSH
payments. Therefore, because they are
used for payment of Medicare DSH, we
believe that these data are more reliable
than data not used for payment
purposes. Hospitals that were not
eligible to receive Medicare DSH
payments on that cost report were
unable to report Medicaid days on
Worksheet S–2, but could report their
Medicaid days on Worksheet S–3.
Therefore, for hospitals that we project
to not be eligible for Medicare DSH
payments, we are using the Medicaid
days reported on Worksheet S–3 to
calculate their Factor 3. A transmittal
has been issued to allow for hospitals
that are not receiving DSH to report
their Medicaid days on Worksheet S–2,
and we hope to rely only on the data
reported on that Worksheet S–2 in the
future, if we continue to use this data on
low-income insured days in the future.
With regard to the comments from
hospitals that found that their Factor 3
was calculated using a cost report that
was less than 12 months, we are
finalizing our proposal to use the 2012
cost report, unless that cost report is
unavailable or reflects less than a full
12-month year. In the event the 2012
cost report is for less than 12 months,
we would use the cost report from 2012
or 2011 that is closest to being a full 12month cost report. In the case where a
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less than 12-month cost report was used
to calculate a hospital’s Factor 3, this
would indicate that both the 2012 and
2011 cost reports were less than 12
months. In such a case, we would use
the longer of the two cost reports to
calculate a hospital’s Factor 3. We did
not make a proposal to annualize or
combine cost reports to calculate Factor
3. We note that section 1886(r)(2)(c) of
the Act specifies that Factor 3 is equal
to the percent that represents ‘‘the
amount of uncompensated care for such
hospital for a period selected by the
Secretary (as estimated by the Secretary,
based on appropriate data . . .’’ divided
by ‘‘the aggregate amount of
uncompensated care for all subsection
(d) hospitals that receive a payment
under this subsection for such period
(as so estimated . . .’’ In implementing
this provision, as we did through
rulemaking in FY 2014, we believe it is
appropriate to first select the period—in
this case, the period for which we have
the most recently available data—and
then to select the data from a cost report
that aligns best with that period.
However, we acknowledge that the
situations presented by commenters,
where a hospital remains in operation in
both Federal fiscal years for which we
analyze cost report data but submits cost
reports for both Federal fiscal years that
reflect substantially less than a full year
of data, pose unique challenges in the
context of estimating Factor 3. As a
result, this is an issue that we intend to
consider further and may address in
future rulemaking.
With regards to the comments from
hospitals stating that their DSH
eligibility is inaccurate, we note that we
used the FY 2012 SSI ratios and the
Medicaid fraction listed in the March
2014 update of the Provider Specific
File in order to identify which hospitals
are projected to receive DSH for FY
2015, and thus are eligible to receive
uncompensated care payments and
interim uncompensated care payments
for FY 2015. We did not use historical
cost report data to make this
determination. We believe that the FY
2012 SSI ratios and the Medicaid
fraction in the March 2014 update of
Provider Specific File are the most
recently available information regarding
whether a hospital is currently being
paid Medicare DSH on an interim basis,
and therefore, we believe they are an
appropriate data source to make our
determination of which hospitals are
projected to receive DSH for FY 2015,
and thus are eligible to receive
uncompensated care payments, as
presented in Table 18. As we have
stated previously, final determination of
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DSH eligibility and uncompensated care
payments are made at cost report
settlement.
In making our DSH projections for FY
2015, we also identify which hospitals
are SCHs that we estimate will be paid
the hospital-specific rate and not the
Federal rate and, therefore, will not
receive a Medicare DSH payment and
will be ineligible to receive the
uncompensated care payment. In the FY
2015 IPPS/LTCH PPS proposed rule, we
inadvertently identified several MDHs
as SCHs in our projections and have
updated our list of SCHs for the final
rule accordingly.
Finally, we accept the
recommendation of many commenters
to provide the public with an additional
30 days subsequent to the publication of
the final rule in order to review and
submit comments limited to whether
any hospitals should be added to the list
of hospitals eligible to receive interim
empirically justified DSH payments and
uncompensated care payments or if any
hospitals should be removed from the
list based on changes in their
subsection(d) status, as we did in the FY
2014 IPPS/LTCH PPS final rule.
Commenters can submit their comments
to our inbox at Section3133DSH@cms.
hhs.gov. After receiving and reviewing
comments, if we make any changes to
the list, we will post on the Web site a
revised table showing the final Factor 3
for each hospital prior to October 1,
2014. This timetable will give MACs
sufficient time in order to enter the final
data into the provider specific file and
make timely payments for discharges
occurring on or after October 1, 2014.
Comment: Several commenters asked
whether the Medicaid days used to
calculate Factor 3 can be reconciled
based on audit by the Medicare
contractor and whether any recouped
uncompensated care payments would
be redistributed to the providers
receiving an uncompensated care
payment at cost report settlement.
Response: As we discussed in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50645), at this time, we do not intend
to reconcile Factor 3 because we believe
the statute provides the authority to
make uncompensated care payments on
the basis of estimates of Factors 1, 2,
and 3 and that it is preferable to do so
in order to avoid unacceptable delays in
the final determination of
uncompensated care payments.
Comment: One commenter objected to
the proposal to calculate Factor 3 based
on a hospital’s share of total Medicaid
days and Medicare SSI days as a proxy
for measuring a hospital’s share of
uncompensated care. The commenter
believed that this proxy does not
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appropriately target hospitals with the
highest burden of uncompensated care
costs and instead rewards hospitals in
states where Medicaid has expanded.
Response: For the reasons discussed
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50639), we continue to
believe that our methodology to
calculate Factor 3 based on a hospital’s
share of Medicaid days and SSI days
does not inappropriately reward States
that expand Medicaid coverage.
Furthermore, as discussed above and in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50634 through 50639), we
believe that using the low-income
insured days as a proxy for
uncompensated care costs provides a
reasonable basis to determine Factor 3
on a temporary basis as we work to
improve Worksheet S–10 to accurately
and consistently capture
uncompensated care costs.
Comment: Several commenters
requested that hospitals have the
opportunity to request to have the SSI
days recalculated on the basis of their
cost reporting period, not Federal fiscal
year, as part of their Factor 3
calculation.
Response: We do not believe that this
would improve our estimates for Factor
3. For the DSH calculation, CMS
generally issues SSI ratios based on a
Federal fiscal year to be used to
determine a hospital’s Medicare DSH
payments at cost report settlement. For
the purpose of the Medicare DSH
payment, a provider may request a
realignment under § 412.106(b)(3) such
that its SSI ratio is recalculated based on
the hospital’s specific cost-reporting
period. The choice to request a
realignment and the timing of this
choice may vary. Therefore, a hospital’s
decision whether to have its SSI ratio
calculated on the basis of its cost
reporting period may not have been
made at the time we determine Factor
3 for a specific Federal fiscal year.
Furthermore, we do not believe that
allowing hospitals the option of having
their SSI days calculated on the basis of
their cost reporting period would
improve our estimates of Factor 3.
Therefore, to preserve consistency and
administrative efficiency, we continue
to believe it is appropriate to use SSI
ratios based on the Federal fiscal year.
Comment: Several commenters asked
how the decision in Allina v. Sebelius
would affect the calculation of Factor 3.
Commenters stated that the SSI days
should exclude MA days, and MA dualeligible days should be included as
Medicaid days in the calculation of
Factor 3 for FY 2015 and that CMS
should reconcile the FY 2014 Factor 3
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estimates based on the decision in
Allina v. Sebelius.
Response: Similar to what we stated
earlier in this final rule, we do not
believe the Allina decision has any
bearing on our estimate of Factor 3 for
either FY 2014 or FY 2015. The decision
in Allina did not address our decision
to readopt the policy of counting
Medicare Advantage days in the SSI
ratio for FY 2014 and subsequent fiscal
years. Nor did the decision address the
issue of how patient days should be
counted for purposes of estimating
uncompensated care. Moreover, section
1886(r)(2)(C) of the Act provides
discretion for the Secretary to determine
how to estimate uncompensated care
costs, and for FY 2015, we are finalizing
our proposal to continue to apply the
methodology adopted in the FY 2014
IPPS/LTCH PPS final rule to define
uncompensated care based on the proxy
of utilization by low-income insured
patients. Specifically, Factor 3 will be
based on a hospital’s share of total
Medicaid days and SSI days. Consistent
with the policy that we finalized in the
FY 2014 IPPS/LTCH PPS final rule
regarding the counting of SSI days, we
believe that, for purposes of determining
uncompensated care payments, SSI days
should include both MA and FFS SSI
days.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50642), we discussed several
specific issues concerning the use of
cost report data to determine Factor 3.
One issue concerned the process and
data to be employed in determining
Factor 3 in the case of hospital mergers.
Specifically, two hospitals that merged
in 2011 with one surviving provider
number requested that we account for
the merger by including data from both
hospitals’ cost reports immediately prior
to the merger in the calculation of the
Factor 3 amount. In that final rule, we
had calculated Factor 3 using only the
surviving hospital’s cost report data and
SSI ratio data. In the final rule (78 FR
50602), we responded to the public
comment that Factor 3 would be
calculated based on the low-income
insured patient days (that is, Medicaid
days and SSI days) under the surviving
CCN, based on the most recent available
data for that CCN (for FY 2014, from the
cost report for 2011 or 2010). We noted
that this was consistent with the
treatment of other IPPS payment factors,
where data used to calculate a hospital’s
Medicare DSH payment adjustment,
CCRs for outlier payments, and wage
index values are tied to a hospital’s
CCN. Data associated with a CCN that is
no longer in use are not used to
determine those IPPS hospital payments
under the surviving CCN.
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Since the publication of the FY 2014
IPPS/LTCH PPS final rule, we have
received additional input from hospitals
that have undergone mergers that
suggest using only the surviving CCN
produces an estimate of the surviving
hospital’s uncompensated care burden
that is lower than warranted. For FY
2015, for example, Factor 3 of the
uncompensated care payment
calculation would be determined using
2011/2012 cost reports. As a result, for
any mergers occurring between FY 2011
and FY 2015, Factor 3 of the
uncompensated care payment for FY
2015 would reflect only the data of the
hospital with the surviving CCN, not the
combination of the data from the two
hospitals that merged. We believe that
revising our methodology to incorporate
data from both of the hospitals that
merged could improve our estimate of
the uncompensated care burden of the
merged hospital. Accordingly, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28103 through 28104), we proposed
to revise our methodology for
determining Factor 3 to incorporate data
from both merged hospitals until data
for the merged hospitals become
available under the surviving CCN.
In addition, because the data systems
used to calculate Factor 3 do not
identify hospitals that have merged, we
also proposed to establish a process to
identify hospitals that have merged after
the period of the historical data that are
being used to calculate Factor 3, up to
a point in time during ratesetting for
that Federal fiscal year. Under this
approach, we would combine the data
for the merged hospitals to calculate
Factor 3 of the uncompensated care
payment. Specifically, we proposed that
we would identify the hospitals that
merged after the period from which data
are being used to calculate Factor 3 (for
FY 2015, 2012 and 2011) but before the
publication of each year’s final rule. For
purposes of the proposal, we defined a
merger to be an acquisition where the
Medicare provider agreement of one
hospital is subsumed into the provider
agreement of the surviving provider. We
would not consider an acquisition
where the new owner voluntarily
terminates the Medicare provider
agreement of the hospital it purchased
by rejecting assignment of the previous
owner’s provider agreement to be a
merger. We believe it is appropriate to
combine data to calculate Factor 3 for a
merged hospital where the Medicare
provider agreement of one hospital is
subsumed into the provider agreement
of the surviving provider because, in
this type of acquisition as described in
the September 6, 2013 Survey &
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Certification Memorandum S&C: 13–60–
ALL (http://www.cms.gov/Medicare/
Provider-Enrollment-and-Certification/
SurveyCertificationGenInfo/Downloads/
Survey-and-Cert-Letter-13-60.pdf), the
buyer is subject to all applicable statutes
and regulations and to the terms and
conditions under which the assigned
agreement was originally issued. These
include, but are not limited to, Medicare
requirements to adjust payments to
account for prior overpayments and
underpayments, even if they relate to a
pre-acquisition period (successor
liability), and to adjust payments to
collect civil monetary penalties.
Therefore, we believe it is appropriate to
also retain the data of the subsumed
hospital to calculate the uncompensated
care payment for the merged hospital.
Conversely, by rejecting assignment of
the Medicare provider agreement of the
subsumed hospital, the surviving
provider has voluntarily terminated the
Medicare provider agreement and is
precluded from having successor
liability for Medicare overpayments or
underpayments that would have
otherwise been made to the subsumed
provider. Furthermore, when the
surviving hospital rejects automatic
assignment of the existing provider
agreement, but wishes to participate in
the Medicare program, the merged
hospital is considered an initial
applicant to the Medicare program. In
an instance in which the surviving
provider has rejected assignment of the
Medicare provider agreement of the
subsumed provider, it would not seem
appropriate to use data from the
subsumed provider for purposes of
Medicare payment, including for the
calculation of a hospital’s
uncompensated care payment.
For FY 2015, we proposed to identify
mergers by querying the Medicare
contractors. We believe it is appropriate
to obtain merger information from the
Medicare contractors, as a copy of each
final sales agreement/transaction
indicating the effective date of the
acquisition is generally submitted to the
Medicare contractors once an
acquisition is finalized. For the purpose
of the proposed rule, we requested that
the Medicare contractors provide us
with a list of mergers that occurred
between October 1, 2010 (the first day
of FY 2011, which is the earliest date
that would be included in any 2011 cost
report data that are used to calculate a
hospital’s Factor 3) through January
2014 (when we started preparing for the
FY 2015 IPPS/LTCH PPS proposed
rule). On the basis of this information,
we would then combine the data
elements of any hospitals that had
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merged to calculate the uncompensated
care payment for the merged hospital.
Specifically, we proposed to combine
the Medicaid days from the most
recently available full year cost reports
and the SSI days from the most recently
available SSI ratios tied to the two CCNs
prior to the merger to calculate the
merged hospital’s Factor 3. For FY 2015,
we proposed to combine the Medicaid
days from either the 2011 or 2012 cost
reports and would use the most recently
available SSI ratios available at the time
the final rule is developed.
In order to confirm these mergers and
the accuracy of the data used to
determine each merged hospital’s
uncompensated care payment, we
proposed to publish a table on the CMS
Web site, in conjunction with the
issuance of the proposed and final rules
for a fiscal year, containing a list of the
mergers that we are aware of and the
computed uncompensated care payment
for each merged hospital. A copy of this
table was published on the CMS Web
site in conjunction with the issuance of
the FY 2015 proposed rule. The affected
hospitals had the opportunity to
comment during the public comment
period on the accuracy of this
information.
We proposed to treat hospitals that
merge after the development of the final
rule similar to new hospitals. For these
newly merged hospitals, we would not
have data currently available to
calculate a Factor 3 amount that
accounts for the merged hospital’s
uncompensated care burden. In
addition, we would not have data to
determine if the newly merged hospital
is eligible for Medicare DSH payment
and, therefore, eligible for
uncompensated care payments for the
applicable fiscal year because the only
data we would have to make this
determination are those for the
surviving CCN. Accordingly, we
proposed to treat newly merged
hospitals in a similar manner as new
hospitals, such that the newly merged
hospital’s final uncompensated care
payment would be determined at cost
report settlement where the numerator
of the newly merged hospital’s Factor 3
would be based on the Medicaid days
and SSI days reported on the cost report
used for the applicable fiscal year. We
proposed that the interim
uncompensated care payments for the
newly merged hospitals would be based
on only the data of the surviving
hospital’s CCN at the time of the
preparation of the final rule for the
applicable fiscal year. In other words,
for newly merged hospitals, eligibility to
receive interim uncompensated care
payments and the amount of any
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50021
interim uncompensated care payments
would be based on the Medicaid days
from either the 2011 or 2012 cost reports
and the most recently available SSI
ratios available at the time the final rule
is developed for only the surviving
CCN. However, at cost report settlement,
we would determine the newly merged
hospital’s final uncompensated care
payments based on the Medicaid days
and SSI days reported on the cost report
used for the applicable fiscal year. That
is, we would revise the numerator of
Factor 3 for the newly merged hospital
to reflect the Medicaid and SSI days
reported on the cost report for the
applicable fiscal year. We invited public
comment on our proposed change to the
treatment of hospital mergers in the
calculation of a hospital’s
uncompensated care payment.
Comment: Commenters uniformly
supported the proposal to establish a
process to identify the hospitals that
have merged so CMS can calculate the
merged hospital’s share of the total
uncompensated care amount available
using the low-income patient days from
all hospitals that existed prior to the
merger. Several commenters identified
additional hospitals that had undergone
a merger that were not included on the
list of mergers identified in the FY 2015
IPPS/LTCH PPS proposed rule. A
number of commenters requested that
the public have additional time after the
publication of the final rule to review
and submit corrections to CMS’ list of
identified mergers. One commenter
asked CMS to clarify that, under the
proposal, CMS would recalculate the
hospital’s uncompensated care
payments by combining the Medicaid
days and SSI days published with the
final rule from the applicable ‘‘data
year’’ for the surviving CCN, as well as
for any acquired CCNs that were retired
through the merger process.
Response: We appreciate the
commenters’ support and are finalizing
our proposal as proposed. We have
updated our list of mergers based on
information submitted by the Medicare
contractor as of June 2014. In addition,
we have reviewed the commenters’
submissions of mergers not previously
identified in the proposed rule and have
updated our list accordingly. In
response to the request from one
commenter, for the hospitals that we
have listed as undergoing a merger, we
are confirming that we would
recalculate the hospital’s
uncompensated care payments by
combining the Medicaid days and SSI
days published with the final rule from
the applicable ‘‘data year’’ for the
surviving CCN, as well as for any
acquired CCNs that were retired through
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the merger process. For example, to
calculate the FY 2015 Factor 3 using the
FY 2012 SSI ratio and the full year cost
report from 2012 or 2011, we would
combine the FY 2012 SSI days and
Medicaid days from the 2012 or 2011
cost report from the surviving and
retiring providers. We would not update
the merged hospital’s Factor 3 after that.
For a newly merged hospital, defined
for the purpose of this policy as a
hospital that we do not identify as
undergoing a merger until after the
public comment period and additional
review period after the final rule or that
undergoes a merger during the fiscal
year, the final Factor 3 would be
recalculated based on the Medicaid days
and SSI days reported on the cost report
used for the applicable fiscal year since
the Factor 3 that we are publishing in
this final rule would not reflect the
merger. For example, for a newly
merged hospital that merged in FY
2015, the numerator of its Factor 3
would be recalculated based on the FY
2015 SSI days and the Medicaid days
reported on its 2015 cost report. Finally,
in response to the comments seeking
additional review of CMS’ list of
identified mergers, we are providing an
additional 30 days after the publication
of this final rule for hospitals to review
and submit comments on the accuracy
of the list of mergers that we have
identified in this final rule. Comments
can be submitted to our inbox at Section
[email protected] and any changes
to Factor 3 will be posted on the CMS
Web site prior to October 1, 2014.
Comment: One commenter expressed
concern about the process of requesting
that MACs provide information to CMS
on mergers/acquisitions. The
commenter noted that the MACs may
not have the most up-to-date
information on mergers to provide to
CMS because documentation of the
merger, such as tie-in or tie-out notices,
can be delayed in getting to a contractor.
Response: We appreciate the
commenters’ concerns. We believe that
we have implemented several
safeguards in the event that a merger is
not identified by the MACs, including
allowing opportunity for comment on
the accuracy of the mergers that we have
identified during the comment period
for the proposed rule and after the
publication of the final rule. In addition,
as described earlier, for any newly
merged hospital or for a hospital that we
do not identify as having undergone a
merger, we will recalculate the merged
hospital’s Factor 3 at the end of the
applicable fiscal year based on the
Medicaid days and SSI days reported on
the cost report used for the applicable
fiscal year since the Factor 3 published
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in the final rule would not reflect the
merger.
Comment: MedPAC and one other
commenter expressed concern about our
policy of distributing the
uncompensated care payments as a perdischarge add-on. They believed this
policy is problematic because the perdischarge add-on varies widely from
hospital to hospital. The variability of
the add-on payments in turn distorts the
MS–DRG prices and creates problematic
incentives for ACOs and MA plans.
Therefore, MedPAC and the other
commenter believed that it would be
better to provide a common interim addon payment for all DSH hospitals in a
county. Any underpayments or
overpayments to an individual hospital
could be corrected at year-end
settlement or on an interim basis during
the year (as is already necessary under
the current system). One commenter
also suggested applying a growth factor
based on CBO projections to CMS’
historical discharge data to calculate the
interim per-discharge uncompensated
care payments to mitigate overpayments
and stabilize cash flow. Another
commenter opposed MedPAC’s
recommendation and supported CMS’
current methodology to calculate
interim uncompensated care payments,
stating that MedPAC’s recommendation
could cause cash-flow problems for
providers.
Response: We consider these
comments to be outside the scope of the
proposed rule, as we did not propose
any revision in our method of making
interim payments for uncompensated
care. However, we would like to make
two preliminary reactions to this
recommendation. The first observation
is that we have received very few
comments from the hospital industry
indicating that the problem cited by
these two commenters actually exists.
We would expect that, if hospitals were
truly disadvantaged in the manner cited
by these commenters by our
methodology for making interim
payment uncompensated care
payments, we would have received
many more comments to that effect. The
second preliminary reaction is that
adopting the recommendation may
pose, for some hospitals, serious
problems that may conceivably exceed
the problem that the recommendation is
designed to solve. For example,
reducing the interim uncompensated
care payments of high DSH hospitals to
a county-wide average payment may
cause serious cash flow problems during
the period before the interim payments
can be adjusted or settled. Similarly,
low DSH hospitals may receive
significantly higher interim payments
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than would be warranted by their actual
uncompensated care data. As a result,
these hospitals would have to take
financial management steps to ensure
that they are capable of making
significant repayments when interim
payments are adjusted or settled.
Comment: Commenters suggested that
CMS implement a stop-loss and stopgain policy to limit the amount by
which a hospital’s DSH payment could
change in a single year.
Response: As we previously stated in
a response to a similar comment in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50622), we do not believe that the
statute provides authority for adopting a
stop-loss and stop-gain policy designed
to limit changes in DSH payments.
Comment: Commenters expressed
concern that there shall be no
administrative or judicial review of the
uncompensated care factors.
Response: Section 1886(r)(3) of the
Act provides that there will be no
administrative or judicial review under
section 1869 of the Act, section 1878 of
the Act, or otherwise of any of the
following:
• Any estimate of the Secretary for
purposes of determining the factors
described in paragraph (2) of section
1886(r) of the Act.
• Any period selected by the
Secretary for such purposes.
The regulation at § 412.106(g)(2),
which was finalized in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50643), is consistent with these
statutory limitations on review.
G. Medicare-Dependent, Small Rural
Hospital (MDH) Program (§ 412.108)
and Sole Community Hospitals (SCHs)
(§ 412.92)
1. Background for MDH Program
Section 1886(d)(5)(G) of the Act
provides special payment protections,
under the IPPS, to a Medicaredependent, small rural hospital (MDH).
(For additional information on the MDH
program and the payment methodology,
we refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51683
through 51684).) As we discussed in the
FY 2011 IPPS/LTCH PPS final rule (75
FR 50287) and in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51683
through 51684), section 3124 of the
Affordable Care Act extended the
expiration of the MDH program from the
end of FY 2011 (that is, for discharges
occurring before October 1, 2011) to the
end of FY 2012 (that is, for discharges
occurring before October 1, 2012).
Under prior law, as specified in section
5003(a) of Public Law 109–171 (DRA
2005), the MDH program was to be in
effect through the end of FY 2011 only.
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Since the extension of the MDH
program through FY 2012 provided by
section 3124 of the Affordable Care Act,
the MDH program has been further
extended multiple times. First, section
606 of the ATRA (Pub. L. 112–240)
extended the MDH program through FY
2013 (that is, for discharges occurring
before October 1, 2013). Second, section
1106 of the Pathway for SGR Reform Act
of 2013 (Pub. L. 113–67) extended the
MDH program through the first half of
FY 2014 (that is, for discharges
occurring before April 1, 2014). In the
interim final rule with comment period
(IFC) that appeared in the Federal
Register on March 18, 2014 (the ‘‘March
2014 IFC’’) (79 FR 15025 through
15027), we discussed the expiration of
the MDH program on March 31, 2014.
(In section IV.P. of the preamble of this
final rule, we are responding to any
public comments we received on the
March 2014 IFC and are stating our
finalized policy for the extension of the
MDH program for the first half of FY
2014, through March 31, 2014, under
the Pathway for SGR Reform Act of
2013.) In the March 2014 IFC, we
explained how providers may be
affected by the 6-month extension of the
MDH program under the Pathway for
SGR Reform Act of 2013 and described
the steps to reapply for MDH status for
FY 2014, as applicable. Generally, a
provider that was classified as an MDH
as of September 30, 2013, was reinstated
as an MDH effective October 1, 2013,
with no need to reapply for MDH
classification. However, if the MDH had
classified as an SCH or cancelled its
rural classification under § 412.103(g)
effective on or after October 1, 2013, the
effective date of MDH status may not be
retroactive to October 1, 2013. In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50647 through 50649) and the March
2014 IFC (79 FR 15025 through 15027),
we made conforming changes to the
regulations at § 412.108(a)(1) and
(c)(2)(iii) to reflect the extensions of the
MDH program provided for by the
ATRA and Pathway for SGR Reform Act
of 2013, respectively. Lastly, under
current law, section 106 of the PAMA
(Pub. L. 113–93) provides for a 1-year
extension of the MDH program effective
from April 1, 2014 through March 31,
2015. Specifically, section 106 of the
PAMA amended sections
1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II)
of the Act by striking ‘‘April 1, 2014’’
and inserting ‘‘April 1, 2015’’. Section
106 of the PAMA also made conforming
amendments to sections 1886(b)(3)(D)(i)
and 1886(b)(3)(D)(iv) of the Act.
We addressed the extension of the
MDH program for the second half of FY
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2014 (that is, from April 1, 2014 through
September 30, 2014) under the PAMA
in a notice that appeared in the Federal
Register on June 17, 2014 (79 FR 34446
through 344449). For additional
information on the extensions of the
MDH program after FY 2012, we refer
readers to the following: the FY 2013
IPPS/LTCH PPS final rule that appeared
in the Federal Register on August 31,
2012 (77 FR 53404 through 53405 and
53413 through 53414); the FY 2013 IPPS
notice that appeared in the Federal
Register on March 7, 2013 (78 FR
14689); the FY 2014 IPPS/LTCH PPS
final rule that appeared in the Federal
Register on August 19, 2013 (78 FR
50647 through 50649); the FY 2014
interim final rule with comment period
that appeared in the Federal Register on
March 18, 2014 (the ‘‘March 2014 IFC’’)
(79 FR 15025 through 15027); and the
FY 2014 notice that appeared in the
Federal Register on June 17, 2014 (79
FR 34446 through 34449).
2. PAMA Provisions for FY 2015 for
MDHs
Prior to the enactment of the PAMA,
under section 1106 of the Pathway for
SGR Reform Act of 2013, the MDH
program authorized by section
1886(d)(5)(G) of the Act was set to
expire midway through FY 2014.
Section 106 of the PAMA amended
sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide
for an additional 1-year extension of the
MDH program, effective from April 1,
2014 through March 31, 2015. Section
106 of the PAMA also made conforming
amendments to sections 1886(b)(3)(D)(i)
and 1886(b)(3)(D)(iv) of the Act.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28104), we
proposed to make conforming changes
to the regulations at §§ 412.108(a)(1) and
(c)(2)(iii) to reflect the statutory
extension of the MDH program for the
first 6 months of FY 2015 made by
section 106 of the PAMA.
We did not receive any public
comments on our proposed conforming
changes to the existing regulations text
at §§ 412.108(a)(1) and (c)(2)(iii) to
reflect the statutory extension of the
MDH program through the first half of
FY 2015 (that is, through March 31,
2015) in accordance with section 106 of
the PAMA. Therefore, in this final rule,
we are adopting our proposed revisions
to the regulations at §§ 412.108(a)(1) and
(c)(2)(iii) as final without modification.
We note that these regulatory provisions
supersede the conforming changes to
§§ 412.108(a)(1) and (c)(2)(iii) made in
the March 2014 IFC to reflect the
extension of the MDH program through
March 31, 2014, under the Pathway for
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50023
SGR Reform Act, as discussed in section
IV.P. of the preamble of this final rule.
3. Expiration of the MDH Program
Because section 106 of the PAMA
extends the MDH program through the
first half of FY 2015 only, beginning
April 1, 2015, the MDH program will no
longer be in effect. Because the MDH
program is not authorized by statute
beyond March 31, 2015, beginning April
1, 2015, all hospitals that previously
qualified for MDH status will no longer
have MDH status.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53404 through 53405), we
revised our SCH policies to allow MDHs
to apply for SCH status and be paid as
such under certain conditions,
following expiration of the MDH
program at the end of FY 2012. We
codified these changes in the
regulations at § 412.92(b)(2)(i) and
§ 412.92(b)(2)(v). For additional
information, we refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR
53404 through 53405 and 53674). We
note that those same conditions apply to
MDHs that intend to apply for SCH
status with the expiration of the MDH
program on March 31, 2015.
Specifically, the existing regulations at
§ 412.92(b)(2)(i) and (b)(2)(v) allow for
an effective date of approval of SCH
status that is the day following the
expiration date of the MDH program. In
accordance with these regulations, in
order for an MDH to receive SCH status
effective April 1, 2015, it must apply for
SCH status at least 30 days before the
end of the MDH program; that is, the
MDH must apply for SCH status by
March 1, 2015. The MDH also must
request that, if approved as an SCH, the
SCH status be effective with the
expiration of the MDH program
provision; that is, the MDH must request
that the SCH status, if approved, be
effective April 1, 2015, immediately
after its MDH status expires with the
expiration of the MDH program on
March 31, 2015. We note that an MDH
that applies for SCH status in
anticipation of the expiration of the
MDH program would not qualify for the
April 1, 2015 effective date upon
approval if it does not apply by the
March 1, 2015 deadline. The provider
would instead be subject to the usual
effective date for SCH classification, that
is, 30 days after the date of CMS’ written
notification of approval as specified at
§ 412.92(b)(2)(i).
Although we made no proposals
related to the expiration of the MDH
program, we received the following
comments.
Comment: A few commenters
expressed concern about the financial
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impact of the expiration of the MDH
program. Some of these commenters
urged CMS to continue the MDH
program permanently, while other
commenters urged CMS to support
legislative efforts to extend these
provisions beyond the current March
31, 2015 statutory expiration date. Some
commenters urged CMS to work with
Congress to extend the MDH provision
because these hospitals are vitally
needed in serving elderly persons with
health care needs. Other commenters
stated that the MDH program provides
needed funding for hospitals with
Medicare as their predominant payor.
The commenters stated that many of
these hospitals provide primarily
outpatient services, and the low
Medicare OPPS rates, which pay less
than cost, threaten the financial viability
of these hospitals without the added
funding that Medicare dependent status
provides. In order to maintain access to
care for Medicare beneficiaries and
others in many rural communities, the
commenters urge CMS to continue the
MDH program permanently.
Response: While we appreciate the
commenters’ concerns about the
expiration of the MDH program, CMS
does not have the authority under
current law to extend the MDH program
beyond the March 31, 2015 statutory
expiration date. These comments are
similar to comments we received
previously, prior to the statutory
extensions of the MDH program for FYs
2013 and 2014 provided by subsequent
legislation, and discussed in both the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53413 through 53414) and the FY
2014 IPPS/LTCH PPS final rule (78 FR
50647 through 50649.
Therefore, under current law,
beginning April 1, 2015, all hospitals
that previously qualified for MDH status
will no longer have MDH status.
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4. Effect on MDHs of Adoption of New
OMB Delineations
We received some comments
regarding the effect of the
implementation of the new OMB
delineations (discussed in section
III.H.5. of the preamble of this final rule)
on MDHs, including requests for a
transition period for MDHs to adapt to
the changes that would result from the
new OMB delineations; in particular,
changes from rural to urban status. We
refer readers to section III.H.5. (Update
of Application of Urban to Rural
Classification Criteria) of the preamble
of this final rule for our summary of
public comments received and our
responses to those comments.
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5. Effect on SCHs of Adoption of New
OMB Delineations and 2-Year
Transition for CAHs
Section 1886(d)(5)(D)(iii) of the Act
defines a sole community hospital
(SCH) generally as a hospital that is
located more than 35 road miles from
another hospital or that, by reason of
factors such as isolated location,
weather conditions, travel conditions, or
absence of other like hospitals (as
determined by the Secretary), is the sole
source of inpatient hospital services
reasonably available to Medicare
beneficiaries. The regulations at 42 CFR
412.92 set forth the criteria that a
hospital must meet to be classified as a
SCH. For more information on SCHs, we
refer readers to the FY 2009 IPPS/LTCH
PPS final rule (74 FR 43894 through
43897).
In connection with the
implementation of the new OMB
delineations for urban and rural areas,
as discussed in section III.H.5. of the
preamble of this final rule, we received
public comments requesting a transition
period for SCHs affected by
implementation of the new OMB
delineations, similar to the 2-year
transition period for affected CAHs, as
discussed in section VI.D.2. of the
preamble of this final rule, during
which the CAH must reclassify as rural
in order to retain its CAH status after the
2-year transition period ends. We refer
readers to section III.H.5. of the
preamble of this final rule for the
discussion of and responses to those
public comments.
We also were asked to clarify the
status of a CAH during the 2-year
transition period and its effect on SCHs.
Comment: One commenter requested
that CMS clarify that a hospital’s SCH
status would not be affected by a CAH
that is now located in an urban area as
a result of a new OMB delineation while
that CAH is in its 2-year transition
period to reclassify as rural.
Response: We are clarifying that
during an affected CAH’s 2-year
transition period, the facility will
continue to be considered a CAH and,
therefore, would not fall under the
definition of ‘‘like hospital’’ at
§ 412.92(c)(2). Therefore, an affected
CAH will not impact the status of an
SCH during that CAH’s 2-year transition
period. For purposes of determining
whether an SCH is located near a CAH
affected by the most recent change in
OMB delineations implemented in this
final rule effective October 1, 2014, we
plan to post on the CMS Web site, a list
of the affected CAHs. We refer readers
to section VI.D.2. of the preamble of this
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final rule for a discussion related to the
CAH 2-year transition period.
H. Hospital Readmissions Reduction
Program: Changes for FY 2015 Through
FY 2017 (§§ 412.150 Through 412.154)
1. Statutory Basis for the Hospital
Readmissions Reduction Program
Section 3025 of the Affordable Care
Act, as amended by section 10309 of the
Affordable Care Act, added a new
section 1886(q) to the Act. Section
1886(q) of the Act establishes the
‘‘Hospital Readmissions Reduction
Program,’’ effective for discharges from
an ‘‘applicable hospital’’ beginning on
or after October 1, 2012, under which
payments to those applicable hospitals
may be reduced to account for certain
excess readmissions.
Section 1886(q)(1) of the Act sets forth
the methodology by which payments to
‘‘applicable hospitals’’ will be adjusted
to account for excess readmissions. In
accordance with section 1886(q)(1) of
the Act, payments for discharges from
an ‘‘applicable hospital’’ will be an
amount equal to the product of the
‘‘base operating DRG payment amount’’
and the adjustment factor for the
hospital for the fiscal year. That is,
‘‘base operating DRG payments’’ are
reduced by a hospital-specific
adjustment factor that accounts for the
hospital’s excess readmissions. Section
1886(q)(2) of the Act defines the base
operating DRG payment amount as ‘‘the
payment amount that would otherwise
be made under subsection (d)
(determined without regard to
subsection (o) [the Hospital VBP
Program]) for a discharge if this
subsection did not apply; reduced by
. . . any portion of such payment
amount that is attributable to payments
under paragraphs (5)(A), (5)(B), (5)(F),
and (12) of subsection (d).’’ Paragraphs
(5)(A), (5)(B), (5)(F), and (12) of
subsection (d) refer to outlier payments,
IME payments, DSH adjustment
payments, and add-on payments for
low-volume hospitals, respectively.
Furthermore, section 1886(q)(2)(B) of
the Act specifies special rules for
defining ‘‘the payment amount that
would otherwise be made under
subsection (d)’’ for certain hospitals,
including policies for SCHs and for
MDHs for FY 2013. In the FY 2013
IPPS/LTCH PPS final rule (77 FR
53374), we finalized policies to
implement the statutory provisions
related to the definition of ‘‘base
operating DRG payment amount’’ with
respect to those hospitals.
Section 1886(q)(3)(A) of the Act
defines the ‘‘adjustment factor’’ for an
applicable hospital for a fiscal year as
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equal to the greater of ‘‘(i) the ratio
described in subparagraph (B) for the
hospital for the applicable period (as
defined in paragraph (5)(D)) for such
fiscal year; or (ii) the floor adjustment
factor specified in subparagraph (C).’’
Section 1886(q)(3)(B) of the Act, in turn,
describes the ratio used to calculate the
adjustment factor. It states that the ratio
is ‘‘equal to 1 minus the ratio of—(i) the
aggregate payments for excess
readmissions . . . and (ii) the aggregate
payments for all discharges. . . .’’
Section 1886(q)(3)(C) of the Act
establishes the floor adjustment factor,
which is set at 0.99 for FY 2013, 0.98
for FY 2014, and 0.97 for FY 2015 and
subsequent fiscal years.
Section 1886(q)(4) of the Act defines
the terms ‘‘aggregate payments for
excess readmissions’’ and ‘‘aggregate
payments for all discharges’’ for an
applicable hospital for the applicable
period. The term ‘‘aggregate payments
for excess readmissions’’ is defined in
section 1886(q)(4)(A) of the Act as ‘‘the
sum, for applicable conditions . . . of
the product, for each applicable
condition, of (i) the base operating DRG
payment amount for such hospital for
such applicable period for such
condition; (ii) the number of admissions
for such condition for such hospital for
such applicable period; and (iii) the
excess readmissions ratio . . . for such
hospital for such applicable period
minus 1.’’ The ‘‘excess readmissions
ratio’’ is a hospital-specific ratio based
on each applicable condition.
Specifically, section 1886(q)(4)(C) of the
Act defines the excess readmissions
ratio as the ratio of actual-over-expected
readmissions; specifically, the ratio of
‘‘risk-adjusted readmissions based on
actual readmissions’’ for an applicable
hospital for each applicable condition,
to the ‘‘risk-adjusted expected
readmissions’’ for the applicable
hospital for the applicable condition.
Section 1886(q)(5) of the Act provides
definitions of ‘‘applicable condition,’’
‘‘expansion of applicable conditions,’’
‘‘applicable hospital,’’ ‘‘applicable
period,’’ and ‘‘readmission.’’ The term
‘‘applicable condition’’ (which is
addressed in detail in section IV.C.3.a.
of the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51665 through 51666)) is
defined as a ‘‘condition or procedure
selected by the Secretary among
conditions and procedures for which: (i)
Readmissions . . . represent conditions
or procedures that are high volume or
high expenditures . . . and (ii)
measures of such readmissions . . .
have been endorsed by the entity with
a contract under section 1890(a) [of the
Act] . . . and such endorsed measures
have exclusions for readmissions that
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are unrelated to the prior discharge
(such as a planned readmission or
transfer to another applicable hospital).’’
Section 1886(q)(5)(B) of the Act also
requires the Secretary, beginning in FY
2015, ‘‘to the extent practicable, [to]
expand the applicable conditions
beyond the 3 conditions for which
measures have been endorsed . . . to
the additional 4 conditions that have
been identified by the Medicare
Payment Advisory Commission in its
report to Congress in June 2007 and to
other conditions and procedures as
determined appropriate by the
Secretary.’’
Section 1886(q)(5)(C) of the Act
defines ‘‘applicable hospital,’’ that is, a
hospital subject to the Hospital
Readmissions Reduction Program, as a
‘‘subsection (d) hospital or a hospital
that is paid under section 1814(b)(3) [of
the Act], as the case may be.’’ The term
‘‘applicable period,’’ as defined under
section 1886(q)(5)(D) of the Act,
‘‘means, with respect to a fiscal year,
such period as the Secretary shall
specify.’’ As explained in the FY 2012
IPPS/LTCH PPS final rule (76 FR
51671), the ‘‘applicable period’’ is the
period during which data are collected
in order to calculate various ratios and
payment adjustments under the
Hospital Readmissions Reduction
Program.
Section 1886(q)(6) of the Act sets forth
the public reporting requirements for
hospital-specific readmission rates.
Section 1886(q)(7) of the Act limits
administrative and judicial review of
certain determinations made pursuant
to section 1886(q) of the Act. Finally,
section 1886(q)(8) of the Act requires
the Secretary to collect data on
readmission rates for all hospital
inpatients (not just Medicare patients)
for a broad range of both subsection (d)
and non-subsection(d) hospitals, in
order to calculate the hospital—specific
readmission rates for all such hospital
inpatients and to publicly report these
‘‘all-patient’’ readmission rates.
2. Regulatory Background
The payment adjustment factor set
forth in section 1886(q) of the Act did
not apply to discharges until FY 2013.
In the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51660 through 51676), we
addressed the issues of the selection of
readmission measures and the
calculation of the excess readmissions
ratio, which will be used, in part, to
calculate the readmissions adjustment
factor. Specifically, in that final rule, we
finalized policies that relate to the
portions of section 1886(q) of the Act
that address the selection of and
measures for the applicable conditions,
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the definitions of ‘‘readmission’’ and
‘‘applicable period,’’ and the
methodology for calculating the excess
readmissions ratio. We also established
policies with respect to measures for
readmission for the applicable
conditions and our methodology for
calculating the excess readmissions
ratio.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53374 through 53401), we
finalized policies that relate to the
portions of section 1886(q) of the Act
that address the calculation of the
hospital readmission payment
adjustment factor and the process by
which hospitals can review and correct
their data. Specifically, in that final
rule, we addressed the base operating
DRG payment amount, aggregate
payments for excess readmissions and
aggregate payments for all discharges,
the adjustment factor, applicable
hospital, limitations on review, and
reporting of hospital-specific
information, including the process for
hospitals to review readmission
information and submit corrections. We
also established a new Subpart I under
42 CFR Part 412 (§§ 412.150 through
412.154) to codify rules for
implementing the Hospital
Readmissions Reduction Program.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50649 through 50676), we
finalized our policies that relate to
refinement of the readmissions
measures and related methodology for
the current applicable conditions,
expansion of the ‘‘applicable
conditions’’ beginning for FY 2015, and
clarification of the process for reporting
hospital—specific information,
including the opportunity to review and
submit corrections. We also established
policies related to the calculation of the
adjustment factor for FY 2014.
3. Overview of Policies for the FY 2015
Hospital Readmissions Reduction
Program
In this final rule, we are—
• Making refinements to the
readmissions measures and related
methodology for FY 2015 and
subsequent years (section IV.H.4. of the
preamble of this final rule);
• Expanding the scope of ‘‘applicable
conditions’’ for FY 2017 to include
coronary artery bypass graft (CABG)
(section IV.H.6. of the preamble of this
final rule);
• Discussing the maintenance of
technical specifications for quality
measures (section IV.H.7. of the
preamble of this final rule);
• Describing a waiver from the
Hospital Readmissions Reduction
Program for hospitals formerly paid
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under section 1814(b)(3) of the Act
(§ 412.154(d)) (section IV.H.8. of the
preamble of this final rule);
• Specifying the adjustment factor
floor for FY 2015 (section IV.H.9. of the
preamble of this final rule);
• Specifying the applicable period for
FY 2015 (section IV.H.10. of the
preamble of this final rule);
• Making changes to the calculation
of the aggregate payments for excess
readmissions to include two additional
readmissions measures (chronic
obstructive pulmonary disease (COPD)
and THA/TKA)) (section IV.H.11. of the
preamble of this final rule); and
• Discussing whether to establish an
exceptions process to address hospitals
with extraordinary circumstances
(section IV.H.12. of the preamble of this
final rule).
4. Refinement of the Readmission
Measures and Related Methodology for
FY 2015 and Subsequent Years Payment
Determinations
We note that, during the comment
period following the proposed rule, we
received comments that were not related
to our specific proposals and considered
out of scope for the Hospital
Readmissions Reduction Program in the
FY 2015 IPPS/LTCH PPS proposed rule.
Some of the out-of-scope comments
were related to a wide range of aspects
of the Hospital Readmissions Reduction
Program and its readmission measures.
For example, there were
recommendations for statutory changes
to the program payment structure and
previously finalized program
definitions, changes to the program
goals, frequency of assessing and
reporting performance on measures, and
changes to the 30-day window of
measuring readmissions. Notably, there
were many comments on risk
adjustment for socioeconomic status
(SES) at the patient- and hospital-level.
While we appreciate the commenters’
feedback, these topics are out of scope
of this rule, and we will not be
specifically addressing them, with the
exception of risk-adjustment for SES.
Among the out-of-scope topics, we are
addressing the risk-adjustment for SES
because of the volume of comments and
the importance of this topic for outcome
measures in payment programs. All
other out-of-scope topics not
specifically addressed in this rule will
be taken into consideration when
developing policies and program
requirements for future years.
Comment: Many of the commenters
on CMS quality programs and those
specifically commenting on the Hospital
Readmissions Reduction Program
expressed concern that these programs
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do not risk-adjust for SES. Many
commenters expressed concern that the
lack of risk adjustment for SES leads to
the unintended consequences of unfair
payment adjustments which: (1)
Disproportionately penalize hospitals
serving high proportions of low-SES
patients; (2) penalize hospitals for
patient characteristics outside of their
control; and (3) decrease financial
resources of the hospitals most likely to
serve low-SES patients which would
lead to lower quality of care for these
patients. Many commenters outlined
specific SES characteristics that are not
adjusted for in the current readmission
measures, including Medicare dualeligible status, life circumstances, access
to health care post-discharge, literacy,
education level, community factors,
language, income, poverty level, living
conditions and support in the home
(that is, post-discharge support
structure), complex medical histories,
and having chronic conditions.
One commenter noted that claims
data cannot be used to identify SES,
making it difficult for the commenter to
support the Hospital Readmissions
Reduction Program, which uses claimsbased measures. Other commenters
believed that risk adjustment for SES
‘‘levels the playing field’’ among all
hospitals while still illuminating
disparities.
Response: We appreciate the
commenters’ concerns and note that
these concerns were addressed in the
FY 2014 IPPS/LTCH PPS final rule (79
FR 50653 through 50654; 50673 through
50674). As described in prior
rulemaking, we do not currently riskadjust for SES in the Hospital
Readmissions Reduction Program.
However, we do risk-adjust for
comorbidities (that is, correlated
illnesses) and other factors to ensure
that hospitals are not penalized for
serving populations that are sicker or
have higher incidences of chronic
disease.
We are aware that there are differing
opinions regarding this approach. We
appreciate the commenters’ suggestions
on the importance of addressing SES in
the Hospital Readmissions Reduction
Program. We have continued to consider
and evaluate stakeholder concerns
regarding the influence of patient SES
status on readmission rates.
Comment: One commenter noted that
the purpose of the Hospital
Readmissions Reduction Program is to
transform the Medicare payment and
delivery system. Other commenters
supported this belief and urged CMS not
to adjust the readmission measures for
SES.
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Response: We appreciate the feedback
and support not to adjust the
readmissions measures for SES.
Comment: Some commenters urged
that CMS not risk-adjust the
readmission measures with SES until it
is proven that the program is biased
against low-SES hospitals. These
commenters noted that the Hospital
Readmissions Reduction Program is
designed to provide incentives for
changes that also enhance the quality of
health care and that the same care
protocols that work with a different
population of patients who are not lowSES may also work with low-SES
patients.
Response: We appreciate support of
the Hospital Readmissions Reduction
Program’s goal to encourage improved
health care through this program. Like
the commenters, we continue to believe
that the same care protocols and
processes that are successful in caring
for nonlow-SES patient populations
may also be successful in caring for lowSES patient populations.
Comment: Many commenters
provided recommendations on how to
risk-adjust for SES and specifically
recommended adopting the
recommendations of the draft report
issued by NQF’s Expert Panel on RiskAdjustment for Sociodemographic
Factors (Draft Report available at:
http://www.qualityforum.org/Risk_
Adjustment_SES.aspx). A few
commenters supported risk adjustment
for SES as recently proposed in two bills
in the 113th Congress (S. 2501, ‘‘The
Hospital Readmissions Program
Accuracy and Accountability Act,’’ and
H.R.4188, the ‘‘Establishing Beneficiary
Equity in the Hospital Readmission
Program Act’’). Both bills attempt to
address the potential disproportionate
impact of payment penalties on
hospitals that serve high proportions of
low-SES patients.
Response: We appreciate these
comments and the importance of the
role that SES plays in the care of
patients. We are aware that there are
differing opinions regarding our current
approach in risk-adjusting measures in
the Hospital Readmissions Reduction
Program for SES. We note that the
readmission measures aim to reveal
differences related to the quality of care
provided. We believe that quality of care
received by patients of lower SES
contributes at least in part to the
observed association between SES status
and the readmissions rate. We continue
to have concerns about holding
hospitals to different standards for the
outcomes of their patients of low SES—
we do not want to mask potential
disparities or minimize incentives to
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improve the outcomes of disadvantaged
populations.
We routinely monitor the impact of
SES on hospitals’ results. To date, we
have found that hospitals that care for
large proportions of patients of low SES
are capable of performing well on our
measures (we refer readers to the 2013
Medicare Hospital Quality Chart Book
on pages 46 through 53 at: http://www.
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook2013.pdf). Previous analyses presented
at the NQF during endorsement
proceedings of the Hospital-Wide AllCause Unplanned Readmission Measure
(available at: http://www.qualityforum.
org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=70813) also show
that adding SES to the risk-adjustment
has a negligible impact on hospitals’
risk-standardized rates. The risk
adjustment for clinical factors likely
captures much of the variation due to
SES, therefore resulting in an
attenuation of the impact of SES factors
on hospitals’ results.
We continue to monitor related
activities at NQF, such as the July 23,
2014 decision by the NQF Board in
which the Board approved a trial period
to test the impact of sociodemographic
factor risk adjustment of performance
measures (available at: http://www.
qualityforum.org/Press_Release/2014/
NQF_Board_Approves_Trial_Risk_
Adjustment.aspx), and in Congress. As
we stated in the past, we are committed
to working with the NQF and other
stakeholder communities to
continuously refine our measures and to
address the concerns associated with
SES and risk adjustment. We believe
that continued collaboration with the
stakeholder communities will enable us
to identify feasible ways to
appropriately address any unintended
consequences for providers serving high
proportions of low-SES patients.
Comment: Many commenters
provided recommendations on how to
risk-adjust for SES and specifically
referenced MedPAC’s recommendation
to use ‘‘peer group stratification,’’ that
is, stratifying hospitals by the hospital’s
proportion of low-SES patients, as a
method to correlate readmission rates
and penalties with patient income.
These commenters also recognized that
this new method would require
legislative changes because the current
payment adjustment formula used to
compute the readmission penalty is set
in law.
Response: We appreciate the
suggestion for risk-adjustment by ‘‘peer
group stratification’’ as a method to
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address SES. We will take MedPAC’s
recommendations into consideration for
the Hospital Readmissions Reduction
Program, but also note that MedPAC
recognizes that statutory changes would
be required for us to adopt this
recommendation because the current
payment adjustment formula used to
compute the readmission penalty is
established by statute.
Comment: A few commenters
supported the use of an unplanned
hospital-wide readmission measure
(some of these commenters specifically
asked CMS to consider adding the
Hospital-Wide All-Cause Readmission
Measure (NQF #1789)) as this type of
measure would capture a global
perspective on hospital performance
and urged CMS to consider these
measures instead of CABG.
Response: We thank the commenters
for this input and will continue to take
the recommendation into consideration,
as we stated previously in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50658). We developed the HospitalWide All-Cause Readmission Measure
(NQF #1789) (HWR measure) that has
been implemented in the Hospital IQR
Program. The HWR measure estimates
the hospital-level, risk-standardized rate
of all-cause, unplanned readmission
within 30 days of hospital discharge
with any eligible condition. The
measure reports a single composite riskstandardized readmission rate (RSRR),
derived from the volume-weighted
results of five different models, one for
each of the following specialty cohorts
(groups of related discharge condition
categories or procedure categories):
surgery/gynecology; general medicine;
cardiorespiratory; cardiovascular; and
neurology.
While we appreciate the commenters’
recommendations to consider this
measure for the Hospital Readmissions
Reduction Program, we believe that
section 1886(q)(5)(A) of the Act
(defining ‘‘applicable condition’’)
prohibits us from adopting the many
categories of diagnoses and procedures
comprising the HWR measure as a
single ‘‘condition.’’ Based on the
limitations of the current statutory
provisions for the Hospital
Readmissions Reduction Program, we
have not implemented the HWR
measure in the Hospital Readmissions
Reduction Program.
Comment: One commenter opposed
the addition of the 30-day Ischemic
stroke readmission measure in the
Hospital Readmissions Reduction
Program because it is not risk-adjusted
using the National Institutes Stroke
Severity Scale.
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Response: We thank the commenter
for this feedback and note that we did
not propose this measure for the
Hospital Readmissions Reduction
Program. We note that, in the FY 2014
IPPS/LTCH PPS final rule, we discussed
this issue with respect to the Hospital
IQR Program (79 FR 50801). At that time
we stated that we appreciated the
concerns of the stakeholders on this
issue. We also stated that not only are
we committed to working with the
stakeholder communities and to
continuously refine our measures,
which for the stroke outcome measures
includes risk-adjusted patient severity,
but also committed to working with the
stroke communities and other
stakeholders to seek feasible ways to
incorporate additional severity
adjustment as suggested. Finally, we
highlighted that stroke is the fifth
leading cause of adult mortality in the
United States, and therefore we believe
it would be a disservice to patients to
delay inclusion of these current stroke
outcome measures in quality reporting
and quality improvement initiatives. We
are committed to making these measures
better and working with stakeholders to
do so, and will take these comments
into consideration.
Comment: A few commenters noted
that heart failure readmission rates are
inversely related to heart failure
mortality rates.
Response: We appreciate the
commenters’ concerns and note that this
issue was addressed in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50650).
Comment: A few commenters
recommended that the Hospital
Readmissions Reduction Program be
improved by excluding admissions that
are part of the natural disease or
treatment progression, in order to fairly
assess hospitals and avoid unintended
consequences for patients and their
families. One commenter specifically
highlighted readmissions due to
ongoing care for patients suffering
traumatic injury and requiring staged
operative therapies should also be
excluded.
Response: We appreciate these
suggestions and agree that admissions
that are part of planned management to
address disease progression should not
be counted in the outcome. We identify
and do not count in the measure results
and the readmission outcomes those
admissions that are planned
readmissions for ongoing care
management. For example, ongoing
treatments such as maintenance
chemotherapy for cancer or cardiac
device placement for cardiovascular
disease patients are excluded from the
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calculation of the measure result for
readmission rates.
Comment: Many commenters
requested that CMS be more transparent
and collaborative in its approach to all
measures in the Hospital Readmissions
Reduction Program.
Response: We appreciate this
feedback regarding our proposed
changes to the planned readmission
algorithm and the proposed refinements
to the measure cohort in the Elective
Primary Total Hip Arthroplasty (THA)
and/or Total Knee Arthroplasty (TKA)
All-Cause Unplanned 30-Day RiskStandardized Readmission Measure. We
strive to collaborate with stakeholders,
as well as be transparent about the
direction of the Hospital Readmissions
Reduction Program and the measures
proposed for the program. We
previously discussed in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50657
through 50658) that we use multiple
methods to communicate with
stakeholders; for example, through press
releases, open door forums, as well as
through the Federal rulemaking process.
We also post all measure methodology
documents online for broad public
access at our Web site (http://www.cms.
gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html).
In addition, during measure
development, we seek public comments
on various stages of development, and
also have the measures undergo the
NQF’s endorsement processes and
measure maintenance reviews. We also
adhere to the Affordable Care Act’s
provision that requires all measures that
will be proposed in future rulemaking
be reviewed by NQF’s MAP as part of
the pre-rulemaking process. All of these
processes are open to the public for
comment. While we believe all of these
processes help to inform the public of
our plans for and decisions regarding
the Hospital Readmissions Reduction
Program, we will strive to collaborate
with all of our stakeholders to identify
more effective ways of communicating
our plans and decisions.
a. Refinement of Planned Readmission
Algorithm for Acute Myocardial
Infarction (AMI), Heart Failure (HF),
Pneumonia (PN), Chronic Obstructive
Pulmonary Disease (COPD), and Total
Hip Arthroplasty and Total Knee
Arthroplasty (THA/TKA) 30-Day
Readmission Measures
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50651 through 50655), we
finalized for 2014 and subsequent years’
payment determinations the use of the
CMS Planned Readmission Algorithm
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Version 2.1 in the AMI, HF, PN, COPD,
and THA/TKA readmission measures.
The algorithm identifies readmissions
that are planned and occur within 30
days of discharge from the hospital. A
complete description of the CMS
Planned Readmission Algorithm
Version 2.1, which includes lists of
planned diagnoses and procedures, can
be found on our Web site (available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html). NQF has
endorsed the use of the algorithm for
these measures.
Last year’s stakeholder comments
supported the incorporation of the CMS
Planned Readmission Algorithm
Version 2.1 and suggested that we
update it on a regular basis. In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50652), we agreed to continually review
the CMS Planned Readmission
Algorithm and make updates as needed.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28106 through
28108) we proposed to use a revised
version, the CMS Planned Readmission
Algorithm Version 3.0, for the AMI, HF,
PN, COPD, and THA/TKA readmission
measures for FY 2015 and subsequent
payment determinations. We also
proposed to use this algorithm for the
CABG readmission measure proposed
for inclusion in the Hospital
Readmissions Reduction Program
starting in FY 2017.
Version 3.0 incorporates
improvements that were made based on
a validation study of the algorithm.
Researchers reviewed 634 patients’
charts at 7 hospitals, classified
readmission as planned or unplanned
based on the chart review, and
compared the results to the claimsbased algorithm’s classification of the
readmissions. The findings suggested
the algorithm was working well but
could be refined.
Specifically, the study suggested the
need to make small changes to the tables
of procedures and conditions used in
the algorithm to classify readmission as
planned or unplanned. The algorithm
uses the Agency for Healthcare Research
and Quality’s (AHRQ’s) Clinical
Classification Software (CCS) to group
thousands of procedure and diagnosis
codes into fewer categories of related
procedures or diagnoses. The algorithm
then uses four tables of procedures and
diagnoses categories and a flow diagram
to classify tables as planned or
unplanned. For all measures, the first
table lists procedures that, if present in
a readmission, classify the readmission
as planned. The second table identifies
primary discharge diagnoses that always
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classify readmissions as planned.
Because almost all planned admissions
are for procedures or surgeries, a third
table identifies procedures for which
patients are typically admitted; if any of
these procedures are coded in the
readmission, we classify a readmission
as planned as long as that readmission
does not have an acute (unplanned)
primary discharge diagnosis. The fourth
table lists the acute (unplanned)
primary discharge diagnoses that
disqualify readmissions that include
one or more of the potentially planned
procedure in the third table as planned.
These tables are structured the same
across all measures but the specific
procedure and conditions they contain
vary slightly for certain measures based
on clinical considerations for each
cohort. The final proposed tables for
each measure can be found on our Web
site under the Measure Methodology
reports (available at: http://www.cms.
gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html).
Version 3.0 modifies two of these
tables by removing or adding
procedures or conditions to improve the
accuracy of the algorithm. First, a
validation study revealed that the
algorithm could be improved by
removing two procedure CCS categories
from the third table, the potentially
planned procedure table: CCS 211—
Therapeutic Radiation and CCS 224—
Cancer Chemotherapy. Typically,
patients do not require admission for
scheduled Therapeutic Radiation
treatments (CCS 211). The study found
that readmissions that were classified as
planned because they included
Therapeutic Radiation were largely
unplanned.
The algorithm was also more accurate
when CCS 224—Cancer Chemotherapy
was removed from the potentially
planned procedure table. The second
table of the algorithm classifies all
readmissions with a principal diagnosis
of Maintenance Chemotherapy as
planned. Most patients who receive
cancer chemotherapy have both a code
for Cancer Chemotherapy (CCS 224) and
a principal discharge diagnosis of
Maintenance Chemotherapy (CCS 45).
In the validation study, the
readmissions for patients who received
Cancer Chemotherapy (CCS 224) but
who did not have a principal diagnosis
of Maintenance Chemotherapy were
largely unplanned; therefore, removing
CCS 224 from the potentially planned
procedure table improved the
algorithm’s accuracy. Therefore, Version
3.0 removes CCS 211 and CCS 224 from
the list of potentially planned
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procedures to improve the accuracy of
the algorithm.
As noted above, the algorithm uses a
table of acute principal discharge
diagnoses to help identify unplanned
readmissions. Readmissions that have a
principal diagnosis listed in the table
are classified as unplanned, regardless
of whether they include a procedure in
the potentially planned procedure table.
The validation study identified one
diagnosis CCS that should be added to
the table of acute diagnoses to more
accurately identify truly unplanned
admissions as unplanned: Hypertension
with Complications (CCS 99).
Hypertension with Complications is a
diagnosis that is rarely associated with
planned readmissions.
In addition, the validation study
identified a subset of ICD–9–CM
diagnosis codes within two CCS
diagnosis categories that should be
added to the acute diagnosis table to
improve the algorithm. CCS 149,
Pancreatic Disorders, includes the code
for acute pancreatitis; clinically, there is
no situation in which a patient with this
acute condition would be admitted for
a planned procedure. Therefore, Version
3.0 adds the ICD–9–CM code for acute
pancreatitis, 577.0, to the acute primary
diagnosis table to better identify
unplanned readmissions. Finally, CCS
149, Biliary Tract Disease, is a mix of
acute and nonacute diagnoses. Adding
the subset of ICD–9–CM codes within
this CCS group that are for acute
diagnoses to the list of acute conditions
improves the accuracy of the algorithm
for these acute conditions while still
ensuring that readmissions for planned
procedures, like cholecystectomies, are
counted accurately as planned. For
more detailed information on how the
algorithm is structured and the use of
tables to identify planned procedures
and diagnoses, we refer readers to
discussion of the CMS Planned
Readmission Algorithm Version 2.1 in
our reports (available at: http://www.
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html). As noted above,
readers can find the specific Version 3.0
tables for each measure in the measure
updates and specifications reports at the
above link.
We invited public comment on these
proposals.
Comment: Several commenters
specifically supported all of the
proposed modifications to the planned
readmissions algorithm. Some
commenters supported the use of the
algorithm in general and others
specifically supported the inclusion of
the algorithm in the Hospital-Level 30-
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Day Readmission Following Admission
for an Acute Exacerbation of Chronic
Obstructive Pulmonary Disease.
Response: We appreciate the support
for the inclusion of the planned
readmission algorithm in the Hospital
Readmissions Reductions Program
measures.
Comment: Several commenters
support the periodic update to the
Hospital Readmissions Reduction
Program’s planned readmission
algorithm to ensure its lists of
inclusions and exclusions are accurate.
Response: We appreciate the
comment and, as discussed in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28106), we have revised the planned
readmission algorithm based on a
validation study conducted at 7
hospitals. During the revision of the
algorithm, we also collaborated with
technical and medical experts.
Comment: Several commenters
commended CMS for including the
planned readmission algorithm updates
in the FY 2015 IPPS/LTCH PPS
proposed rule updates specifically
related to the proposed exclusions. They
also suggested CMS exclude unrelated
readmissions.
Response: We appreciate the
commenters’ support and the support to
remove the two procedure Clinical
Classification Software (CCS) categories
of Therapeutic Radiation (CCS 211) and
Cancer Chemotherapy (CCS 224) as we
strive to be transparent with the
stakeholders. We note that we addressed
the concern for exclusion of unrelated
readmissions in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50654). We
indicated last year that unrelated
readmissions are addressed through the
planned readmission algorithm and, in
coordination with medical experts, we
expanded the list of conditions
considered planned. Generally, planned
readmissions are not a signal of quality
of care. Therefore, we have worked with
experts in the medical community, as
well as other stakeholders, to carefully
identify procedures and treatments that
should be considered ‘‘planned’’ and,
therefore, not counted as readmissions.
Comment: Several commenters were
concerned with the exclusion of two
cancer related Clinical Classification
Software (CCS) groups. Some
commenters were specifically
concerned that removal of Clinical
Classification Software (CCS) groups
CCS 211—Therapeutic Radiation and
CCS 224—Cancer Chemotherapy from
the potentially planned procedure table
of the planned readmission algorithm
will have the unintended consequences
of discouraging needed cancer care.
These commenters requested that CMS
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50029
therefore initiate an ad hoc review of
this change. One commenter was
unconvinced that the validation study
findings for Maintenance Chemotherapy
holds true for all hospitals and therefore
hospitals that deliver a large amount of
cancer services could be affected by this
change.
Response: We note that removal of
CCS 211 would be appropriate because
patients are not typically admitted for
therapeutic radiation, and admissions
with this treatment were noted in
general to be unplanned. In addition, we
removed CCS 224 because the
validation study showed admissions for
individuals who receive cancer
chemotherapy but do not have a
principal diagnosis of maintenance
chemotherapy are typically unplanned
admissions. All admissions for patients
with a principal diagnosis of
Maintenance Chemotherapy (that is,
CCS 45) will continue to be considered
planned and will not be counted in the
measure outcome. Therefore, we expect
removal of CCS 211 and CCS 224 to
improve the accuracy of the planned
readmission algorithm and do not
anticipate it will have the unintended
consequence of discouraging needed
cancer care. We appreciate the concern
that the validation study findings may
not apply to all hospitals and will
consider further evaluation of this
concern.
Comment: One commenter noted that
he/she was aware of the methodologies
that separate preventable versus
nonpreventable readmissions while
measures in the Hospital Readmissions
Reduction Program continue to penalize
hospitals for circumstances outside of
their control. The commenter asserted
that ‘‘well researched and documented
methodologies’’ exist to separate
potentially preventable versus
nonpreventable readmissions.
Response: We note that it is difficult,
and can be subjective, to categorize a
readmission as preventable or
unpreventable. The difficulty, and risk
for being subjective, occurs because a
readmission cannot be determined as
being preventable or unpreventable
based on the reason or diagnoses for the
admission alone. For this reason, we
have not chosen to categorize
readmissions as preventable or
unpreventable, but rather planned or
unplanned. The planned readmission
algorithm identifies those diagnoses
codes, identified by medical experts in
multiple specialties, as those frequently
and most likely to be associated with
planned reasons for a readmission. By
categorizing readmissions as planned,
we are trying to remove the subjective
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nature of deeming readmissions as
preventable or unpreventable.
Finally, we are not aware of any
publicly known NQF-approved
methodology for identifying preventable
versus unpreventable readmissions. The
goal of the Hospital Readmissions
Reduction Program is to lower the risk
of all types of admissions through the
most appropriate care and care
transitions. We believe this goal can best
be achieved through measuring and
reporting a risk-standardized metric of
excess readmissions that reflects how
well hospitals are doing in decreasing
unplanned readmissions relative to
hospitals with similar patients.
Comment: One commenter believed
that CMS’ measures would benefit from
refinement, including exclusion of
planned readmissions and unrelated
readmissions. Other commenters were
disappointed that CMS did not propose
a process for excluding readmissions
unrelated to the initial reason for
admission in calculating the measures,
which they characterize as being
mandated by the Affordable Care Act.
Several commenters continued to urge
CMS to exclude from the Hospital
Readmissions Reduction Program
admissions unrelated to the prior
hospital stay, including, for example,
admissions for chemotherapy, trauma,
burns, end-stage renal disease,
maternity, and substance abuse,
because, the commenters stated, by their
nature, they are not preventable
readmissions.
Response: We note that we have been
responsive to stakeholder suggestions to
not include planned readmissions in the
calculations, as discussed in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50654), and as evidenced by multiple
versions of the planned readmission
algorithm since 2012. As with other
aspects of any measure, we continue to
review and revise the area of unrelated
readmissions through our refinement of
the planned readmissions algorithm.
Regarding other types of unrelated
readmissions, we currently do not seek
to differentiate between related and
unrelated readmissions because
readmissions not directly related to the
index condition may still be a result of
the care received during the index
hospitalization. For example, a patient
hospitalized for COPD who develops a
hospital associated infection may
ultimately be readmitted for sepsis. It
would be inappropriate to treat this
readmission as unrelated to the care the
patient received during the index
hospitalization.
Furthermore, the range of potentially
avoidable readmissions also includes
those not directly related to the initial
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hospitalization, such as those resulting
from poor communication at discharge
or inadequate follow-up. Therefore, we
believe that creating a comprehensive
list of potential complications related to
the index hospitalization would be
arbitrary, incomplete, and, ultimately,
extremely difficult to implement.
However, in coordination with medical
experts, we created a planned
readmission algorithm to determine
which conditions and therefore,
readmissions, that are generally
considered planned. Generally, planned
readmissions are not indicative of an
inferior quality of care, therefore are not
counted as readmissions.
Regarding the suggestion to remove
‘‘extreme circumstances [such as]
chemotherapy, trauma, burns, end stage
renal disease, maternity, and substance
abuse because, by their nature, they are
not preventable readmissions,’’ we
addressed this comment in the FY 2013
IPPS/LTCH PPS final rule. In that rule
and the current rulemaking, the
commenters requested that
circumstances like those listed in the
above comment be excluded from the
index hospitalizations. In FY 2013 IPPS/
LTCH PPS final rule, (77 FR 53377), we
stated that ‘‘we appreciate the concern
expressed by some commenters that
patients of these ‘extreme
circumstances’ clinically could be sicker
and more likely to be readmitted. The
measures address clinical differences in
hospitals’ case-mix through risk
adjustment rather than through
excluding patients from the measure as
suggested by the commenter. The goal
in developing outcomes measures is to
create a clinically cohesive cohort that
includes as many patients as possible
admitted with the given condition.
Greatly expanding our list of exclusions
would result in a measure that was less
useful and meaningful because it would
reflect the care of fewer patients. In
addition, we believe that, by excluding
patients with significant comorbidities,
the measure would not assess of the
quality of care for those patients. To
fairly profile hospitals’ performance, it
is critical to place hospitals on a level
playing field and account for their
differences in the patients that present
for care. This is accomplished through
adequate risk-adjustment for patients’
clinical presentation rather than
exclusion of patients.’’
Comment: One commenter urged
CMS to work with the physician and
hospital communities to identify other
planned readmissions that should be
excluded.
Response: We will continue to
involve all stakeholders in the process
of measure development and measure
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maintenance. We also collaborate with
various medical specialty societies and
associations whenever feasible and
appropriate to ensure that their input
and feedback are considered in real-time
during measure development and
maintenance, which also include input
from expert panels, and public comment
periods. We will consider the comment
in future revisions to the algorithm.
Comment: Many commenters believe
that CMS should have had the proposed
Planned Readmission Algorithm
Version 3.0 changes reviewed by NQF
before finalizing and using in the
readmission measures. One commenter
believed the changes to be substantive
and did not support adopting changes
for measures to incorporate the Planned
Readmission Algorithm Version 3.0
until the revised measures have been
recommended by the MAP. One
commenter stated that the size of the
validation study for the Planned
Readmission Algorithm Version 3.0 was
limited, and making recommendations
based on this information, without
external review from NQF, could create
unintended consequences.
Response: We note that the NQF has
reviewed the Planned Readmission
Algorithm Version 3.0 multiple times
over the past 6 to 8 months as it was
submitted for review as part of the
NQF’s annual measure maintenance
review for re-endorsement of the
Hospital-Level 30-Day Readmission
Following Admission for Heart Failure,
Pneumonia, Chronic Obstruction
Pulmonary Disease, and Total Hip
Arthroplasty/Total Knee Arthroplasty
measures. As of July 2014, all of these
measures are still under review by NQF.
NQF also reviewed the Planned
Readmission Algorithm Version 3.0
with the Coronary Artery Bypass
Surgery readmission measure during its
endorsement proceedings of this
measure, which led to the measure
being recommended for endorsement.
We will consider the comment in future
revisions to the algorithm.
Comment: Several commenters
requested that CMS clarify what is a
‘‘related’’ readmission or a ‘‘planned’’
readmission, while others noted the
measures fail to distinguish between a
planned and unplanned readmission.
Other commenters expressed
appreciation for the proposed
exclusions for certain readmissions, but
requested exclusion of unrelated
readmissions.
Response: We note that the issue of
excluding unrelated readmissions from
the Hospital Readmissions Reduction
Program was addressed in FY 2014
IPPS/LTCH PPS final rule (78 FR 50654
through 50655). Regarding clarification
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of what is a planned readmission, we
refer readers to the technical reports for
each measure that define specifically
how planned readmissions are defined
for the measure. The technical reports
can be found in the planned
readmission algorithm at the following
Web site: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html. Finally, we continue
to review and revise our algorithm for
planned readmissions to improve its
accuracy.
Comment: One commenter
emphasized the need to continuously
improve and evaluate the accuracy of a
signal provided by a specific
readmission measure.
Response: We thank the commenter
for this feedback. We believe that
unplanned readmissions, in general, are
a signal of the quality of care that
hospitals provide to their patients. The
commenter is concerned with the
accuracy of the readmission measures;
we note that these measures have been
NQF-endorsed and widely vetted by
technical experts during measure
development and annual measure
maintenance. We will continue to
monitor and update the measures to
ensure their accuracy.
Comment: Some commenters
recommended that CMS create a system
to monitor unintended consequences
related to planned readmissions and
implement an audit function that will
accurately account for true planned
readmissions.
Response: We note that we have been
concerned about the unintended
consequence of hospitals’ increased use
of observation stays and emergency
department visits to avoid counting a
patient as having been readmitted, and
we are tracking these incidences in the
Medicare Hospital Quality Chartbook
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/Downloads/-MedicareHospital-Quality-Chartbook-2013.pdf.
Regarding the recommendation to create
an audit function that will accurately
account for ‘‘true planned
readmissions,’’ we understand this to
mean that the commenter is concerned
about the validity of the planned
readmission algorithm. We note that,
during development and maintenance of
the planned readmission algorithm,
there have been several iterations of the
algorithm as a result of review by
medical experts and other stakeholders
like the NQF. We believe that the
constant review and update of the
algorithm by medical experts and other
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stakeholders provide a planned
readmissions algorithm that accurately
identifies truly planned readmissions.
After consideration of the public
comments we received, we are
finalizing our proposal to update the
planned readmission algorithm. We
believe the updated Planned
Readmission Algorithm Version 3.0
continues to fulfill statutory
requirements to remove planned
readmissions, as well as addresses
stakeholder recommendations to
continually refine and adjust the
algorithm.
b. Refinement of Total Hip Arthroplasty
and Total Knee Arthroplasty (THA/
TKA) 30-Day Readmission Measure
Cohort
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28107), for FY
2015 and subsequent years, we
proposed to refine the measure cohort
for the Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) All-Cause
Unplanned 30-Day Risk-Standardized
Readmission Measure.
Currently, the THA/TKA Readmission
Measure adopted for the Hospital
Readmissions Reduction Program is
intended to only include patients who
have an elective THA or TKA.
Therefore, this measure excludes
patients who have a principal discharge
diagnosis of femur, hip, or pelvic
fracture on their index admission
because hip replacement for hip fracture
is not an elective procedure. However,
after hospitals reviewed their hospitalspecific THA/TKA Readmission
Measure data during the national dry
run conducted during September and
October 2012, we learned that hospitals
code hip fractures that occur during the
same admission as a THA as either a
principal or secondary diagnosis.
According to feedback received from
hospitals participating in the dry run,
the measure methodology failed to
identify and therefore appropriately
exclude a small number of patients (that
is, 0.42 percent of patients in 2009–2010
data) with hip fracture who had
nonelective total hip arthroplasty.
To ensure that all such hip fracture
patients are excluded from the measure,
we proposed to refine the measure to
exclude patients with hip fracture coded
as either principal or secondary
diagnosis during the index admission.
We believe this refinement is responsive
to comments from hospitals and will
allow us to accurately exclude patients
who were initially admitted for a hip
fracture and then underwent total hip
arthroplasty, making their procedure
nonelective.
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50031
Comment: Several commenters
supported the refinements to the Total
Hip Arthroplasty and Total Knee
Arthroplasty 30-day readmission cohort.
Response: We appreciate support of
these refinements to this measure
cohort.
Comment: Several commenters
acknowledged that the change to the
THA/TKA measure is likely
appropriate, but recommended that
CMS submit the proposal to NQF in an
ad hoc review of updates to the planned
readmission algorithm and this measure
cohort, before finalizing this proposal.
Response: We appreciate this
feedback, especially acknowledgement
that the change to the THA/TKA
measure is likely to be appropriate. We
appreciate the suggestion for an ad hoc
NQF review of this change to the THA/
TKA measure cohort. We also
understand the importance of seeking
broad stakeholder review during routine
measure maintenance and note that this
measure was submitted to NQF for
annual maintenance review in June
2014. We note that the proposed
changes to the cohort were the result of
feedback from hospitals that had
participated in the dry run of this
measure and noted that the prior
measure methodology failed to identify,
and therefore appropriately exclude, a
small number of patients (that, is 0.42
percent of patients in the 2009–2010
data) with hip fracture who had
nonelective total hip arthroplasty. The
recommendations resulting from the
hospitals participating in the dry run
were also reviewed by a group of
medical experts working with our
measure developer.
Notwithstanding this expert medical
opinion, we realize that broader
stakeholder review is necessary as we
continue to strive for transparency with
management of the Hospital
Readmissions Reduction Program. We
will work towards improving and
broadening stakeholder review of
measure updates; we will take this
recommendation under consideration.
Comment: One commenter
encouraged CMS to continue to work
with appropriate clinicians and
stakeholder groups (for example, the
American Association of Hip and Knee
Surgeons and the American Academy of
Orthopaedic Surgeons) to identify
planned readmissions that may occur
within 30 days of discharge from the
hospital that are unrelated to the quality
of care received during the initial
admission.
Response: We continually work
towards improving and broadening
stakeholder review of measure updates.
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Comment: One commenter
encouraged CMS to work with the YaleNew Haven Hospital Health Services
Corporation, Center for Outcomes
Research and Evaluation (YNHHSC/
CORE) to determine the most
appropriate method for excluding or
risk-adjusting for cases that involve
conversion of previous hip surgery to
total hip arthroplasty (represented by
CPT code 27132).
Response: We note that the
commenter’s concerns focused on
having us revise our Elective Primary
Total Hip Arthroplasty (THA) and/or
Total Knee Arthroplasty (TKA) AllCause Unplanned 30-Day RiskStandardized Readmission Measure to
exclude additional specific groups of
patients with prior hip surgeries that
place them at a significantly increased
risk of complications, including revision
procedures and those requiring removal
of implanted devices from the femur
(ICD–9–CM codes 78.65). We will
continue to work closely with the
YNHHSC/CORE to determine the most
appropriate method for exclusions or
risk-adjustment for these cases 24 for this
measure.
After consideration of the public
comments we received, we are
finalizing our proposal to the
refinements to the THA/TKA
readmission measure cohort.
c. Anticipated Effect of Proposed
Refinements on Measures
The proposed refinement of the CMS
Planned Readmission Algorithm
Version 2.1 to Version 3.0 would have
had the following effects on the
measures based on our analyses of
discharges between July 2009 and June
2012, if these changes had been applied
for FY 2014. We note that these
statistics are for illustrative purposes
only, and we did not propose to revise
the measure calculations for the FY
2014 payment determination. Rather,
we proposed to apply these changes to
the readmission measures for the FY
2015 payment determination and
subsequent years.
Among hospitals that were subject to
the Hospital Readmissions Reduction
Program in FY 2014 (Table IV.H.1), the
number of eligible discharges based on
the July 2009 through June 2012 data
were 494,121 discharges for AMI;
1,165,606 discharges for HF; 954,033
discharges for PN; 926,433 discharges
for COPD; and 858,266 discharges for
hip/knee (as shown in Table IV.H.1.
below).
The proposed 30-day readmission rate
(excluding the planned readmissions)
would remain constant for AMI and
COPD; increase by 0.1 percentage points
for HF and PN; and increase by 0.4
percentage points for hip/knee.
The new national readmission
(unplanned) rate for each condition
would have been 17.9 percent for AMI;
23.0 percent for HF; 17.7 percent for PN;
21.1 percent for COPD; and 5.27 percent
for hip/knee.
The number of readmissions
considered planned (and, therefore, not
counted as a readmission) would
decrease by 319 for AMI; 1,313 for HF;
866 for PN, 547 for COPD; and 298 for
hip/knee.
The proposed modification of the hip/
knee measure cohort would have had
the following effects on the measure:
The measure cohort would have been
reduced by 0.37 percent; the crude
readmission rate would have been
reduced by 0.02 absolute percentage
points; and the mean RSRR would have
been reduced by 0.03 absolute
percentage points.
TABLE IV.H.1.—COMPARISON OF PLANNED READMISSION ALGORITHMS V 2.1 AND 3.0 FOR AMI/HF/PN/COPD/THA/TKA
READMISSION MEASURES
[Based on 2009–2012 discharges from 3025 hospitals]
AMI
V 3.0
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Number of Discharges ..........
Number of Unplanned Readmissions .....
Readmission
Rate ...............
Number of
Planned Readmissions .....
Planned Readmission Rate ..
% of Readmissions that are
Planned ..........
HF
V 2.1
V 3.0
PN
V 2.1
V 3.0
COPD
V 2.1
V 3.0
THA/TKA
V 2.1
V 3.0
V 2.1
494,121
494,121
1,165,606
1,165,606
954,033
954,033
926,433
926,433
858,266
858,266
88,567
88,248
268,072
266,759
169,213
168,347
195,595
195,048
45,205
44,907
17.9%
17.9%
23.0%
22.9%
17.7%
17.6%
21.1%
21.1%
5.27%
5.23%
11,577
11,896
15,293
16,606
5,867
6,733
5,858
6,405
2,283
2,581
2.3%
2.4%
1.3%
1.4%
0.6%
0.7%
0.6%
0.7%
0.3%
0.3%
11.6%
11.9%
5.4%
5.9%
3.4%
3.8%
2.9%
3.2%
4.8%
5.4%
5. No Expansion of the Applicable
Conditions for FY 2016
In FY 2014 IPPS/LTCH PPS final rule,
we finalized for FY 2015 two new
condition specific readmission
measures: (1) Hospital-level 30-day allcause risk-standardized readmission
rate following elective total hip
arthroplasty (THA) and total knee
arthroplasty (TKA) (NQF #1551); and (2)
Hospital-level 30-day all-cause risk-
standardized readmission rate following
chronic obstructive pulmonary disease
(COPD) (NQF #1891). This brought the
total number of finalized applicable
conditions to five over the past 2 years
of implementation. We also noted in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50657) that commenters requested
that we delay adding other conditionspecific measures. In view of these
requests and our belief that it is
reasonable to allow more time for
hospitals to become familiar with these
five applicable conditions before adding
other applicable conditions in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28108), we did not propose any new
applicable conditions for FY 2016.
Comment: Several commenters
encouraged CMS to strengthen the
Hospital Readmissions Reduction
Program through the inclusion of new
24 Suter L.G., Parzynski C.S., Searfoss R., Dorsey
K.B., Grady J.N., Keenan M., Okai M., Nwosu M.,
Ngo C., Lin Z., Bhat K.R., Krumholz H.M.,
Bernheim S.M. 2014 Procedure-Specific
Readmission Measures Updates and Specifications
Report: Report prepared for the Centers for
Medicare & Medicaid Services. 2014.
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measures for FY 2016 and FY 2017 so
that momentum of recent successes in
the reduction of readmission rates is not
lost. Other commenters not only
supported CMS’ decision not to expand
measures in FY 2016 for the Hospital
Readmissions Program, but also
recommended that CMS delay
expanding the program in FY 2017.
Response: We agree that it is
important for the nation’s hospitals to
continue to be successful in the
reduction of readmission rates and to
utilize this momentum to implement
other condition specific readmission
measures. However, we noticed over the
past 2 years a persistent dichotomy in
stakeholder recommendations where
some recommended expansion of the
program with new measures each fiscal
year and others recommended not
expanding the program in FY 2016 and
FY 2017.
In response to last year’s proposed
rule (78 FR 50657), stakeholders
requested that they be given time to
become familiar with the measures and
the program. For this reason, we did not
propose expanding the program in FY
2016. However, we proposed to expand
the program in FY 2017 with the
Hospital-Level, 30-Day, All-Cause,
Unplanned Readmission Following
Coronary Artery Bypass Graft (CABG)
Surgery measure. We will continue to
review condition-specific readmission
rate performance gaps in conjunction
with our Quality Improvement Strategy
(available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Quality
InitiativesGenInfo/CMS-QualityStrategy.html) and the availability of
robust risk-adjusted readmission
measures. As we indicated in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50657), we will continue to ensure that
hospitals are aware of future proposed
program expansion through press
releases, open door forums, as well as
through the Federal rulemaking process.
We also continue to strive to ensure our
measure selection process for the
Hospital Readmissions Reduction
Program is transparent and allows the
public several opportunities to comment
on measures being selected for the
Hospital Readmissions Reduction
Program.
Comment: Several commenters
suggested expanding the Hospital
Readmissions Reduction Program by
adding the Society of Thoracic
Surgeons’ (STS) Risk-Adjusted Coronary
Artery Bypass Graft (CABG)
Readmission Rate measure (NQF #2514)
in conjunction with CMS’ Hospital 30DayDay, All-Cause, Unplanned, RiskStandardized Readmission Rate (RSRR)
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Following Coronary Artery Bypass Graft
(CABG) Surgery measure (NQF #2515).
These commenters believed that having
the STS registry-based measure in
addition to CMS’ claims-based measure
would help providers and patients fully
understand CABG care. Others
commenters not only recommended
including the Hospital 30-Day Risk—
Standardized Readmission Rates
following Percutaneous Coronary
Intervention (PCI) measure (NQF
#0695), believing it would drive
improvements in quality and patient
outcomes while simultaneously
realizing significant cost savings for
Medicare, but also implementing the
Hospital 30-Day Risk-Standardized
Readmission Rates following
Percutaneous Coronary Intervention
(PCI) measure (NQF #0695) no later than
FY 2017.
Response: We note that both the STS
and the CMS Coronary Artery Bypass
Graft (CABG) Readmission measures
(NQF # 2514 and 2515 respectively)
were both recommended for
endorsement by NQF in May 2014, and
a final decision on the endorsement
status will be forthcoming in the third
quarter of 2014. We note that both
measures are fully harmonized, despite
using different data sources. The STS’
Risk-Adjusted Coronary Artery Bypass
Graft (CABG) Readmission Rate measure
(NQF #2514) uses the STS National
Database, while CMS’ Hospital 30DayDay, All-Cause, Unplanned, RiskStandardized Readmission Rate (RSRR)
following Coronary Artery Bypass Graft
(CABG) Surgery measure (NQF #2515)
uses administrative claims. We believe
having two measures that are fully
harmonized using two different data
sources provides the greatest flexibility
for stakeholders to identify which
measure best fits their current
capabilities for data collection and
submission.
We also note that we believe the use
of the administrative claims-based
measure would be less burdensome for
participating hospitals in the Hospital
Readmissions Reduction Program.
Regarding the recommendation to
expand the program in FY 2017 with the
Hospital 30-Day Risk-Standardized
Readmission Rates following
Percutaneous Coronary Intervention
(PCI) measure (NQF #0695), we note
that this issue was addressed in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50657). We stated that the addition of
measures for the other vascular and PCI
conditions are not feasible for two
reasons: (1) Inpatient admissions for PCI
and other vascular conditions appear to
be decreasing; and (2) the hospitals are
increasingly performing procedures
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50033
relating to these conditions in
outpatient departments. For these
reasons, addition of these measures in
the Hospital Readmissions Reduction
Program is not practical.
After consideration of the public
comments we received, we are
finalizing our proposal not to expand
the applicable conditions in the
Hospital Readmissions Reduction
Program in FY 2016.
6. Expansion of the Applicable
Conditions for FY 2017 To Include the
Patients Readmitted Following Coronary
Artery Bypass Graft (CABG) Surgery
Measure
a. Background
Under section 1886(q)(5)(B) of the
Act, ‘‘[b]eginning with FY 2015, the
Secretary shall, to the extent practicable,
expand the applicable conditions
beyond the 3 conditions for which
measures have been endorsed as
described in subparagraph (A)(ii)(I) . . .
to the additional 4 conditions that have
been identified by the Medicare
Payment Advisory Commission
[MedPAC] in its report to Congress in
June 2007, and to other conditions and
procedures as determined appropriate
by the Secretary.’’ The four conditions
and procedures recommended by
MedPAC are: (1) Coronary artery bypass
graft (CABG) surgery; (2) chronic
obstructive pulmonary disease (COPD);
(3) percutaneous coronary intervention
(PCI); and (4) other vascular conditions.
Section 1886(q)(5)(A)(i) of the Act
directs the Secretary, in selecting an
‘‘applicable condition,’’ to choose from
among readmissions ‘‘that represent
conditions or procedures that are high
volume or high expenditures under this
title (or other criteria specified by the
Secretary).’’
In accordance with section
1886(q)(5)(A) of the Act, effective for the
calculation of the readmissions payment
adjustment factors in FY 2017, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28108 through 28111), we proposed
to expand the scope of applicable
conditions and procedures to include
patients readmitted following CABG
surgery. This proposal is consistent with
the prior FY 2014 IPPS/LTCH PPS final
rule (78 FR 50657) where we indicated
our intent to explore quality measures
that address CABG readmission rates.
We describe this measure in detail
below.
We proposed the inclusion of the
condition of CABG readmissions to the
Hospital Readmissions Reduction
Program based on MedPAC’s
recommendations. For this condition,
we developed a Hospital-Level 30-Day
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All-Cause Unplanned Readmission
Following Coronary Artery Bypass Graft
(CABG) Surgery measure. The National
Quality Forum (NQF) Measure
Applications Partnership (MAP)
Hospital workgroup conditionally
supported this measure for use in the
Hospital Readmissions Reduction
Program. The condition for support is
based on attainment of NQF
endorsement. On February 5, 2014, we
submitted the Hospital-Level 30-Day
All-Cause Unplanned Readmission
Following Coronary Artery Bypass Graft
(CABG) Surgery measure to NQF for
endorsement.
The rationale for expanding the
applicable conditions and the measures
used to estimate the excess
readmissions ratio is described in detail
below.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
b. Overview of the CABG Readmissions
Measure: Hospital-Level, 30-Day, AllCause, Unplanned Readmission
Following Coronary Artery Bypass Graft
(CABG) Surgery
Among the seven conditions MedPAC
identified in its 2007 Report to Congress
as having the highest potentially
preventable readmission rate, CABG had
the highest rate of readmissions within
15 days following discharge (13.5
percent) and second highest average
Medicare payment per readmission
($8,136).25 The annual cost to Medicare
for potentially preventable CABG
readmissions was estimated at $151
million.26
Evidence also shows variation in
readmissions rates for patients with
CABG surgery, supporting the finding
that opportunities exist for improving
care. The median, 30-day, riskstandardized readmission rate among
Medicare fee-for-service patients aged
65 or older hospitalized for CABG in
2009 was 17.2 percent, and ranged from
13.9 percent to 22.1 percent across 1,160
hospitals.27 Although data documenting
readmission reductions in CABG are
limited, there are data that support
CABG readmission as an important
quality metric.28 Studying readmission
rates after CABG surgery in New York,
Hannan, et al. found: (1) Wide variation
25 Medicare Payment Advisory Committee. Report
to the Congress: Promoting Greater Efficiency in
Medicare, 2007.
26 Ibid.
27 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-Level 30-Day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
28 Rumsfield J, Allen L. Reducing Readmission
Rates: Does Coronary Artery Bypass Graft Surgery
Provide Clarity? JACC Cardiovasc Interv. May
2011;4(5):2.
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in readmission rates; (2) the most
common cause of readmission after
CABG is complication related to the
surgery; and (3) that hospital-level
variables such as use of cardiac
rehabilitation and length of stay
influenced readmission rates.29 The
authors also noted that readmission
rates were not closely correlated to
mortality rates and thus measuring
readmission rates likely offers a
complementary metric intended to
assess a different domain of quality.
Mortality measures are more likely to
encourage improvements in clinical
quality, including rapid triage, effective
safety practices, and early intervention
and coordination in the hospital.
Readmission measures place an
increased emphasis on aspects of
quality related to effective transitions to
the outpatient setting, clear
communication with patients and
caregivers, and collaboration across
communities and providers. Together,
these data suggest that reducing
readmission rates following CABG
surgery is an important target for quality
improvement. In addition, inclusion of
this measure in the Hospital
Readmissions Reduction Program aligns
with CMS’ Quality Strategy objectives to
promote successful transitions of care
for patients from the acute care setting
to the outpatient setting, and to reduce
short-term readmission rates. In its final
recommendations for rulemaking, the
MAP conditionally supported the
inclusion of the proposed CABG
measure pending NQF endorsement and
implementation. In order to address this
concern, we submitted the CABG
readmission measure to NQF for
endorsement on February 5, 2014.
We believe the proposed HospitalLevel, 30-Day, All-Cause, Unplanned
Readmission Measure Following CABG
Surgery measure warrants inclusion in
the Hospital Readmissions Reduction
Program for FY 2017 because it meets
the criteria in section 1886(q)(5)(A) of
the Act, as a high cost, high volume
condition that was recognized by
MedPAC Report to Congress in 2007 as
a specific medical condition to focus on
for improving readmission rates. As
with other readmission measures, this
measure also excludes such unrelated
readmissions as planned readmissions
and transfers to other hospitals. For
these reasons, we believe this measure
is appropriate for the Hospital
Readmissions Reduction Program.
29 Hannan EL, Zhong Y, Lahey SJ, et al. 30-day
readmissions after coronary artery bypass graft
surgery in New York State. JACC Cardiovasc Interv.
2011;4(5):569–576.
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We invited public comments on this
proposal.
Comment: Many commenters
supported the use of the Hospital-Level,
30-Day All-Cause Unplanned
Readmission Following Coronary Artery
Bypass Graft Surgery (NQF #2515)
measure unconditionally, while other
commenters only supported the use of
the measure if it was endorsed by the
NQF. Some commenters supported the
measure because it will add more
conditions and procedures to the
Hospital Readmissions Reduction
Program. Other commenters supported
the measure but encouraged CMS to
implement the measure in FY 2016
instead FY 2017 because the measure
will be NQF-endorsed by FY 2016 and
the MAP conditionally recommended
the measure upon endorsement.
Response: We appreciate the
commenters’ support for the inclusion
of the Hospital-Level, 30-DayDay AllCause Unplanned Readmission
Following Coronary Artery Bypass Graft
Surgery measure (NQF #2515) in the
Hospital Readmissions Reduction
Program. We also appreciate the
recommendation to expand the program
by another condition-specific measure a
year earlier than proposed. We note
that, in last year’s final rule, we stated
we would allow the stakeholders time to
become familiar with the current
finalized measures, and for this reason,
we proposed to implement the measure
in FY 2017 rather than FY 2016.
Finally, on May 5–6, 2014, both the
STS Risk-Adjusted Coronary Artery
Bypass Graft (CABG) Readmission Rate
measure (NQF #2514) and the CMS
Hospital 30-DayDay, All-Cause,
Unplanned, Risk Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure (NQF #2515) were
recommended for endorsement by the
NQF (Draft Report for Commenting at:
http://www.qualityforum.org/Project
Materials.aspx?projectID=73619).
Comment: Many commenters did not
support the use of the CMS Hospital 30DayDay, All-Cause, Unplanned, Risk
Standardized Readmission Rate (RSRR)
Following Coronary Artery Bypass Graft
(CABG) Surgery measure (NQF #2515)
for the Hospital Readmissions
Reduction Program. Some of the reasons
commenters gave for not supporting the
CABG readmission measure (NQF
#2515) included:
• Not being given enough time to
establish their quality improvement
program before having to incorporate
additional medical conditions into its
program. These commenters indicated
that expansion of the Hospital
Readmissions Reduction Program
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
through additional conditions (that is,
readmission measures) and penalties
while these hospital programs are being
established will place additional strain
on hospitals before they are given a
chance to succeed in reducing their
readmission rates;
• Not being given time to become
familiar with the CABG readmission
measure (NQF #2515) through the
Hospital IQR Program;
• CMS not addressing Hospital
Readmissions Reduction Program
policies related to a lack of riskadjustment for SES and excessive
payment penalties for a single
readmission;
• Belief that there is the potential
negative consequence of unfairly
targeting hospitals that do perform
CABG surgical procedures, when CABG
is not a universally performed
procedure; and
• Belief that there is the potential
negative unintended consequence of
reducing access for high-risk, older
patients to CABG procedures due to
their increased potential for
complications and readmissions. This
commenter asked that CMS monitor
CABG utilization in high-risk, older
patients to ensure these patients are
offered medically indicated care.
Finally, one commenter did not
support the CABG readmission measure
(NQF #2515) until concerns over the
limitations of the readmissions
exclusions, risk adjustment, and access
to information on hospital performance
on the readmission measures were
resolved.
Response: We acknowledge that there
is a balance between allowing time for
stakeholders to initiate and establish
programs to improve readmission rates
and expanding the Hospital
Readmissions Reduction Program to
narrow the performance gaps noted
throughout the nation with various
medical conditions. We take into
account many factors when we decide
how and when to expand the
readmission measure set, and believe
that addition of the CABG readmission
measure (NQF #2515) for FY 2017 is
reasonable, especially considering that
we had signaled in the FY 2014 IPPS/
LTCH PPS proposed rule (78 FR 27597)
that we were considering how to expand
the Hospital Readmissions Reduction
Program based on the recommendations
in MedPAC’s June 2007 report (available
at: http://www.medpac.gov/documents/
jun07_entirereport.pdf) which included
CABG surgical procedures. We
understand that hospitals prefer time to
become familiar with new measures
and, for this reason, we had posted the
CABG readmission measure (NQF
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#2515) measure methodology reports in
April 2014 the CMS Web site (http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html), as well as
alerted the public of these reports
documents in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28109). We
also have intermittently performed dry
runs for certain measures and may
consider plans to have a dry run for the
CABG readmission measure (NQF
#2515) in order to allow hospitals and
other stakeholders to become more
familiar with the measure.
We also provide the opportunity for
hospitals to review and correct their
readmissions data relating to these
measures prior to its release to the
public on the Hospital Compare Web
site. We anticipate the review and
correction period to be in late July 2014.
Because we have instituted a sequential
pattern of implementing a readmission
measure in the Hospital IQR Program
before implementing it in the Hospital
Readmission Reduction Program, we
believe that stakeholders have sufficient
time to become familiar with this
measure because it will not be
implemented until FY 2017. We also
note suggestions we received from some
commenters that we take advantage of
the readmissions’ improvement
momentum, as evidenced by nationwide
reductions in the rate of hospital
readmissions, by expanding the
Hospital Readmission Reduction
Program measure set beginning in FY
2016 instead of FY 2017. We will
continue to take into consideration
comments regarding expansion of the
Hospital Readmission Reduction
Program during future deliberations on
when to expand the readmission
measure set.
Regarding the concern for a lack of
SES risk-adjustment SES in the CABG
readmission measure (NQF #2515), we
refer readers to section IV.H.4 of this
preamble of this final rule for our
discussion of SES.
We note the commenter’s views that
CMS imposes excessive payment
penalties for a single readmission. We
recognize that not all hospitals perform
CABG procedures. However, we also
note that in the January 2009–
September 2011 Medicare FFS data,
there were over 150,000 CABG
procedures eligible for inclusion in this
measure, and that there was a broad
range of hospital-level risk-standardized
readmission rates after CABG surgical
procedures among hospitals ranges from
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50035
12.0 percent to 23.1 percent.30 We also
note in MedPAC’s June 2007 report
(available at: http://www.medpac.gov/
documents/jun07_entirereport.pdf) that
CABG has the highest potentially
preventable readmission rate within 15
days following discharge (13.5 percent)
and the second highest average
Medicare payment per readmission
($8,136). For these reasons, and because
of the physical and emotional burden of
readmissions on patients themselves,
we seek to ensure readmission rates
following these common, costly, and
preventable procedures are adequately
monitored and hospitals are provided
with performance data to allow quality
improvement.
Finally, regarding the concern for a
potential negative unintended
consequence of reducing access for
high-risk, older patients to CABG
procedures due to such patients’
increased potential for complications
and readmissions, we note that the
readmission measures take into account
the care of older patients in the riskadjustment model in order not to create
disincentives to care for older patients.
We also note that the goal of the
readmissions measures is not to have
readmission rates of zero, but rather to
evaluate hospitals relative to hospitals
with similar patients for excess
readmissions. We will consider ways to
monitor for this unintended
consequence as well.
Comment: Many commenters stated
that the CMS Hospital 30-DayDay, AllCause, Unplanned, Risk Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure (NQF #2515) is
unreliable due to a small number of
CABG surgeries performed during the
measurement period. One commenter
suggested that hospitals may be unfairly
penalized because of variation in
readmission rates that results from a
small number of cases during the
measurement period.
Response: We appreciate the
commenters’ feedback, and note that
reliability is related to sample size. We
do not agree that the CABG readmission
measure is unreliable. We note that the
same statistical approach to reliability
for the CMS Hospital 30-Day, All-Cause,
Unplanned, Risk Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure (NQF #2515) is used
and established for all other CMS NQF30 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
approved, hospital risk-adjusted
outcome measures, including the
mortality and readmissions measures.
We adopted a risk adjustment modeling
methodology for our outcome measures
that takes into account sample size.
We note that this issue was raised and
responded to in part in the FY 2013 and
FY 2014 IPPS/LTCH PPS final rules (77
FR 53379 and 78 FR 50659,
respectively) in our discussion of the
readmission measures for the Hospital
Readmissions Reduction Program. In the
former rule, we stated that ‘‘[w]e
determined the 25-case threshold for
public reporting based on a reliability
statistic that is calculated from the
intercluster correlation, a parameter of
the model [we refer readers to pages 14
through 17 of the document
‘‘PulmonaryAdditionalComment.pdf’’
which can be retrieved at: https://
www.google.com/url?sa=t&rct=j&q=&
esrc=s&source=web&cd=1&ved=0CB0Q
FjAA&url=https%3A%
2F%2Fwww.qualityforum.org%2FWork
Area%2Flinkit.aspx%3FLink
Identifier%3Did%26ItemID%3D
71385&ei=CRDYU4D6BYPhsASm4o
DACA&usg=AFQjCNEvsLpiX23smKp
BINVSv-91IAsXGA&sig2=UMJeMe
1LdVq3lP69ks-1Hg&bvm=bv.71778758,
d.cWc&cad=rja]. We are maintaining the
minimum 25-case threshold that we
adopted through rulemaking last year.’’
We acknowledge that smaller
hospitals typically have less certain
estimates because they have fewer cases
for use in assessing quality. Our
approach to modeling addresses the
concern that small hospitals will be
penalized due to random variation, and
this challenge is inherent in outcome
measurements. However, one advantage
of the statistical model used for the CMS
outcome measures is that it allows for
the inclusion of small hospitals while
characterizing the certainty of their
estimates. The hierarchical logistic
regression model that we use to
calculate the risk-standardized outcome
measures allows the inclusion of
hospitals with relatively few
observations, but takes into account the
uncertainty associated with sample size
in estimating their risk-standardized
outcome rates. The model takes into
account the uncertainty in the estimate
of outcome rates for low-volume
hospitals by assuming that each hospital
is a typically performing hospital. It
weighs that assumption along with the
outcomes for the particular hospital in
calculating the outcome rate. Therefore,
the estimated outcome rates for smaller
hospitals will likely be closer to the
national rate because the limited
number of eligible cases in the hospital
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indicated little about that hospital’s true
outcome rate.
c. Methodology for the CABG Measure:
Hospital-Level, 30-Day, All-Cause,
Unplanned Readmission Following
Coronary Artery Bypass Graft (CABG)
Surgery
The proposed CABG readmission
measure assesses hospitals’ 30-day, allcause risk-standardized rate of
unplanned readmission following
admission for a CABG procedure. In
general, the measure uses the same
approach to risk-adjustment and
hierarchical logistic modeling (HLM)
methodology that is specified for the
AMI, HF, PN, COPD, and THA/TKA
readmission measures that we
previously adopted for this program.
Information on how the measure
employs HLM can be found in the 2012
CABG Readmission Measure
Methodology Report (available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html). This
approach appropriately accounts for the
types of patients a hospital treats (that
is, hospital case-mix), the number of
patients it treats, and the quality of care
it provides. The HLM methodology is an
appropriate statistical approach to
measuring quality based on patient
outcomes when the patients are
clustered within hospitals (and,
therefore, the patients’ outcomes are not
statistically independent) and sample
sizes vary across hospitals. The measure
methodology defines hospital case-mix
based on the clinical diagnoses
provided in the hospitals’ claims for the
hospitals’ patient inpatient and
outpatient visits for the 12 months prior
to the hospitalization for CABG, as well
as those present in the claims for care
at admission. However, the
methodology specifically does not
account for diagnoses present in the
index admission that may indicate
complications rather than patient
comorbidities.
Comment: One commenter supported
the minimum case size and believed
that hospitals that are included in this
measure will far exceed the minimum
case volume, which will result in better
measurement of a predicted readmission
rate.
Response: We appreciate the
commenter’s support.
Comment: One commenter believed
that, for the CABG measure, there
should be areas for accountability on
both the index and discharge hospitals.
For example, if the discharge hospital
does not perform accurate medication
reconciliation, an error resulting in
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Fmt 4701
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readmission should not reasonably be
attributed to the index hospital.
Response: We acknowledge that,
unlike our other readmission measures
in the Hospital Readmissions Reduction
Program, the CABG readmission
measure (NQF #2515) attributes the
readmission outcome to the hospital
that performed the initial CABG
procedure, even if that hospital was not
responsible for discharging the patient
home or to a postacute setting for care.
We took this approach for CABG
readmission measure (NQF #2515)
because, unlike for medical conditions,
transfer to another acute care facility
following CABG surgery is most likely
due to a complication of the initial
CABG procedure or the peri-operative
care the patient received.31 Therefore,
the care provided by the hospital
performing the CABG procedure likely
dominates readmission risk, even
among transferred patients. We believe
that the transferring hospital has control
over the hospital to which they transfer
their CABG patients and will be
encouraged by this measure to work
closely with the institutions they
transfer patients to, to provide optimal
continuity of care for their patients. We
note that this approach is supported by
the high proportion of CABG
readmissions for diagnoses such as heart
failure, pleural effusion, and pneumonia
and is endorsed by clinical experts from
the Society of Thoracic Surgeons and
the nationally convened Technical
Expert Panel members who helped
develop this measure.32
We discuss the measure methodology
below.
(1) Data Sources
The proposed CABG readmission
measure is based on data derived from
administrative claims. It uses Medicare
administrative data from
hospitalizations for Medicare FFS
beneficiaries hospitalized for a CABG
procedure.
(2) Definition of Outcome
The proposed CABG readmission
measure defines 30-day, all-cause
readmission as an unplanned
subsequent inpatient admission to any
applicable acute care facility for any
cause within 30 days of the date of
discharge from the index
31 Hannan EL, Racz MJ, Walford G, Ryan TJ, Isom
OW, Bennett E, Jones RH. Predictors of
Readmission for Complications of Coronary Artery
Bypass Graft Surgery. JAMA. 2003;290:773–780.
32 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
hospitalization. A number of studies
demonstrate that improvements in care
at the time of discharge can reduce 30day readmission rates.33 34 Thirty days is
a meaningful timeframe for hospitals
because readmissions are more likely
attributable to care received within the
index hospitalization and during the
transition to the outpatient setting.
The proposed CABG readmission
measure assesses all-cause unplanned
readmissions (excluding planned
readmissions) rather than readmissions
for CABG only. We include all
unplanned readmissions for several
reasons. First, from the patient
perspective, a readmission for any
reason is likely to be an undesirable
outcome of care, even though not all
readmissions are preventable. Second,
limiting the measure to CABG-related
readmissions may focus quality
improvement efforts too narrowly rather
than encouraging broader initiatives
aimed at improving the overall care
within the hospital and care transitions
from the hospital setting. Moreover, it is
often hard to exclude quality issues and
accountability for a readmission based
on the documented cause of
readmission. For example, a patient
who underwent a CABG surgery and
developed a hospital associated
infection might ultimately be readmitted
for sepsis. It would be inappropriate to
consider such a readmission to be
unrelated to the care the patient
received for their CABG surgery.
Finally, while the measure does not
presume that each readmission is
preventable, quality improvement
interventions generally have shown
reductions in all types of readmissions.
The proposed measure does not count
planned readmissions as readmissions.
Planned readmissions are identified in
claims data using the CMS Planned
Readmission Algorithm Version 3.0 that
detects planned readmissions that may
occur within 30 days of discharge from
the hospital. Version 2.1 of the
algorithm was finalized for use in the
Hospital Readmissions Reduction
Program in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50651 through 50655).
We have since updated the algorithm to
Version 3.0 as part of yearly measure
maintenance. The proposed CABG
readmission measure uses the planned
33 Gulshan Sharma, Kou Yong-Fang, Freeman
Jean L, Zhang Dong D, Goodwin James S.:
Outpatient Follow-up Visit and 30-Day Emergency
Department Visit and Readmission in Patients
Hospitalized for Chronic Obstructive Pulmonary
Disease. Arch Intern Med. Oct. 2010;170:1664–
1670.
34 Nelson EA, Maruish ME, Axler JL.: Effects of
Discharge Planning and Compliance with
Outpatient Appointments on Readmission Rates.
Psychiatr Serv. July 1 2000;51(7):885–889.
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readmission algorithm, tailored for
CABG patients. We adapted the
algorithm for this group of patients with
input from cardiothoracic surgeons and
other experts, narrowing the types of
readmissions considered planned
because planned readmissions following
CABG are less common and less varied
than among patients discharged from
the hospital following a medical
admission. More detailed information
on how the proposed CABG
readmission measure incorporates the
CMS Planned Readmission Algorithm
Version 3.0 can be found in the 2012
CABG Readmission Measure
Methodology Report on the CMS Web
site (available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html). For the proposed
CABG readmission measure, unplanned
readmissions that fall within the 30-day
post-discharge timeframe from the index
admission would not be counted as
readmissions for the index admission if
they were preceded by a planned
readmission.
(3) Cohort of Patients
In order to include a clinically
coherent set of patients in the measure,
we sought input from clinical experts
regarding the inclusion of other
concomitant cardiac and noncardiac
procedures, such as valve replacement
and carotid endarterectomy. Adverse
clinical outcomes following such
procedures are higher than those
following ‘‘isolated’’ CABG procedures;
that is, CABG procedures performed
without concomitant high-risk cardiac
and noncardiac procedures.35 Limiting
the measure cohort to ‘‘isolated’’ CABG
patients is consistent with published
reports of CABG outcomes. Therefore,
the proposed measure cohort considers
only patients undergoing isolated CABG
as eligible for inclusion in the measure.
We defined isolated CABG patients as
those undergoing CABG procedures
without concomitant valve or other
major cardiac, vascular or thoracic
procedures. In addition, our clinical
experts, consultants, and Technical
Expert Panel (TEP) members agreed that
an isolated CABG cohort is a clinically
coherent cohort suitable for a riskadjusted outcome measure. For detailed
information on the cohort definition, we
refer readers to the 2012 CABG
Readmission Measure Methodology
Report on the CMS Web site (available
35 Hannan EL, Zhong Y, Lahey SJ, et al. 30-day
readmissions after coronary artery bypass graft
surgery in New York State. JACC Cardiovasc Interv.
2011;4(5):569–576.
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50037
at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html).
Comment: One commenter supported
focusing on isolated CABG cases for the
measure because it reflects a much more
cohesive clinical population.
Response: We appreciate the
commenter’s support.
(4) Inclusion and Exclusion Criteria
The proposed CABG readmission
measure includes hospitalizations for
patients who are 65 years of age or older
at the time of index admission and for
whom there was a complete 12 months
of Medicare FFS enrollment to allow for
adequate data for risk adjustment. The
measure excludes the following
admissions from the measure cohort: (1)
Admissions for patients who are
discharged against medical advice
(excluded because providers do not
have the opportunity to deliver full care
and prepare the patient for discharge);
(2) admissions for patients who die
during the initial hospitalization (these
patients are not eligible for
readmission); (3) admissions for patients
with subsequent qualifying CABG
procedures during the measurement
period (a repeat CABG procedure during
the measurement period very likely
represents a complication of the original
CABG procedure and is a clinically
more complex and higher risk surgery;
therefore, we select the first CABG
admission for inclusion in the measure
and exclude subsequent CABG
admissions from the cohort); and (4)
admissions for patients without at least
30 days post-discharge enrollment in
Medicare FFS (excluded because the 30day readmission outcome cannot be
assessed in this group).
Comment: One commenter did not
support the CABG measure because it
does not exclude readmissions
unrelated to the initial reason for
admission.
Response: We addressed a similar
comment in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50654). We
continue to review and revise the area
of unrelated readmissions through our
expansion of planned readmissions.
Regarding other types of unrelated
readmissions, we currently do not seek
to differentiate between related and
unrelated readmissions because
readmissions not directly related to the
index condition may still be a result of
the care received during the index
hospitalization. For example, a patient
hospitalized for CABG who develops a
hospital associated infection may
ultimately be readmitted for sepsis. It
would be inappropriate to treat this
readmission as unrelated to the care the
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patient received during the index
hospitalization. Furthermore, the range
of potentially avoidable readmissions
also includes those not directly related
to the initial hospitalization, such as
those resulting from poor
communication at discharge or
inadequate follow-up. Therefore, we
believe that creating a comprehensive
list of potential complications related to
the index hospitalization would be
arbitrary, incomplete, and, ultimately,
extremely difficult to implement.
However, in coordination with medical
experts, we created a planned
readmission algorithm to determine
conditions considered planned.
Generally, planned readmissions are not
a signal of quality of care. Therefore, we
have worked with experts in the
medical community, as well as other
stakeholders, to carefully identify
procedures and treatments that should
be considered ‘‘planned’’ and, therefore,
not counted as readmissions.
(5) Transferred Patients and Attribution
of Readmission Outcome
Among medical conditions, such as
AMI, heart failure, and pneumonia,
transfers between acute care facilities
can occur for a variety of different
reasons and it is likely that the
discharging hospital has the most
influence over a patient’s risk of
readmission and therefore the
readmission outcome is appropriately
assigned to the hospital that discharges
the patient. For that reason, the
currently publicly reported AMI, HF,
and PN readmission measures attribute
the readmission outcome to the hospital
discharging the patient, even if that is
not the hospital that initially admitted
the patient.
In contrast, following CABG surgery,
transfer to another acute care facility
after CABG is most likely due to a
complication of the CABG procedure or
the peri-operative care the patient
received. Therefore, the care provided
by the hospital performing the CABG
procedure likely dominates readmission
risk, even among transferred patients.
This viewpoint is supported by the high
proportion of CABG readmissions for
diagnoses such as heart failure, pleural
effusion, and pneumonia and endorsed
by the clinical experts on YNHHSC/
CORE, and the STS CABG readmission
measure development working groups
and our TEP. Therefore, for this
measure, the readmission outcome is
attributed to the hospital performing the
first (‘‘index’’) CABG, even if this is not
the discharging hospital. For example, a
patient may be admitted to hospital A
for a CABG that qualifies the patient for
inclusion in the measure and is then
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transferred to hospital B. The initial
admission to hospital A and the
admission to hospital B are considered
one acute episode of care, made up of
two inpatient admissions. The measure
identifies transferred patients as those
who are admitted to an acute care
hospital on the same day or following
day of discharge from an eligible
admission.
Comment: One commenter supported
attributing the readmission following a
CABG procedure to the hospital
performing the first CABG procedure.
Response: We appreciate the
commenter’s support.
(6) Risk-Adjustment
The proposed CABG readmission
measure adjusts for differences across
hospitals in the level of risk their
patients have for readmission relative to
patients cared for by other hospitals.
The measure uses administrative claims
data to identify patient clinical
conditions and comorbidities to adjust
patient risk for readmission across
hospitals, but does not adjust for
potential complications of care. We refer
readers to section IV.H.4 of the
preamble of this final rule for further
discussion of risk-adjustment for
socioeconomic factors.
Comment: One commenter was
concerned with the CABG readmission
measure’s predictive ability, but the
commenter did not provide additional
details of its concern.
Response: We believe the
commenter’s primary concern is with
the c-statistic of the measure, and would
like to clarify the important difference
between predictive models intended for
patient-level risk-stratification versus
models used to profile hospital
performance. First, in a patient-level
predictive model, the objective is to
predict patient outcomes and the riskadjustment variables as a means to best
predict these outcomes. As an example,
a patient who has a serious
complication of care may be at higher
risk of mortality and readmission, and
therefore complications might be useful
to include in a model used for patientlevel prediction. Second, and in
contrast, the role of risk-adjustment in
hospital profiling models is to level the
playing field for hospitals in measures
that assess hospitals on their relative
performance—that is, on how well a
hospital is doing compared to other
hospitals with similar patients. The riskadjustment variables should only
include those that are inherent to the
patient and are present at the start of the
time period. Although risk-adjusting for
complications of care could increase the
statistical power of a profiling model, it
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would not make sense to risk-adjust for
complications because it could lead
hospitals with high rates of
complications to appear to be
performing better than hospitals that
admitted similar patients even though
the quality of care is worse. We note
that, in addition to this clarification, the
CABG readmission measure (NQF
#2515) risk model has been validated
using registry data from the STS’ Adult
Cardiac Surgery Database and produced
nearly identical c-statistics in a matched
set of patients with correlation
coefficients between 0.92 and 0.96,
depending upon the statistic used.36
Comment: One commenter
encouraged CMS to ensure measures
risk-adjust for comorbidities and
preexisting conditions for vascular
patients as these are major determinants
of patient outcomes.
Response: We agree with the
commenter that vascular comorbidities
and preexisting conditions for vascular
patients are important determinants of
CABG patient outcomes. The CABG
readmission measure adjusts for a range
of preexisting comorbidities, including
vascular and circulatory conditions,
stroke and cerebrovascular disease, and
other cardiac disorders such as
congestive heart failure and
arrhythmias, as well as comorbidities
that place patients at risk for these
conditions, such as diabetes and endstage renal disease.37
(7) Calculating the Excess Readmissions
Ratio
The proposed CABG readmission
measure uses the same methodology
and statistical modeling approach as the
other Hospital Readmissions Reduction
Program measures. We published a
detailed description of how the
readmission measures estimate the
excess readmissions ratio in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53380 through 53381).
In summary, we proposed to adopt
the Hospital-Level, 30-Day, All-Cause,
Unplanned Readmission Following
Coronary Artery Bypass Graft (CABG)
Surgery measure in the Hospital
Readmissions Reduction Program
beginning in FY 2017.
36 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
37 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
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We note that the set of hospitals for
which this measure is calculated for the
Hospital Readmissions Reduction
Program differs from the set of hospitals
used in calculations for the Hospital
IQR Program. The Hospital
Readmissions Reduction Program
includes only subsection (d) hospitals as
defined in 1886(d)(1)(B) of the Act,
while the Hospital IQR Program
calculations include non-IPPS hospitals
such as CAHs, cancer hospitals, and
hospitals located in the Territories of
the United States. However, we believe
that the CABG readmissions measure is
appropriate for use in both programs.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
Hospital-Level, 30-Day, All-Cause,
Unplanned Readmission Measure
Following CABG Surgery measure for
inclusion in the Hospital Readmissions
Reduction Program for FY 2017.
7. Maintenance of Technical
Specifications for Quality Measures
Technical specification of the
readmission measures are provided at
our Web site in the Measure
Methodology Reports (available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html). Additional
resources about the Hospital
Readmissions Reduction Program and
measure technical specifications and
methodology are on the QualityNet Web
site on the Resources Web page
(available at: https://www.qualitynet.
org/dcs/ContentServer?c=Page&page
name=QnetPublic%2FPage%2FQnet
Tier3&cid=1228772412995).
Many of the quality measures used in
different Medicare and Medicaid
reporting programs are NQF endorsed.
As part of its regular maintenance
process for NQF-endorsed performance
measures, the NQF requires measure
stewards to submit annual measure
maintenance updates and undergo
maintenance of endorsement review
every 3 years. 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
NQF on an annual basis. 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 NQF’s annual or
triennial maintenance processes for
endorsed measures may result in the
NQF requiring updates to the measures.
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We believe that it is important to have
in place a subregulatory process to
incorporate nonsubstantive updates
required by the NQF into the measure
specifications we have adopted for the
Hospital Readmissions Program so that
these measures remain up-to-date. The
NQF regularly maintains its endorsed
measures through annual and triennial
reviews, which may result in the NQF
requiring updates to the measures. We
note that, for this calendar year, the AMI
readmission measure is undergoing the
NQF maintenance endorsement process.
For the Hospital Readmissions
Reduction Program, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28111), we proposed to follow the
finalized processes outlined for
addressing changes to adopted measures
in the Hospital IQR Program
‘‘Maintenance of Technical
Specifications for Quality Measures’’
section found in section IX.A.1.b. of the
preamble of the proposed rule.
We believe this proposal adequately
balances our need to incorporate NQF
updates to NQF-endorsed Hospital
Readmissions Reduction Program
measures in the most expeditious
manner possible while preserving the
public’s ability to comment on updates
that so fundamentally change an
endorsed measure that it is no longer
the same measure that we originally
adopted. We invited public comment on
this proposal.
Comment: One commenter
commended the proposal to follow the
finalized processes outlined for
addressing changes to adopted measures
in the Hospital IQR Program
‘‘Maintenance of Technical
Specifications for Quality Measures’’
section found in section IX.A.1.b. of the
preamble of the proposed rule (79 FR
28218). The commenter noted that this
policy of handling substantive and
nonsubstantive changes to measures
that arise through measure maintenance
processes allows CMS two mechanisms
to address measure updates: (1) The use
of future proposed rules and review
periods for substantive changes; (2)
subregulatory processes for
nonsubstantive changes which also
preserves CMS’ autonomy and
flexibility to rapidly implement
nonsubstantive updates to measures.
No commenters opposed or
recommended changes to the proposal.
Response: We appreciate the
commenter’s support.
Comment: One commenter indicated
that any changes to a measure
developed for adults but now include
those <18 years of age should not be
considered nonsubstantive.
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Response: We appreciate this
comment and note that this concern was
addressed in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50776).
After consideration of the public
comments we received, we are
finalizing the proposed maintenance of
technical specifications for quality
measures for the Hospital Readmissions
Reduction Program.
8. Waiver From the Hospital
Readmissions Reduction Program for
Hospitals Formerly Paid Under Section
1814(b)(3) of the Act (§ 412.152 and
§ 412.154(d))
The definition of ‘‘applicable
hospital’’ under section 1886(q)(5)(C) of
the Act also includes hospitals paid
under section 1814(b)(3) of the Act.
Section 1886(q)(2)(B)(ii) of the Act,
however, allows the Secretary to exempt
such hospitals from the Hospital
Readmissions Reduction Program,
provided that the State submit an
annual report to the Secretary
describing how a similar program to
reduce hospital readmissions in that
State achieves or surpasses the
measured results in terms of health
outcomes and cost savings established
by Congress for the program as applied
to ‘‘subsection (d) hospitals.’’
The State of Maryland entered into an
agreement with CMS, effective January
1, 2014, to participate in CMS’ new
Maryland All-Payer Model, a 5-year
hospital payment model. This model is
being implemented under section
1115A of the Act, as added by section
3021 of the Affordable Care Act, which
authorizes the testing of innovative
payment and service delivery models,
including models that allow States to
‘‘test and evaluate systems of all-payer
payment reform for the medical care of
residents of the State, including dualeligible individuals.’’ Section 1115A of
the Act authorizes the Secretary to
waive such requirements of titles XI and
XVIII of the Act as may be necessary
solely for purposes of carrying out
section 1115A of the Act with respect to
testing models.
As part of this agreement, Medicare
will no longer pay Maryland hospitals
in accordance with section 1814(b)(3) of
the Act. Therefore, section
1886(q)(2)(B)(ii) of the Act is no longer
applicable to Maryland hospitals. The
effect of Maryland hospitals no longer
being paid under 1814(b)(3) of the Act
is that they are not entitled to be
exempted from the Hospital
Readmissions Reduction Program under
section 1886(q)(2)(B)(ii) of the Act but,
for the model, would be included in the
Hospital Readmissions Reduction
Program. In other words, the exemption
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from the Hospital Readmissions
Reduction Program under section
1814(b)(3) of the Act no longer applies.
However Maryland hospitals will not be
participating in the Hospital
Readmissions Reduction Program
because section 1886(q) of the Act and
its implementing regulations have been
waived for purposes of the model, under
the terms of the agreement.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28111 through
28112), we proposed to make
conforming changes to the
implementing regulations to reflect this
change. Under § 412.152, we proposed
to delete from the definition of an
‘‘applicable hospital’’ the following
language: ‘‘or a hospital in Maryland
that is paid under section 1814(b)(3) of
the Act and that, absent the waiver
specified by section 1814(b)(3) of the
Act, would have been paid under the
hospital inpatient prospective payment
system.’’ Under § 412.154, we proposed
to delete § 412.154(d) in its entirety.
We invited public comment on these
proposals.
Comment: Several commenters
supported CMS’ proposal to continue to
exempt Maryland hospitals, now being
paid under the Maryland All-Payer
Model, from the Hospital Readmissions
Reduction Program and the proposed
conforming changes to the Hospital
Readmissions Reduction Program
regulations.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing the changes to the Hospital
Readmissions Reduction Program
regulations as proposed without
modification. Specifically, we are
finalizing our proposal to make
conforming changes to our regulations
at § 412.152 and § 412.154(d) to reflect
that Maryland elected to no longer have
Medicare pay Maryland hospitals in
accordance with section 1814(b)(3) of
the Act.
9. Floor Adjustment Factor for FY 2015
(§ 412.154(c)(2))
Section 1886(q)(3)(A) of the Act
defines the ‘‘adjustment factor’’ for an
applicable hospital for a fiscal year as
equal to the greater of ‘‘(i) the ratio
described in subparagraph (B) for the
hospital for the applicable period (as
defined in paragraph (5)(D)) for such
fiscal year; or (ii) the floor adjustment
factor specified in subparagraph (C).’’
Section 1886(q)(3)(B) of the Act, in turn,
describes the ratio used to calculate the
adjustment factor. Specifically, it states
that the ratio is ‘‘equal to 1 minus the
ratio of—(i) the aggregate payments for
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excess readmissions . . . and (ii) the
aggregate payments for all discharges
. . . .’’ The calculation of this ratio is
codified at § 412.154(c)(1) of the
regulations. Section 1886(q)(3)(C) of the
Act specifies the floor adjustment factor,
which is set at 0.99 for FY 2013, 0.98
for FY 2014, and 0.97 for FY 2015 and
subsequent fiscal years. We codified the
floor adjustment factor at § 412.154(c)(2)
of the regulations (77 FR 53386).
Consistent with 1886(q)(3) of the Act,
codified at § 412.154(c)(2), the
adjustment factor is either the greater of
the ratio or, for FY 2015 and subsequent
fiscal years, a floor adjustment factor of
0.97. Under our established policy, the
ratio is rounded to the fourth decimal
place. In other words, for FY 2015 and
subsequent fiscal years, a hospital
subject to the Hospital Readmissions
Reduction Program will have an
adjustment factor that is between 1.0 (no
reduction) and 0.9700 (greatest possible
reduction).
Comment: One commenter expressed
concern that the maximum reduction
has been raised from 2 percent to 3
percent and that, in conjunction with
adding two new measures to the
program, this change will only increase
harm to safety net hospitals.
Response: We recognize the
commenter’s concern regarding the
magnitude of the maximum payment
reduction for FY 2015 provided under
the statute. Section 1886(q)(3) of the Act
requires that, effective for discharges
occurring in FY 2015 and beyond, the
maximum readmissions payment
adjustment factor or the floor
adjustment factor to be 0.97 or a 3
percent reduction, applied to a
hospital’s base operating DRG payment
amount. We note that we estimate that
only 39 hospitals will be subject to the
maximum reduction for FY 2015.
After consideration of the public
comments we received, we are
finalizing our proposal that the floor
adjustment factor be 0.97 for FY 2015,
consistent with section 1886(q)(3) of the
Act, as codified at § 412.154(c)(2).
10. Applicable Period for FY 2015
Under section 1886(q)(5)(D) of the
Act, the Secretary has the authority to
specify the applicable period with
respect to a fiscal year under the
Hospital Readmissions Reduction
Program. We finalized our policy to use
3 years of claims data to calculate the
readmission measures in the FY 2012
IPPS/LTCH PPS final rule (76 FR
51671). In the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53675), we codified the
definition of ‘‘applicable period’’ in the
regulations at 42 CFR 412.152 as the 3year period from which data are
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collected in order to calculate excess
readmissions ratios and adjustments for
the fiscal year, which includes aggregate
payments for excess readmissions and
aggregate payments for all discharges
used in the calculation of the payment
adjustment.
Consistent with the definition at
§ 412.152, we established that the
applicable period for FY 2014 under the
Hospital Readmissions Reduction
Program is the 3-year period from July
1, 2009, to June 30, 2012. That is, we
determined the excess readmissions
ratios and calculate the payment
adjustment (including aggregate
payments for excess readmissions and
aggregate payments for all discharges)
for FY 2014 using data from the 3-year
time period of July 1, 2009 to June 30,
2012, as this was the most recent
available 3-year period of data upon
which to base these calculations (78 FR
50669).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28112), for FY
2015, consistent with the definition at
§ 412.152, we proposed an ‘‘applicable
period’’ for the Hospital Readmissions
Reduction Program to be the 3-year
period from July 1, 2010 to June 30,
2013. In other words, we proposed that
the excess readmissions ratios and the
payment adjustment (including
aggregate payments for excess
readmissions and aggregate payments
for all discharges) for FY 2015 would be
calculated based on data from the 3-year
time period of July 1, 2010 to June 30,
2013. We invited public comment on
these proposals.
Comment: Several commenters
requested that CMS make real-time
reporting of readmission rates accessible
to hospitals, while other commenters
suggested that CMS monitor reported
data for correlation and trends to
identify if hospitals are making
unacceptable trade-offs by reducing
readmissions at the expense of
increasing post discharge mortality.
Response: We note that these requests
are considered out of scope for the
Hospital Readmissions Reduction
Program in the FY 2015 IPPS/LTCH PPS
proposed rule and will take these
requests under consideration during
future rulemaking.
Comment: Several commenters
requested that CMS revise the
applicable time period to only include
the most recent year. One commenter
believed that it is unfair to penalize
hospitals for performance from 2 or 3
years ago, especially if they have
improved in the most recent year.
Response: We note that we addressed
this concern in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53380), and that
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we use a 3-year period of index
admissions to increase the number of
cases per hospital used for measure
calculation, which improves the
precision of each hospital’s readmission
estimate. Although this approach
utilizes older data, it also identifies
more variation in hospital performance
and still allows for improvement from
one year of reporting to the next.
After consideration of the public
comments we received, we are
finalizing as proposed the applicable
period of the 3-year time period of July
1, 2010 to June 30, 2013 to calculate the
excess readmission ratios and the
readmission payment adjustment factors
for FY 2015.
11. Inclusion of THA/TKA and COPD
Readmissions Measures To Calculate
Aggregate Payments for Excess
Readmissions Beginning in FY 2015
Under the Hospital Readmissions
Reduction Program the ‘‘base operating
DRG payment amount’’ defined at
§ 412.152 is used both to determine the
readmission adjustment factor that
accounts for excess readmissions under
section 1886(q)(3) of the Act and to
determine which payment amounts will
be adjusted to account for excess
readmissions under section 1886(q) of
the Act. Consistent with section
1886(q)(2) of the Act, in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53374
through 53383), under the regulations at
§ 412.152, we define the ‘‘base operating
DRG payment amount’’ and specify that
it does not include adjustments or addon payments for IME, DSH, outliers and
low-volume hospitals as required by
section 1886(q)(2) of the Act.
Furthermore, consistent with section
1886(q)(2)(B)(i) of the Act, for SCHs and
for MDHs for FY 2013, the definition of
‘‘base operating DRG payment amount’’
at § 412.152 excludes the difference
between the hospital’s applicable
hospital-specific payment rate and the
Federal payment rate.
For FY 2015 and subsequent years, for
purposes of calculating the payment
adjustment factors and applying the
payment methodology, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28112 through 282117), we proposed
that the base operating DRG payment
amount for MDHs includes the
difference between the hospital-specific
payment rate and the Federal payment
rate (as applicable).
Section 1886(q)(3)(B) of the Act
specifies the ratio used to calculate the
adjustment factor under the Hospital
Readmissions Reduction Program. It
states that the ratio is ‘‘equal to 1 minus
the ratio of—(i) the aggregate payments
for excess readmissions . . . and (ii) the
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aggregate payments for all discharges.
. . .’’ The definition of ‘‘aggregate
payments for excess readmissions’’ and
‘‘aggregate payments for all discharges,’’
as well as a methodology for calculating
the numerator of the ratio (aggregate
payments for excess readmissions) and
the denominator of the ratio (aggregate
payments for all discharges) are codified
at § 412.154(c)(2) of the regulations (77
FR 53387).
Section 1886(q)(4) of the Act sets forth
the definitions of ‘‘aggregate payments
for excess readmissions’’ and ‘‘aggregate
payments for all discharges’’ for an
applicable hospital for the applicable
period. The term ‘‘aggregate payments
for excess readmissions’’ is defined in
section 1886(q)(4)(A) of the Act as ‘‘for
a hospital for an applicable period, the
sum, for applicable conditions . . . of
the product, for each applicable
condition, of (i) the base operating DRG
payment amount for such hospital for
such applicable period for such
condition; (ii) the number of admissions
for such condition for such hospital for
such applicable period; and (iii) the
excess readmissions ratio . . . for such
hospital for such applicable period
minus 1.’’ We codified this definition of
‘‘aggregate payments for excess
readmissions’’ under the regulations at
§ 412.152 as the product, for each
applicable condition, of: (1) The base
operating DRG payment amount for the
hospital for the applicable period for
such condition; (2) the number of
admissions for such condition for the
hospital for the applicable period; and
(3) the excess readmissions ratio for the
hospital for the applicable period minus
1 (77 FR 53675).
The excess readmissions ratio is a
hospital-specific ratio calculated for
each applicable condition. Specifically,
section 1886(q)(4)(C) of the Act defines
the excess readmissions ratio as the
ratio of ‘‘risk-adjusted readmissions
based on actual readmissions’’ for an
applicable hospital for each applicable
condition, to the ‘‘risk-adjusted
expected readmissions’’ for the
applicable hospital for the applicable
condition. The methodology for the
calculation of the excess readmissions
ratio was finalized in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51673).
‘‘Aggregate payments for excess
readmissions’’ is the numerator of the
ratio used to calculate the adjustment
factor under the Hospital Readmissions
Reduction Program (as described in
further detail later in this section).
The term ‘‘aggregate payments for all
discharges’’ is defined at section
1886(q)(4)(B) of the Act as ‘‘for a
hospital for an applicable period, the
sum of the base operating DRG payment
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50041
amounts for all discharges for all
conditions from such hospital for such
applicable period.’’ ‘‘Aggregate
payments for all discharges’’ is the
denominator of the ratio used to
calculate the adjustment factor under
the Hospital Readmissions Reduction
Program. We codified this definition of
‘‘aggregate payments for all discharges’’
under the regulations at § 412.152 (77
FR 53387).
We finalized the inclusion of two
additional applicable conditions, COPD
and THA/TKA, to the Hospital
Readmissions Reduction Program
beginning for FY 2015 in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50657
through 50664). In section IV.H.11. of
the preamble of the proposed rule, we
discussed the proposed methodology to
include these two additional measures
in the calculation of the readmissions
payment adjustment for FY 2015.
Specifically, we proposed how the
addition of COPD and THA/TKA
applicable conditions would be
included in the calculation of the
aggregate payments for excess
readmissions, which is the numerator of
the readmissions payment adjustment.
We note that this proposal does not alter
our established methodology for
calculating aggregate payments for all
discharges, that is, the denominator of
the ratio (77 FR 53387).
As discussed above, when calculating
the numerator (aggregate payments for
excess readmissions), we determine the
base operating DRG payments for the
applicable period. ‘‘Aggregate payments
for excess readmissions’’ (the
numerator) is defined as ‘‘the sum, for
applicable conditions . . . of the
product, for each applicable condition,
of (i) the base operating DRG payment
amount for such hospital for such
applicable period for such condition; (ii)
the number of admissions for such
condition for such hospital for such
applicable period; and (iii) the excess
readmissions ratio . . . for such hospital
for such applicable period minus 1.’’
When determining the base operating
DRG payment amount for an individual
hospital for such applicable period for
such condition, we use Medicare
inpatient claims from the MedPAR file
with discharge dates that are within the
same applicable period to calculate the
excess readmissions ratio. We use
MedPAR claims data as our data source
for determining aggregate payments for
excess readmissions and aggregate
payments for all discharges, as this data
source is consistent with the claims data
source used in IPPS rulemaking to
determine IPPS rates.
For FY 2015, we proposed to use
MedPAR claims with discharge dates
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that are on or after July 1, 2010, and no
later than June 30, 2013. Under our
established methodology we use the
update of the MedPAR file for each
Federal fiscal year, which is updated 6
months after the end of each Federal
fiscal year within the applicable period,
as our data source (that is, the March
updates of the respective Federal fiscal
year MedPAR files) for the final rules.
The FY 2010 through FY 2013
MedPAR data files can be purchased
from CMS. Use of these files allows the
public to verify the readmissions
adjustment factors. Interested
individuals may order these files
through the CMS Web site at: http://
www.cms.hhs.gov/LimitedDataSets/ by
clicking on MedPAR Limited Data Set
(LDS)–Hospital (National). This Web
page describes the files and provides
directions and further detailed
instructions for how to order the data
sets. Persons placing an order must send
the following: A Letter of Request, the
LDS Data Use Agreement and Research
Protocol (refer to the Web site for further
instructions), the LDS Form, and a
check for $3,655 to:
• If using the U.S. Postal Service:
Centers for Medicare and Medicaid
Services, RDDC Account, Accounting
Division, P.O. Box 7520, Baltimore, MD
21207–0520.
• If using express mail: Centers for
Medicare and Medicaid Services, OFM/
Division of Accounting–RDDC, Mailstop
C#07–11, 7500 Security Boulevard,
Baltimore, MD 21244–1850.
In the proposed rule, we proposed to
determine aggregate payments for excess
readmissions and aggregate payments
for all discharges using data from
MedPAR claims with discharge dates
that are on or after July 1, 2010, and no
later than June 30, 2013. However, we
note that, for the purpose of modeling
the proposed FY 2015 readmissions
payment adjustment factors for the
proposed rule, we used excess
readmissions ratios for applicable
hospitals from the FY 2014 Hospital
Readmissions Reduction Program
applicable period. For the final rule,
applicable hospitals will have had the
opportunity to review and correct data
from the proposed FY 2015 applicable
period of July 1, 2010 to June 30, 2013,
before they are made public under our
policy regarding the reporting of
hospital-specific information, which is
discussed later in this section.
In the proposed rule, for FY 2015, we
proposed to use MedPAR data from July
1, 2010 through June 30, 2013.
Specifically, in the proposed rule, we
used the March 2011 update of the FY
2010 MedPAR file to identify claims
within FY 2010 with discharges dates
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that are on or after July 1, 2010, the
March 2012 update of the FY 2011
MedPAR file to identify claims within
FY 2011, the March 2013 update of the
FY 2012 MedPAR file to identify claims
within FY 2012, and the December 2013
update of the FY 2013 MedPAR file to
identify claims within FY 2013 with
discharge dates no later than June 30,
2013. For the final rule, we proposed to
use the same MedPAR files as listed
above for claims within FY 2010, FY
2011 and FY 2012. For claims within FY
2013, we proposed to use in the final
rule the March 2014 update of the FY
2013 MedPAR file.
In order to identify the admissions for
each condition, including the two
additional conditions THA/TKA and
COPD, to calculate the aggregate
payments for excess readmissions for an
individual hospital, for FY 2015, we
proposed to identify each applicable
condition using the ICD–9–CM codes
used to identify applicable conditions to
calculate the excess readmissions ratios.
Under our existing policy, we identify
eligible hospitalizations and
readmissions of Medicare patients
discharged from an applicable hospital
having a principal diagnosis for the
measured condition in an applicable
period (76 FR 51669). The discharge
diagnoses for each applicable condition
are based on a list of specific ICD–9–CM
codes for that condition. These codes
are posted on the QualityNet Web site
at: http://www.QualityNet.org >
Hospital-Inpatient > Claims-Based
Measures > Readmission Measures >
Measure Methodology.
In order to identify the applicable
conditions to calculate the aggregate
payments for excess readmissions, for
FY 2015, we proposed to identify the
claim as an applicable condition
consistent with the methodology to
identify conditions to calculate the
excess readmissions ratio. In other
words, the applicable conditions of
AMI, HF and PN are identified for the
calculation of aggregate payments for
excess readmissions if the ICD–9–CM
code for that condition is listed as the
principal diagnosis on the claim.
In order to identify claims with the
applicable condition of THA/TKA, we
proposed that any claim that has the
procedure codes for THA/TKA listed in
any diagnosis/procedure field of the
claim would be included in the
calculation of aggregate payments for
readmissions, consistent with the
methodology to calculate the excess
readmissions ratio for THA/TKA. In
order to identify claims with the
applicable condition of COPD, we
proposed to identify claims that either
have the ICD–9–CM code for that
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condition is listed as the principal
diagnosis on the claim or has a principal
diagnosis of some respiratory failure
along with secondary diagnosis of
COPD.
Under our established methodology
for calculating aggregate payments for
readmissions, admissions that are not
considered index admissions for the
purpose of the readmissions measures
are excluded from the calculation of the
excess readmissions ratio, and therefore
also are not considered admissions for
the purposes of determining a hospital’s
aggregate payments for excess
readmissions (78 FR 50670 through
50876). With the addition of THA/TKA
and COPD as applicable conditions
beginning in FY 2015, we proposed to
modify our current methodology to
identify the admissions included in the
calculation of ‘‘aggregate payments for
excess readmissions’’ for THA/TKA and
COPD in the same manner as the
original applicable conditions (AMI, HF
and PN). That is, THA/TKA and COPD
admissions that would not considered
index admissions in the readmissions
measures also would not considered
admissions for the purposes of
calculation a hospital’s aggregate
payments for excess readmissions.
In the proposed rule, for FY 2015, we
proposed to continue to apply the same
exclusions to the claims in the MedPAR
file as we applied for FY 2014 (78 FR
50670 through 50673), and we proposed
to apply those exclusions for the two
additional applicable conditions, THA/
TKA and COPD. For FY 2015, in order
to have the same types of admissions to
calculate aggregate payments for excess
readmissions as is used to calculate the
excess readmissions ratio, we proposed
to identify admissions for all five
applicable conditions, AMI, HF, PN,
THA/TKA and COPD, for the purposes
of calculating aggregate payments for
excess readmissions as follows:
• We would exclude admissions that
are identified as an applicable condition
if the patient died in the hospital, as
identified by the discharge status code
on the MedPAR claim.
• We would exclude admissions
identified as an applicable condition for
which the patient was transferred to
another provider that provides acute
care hospital services (that is, a CAH or
an IPPS hospital), as identified through
examination of contiguous stays in
MedPAR at other hospitals.
• We would exclude admissions
identified as an applicable condition for
patients who are under the age of 65, as
identified by linking the claim
information to the information provided
in the Medicare Enrollment Database.
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• For conditions identified as AMI,
we would exclude claims that are same
day discharges, as identified by the
admission date and discharge date on
the MedPAR claim.
• We would exclude admissions for
patients who did not have Medicare
Parts A and B FFS enrollment in the 12
months prior to the index admission,
based on the information provided in
the Medicare Enrollment Database.
• We would exclude admissions for
patients without at least 30 days postdischarge enrollment in Medicare Parts
A and B fee-for-service, based on the
information provided in the Medicare
Enrollment Database.
• We would exclude all multiple
admissions within 30 days of a prior
index admission’s discharge date, as
identified in the MedPAR file,
consistent with how multiple
admissions within 30 days of an index
admission are excluded from the
calculation of the excess readmissions
ratio.
These exclusions are consistent with
our current methodology, which was
established in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50671).
In addition to the exclusions
described above for all five applicable
conditions, for FY 2015, we proposed
the following steps to identify
admissions specifically for THA/TKA
for the purposes of calculating aggregate
payments for excess readmissions:
• We proposed to exclude admissions
for THA/TKA for all transfer cases
regardless of whether the discharge was
a transfer to another hospital or from
another hospital, consistent with the
calculation of the excess readmissions
ratio for THA/TKA.
• We proposed to exclude admissions
for THA/TKA for cases where the
discharge includes a femur, hip, or
pelvic fracture coded in the principal or
secondary diagnosis fields, consistent
with the calculation of the excess
readmissions ratio for THA/TKA.
• We proposed to exclude admissions
for THA/TKA for cases where the
discharge includes a mechanical
complication coded in the principal
diagnosis field, consistent with the
calculation of the excess readmissions
ratio for THA/TKA.
• We proposed to exclude admissions
for THA/TKA for cases where the
discharge includes a malignant
neoplasm of the pelvis, sacrum, coccyx,
lower limbs, or bone/bone marrow or a
disseminated malignant neoplasm
coded in the principal diagnosis field,
consistent with the calculation of the
excess readmissions ratio for THA/TKA.
• We proposed to exclude admissions
for THA/TKA for cases where the
discharge includes more than two hip/
knee procedures.
• We proposed to exclude admissions
for THA/TKA for cases that meet either
any of the following conditions or
following procedures concurrent with
THA/TKA: Revision procedures; partial
hip arthroplasty (PHA) procedures;
resurfacing procedures; and removal of
implanted devices/prostheses.
Furthermore, we proposed to only
identify Medicare FFS claims that meet
the criteria (that is, claims paid for
under Medicare Part C (Medicare
Advantage) would not be included in
this calculation), consistent with the
methodology to calculate excess
readmissions ratios based solely on
admissions and readmissions for
Medicare FFS patients. Therefore,
consistent with our established
methodology, for FY 2015, we would
exclude admissions for patients enrolled
in Medicare Advantage as identified in
the Medicare Enrollment Database. This
proposal is consistent with how
admissions for Medicare Advantage
patients are identified in the calculation
of the excess readmissions ratios under
our established methodology. The tables
below list the ICD–9–CM codes we
proposed to use to identify each
applicable condition to calculate the
aggregate payments for excess
readmissions under this proposal for FY
2015. The tables include the ICD–9–CM
codes we proposed to use to identify the
two conditions, THA/TKA and COPD,
added to the Hospital Readmissions
Reduction Program beginning for FY
2015. These ICD–9–CM codes also
would be used to identify the applicable
conditions to calculate the excess
readmissions ratios, consistent with our
established policy (76 FR 51673 through
51676).
ICD–9–CM CODES TO IDENTIFY PNEUMONIA (PN) CASES
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ICD–9–CM Code
480.0 .............................
480.1 .............................
480.2 .............................
480.3 .............................
480.8 .............................
480.9 .............................
481 ................................
482.0 .............................
482.1 .............................
482.2 .............................
482.30 ...........................
482.31 ...........................
482.32 ...........................
482.39 ...........................
482.40 ...........................
482.41 ...........................
482.42 ...........................
482.49 ...........................
482.81 ...........................
482.82 ...........................
482.83 ...........................
482.84 ...........................
482.89 ...........................
482.9 .............................
483.0 .............................
483.1 .............................
483.8 .............................
485 ................................
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Description of code
Pneumonia due to adenovirus.
Pneumonia due to respiratory syncytial virus.
Pneumonia due to parainfluenza virus.
Pneumonia due to SARS-associated coronavirus.
Viral pneumonia: pneumonia due to other virus not elsewhere classified.
Viral pneumonia unspecified.
Pneumococcal pneumonia [streptococcus pneumoniae pneumonia].
Pneumonia due to klebsiella pneumoniae.
Pneumonia due to pseudomonas.
Pneumonia due to hemophilus influenzae [h. influenzae].
Pneumonia due to streptococcus unspecified.
Pneumonia due to streptococcus group a.
Pneumonia due to streptococcus group b.
Pneumonia due to other streptococcus.
Pneumonia due to staphylococcus unspecified.
Pneumonia due to staphylococcus aureus.
Methicillin Resistant Pneumonia due to Staphylococcus Aureus.
Other staphylococcus pneumonia.
Pneumonia due to anaerobes.
Pneumonia due to escherichia coli [e.coli].
Pneumonia due to other gram-negative bacteria.
Pneumonia due to legionnaires’ disease.
Pneumonia due to other specified bacteria.
Bacterial pneumonia unspecified.
Pneumonia due to mycoplasma pneumoniae.
Pneumonia due to chlamydia.
Pneumonia due to other specified organism.
Bronchopneumonia organism unspecified.
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ICD–9–CM CODES TO IDENTIFY PNEUMONIA (PN) CASES—Continued
ICD–9–CM Code
486 ................................
487.0 .............................
488.11 ...........................
Description of code
Pneumonia organism unspecified.
Influenza with pneumonia.
Influenza due to identified novel H1N1 influenza virus with pneumonia.
ICD–9–CM CODES TO IDENTIFY HEART FAILURE (HF) CASES
ICD–9–CM
Code
402.01
402.11
402.91
404.01
...........................
...........................
...........................
...........................
404.03 ...........................
404.11 ...........................
404.13 ...........................
404.91 ...........................
404.93 ...........................
428.xx ...........................
Code description
Hypertensive heart disease, malignant, with heart failure.
Hypertensive heart disease, benign, with heart failure.
Hypertensive heart disease, unspecified, with heart failure.
Hypertensive heart and chronic kidney disease, malignant, with heart failure and with chronic kidney disease stage I
through stage IV, or unspecified.
Hypertensive heart and chronic kidney disease, malignant, with heart failure and with chronic kidney disease stage V
or end stage renal disease.
Hypertensive heart and chronic kidney disease, benign, with heart failure and with chronic kidney disease stage I
through stage IV, or unspecified.
Hypertensive heart and chronic kidney disease, benign, with heart failure and with chronic kidney disease stage I
through stage IV, or unspecified failure and chronic kidney disease stage V or end stage renal disease.
Hypertensive heart and chronic kidney disease, unspecified, with heart failure and chronic kidney disease stage V or
end stage renal disease heart failure and with chronic kidney disease stage I through stage IV, or unspecified.
Hypertensive heart and chronic kidney disease, unspecified, with heart failure and chronic kidney disease stage V or
end stage renal disease.
Heart Failure.
ICD–9–CM CODES TO IDENTIFY ACUTE MYOCARDIAL INFARCTION (AMI) CASES
ICD–9–CM
code
410.00
410.01
410.10
410.11
410.20
410.21
410.30
410.31
410.40
410.41
410.50
410.51
410.60
410.61
410.70
410.71
410.80
410.81
410.90
410.91
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Description of Code
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
AMI
(anterolateral wall)—episode of care unspecified.
(anterolateral wall)—initial episode of care.
(other anterior wall)—episode of care unspecified.
(other anterior wall)—initial episode of care.
(inferolateral wall)—episode of care unspecified.
(inferolateral wall)—initial episode of care.
(inferoposterior wall)—episode of care unspecified.
(inferoposterior wall)—initial episode of care.
(other inferior wall)—episode of care unspecified.
(other inferior wall)—initial episode of care.
(other lateral wall)—episode of care unspecified.
(other lateral wall)—initial episode of care.
(true posterior wall)—episode of care unspecified.
(true posterior wall)—initial episode of care.
(subendocardial)—episode of care unspecified.
(subendocardial)—initial episode of care.
(other specified site)—episode of care unspecified.
(other specified site)—initial episode of care.
(unspecified site)—episode of care unspecified.
(unspecified site)—initial episode of care.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
ICD–9–CM CODES TO IDENTIFY CHRONIC OBSTRUCTIVE PULMONARY DISEASE (COPD) CASES
ICD–9–CM Code
Description of code
491.21 ...........................
Obstructive chronic bronchitis; With (acute) exacerbation; acute exacerbation of COPD, decompensated COPD, decompensated COPD with exacerbation.
Obstructive chronic bronchitis; with acute bronchitis.
Other chronic bronchitis. Chronic: tracheitis, tracheobronchitis.
Unspecified chronic bronchitis.
Other emphysema; emphysema (lung or pulmonary): NOS, centriacinar, centrilobular, obstructive, panacinar,
panlobular, unilateral, vesicular. MacLeod’s syndrome; Swyer-James syndrome; unilateral hyperlucent lung.
Chronic obstructive asthma; asthma with COPD, chronic asthmatic bronchitis, unspecified.
Chronic obstructive asthma; asthma with COPD, chronic asthmatic bronchitis, with status asthmaticus.
Chronic obstructive asthma; asthma with COPD, chronic asthmatic bronchitis, with (acute) exacerbation.
Chronic: nonspecific lung disease, obstructive lung disease, obstructive pulmonary disease (COPD) NOS. NOTE: This
code is not to be used with any code from categories 491–493.
Other diseases of lung; acute respiratory failure; respiratory failure NOS.
491.22 ...........................
491.8 .............................
491.9 .............................
492.8 .............................
493.20 ...........................
493.21 ...........................
493.22 ...........................
496 ................................
518.81* .........................
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ICD–9–CM CODES TO IDENTIFY CHRONIC OBSTRUCTIVE PULMONARY DISEASE (COPD) CASES—Continued
ICD–9–CM Code
Description of code
518.82* .........................
518.84* .........................
799.1* ...........................
Other diseases of lung; acute respiratory failure; other pulmonary insufficiency, acute respiratory distress.
Other diseases of lung; acute respiratory failure; acute and chronic respiratory failure.
Other ill-defined and unknown causes of morbidity and mortality; respiratory arrest, cardiorespiratory failure.
*Principal diagnosis when combined with a secondary diagnosis of AECOPD (491.21, 491.22, 493.21, or 493.22)
ICD–9–CM CODES TO IDENTIFY
TOTAL HIP ARTHROPLASTY/TOTAL
KNEE ARTHROPLATY (THA/TKA)
CASES
ICD–9–CM
code
Description of code
81.51 ................
81.54 ................
Total hip arthroplasty.
Total knee arthroplasty.
For FY 2015, we proposed to calculate
aggregate payments for excess
readmissions, using MedPAR claims
from July 1, 2010 to June 30, 2013, to
identify applicable conditions based on
the same ICD–9–CM codes used to
identify the conditions for the
readmissions measures, and to apply the
proposed exclusions for the types of
admissions discussed above. To
calculate aggregate payments for excess
readmissions, we proposed to calculate
the base operating DRG payment
amounts for all claims in the 3-year
applicable period for each applicable
condition (AMI, HF, PN, COPD and
THA/TKA) based on the claims we have
identified as described above. Once we
have calculated the base operating DRG
amounts for all the claims for the five
applicable conditions, we proposed to
sum the base operating DRG payments
amounts by each condition, resulting in
five summed amounts, one amount for
each of the five applicable conditions.
We proposed to then multiply the
amount for each condition by the
respective excess readmissions ratio
minus 1 when that excess readmissions
ratio is greater than 1, which indicates
that a hospital has performed, with
respect to readmissions for that
applicable condition, worse than the
average hospital with similar patients.
Each product in this computation
represents the payments for excess
readmissions for that condition. We
proposed to then sum the resulting
products which represent a hospital’s
proposed ‘‘aggregate payments for
excess readmissions’’ (the numerator of
the ratio). Because this calculation is
performed separately for each of the five
conditions, a hospital’s excess
readmissions ratio must be less than or
equal to 1 on each measure to aggregate
payments for excess readmissions (and
thus a payment reduction under the
Hospital Readmissions Reduction
Program). We note that we did not
propose any changes to our existing
methodology to calculate ‘‘aggregate
payments for all discharges’’ (the
denominator of the ratio).
We proposed the following
methodology for FY 2015 as displayed
in the chart below.
FORMULAS TO CALCULATE THE READMISSIONS ADJUSTMENT FACTOR
Aggregate payments for excess readmissions = [sum of base operating DRG payments for AMI × (Excess Readmissions Ratio for AMI–1)] +
[sum of base operating DRG payments for HF × (Excess Readmissions Ratio for HF–1)] + [sum of base operating DRG payments for PN ×
(Excess Readmissions Ratio for PN–1)] + [sum of base operating DRG payments for COPD) × (Excess Readmissions Ratio for COPD–1)] +
[sum of base operating DRG payments for THA/TKA × (Excess Readmissions Ratio for THA/TKA–1)].
*Note, if a hospital’s excess readmissions ratio for a condition is less than/equal to 1, then there are no aggregate payments for excess readmissions for that condition included in this calculation.
Aggregate payments for all discharges = sum of base operating DRG payments for all discharges.
Ratio = 1-(Aggregate payments for excess readmissions/Aggregate payments for all discharges).
Proposed Readmissions Adjustment Factor for FY 2015 is the higher of the ratio or 0.9700.
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*Based on claims data from July 1, 2010 to June 30, 2013 for FY 2015.
We invited public comment on these
proposals.
Comment: Several commenters
supported the inclusion of the Elective
Primary Total Hip Arthroplasty (THA)
and/or Total Knee Arthroplasty (TKA)
All-Cause Unplanned 30-Day RiskStandardized Readmission and the
Hospital-level 30-day Readmission
Following Admission for an Acute
Exacerbation of Chronic Obstructive
Pulmonary Disease measures. Others
commenters supported the modified
exclusions for both of these measures, as
well as the payment adjustment factor
and calculation of aggregate payments.
Response: We thank the commenters
for support of the exclusions, payment
adjustment factor, and calculation of
aggregate payments for the Elective
Primary Total Hip Arthroplasty (THA)
and/or Total Knee Arthroplasty (TKA)
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All-Cause Unplanned 30-Day RiskStandardized Readmission and the
Hospital-Level 30-day Readmission
Following Admission for an Acute
Exacerbation of Chronic Obstructive
Pulmonary Disease measures, and the
support to expand the Hospital
Readmissions Reduction Program with
this measures.
Comment: On CMS’ proposed
methodology to identify THA/TKA
admissions to include in the calculation
of Aggregate Payments for Excess
Readmissions, one commenter
recommended that CMSCMS expand
the list of exclusions to specifically
exclude conversion of previous hip
surgery to total hip arthroplasty
(represented by CPT code 27132). The
commenter noted that, while the current
granularity of the ICD–9–CM coding
framework may complicate isolating
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these cases, the commenter believed
that the previous surgery of the hip is
a specific risk factor for complications
(for example, infection, fracture), and
therefore these cases should be
identified for purposes of the
readmission measure.
Response: As discussed earlier in this
final rule, in order to calculate aggregate
payments for excess readmissions,
consistent with our existing policy, we
proposed to identify each applicable
condition using the ICD–9–CM codes
used to identify applicable conditions to
calculate the excess readmissions ratios.
We do not believe it would be
appropriate to apply an exclusion to the
set of admissions used to calculate the
aggregate payments that is not applied
in the measure cohort definition that is
calculation of the excess readmission
ratio. The current measure for THA/
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TKA excludes specific groups of
patients with prior hip surgeries that
place them at a significantly increased
risk of complications, including revision
procedures and those requiring removal
of implanted devices from the femur
(ICD–9–CM codes 78.65). We are
currently exploring the specificity of
ICD–9–CM versus CPT codes for prior
hip surgery to assess whether the
measure cohort definition could be
further refined by including CPT codes.
If we determine that any changes to the
measure cohort may be appropriate, we
would propose such changes through
future rulemaking.
Comment: Several commenters
recommended changes to the
methodology to calculate the
readmission payment adjustment
factors. Several commenters stated that
the proposed calculation of the
readmission payment adjustment factor
creates excessive payment reductions.
Commenters noted that the calculation
of the readmissions payment adjustment
factors is flawed because the excess
readmission ratio should be applied to
the number of a hospital’s readmissions,
not admissions, in order to determine
the hospital’s excess payments for
readmissions.
Furthermore, these commenters
asserted that CMS has the authority
through rulemaking to apply the excess
readmission ratio to a hospital’s
readmissions to determine a hospital’s
excess payments for readmissions,
which they believed would be
consistent with Congressional intent.
Commenters noted that CMS’ estimated
savings exceed the Congressional
Budget Office (CBO) score for the
provision, which commenters believed
demonstrates that CMS’ literal reading
of the statute is not consistent with
Congressional intent. Commenters also
suggested that CMS could determine the
magnitude of the readmission reduction
using the 25th percentile of hospital
performance on the readmission
measures rather than assuming average
hospital performance, which is the
assumption of the current methodology
used to determine the number of
expected readmissions.
Response: We received a similar
comment in response to the FY 2013
IPPS/LTCH PPS proposed rule (77 FR
53393) and to the FY 2014 IPPS/LTCH
PPS proposed rule (78 FR 50673). We
continue to believe that the statute is
prescriptive with respect to the
calculation of ‘‘aggregate payments for
excess readmissions’’ where the statute
specifies that the ‘‘aggregate payments
for excess readmissions’’ is the sum for
each condition of the product of ‘‘the
operating DRG payment amount for
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such hospital for such applicable period
for such condition’’ and ‘‘the number of
admissions for such condition’’ and
‘‘the excess readmission ratio’’ minus
one. We believe that section
1886(q)(4)(A) of the Act requires us to
include all admissions for a condition in
the calculation of ‘‘aggregate payments
for excess readmissions.’’ We do not
believe we have the discretionary
authority to implement an alternative
methodology under the existing the
statute. We continue to believe that we
are implementing the provision as
required by law.
Comment: Several commenters stated
that the Hospital Readmissions
Reduction Program does not account for
improvement in readmission rates. One
commenter asserted that there is no
incentive for improvement under the
Hospital Readmissions Reduction
Program as there is in the Hospital VBP
Program and stated that penalties under
this program are due to issues out of the
control of the hospital. One commenter
suggested that the penalty should equal
the cost of excess readmissions over a
fixed target level of readmissions, as
opposed to a hospital being measured
against the national average.
Response: We appreciate the
comments on various ways to change
the calculations of the readmissions
payment adjustment factors and
readmissions measures to account for
improvement in readmission rates or
provide incentives for readmissions, as
opposed to penalties. We received
similar comments in responses in
previous rulemaking (77 FR 53394 and
78 FR 50673). The Hospital
Readmissions Reduction Program under
section 1886(q) of the Act is structured
to compare a hospital’s performance for
certain conditions compared to the
average hospital. If a hospital can
improve over time and those
improvements result in a performance
on readmissions for the applicable
conditions that is better than the average
hospital, the hospital has the potential
to reduce its penalty or not be subject
to a penalty at all. As we have stated in
previous rules, the statute does not
provide us with the authority to reward
hospitals for improvement, which is
allowed under section 1886 (p) of the
Act for the Hospital VBP Program.
Comment: MedPAC provided several
recommendations to change the
Hospital Readmissions Reduction
Program related to the calculation of the
readmissions payment adjustment
factor, which MedPAC acknowledged
would require statutory changes.
Specifically, MedPAC stated that the
readmission penalty formula is flawed
because aggregate penalties remain
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constant even as national readmission
rates decline. In addition, MedPAC
pointed out that the condition-specific
penalty per excess readmission is higher
for conditions with low readmission
rates, which becomes more important
with the inclusion of elective total hip
and total knee arthroplasty (relatively
low readmission rate conditions) to the
Hospital Readmissions Reduction
Program. Lastly, MedPAC believed the
readmissions multiplier should be
removed from the formula and replaced
with a penalty that roughly equals the
cost of excess readmissions over a fixed
target level of readmissions. Given a
fixed target, under this approach
penalties would decline if hospitals’
collective performance improves.
Response: We appreciate the
comments and suggestions made by
MedPAC. We note that these comments
are similar to comments submitted year
for the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50674), and we agree that to
implement these recommendations
would require statutory changes.
Comment: Several commenters
requested that CMS clarify whether
admissions denied by the CMS
Recovery Audit Contractor (RACs) are
excluded from either the numerator or
the denominator in the calculation of
the excess readmission ratios or in the
calculation of the readmissions payment
adjustment factors. Commenters
believed that by including admissions
denied by the CMS RACs, a hospital
would be penalized twice for the same
admission—once by the RAC denial and
a second time by having the admission
included in the readmission payment
penalty.
Response: As we explained in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50675), we use MedPAR claims data as
our data source to calculate
readmissions payment adjustment
factors, specifically the excess payments
for readmissions and payment for all
discharges. In this final rule, for FY
2015, we are finalizing a policy to use
MedPAR data for discharges from July 1,
2010 through June 30, 2013, consistent
with our historical practice. We also are
finalizing the policy to use the March
2011 update of the FY 2010 MedPAR
file, the March 2012 update of the FY
2011 MedPAR, the March 2013 update
of the FY 2012 MedPAR file and the
March 2014 update of the FY 2013
MedPAR file to identify the discharges
occurring from July 1, 2010 through
June 30, 2013. In addition, the Standard
Analytic File is the data source used to
calculate the excess readmission ratios.
We use the June 2011 update of the
2010 SAF file, the June 2012 update of
the 2011 file, the June 2012 update of
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the 2012 file, and the September 2013
update of the 2013 file.
RACs have up to 3 years to review
claims to determine whether a claim
was inappropriately billed as inpatient
when it should have been an outpatient
claim. If a claim is denied as an
inpatient stay, the claim is adjusted
through the standard Medicare claims
processing systems, going through the
CWF, SAF and MedPAR. However,
given the timing of the RAC audits and
the updates of the SAF and MedPAR
files used to calculate the readmissions
measures and readmissions payment
adjustment factors, it is not certain that
all denied claims will be reflected in our
claims files at the time of our
calculations. However, we continue to
believe that using these updates of the
MedPAR and SAF files is consistent
with IPPS ratesetting and allows for
transparency for the public to obtain
this dataset for replication. Furthermore,
inpatient stays that are denied payment
under Medicare Part A typically remain
classified as inpatient stays, and can be
billed to Medicare Part B as an Medicare
Part B inpatient stay. These inpatient
stays that are denied payment under
Medicare Part A will typically continue
to count as a qualifying inpatient stay
for other payment purposes such as
qualifying for SNF benefits and
Medicare DSH patient days. Therefore,
we continue to believe that it is
appropriate to include these admissions
in the Hospital Readmissions Reduction
Program.
Comment: One commenter opposed
the proposal that the base operating
DRG payment amount for MDHs include
the difference between the hospitalspecific rate payment and the Federal
rate payment in FY 2015, noting that,
for teaching MDHs, the hospital-specific
rate add-on payment is inclusive of
costs associated with teaching and that
the inclusion of such payment would
violate the Affordable Care Act. This
commenter requested that CMS
maintain the current definition of ‘‘base
operating DRG payment amount,’’
which excludes this additional hospitalspecific payment rate amount.
Response: We disagree with the
commenter. The ‘‘base operating DRG
payment amount’’ is generally defined
as the wage-adjusted DRG operating
payment plus any applicable new
technology add-on payments (§ 412.152
and § 412.160). For years prior to FY
2014, the statutory provisions related to
the definition of ‘‘base operating DRG
payment amount’’ under section
1886(q)(2)(B)(i) of the Act excluded the
difference between an MDH’s applicable
hospital-specific payment rate and the
Federal payment rate (referred to as the
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hospital-specific add-on) from the
definition of the base operating DRG
payment amount. (MDHs are paid based
on the Federal rate or, if higher, the
Federal rate plus 75 percent of the
amount by which the Federal rate is
exceeded by the updated hospitalspecific rate from certain specified base
years.) However, section 1886(q)(2)(B)(i)
of the Act states that the exclusion of
the hospital-specific add-on from the
base operating DRG payment amount is
only effective for MDHs with respect to
discharges occurring during FYs 2012
and 2013. Furthermore, section
1886(q)(2)(B)(ii) of the Act requires that
the definition of base operating DRG
payment amount exclude payments
made under section 1886(d)(5)(B) of the
Act (IME payments). While a portion of
the hospital-specific rate is related to
teaching services provided by teaching
MDHs, we do not consider that amount
to be a payment under section
1886(d)(5)(B) of the Act. We otherwise
do not have authority to exclude the
difference between the hospital-specific
payment rate for MDHs from the
definition of base operating DRG
payment amount for discharges.
Therefore, in accordance with the
statute, beginning in FY 2014, the
definition of ‘‘base operating DRG
payment amount’’ includes the
difference between an MDH’s applicable
hospital-specific rate payment and
Federal rate payment (that is, the
hospital-specific add-on). As a result, in
the calculation of the readmissions
payment adjustment factor, which is a
ratio of a hospital’s ‘‘aggregate payments
for excess readmissions’’ and a hospitals
‘‘aggregate payments for all discharges’’,
the base operating DRG payment
amounts used in this calculation for
MDHs also includes the hospitalspecific add-on, if applicable.
Furthermore, the statute specifies that
the readmissions payment adjustment
factor is applied to the base operating
DRG payment amount for each Medicare
FFS discharge in a Federal fiscal year.
Therefore, we are adopting our
proposal as final, and for FY 2015, the
readmissions payment adjustment factor
will be applied to the base operating
DRG payment amount, including the
hospital-specific add on for MDHs as
applicable. This is consistent with the
policy established for the treatment of
MDHs under the Hospital Readmissions
Reduction Program and the Hospital
VBP Program for FY 2014 in the notice
that appeared in the Federal Register on
June 17, 2014 (79 FR 34448 through
34449) that implemented the extension
of the MDH program through September
30, 2015, as provided by the PAMA. In
that notice, we explained that this
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change in the determination of base
operating DRG for MDHs consistent is
with the section 1886(q)(2)(B)(i) of the
Act, and affects both the calculation of
the readmission payment adjustment
factor and the payments reduced by the
readmission payment adjustment factor
for MDHs that receive the hospitalspecific add-on payment.
As noted previously, MDHs are paid
the higher of the Federal rate payment
or Federal rate payment plus the
hospital-specific add-on payment on a
per claim basis. At cost report
settlement, the MAC determines which
of the payment options yields a higher
aggregate payment for an MDH, and also
determines the final hospital-specific
add-on payment (if applicable) for that
MDH for each cost reporting period.
Because a final payment determination
for an MDH’s cost reporting period is
not done until cost report settlement, if
an MDH ultimately receives the
hospital-specific add-on (that is, its final
payment is determined to be the Federal
rate payment plus 75 percent of the
amount by which the Federal rate
payment is exceeded by the updated
hospital-specific rate payment), then
additional adjustments under the
Hospital Readmissions Reduction
Program will be made during cost report
settlement and not on the claim. If at
cost report settlement an MDH
ultimately does not receive a hospitalspecific add-on for the cost reporting
period (that is, its final payment is
determined to be the Federal rate
payment only), then no additional
adjustment (if otherwise applicable)
under the Hospital Readmissions
Reduction Program will be made.
Comment: Some commenters
supported the proposed series of
changes to calculate the aggregate
payments for excess readmissions for
FY 2015 including the two additional
conditions of COPD and TKA/THA.
Specifically, some commenters
supported CMS’ exclusions of
admissions to calculate aggregate
payments for excess readmissions, most
of which conformed to the calculation
exclusions of the individual measures.
Commenters supported CMS’ proposals
where index admissions that are not
considered readmissions for the purpose
of the readmissions measures and are
excluded from the calculation of the
excess readmission ratio, would also be
excluded from the admissions used to
determine a hospital’s aggregate
payments for excess readmissions, such
as exclusions for admissions for patients
who did not have Medicare Part A and
B for 12 months prior to the admission
or 3030 days after the admission, as
identified by linking MedPAR claims
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files to the Medicare Enrollment
Database (EDB). Some commenters
supported CMS’ proposal to use of
MedPAR data to calculate the
readmissions payment adjustment
factors.
Response: We thank the commenters
for their support of our proposed
methodology to calculate the
readmission payment adjustment factors
with the inclusion of two additional
readmissions measures of THA/TKA
and COPD, and we are finalizing the
policies as proposed. The MedPAR data
we are finalizing to use to calculate the
readmissions payment adjustment
factors for FY 2015 is specified above.
We note that we stated in the
proposed rule (79 FR 28113) that, for the
final rule, applicable hospitals will have
had the opportunity to review and
correct data from the proposed FY 2015
applicable period of July 1, 2010 to June
30, 2013 before they are made public
under our policy regarding the reporting
of hospital-specific information. In
previous years, the review and
correction period occurred prior to the
publication of the final rule, and we
published the final excess readmission
ratios and readmission payment
adjustment factors on the CMS IPPS
Web site and the final readmission
payment adjustment factors in Table 15
in conjunction with the issuance of the
final rule. Since the publication of the
proposed rule, we experienced
unexpected delays in the production of
the excess readmission ratios, which has
resulted in a later than expected start to
the 30-day review and corrections
period. For the data from the FY 2015
applicable period, the review and
corrections period will still be ongoing
through August 19, 2014, which extends
beyond the issuance of this FY 2015
IPPS/LTCH PPS final rule. As a result,
in Table 15A listed in the Addendum of
this final rule (which is available only
via the Internet on the CMS Web site),
we are providing proxy FY 2015
readmission payment adjustment
factors, and are posting the
corresponding proxy excess readmission
ratios, which are based on the FY 2015
application period of July 1, 2010 to
June 30, 2013, on the CMS IPPS Web
site. After the completion of the review
and corrections process, we will publish
the final FY 2015 readmissions payment
adjustment factors in Table 15B that
will be effective for determining
payments for discharges occurring on or
after October 1, 2014, and the
corresponding final excess readmission
ratios on the CMS IPPS Web site. We
expect the final FY 2015 readmissions
payment adjustment factors in Table
15B and the corresponding final excess
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readmission ratios to be posted on the
CMS IPPS Web site prior to October 1,
2014.
After consideration of the public
comments we received, we are
finalizing without modification our
proposals pertaining to the inclusion of
THA/TKA and COPD readmissions
measures to calculate aggregate
payments for excess readmissions
beginning in FY 2015.
12. Hospital Readmissions Reduction
Program Extraordinary Circumstances
Exceptions
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50676), we indicated that
commenters had requested a potential
waiver or exemption process for
hospitals located in areas that
experience disasters or other
extraordinary circumstances, even
though we had not proposed an
extraordinary circumstance exceptions/
exemptions (ECE) policy for the
Hospital Readmissions Reduction
Program. We noted that there are several
policy and operational considerations in
developing a disaster exemption process
for the Hospital Readmissions
Reduction Program.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28117) we
welcomed public comment on whether
an exemption process should be
implemented, and the policy and
operational considerations for a
potential Hospital Readmissions
Reduction Program ECE policy.
Comment: A few commenters
supported the creation of an
extraordinary circumstance exemption
process. The commenters recommended
that an extraordinary circumstance
exemption process should be allowed
for hospitals that experience a natural
disaster and should also be applied to
the payment year in which the date of
the disaster occurs because the Hospital
Readmissions Reduction Program uses 2
years of performance data that also
overlaps with subsequent payment
years. Two commenters specifically
indicated that the extraordinary
circumstance exemption process should
be similar to the existing Hospital VBP
Program exceptions process. Finally, a
commenter suggested establishing a 90day period, beginning with the date of
the disaster, for hospitals to submit a
request for an exemption from the
Hospital Readmissions Reduction
Program for a specific fiscal year. No
commenters made other
recommendations on how to
operationalize an extraordinary
circumstance exemption policy and
supporting processes.
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Response: We appreciate the input
from the commenters. We will take into
consideration these recommendations as
we consider whether an exemption
process for the Hospital Readmissions
Reduction Program should be
implemented.
I. Hospital Value-Based Purchasing
(VBP) Program
1. Statutory Background
Section 1886(o) of the Act, as added
by section 3001(a)(1) of the Affordable
Care Act, requires the Secretary to
establish a hospital value-based
purchasing program (the Hospital
Value-Based Purchasing (VBP) Program)
under which value-based incentive
payments are made in a fiscal year to
hospitals that meet performance
standards established for a performance
period for such fiscal year. Both the
performance standards and the
performance period for a fiscal year are
to be established by the Secretary.
Section 1886(o)(1)(B) of the Act states
that the Hospital VBP Program applies
to payments for hospital discharges
occurring on or after October 1, 2012. In
accordance with section 1886(o)(6)(A) of
the Act, we are required to make valuebased incentive payments under the
Hospital VBP Program to hospitals that
meet or exceed performance standards
for a performance period for a fiscal
year. As further required by section
1886(o)(6)(C)(ii)(I) of the Act, we base
each hospital’s value-based payment
percentage on the hospital’s Total
Performance Score (TPS) for a specified
performance period. In accordance with
section 1886(o)(7) of the Act, the total
amount available for value-based
incentive payments for a fiscal year will
be equal to the total amount of the
payment reductions for all participating
hospitals for such fiscal year, as
estimated by the Secretary. For FY 2014,
the available funding pool was equal to
1.25 percent of the base-operating DRG
payments to all participating hospitals,
as estimated by the Secretary. The size
of the applicable percentage has
increased to 1.50 percent for FY 2015
and will increase to 1.75 percent for FY
2016, and to 2.0 percent for FY 2017
and successive fiscal years.
Section 1886(o)(1)(C) of the Act
generally defines the term ‘‘hospital’’ for
purposes of the Hospital VBP Program
as a subsection (d) hospital (as that term
is defined in section 1886(d)(1)(B) of the
Act), but excludes from the definition of
the term ‘‘hospital,’’ with respect to a
fiscal year: (1) A hospital that is subject
to the payment reduction under section
1886(b)(3)(B)(viii)(I) of the Act (the
Hospital IQR Program) for such fiscal
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year; (2) a hospital for which, during the
performance period for the fiscal year,
the Secretary has cited deficiencies that
pose immediate jeopardy to the health
or safety of patients; and (3) a hospital
for which there are not a minimum
number (as determined by the Secretary)
of measures that apply to the hospital
for the performance period for the fiscal
year involved, or for which there are not
a minimum number (as determined by
the Secretary) of cases for the measures
that apply to the hospital for the
performance period for such fiscal year.
2. Overview of Previous Hospital VBP
Program Rulemaking
We refer readers to the Hospital
Inpatient VBP Program final rule (76 FR
26490 through 26547), FY 2012 IPPS/
LTCH PPS final rule (76 FR 51653
through 51660), CY 2012 OPPS/ASC
final rule with comment period (76 FR
74527 through 74547), FY 2013 IPPS/
LTCH PPS final rule (77 FR 53567
through 53614), FY 2014 IPPS/LTCH
PPS final rule (78 FR 50676 through
50707), and CY 2014 OPPS/ASC final
rule with comment period (78 FR 75120
through 75121) for further descriptions
of our policies for the Hospital VBP
Program.
We have also codified certain
requirements for the Hospital VBP
Program at Title 42, Sections 412.160
through 412.167 of our regulations.
3. FY 2015 Payment Details
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a. Payment Adjustments
Section 1886(o)(7)(B) of the Act
instructs the Secretary to reduce the
base operating DRG payment amount for
a hospital for each discharge in a fiscal
year by an applicable percent. Under
section 1886(o)(7)(A) of the Act, the sum
total of these reductions in a fiscal year
must equal the total amount available
for value-based incentive payments for
all eligible hospitals for the fiscal year,
as estimated by the Secretary. We
finalized details on how we would
implement these provisions in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53571 through 53573) and refer readers
to that rule for further details.
Under section 1886(o)(7)(C)(iii) of the
Act, the applicable percent for the FY
2015 Hospital VBP Program is 1.50
percent. In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28117 through
28118), using the methodology we
adopted in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53571 through 53573),
we estimated that the total amount
available for value-based incentive
payments for FY 2015 was $1.4 billion,
based on the December 2013 update of
the FY 2013 MedPAR file. We stated
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that we intended to update this estimate
for the FY 2015 IPPS/LTCH PPS final
rule, using the March 2014 update of the
FY 2013 MedPAR file. Based on the
March 2014 update of the FY 2013
MedPAR file, we continue to estimate
that the amount available for valuebased incentive payments for FY 2015 is
$1.4 billion.
As finalized in the FY 2013 IPPS/
LTCH PPS final rule, we will utilize a
linear exchange function to translate
this estimated amount available into a
value-based incentive payment
percentage for each hospital, based on
its TPS. We will then calculate a valuebased incentive payment adjustment
factor that will be applied to the base
operating DRG payment amount for
each discharge occurring in FY 2015, on
a per-claim basis. We noted in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28117–28118) that we were
publishing proxy value-based incentive
payment adjustment factors in Table 16
of that proposed rule (which is available
via the Internet on the CMS Web site).
The proxy factors are based on the TPSs
from the FY 2014 Hospital VBP
Program. These FY 2014 performance
scores are the most recently available
performance scores that hospitals have
been given the opportunity to review
and correct. The slope of the linear
exchange function used to calculate
those proxy value-based incentive
payment adjustment factors was
2.0952951561. This slope, along with
the estimated amount available for
value-based incentive payments, was
also published in Table 16.
We stated that we intended to update
this table as Table 16A in this final rule
(which will be available via the Internet
on the CMS Web site) to reflect changes
based on the March 2014 update to the
FY 2013 MedPAR file. We also stated
that we intended to update the slope of
the linear exchange function used to
calculate those updated proxy valuebased incentive payment adjustment
factors. The slope of the linear exchange
function used to calculate those updated
proxy value-based incentive payment
adjustment factors is 2.0950773214. The
updated proxy value-based incentive
payment adjustment factors for FY 2015
continue to be based on historic FY
2014 Program TPSs because hospitals
will not have been given the
opportunity to review and correct their
actual TPSs for the FY 2015 Hospital
VBP Program until after this FY 2015
IPPS/LTCH PPS final rule is published.
After hospitals have been given an
opportunity to review and correct their
actual TPSs for FY 2015, we will add
Table 16B (which will be available via
the Internet on the CMS Web site) to
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50049
display the actual value-based incentive
payment adjustment factors, exchange
function slope, and estimated amount
available for the FY 2015 Hospital VBP
Program. We expect that Table 16B will
be posted on the CMS Web site in
October 2014.
We received a number of public
comments on our stated intention to
update Table 16 as Table 16A for the
final rule:
Comment: Commenters found Table
16 misleading and urged CMS to adopt
a change in the process that would
allow for a more meaningful release of
information in the proposed rule on
Hospital VBP performance. Specifically,
commenters stated that Table 16 is not
useful to hospitals that attempt to assess
their performance in comparison to
others when CMS has added or removed
new measures and changed the domain
weights. As a result, commenters urged
CMS to calculate proxy factors using the
updated measures and domain weights
finalized in last year’s rule for FY 2015
so that hospitals are not forced to rely
on data provided to them from other
entities, such as State hospital
associations that provide updated
information to their members.
Response: While we understand
commenters’ concerns with comparing
Hospital VBP performance information
across program years, we make these
calculations using the most recentlyavailable performance data that
hospitals have had the opportunity to
review, which at the time of the IPPS/
LTCH PPS rule’s publication does not
include the scoring data for the next
fiscal year. We do not believe it would
be useful to publish proxy factors using
domain weights finalized for the next
fiscal year without the corresponding
performance scoring data from the same
program year because that action would
mix policies between fiscal years, which
is why we have adopted the practice of
calculating proxy factors from the
previous year. We believe that these
calculations represent the most accurate
data available at the time of the final
rule’s publication and appropriately
reflect policies for a single program
year.
b. Base Operating DRG Payment
Amount Definition for MedicareDependent, Small Rural Hospitals
(MDHs)
Section 106 of Public Law 113–93, the
Protecting Access to Medicare Act of
2014 (PAMA), extended the MDH
program through March 31, 2015. We
note that that the special treatment for
MDHs under section 1886(o)(7)(D)(ii)(I)
of the Act, with regard to definition of
base operating DRG payment amount,
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does not apply to discharges occurring
after FY 2013.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28118), for FY
2015 and subsequent years, for purposes
of calculating the payment adjustment
factors and applying the payment
methodology, we proposed that the base
operating DRG payment amount for
MDHs will include the difference
between the hospital-specific payment
rate and the Federal payment rate (as
applicable). We also proposed to revise
the definition of ‘‘base operating DRG
payment amount’’ in section 412.160
paragraph (2) of our regulations to
reflect this change. We welcomed
comments on this proposal.
Comment: One commenter opposed
CMS’ proposal to revise the definition of
base operating DRG payment amount for
MDHs to include the difference between
the hospital-specific payment rate addon payment amount and the Federal
payment rate, noting that for teaching
MDHs, the hospital-specific rate add-on
payment amount is inclusive of costs
associated with teaching and that the
inclusion of such payment would
violate the Affordable Care Act. This
commenter requested that CMS
maintain the current definition of base
operating DRG payment amount, which
excludes this additional hospitalspecific payment rate amount.
Response: We disagree with this
comment. Section 1886(o)(7)(D)(i)(II) of
the Act requires that the definition of
base operating DRG payment amount
exclude payments made under section
1886(d)(5)(B) of the Act. While a portion
of the hospital-specific rate is related to
teaching services provided by teaching
MDHs, we do not consider that amount
to be a payment under section
1885(d)(5)(B) of the Act. We do not
believe that we have authority to
exclude the difference between the
hospital-specific payment rate and the
Federal payment rate for MDHs from the
definition of base operating DRG
payment amount for discharges after FY
2013.
We did not receive any public
comments on the corresponding
proposed regulatory revision at 42 CFR
412.160.
After consideration of the public
comments we received, we are
finalizing our policy, as proposed, to
revise the definition of ‘‘base operating
DRG payment amount’’ for MDH to
include the difference between the
hospital-specific payment rate and the
Federal payment rate (as applicable).
We also are finalizing the revision to the
definition of ‘‘base operating DRG
payment amount’’ in section 412.160,
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paragraph (2), of our regulations, as
proposed.
We also received a number of general
comments on the Hospital VBP
Program:
Comment: Commenters asked that
CMS to clarify why CMS did not
address FY 2018 Hospital VBP Program
requirements in the proposed rule.
Response: We adopted certain FY
2018 policies related to claims-based
measures that require a long
performance period in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50692
through 50694 and 50698 through
50699). For the same reason, we are
adopting certain policies related to FY
2019 and FY 2020 measures in this final
rule. We intend to propose additional
FY 2018 policies, including additional
measures, performance periods,
performance standards, and other
policies in future rulemaking.
Comment: One commenter expressed
concern about the instability and
changing requirements of the Hospital
VBP Program. The commenter was
especially concerned that 60 percent of
the measures are calculated based on
coding that could result in inaccurate
measure rates. The commenter
suggested that there be some sort of
validation for hospitals performing well
to assure that coding practices are being
met.
Response: As discussed in the
Hospital Inpatient VBP Program final
rule (76 FR 26537 through 26538), we
have finalized a policy under which we
will use the validation process that we
use for the Hospital IQR Program to
ensure that Hospital VBP data are
accurate. As we described in that final
rule, we view the Hospital IQR
Program’s validation processes as
sufficient to ensure that Hospital VBP
Program data are accurate, and we
intend to continue working with
stakeholders to develop additional
validation processes as necessary to
ensure data accuracy for the Hospital
VBP Program.
Comment: One commenter urged
CMS to put measures in place prior to
affecting Medicare payments. The
commenter suggested the best way to
improve patient care is to ‘‘put into
practice’’ a measure and track it over
time. According to the commenter, if
there is no improvement in the results,
the measure could then be included in
the Hospital VBP Program.
Response: We interpret the comment
as suggesting that we adopt measures for
reporting purposes prior to adopting
them under the Hospital VBP Program.
We note that we can only select
measures for the Hospital VBP Program
that have been specified under the
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Hospital IQR Program and publicly
reported on the Hospital Compare Web
site. However, we appreciate the
suggestion that we track measures over
time before adopting them for the
Hospital VBP Program to ensure that
these measures will serve the goals of
the program, and we will take the
suggestion into consideration as we
develop future policies.
Comment: Commenters strongly
supported CMS’ removal of process
measures that use chart-abstracted data
and supported the use of outcomes
measures.
Response: We thank the commenters
for their support.
Comment: One commenter urged
CMS to return a hospital’s ‘‘carve-out’’
if the hospital is deemed ineligible for
the Hospital VBP Program as a result of
the policy by which CMS requires that
hospitals submit a minimum number of
cases and measures across domains in
order to receive a Total Performance
Score.
Response: Hospitals that are excluded
from the Hospital VBP Program for a
fiscal year for any reason do not have
the applicable percentage withheld from
their base operating DRG payment
amounts.
Comment: Several commenters stated
that they do not believe 2 percent of the
amount of Medicare hospital payments
is significant enough to drive valuebased change in the system. A few
commenters suggested that CMS
consider alternative ways to align
Medicare payments with the policies
developed in the Hospital VBP Program
to promote more change.
Response: The statute ultimately caps
the Hospital VBP Program’s funding at
2 percent of base-operating DRG
payment amounts, and we view this
amount as substantial enough to provide
significant incentives to hospitals to
improve the quality of care they provide
to Medicare beneficiaries.
Comment: Several commenters
supported CMS’ efforts to align the
Hospital VBP Program with existing
hospital and physician quality reporting
initiatives, including the Physician
Value-Based Modifier (VM) Program.
One commenter stated that the programs
should encourage consistent quality
throughout the continuum of care.
However, one commenter cautioned
CMS in its goal of increasing alignment
between the Hospital VBP and
physician quality reporting initiatives
because, despite generally supporting
alignment between Medicare reporting
requirements to decrease the
administrative burden on providers, the
commenter expressed concern that the
Medicare Spending per Beneficiary
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(MSPB) measure is inappropriate for
inclusion in the physician quality
reporting programs.
Response: We will consider possible
policies aimed at aligning our quality
programs across different care settings
in future rulemaking. We disagree,
however, that the MSPB measure is
generally inappropriate for inclusion in
physician quality reporting programs.
We view measures of efficiency like
MSPB as critical components of quality
measurement and pay-for-performance
programs.
Comment: One commenter suggested
that CMS adopt more specific
achievement thresholds and
benchmarks to draw comparisons
between hospitals of similar size, with
similar access to technology, specialized
staff, and patient populations.
Response: We do not believe that
these types of specific adjustments to
Hospital VBP Program performance
standards are feasible at this time. To
implement this change, we would need
to incorporate detailed adjustment
methodologies in each of the measures
that we have adopted for the Hospital
VBP Program. We do not believe we
have sufficient data on the various
comparison points that the commenter
suggests to create separate Hospital VBP
Program performance standards for
different types of hospitals at this time.
Moreover, the Hospital VBP Program’s
scoring methodology, based on several
years’ research and policy development,
is designed to provide incentives to
hospitals based on national performance
metrics. As discussed further below, we
continue to believe that the scoring
methodology appropriately holds
hospitals accountable based on
established and well-understood
metrics. However, we may consider
50051
adjustments of the type the commenter
suggests in the future as more data
becomes available for analyses.
4. Measures for the FY 2017 Hospital
VBP Program
a. Measures Previously Adopted
In the FY 2013 IPPS/LTCH PPS final
rule, we finalized our proposal to
readopt measures from the prior
program year for each successive
program year, unless proposed and
finalized otherwise (for example,
because one or more of the measures is
‘‘topped-out’’ or for other policy
reasons). We stated our belief that this
policy would facilitate measure
adoption for the Hospital VBP Program
for future years, as well as align the
Hospital VBP Program with the Hospital
IQR Program (77 FR 53592). The FY
2016 Hospital VBP Program includes
the following measures:
FINALIZED MEASURES FOR THE FY 2016 HOSPITAL VBP PROGRAM
Clinical process of care domain
AMI–7a ..................
IMM–2 ...................
PN–6 .....................
SCIP–Inf–2 ............
SCIP–Inf–3 ............
SCIP–Inf–9 ............
SCIP–Card–2 ........
SCIP–VTE–2 .........
Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival.
Influenza Immunization.
Initial Antibiotic Selection for CAP in Immunocompetent Patient.
Prophylactic Antibiotic Selection for Surgical Patients.
Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time.
Urinary Catheter Removed on Postoperative Day 1 or Postoperative Day 2.
Surgery Patients on Beta-Blocker Therapy Prior to Arrival Who Received a Beta-Blocker During the Perioperative Period.
Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24
Hours After Surgery.
Patient experience of care domain
HCAHPS ...............
Hospital Consumer Assessment of Healthcare Providers and Systems Survey.
Outcomes Domain
CAUTI ...................
CLABSI .................
MORT–30–AMI .....
MORT–30–HF .......
MORT–30–PN .......
PSI–90 ..................
SSI ........................
Catheter-Associated Urinary Tract Infection.
Central Line-Associated Blood Stream Infection.
Acute Myocardial Infarction (AMI) 30-day mortality rate.
Heart Failure (HF) 30-day mortality rate.
Pneumonia (PN) 30-day mortality rate.
Complication/patient safety for selected indicators (composite).
Surgical Site Infection:
• Colon
• Abdominal Hysterectomy
Efficiency domain
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MSPB–1 ................
Medicare Spending per Beneficiary.
We received a number of comments
on measures that we have previously
adopted for the Hospital VBP Program.
Comment: Several commenters urged
CMS to consider updating and
researching the HCAHPS Survey as a
whole because the measure has been
used for over a decade and the
technology and tools have changed in
this period of time. Several commenters
stated that less expensive survey
administration modes should be
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available to minimize survey costs for
participating hospitals. One commenter
noted that the methods for delivering
the survey are outdated given today’s
Internet-based society.
Response: While the HCAHPS Survey
has been in use for nearly a decade, we
continually review the survey and,
when warranted, make changes to
improve its content, implementation
and data submission processes, and
public reporting of its results. For
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instance, in recent years we added five
new survey items, including the Care
Transition Measure, made the patientmix adjustment for ‘language spoken at
home’ more granular to account for
differences among speakers of major
languages, investigated the suitability of
new modes of survey administration,
and made survey results and analytical
tools available to the public via
downloadable databases on CMS Web
sites. We continually examine and
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refine HCAHPS protocols for survey
implementation, oversight, and public
reporting to maintain the integrity of the
survey and increase the usefulness and
accessibility of its results. We will
continue to asses, analyze and improve
the HCAHPS Survey to increase its
value to consumers and hospitals.
With regard to comments urging us to
update the HCAHPS tool, we note that
the HCAHPS Survey was purposely
designed to accommodate, to the degree
possible, the variety of patient survey
methodologies hospitals employed prior
to the introduction of HCAHPS. Thus,
the HCAHPS Survey was made available
in four modes of survey administration
(mail only; telephone only; mail with
telephone follow-up; and Active
Interactive Voice Response modes).
Hospitals are given the option to either
self-administer the survey or engage an
approved survey vendor, of which
several dozen are listed on the official
HCAHPS On-Line Web site,
www.HCAHPSonline.org. In addition,
hospitals are permitted to add their own
supplemental items to the survey.
We are sensitive to the costs of survey
administration, especially as patient
experience surveys become a standard
element of quality improvement and
public reporting programs for other
types of healthcare providers. In 2008,
we conducted a large-scale mode
experiment to test the suitability of a
Web-based mode of the HCAHPS
Survey and concluded that a number of
factors, including unavailability of
email addresses for a substantial portion
of the hospital patient population and
low response rates, preclude the
adoption of a Web-based mode at this
time. We will continue to monitor and
periodically evaluate the suitability of
alternative, electronic survey modes. We
are continuing to look at this issue. In
particular, we are tracking access to the
Internet among the elderly and minority
populations since currently access to
the Internet is lower for these critical
populations that participate in our
surveys.38
Comment: Several commenters
expressed concerns about the
sufficiency of the risk adjustment of the
HCAHPS composite measures. One
commenter pointed out that research
shows that high-acuity patients score
their patient experience at a lower level,
systematically disadvantaging hospitals
that take on complex and sicker
patients, and suggested that CMS
incorporate additional adjustments to
account for patients’ illness severity.
One commenter urged CMS to further
research broad improvements to the
HCAHPS survey delivery and
adjustment methodologies. A few
commenters suggested that CMS
exclude HCAHPS scores from the
Hospital VBP Program until riskadjustments are updated and its validity
has been determined.
Response: Research on health care
providers indicates that a number of
quality measures differ on a regional
basis, which is indicative of true
differences that should not be obscured
by data adjustment.
CMS and the HCAHPS Project Team
are familiar with the studies commenter
cited. We also are aware of a number of
studies published in peer-reviewed
journals that have found that patient
experience of care, as measured by the
HCAHPS Survey, is strongly and
positively related to clinical process
measures, outcomes, readmissions, and
mortality. For brief reviews of these
findings, we refer readers to: ‘‘The
Patient Experience and Health
Outcomes’’ 39 and ‘‘What does the
patient know about quality?’’ 40
With respect to the articles cited by
the commenter, we note that other
researchers have cited flaws in the
approach, data and methodology
employed in the Fenton, et al., study,
which did not directly examine the
HCAHPS Survey. The study by Lyu, et
al. is premised upon the
misunderstanding that we use patient
experience as the sole criterion for
measuring and assessing hospital
quality. In addition, their findings,
based on examination of 31 hospitals,
may insufficiently represent the over
3,000 hospitals that participate in the
Hospital VBP Program and the
approximately 4,000 hospitals that
participate in the Hospital IQR Program.
In addition, a recent national study
found a significant positive relationship
between patient experience of care and
surgical quality, which suggests that
incentives to improve surgical patient
experience and surgical quality are
aligned.41
Comment: One commenter suggested
that CMS separate the Cleanliness &
Quietness dimension on the HCAHPS
38 ‘‘A Randomized Experiment Investigating the
Suitability of Speech-Enabled IVR and Web Modes
for Publicly Reported Surveys of Patients’
Experience of Hospital Care.’’ M.N. Elliott, J.A.
Brown, W.G. Lehrman, M.K. Beckett, K.
Hambarsoomian, L.A. Giordano and E. Goldstein.
Medical Care Research and Review. 70: 165–184.
2013.
39 Matthew Manary, William Boulding, Richard
Staelin, and Seth Glickman. New England Journal
of Medicine, 368 (3): 201–203. 2013.
40 Karen Luxford. International Journal for
Quality in Health Care. 24 (5): 439–440. 2012.
41 Tsai, et al. ‘‘Patient Satisfaction and Quality of
Surgical Care in US Hospitals.’’ Annals of Surgery,
2014.
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Survey, stating that it would be more
helpful for consumers to know which
element is driving hospitals’
performance and improvement in those
areas.
Response: ‘‘Hospital Environment’’ is
one of eight equally-weighted
dimensions in the Patient Experience of
Care Domain of the Hospital VBP
Program. The Hospital Environment
dimension is itself composed of two
equally-weighted measures from the
HCAHPS Survey: Percent of patients
who responded ‘‘Always’’ to the
hospital cleanliness item, and percent of
patients who responded ‘‘Always’’ to
the hospital quietness item. Therefore,
the Hospital Environment dimension
assigns 5 points to each of the
environment measures. The Hospital
Environment dimension is given the
same weight in Hospital VBP Program
as other key HCAHPS measures, such as
Communication with Nurses, and
Discharge Information (‘‘A Step-by-Step
Guide to Calculating the Patient
Experience of Care Domain Score in the
Hospital Value-Based Purchasing FY
2013 Actual Percentage Payment
Summary Report,’’ available on
HCAHPS On-Line Web site at: http://
www.hcahpsonline.org/Hospital
VBP.aspx.) While the two environment
measures have been combined in the
Hospital VBP Program, consumers can
see how hospitals perform on
cleanliness and quietness separately by
examining the measure scores posted on
the Hospital Compare Web site.
Comment: One commenter urged
CMS to reevaluate the validity of
questions used on the HCAHPS Survey
related to pain management, including
whether the survey appropriately
reflects patient satisfaction and whether
or not it may encourage inappropriate
treatment. The commenter expressed
concern about the abuse of opioid pain
relievers in hospital settings. The
commenter explained that the HCAHPS
Survey principally focuses on effective
use of pharmacotherapy, which may be
consistent with the patient’s wishes but
is not always in his or her best interest.
Response: The Pain Management
domain is derived from three items on
the HCAHPS Survey. It is important to
note that the HCAHPS Survey is
designed to capture and report patient
experience of care at the hospital level,
not at the level of physician, and that
only adult inpatients are eligible for the
HCAHPS Survey (emergency room
patients would be eligible for the survey
only if they were subsequently admitted
as inpatients). The HCAHPS sampling
protocol does not support reliable
measurement of performance at the
physician level. Any use of the
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HCAHPS Survey to evaluate individual
physicians is inconsistent with our
guidance.
We understand and share the
commenter’s concerns about the rising
level of abuse of opioid pain relievers in
the United States. The HCAHPS Survey
includes three questions about pain
control to measure and publicly report
patient experience with this common,
yet critical, aspect of hospitalization;
and neither the patient nor the
physician(s) is identified in survey data
submitted to CMS. Pain control is an
important part of patient care in a
hospital and should be evaluated at the
hospital level. There are non-opioid
options for pain control that many
hospitals use.
All items on the HCAHPS Survey
have been carefully constructed and
tested, both in the field and in focus
groups of patients and caregivers.42 The
statistical reliability of the Pain
Management domain was 0.80 in 2013.
We share the commenter’s
commitment to reducing abuse of
opioids and will reach out to hospitals
and physicians to help them more fully
understand the capacities and limits of
the HCAHPS Survey in this regard and
will pursue further research on the
wording of the pain management items
in the HCAHPS Survey.
Comment: One commenter proposed
replacing the MSPB measure with the
NQF-endorsed Relative Resource Use
(RRU) measure, or a measure designed
to track health care resource use by
providers, health plans, or other units
for individuals having one of five
chronic diseases (COPD, cardiovascular
disease, diabetes, asthma, and
hypertension).
Response: We disagree that the MSPB
should be replaced with an RRU
measure. We note that the MSPB
measure is also NQF-endorsed.
Inclusion of an overall measure of cost
is an essential complement to the
condition-specific measures included in
the clinical process of care and
outcomes domains. Relying on
condition-specific measures alone, such
as RRU measures, would disregard
differences in overall cost. The MSPB
measure is reported as a ratio of the
payment-standardized, risk-adjusted
MSPB amount for each hospital divided
by the weighted median MSPB amount
across all hospitals. As discussed in
section IV.I.6.b. of the preamble of this
final rule (Possible Future Efficiency
and Cost Reduction Domain Measure
Topics), we are considering expansion
of the Efficiency and Cost Control
42 Sofaer, et al., Health Services Research, 40: 6,
2018–2036. 2005.
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domain to include six condition-specific
Medicare payment measures (three
medical and three surgical conditionspecific episodes) in addition to the
MSPB measure and would do so
through public notice and comment
rulemaking.
Comment: Several commenters
recommended that CMS refine its
policies on risk-adjustment in the MSPB
and other measures to include
socioeconomic status because a patient’s
socioeconomic status affects clinical
outcomes.
Commenters explained that
comorbidities, socioeconomic status,
and sociodemographic factors are major
determinants of outcomes, and
penalizing physicians and hospitals for
readmissions of the most chronically ill
patients without proper risk adjustment
could provide unintended negative
consequences. Commenters stated that,
without a risk-adjustment factor,
hospitals treating these patients become
subject to penalizations for
readmissions not related to the care
provided as well as penalizations for
extending an inpatient stay in order to
better optimize the patient’s health
status. Further, commenters suggested
that hospitals that serve a
disproportionate share of these patients
could conceivably do the most to
improve their health status but are
disproportionately penalized without a
risk adjustment.
One commenter suggested that CMS
examine NQF’s Risk Adjustment for
Socioeconomic Status or Other
Sociodemographic Factors Draft Report
for determining the appropriate risk
adjustment methodology for the
Hospital VBP Program. (Draft Report
available at: http://www.qualityforum.
org/Risk_Adjustment_SES.aspx.)
Another commenter strongly supported
the recommendations contained in the
draft report and urged CMS to
accordingly modify its risk-adjustment
methodology to include such factors.
Response: We appreciate these
comments and the importance of the
role that SES plays in the care of
patients. With regard to the MSPB
measure’s risk adjustment specifically,
we note that the MSPB measure was
finalized in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51619 through
51627). In that rule, we addressed
concerns about risk adjustment. We are
aware that there are differing opinions
regarding our current approach in riskadjusting measures in the Hospital
Readmissions Reduction Program for
SES. We note that the readmission
measures aim to reveal differences
related to the quality of care provided.
We believe that quality of care received
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50053
by patients of lower SES contributes at
least in part to the observed association
between SES status and the
readmissions rate. We continue to have
concerns about holding hospitals to
different standards for the outcomes of
their patients of low SES—we do not
want to mask potential disparities or
minimize incentives to improve the
outcomes of disadvantaged populations.
We routinely monitor the impact of
SES on hospitals’ results. To date, we
have found that hospitals that care for
large proportions of patients of low SES
are capable of performing well on our
measures (see the 2013 Medicare
Hospital Quality Chart Book on pages 46
through 53 at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/Downloads/-MedicareHospital-Quality-Chartbook-2013.pdf).
Previous analyses presented at the NQF
during endorsement proceedings of the
Hospital-Wide All-Cause Unplanned
Readmission Measure (available at:
http://www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=
70813) also show that adding SES to the
risk-adjustment has a negligible impact
on hospitals’ risk-standardized rates.
The risk adjustment for clinical factors
likely captures much of the variation
due to SES, therefore resulting in an
attenuation of the impact of SES factors
on hospitals’ results.
We continue to monitor related
activities at NQF, such as the July 23,
2014 decision by the NQF Board in
which the Board approved a trial period
to test the impact of sociodemographic
factor risk adjustment of performance
measures (available at: http://www.
qualityforum.org/Press_Release/2014/
NQF_Board_Approves_Trial_Risk_
Adjustment.aspx), and in Congress. As
we stated in the past, we are committed
to working with the NQF and other
stakeholder communities to
continuously refine our measures and to
address the concerns associated with
SES and risk adjustment. We believe
that continued collaboration with the
stakeholder communities will enable us
to identify feasible ways to
appropriately address any unintended
consequences for providers serving high
proportions of low-SES patients.
Comment: Some commenters
expressed concern about the influence
of factors that are outside the hospital’s
control on the MSPB measure and the
lack of associated quality or outcome
measures. One of these commenters
stated that any measures focusing
exclusively on cost such as the MSPB
measure create incentives to reduce
services in ways that adversely affect
patient outcomes and that such cost
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measures also create disincentives to
adopt new technologies.
One commenter expressed concern
that the measure does not track the
frequency of hospitalization, noting that
a community that reduces avoidable
hospitalizations may experience higher
per-hospitalization costs, even if overall
costs go down.
Response: Regarding the commenters’
concern with the degree of the hospital’s
control over the MSPB measure, we
continue to disagree that care furnished
to beneficiaries after they are discharged
from an acute care hospital is outside of
the hospital’s control. As we stated in
the FY 2012 IPPS/LTCH PPS final rule,
we believe that hospitals that provide
quality inpatient care, conduct
appropriate discharge planning, and
work with providers and suppliers on
appropriate follow-up care can achieve
efficiencies and perform well on the
measure (76 FR 51621).
Regarding the comment that the
MSPB measure does not account for
quality, we continue to agree that it is
beneficial to view a cost measure in
light of other quality measures. We do
not believe that a including measure of
cost, independent of quality in the
Hospital VBP Program, would result in
a reduction of needed services or in a
disincentive to develop new
technologies, because as we stated in
the FY 2012 IPPS/LTCH PPS final rule,
for purposes of the Hospital VBP
Program, we will weight and combine
the Efficiency and Cost Control domain
with the other domain scores, in order
to calculate each hospital’s TPS,
ensuring that that MSPB and any other
Efficiency and Cost Control Domain
measures we adopt make up only a
portion of the TPS and that the
remainder is based on hospitals’
performance on the other quality
measures (76 FR 51622). As we stated in
the FY 2013 IPPS/LTCH PPS final rule,
section 1886(o)(2)(B)(ii) of the Act
expressly requires the inclusion of
‘‘measures of Medicare spending per
beneficiary’’ in the Hospital VBP
Program. We do not believe that the
MSPB measure itself should assess both
cost and quality. We believe that a
inclusion of a distinct measure of cost,
independent of quality, as part of the
Hospital VBP Program enables us to
identify hospitals involved in the
provision of high quality care at a lower
cost to Medicare (77 FR 53586).
With regard to tracking the frequency
of hospital admissions, we do not
believe that the measure would
adversely affect communities involved
in minimizing hospitalizations because
the risk adjustment takes into account
the severity of illness of hospitalized
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beneficiaries so that hospitals admitting
more complex patients would have their
Medicare spending compared to the
expected spending for similarly
complex patients.
Comment: One commenter
recommended that CMS delay any
further implementation of the MSPB
measure until after the Physician VM
Program is implemented, stating that
hospitals should not be expected to bear
the consequences of physicians’
decisions.
Response: We agree that alignment of
incentives across programs is important.
In the CY 2014 Physician Fee Schedule
final rule (78 FR 74774 through 74780),
we finalized the inclusion of the MSPB
amount in the cost composite portion of
the physician value-based modifier
(VM), beginning with the 2016 VM. We
do not believe that it would be
appropriate to suspend the further use
of the MSPB measure until after the VM
is implemented.
We continue to believe, as we stated
in the FY 2012 IPPS/LTCH PPS final
rule, that the MSPB measure is an
important step in encouraging hospitals
to redesign and coordinate care with
other providers and suppliers of care,
and that its timely implementation is
critical to incentivizing hospitals to
provide the highest-quality, most
efficient care possible to Medicare
beneficiaries (76 FR 51657).
Comment: One commenter expressed
concern that the MSPB measure
overlaps conceptually with the Hospital
Readmissions Reduction Program, as
hospitals are already being penalized for
excessive readmissions under that
program. The commenter urged CMS to
reevaluate the MSPB measures so that
CMS does not place disproportionate
domain weighting on spending outside
of hospitals’ control.
Response: We disagree that the MSPB
measure inappropriately overlaps with
measures used in the Hospital
Readmissions Reduction Program. As
we stated in the FY 2012 IPPS/LTCH
PPS final rule, the MSPB measure is not
a measure of readmission rates, but
rather it is a measure of total Medicare
spending per beneficiary, relative to a
hospital stay. A Medicare spending per
beneficiary measure is required by the
section 1886(o)(2)(B)(ii) of the Act to be
included in the Hospital VBP Program,
and therefore, in the Hospital IQR
Program. We also continue to believe
that the Medicare payments made for
readmissions must be attributable to the
index hospital stay, in order to: fully
capture Medicare spending relative to a
hospital stay; encourage the provision of
comprehensive inpatient care, discharge
planning, and follow-up; and strengthen
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incentives to reduce readmissions (76
FR 51621).
We further disagree, as we stated
earlier, that the MSPB measure
represents services that are outside of
the hospital’s control. As we stated
above, and in the FY 2012 IPPS/LTCH
PPS final rule, we believe that hospitals
that provide quality inpatient care,
conduct appropriate discharge planning,
and work with providers and suppliers
on appropriate follow-up care can
achieve efficiencies and perform well on
the measure (76 FR 51621).
We thank commenters for this
feedback.
b. Changes Affecting ‘‘Topped-Out’’
Measures
(1) Removal of Six ‘‘Topped-Out’’
Measures
For the FY 2017 Hospital VBP
Program measure set, we evaluated
whether any measures that we
previously adopted are now ‘‘toppedout’’ by focusing on two criteria: (1)
national measure data showing
statistically indistinguishable
performance levels at the 75th and 90th
percentiles; and (2) national measure
data showing a truncated coefficient of
variation (TCV) less than 0.10. We refer
readers to the Hospital Inpatient VBP
Program final rule (76 FR 26496 through
26497) for further discussion of these
current ‘‘topped-out’’ criteria and to our
proposal below to modify the second
criterion.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28119), based on
our evaluation of the most recently
available data, we stated our belief that
PN–6, SCIP–Card–2, SCIP–Inf–2, SCIP–
Inf–3, SCIP–Inf–9, and SCIP–VTE–2 are
all now ‘‘topped-out.’’ Therefore, we
proposed to remove these six measures
from the FY 2017 Hospital VBP measure
set because measuring hospital
performance on these measures will
have no meaningful effect on a
hospital’s TPS. We believe that
removing these ‘‘topped-out’’ measures
will continue to ensure that we make
valid statistical comparisons through
our finalized scoring methodology and
will reduce the reporting burden on
participating hospitals.
We welcomed public comments on
this proposal.
Comment: Many commenters
supported CMS’ proposal to remove
‘‘topped-out’’ measures, expressing
appreciation for our efforts to streamline
the program.
Response: We thank the commenters
for their support.
Comment: One commenter suggested
that CMS flag additional measures that
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are approaching ‘‘topped-out’’ status in
future rulemaking.
Response: We thank the commenter
for this suggestion and will take it into
consideration in future rulemaking.
Comment: Commenters urged caution
with CMS’ proposed removal of
‘‘topped-out’’ measures, stating that
several are only recently ‘‘topped-out.’’
Commenters also suggested that CMS
consider adding more measures to the
Hospital VBP Program to make up for
the proposed removal of ‘‘topped-out’’
measures and to ensure that no single
measure has a disproportionate impact
on hospital performance in more than
one program.
Response: We will consider new
measures as they become eligible for
inclusion in the Hospital VBP Program.
Comment: One commenter suggested
that identified ‘‘topped-out’’ measures
remain available in other reporting
programs because the commenter
believes that reporting these six specific
measures has contributed to recent
increases and emphasis on improved
healthcare quality in hospitals, with a
significant impact on local improvement
efforts.
Response: While we appreciate
commenter’s observation that quality
reporting has contributed to improved
healthcare quality in hospitals, we
believe that topped-out measures should
be assessed to supplement a clinicallybased assessment of the measure’s
impact on a clinical topic or domain.
Comment: Commenters supported the
removal of the ‘‘topped-out’’ measures
but expressed confusion at why the
measures will not be removed sooner
than 2017.
Response: We evaluate the Clinical
Care—Process Domain measures for
‘‘topped-out’’ status on an annual basis
in order to propose changes, if
necessary, during the rulemaking
process, and we do not believe it would
be helpful to participating hospitals to
remove measures that have been
previously adopted for the Program in
previous rulemakings. We note that, for
example, we are currently in the middle
of the Clinical Process of Care domain’s
performance period for the FY 2016
Hospital VBP Program, which was
adopted as CY 2014. We do not believe
it would be helpful to hospitals to
attempt to retire a measure in the
middle of their performance period,
barring substantial extenuating
circumstances. We believe removing
these measures for the FY 2017 Hospital
VBP Program, adopted with a CY 2015
performance period, is most feasible.
Comment: Some commenters
suggested that CMS retire measures
when their evidentiary basis has
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changed, when the collection and
measurement costs exceed their utility,
or when measures have been
demonstrated to have minimal impact
on health outcomes and status.
Response: We thank the commenters
for their suggestions, and may consider
additional ‘‘topped-out’’ criteria in
future rulemaking.
After consideration of the public
comments we received, we are
finalizing our proposal to remove PN–6,
SCIP–Card–2, SCIP–Inf–2, SCIP–Inf–3,
SCIP–Inf–9, and SCIP–VTE–2 from the
FY 2017 measure set due to their being
‘‘topped-out.’’
(2) Change to Truncated Coefficient of
Variation Criterion to Determine
Whether a Measure is ‘‘Topped-Out’’
As stated above, we have adopted two
criteria for determining the ‘‘toppedout’’ status of Hospital VBP Program
measures:
• Statistically indistinguishable
performance at the 75th and 90th
percentiles; and
• Truncated coefficient of variation
< 0.10.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28119), we
proposed to modify the second criterion
to the following:
• Truncated coefficient of variation
≤ 0.10.
The coefficient of variation (CV) is a
common statistic that expresses the
standard deviation as a percentage of
the sample mean in a way 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
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. By proposing to
change the truncated CV from ‘‘less
than’’ to ‘‘less than or equal to’’ 0.10
under our ‘‘topped-out’’ test, we will
better be able to distinguish measures
with significant variation in
performance among hospitals and more
accurately determine what measures are
‘‘topped-out’’ for purposes of the
Program.
We welcomed public comments on
this proposal.
Comment: Commenters agreed with
the methodology regarding calculations
to determine whether a measure is
topped-out, and agreed with the
proposal to alter the threshold from
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50055
‘‘less than 0.10’’ to ‘‘less than or equal
to 0.10.’’
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our modification to the
truncated coefficient of variation
criterion for determining whether a
measure is ‘‘topped-out’’ as proposed.
c. New Measures for the FY 2017
Hospital VBP Program
We considered if we should adopt
additional measures for the FY 2017
Hospital VBP Program. We considered
which measures are eligible for
adoption based on the statutory
requirements, including specification
under the Hospital IQR Program and
posting dates on the Hospital Compare
Web site, and our priorities for quality
improvement as outlined in the
National Quality Strategy (NQS)
(available for download at: http://www.
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/Quality
InitiativesGenInfo/Downloads/CMSQuality-Strategy.pdf).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28119 through
28121) we stated that we believe that
the following three proposed measures
meet the statutory requirements for
inclusion in the FY 2017 Hospital VBP
Program. We also believe that these
measures represent important
components of quality improvement in
the acute inpatient hospital setting.
We received a number of general
comments on quality measures for the
Hospital VBP Program:
Comment: Many commenters
supported CMS’ proposals to adopt
MRSA, C. difficile Infection, and PC–01
for the FY 2017 Program. These
commenters believed that the measures
are appropriate for the Program and will
have been publicly posted on Hospital
Compare in accordance with the
Hospital VBP Program’s statute.
Response: We agree and thank the
commenters.
Comment: Commenters supported
CMS’ proposal to readopt the IMM–2
measure for FY 2017 and suggested that
CMS consider adopting additional
immunization measures in the future.
Response: As with other suggested
measure topics, we will consider new
measures as they become available to us
under the statutory requirements for the
Hospital VBP Program.
Comment: A few commenters
recommended that the Hospital VBP
Program should include a mix of
measures, including measures that
would test adherence to evidence-based
medical interventions.
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Response: We agree, and we have
attempted to introduce a variety of
quality measure types into the Hospital
VBP Program, including measures of
processes, outcomes, and efficiency.
Comment: One commenter believed
that all measures in the Hospital IQR,
HAC Reduction, and Hospital VBP
Programs should be NQF-endorsed
before their adoption by CMS, because
NQF-endorsement ensures that the
measures have been evaluated by a
panel of experts in quality
measurement. The commenter therefore
supported the removal of measures that
have lost NQF-endorsement.
Response: We note that the Hospital
VBP Program relies on data submitted
under the Hospital IQR Program, and
the Hospital IQR Program’s statute
enables us to select measures that have
not been endorsed by NQF, as long as
due consideration is given to measures
that have been endorsed or adopted by
a consensus organization identified by
the Secretary. Our statistical and
clinical assessment of the measures
chosen for adoption in the Hospital VBP
Program supports our belief that the
measures are sufficiently valid and
reliable. Each measure has been used in
the Hospital IQR Program for at least
one year, and we believe each measure
we adopt will improve patient
outcomes.
Comment: Commenters suggested that
CMS consider exploring measures
related to sepsis mortality as an
alternative to current proposals.
Commenters recommended that CMS
prioritize the development of quality
measures that promote nutrition
screening and assessment of nutrition
interventions. Additional commenters
recommended that CMS consider
measures of advance care planning,
malnutrition care, measures related to
diabetes, atrial fibrillation, COPD, and
oncology, additional process measures,
immunization measures, and a measure
of all-cause readmission. Other
commenters suggested that CMS
consider PSI–4: Death among surgical
inpatients with serious treatable
complications, COPD 30-day mortality,
and AMI Payment per Episode for the
Hospital VBP Program.
Additional commenters suggested that
CMS consider adopting STK–1 (venous
thromboembolism (VTE) prophylaxis);
STK–2 (discharged on antithrombotic
therapy); and STK–4 (percentage of
eligible patients receiving thrombolytic
therapy within 0–3 hours of symptom
onset). One commenter specifically
noted that the STK–4 measure in the
Hospital VBP Program as it is especified and has not been deemed
‘‘topped-out.’’
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Response: We will consider new
measures for the Hospital VBP Program
as they become eligible for inclusion in
the measure set. We note, however, that
section 1886(o)(2)(A) of the Act
specifically excludes measures of
readmissions from the Hospital VBP
Program.
Comment: One commenter urged
CMS to expand the Surgical Site
Infection list within the Outcomes
domain to include Major Joint
Replacement Surgeries and Spine
procedures so that surgical specialty
hospitals are able to participate in future
Hospital VBP Programs. Otherwise, the
commenter believed, hospitals that
qualify for the Hospital VBP Program,
and whose excellent performance
records bolster the overall quality and
efficacy of the program, may be
excluded because the SSI list does not
include these common procedures
which make up the majority of the
procedures they perform.
Response: We thank the commenter
for this suggestion. We are continuously
evaluating the program and working to
identify new, potentially suitable
measures to fill measure gaps. We
appreciate the commenter’s input for
measure selection and will take this
feedback into consideration in future
rulemaking. We note that CDC
maintains ongoing collaborations with a
number of professional surgical
organizations and is currently in the
process of developing additional SSI
metrics for higher volume surgical
procedures. Once these measures are
finalized, we may consider them for
future inclusion in our quality reporting
and pay for performance programs.
Comment: Many commenters
expressed concern that measures in both
the Hospital VBP and HAC Reduction
Programs overlap. Commenters pointed
to a wide variety of concerns, including:
Multiple competing benchmarks,
various penalty calculation
methodologies, wasting precious
resources, and the potential for
confusion among hospitals and
beneficiaries.
Many commenters noted that using
measures in both HAC Reduction and
the Hospital VBP Programs potentially
penalizes participating hospitals twice,
or could result in instances where
hospitals perform well in one program
and are penalized in the other. Another
commenter stated that the overlap
inappropriately magnifies the impact
and importance of the measures.
Some commenters were concerned
that the overlap between measures in
the HAC Reduction and Hospital VBP
Programs may create a defeatist attitude
among certain hospitals that are
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disproportionately affected, such as
safety net hospitals. Commenters noted
that such duplication between quality
programs could draw needed dollars
away from the very organizations that
need to be focusing in this area.
Response: We acknowledge that there
is some overlap in quality measures
between the Hospital VBP Program and
the HAC Reduction Program. While we
are aware that commenters object to the
possibility of scoring hospitals on
certain measures under both programs,
we note that these measures cover
topics of critical importance to quality
improvement in the inpatient hospital
setting, and to patient safety. We
selected these quality measures because
we believe that HAC measures comprise
some of the most critical patient safety
areas therefore justifying the use
measures in more than one program.
The MRSA Bacteremia and C. difficile
Infection measures that we have
proposed to adopt track infections that
could cause significant health risks to
Medicare patients, and we believe it is
appropriate to provide incentives for
hospitals to avoid them under more
than one program.
We further stress that the HAC
Reduction Program and the Hospital
VBP Program are separate programs
with different purposes and policy
goals. For example, the HAC Reduction
Program is a program that reduces
payments to hospitals for excess HACs
to increase patient safety in hospitals.
On the other hand, the Hospital VBP
Program is an incentive program that
redistributes a portion of the Medicare
payments made to hospitals based on
their performance on various measures.
Therefore, although the measures exist
in more than one program, the measures
are used and calculated for very distinct
purposes. Accordingly, as stated above,
we believe that the critical importance
of these measures to patient safety
warrants their inclusion in both
programs. We will, in the future,
monitor the HAC Reduction and
Hospital VBP Programs and analyze the
impact of our measures selection,
including any unintended consequences
with having a measure in more than one
program, and will revise the measure set
in one or both programs if needed.
Comment: Many commenters stated
that CMS’ proposed measures for FY
2017, despite appearing to have the
potential to be positive additions to the
program, have not been publicly
reported on the Hospital Compare Web
site for 1 year as required by the Act.
Response: Section 1886(o)(2)(C)(i) of
the Act requires that measures must
have been ‘‘included on the Hospital
Compare Internet Web site for at least 1
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year prior to the beginning of the
performance period.’’ As commenters
noted, we first reported these measures’
data in December 2013, and have
proposed an FY 2017 performance
period for these measures of CY 2015,
which complies with the statutory
requirement in section 1886(o)(2)(C)(i)
of the Act. Accordingly, we believe that
the three proposed measures meet the
statutory requirements for inclusion in
the FY 2017 Hospital VBP Program. We
also believe that these measures
represent important components of
quality improvement in the acute
inpatient hospital setting. However, to
the extent that there remains any
question regarding our interpretation of
section 1886(o)(2)(C)(i) of the Act, we
are finalizing that the effective date of
the new FY 2017 measures, PC–01,
MRSA Bacteremia, and C. difficile
Infection, will be January 1, 2015,
consistent with the beginning of the
performance period for those measures.
Comment: One commenter believed
that the AMI–7a measure is
inappropriate for the Hospital VBP
Program because it does not apply to
most hospitals due to a low volume of
cases.
Response: While we understand that
many hospitals do not provide services
that would be measured by the AMI–7a
measure, the finalized Hospital VBP
Program scoring methodology does not
penalize hospitals that do not have
sufficient cases for that measure, or any
measures that we have adopted. Even if
the measure will only apply to a small
number of hospitals, we believe that this
measure accomplishes the goals of the
Hospital VBP Program and will improve
patient outcomes in the hospitals where
the measure will apply. We will
consider proposing removal of this
measure in future policy making.
Comment: Commenters expressed
continued concern about the three 30day mortality measures that we have
adopted and placed into the Clinical
Care—Outcomes domain. Commenters
stated that the measures do not
meaningfully reflect hospital
performance because they do not meet
the lower limit of moderate reliability
identified by CMS’ analytical contractor
in a 2012 report. Commenters expressed
their appreciation for our adoption of
longer performance periods for these
measures, but noted that even at 24
months, the measures’ reliability is
significantly less than we require for
chart-abstracted measures. Commenters
suggested that we consider a plan to
improve or replace the mortality
measures and consider reducing the
domain weighting allocated to the
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Clinical Care—Outcomes domain in the
meantime.
Response: As we stated in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53591) and the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50693), we believe that
the mortality measures capture
important quality data for purposes of
the Hospital VBP Program. We believe
that the three 30-day mortality measures
are sufficiently reliable for inclusion in
the Hospital VBP Program, particularly
in light of our finalized policies to set
a 25 case minimum and to extend the
performance period’s duration for these
measures over successive years to reach
36 months.
Comment: One commenter requested
that CMS change the mortality
measures’ populations to ensure that the
same patient is not counted under more
than one measure. The commenter
explained that its mortality measure
scores had been adversely affected by a
patient that had been counted under
both pneumonia and AMI mortality.
Response: If a patient was
hospitalized for AMI and Pneumonia on
a different date and died within 30 days
from the first hospitalization in the
three-year time frame we used to
calculate the mortality measures, the
patient could be included in both AMI
and Pneumonia mortality measures.
However, cohorts of mortality are
determined by the principle diagnosis
on the index hospitalization claims (that
is, the denominator is defined as
discharges/admissions not patients).
There is only one principal diagnosis on
each claim, therefore it is not likely that
a specific patient’s claim or admission
would be in both AMI and Pneumonia
measures.
(1) Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia (NQF #1716)
Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia (NQF #1716)
is a risk-adjusted outcome measure
monitoring hospital onset of MRSA
Bacteremia bloodstream infection events
using the standardized infection ratio
(MRSA Bacteremia SIR) among all
inpatients in the facility. The MRSA
Bacteremia SIR is reported via the
Center for Disease Control and
Prevention’s (CDC) National Healthcare
Safety Network (NHSN). We adopted
this measure beginning with the FY
2015 payment determination under the
Hospital IQR Program in the FY 2012
IPPS/LTCH PPS final rule (76 FR
51630). Initial measure data were posted
on Hospital Compare in December 2013.
We remain concerned about the
persistent public health threat presented
by MRSA Bacteremia infections.
According to a 2013 study available at
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50057
the National Institute of Health’s Web
site, MRSA Bacteremia ‘‘results in
longer hospitalization, increased
expenses, and poorer patient prognosis’’
and ‘‘has been swiftly increasing
worldwide over the past several
decades.’’ 43 As we noted in the FY 2012
IPPS/LTCH PPS final rule (76 FR
51630), invasive MRSA Bacteremia
infections may cause about 18,000
deaths during a hospital stay a year.44
The Measure Application Partnership
(MAP) supported the direction of the
MRSA Bacteremia measure for inclusion
in the Hospital VBP Program in the
MAP Pre-Rulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS found at:
https://www.qualityforum.org/Work
Area/linkit.aspx?LinkIdentifier=id&
ItemID=72746. The MAP noted that the
measure addresses an NQS priority not
adequately addressed in the program
measure set, the measure should be
applied following public reporting on
Hospital Compare, and the most recent
version of the NQF-endorsed measure
should be applied.
We believe that this measure is
eligible for the Hospital VBP Program
based on the MAP recommendation, our
adoption of the most recent NQFendorsed version under the Hospital
IQR Program, and our posting of
measure data on Hospital Compare.
Based on the continued danger that
MRSA Bacteremia infections present to
patients and to public health, we further
believe that this measure is appropriate
for the Hospital VBP Program.
Therefore, we proposed to adopt the
MRSA Bacteremia measure for the FY
2017 Hospital VBP Program, and we
proposed to place the measure into the
Safety domain.
We invited public comment on this
proposal.
Comment: Commenters supported
CMS’ proposal to adopt MRSA
Bacteremia and C. difficile infection
measures for the FY 2017 Program,
stating that the measures will provide
incentives for hospitals to employ
appropriate infection control and
prevention and antimicrobial
stewardship programs. (CMS discusses
C. difficile infection in more detail in
the next section). Another commenter
noted that the measure is a first step
towards encouraging hospitals to focus
43 Tatokoro et al. BMC Urology 2013, 13:35.
Available at http://www.ncbi.nlm.nih.gov/pmc/
articles/PMC3720197/pdf/1471-2490-13-35.pdf
44 Catherine Liu, Arnold Bayer, et al., Clinical
practice Guidelines for the treatment of MethicillinResistant Staphylococcus aureus Infections in Adult
and Children. Infectious Disease Society of America
2011; 52:e18.
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on prevention and appropriate
treatment of these infections.
One commenter noted that quality
measures implemented in the U.K. had
a positive effect on C. difficile infections
and treatments and that appropriate
treatment of C. difficile infections have
important implications for patient
outcomes, society, and the reduction of
healthcare expenditures. Another
commenter noted that MRSA
Bacteremia and C. difficile infections are
both largely preventable diseases.
Another commenter expressed specific
support for CMS’ proposal to adopt the
C. difficile Infection measure, stating
that stoma care management is
necessary at all clinical stages to avoid
life threatening and costly infections.
Response: We thank the commenters
for their support.
Comment: One commenter urged
CMS to delay use of the MRSA
Bacteremia and C. difficile measures
until FY 2018 because, while the
measures are NQF-endorsed, the MAP
did not fully support them for the
Hospital VBP Program. The commenter
stated that the MAP voted to ‘‘support
direction’’ and noted that the measure
should be publicly reported for a
sufficient amount of time prior to being
added to the Hospital VBP Program.
Response: We disagree. We view the
MRSA Bacteremia and C. difficile
Infection measures as important quality
measures to be added to the Safety
domain because they track infections
that present significant danger to
patients. We believe that tracking
hospitals on these measures—and
providing incentives for better
performance—will result in reduced
harm to patients, better health care
quality, and an improved health care
system.
Comment: One commenter urged
caution with the C. difficile infection
and MRSA Bacteremia measures, and
argued that they must track to hospital
onset-infections. Commenters suggested
that many infections emerge in the
community, meaning hospitals are not
at fault for the origination of the
infection. One commenter noted that
infections caused by MRSA Bacteremia
vary widely geographically, and there
has been a rise in the frequency of
community-associated MRSA
Bacteremia skin/soft tissue infections,
many of which are likely best treated
with direct interventions at the site of
infection and do not require antibiotics.
The commenter believed that as the
proportion of community-associated
strains become predominant, hospitals
will have less ability to have any
appreciable impact on their frequency.
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A few commenters requested that the
MRSA Bacteremia and C. difficile
Infection measures control for known
regional variation in the infection rates
so that hospitals that care for high-risk
populations are not inadvertently
targeted or encouraged to limit access to
care by such high-risk patients. Some
commenters suggested that a better way
to track MRSA Bacteremia and C.
difficile infections is to include
measures that focus on best practices
and guidelines for patients who contract
MRSA Bacteremia or C. difficile
infections.
One commenter also asked CMS to
consider that C. difficile infections are
higher in surgical patients, rather than
non-surgical patients, and are
particularly high in gastrointestinal
surgery patients. Therefore, the
commenter believed that hospitals that
perform a greater number of colorectal
procedures will have higher rates of C.
difficile infections in their patients,
even if they are perfectly compliant
with all the applicable guidelines and
practices.
Response: The MRSA and C. difficile
measures differentiate between
community-acquired and hospital-onset
events based on a patient’s date of
admission and date(s) of specimen
collection, and includes an adjustment
for many risk factors specifically facility
size, medical teaching hospital
affiliation, prevalence of communityonset infection, and for CDI test type.
Therefore, we do not believe the
measures need to be revised to account
for these factors because the current
approach already addresses many of the
commenters’ concerns. However, we
will collaborate with CDC to evaluate
whether there is a need to consider
additional risk adjustment factors, such
as occurrence of gastrointestinal
surgeries, suggested by the commenters
for future policy development. While
we are willing to consider other risk
factors, the additional adjustment
gained must be weighed against the
extra burden added to collected more
required data elements. The issue of the
same measures being included in
multiple programs is addressed further
below.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
MRSA Bacteremia measure for the FY
2017 Hospital VBP Program.
(2) Clostridium difficile (C. difficile)
Infection (NQF #1717)
C. difficile Infection (NQF #1717) is a
risk-adjusted outcome measure
monitoring hospital onset of C. difficile
Infection events using the standardized
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infection ratio (C. difficile SIR) among
all inpatients in the facility. The C.
difficile SIR is reported via CDC’s
NHSN. We adopted this measure
beginning with the FY 2015 payment
determination under the Hospital IQR
Program in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51630 through 51631).
Initial measure data were posted on
Hospital Compare in December 2013.
As with MRSA Bacteremia infections,
we are concerned about the seriousness
of C. difficile infections. According to a
2012 study, ‘‘infection with Clostridium
difficile is associated with poor
outcomes for patients. Previous work
has determined that, regardless of
baseline risk of death, for every 10
patients that acquire C. difficile in the
hospital, 1 patient will die. Clostridium
difficile is also associated with
increased health care costs. One of the
primary mechanisms by which C.
difficile increases costs is by increasing
the length of time patients spend in
hospital.’’ 45
As we stated in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51630
through 51631), C. difficile infections
have become more frequent, more
severe, and more difficult to treat in
recent years. Each year, tens of
thousands of people in the United States
get sick from C. difficile, including some
otherwise healthy people who are not
hospitalized or taking antibiotics.
The MAP noted that the measure
addresses an NQS priority not
adequately addressed in the program
measure set, the measure should be
applied following public reporting on
Hospital Compare, and that the most
recent version of the NQF-endorsed
measure should be applied.
We believe that this measure is
eligible for the Hospital VBP Program
based on the MAP recommendation, our
adoption of the most recent NQFendorsed version under the Hospital
IQR Program, and our posting of
measure data on Hospital Compare, as
well as the continued danger that C.
difficile infections present to patients
and the public health. Therefore, we
proposed to adopt the C. difficile SIR
measure for the FY 2017 Hospital VBP
Program, and we proposed to place the
measure into the Safety domain.
We invited public comment on this
proposal.
Comment: One commenter urged
CMS to delay use of the C. difficile
Infection measure until FY 2018
45 Forster et al. ‘‘The effect of hospital-acquired
infection with Clostridium difficile on length of stay
in hospital.’’ Canadian Medical Association
Journal, January 10, 2012. Available at http://
www.ncbi.nlm.nih.gov/pmc/articles/PMC3255231/
pdf/1840037.pdf.
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because C. difficile infections have
diverse sources and are not associated
with symptomatic cases for which
infection control interventions are
primarily targeted. Further, the
commenter had concerns about current
lab identification definitions used for
public reporting because (1)
asymptomatic cases with positive lab
identification events are included, (2)
recurrences are counted as new cases if
tested again after two weeks, and (3)
patients may be asymptomatically
colonized prior to admission and
develop the disease, resulting in
attribution of a healthcare associated
infection, regardless of any hospital’s
infection prevention strategies. Finally,
the commenter noted that there is no
standard strategy for testing patients for
C. difficile infections.
Response: The CDC Web site includes
posted information for appropriate
clinical practice, testing, and
identification of C. difficile infections at:
http://www.cdc.gov/HAI/organisms/
cdiff/Cdiff_clinicians.html. These
practices are strongly suggested when
tracking C. difficile cases for reporting to
NHSN, and include guidance to only
perform the test for C. difficile and its
toxins on diarrheal (unformed) stool
from symptomatic patients, unless ileus
due to C. difficile is suspected, and to
avoid testing stool from asymptomatic
patients, for routine identification of
asymptomatic carriers, or as a test of
cure. Following this guidance as a
standard of practice will avoid reporting
of asymptomatic, colonized patients,
who are not to be reported per NHSN
protocol. Recurrent cases are counted
separately from incident cases and are
not included in the hospital-onset,
incident C. difficile metric reported to
CMS. Per published research and the
NHSN protocol, a recurrent C. difficile
LabID Event is defined as a specimen
obtained >2 weeks (>= 2 weeks is a
duplicate and not reported) and ≤8
weeks after the most recent CDI LabID
Event for that patient. Incident cases are
defined and counted as specimens
obtained >8 weeks after the most recent
CDI LabID Event for that patient
(McDonald LC, et al. Infect Control
Hosp Epidemiol 2007; 28:140–145).
Comment: One commenter cautioned
that the C. difficile Infection measure
may result in discouraging healthcare
professionals from screening for or
attempting to diagnose mild cases of
CDI because the measure focuses on
rates of infection rather than screening.
The commenter suggested that CMS
consider rewarding hospitals for
limiting prolonged periods of multiple
antibiotic use among patients, for
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optimizing antimicrobial therapy, and
for instituting CDI prevention programs.
Response: We will consider this
feedback; however we do not think that
this measure will discourage healthcare
professionals from testing for C. difficile
when clinically indicated, particularly
given the potential for serious harm that
C. difficile infections present to patients.
Though healthcare professionals may
have incentives to avoid diagnostic
testing, they also have incentives to treat
with confirmation of the diagnosis, in
part because of the danger of
overprescribing antibiotics and its
associated complications for patients.
We will consider the commenter’s
suggestions in the future.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the C.
difficile infection measure for the FY
2017 Hospital VBP Program.
(3) PC–01: Elective Delivery Prior to 39
Completed Weeks Gestation (NQF
#0469)
PC–01: Elective Delivery Prior to 39
Completed Weeks Gestation (NQF
#0469) is a chart-abstracted measure
that we adopted beginning with the FY
2015 payment determination for the
Hospital IQR Program in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53528
through 53530). Initial measure data
were posted on Hospital Compare in
December 2013. Although this is a
chart-abstracted measure, we finalized
our policy in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53528 through
53529) that this measure would be
collected in aggregated numerator,
denominator, and exclusion counts per
hospital via a Web-based tool, instead of
collecting patient-level data from
hospitals.
As we described in the FY 2013 IPPS/
LTCH PPS final rule referenced above,
the Strong Start Initiative (http://www.
innovation.cms.gov/initiatives/strongstart/) was launched to help reduce
early elective births. At launch, the HHS
Secretary stated that more than half a
million infants are born prematurely in
America each year. Fortunately, the
early elective birth rate has steadily
decreased. In 2012, the number of early
elective births had decreased to
approximately 456,000 or 11.55 percent
of the total number of births.46 Early
elective births may require additional
medical attention and early intervention
services. Research indicates that elective
deliveries before 39 weeks increase the
46 Martin, JA, Hamilton, BE, Osterman, MJK,
Curtin, SC, Mathews, TJ. (2013). Births: Final data
for 2012. Natl Vital Stat Rpt. 62(9). Retrieved from
http://www.cdc.gov/nchs/data/nvsr/nvsr62/nvsr62_
09.pdf.
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50059
risk of significant complications for
mother and baby, as well as long-term
health problems.47 48 49 50 Early elective
births are a public health problem that
has significant consequences for
families well into a child’s life.
As a public campaign to reduce early
elective births, the Strong Start
Initiative’s objective is to test ways to
reverse this trend by helping provide
expectant mothers with the care they
need for a healthy delivery and a
healthy baby, and by focusing on
reducing early elective deliveries, which
can lead to a variety of health problems
for mothers and infants. The Strong
Start Initiative cuts across many
agencies within HHS and involves
external organizations including the
March of Dimes and the American
College of Obstetricians and
Gynecologists (ACOG). We believe that
a reduction in the number of
nonmedically indicated elective
deliveries at ≥37 to <39 weeks gestation
will result in a substantial decrease in
neonatal morbidity and mortality, as
well as a significant savings in health
care costs. In addition, the rate of
cesarean sections should decrease with
fewer elective inductions, resulting in
decreased length of stay and health care
costs.
The MAP supported adoption of the
PC–01 Elective Delivery measure for
inclusion in the Hospital VBP Program
in the MAP Pre-Rulemaking Report:
2013 Recommendations on Measures
Under Consideration by HHS found at
https://www.qualityforum.org/Work
Area/linkit.aspx?LinkIdentifier=id&Item
ID=72746. The MAP noted that the
measure addresses an NQS priority not
adequately addressed in the program
measure set.
We proposed to adopt this measure
for the Hospital VBP Program and we
proposed to place the measure into the
Clinical Care—Process domain because
we believe this measure furthers the
NQS’s three-part aim of better
healthcare for individuals, better health
for populations, and lower costs of
healthcare. In addition, although the
47 Glantz, J. (Apr. 2005). Elective induction vs.
spontaneous labor associations and outcomes. J
Reprod Med. 50(4):235–40.
48 Vardo, J., Thornburg, L., Glantz J., (2011).
Maternal and neonatal morbidity among
nulliparous women undergoing elective induction
of labor. J. report med. 56(1–2): 25–30.
49 Tita, A., Landon, M., Spong, C., Lai, Y., Leveno,
K., Varner, M., et al. (2009). Timing of elective
repeat cesarean delivery at term and neonatal
outcomes. [Electronic Version]. NEJM. 360:2, 111–
120.
50 Clark, S., Miller, D., Belfort, M., Dildy, G., Frye,
D., & Meyers, J. (2009). Neonatal and maternal
outcomes associated with elective delivery.
[Electronic Version]. Am J Obstet Gynecol.
200:156.e1–156.e4.
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PC–01 Elective Delivery measure
captures data from all applicable
patients, we also believe that the
measure is specifically relevant to the
nearly 2 million Medicare beneficiaries
who are aged 44 and under, most of
whom are dual eligible beneficiaries,
who have the potential to be impacted
by early elective births. In 2011,
Medicare paid for roughly 14,000 births.
We welcomed public comment on
this proposal.
Comment: Many commenters
supported CMS’ proposal to include the
PC–01 measure in the Hospital VBP
Program, noting that many hospitals
continue to have rates of early elective
delivery in excess of 15 percent despite
the American College of Obstetricians
and Gynecologists recommendations
that no elective delivery be performed
before the gestational age of 39 weeks
without a medical indication. One
commenter believed that this measure
will reduce costs and also have the
potential to greatly improve newborn
outcomes of care.
Response: We thank the commenters
for their support.
Comment: Several commenters
expressed opposition to the PC–01
measure for the FY 2017 Hospital VBP
Program because the measure is Webbased, and there has not been any chart
validation for accuracy and consistency
of data collection across hospitals. Some
commenters specifically opposed using
any data that are not validated under the
Hospital VBP Program, stating that PC–
01 should therefore not be finalized for
the program based on data accuracy
concerns. Commenters stated that, while
hospitals are working diligently to
collect accurate data for this measure, it
is possible that hospitals collecting the
most accurate data will have the lowest
scores.
Commenters stated that the
benchmark of 0 percent is not realistic
considering that justifications for
Elective Delivery are based off of ICD–
9–CM codes and The Joint Commission
(TJC) has stated that not all the
justifications for an elective delivery are
included on the ICD–9–CM Justification
Table. Further, commenters noted that
TJC has stated that the purpose of this
measure is to enable hospitals to
establish a baseline for their
performance, which in turn serves as a
determinant of whether improvement
efforts are effective over time.
One commenter suggested that CMS
wait to adopt this type of measure until
the electronic clinical quality measure
version is available. One commenter did
not support the recommendation to add
the PC–01 measure to the Clinical
Care—Process domain because the
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measure algorithm exclusions are
applied prior to denominator selection.
The commenter stated that these
exclusions make the quarterly
denominators very low, even for a large
facility, and that, therefore, the measure
does not truly assess the quality of care
provided.
Response: We disagree with the
concept that this measure may be
inherently invalid because not all
justifications for an elective delivery are
included in the ICD–9–CM Justification
Table, or invalid because of the volume
of exclusions. All NQF-endorsed
measures must meet strict reliability
and validity criteria to gain
endorsement. PC–01 is NQF-endorsed
therefore the measure as defined is
clinically valid. Regarding the accuracy
of the submitted data, hospitals are
required to acknowledge the accuracy of
the data submitted through the Hospital
IQR Program’s Data Accuracy and
Completeness Acknowledgment
statement on an annual basis. To
validate the accuracy of submitted data,
we employ logic checks as we do for
other measures. For example, the
number of cases entered in the
numerator cannot be greater than the
number of cases entered in the
denominator.
As explained in section IX.A.11 of
this preamble, because the PC–01 data
are collected in aggregate instead of for
individual patients, we cannot use the
same mechanism to assess reliability of
PC–01 as we use for chart-abstracted
clinical process of care measures
reported at the patient level. The
approach for other clinical process of
care measures involves sampling,
whereas the analogous approach for
aggregate data would involve collecting
all data from a hospital. We believe that
the benefits of validating aggregate data
in this way are outweighed by the
burden to hospitals in submitting
potentially hundreds of records to
validate one measure, and also believe
that this approach would be costprohibitive for CMS.
However, we are exploring different
options to assess the general validity of
PC–01 data more robustly. For the
reasons outlined in the proposed rule,
we continue to believe this measure is
appropriate for the Hospital VBP
Program. We have adopted the e-CQM
version of this measure under our
voluntary electronic reporting option for
the Hospital IQR Program.
Comment: Some commenters opposed
CMS’ proposed adoption of the PC–01
measure, stating that CMS should first
determine that there is sufficient room
for making additional substantive
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Fmt 4701
Sfmt 4700
improvements that would result in
better patient care.
Response: The NQF notes that preterm births are a rapidly escalating
public health problem, and that early
elective delivery contributes to this
problem.51 As stated above, many
commenters have noted that many
hospitals continue to have rates of early
elective delivery in excess of 15 percent
despite the American College of
Obstetricians and Gynecologists
recommendations that no elective
delivery be performed before the
gestational age of 39 weeks without a
medical indication. Therefore, we
believe that hospitals have the
opportunity to improve upon a
detrimental practice that was until very
recently rapidly expanding.52
Comment: Commenters expressed
concerns about CMS’ proposal to adopt
the PC–01 measure, noting that many
hospitals do not provide perinatal care
services and stating that the volume of
Medicare births is not high enough to
justify this measure’s placement into the
Hospital VBP Program. Commenters
suggested that CMS remove PC–01 from
the proposed measure set.
Response: We continue to believe this
measure is appropriate for the Hospital
VBP Program, as we described in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28120). The measure is NQFendorsed and was supported for the
Hospital VBP Program by the MAP, and
addresses an NQS priority not
adequately addressed in the Program’s
measure set to date. In addition, as we
noted, nearly 2 million Medicare
beneficiaries are aged 44 and under, and
in 2011, Medicare paid for roughly
14,000 births.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the PC–
01 measure for the FY 2017 Hospital
VBP Program.
d. Adoption of the Current Central LineAssociated Bloodstream Infection
(CLABSI) Measure (NQF #0139) for the
FY 2017 Hospital VBP Program
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50682 and 50686), we
adopted the CLABSI measure for the FY
2016 Hospital VBP Program. We stated
our belief that adopting the current
CLABSI measure is consistent with the
MAP’s recommendation in the MAP
Pre-Rulemaking Report: 2013
Recommendations on Measures Under
51 https://www.qualityforum.org/WorkArea/link
it.aspx?LinkIdentifier=id&ItemID=72746.
52 Osterman MJK, Martin JA. Changes in cesarean
delivery rates by gestational age: United States,
1996–2011. NCHS data brief, no 124. Hyattsville,
MD: National Center for Health Statistics. 2013.
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Consideration by HHS found at https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&Item
ID=72746, to use the standardized
infection ratio version of the measure
until the reliability-adjusted CLABSI
measure is NQF-endorsed. We have
stated our intent to consider adopting
the reliability-adjusted CLABSI measure
in future rulemaking.
The reliability-adjusted standardized
infection ratio (SIR) is an outcome
measure that summarizes the
healthcare-associated infection
experience by type of infection (for
example, central-line associated
bloodstream infection, surgical site
infection) for individual hospitals. The
reliability-adjusted measure enables
more meaningful statistical
differentiation between hospitals by
accounting for differences in patient
case-mix, exposures to medical devices
or procedures (for example, central line
days, surgical procedure volume), and
unmeasured factors that are not
reflected in the unadjusted SIR and that
cause variation in outcomes between
hospitals. Accounting for these sources
of variability enables better measure
discrimination between hospitals and
leads to more reliable quality
measurements.
However, in the absence of NQF
endorsement of the reliability-adjusted
CLABSI measure or any additional MAP
recommendations, and unless and until
the Hospital IQR Program adopts the
reliability adjustments, we believe we
may only consider the current version of
the CLABSI measure for adoption under
the Hospital VBP Program. We continue
to believe that the CLABSI measure
encourages hospitals to minimize
infection events that present significant
health risks to patients. Therefore, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28120 through 28121), we
proposed to adopt the current version of
the CLABSI measure for the FY 2017
Hospital VBP Program and subsequent
years. If a reliability-adjusted version of
the measure becomes available to us in
the future, we will consider adopting it.
We welcomed public comment on
this proposal.
Comment: Commenters requested that
CMS clarify whether the CLABSI and
CAUTI measures will include non-ICU
locations. Commenters also requested
that CMS clarify whether hospitals that
report CLABSI and CAUTI to NHSN as
Mixed Acuity Units instead of ICUs will
receive SIRs for the Hospital VBP
Program, or if the measures will not be
applicable for hospitals that do not
report for ICUs.
Response: For the CLABSI and CAUTI
measures, we will score hospitals using
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adult, pediatric, and neonatal ICU data
only for the FY 2017 and FY 2018
Hospital VBP Programs, because the
baseline periods for FY 2017 and FY
2018 are CY 2013 and 2014 respectively.
These baseline periods are prior to the
Hospital IQR Program requirement that
hospitals report data on selected nonICU locations (78 FR 50787). Therefore,
we will have no data on non-ICU
locations to use for performance or
improvement benchmarks for these
program years.
Beginning with the FY 2019 Program,
we intend to publicly report the CLABSI
and CAUTI SIR data reported to the
Hospital IQR Program on selected nonICU locations (that is, adult or pediatric
medical ward, surgical ward, and
medical/surgical ward). We will
consider inclusion of these locations in
the Hospital VBP Program as soon as
applicable reliable baseline data are
available.
Mixed acuity units do not meet NHSN
definitions for the six select non-ICU
locations, and therefore are not required
to be reported for Hospital IQR Program
purposes, so we will not use data from
those units for the Hospital VBP
Program for any of the baseline or
performance periods. We refer readers
to the NHSN Helpdesk Mailbox (nhsn@
cdc.gov) with any specific questions
about correctly defining and mapping
patient care locations into NHSN.
Comment: One commenter supported
the continued inclusion of the existing
risk-adjusted, rate-based ICU-only
NHSN CLABSI measure in the FY 2017
Hospital VBP Program. The commenter
also urged CMS to calculate the CLABSI
measure using the ICU-only
specifications until the facility-wide
measure is available for both the
baseline and performance periods of the
Hospital VBP Program. The commenter
was unaware of how CMS will deal with
the CLABSI measure once it transitions
to a facility-wide measure and
expressed concern that CMS might
dispense with the improvement score
when the baseline and performance
periods do not match. The commenter
noted that the CDC has sufficiently
granular data to continue reporting ICUonly results to CMS despite the
collection moving to facility wide.
Response: We agree that improvement
scores are an important part of the
Hospital VBP Program. We refer readers
to our response to the previous
commenter, in which we explain our
intention to follow the commenter’s
suggestion, and provide the timelines
for transitioning from the ICU-only
measure to the broader measure of
CLABSI in ICU and select non-ICU
locations.
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50061
Comment: One commenter urged
CMS to rapidly incorporate a reliabilityadjusted Standardized Infection Ration
(SIR) calculation for the CLABSI
measure because it provides a more
robust calculation to identify differences
among hospital rates.
Response: We continue to believe that
the CLABSI measure encourages
hospitals to minimize infection events
that present significant health risks to
patients. However, in the absence of
NQF-endorsement of the reliabilityadjusted measure and any additional
MAP recommendations, and unless we
decide to adopt the reliability
adjustments in the Hospital IQR
Program, we believe we may only
consider the current version of the
CLABSI measure for adoption under the
Hospital VBP Program. If a reliabilityadjusted version of the measure
becomes available to us in the future,
we will consider adopting it.
Comment: One commenter stated that
CMS should not finalize the CLABSI
measure and should wait until the
reliability-adjusted version of the
measure is endorsed by NQF. The
commenter explained that many
hospitals are having difficulty reporting
the current measure, resulting in
deviations in accuracy that may create
profound differences in hospital
performance.
Response: We will consider adopting
the new version of the measure if it is
endorsed by NQF. However, reliability
adjustment is a methodology designed
to address hospitals with small
numerators and denominators. The
methodology is not designed to assist
hospitals in reporting CLABSI data
accurately. To assist hospitals in
accurately reporting CLABSI, CMS and
CDC have been working collaboratively
to clarify NHSN protocol specifications
and to educate hospitals on these
protocols.
Comment: One commenter was
pleased with CMS’ proposal to adopt
the CLABSI measure, stating that it
measures important safety outcomes for
consumers and purchasers.
Response: We agree and thank the
commenter.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
current CLABSI measure for the FY
2017 Hospital VBP Program.
e. Summary of Previously Adopted and
New Measures for the FY 2017 Hospital
VBP Program
The following table outlines the
measures for the FY 2017 Hospital VBP
Program, including those that we are
readopting and those measures we are
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adopting for the first time. As discussed
further below, this table also includes
the FY 2017 domains into which we are
placing the readopted measures, as well
as the domains into which we are
placing the newly adopted measures.
PREVIOUSLY ADOPTED AND NEW MEASURES FOR THE FY 2017 HOSPITAL VBP PROGRAM
Measure
Description
Domain
CAUTI * ............................
CLABSI ** .........................
C. difficile *** ....................
MRSA *** ..........................
PSI–90 * ...........................
SSI * .................................
MORT–30–AMI * ..............
Catheter-Associated Urinary Tract Infection (NQF #0138) ......................................................
Central Line-Associated Blood Stream Infection (NQF #0139) ................................................
Clostridium difficile Infection (NQF #1717) ...............................................................................
Methicillin-Resistant Staphylococcus aureus Bacteremia (NQF #1716) ..................................
Complication/patient safety for selected indicators (composite) (NQF #0531) ........................
Surgical Site Infection: (NQF #0753) ........................................................................................
• Colon
• Abdominal Hysterectomy
Acute Myocardial Infarction (AMI) 30-day mortality rate (NQF #0230) ....................................
MORT–30–HF * ................
Heart Failure (HF) 30-day mortality rate (NQF #0229) ............................................................
MORT–30–PN * ...............
Pneumonia (PN) 30-day mortality rate (NQF #0468) ...............................................................
AMI–7a * ...........................
Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival (NQF #0164) ................
IMM–2 * ............................
Influenza Immunization (NQF #1659) .......................................................................................
PC–01 *** .........................
Elective Delivery Prior to 39 Completed Weeks Gestation (NQF #0469) ................................
MSPB–1 * .........................
Medicare Spending per Beneficiary (NQF #2158) ...................................................................
HCAHPS * ........................
Hospital Consumer Assessment of Healthcare Providers and Systems Survey (NQF #0166)
Safety.
Safety.
Safety.
Safety.
Safety.
Safety.
Clinical Care—Outcomes.
Clinical Care—Outcomes.
Clinical Care—Outcomes.
Clinical Care—Process.
Clinical Care—Process.
Clinical Care—Process.
Efficiency and Cost
Reduction.
Patient and Caregiver
Centered Experience of Care/Care
Coordination.
* Measures readopted for the FY 2017 Hospital VBP Program.
** Measure adopted for the FY 2017 Hospital VBP Program that were not previously subject to automatic readoption.
*** Measures newly adopted for the FY 2017 Hospital VBP Program in this final rule.
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5. Additional Measures for the FY 2019
Hospital VBP Program
a. Hospital-Level Risk-Standardized
Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty
(THA) and Total Knee Arthroplasty
(TKA)
Hospital-level Risk-Standardized
Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty
(THA) and Total Knee Arthroplasty
(TKA) (NQF #1550) is an outcome
measure that we adopted beginning
with the FY 2015 payment
determination under the Hospital IQR
Program in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53516 through 53518).
The measure assesses complications
occurring after THA and TKA surgery
from the date of the index admission to
90 days post date of the index
admission. The outcome is one or more
of the following complications: Acute
myocardial infarction, pneumonia, or
sepsis/septicemia within 7 days of
admission; surgical site bleeding,
pulmonary embolism or death within 30
days of admission; or mechanical
complications, periprosthetic joint
infection or wound infection within 90
days of admission. We posted THA/
TKA measure data on the Hospital
Compare Web site in December 2013.
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We refer readers to the FY 2013 IPPS/
LTCH PPS final rule and to the THA/
TKA complication methodology report
(http://qualitynet.org/dcs/Blob
Server?blobkey=id&blobnocache=true
&blobwhere=1228890067881&blob
header=multipart%2Foctet-stream&blob
headername1=Content-Disposition
&blobheadervalue1=attachment%3B
filename%3DTHK_CmpMsrUpdtSpecs_
080113.pdf&blobcol=urldata&blob
table=MungoBlobs) for additional
details on the THA/TKA measure.
We continue to believe that measuring
and reporting risk-standardized
complication rates will inform health
care providers about opportunities to
improve care, strengthen incentives for
quality improvement, and promote
improvements in the quality of care
received by patients and in the
outcomes they experience. We believe
that THA/TKA is an important measure
of clinical outcomes, and, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28121 through 28122), we proposed
to adopt it for the FY 2019 Hospital VBP
Program and subsequent years. The
MAP supported the adoption of the
measure for inclusion in the Hospital
VBP Program in its MAP PreRulemaking Report: 2013
Recommendations on Measures Under
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Consideration by HHS found at https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&
ItemID=72746, noting it addresses a
high-volume elective procedure with
variation in performance. We proposed
to adopt this measure for FY 2019 now
based on the length of the measure’s
reporting period and the time necessary
to complete scoring calculations.
Because it is an outcome measure, we
proposed to place it in the Clinical
Care—Outcomes domain.
We welcomed public comments on
this proposal.
Comment: Several commenters
supported CMS’ proposal to adopt THA/
TKA for the FY 2019 Program, stating
that the measure will further drive
hospitals to boost their care quality
initiatives focused on this procedure.
Some commenters urged CMS to
consider adopting it as early as FY 2018.
Response: We believe that the time
periods necessary to collect sufficiently
reliable performance data on this
measure preclude us from adopting the
measure sooner than FY 2019.
Comment: Several commenters
opposed adoption of the THA/TKA
measure, stating that it has not met the
one-year public reporting requirement
outlined in the Hospital VBP Program
statute.
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Response: As described above with
respect to measures proposed for FY
2017, section 1886(o)(2)(C)(i) of the Act
requires that measures must have been
‘‘included on the Hospital Compare
Internet for at least 1 year prior to the
beginning of the performance period.’’
As commenters noted, we reported
these measures’ data in December 2013,
and have proposed an FY 2017
performance period for these measures
of CY 2015, which complies with the
statutory requirement in section
1886(o)(2)(C)(i) of the Act. We believe
that this measure meets the statutory
requirements for inclusion in the FY
2019 Hospital VBP Program. We also
believe that this measure represents an
important component of quality
improvement in the acute inpatient
hospital setting. However, to the extent
that there remains any question
regarding our interpretation of section
1886(o)(2)(C)(i) of the Act, we are
finalizing that the effective date of the
THA/TKA measure will be July 1, 2015,
consistent with the beginning of the
performance period for that measure.
Comment: One commenter supported
the addition of the THA/TKA quality
measure because it is MAP-approved
and will further drive hospitals to boost
their quality of care initiatives around
these high-volume procedures that
reduce pain and increase mobility for
hundreds of thousands of Medicare
beneficiaries each year. The commenter
noted that this measure is particularly
important because it captures multiple
complications and adverse events at
various post-operative time intervals
and would give hospitals a common
benchmark around which to organize
their quality improvement efforts.
Response: We agree and thank the
commenter for its support.
Comment: One commenter expressed
concern about the accuracy of the
administrative data sets that are the
basis for the THA/TKA measure, stating
that the coding data have been known
to underreport significant comorbidities
that may therefore skew quality
measurement.
Response: We believe that the
administrative claims data used for the
Hip/Knee Complication measure is
sufficiently accurate for purposes of
Hospital VBP Program inclusion. We
have validated the AMI, HF, and
pneumonia mortality measures by
building comparable models using
medical record data for risk adjustment
for heart failure patients (National Heart
Failure data), AMI patients (Cooperative
Cardiovascular Project data), and
pneumonia patients (National
Pneumonia Project dataset). When the
medical record-based models were
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applied to the corresponding patient
population, the hospital riskstandardized rates estimated using the
claims-based risk adjustment models
had a high level of agreement with the
results based on the medical record
model, thus supporting the use of the
claims-based models for public
reporting.
Regarding the commenter’s concern
about underreporting significant
comorbidities, during measure
development, we also conducted a
medical record validation study of the
THA/TKA complications measure. The
goal of that study was to determine the
overall agreement between arthroplasty
patients identified as having a
complication (or no complication) in the
claims-based measure and those who
had a complication (or no complication)
also documented in the medical record.
Overall measure agreement was 93
percent (598/644 patients) before any
changes were made to the model
specifications. After the measure
specifications were changed based upon
both the results of this validation study,
the measure agreement between claims
data and the medical record was 99
percent (635/644).
Comment: Some commenters opposed
the proposed adoption of the THA/TKA
measure, stating that CMS should verify
that the measure is properly riskadjusted across patient populations to
ensure that hospitals are not deterred
from performing these surgeries for
older, high-risk beneficiaries. One
commenter opposed the adoption of the
THA/TKA measure because it uses the
same hierarchical logical modeling
methodology that is specified for the
mortality measures included in the
Hospital VBP Program, and the
commenter continued to have concerns
about the ability of this model to
accurately distinguish between
hospitals’ performance. The commenter
suggested instead that the model should
include an adjustment for
socioeconomic status, which commenter
believes is an important predictor of
complication rates. The commenter
believes the measure is insufficient for
inclusion in payment policies, for these
reasons. Another commenter expressed
support for the proposed THA/TKA
measure, conditioned on CMS’ adoption
of a sociodemographic adjustment to the
measure.
Response: We refer readers to our
earlier discussion of risk adjustment
based on socioeconomic status with
respect to the MSPB measure in section
IV.I.4. of the preamble of this final rule,
which also is relevant for this measure.
As discussed in the previous section, we
believe that the THA/TKA measure’s
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risk adjustment methodology
appropriately considers and adjusts for
clinical factors.
After consideration of the public
comments we received, we are
finalizing the THA/TKA measure for the
FY 2019 Hospital VBP Program and
subsequent years.
b. PSI–90 Measure
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50698), we declined to
finalize the PSI–90 measure for the FY
2019 Hospital VBP Program in order to
adopt a more recent baseline period
than would have been possible at that
time. However, we did not intend to
signal that we would not adopt the PSI–
90 measure for FY 2019 and subsequent
years. We continue to believe that
adopting this Agency for Healthcare
Research and Quality (AHRQ) Patient
Safety Indicator (PSI) composite
measure provides strong incentives for
hospitals to ensure that patients are not
harmed by the medical care they
receive, which is a critical consideration
in quality improvement. In order to
clarify the measure’s status under the
Hospital VBP Program and ensure that
there is no confusion about our intent,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28122), we
proposed to readopt the PSI–90 measure
for FY 2019 Hospital VBP Program and
subsequent years.
We welcomed public comments on
this proposal.
Comment: Several commenters
supported CMS’ proposal to adopt the
PSI–90 measure for the FY 2019
Program. One commenter noted that the
measure captures important patient
safety outcomes for consumers and
purchasers.
Response: We thank the commenters
for their support.
Comment: Several commenters
suggested that CMS publish hospitals’
performance on both the full composite
measure and its individual indicators.
One commenter suggested that CMS
consider separate patient safety
indicators for the Hospital VBP Program
rather than the composite.
Response: With respect to
commenters’ suggestions that we
publish hospitals’ performance on
individual indicators, we may consider
doing so in the future. However, since
we have adopted the composite measure
for the Hospital VBP Program, we
believe it is appropriate to publish
hospitals’ performance on that measure,
rather than its components, as a
reflection of performance measured and
scored under the Program. The
composite measure is the basis for
awarding achievement and
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improvement points under the Hospital
VBP Program, not its underlying
indicators, and we believe it is
appropriate to focus the Program’s
public reporting on the measures that
receive points under the Program.
Comment: Some commenters urged
CMS to remove the PSI–90 measure
from the Hospital VBP, Hospital IQR,
and HAC Reduction Programs
immediately based on NQF’s recent
report on patient safety measures.
Several commenters noted that the
NQF’s Patient Safety Standing
Committee did not recommend the
measure for endorsement during
maintenance review.
Commenters also noted that the PSI–
90 measure is undergoing maintenance
review by the NQF. One commenter
stated that AHRQ’s proposed changes to
the measure to regain NQF’s
endorsement may be significant and
suggested that CMS consider whether it
should continue to adopt the measure
for the Hospital VBP, HAC Reduction,
and Hospital IQR Programs.
Response: We would like to clarify
the status of the PSI–90 measure with
regard to NQF endorsement. As part of
the routine NQF measure maintenance
process, the Patient Safety Committee
expressed concerns about the weighting
of the PSI–90 component measures and
requested to see additional measure
information related to re-weighting of
PSI–90 with three additional
components (PSI–9, PSI 10 and PSI–11
before deciding if it would recommend
continued endorsement of the measure.
AHRQ has submitted the requested data
for the NQF Patient Safety Committee’s
consideration.
If, during the NQF review process,
significant changes are made to the
measure, we will evaluate those
changes, including whether the measure
remains appropriate for the Hospital
VBP Program.
Comment: Several commenters stated
that the PSI–90 measure lacks robust
risk-adjustment and tends to penalize
hospitals with larger case volumes.
Several commenters argued that the
measure relies on inadequately
validated claims data. Commenters
stated that claims-based measures are
not necessarily reliable for Hospital VBP
Program purposes. Commenters argued
that the measure’s basis in
administrative claims data presents
significant limitations and that using
administrative claims data is a less
accurate method of identifying patient
severity than clinical data abstracted
from medical records.
Another commenter was opposed to
further adoption of the PSI–90 measure
for the Hospital VBP Program, stating
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that composite measures calculated
using retrospective claims data create
many problems for quality improvement
activities, as the commenter believes
claims-based data create inherent
difficulties that are not present in nonclaims data. The commenter was also
opposed to rebalancing the PSI–90
measure by adding new metrics or
shifting weighting to better measures in
the composite, and stated that nonclaims data should be considered for
future composites when feasible.
Response: Each of the PSI–90
composite component measures
includes detailed risk-adjustment for
clinical factors (for example, modified
diagnostic related groupings, major
diagnostic categories, comorbidities),
age, and gender that influence the risk
for experiencing a patient safety event
during hospitalization. AHRQ’s Quality
Indicator program continually updates
and refines the indicators to capture the
best possible quality indicators for the
measure.
We also note that there are previously
conducted validation studies examining
the relationship between billing or
claims data and medical records.
In addition, AHRQ has advised us
that the NQF-convened a group of
experts to determine what criteria
should be used for evaluating the
indicators in the PSI–90 measure. The
Technical Expert Panel provided clear
guidance on the relationship between
the individual component indicators
and the composite in the Composite
Performance Measure Evaluation
Guidance document (NQF, April 2013),
available at http://www.quality
forum.org/Publications/2013/04/
Composite_Performance_Measure_
Evaluation_Guidance.aspx. Specifically,
individual component measures that are
included in the composite performance
measure: (1) Should be justified based
on the clinical evidence; (2) do not need
to be NQF endorsed; (3) generally
should demonstrate a gap in
performance; and (4) may not be
sufficiently reliable independently, but
contribute to the reliability of the
composite performance measure.
AHRQ convened a Composite
Measure Workgroup of experts in the
field to determine the best weighting
strategy. The methodology of the PSI–90
measure is detailed in the original
technical report by the AHRQ
Composite: http://quality
indicators.ahrq.gov/Downloads/
Modules/PSI/PSI_Composite_
Development.pdf. Several alternative
approaches were discussed with the
AHRQ Composite Measure Workgroup
and the first NQF Composite Measure
Steering Committee. Factor analysis was
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considered as one approach and was
deemed to have no clear advantages
over less complex, more intuitively
clear weighting schemes. In brief,
numerator weighting that is used in
PSI–90 was preferred due to its greater
simplicity and clarity.
Comment: A few commenters strongly
opposed the duplicative use of PSI–90
in both the Hospital VBP and HAC
Reduction Programs.
Response: As discussed further above,
while we are aware that commenters
object to the possibility of scoring
hospitals on certain NHSN measures
under both the Hospital VBP and HAC
Reduction Programs, we note that these
measures cover topics of critical
importance to quality improvement in
the inpatient hospital setting, and to
patient safety.
Comment: Some commenters opposed
adoption of the PSI–90 composite
measure, stating that its component
indicators have serious flaws.
Commenters stated that, for example,
the PSI–15 indicator (accidental
puncture or laceration), does not clearly
define what constitutes an ‘‘accidental
puncture.’’ Commenters also stated that
PSI–12 (postoperative PE/DVT rate)
relies on risk adjustment criteria that
could lead to potential unintended
consequences such as tagging every LE
thrombophlebitis, whether or not they
are clinically significant. One
commenter stated that emergent cases
and patients with a prior history of PE
or DVT should also be excluded from
that measure.
Response: We continue to believe the
PSI–90 measure is an important
measure of patient safety, and therefore
warrants inclusion in the Hospital VBP
Program. PSI 15—accidental puncture
and laceration and PSI 12—
Perioperative Pulmonary Embolism or
Deep Vein Thrombosis Rate are
endorsed as valid and reliable measures
(NQF 0345, NQF 0450, respectively).
Expert panels have felt that these are
scientifically sound measures.
Comment: One commenter expressed
concern about the reliability and
reproducibility of the PSI–90 claimsbased composite measure because of
generally poor agreement between these
and NHSN-based surveillance criteria,
with the exception of surgical site
infection (SSI). The commenter
encouraged AHRQ and other
independent researchers to examine the
value, validity, reliability, and
reproducibility of PSI–90 by comparing
it to epidemiologic measures within
NHSN’s domain. The commenter
recommended that CMS study how
these measures correlate with SSI and
NHSN-based surveillance criteria.
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Response: We agree with the
commenter that studying the correlation
between PSI–90 and with SSI and
NHSN-based surveillance criteria would
provide additional insights into PSI–90
measure validity, and will consider this
in the future. We note that we are
finalizing a policy to access certain
NHSN data reported to the Hospital IQR
Program which would make it possible
to conduct this type of alignment
analysis between the PSI–90 measure
and the NHSN measures.
Comment: Commenters suggested that
CMS consider removing the PSI–12
indicator from the PSI–90 composite for
the FY 2015 Program until stakeholder
concerns with the indicator’s validity
have been resolved.
Response: We do not believe the PSI–
12 indicator should be removed from
the PSI–90 composite measure because
it is designed to improve surveillance
and awareness of post-operative deep
vein thrombosis and pulmonary
embolism. We believe that monitoring
these conditions is important to protect
patients from post-operative
complications.
Comment: A few commenters asked
CMS not to finalize several proposed
new measures for the FY 2019 Hospital
VBP Program until they are NQFendorsed, recommended by the MAP,
and hospitals have experience in
reporting and understanding the
measures.
Response: We believe that we have
complied with the Hospital VBP
Program’s statutory requirements with
respect to endorsement from NQF, MAP
recommendations, and reporting
through the Hospital IQR Program prior
to adopting these measures under the
Hospital VBP Program. Further, for the
reasons we described in the proposed
rule and in our responses to comments
on that proposed rule, we continue to
believe that the proposed measures
represent improvements to the Hospital
VBP Program’s measure set by
expanding to new clinical topics and
addressing public health concerns.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the PSI–
90 composite measure for the FY 2019
Hospital VBP Program.
6. Possible Measure Topics for Future
Program Years
a. Care Transition Measure (CTM–3)
Items for Hospital Consumer
Assessment of Healthcare Providers and
Systems (HCAHPS) Survey
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28122), we stated
that we are considering proposing to
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add the Care Transition Measure (CTM)
from the HCAHPS Survey to the Patient
and Caregiver Centered Experience of
Care/Care Coordination (PEC/CC)
domain of the FY 2018 Hospital VBP
Program. We sought public comments
on this topic.
The CTM was added to the HCAHPS
Survey of hospital inpatients in January
2013 (77 FR 53513 through 53516).
Three items were added to the HCAHPS
Survey to create the new Care
Transition Measure composite. After
collecting four quarters of data on these
items (January 2013 through December
2013), we intend to publicly report CTM
scores for the first time on our Hospital
Compare Web site in October 2014.
Once the CTM has been publicly
reported on Hospital Compare for one
year, in accordance with the statutory
requirements of the Hospital VBP
Program, we are considering proposing
to adopt CTM as the ninth dimension of
the HCAHPS survey in the PEC/CC
domain for the FY 2018 Hospital VBP
Program. We intend to propose that the
PEC/CC domain in the FY 2018 Hospital
VBP Program would have a baseline
period of January 1, 2014 through
December 31, 2014, and a performance
period of January 1, 2016 through
December 31, 2016.
Currently, the PEC/CC domain is
comprised of eight dimensions of the
HCAHPS Survey. Scoring in this
domain is based on two elements: The
HCAHPS Base Score and HCAHPS
Consistency Points Score. For additional
information on the calculation of the
PEC/CC domain score, we refer readers
to ‘‘A Step-by-Step Guide to Calculating
the Patient Experience of Care Domain
Score in the Hospital Value-Based
Purchasing FY 2013 Actual Percentage
Payment Summary Report,’’ at: http://
www.hcahpsonline.org/HospitalVBP
.aspx.
We specifically sought public
comments on how the new CTM
dimension should be included in the
scoring methodology that we have
adopted for the PEC/CC domain. In
accordance with the finalized Hospital
VBP Program scoring methodology for
other domains, we are considering the
‘‘normalization’’ approach, which
would introduce only minor changes to
the original scoring formula, as follows.
For purposes of the HCAHPS Base
Score, the new CTM dimensions would
be calculated in the same manner as the
eight existing HCAHPS dimensions. For
each of the nine dimensions,
Achievement Points (0–10 points) and
Improvement Points (0–9 points) would
be calculated, the larger of which would
be summed across the nine dimensions
to create a pre-normalized HCAHPS
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Base Score (0–90 points, as compared to
0–80 points when only eight
dimensions were included). The prenormalized HCAHPS Base Score would
then be multiplied by 8/9 (0.88888) and
rounded according to standard rules
(values of 0.5 and higher are rounded
up, values below 0.5 are rounded down)
to create the normalized HCAHPS Base
Score. Each of the nine dimensions
would be of equal weight, so that, as
before, the normalized HCAHPS Base
Score would range from 0 to 80 points.
HCAHPS Consistency Points would
then be calculated in the same manner
as before and would continue to range
from 0 to 20 points. The Consistency
Points Score would now consider scores
across all nine of the PEC/CC domain
dimensions, whereas before it
considered only the eight dimensions
that preceded the CTM measure.
The final element of the scoring
formula would be the sum of the
HCAHPS Base Score and the HCAHPS
Consistency Points Score and would
range from 0 to 100 points, as before.
We welcomed public comments on
this approach to including the CTM–3
dimensions in the PEC/CC domain
score.
Comment: Many commenters
supported incorporating the HCAHPS
Care Transition Measure (CTM–3) into
the PEC/CC domain, given the critical
importance of the care transition for
improving patient outcomes and
reducing patient suffering. Other
commenters strongly supported the
addition and urged CMS to finalize it.
Commenters also supported the
proposed methodology for scoring and
weighting the measure within the
domain.
One commenter noted that the
measure develops a ninth dimension of
the HCAHPS Survey in the PEC/CC
domain for FY 2018. The commenter
stated that this measure is a significant
first step in addressing shared
accountability and quality of care
during transitions of care periods and
discharges from the health-system
setting. The commenter further agreed
that the normalization approach should
be used for this care transition measure
and calculation of total performance
score.
One commenter commended CMS for
considering adopting the CTM–3 items
on the HCAHPS Survey, stating that
effective management of care transitions
is essential to ensuring proper patient
recoveries while reducing readmissions
and ensuring medication adherence.
Another commenter supported our plan
to include the CTM–3 items on the
HCAHPS survey in the Hospital VBP
Program in future years, noting that
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providing incentivizes for hospitals to
coordinate patient transitions will aid
significantly in decreasing readmissions
and potentially mortality among
Medicare patients. Other commenters
supported adoption of the CTM–3 items
on the HCAHPS Survey under the
Hospital IQR Program and offered to
evaluate their inclusion under the
Hospital VBP Program once the items
have been publicly reported. Other
commenters noted that their support
because managing safe and effective
transitions of care is a critical
competency in the health care system.
Response: We appreciate the
comments in support of adding the Care
Transition Measure to the Hospital VBP
Program and the proposed methodology
and weighting of this dimension in the
PEC/CC domain.
Comment: Several commenters did
not support the addition of the threequestion care transition measure as a
ninth dimension to the HCAHPS
Hospital VBP Program scoring before
evidence supporting its validity and
materiality to the Hospital VBP Program
was released. One commenter suggested
that CMS exclude HCAHPS scores from
the program or adjust provider scores to
account for demographic factors that
have been shown to impact survey
results. One commenter requested
additional analysis of the measure
results after its first year of
implementation.
Response: Should we decide to
formally propose the addition of the
HCAHPS Care Transition Measure to the
Patient Experience of Care domain of
the Hospital VBP Program through the
rulemaking process, we will release
additional information about the
validity, reliability and statistical
properties of the CTM.
In order to achieve the goal of fair
comparisons across all hospitals that
participate in HCAHPS, it is necessary
to adjust for factors that are not directly
related to hospital performance but do
affect how patients answer HCAHPS
survey items. The HCAHPS patient-mix
adjustment is intended to eliminate any
advantage or disadvantage in scores that
might result from patient characteristics
beyond a hospital’s control. We do not
collect or adjust for patients’
socioeconomic status, however the
HCAHPS patient-mix adjustment does
include patients’ highest level of
education, which can be related to
socioeconomic status. (HCAHPS OnLine Web site, Mode and Patient-mix
Adjustment: http://www.hcahp
sonline.org/modeadjustment.aspx.)
Comment: One commenter pointed to
an analysis by the Cleveland Clinic that
that shows that as patients’ severity of
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illness worsens, HCAHPS scores decline
in a statistically significant manner.
Further, the commenter notes that the
same relationship was observed when
the researchers examined the
relationship between patients’
symptoms of depression and responses
to HCAHPS—as symptoms of
depression worsened, HCAHPS scores
declined. The commenter believed this
trend also may affect scores for other
surveys in the CAHPS family. The
commenter encouraged CMS to conduct
an analysis that assesses the extent of
the issue, and identifies potential
mechanisms for enhancing how CAHPS
scores are adjusted for patient factors.
Response: Since its national
implementation in 2006, the HCAHPS
Survey has included an item that asks
for patients’ assessment of their overall
health. We use this information in a
transparent manner in the standard
patient-mix adjustment of HCAHPS
scores, as explained on the official
HCAHPS On-Line Web site,
www.HCAHPSonline.org, in our
research documents, in the patient-mix
adjustment coefficients that are posted
on this Web site, and in published
research.
Responding to comments about
HCAHPS in previous IPPS/LTCH PPS
rulemaking, we added an item to the
HCAHPS Survey in January 2013 that
asks patients to assess their overall
mental or emotional health. We have
analyzed the impact of this item and
found that its inclusion in patient-mix
adjustment does not explain more or
improve the model in which the ‘overall
health’ item also appears. Therefore we
include only the ‘overall health’ item in
the HCAHPS patient-mix adjustment, as
this adequately adjusts for patient
severity.
With respect to a Cleveland Clinic
analysis that is said to show a greater
than expected impact of severity of
illness on HCAHPS scores, we
understand that this analysis does not
examine associations between patient
characteristics and HCAHPS scores after
the standard HCAHPS patient-mix
adjustment has been applied. The
standard HCAHPS patient-mix
adjustment would be expected to
remove most or all of the association
mentioned. We also understand that the
Cleveland Clinic analysis is not based
on national data. In addition, recent
research found that using patients’
clinical characteristics in adjustment
models had relatively little impact
relative to survey questions about
patients’ health and that adding such
measures to the existing HCAHPS case-
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mix adjustment model would have very
little effect.53
Comment: One commenter urged
CMS to expedite the initiative to
include additional patient-centered
palliative care measures into the
Hospital VBP Program because the
HCAHPS Survey is currently the only
measure of patient experience, which
misses all who die in the hospital or
who are too ill to fill out the survey. The
commenter noted that these individuals
are most vulnerable due to the severity
of their illness and deserve to have their
and their families’ experiences
measured.
Response: The survey methodology
and question wording at this point
cannot accommodate proxy
respondents, so HCAHPS cannot
measure the experience of care of those
who died in the hospital. However, as
about 6.6 percent of hospice patients in
2012 died in a hospital setting,54 the
new Hospice Experience of Care Survey,
which is specifically designed for proxy
respondents, will be able to capture
some information about the experience
in the hospital setting.
b. Possible Future Efficiency and Cost
Reduction Domain Measure Topics
In the interest of expanding the
Efficiency and Cost Reduction domain
to include a more robust measure set,
including measures that supplement the
MSPB measure with more condition
and/or treatment specific episodes, as
well as facilitating alignment with the
Physician VM Program, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28122 through 28224), we stated that we
are considering proposing to add new
episode-based payment measures to the
Hospital VBP Program through future
rulemaking. Expanding the Efficiency
and Cost Reduction domain to include
such measures would create incentives
for coordination between hospitals and
physicians to optimize the care they
provide to Medicare beneficiaries and
would increase alignment between the
Hospital VBP and Physician VM
Programs. Any future Hospital VBP
Program measures would first be
finalized for inclusion in the Hospital
IQR Program and included on the
Hospital Compare Web site for one year,
as required by section 1886(o)(2)(C) of
the Act.
As we discussed in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28123),
the six episode-based standardized
53 Cleary,
et al. Medical Care. 52: 619–625. 2014.
Facts and Figures: Hospice Care in
America, 2013 Edition. National Hospice and
Palliative Care Organization. Available at http://
www.nhpco.org/sites/default/files/public/Statistics_
Research/2013_Facts_Figures.pdf.
54 NHPCO’s
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payment measures we are considering
are similar in many ways to the NQFendorsed MSPB measure already
included in the Efficiency domain and,
like the MSPB measure, Medicare
payments included in these episodebased measures would be standardized
according to the CMS standardization
methodology finalized for the MSPB
measure in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51626). In the FY 2013
IPPS/LTCH PPS proposed rule (79 FR
28123 through 28124), we also
discussed notable differences between
these new measures under
consideration and the MSPB measure.
Most notably, we would only include
Medicare payments for services that are
clinically related to the health
conditions treated during the hospital
stay that triggered the episode. We
stated that the aim of including these
episode-based payment measures in the
Hospital VBP Program would be to
differentiate between hospitals that
provide care efficiently (that is, high
quality care at a lower cost to Medicare).
We stated our belief that risk-adjusted
standardized Medicare payments are an
appropriate indicator of efficiency as
they allow us to compare hospitals
without regard to such factors as
geography and teaching status. This
comparison is particularly important
with clinically coherent episodes
because it distinguishes the degree to
which practice pattern variation
influences the cost of care. We believe
that creating incentives for
appropriately reducing practice pattern
variation is an important part of our
aims to lower the cost of care
appropriately and create better
coordinated care for Medicare
beneficiaries.
We noted another difference between
the episode-based measures we are
considering and the MSPB measure,
which occurs when, during the 30 days
following discharge from an index
admission, a beneficiary is readmitted
for a condition that is clinically related
to the index admission and that also
triggers an episode-based cost measure
episode. We provided details of which
admissions would begin a new episode
and contribute to a preceding episode
may be found at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/hospital-valuebased-purchasing/index.html?redirect=/
hospital-value-based-purchasing.
We stated that we are considering
three medical and three surgical
episodes for the potential inclusion in
the initial expansion of the Efficiency
domain. The medical episodes would
address the following conditions: (1)
Kidney/urinary tract infection; (2)
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cellulitis; and (3) gastrointestinal
hemorrhage. A medical episode would
be ‘triggered’ by an inpatient claim with
a specified MS–DRG. The surgical
episodes currently under consideration
are (1) hip replacement/revision; (2)
knee replacement/revision; and (3)
lumbar spine fusion/refusion. A surgical
episode would be triggered when an
inpatient claim has one of the specified
MS–DRGs and at least one of the
procedure codes specified for that
episode. We welcomed public comment
on the three medical and three surgical
conditions that we are considering as
new episode-based measures for initial
expansion of the Efficiency domain.
Comment: A few commenters
expressed support for one or more
specific episodes, and some commenters
suggested that CMS also consider
adding additional measures to the
domain in the future. One commenter
supported the proposal to adopt a hip/
knee replacement/revision measure in
the future efficiency domain, as the
episode would encourage care
coordination. Some of those
commenters who supported one or more
of these episodes also expressed
concerns.
Many commenters did not support
inclusion of the episode-based
standardized measures into the Hospital
VBP Program. One commenter stated
that the DRG triggers for urinary tract
infection and cellulitis are often
unrelated to an index inpatient
admission. A few commenters also
requested additional information on the
measures CMS is considering.
Response: We appreciate the
commenter’s support of the hip and
knee replacement/revision conditionspecific measures.
Regarding the comment on the
kidney/urinary tract infection and
cellulitis episodes, we would like to
clarify that these episode are only
triggered by the presence of a specific
MS–DRG on an inpatient claim. Thus,
the episodes can only be initiated when
the kidney/urinary tract infection or
cellulitis is the primary reason for
inpatient hospitalization.
With regard to the request for
additional information, we note that we
provided detailed measure
specifications at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/hospital-valuebased-purchasing/index.html?redirect=/
hospital-value-based-purchasing, and
we reiterate that would implement any
future measures for the Hospital VBP
Program by first proposing and
finalizing them for inclusion in the
Hospital IQR Program, through notice
and comment rulemaking.
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We thank the commenters for the
responses and we will consider them as
we develop future measures for the
Hospital VBP Program.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28122 through
28123), we noted that there are a
number of other types of episodes that
could also meet the episode selection
criteria we describe below, including
those related to heart and lung (for
example, heart failure and pneumonia).
We stated that we are exploring data
related to episodes for these types of
conditions under the Physician VM
Program. We welcomed comment
regarding the applicability of episodebased measures for these or other
conditions for future expansion of the
Efficiency domain.
Comment: One commenter applauded
CMS’ consideration of conditionspecific episode-based cost measures,
and suggested that CMS consider
focusing on additional high-impact
conditions such as heart failure, stroke,
and diabetes. The commenter also
suggested that CMS attempt to identify
geographic areas and hospitals where
volume may be unduly high. Another
commenter stated that, in FY 2017, CMS
will be reporting Cost per Episode for
pneumonia and heart failure through
the Hospital IQR Program and was
unclear why CMS is using different
medical episodes here. Another
commenter recommended that CMS
consider the development and inclusion
of additional measures outside of
therapeutic areas already represented in
the Hospital VBP Program, including
measuring relating to diabetes, atrial
fibrillation, COPD, and oncology.
Several commenters who supported the
measures encouraged CMS to develop
additional episodes although these
commenters did not identify specific
episode names.
Response: We thank the commenters
for the support of the six measures and
the suggestions for additional high
impact conditions and will consider
their suggestions in the future.
Regarding the comment that pneumonia
and heart failure episodes were in the
Hospital IQR Program but not among the
six measures among the proposed
conditions for potential inclusion in the
Efficiency domain, the 6 measures were
selected for common conditions with
the five criteria discussed below. Other
measures such as pneumonia and heart
failure could be considered among the
medical episodes for potential inclusion
in the future. As stated earlier, we
would first propose any future Hospital
VBP Program measures for the Hospital
IQR Program, through notice and
comment rulemaking.
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We thank the commenters for the
responses and we will consider them as
we develop future measures for the
Hospital VBP Program.
In selecting the six conditions around
which we would develop episode
measures for future expansion of the
Efficiency domain, we considered the
following five criteria: (1) The condition
constitutes a significant share of
Medicare payments for hospitalized
patients during and surrounding the
hospital stay; (2) the degree to which
clinical experts consulted for this
project agree that standardized Medicare
payments for services provided during
the episode can be linked to the care
provided during the hospitalization; (3)
episodes of care for the condition are
comprised of a substantial proportion of
payments for post-acute care, indicating
episode payment differences are driven
by utilization outside of the MS–DRG
payment; (4) episodes of care for the
condition reflect high variation in postdischarge payments, enabling
differentiation between hospitals; and,
(5) the medical condition is managed by
general medicine physicians or
hospitalists and the surgical conditions
are managed by surgical subspecialists,
enabling comparison between similar
practitioner types within each episode
measure.
For analysis purposes, the five
selection criteria were applied to 2012
Medicare acute inpatient hospital data
in a hierarchical manner, to prioritize
the inpatient conditions. After the
selection criteria were applied, we
narrowed the medical and surgical
episodes to those episodes that are less
complex, in order to allow CMS and
hospitals to gain experience with this
new measure type. Full details of the
episode selection criteria are available
on the CMS Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/hospital-value-basedpurchasing/index.html?redirect=/
hospital-value-based-purchasing. We
welcomed public comments on the
episode selection criteria we utilized.
Comment: Some commenters
expressed support for the criteria. One
commenter asked who is responsible for
defining the episodes of care for cost
management purposes.
Response: We thank the commenters
for the support of the criteria. We have
worked closely with clinicians and
contractors experienced in health
services research to develop the episode
measure selection criteria and to define
the episodes of care cost measures.
We thank the commenters for the
responses and we will consider them as
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we develop future measures for the
Hospital VBP Program.
Complete episode specifications,
including the MS–DRG and ICD–9–CM
procedure codes used to identify each of
the episodes, details of episode
construction methodology, and
information on the clinical expert
reviewers for this project are available
on the CMS Web site at: http://www.
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
hospital-value-based-purchasing/index.
html?redirect=/hospital-value-basedpurchasing. We welcomed public
comments on these specifications and
the construction of the six episodebased payment measures that we are
considering.
Comment: A number of commenter
expressed concern regarding the lack of
assessment of quality within the 6 cost
measures or association with existing
quality measures, both among those
who supported the measures and those
who did not. One commenter did not
support the addition of six episodebased payment measures to the
Efficiency domain in addition to the
MSPB measure until a sufficient number
of appropriate clinical outcome or
clinical process measures related to
these therapeutic areas are included in
the program and have demonstrated
high provider performance, and noted
that the inclusion of cost measures
without relevant quality measures could
have the unintended consequence of
sacrificing quality of care for the sake of
cost reduction.
Response: As we take incremental
steps towards providing all stakeholders
with comprehensive metrics, we have
selected condition-specific cost
measures for common conditions with
evidence of large variation in payments
to encourage higher value care where
there is the most opportunity for
improvement, the greatest number of
patients to benefit from improvements,
and the largest sample size to ensure
reliability. Regarding the comment that
the measures under consideration do
not account for quality, we continue to
believe that it is beneficial to view a cost
measure in light of other quality
measures. As we stated in the FY 2012
IPPS/LTCH PPS final rule, for purposes
of the Hospital VBP Program, we would
weight and combine the Efficiency and
Cost Control domain with the other
domain scores, in order to calculate
each hospital’s TPS. This ensures that
any future spending measures would
make up only a portion of the TPS and
that the remainder would be based on
hospitals’ performance on the other
quality measures (76 FR 51622). We
continue to believe that distant
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measures of cost, independent of
quality, enable us to identify hospitals
involved in the provision of high quality
care at a lower cost to Medicare (77 FR
53586).
Comment: Several commenters
expressed concern about the potentially
small number of episodes, which leads
to more random variation. These
commenters expressed concern about
the reliability of the proposed
condition-specific cost measures. One
commenter noted that there would be
fewer observations for each condition
than there would be for an all-condition
measure, such as the MSPB measure,
and expressed concern that this would
result in more random variation without
providing clear additional information
about the average costliness of the
hospitals’ care. To ensure reliability, the
commenter expressed the belief that it is
important that the cost measures used
should be as broadly based as possible.
Another commenter expressed concern
that CMS may not be able to reliably
and validly calculate Hospital VBP
improvement scores and recommended
that CMS focus on achievement scores.
This commenter suggested that
condition-specific cost measures will
split efficiency data into small pools of
information that are more prone to
random variation and inconclusive
results.
Response: As we take incremental
steps towards providing all stakeholders
with comprehensive metrics, we have
selected for potential future inclusion in
the Efficiency domain conditionspecific cost measures for common
conditions with evidence of large
variation in payments to encourage
higher value care where there is the
most opportunity for improvement, the
greatest number of patients to benefit
from improvements, and the largest
sample size to ensure reliability. To
further ensure reliability, inclusion of
the condition-specific cost measures for
individual hospitals would require a
minimum number of cases, which
would be based on statistical tests of
reliability and would be proposed
through future rulemaking.
We also note that commenters have
previously suggested that we narrow the
MSPB measure to condition-specific
measures, and we responded in the FY
2012 IPPS/LTCH PPS final rule that we
would consider adding conditionspecific measures to the Efficiency
domain through future rulemaking (76
FR 51623). As we stated in the FY 2015
IPPS/LTCH PPS proposed rule, we
believe that these condition-specific,
cost and-outcome-measure groupings
would allow patients and payers to
make more fully informed comparisons
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of hospitals’ performance. Including
condition-specific cost measures would
also provide hospitals with actionable
feedback that would better assist them
in targeting resources for improvements
than would an overall cost-measure
alone.
Comment: A number of commenters
expressed their concern that the episode
measures, like the MSPB measure,
include the cost of services that they
perceived to be beyond hospitals’
control, including post-acute care and
readmissions. Commenters also
expressed their concern that including
post-acute care may skew measure
results, due to including greater effects
of patient comorbidities. Some
commenters suggested that the measures
would be more appropriate for inclusion
in the Shared Savings Program or after
they are implemented in the Physician
Value Modifier (VM). Some commenters
also suggested that the measures
account for site of service choices made
by beneficiaries.
Response: We disagree that Medicare
payments for post-discharge services are
beyond the influence of hospitals, and
we believe that including post-acute
care services in the episodes of care is
important because it ensure that these
high-cost services, often with alternative
post-acute options with large variations
in cost, are included in the overall
condition-specific episode costs. Patient
comorbidities that contribute to higher
post-acute care costs are included in the
risk adjustment models to address the
concerns raised.
We agree that it is important to align
incentives across CMS payment
incentive programs. While these
measures have not been proposed for
inclusion in the Shared Savings
Program or the VBM at present, they
have been included in the Supplemental
Quality and Resource Use Reports
distributed to groups of 100 or more EPs
in the summer of 2014 and we intend
to continue to include them in these
reports, as they are disseminated to
more groups of EPs, including solo
practitioners, in the future. We would
also consider proposing them for
inclusion in the VM and MSSP
programs through future rulemaking.
As we stated in the stated in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51625), we do not believe that site of
service adjustments are appropriate for
spending measures, because such
adjustments would undermine the
ability of the measures to meaningfully
capture differences in Medicare
spending. However, we would consider
the potential inclusion of site of service
choice as we further examine the
measure.
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Comment: Some commenters
suggested that CMS explore the
Bundling Payments for Care
Improvement (BPCI) initiative before
these six potential measures are
implemented. These commenters
expressed concern that the measure
specifications and episode construction
rules were not aligned with the Bundled
Payments for Care Improvement
initiative, resulting in confusion among
hospitals, and suggested that CMS
consider this initiative before further
pursuing these six episodes.
Response: We considered the BPCI
methodology when we developed the
episode based payment measures we
discuss in this rule. We believe the
episodes included in the Hospital VBP
Program should be more specific in
their inclusion of clinically-related
costs, because these measures would be
publicly reported and used to evaluate
hospitals and adjust their payments,
based on performance for specific
conditions.
The BPCI approach (model 2)
includes the inpatient hospital stay for
the anchor MS–DRG and all related care
covered under Medicare Part A and Part
B within 30, 60, or 90 days following
discharge from the acute care hospital.
Unrelated services are not included in
the BPCI episode. These excluded
services can be found at http://
innovation.cms.gov/Files/x/BPCI2-4_
PartA-B_Exclusion.pdf. In contrast, the
6 condition-based episodes discussed in
the proposed rule include all costs from
the index admission and only clinicallyrelated costs from Part A and B services
occurring immediately before and after
the index admission. Service costs may
only be included in the condition-based
episodes if they meet certain cost
thresholds and are billed with select
procedures, services, and/or diagnoses.
In other words, the BPCI approach is
designed to pay for an episode of care,
which includes all relevant services for
a set period of time. The six conditionbased episodes proposed for potential
future consideration are designed to
support more targeted assessments of
hospital performance by using the cost
of major, clinically-related services in
the post-discharge period as an
indicator of a hospital’s success in
delivering clinically-relevant, high
quality, and appropriate services during
the index hospital admission.
Comment: Many commenters stated
that the 6 condition-based episode
measures under consideration did not
risk adjust for sociodemographic factors
and encouraged CMS to review its risk
adjustment models. One commenter
noted that lack of proper riskadjustment for sociodemographic status
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50069
could result in unintended negative
consequences. Some commenters
discussed the recent NQF draft report
on the subject that suggested that
measures take these factors into
account.
Response: We refer readers to our
earlier discussion of risk adjustment
based on socioeconomic status with
respect to the MSPB measure which also
is relevant for these measures.
Comment: Many commenters stated
that inclusion of the 6 measures would
mean double counting the services that
are already included in the MSPB
measure, which is the only measure in
the Efficiency domain. Some
commenters suggested that if these
measures are adopted for inclusion in
the Efficiency domain, then they should
replace, rather than supplement the
MSPB.
Response: We disagree that inclusion
of additional condition-specific
measures in the Efficiency and Cost
Control domain would inappropriately
double count payments for episodes
attributed to hospitals. Unlike the MSPB
measure, the condition-specific cost
measures only include costs from
services/procedures related to the
condition. These condition-specific,
cost-and-outcome-measure groupings
would allow patients and payers to
make more fully informed comparisons
of hospitals’ performance.
Including condition-specific cost
measures would also provide hospitals
with actionable feedback that will better
equip them to implement targeted
improvements than an overall costmeasure alone. Relying on conditionspecific measures alone would disregard
differences in overall cost. The MSPB–
1 measure is reported as a ratio of
payment-standardized, risk-adjusted
MSPB amount for each hospital divided
by the weighted median MSPB amount
across all hospitals. These six clinical
episode measures, if adopted in the
future, are intended to supplement the
information provided by the MSPB. We
note that, as mentioned above,
commenters have previously suggested
that we narrow the MSPB measure to
condition-specific measures, and we
responded in the FY 2012 IPPS/LTCH
PPS final rule that we would consider
adding condition-specific measures to
the Efficiency domain through future
rulemaking (76 FR 51623).
Comment: Several commenters noted
that CMS should follow the MAP
process and propose to include these
measures in the Hospital IQR Program
first, prior to inclusion in the Hospital
VBP Program.
Response: Any future Hospital VBP
Program measures would first be
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finalized for inclusion in the Hospital
IQR Program and included on the
Hospital Compare Web site for one year,
as required by section 1886(o)(2)(C)(i) of
the Act.
Comment: Several commenters,
including those who supported the
measure, requested additional
information on the six measures. One
commenter expressed concern about the
proposed cost measures and
recommended that the public have
additional opportunity to review and
comment on this proposal before CMS
moves ahead on a hip/knee surgical
episode under the Hospital VBP
Program.
Response: The six episode cost
measures have been designed
specifically for the Medicare program
using transparent methodology that is
described in materials that are publicly
available on the CMS hospital valuebased purchasing Web site: http://www.
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
hospital-value-based-purchasing/
index.html. There will be additional
opportunity to review and comment on
this proposal before we would move
ahead on any of the six episodes under
consideration.
Comment: One commenter stated that
readmissions for a condition clinically
related to the index admission should
not start a new index admission because
it would be holding hospitals
accountable twice for the care provided.
Response: The methodology of the
condition-specific cost measures assigns
separate significance to a readmission
that is grouped to a related previous
hospitalization and a second triggered
episode for the same condition. These
admissions would not necessarily be
attributed to the same hospitals, and
assigning one as a readmission to the
previous hospitalization and also
allowing it to begin a second episode
provides an opportunity for both
managing hospitals to be evaluated.
We will consider the suggestion that
readmissions not trigger new episodes,
but we believe that it may be
appropriate to begin a new episode in
these cases, because Medicare payments
made for the care provided during these
subsequent hospitalizations represents a
significant cost that would otherwise
not be captured. We also note that the
measures could be calculated similarly
to the MSPB measure, where the total
cost per episode could be divided by the
number of episodes, so that the amount
would represent an average of the
episode costs for multiple admissions.
Comment: One commenter suggested
that CMS focus on the development of
a multi-dimensional patient-reported
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composite measure of maternity care in
the near-term, which could be collected
six weeks after birth to measure
outcomes and identify common newonset morbidities during a post-partum
visit. Another commenter recommended
the adaption of the generic Consumer
Assessment of Healthcare Providers and
Systems (CAHPS) survey to measure the
experience of care of childbearing
women and newborns.
Response: Patients admitted for
maternity care are eligible for the
HCAHPS Survey and comprise a
significant portion of patients who
report their experience of care. We are
considering whether to extend the
HCAHPS Survey to encompass the
pediatric population; currently the
HCAHPS Survey is oriented toward
patients 18 years of age and older.
We thank the commenters for the
responses and we will consider them as
we develop future measures for the
Hospital VBP Program.
7. Previously Adopted and Newly
Finalized Performance Periods and
Baseline Periods for the FY 2017
Hospital VBP Program
a. Background
Section 1886(o)(4) of the Act requires
the Secretary to establish a performance
period for the Hospital VBP Program for
a fiscal year that begins and ends prior
to the beginning of such fiscal year. We
refer readers to the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50689 through
50692) and the CY 2014 OPPS/ASC
final rule with comment period (78 FR
75020 through 75021) for the
performance periods and baseline
periods for the Clinical Care—Process,
Patient Experience of Care, Clinical
Care—Outcomes, and Efficiency and
Cost Reduction domains for the FY 2016
Hospital VBP Program.
As discussed further below, in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50702 through 50704), we adopted new
NQS-based quality domains for FY
2017, and in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28124
through 28125), we proposed to adopt
performance and baseline periods using
those new domains for the FY 2017
Hospital VBP Program.
b. Previously Adopted Baseline and
Performance Periods for the FY 2017
Hospital VBP Program
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50692 through 50694 and
50698 through 50699), because of the
time needed to process measure data for
the three 30-day mortality measures
(Clinical Care—Outcomes domain) and
the PSI–90 measure (also referred to in
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previous rulemaking as the AHRQ
patient safety PSI–90 composite
measure) (Safety domain), and in
consideration of our policy goal to
collect enough data to generate the most
reliable scores possible, we adopted
performance periods and performance
standards for the 30-day mortality
measures for FY 2017, FY 2018, and FY
2019, and for the PSI–90 measure for FY
2017 and FY 2018.
c. Clinical Care—Process Domain
Performance Period and Baseline Period
for the FY 2017 Hospital VBP Program
In the FY 2014 IPPS/LTCH PPS final
rule, we adopted a 12-month
performance period for the FY 2016
Clinical Care—Process domain
measures of CY 2014 (January 1, 2014
through December 31, 2014). We also
adopted a corresponding 12-month
baseline period of CY 2012 (January 1,
2012, through December 31, 2012), for
purposes of calculating improvement
points and performance standards.
Based on our review of FY 2013 and
FY 2014 Hospital VBP performance
period denominator data, we continue
to believe that a 12-month performance
period provides us with reliable and
sufficient data for scoring Clinical
Care—Process domain measures under
the Hospital VBP Program. These data
are available for public review on our
Hospital Compare Web site. Therefore,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28124), we
proposed to adopt a 12-month
performance period for FY 2017 Clinical
Care—Process domain measures
(including the proposed PC–01
measure) of CY 2015 (January 1, 2015,
through December 31, 2015). We also
proposed to adopt a corresponding 12month baseline period of CY 2013
(January 1, 2013, through December 31,
2013) for purposes of calculating
improvement points and calculating
performance standards.
We invited public comment on these
proposals.
Comment: Many commenters
supported CMS’ proposed baseline and
performance periods for FY 2017
measures in the Safety, Clinical Care—
Process, and Efficiency and Cost
Reduction domains.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing the FY 2017 Clinical Care—
Process performance and baseline
periods as proposed.
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d. PEC/CC Domain Performance Period
and Baseline Period for the FY 2017
Hospital VBP Program
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50689), we adopted a 12month performance period for FY 2016
Patient Experience of Care domain
measures of CY 2014, or January 1, 2014
through December 31, 2014, for the FY
2016 Hospital VBP Program. We also
adopted a corresponding 12-month
baseline period of CY 2012 (January 1,
2012 through December 31, 2012), for
purposes of calculating improvement
points and calculating performance
standards. We continue to believe that
a 12-month performance period
provides us sufficient HCAHPS data on
which to score hospital performance,
which is an important goal both for
CMS and for stakeholders.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28124), we
proposed to adopt a 12-month
performance period for the FY 2017
PEC/CC domain of CY 2015 (January 1,
2015 through December 31, 2015). We
also proposed to adopt a corresponding
12-month baseline period of CY 2013
(January 1, 2013 through December 31,
2013) for purposes of calculating
improvement points and calculating
performance standards.
We invited public comment on these
proposals. However, we did not receive
specific comments on the PEC/CC
domain’s performance period for FY
2017. Accordingly, we are finalizing the
FY 2017 performance and baseline
periods for the PEC/CC domain as
proposed.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
e. Performance Period and Baseline
Period for NHSN Measures in the Safety
Domain for the FY 2017 Hospital VBP
Program
In the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75121), for
the three NHSN HAI measures that we
have adopted for the FY 2016 Hospital
VBP Program (Catheter-Associated
Urinary Tract Infection (CAUTI),
CLABSI, and Surgical Site Infection
(SSI)), we adopted an FY 2016
performance period of CY 2014 (January
1, 2014 through December 31, 2014),
with a corresponding baseline period of
CY 2012 (January 1, 2012 through
December 31, 2012) for purposes of
calculating improvement points and
calculating performance standards.
We continue to believe that a 12month performance period provides us
with sufficient data on which to score
hospital performance on NHSN
measures in the Safety domain. We also
noted that 12-month performance and
baseline periods are consistent with the
reporting periods used for these
measures under the Hospital IQR
Program (78 FR 50689). Therefore, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28124) for the FY 2017
NHSN measures in the Safety domain
(including the proposed CLABSI, C.
difficile Infection and MRSA Bacteremia
measures), we proposed to adopt a
performance period of CY 2015 (January
1, 2015 through December 31, 2015),
and a corresponding baseline period of
CY 2013 (January 1, 2013 through
December 31, 2013) for purposes of
calculating improvement points and
calculating performance standards.
We invited public comment on these
proposals.
Comment: One commenter supported
the performance and baseline periods
for the FY 2017 NHSN measures in the
Safety domain but recommended
collaboration with NHSN on limitations
of SIR analysis, especially for smaller
size facilities or those with lower
volumes of use of devices such as
central lines, urinary catheters, and
surgical procedures. The commenter
also expressed concern that an SIR may
not calculate even for a 12-month block
of time for some hospitals.
Response: We intend to continue
working with CDC to ensure that
reliable SIRs are calculated for
participating hospitals.
After consideration of the public
comment we received, we are finalizing
the FY 2017 performance period and
baseline periods for the NHSN measures
in the Safety domain as proposed.
f. Efficiency and Cost Reduction Domain
Performance Period and Baseline Period
for the FY 2017 Hospital VBP Program
In the FY 2014 IPPS/LTCH PPS final
rule, we adopted a 12-month
50071
performance period for the MSPB
measure for the FY 2016 Hospital VBP
Program of CY 2014 (January 1, 2014,
through December 31, 2014), with a
corresponding baseline period of CY
2012 (January 1, 2012, through
December 31, 2012). This performance
and baseline period enable us to collect
sufficient measure data, while allowing
time to calculate and incorporate MSPB
measure data into the Hospital VBP
Program scores in a timely manner.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28124 through
28125), we proposed to adopt a 12month performance period for the FY
2017 Efficiency and Cost Reduction
domain of CY 2015 (January 1, 2015
through December 31, 2015), with a
corresponding baseline period of CY
2013 (January 1, 2013 through December
31, 2013). We noted that this proposed
performance and baseline period aligns
with the performance and baseline
periods for Clinical Care—Process, PEC/
CC, and certain Safety measures under
the new domain structure.
We invited public comments on these
proposals.
Comment: Commenters supported
CMS’ proposed baseline and
performance periods for FY 2017
measures in the Safety, Clinical Care—
Process, and Efficiency and Cost
Reduction domains.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing the FY 2017 performance and
baseline periods for the Efficiency and
Cost Reduction domain as proposed.
g. Summary of Previously Adopted and
Newly Finalized Performance Periods
and Baseline Periods for the FY 2017
Hospital VBP Program
The table below summarizes the
newly finalized baseline and
performance periods for the FY 2017
Hospital VBP Program (with previously
adopted baseline and performance
periods for the mortality and AHRQ PSI
composite (PSI–90) measures noted).
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE AND BASELINE PERIODS FOR THE FY 2017 HOSPITAL VBP
PROGRAM
Domain
Baseline period
Safety:
• PSI–90* ....................................................
• NHSN (CAUTI, CLABSI, SSI, C. difficile
Infection, MRSA Bacteremia).
Clinical Care—Outcomes:
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Performance period
• October 1, 2010–June 30, 2012* .................
• January 1, 2013–December 31, 2013 .........
......................................................................
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• October 1, 2013–June 30, 2015.*
• January 1, 2015–December 31, 2015.
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PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE AND BASELINE PERIODS FOR THE FY 2017 HOSPITAL VBP
PROGRAM—Continued
Domain
Baseline period
Performance period
• Mortality* (MORT–30–AMI, MORT–30–
HF, MORT–30–PN).
Clinical Care—Process
• (AMI–7a, IMM–2, PC–01) ........................
Efficiency and Cost Reduction (MSPB–1) .........
Patient and Caregiver-Centered Experience of
Care/Care Coordination (HCAHPS).
• October 1, 2010–June 30, 2012* .................
• October 1, 2013–June 30, 2015.*
January 1, 2013–December 31, 2013 .............
January 1, 2013–December 31, 2013 .............
January 1, 2013–December 31, 2013 .............
January 1, 2015–December 31, 2015.
January 1, 2015–December 31, 2015.
January 1, 2015–December 31, 2015.
* Previously adopted performance and baseline periods.
We note that we intend to propose
additional baseline and performance
periods for the FY 2018 Hospital VBP
Program in future rulemaking.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
8. Previously Adopted and Newly
Finalized Performance Periods and
Baseline Periods for Certain Measures
for the FY 2019 Hospital VBP Program
a. Previously Adopted and Newly
Finalized Performance Period and
Baseline Period for the FY 2019
Hospital VBP Program for Clinical
Care—Outcome Domain Measures
As described above, we have
previously adopted the FY 2019
performance and baseline periods for
the three 30-day mortality measures that
we have adopted for the former
Outcome domain and that we have
since placed into the Clinical Care—
Outcomes domain under the new
domain structure.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28121 through
28122), we proposed to adopt the THA/
TKA measure for the FY 2019 Hospital
VBP Program and to place that measure
in the Clinical Care—Outcomes domain.
THA/TKA is reported to the Hospital
IQR Program for 36-month time periods.
However, we do not believe that we can
feasibly adopt a 36-month performance
period for this measure and adopt it for
the FY 2019 Hospital VBP Program.
Based on the time needed to complete
measure calculations and performance
scoring, we believe that we must
conclude the performance period for
this measure by June 30, 2017. We
believe that a 30-month performance
period will result in sufficiently reliable
quality measure data for purposes of
Hospital VBP Program scoring, and our
analysis of historic data supported our
belief that comparisons between a 36month baseline period and a 30-month
performance period will not result in
significant differences in measure
scores. Further, adopting this proposed
performance period would enable us to
include the measure in the FY 2019
Hospital VBP Program, which would
ensure that hospitals continue focusing
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on measures of outcomes under the
Hospital VBP Program and that we
continue transitioning the Hospital VBP
Program from its initial focus on process
measures to outcome measures.
We note that we have proposed below
to adopt a 36-month performance period
for the THA/TKA measure for the FY
2020 Hospital VBP Program. We have
examined the correlation between
hospitals’ performance on the THA/
TKA measure for 30-month and 36month periods, and we believe that the
30-month period meets our standard for
moderate reliability of quality measure
data during the specified time period.
However, as with the 30-day mortality
and PSI–90 measures, we are attempting
to align performance periods under the
Hospital VBP Program with reporting
periods under the Hospital IQR
Program, while introducing measures
covering important clinical topics into
the Hospital VBP Program as quickly as
possible. We believe that our proposal
for a 30-month performance period for
this measure for the FY 2019 Hospital
VBP Program allows us to bring the
measure into the program in FY 2019
and to accomplish that alignment
beginning with the FY 2020 Hospital
VBP Program.
Therefore, we proposed to adopt an
FY 2019 performance period of January
1, 2015 through June 30, 2017 for the
THA/TKA measure. Further, we
proposed to adopt an FY 2019 baseline
period for this measure of July 1, 2010
to June 30, 2013 for purposes of
calculating performance standards and
awarding improvement points.
We welcomed public comments on
these proposals.
We did not receive any specific public
comments on these proposals and are
finalizing the FY 2019 performance and
baseline periods for the THA/TKA
measure as proposed.
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b. Performance Period and Baseline
Period for the PSI–90 Safety Domain
Measure for the FY 2019 Hospital VBP
Program
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50692 through 50694), we
adopted performance periods and
baseline periods for the PSI–90 measure
for the FY 2017 and FY 2018 Hospital
VBP Programs. We adopted this policy
in light of the time needed to process
measure data and our policy goal to
collect enough data to generate the most
reliable measure scores possible. We
stated our belief that aligning the
Hospital VBP Program performance
periods with the Hospital IQR Program
reporting period duration would allow
hospitals to review Hospital Compare
measure rates when they are updated
and incorporate this information into
their quality improvement efforts, rather
than having to wait until the Hospital
VBP Program provides its scoring
reports to hospitals. We stated our
further belief that aligning the Hospital
IQR Program and the Hospital VBP
Program in this manner will minimize
the burden on participating hospitals by
aligning the time periods during which
they must monitor their performance on
this measure.
We did not finalize a baseline period
and performance period for the AHRQ
PSI–90 measure for FY 2019 in that final
rule (78 FR 50692 through 50694). We
stated that, by declining to finalize the
measure’s FY 2019 performance and
baseline periods in that final rule, we
would be able to adopt a more recent
baseline period than we initially
proposed. We stated that we intended to
propose baseline and performance
periods for the AHRQ PSI measure for
the FY 2019 Hospital VBP Program in
future rulemaking.
We continue to believe that we should
adopt performance and baseline periods
of 24 months for the PSI–90 measure.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28126) we
proposed to adopt an FY 2019
performance period for the PSI–90
measure of July 1, 2015 through June 30,
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2017, with a corresponding 24-month
baseline period of July 1, 2011 through
June 30, 2013, for purposes of
calculating performance standards and
awarding improvement points.
We welcomed public comments on
these proposals. However, we did not
receive any specific public comments
on this proposal and are finalizing the
FY 2019 performance and baseline
periods for the PSI–90 measure as
proposed.
50073
c. Summary of Previously Adopted and
Newly Finalized Performance Periods
and Baseline Periods for Certain
Measures for the FY 2019 Hospital VBP
Program
The following table summarizes
previously adopted and proposed
performance and baseline periods for
the FY 2019 Hospital VBP Program:
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE AND BASELINE PERIODS FOR CERTAIN MEASURES FOR THE
FY 2019 HOSPITAL VBP PROGRAM
Domain
Baseline period
Safety:
• PSI–90 .....................................................
Clinical Care—Outcomes:
• Mortality* (MORT–30–AMI, MORT–30–
HF, MORT–30–PN).
• THA/TKA ..................................................
Performance period
• July 1, 2011–June 30, 2013 .........................
• July 1, 2015–June 30, 2017.
• July 1, 2009–June 30, 2012* .......................
• July 1, 2014–June 30, 2017.*
• July 1, 2010–June 30, 2013 .........................
• January 1, 2015–June 30, 2017.
* Previously adopted performance and baseline periods.
9. Performance Period and Baseline
Period for the Clinical Care—Outcomes
Domain for the FY 2020 Hospital VBP
Program
As described above with respect to
the mortality measures, in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50692
through 50694), we adopted
performance periods and baseline
periods for the three 30-day mortality
measures for the FY 2017, FY 2018, and
FY 2019 Hospital VBP Programs. We
adopted this policy in light of the time
needed to process measure data and to
ensure that we collect enough measure
data for reliable performance scoring, as
described further above. We continue to
believe that we should adopt 36-month
performance and baseline periods for
the mortality measures when possible to
accommodate those durations.
We believe that a similar rationale
applies to the new THA/TKA measure
that we proposed to adopt for the
Clinical Care—Outcomes domain for the
FY 2019 Hospital VBP Program, and
which, under our policy of measure
readoption, we generally would readopt
for the FY 2020 Hospital VBP Program
if finalized. As stated above, we have
examined the correlation between
hospitals’ performance on the THA/
TKA measure for 30-month and 36month periods, and we believe that the
30-month period meets our standard for
moderate reliability of quality measure
data during the specified time period.
However, as with the 30-day mortality
and PSI–90 measures, we are attempting
to align performance periods under the
Hospital VBP Program with reporting
periods under the Hospital IQR
Program, while introducing measures
covering important clinical topics into
the program as quickly as possible. We
believe that our proposal for a 30-month
performance period for this measure for
FY 2019 allows us to accomplish that
alignment beginning with the FY 2020
Program.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28126
through 28127) we proposed to adopt a
36-month performance period for the
measures in the Clinical Care—
Outcomes domain in the FY 2020
Hospital VBP Program (including the
proposed THA/TKA measure for FY
2020, if that measure is adopted for the
FY 2020 Hospital VBP Program) of July
1, 2015 through June 30, 2018, with a
corresponding 36-month baseline period
of July 1, 2010 through June 30, 2013,
for purposes of calculating performance
standards and awarding improvement
points.
We welcomed public comment on
these proposals.
We did not receive any specific public
comments on this proposal and are
finalizing the FY 2020 performance and
baseline periods for the Clinical Care—
Outcomes domain as proposed.
The following table summarizes the
finalized performance and baseline
period for the Clinical Care—Outcomes
domain for the FY 2020 Hospital VBP
Program:
PERFORMANCE AND BASELINE PERIOD FOR THE CLINICAL CARE—OUTCOMES DOMAIN FOR THE FY 2020 HOSPITAL VBP
PROGRAM
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Domain
Baseline period
Clinical Care—Outcomes:
• Mortality (MORT–30 AMI, MORT–30–HF, MORT-30–
PN).
• THA/TKA .....................................................................
10. Performance Standards for the
Hospital VBP Program
a. Background
Section 1886(o)(3)(A) of the Act
requires the Secretary to establish
performance standards for the measures
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• July 1, 2010–June 30, 2013 ...............
• July 1, 2015–June 30, 2018.
• July 1, 2010–June 30, 2013 ...............
• July 1, 2015–June 30, 2018.
selected under the Hospital VBP
Program for a performance period for
the applicable fiscal year. The
performance standards must include
levels of achievement and improvement,
as required by section 1886(o)(3)(B) of
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Frm 00221
Fmt 4701
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the Act, and must be established and
announced not later than 60 days before
the beginning of the performance period
for the fiscal year involved, as required
by section 1886(o)(3)(C) of the Act. We
refer readers to the Hospital Inpatient
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VBP Program final rule (76 FR 26511
through 26513) for further discussion of
achievement and improvement
standards under the Hospital VBP
Program.
In addition, when establishing the
performance standards, section
1886(o)(3)(D) of the Act requires the
Secretary to consider appropriate
factors, such as: (1) practical experience
with the measures, including whether a
significant proportion of hospitals failed
to meet the performance standard
during previous performance periods;
(2) historical performance standards; (3)
improvement rates; and (4) the
opportunity for continued
improvement.
b. Performance Standards for the FY
2016 Hospital VBP Program
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53599 through 53604), we
adopted performance standards for FY
2015 and certain FY 2016 Hospital VBP
Program measures. We also finalized
our policy to update performance
periods and performance standards for
future Hospital VBP Program years via
notice on the CMS Web site or another
publicly available Web site.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50694 through 50698), we
revised our regulatory definitions of
‘‘achievement threshold’’ and
‘‘benchmark’’ at 42 CFR 412.160 and
adopted performance standards for
additional FY 2016 Hospital VBP
Program measures. We also adopted an
interpretation of ‘‘achievement
threshold’’ and ‘‘benchmark’’ under
section 412.160 to not include the
numerical values that result when the
performance standards are calculated.
We further adopted a policy under
which we may update a measure’s
performance standards for a fiscal year
once if we identify data issues,
calculation errors, or other problems
that would significantly affect the
displayed performance standards. We
refer readers to the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50695 through
50698) for the complete set of FY 2016
performance standards.
c. Previously Adopted Performance
Standards for the FY 2017, FY 2018, and
FY 2019 Hospital VBP Programs
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50698 through 50699), we
adopted performance standards for the
three 30-day mortality measures for the
FY 2017, FY 2018, and FY 2019
Hospital VBP Programs and for the PSI–
90 measure for the FY 2017 and FY
2018 Hospital VBP Programs. We refer
readers to that final rule for those
performance standards.
d. Additional Performance Standards for
the FY 2017 Hospital VBP Program
In accordance with our finalized
methodology for calculating
performance standards (discussed more
fully in the Hospital Inpatient VBP
Program final rule (76 FR 26511 through
26513)), in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28127 through
28128) we proposed to adopt the
following additional performance
standards for the FY 2017 Hospital VBP
Program. We note that the numerical
values for the performance standards
displayed below represent estimates
based on the most recently available
data, and we intend to update the
numerical values in the FY 2015 IPPS/
LTCH PPS final rule. We note further
that the MSPB measure’s performance
standards are based on performance
period data; therefore, we are unable to
provide numerical equivalents for the
standards at this time.
We note further that the performance
standards for the NHSN measures
(CAUTI, SSI, and proposed CLABSI,
MRSA Bacteremia, and C. difficile
Infection), the PSI–90 measure, and the
MSPB measure are calculated with
lower values representing better
performance, in contrast to other
measures, on which higher values
indicate better performance. As
discussed further in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50684), the
performance standards for SSI are
computed separately for each measure
stratum. We will award achievement
and improvement points to each stratum
separately and then compute a weighted
average of the points awarded to each
stratum by predicted infections. We
note that we misstated PC–01 measure’s
benchmark in the proposed rule and
have corrected that error in the table
below.
PREVIOUSLY ADOPTED AND PROPOSED PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM:
SAFETY, CLINICAL CARE—OUTCOMES, CLINICAL CARE—PROCESS, AND EFFICIENCY AND COST REDUCTION MEASURES
Measure ID
Description
Achievement threshold
Benchmark
Safety Measures
CAUTI ................................
CLABSI ..............................
C. difficile ...........................
MRSA Bacteremia .............
PSI–90* ..............................
SSI .....................................
Catheter-Associated Urinary Tract Infection
Central Line-Associated Blood Stream Infection.
Clostridium difficile Infection ........................
Methicillin-Resistant
Staphylococcus
aureus Bacteremia.
Complication/patient safety for selected indicators (composite)*.
Surgical Site Infection.
• Colon ....................................................
• Abdominal Hysterectomy .....................
0.8371 .........................................
0.4483 .........................................
0.0000.
0.0000.
0.7927 .........................................
0.8613 .........................................
0.0000.
0.0000.
*0.577321 ....................................
*0.397051.
• 0.7117 ......................................
• 0.7509 ......................................
• 0.0000.
• 0.0000.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Clinical Care—Outcomes Measures
MORT–30–AMI* .................
MORT–30–HF* ..................
MORT–30–PN* ..................
Acute Myocardial Infarction (AMI) 30-day
mortality rate*.
Heart Failure (HF) 30-day mortality rate* ....
Pneumonia (PN) 30-day mortality rate* ......
*0.851458 ....................................
*0.871669.
*0.881794 ....................................
*0.882986 ....................................
*0.903985.
*0.908124.
Clinical Care—Process Measures
AMI–7a ...............................
IMM–2 ................................
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0.954545 .....................................
1.000000.
0.995882 .....................................
1.000000.
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PREVIOUSLY ADOPTED AND PROPOSED PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM: SAFETY, CLINICAL CARE—OUTCOMES, CLINICAL CARE—PROCESS, AND EFFICIENCY AND COST REDUCTION MEASURES—
Continued
Measure ID
Description
Achievement threshold
Benchmark
PC–01 ................................
Elective Delivery Prior to 39 Completed
Weeks Gestation.
0.031250 .....................................
0.000000.
Efficiency and Cost Reduction Measure
MSPB–1 .............................
Medicare Spending per Beneficiary ............
Median Medicare Spending per
Beneficiary ratio across all
hospitals during the performance period.
Mean of the lowest decile Medicare Spending per Beneficiary
ratios across all hospitals during the performance period.
*Previously adopted performance standards.
PROPOSED PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM PATIENT AND CAREGIVER-CENTERED
EXPERIENCE OF CARE/CARE COORDINATION DOMAIN
Communication with Nurses ..................................................................................................
Communication with Doctors .................................................................................................
Responsiveness of Hospital Staff ..........................................................................................
Pain Management ..................................................................................................................
Communication about Medicines ..........................................................................................
Hospital Cleanliness & Quietness .........................................................................................
Discharge Information ............................................................................................................
Overall Rating of Hospital ......................................................................................................
We note that we intend to propose
additional performance standards for
the FY 2018 Hospital VBP Program in
future rulemaking.
We welcomed public comments on
these proposed performance standards.
Achievement
threshold
(percent)
Floor
(percent)
HCAHPS survey dimension
We did not receive any specific public
comments on the proposed performance
standards. We are therefore finalizing
the FY 2017 performance standards as
outlined below.
Set out below are the updated the
numerical values for the performance
56.90
62.03
36.46
49.47
42.89
43.46
61.86
35.00
Benchmark
(percent)
78.08
80.43
64.83
70.20
62.82
65.26
85.59
69.81
86.41
88.71
79.62
78.18
73.15
79.06
91.04
84.27
standards. As with the NHSN measures
and the PSI–90 measure, we note that
better performance on the PC–01
measure is represented by lower
numerical values.
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM:
SAFETY, CLINICAL CARE—OUTCOMES, CLINICAL CARE—PROCESS, AND EFFICIENCY AND COST REDUCTION MEASURES
Measure ID
Description
Achievement threshold
Benchmark
Safety Measures
CAUTI ................................
CLABSI ..............................
C. difficile ...........................
MRSA Bacteremia .............
PSI–90* ..............................
SSI .....................................
Catheter-Associated Urinary Tract Infection
Central Line-Associated Blood Stream Infection.
Clostridium difficile Infection ........................
Methicillin-Resistant
Staphylococcus
aureus Bacteremia.
Complication/patient safety for selected indicators (composite)*.
Surgical Site Infection.
• Colon ....................................................
• Abdominal Hysterectomy .....................
0.845 ...........................................
0.457 ...........................................
0.000.
0.000.
0.750 ...........................................
0.799 ...........................................
0.000.
0.000.
*0.577321 ....................................
*0.397051.
• 0.751 ........................................
• 0.698 ........................................
• 0.000.
• 0.000.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Clinical Care—Outcomes Measures
MORT–30–AMI* .................
MORT–30–HF* ..................
MORT–30–PN* ..................
Acute Myocardial Infarction (AMI) 30-day
mortality rate*.
Heart Failure (HF) 30-day mortality rate* ....
Pneumonia (PN) 30-day mortality rate* ......
*0.851458 ....................................
*0.871669.
*0.881794 ....................................
*0.882986 ....................................
*0.903985.
*0.908124.
Clinical Care—Process Measures
AMI–7a ...............................
IMM–2 ................................
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Fibrinolytic Therapy Received Within 30
Minutes of Hospital Arrival.
Influenza Immunization ...............................
18:25 Aug 21, 2014
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0.954545 .....................................
1.000000.
0.951607 .....................................
0.997739.
Sfmt 4700
E:\FR\FM\22AUR2.SGM
22AUR2
50076
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM:
SAFETY, CLINICAL CARE—OUTCOMES, CLINICAL CARE—PROCESS, AND EFFICIENCY AND COST REDUCTION MEASURES—Continued
Measure ID
Description
Achievement threshold
Benchmark
PC–01 ................................
Elective Delivery Prior to 39 Completed
Weeks Gestation.
0.031250 .....................................
0.000000.
Efficiency and Cost Reduction Measure
MSPB–1 .............................
Medicare Spending per Beneficiary ............
Median Medicare Spending per
Beneficiary ratio across all
hospitals during the performance period.
Mean of the lowest decile Medicare Spending per Beneficiary
ratios across all hospitals during the performance period.
*Previously adopted performance standards.
PERFORMANCE STANDARDS FOR THE FY 2017 HOSPITAL VBP PROGRAM PATIENT AND CAREGIVER-CENTERED
EXPERIENCE OF CARE/CARE COORDINATION DOMAIN
Communication with Nurses ..................................................................................................
Communication with Doctors .................................................................................................
Responsiveness of Hospital Staff ..........................................................................................
Pain Management ..................................................................................................................
Communication about Medicines ..........................................................................................
Hospital Cleanliness & Quietness .........................................................................................
Discharge Information ............................................................................................................
Overall Rating of Hospital ......................................................................................................
e. Performance Standards for the FY
2019 and FY 2020 Hospital VBP
Programs
As discussed further above, we have
adopted certain Safety and Clinical
Care—Outcomes domain measures for
future program years in order to ensure
that we can adopt performance periods
Achievement
threshold
(percent)
Floor
(percent)
HCAHPS survey dimension
and baseline periods of sufficient length
for performance scoring purposes. In the
FY 2015 IPPS/LTCH PPS proposed rule,
we also proposed to adopt the PSI–90
measure in the Safety domain and the
THA/TKA measure in the Clinical
Care—Outcomes domain for the FY
2019 Hospital VBP Program. We note
that, as described above with respect to
58.14
63.58
37.29
49.53
41.42
44.32
64.09
35.99
Benchmark
(percent)
78.19
80.51
65.05
70.28
62.88
65.30
85.91
70.02
86.61
88.80
80.01
78.33
73.36
79.39
91.23
84.60
the NHSN, PSI–90, and MSPB measures,
better performance is represented by
lower values for the THA/TKA measure.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28128
through 28129) we proposed to adopt
the following performance standards for
the FY 2019 Hospital VBP Program:
PREVIOUSLY ADOPTED AND PROPOSED PERFORMANCE STANDARDS FOR CERTAIN SAFETY AND CLINICAL CARE—
OUTCOMES DOMAIN MEASURES FOR THE FY 2019 HOSPITAL VBP PROGRAM
Measure ID
Achievement
threshold
Description
Benchmark
Safety Measures
PSI–90 ...............................
Complication/patient safety for selected indicators (composite) ........................
0.840421
0.589716
*0.850671
*0.883472
*0.882334
0.032521
*0.873263
*0.908094
*0.907906
0.022895
Outcomes Measures
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
MORT–30–AMI* .................
MORT–30–HF* ...................
MORT–30–PN* ..................
THA/TKA ............................
* Previously
Acute Myocardial Infarction (AMI) 30-day mortality rate* ...................................
Heart Failure (HF) 30-day mortality rate* ............................................................
Pneumonia (PN) 30-day mortality rate* ..............................................................
Hospital-level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA).
adopted performance standards.
We welcomed public comments on
these proposed performance standards.
We did not receive any specific public
comments on this proposal and are
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finalizing the FY 2019 performance
standards as outlined below.
Set out below are the updated
numerical values for the FY 2019
performance standards. We note that, as
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described above with respect to the
NHSN, PSI–90, and MSPB measures,
better performance is represented by
lower values for the THA/TKA measure.
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50077
PREVIOUSLY ADOPTED AND NEWLY FINALIZED PERFORMANCE STANDARDS FOR CERTAIN SAFETY AND CLINICAL CARE—
OUTCOMES DOMAIN MEASURES FOR THE FY 2019 HOSPITAL VBP PROGRAM
Measure ID
Achievement
threshold
Description
Benchmark
Safety Measures
PSI–90 ...............................
Complication/patient safety for selected indicators (composite) ........................
0.840335
0.589462
*80.850671
*80.883472
*80.882334
0.032229
*80.873263
*80.908094
*80.907906
0.023178
Outcomes Measures
MORT–30–AMI* .................
MORT–30–HF* ...................
MORT–30–PN* ..................
THA/TKA ............................
* Previously
Acute Myocardial Infarction (AMI) 30-day mortality rate* ...................................
Heart Failure (HF) 30-day mortality rate* ............................................................
Pneumonia (PN) 30-day mortality rate* ..............................................................
Hospital-level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA).
adopted performance standards.
We also proposed to adopt the
following performance standards for the
FY 2020 Hospital VBP Program:
PROPOSED PERFORMANCE STANDARDS FOR CLINICAL CARE—OUTCOMES DOMAIN MEASURES FOR THE FY 2020
HOSPITAL VBP PROGRAM
Measure ID
Achievement
threshold
Description
Benchmark
Clinical Care—Outcomes Measures
MORT–30–AMI ..................
MORT–30–HF ....................
MORT–30–PN ....................
THA/TKA ............................
Acute Myocardial Infarction (AMI) 30-day mortality rate ....................................
Heart Failure (HF) 30-day mortality rate .............................................................
Pneumonia (PN) 30-day mortality rate ...............................................................
Hospital-level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA).
We welcomed public comments on
these proposed performance standards.
We did not receive any specific public
comments on this proposal and are
finalizing the FY 2020 performance
standards as outlined below.
Set out below are the updated the
numerical values for the FY 2020
performance standards. We note that, as
0.853511
0.881394
0.882281
0.032521
0.875840
0.905962
0.909460
0.022895
described above with respect to the
NHSN, PSI–90, and MSPB measures,
better performance is represented by
lower values for the THA/TKA measure.
PERFORMANCE STANDARDS FOR CLINICAL CARE—OUTCOMES DOMAIN MEASURES FOR THE FY 2020 HOSPITAL VBP
PROGRAM
Measure ID
Achievement
threshold
Description
Benchmark
Clinical Care—Outcomes Measures
MORT–30–AMI ..................
MORT–30–HF ....................
MORT–30–PN ....................
THA/TKA ............................
Acute Myocardial Infarction (AMI) 30-day mortality rate ....................................
Heart Failure (HF) 30-day mortality rate .............................................................
Pneumonia (PN) 30-day mortality rate ...............................................................
Hospital-level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA).
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
f. Technical Updates Policy for
Performance Standards
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50694 through 50698), we
revised our regulatory definitions of
‘‘achievement threshold’’ and
‘‘benchmark’’ at 42 CFR 412.160 and
adopted performance standards for
additional FY 2016 Hospital VBP
Program measures. We also adopted an
interpretation of ‘‘achievement
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threshold’’ and ‘‘benchmark’’ under
section 412.160 to not include the
numerical values that result when the
performance standards are calculated.
We further adopted a policy under
which we may update a measure’s
performance standards for a fiscal year
once if we identify data issues,
calculation errors, or other problems
that would significantly change the
displayed performance standards.
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0.853715
0.881090
0.882266
0.032229
0.875869
0.906068
0.909532
0.023178
Our historic practice has been to
display Hospital VBP Program
performance standards’ numerical
values in rulemaking. We adopted this
practice for the convenience of the
public. Although we have typically
expressed the performance standards for
each Hospital VBP measure as a
numerical value prior to the start of the
performance period for that measure, we
do not display numerical values for the
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
MSPB measure because the measure is
constructed as a measure of costs
attributable to patient care during a
specified episode of care during the
performance period itself (77 FR 53601).
We have stated that with respect to the
MSPB measure, we do not believe it is
helpful for hospitals to be compared
against performance standards
constructed from baseline period data
given the potential changes in market
forces and utilization practices that
occur over time.
Further, during the long interval
between the time we first display the
performance standards for all measures
but the MSPB measure and the time that
we calculate the achievement and
improvement scores for those measures
based on actual hospital performance,
one or more of those measures might
have been technically updated in a way
that inhibits our ability to ensure that
we are making appropriate comparisons
between the baseline and performance
period. For example, the software used
to calculate the PSI–90 measure is
regularly updated to incorporate coding
changes, refinements based on the
consensus development process, and
refinements to improve specificity and
sensitivity. The statistical modeling we
use to adjust measure calculations for
PSI–90 and HCAHPS also needs to be
periodically updated to incorporate
coefficient factors that more properly
account for patient mix (both measures)
and the HCAHPS survey data collection
mode (HCAHPS survey). These types of
technical updates do not substantively
affect the measure rate calculation
methodology, but they do sometimes
affect our ability to make appropriate
comparisons between the baseline and
performance period if, for example, the
baseline performance standards are
tabulated using one version of the
software and hospital performance
during subsequent performance periods
is tabulated with another version. We
believe that in order to make the most
accurate comparison of hospital
performance across time, we should use
the most updated version of the measure
that is available at the time we calculate
that performance because the updated
version will produce the most valid
measure rates.
Further, as part of its regular
maintenance process for NQF-endorsed
performance measures, NQF requires
measure stewards to submit annual
measure maintenance updates and
undergo maintenance of endorsement
review every 3 years. In the measure
maintenance process, the measure
steward (owner/developer) is
responsible for updating and
maintaining the currency and relevance
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of the measure and will confirm existing
or minor specification changes with
NQF on an annual basis. NQF solicits
information from measure stewards for
annual reviews, and it reviews measures
for continued endorsement in a specific
3-year cycle.
The NQF’s annual or triennial
maintenance processes for endorsed
measures may result in the NQF
requiring updates to the measures in
order to maintain endorsement status.
We believe that it is important to
incorporate nonsubstantive updates
required by the NQF, as well as
nonsubstantive updates made to other
measures, into the measure
specifications we have adopted for the
Hospital VBP Program so that these
measures remain up-to-date and ensure
that we make fair comparisons between
the performance and baseline periods
that we adopt under the program. We
also recognize that some updates to
measures are substantive in nature and
might not be appropriate for adoption
without further rulemaking.
With respect to what constitutes
substantive versus nonsubstantive
changes to measures, we would make
this determination on a case-by-case
basis. Examples of nonsubstantive
changes to measures might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,
and exclusions for a measure (such as
the addition of a hospice exclusion to
the 30-day mortality measures). We
believe that nonsubstantive changes
may include updates to measures based
upon changes to guidelines upon which
the measures are based.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28129
through 28130) we proposed to amend
the definition of ‘‘performance
standards’’ under section 412.160 to
enable us to update performance
standards’ numerical values to
incorporate nonsubstantive technical
updates that are made to Hospital VBP
Program measures between the time that
they are adopted for a particular
program year and the time that we
actually calculate hospital performance
on those measures after the performance
period for the program year has
concluded. Further, we proposed to
inform hospitals of these technical
updates through postings on our
Hospital VBP Program Web site, the
QualityNet Web site, other educational
outreach efforts, and/or the scoring
reports that we provide for each
program year. We noted that these
proposals, if finalized, may have the
effect of superseding the performance
standards that we establish prior to the
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Fmt 4701
Sfmt 4700
start of the performance period for the
affected measures, but we believe them
to be necessary to ensure that the
performance standards in the Hospital
VBP Program’s scoring calculations
enable the fairest comparisons between
performance measured during the
baseline period and performance period.
We would continue to use rulemaking
to adopt substantive updates to the
measures we have adopted for the
Hospital VBP Program. Examples of
changes that we might consider to be
substantive would be those in which the
changes are so significant that the
measure is no longer the same measure
or when a standard of performance
assessed by a measure becomes more
stringent (that is, changes in acceptable
timing of medication, procedure/
process, or test administration). We also
noted that the NQF process incorporates
an opportunity for public comment and
engagement in the measure maintenance
process.
We also proposed to include in our
revised definition of ‘‘performance
standards’’ under section 412.160 of our
regulations the policy we adopted in the
FY 2013 IPPS/LTCH PPS final rule to
update the performance standards once
if we identify data issues, calculation
errors, or other problems that would
significantly change the standards (78
FR 50695). We proposed to make this
change so that our policies governing
updates to the performance standards
appear together.
We welcomed public comments on
these proposals. We also specifically
sought public comments on what we
should consider to be substantive
changes in measures’ performance
standards, including whether or not we
should consider certain changes in
performance standards as a result of
technical or nonsubstantive updates to
be substantive.
Comment: Several commenters
opposed CMS’ proposal to adopt
technical updates for performance
standards, stating that there is no reason
we cannot use the public notice and
technical corrections process to
disseminate changes in performance
standards to stakeholders. Some
commenters stated that not all
stakeholders have access to QualityNet
to receive the updates that CMS
proposed. One commenter noted that
changing performance standards targets
with more than annual frequency would
undermine hospitals’ ability to
implement performance improvement
efforts. Commenters noted that the
Hospital VBP Program is designed to
hold hospitals accountable for their
performance during a specified time
period based on standards that are
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published before that performance
period begins.
One commenter recommended that
CMS apply changes in the risk
adjustment system only when a new
performance standard is published and
then use those same updates when
performance is measured for the
performance period—if the changes are
indeed ‘‘nonsubstantive,’’ as the
proposed regulatory text would specify,
delaying the application of such updates
should not be detrimental to the
Hospital VBP Program. The commenter
expressed concern that changes could
be made resulting both in different
hospital performance and a different
performance standard, which would
eliminate the usefulness of the minimal
amount of information currently
available to hospitals on these measures.
Response: We disagree with the
recommendation to have all measure
changes subject to notice-and-comment
rulemaking. As previously noted in FY
2014 IPPS/LTCH PPS final rule (78 FR
50776), we believe that the maintenance
of technical specifications for quality
measure policy for the Hospital IQR
Program also is applicable to the
Hospital VBP Program. We believe this
policy adequately balances our need to
incorporate nonsubstantive NQF
updates to NQF-endorsed measures in
the most expeditious manner possible,
while preserving the public’s ability to
comment on updates that so
fundamentally change an endorsed
measure that it is no longer the same
measure that we originally adopted. We
also note that the NQF process
incorporates an opportunity for public
comment and engagement in the
measure maintenance process. These
policies regarding what is considered
substantive versus nonsubstantive apply
to all measures in the Hospital IQR
Program and the Hospital VBP Program,
and we believe the same standard
applies when determining what should
be considered substantive changes to
performance standards.
We believe that it is of paramount
importance that the performance
standards that we adopt accurately
reflect hospitals’ actual performance
during the baseline period. We view our
Technical Updates authority policy as a
means to ensure that accuracy and to
ensure that the program scores hospitals
based on performance standards that
reflect the actual provision of care in
hospitals around the country.
With respect to commenters’ concerns
that we may update performance
standards more than annually, we are
aware that updates may have
unintended consequences on hospitals’
quality improvement efforts. We do not
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18:25 Aug 21, 2014
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intend to make updates to performance
standards except to improve the
standards’ accuracy and to ensure that
the numerical values that we display for
hospitals accurately reflect hospitals’
performance during the baseline period,
as applicable. In addition, with respect
to commenters’ suggestion that delays to
performance standards updates would
not be detrimental to the Hospital VBP
Program, we disagree. We believe that
we must provide hospitals with as much
accurate information as is possible so
that they may develop and implement
quality improvement policies. We do
not believe it would be helpful to
hospitals for us to delay publishing a
technical update on the basis that the
update will not significantly affect
performance.
We note further that we do not intend
to limit any updates made to
performance standards using this
authority to QualityNet accountholders.
We intend to publish any changes made
under this policy on the public
QualityNet Web site and through our
Hospital VBP Program listserv entitled,
‘‘Hospital Inpatient Value-Based
Purchasing (HVBP) and Improvement,’’
available under the notifications and
discussions link on our home page.
Comment: One commenter suggested
that CMS should define in specific
terms what should constitute a
‘‘substantive’’ versus a
‘‘nonsubstantive’’ update to the Hospital
VBP Program performance standards
before adopting the authority to make
technical updates. The commenter
further stated that CMS should be as
transparent with stakeholders as
possible about these changes, noting
that midstream updates could have
profound impacts on hospitals’
performance under Hospital VBP
Program.
Response: With respect to what
constitutes substantive versus
nonsubstantive changes, we expect to
make this determination on a case-bycase basis. Examples of nonsubstantive
changes to measures might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,
and exclusions for a measure (such as
the addition of a hospice exclusion to
the 30-day mortality measures). We
believe that nonsubstantive changes
may include updates to NQF-endorsed
measures based upon changes to
guidelines upon which the measures are
based. However, as commenters have
requested, we intend to be as
transparent as possible with
stakeholders about any technical
updates that we would adopt, including
the rationale for any such updates and
PO 00000
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Fmt 4701
Sfmt 4700
50079
their effects on finalized performance
standards.
We will continue to use rulemaking to
adopt substantive updates made to
measures we have adopted for the
Hospital IQR Program. Examples of
changes that we might consider to be
substantive would be those in which the
changes are so significant that the
measure is no longer the same measure,
or when a standard of performance
assessed by a measure becomes more
stringent, for example, changes in
acceptable timing of medication,
procedure/process, or test
administration. Another example of a
substantive change would be where the
NQF has extended its endorsement of a
previously endorsed measure to a new
setting, such as extending a measure
from the inpatient setting to hospice.
These policies regarding what is
considered substantive versus
nonsubstantive would apply to all
measures in the Hospital IQR Program.
After consideration of the public
comments we received, we are
finalizing the technical updates policy
for performance standards as proposed.
We are also finalizing our proposed
revisions to the definition of
‘‘performance standards’’ in section
412.160 of our regulations.
g. Request for Public Comments on
International Classification of Diseases,
Tenth Revision, Clinical Modification/
Procedure Coding System (ICD–10–CM/
PCS) Transition
Beginning October 1, 2015, when the
ICD–10–CM/PCS codes become the
required code set, we will collect nonelectronic health record-based quality
measure data coded only in ICD–10–
CM/PCS. Even though we expect that
the endorsement status of the measures
we have adopted for the Hospital VBP
Program will remain the same, we are
concerned that the transition to a new
coding system might have unintended
consequences on quality measure data
denominators, statistical adjustment
coefficients, and measure rates. We are
concerned about the possible impacts
on the Hospital VBP Program, and
requested public comments on how we
should accommodate the transition.
Specifically, we requested comments
on how, if at all, we should adjust
performance scoring under the Hospital
VBP Program to accommodate quality
data coded under ICD–10–CM/PCS, or
otherwise ensure fair and accurate
comparisons under the Hospital VBP
Program once the transition date has
passed. For example, we could consider
analyzing the effects of the ICD–10–CM/
PCS transition on hospitals’ measured
performances and, if substantive
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
differences result, retrospectively adjust
performance standards in order to
ensure that they accurately reflect the
underlying methodology. We could also
consider performing similar adjustments
to hospitals’ measure rates, measure
scores, or TPSs once our analysis is
completed. We also might consider
scoring hospitals only on achievement if
analysis indicates that we are unable to
reliably and validly calculate
improvement scores when comparing
International Classification of Diseases,
Ninth Revision, Clinical Modification
(ICD–9–CM) based baseline period data
to ICD–10–CM/PCS based performance
period data. However, while we intend
to analyze the effects of the ICD–10–
CM/PCS transition on hospitals’
performance, we do not have the
necessary data for all hospitals at this
time.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28130) we stated
that we intended to take two steps to
analyze ICD–10–CM/PCS potential
impact before receiving ICD–10–CM/
PCS-based fall 2015 discharge data in
May 2016. First, we stated that we will
assess measure specifications to
qualitatively assess impact to measure
denominators after CMS releases ICD–
10–CM/PCS-based measure
specifications in the future. Second, we
stated that we intend to voluntarily
solicit information from no more than 9
hospitals before October 1, 2015 to
estimate the impact of ICD–10–CM/PCS
on their Hospital VBP measure rates and
denominator counts. We intend to use
this information to inform both
proposed and future Hospital VBP
Program policy and measures.
We welcomed public comments on
this topic.
Comment: One commenter supported
CMS’ implementation of ICD–10–CM/
PCS on October 1, 2015 without any
further delays. The commenter also
warned that, while adoption is welcome
and overdue, implementation of the
new system must be carefully
orchestrated to minimize the
administrative burden on hospitals. The
commenter noted their appreciation of
CMS’ efforts to offer extensive
educational opportunities for hospitals
and noted that extensive end-to-end
testing of both the electronic transaction
and the adjudication of the claim by
Medicare contractors and State
Medicaid agencies will be needed to
ensure a smooth transition from ICD–9–
CM to ICD–10–CM/PCS.
Response: We thank the commenter
for its support. We would like to clarify
that HHS has not yet finalized an ICD–
10 implementation date through
rulemaking. We refer readers to the CMS
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18:25 Aug 21, 2014
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Web page on ICD–10 (http://
cms.hhs.gov/Medicare/Coding/ICD10/
index.html) and the Federal Register for
current information.
Comment: A few commenters
recommended that CMS work with
more than nine hospitals, as well as
other national hospital associations and
stakeholders interested in volunteering
to participate in the ICD–10–CM/PCS
transition process, to gain a broader
understanding of the coding transition
and its impact on CMS’ quality
reporting and pay-for-performance
programs.
Response: We believe an initial
limited analysis will enable us to better
understand the impact of the ICD–10–
CM/PCS transition on hospitals’
performance. We intend to continue
discussing this topic with stakeholders
in the future.
Comment: One commenter supported
CMS’ suggested strategy for analyzing
Hospital VBP Program performance
scores to accommodate the ICD–10–CM/
PCS transition, but requested that CMS
make any adjustment methodology
public and continue to score hospitals
on both achievement and improvement.
Response: We intend to discuss
publicly any adjustments that we would
subsequently propose through
rulemaking for the Hospital VBP
Program.
Comment: Many commenters urged
CMS not to adopt achievement-only
scoring as a result of the ICD–10–CM/
PCS transition, stating that
improvement points are a balancing
feature of the Hospital VBP Program that
provide incentives for progress. Some
commenters stated that the Hospital
VBP Program statute requires that CMS
score hospitals on both achievement
and improvement, and suggested that
CMS ‘‘waive’’ hospitals’ participation in
the program until we have adequate
data to provide both elements of
performance scoring.
Several commenters suggested that
CMS remove measures from the
program for a year if we cannot
calculate reliable improvement scores.
Other commenters requested that CMS
allow sufficient time to analyze the
impact of the ICD–10–CM/PCS
transition and address any potential
issues before penalizing hospitals in
future Hospital VBP Program years. One
commenter suggested holding hospitals
harmless if CMS cannot accurately
accept and calculate quality measures.
Response: We thank the commenters
for this feedback and will take it into
consideration as we develop our policy
on this issue.
Comment: Several commenters
expressed concern that transitioning the
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Hospital VBP Program to the ICD–10–
CM/PCS system could significantly alter
how measures are scored between the
baseline and performance periods. The
commenter opined that comparisons
between the ICD–9–CM and ICD–10–
CM/PCS systems would be unfair, and
suggested that CMS score hospitals
using ICD–9–CM data and an ICD–10–
CM/PCS crosswalk. Commenters
suggested that CMS run both the
baseline data and the performance data
using ICD–9–CM (using crosswalk
software) and make the results of the
testing publicly available. A few
commenters urged CMS to formalize its
ICD–10–CM/PCS testing plans to ensure
that end-to-end testing begins no later
than January 2015 and is made available
to all hospitals.
Response: We thank the commenters
for this feedback and will take it into
consideration as we develop our policy
on this issue.
Comment: One commenter
recommended that CMS update its
quality measures in order to best take
advantage of the added granularity
offered by ICD–10–CM/PCS. The
commenter does not believe that it will
be possible to accurately adjust
performance standards retrospectively
in order to correct the substantive
differences in ICD–9–CM and ICD–10–
CM/PCS quality data. The commenter
suggested that evaluating quality
measures solely on achievement would
minimize the administrative costs
associated with identifying the
feasibility, validity, and reliability of
comparing quality measures based on
dissimilar code sets, and would also
allow measure developers to freely
update quality measures without the
fear of distorting comparisons between
baseline and performance period data
coded in dissimilar formats.
Commenters agreed that the ICD–10–
CM/PCS transition may have an impact
on quality measurement based on
claims data, and encouraged CMS to
analyze those effects rigorously once
data are available.
Response: We thank the commenters
for this feedback and will take it into
consideration as we develop our policy
on this issue.
We thank the commenters for these
responses and we will consider them as
we plan for the ICD–10–CM/PCS
transition under the Hospital VBP
Program.
11. FY 2017 Hospital VBP Program
Scoring Methodology
a. General Hospital VBP Program
Scoring Methodology
In the Hospital Inpatient VBP Program
final rule (76 FR 26514), we adopted a
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methodology for scoring clinical process
of care, patient experience of care, and
outcome measures. As noted in that
rule, this methodology outlines an
approach that we believe is well
understood by patient advocates,
hospitals, and other stakeholders
because it was developed during a
lengthy process that involved extensive
stakeholder input, and was based on a
scoring methodology we presented in a
report to Congress. We also noted in that
final rule that we had conducted
extensive additional research on a
number of other important methodology
issues to ensure a high level of
confidence in the scoring methodology.
In addition, we believe that, for reasons
of simplicity, transparency, and
consistency, it is important to score
hospitals using the same general
methodology each year, with
appropriate modifications to
accommodate new domains and
measures. We finalized a similar scoring
methodology for the MSPB measure in
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51654 through 51656).
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53604 through 53605), for
the FY 2015 Hospital VBP Program, we
finalized our proposal to use these same
general scoring methodologies to score
hospital performance for the FY 2015
Hospital VBP Program. In that rule, we
stated that we believe these scoring
methodologies continue to
appropriately capture hospital quality as
reflected by the finalized quality
measure sets. We also noted that
readopting the finalized scoring
methodology from prior program years
represents the simplest and most
consistent policy for hospitals and the
public. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50699), we readopted
the finalized general scoring
methodology adopted for the FY 2015
Hospital VBP Program for the FY 2016
Hospital VBP Program.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50702 through 50704), we
adopted new quality domains based on
the NQS for FY 2017 and subsequent
years.
We continue to agree with the
reasoning for the scoring methodology
outlined in the FY 2013 IPPS/LTCH PPS
final rule and summarized above.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28130
through 28131) we proposed to adopt
the general scoring methodology
adopted for the FY 2016 Hospital VBP
Program for the FY 2017 Hospital VBP
Program, with appropriate
modifications to accommodate the new
quality domains that we have
previously adopted. These proposed
modifications to our scoring
methodology are limited to reclassified
quality domains, new placements for
measures within those domains, and
domain weighting. We discuss below a
proposal to revise the finalized domain
weighting for FY 2017.
We welcomed public comment on
this proposal. We also received a
number of general comments on the
Hospital VPB Program’s scoring
methodology.
Comment: Several commenters stated
that CMS should consider phasing out
improvement scoring for selected
measures or the entire Hospital VBP
Program that have been included in the
Hospital VBP Program for several years
in order to emphasize comparative
performance on the measures. Several
commenters agreed that phasing out
improvement scoring after several years
(one commenter suggested 3 years)
would emphasize comparative
performance on the measures. While
some commenters noted that
improvement at the outset of the
program is very important to
encouraging historically poorperforming hospitals to invest in
improvement, those commenters believe
that hospitals should be compared and
paid on their achievements and not
merely for improving on subpar
performance after a period of time.
Several other commenters, on the
other hand, expressed strong support for
pay-for-performance programs that
assess multiple aspects of care and
recognize hospitals for achievement
versus national benchmarks and
improvement versus baseline
performance. Commenters stated that
this incentive structure can provide
greater inducement for hospitals to
improve performance. Commenters
believed this construct is foundational
for hospitals to improve performance in
a rational and predictable manner.
Response: We thank the commenters
for this feedback. We will take it under
consideration as we develop Hospital
VBP Program policies.
Comment: One commenter
recommended that CMS consider
comparing ‘‘like’’ hospitals—such as
those of similar sizes, teaching status,
and case mix—under the Hospital VBP
Program in order to avoid inadvertently
providing scoring advantages or
disadvantages to participating hospitals.
Response: We do not believe the
quality measures that we have adopted
for the Hospital VBP Program
incorporate the necessary data to
disaggregate hospitals’ performance by
size, teaching status, or case mix any
further than they already do through
risk adjustment. We do intend, however,
to assess the feasibility of this
suggestion through our program
monitoring and evaluation efforts.
After consideration of the public
comments we received, we are
finalizing our proposal to adopt the
general scoring methodology adopted
for the FY 2016 Hospital VBP Program
for the FY 2017 Hospital VBP Program,
with appropriate modifications to
accommodate the new quality domains
that we have previously adopted. These
modifications to our scoring
methodology are limited to reclassified
quality domains, new placements for
measures within those domains, and
domain weighting.
b. Domain Weighting for the FY 2017
Hospital VBP Program for Hospitals
That Receive a Score on All Domains
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50702 through 50704), we
adopted our proposal to align the
Hospital VBP Program’s quality
measurement domains with the NQS’s
quality priorities, with certain
modifications. We adopted this
realignment beginning with the FY 2017
Hospital VBP Program. We also adopted
the following domains and domain
weights for the FY 2017 Hospital VBP
Program for hospitals that receive a
score in all newly aligned domains.
PREVIOUSLY ADOPTED DOMAINS AND DOMAIN WEIGHTS FOR THE FY 2017 HOSPITAL VBP PROGRAM FOR HOSPITALS
RECEIVING A SCORE ON ALL NEWLY ALIGNED DOMAINS
Domain
Weight
Safety ...............................................................................................................................................................................................
Clinical Care ....................................................................................................................................................................................
• Clinical Care—Outcomes .....................................................................................................................................................
• Clinical Care—Process .........................................................................................................................................................
Efficiency and Cost Reduction ........................................................................................................................................................
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• 25
• 10
25
percent.
percent.
percent.
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percent.
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PREVIOUSLY ADOPTED DOMAINS AND DOMAIN WEIGHTS FOR THE FY 2017 HOSPITAL VBP PROGRAM FOR HOSPITALS
RECEIVING A SCORE ON ALL NEWLY ALIGNED DOMAINS—Continued
Domain
Weight
Patient and Caregiver Centered Experience of Care/Care Coordination .......................................................................................
However, as discussed in more detail
above, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28119), we are
finalizing our proposal to remove six
‘‘topped-out’’ measures from the FY
2017 Clinical Care—Process subdomain.
This substantial reduction in the
number of measures adopted for the
Clinical Care—Process subdomain
warrants reconsideration of the finalized
domain weighting for FY 2017 that we
adopted in the FY 2014 IPPS/LTCH PPS
final rule.
As described in more detail above, we
are also finalizing our proposal to readopt the CLABSI measure and to adopt
two new measures (MRSA Bacteremia
and C. difficile Infection) for the Safety
domain for FY 2017 Hospital VBP
Program and subsequent years, which
raises the total number of measures in
this domain for FY 2017 to six. Because
we proposed to make changes in the
number of measures in only two
domains (Safety and Clinical Care), we
focused our proposed domain weighting
25 percent.
changes in the proposed rule on these
domains only. Because we continue to
believe that hospitals should be
provided strong incentives to perform
well on measures of patient safety, in
view of the new measures we proposed
to add to that domain, we proposed to
revise the previously finalized domain
weighting for the FY 2017 Hospital VBP
Program for hospitals receiving a score
on all newly aligned domains as
follows:
PROPOSED REVISED DOMAIN WEIGHTS FOR THE FY 2017 HOSPITAL VBP PROGRAM FOR HOSPITALS RECEIVING A SCORE
ON ALL NEWLY ALIGNED DOMAINS
Domain
Weight
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Safety ...............................................................................................................................................................................................
Clinical Care ....................................................................................................................................................................................
• Clinical Care—Outcomes .....................................................................................................................................................
• Clinical Care—Process .........................................................................................................................................................
Efficiency and Cost Reduction ........................................................................................................................................................
Patient and Caregiver Centered Experience of Care/Care Coordination .......................................................................................
We welcomed public comments on
the proposed revised domain weights.
Comment: Several commenters
expressed broad support for CMS’
proposed revision to the domain
weighting for FY 2017, agreeing that it
appropriately shifts the program’s focus
to the Safety domain and away from
Clinical Care—Process domain. One
commenter commended CMS’ efforts to
move the delivery system towards
value-driven paradigms that reward
high quality and cost effective health
care providers. A few commenters noted
that the Safety domain is largely
comprised of well-developed HAI
outcome measures. One commenter
noted that the domain weights largely
align with the National Quality
Strategy’s quality priorities and places
an increased focus on patient safety.
Some commenters specifically
expressed support for maintaining the
weight of the Efficiency and Cost
Reduction domain at 25 percent.
Response: We thank the commenters
for their support.
Comment: Several commenters
wanted CMS to maintain the Clinical
Care—Process domain weighting at 35
percent, and noted that measures of
clinical processes continue to play an
important role in improving the quality
of care. One commenter suggested CMS
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not reduce the weight for Clinical
Care—Process measures to 5 percent
because commenter believed that these
measures play a vital role in quality
improvement and should remain a
significant component of the Hospital
VBP Program. The commenter also
noted that a hospital’s level of
performance on Clinical Care—Process
measures reflects a hospital’s overall
discipline and commitment to quality
improvement that extends beyond just
the specific topics being measured.
Other commenters suggested that the
final rule should increase the weight for
the Clinical Care—Process domain in
order to ensure that the Hospital VBP
Program’s focus is appropriately on
improving patient outcomes. A few
commenters noted that measuring
clinical processes gives hospitals the
data they need to improve performance
and identify good process measures that
are not burdensome to collect. One
commenter stated that the Clinical
Care—Outcomes and Safety domains
already reflect higher priority than
Clinical Care—Process domain
measures. This commenter suggested
that process measures may be used to
identify gaps that may not be readily
apparent from outcome measures. One
commenter encouraged CMS to give the
Clinical Care—Process measures the
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20
30
• 25
• 5
25
25
percent.
percent.
percent.
percent.
percent.
percent.
greatest weight because of the
limitations of the measures in the other
domains and because this domain
provides hospitals with the most
actionable information on quality
performance.
One commenter questioned the extent
to which measures of clinical process
are necessary given the low domain
weighting allocated to the Clinical
Care—Process domain. The commenter
suggested that CMS consider phasing
the measures out of the program
entirely.
Other commenters suggested
additional measures that should be
added to the Clinical Care—Process
Domain, including one commenter who
suggested the Medicare Service
Utilization measure be added to the
Efficiency and Cost Reduction domain.
Response: Because we proposed to
remove six ‘‘topped-out’’ measures from
the FY 2017 Clinical Care—Process
subdomain, the number of measures
adopted for that subdomain will be
significantly reduced. For that reason,
we reconsidered the finalized domain
weighting for FY 2017 that we adopted
in the FY 2014 IPPS/LTCH PPS final
rule. We continue to believe that
hospitals should be provided strong
incentives to perform well on measures
of patient safety, and we believe the
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revised domain weighting appropriately
reduces the relative weighting allocated
to the Clinical Care—Process domain, in
accordance with the substantially
reduced number of measures adopted
under that domain. As we have stated
in prior rulemaking, we believe that the
Hospital VBP Program should shift from
its initial focus on measures of
processes to measures of outcomes and
efficiency, and we believe that the
proposed domain weighting change
appropriately continues that policy
change.
Comment: One commenter urged that
CMS ensure that the IMM–2 measure is
afforded sufficient weight in
determining hospital value-based
payments, such as by including this
measure in the Safety domain.
Response: We believe we have placed
the IMM–2 measure appropriately
within the Clinical Care—Process
domain, as it is a chart-abstracted
measure. We further believe that we
have allocated sufficient domain
weighting to the Clinical Care—Process
domain, and respond to additional
comments on the FY 2017 domain
weighting in subsequent sections below.
Comment: One commenter
recommended that CMS decrease the
weight of the consistency score in the
HCAHPS survey to 10 percent and
weight the HCAHPS measure total score
with the new care transition measures at
90 percent. Alternatively, the
commenter suggested that CMS revise
the methodology of the consistency
score to more accurately measure
consistent performance and leave the
weight of 20 percent in place. Instead of
using the HCAHPS floor values as the
minimum range for consistency, the
commenter suggested that CMS use the
25th percentile value so that
consistency points would only be
rewarding hospitals maintaining a
reasonable level of performance in each
HCAHPS measure.
Response: We continue to believe that
the HCAHPS survey is an important and
significant component of the Total
Performance Score. We further believe
that Consistency Points appropriately
encourage hospitals to attempt to
improve their scores on all dimensions
of the HCAHPS survey, and are
therefore appropriately allotted 20
points within the domain. While we
may reexamine the HCAHPS survey’s
scoring methodology if we adopt the
CTM–3 items in the future, we do not
believe that it is appropriate at this time
to reduce the Consistency Points
component of the PEC/CC domain to 10
percent.
Comment: Many commenters urged
CMS to revise the MSPB measure to
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include both quality and cost outcomes,
which means achieving better outcomes
at lower total health costs, rather than
simply and crudely cutting costs. A few
commenters stated that basing 25
percent of the TPS on a measure of cost
comparison with no quality component
will encourage hospitals to further cut
costs beyond the incentives of the DRG
system, with uncertain checks on
corresponding quality impacts. Several
commenters stated that because so
much of the MSPB measure is outside
of the hospital’s control, the domain
should not be factor so heavily into the
TPS.
A few commenters urged CMS to
consider removing the MSPB measure
entirely or dropping the Efficiency and
Cost Reduction domain’s weighting to 5
percent because the commenters
suggested that measures aimed at
improving efficiency should be
grounded in current best evidence,
should evaluate clinical outcomes
concurrently with resource use, and
should be interpretable based on
outcomes achieved with resources
expended. Another commenter
recommended lowering the weight of
the Efficiency domain when the new
episode-based payment measures’ initial
implementation begins to provide CMS
and hospitals an opportunity to gain
experience with these measures. The
commenter noted that lowering the
weight of the Efficiency domain
provides a period of time for the
development of more accurate or
relevant Efficiency measures into the
program.
However, several commenters
suggested that CMS increase weighting
of the Efficiency and Cost Reduction
domain. A few commenters suggested
that CMS consider incrementally
increasing the Efficiency and Cost
Reduction domain’s weight to 50
percent as more efficiency measures are
developed in the coming years. One
commenter suggested that this change
should occur in six years.
Response: We believe we have
appropriately balanced our desire to
provide strong incentives for hospitals
to consider the cost and the quality of
the care that they provide to Medicare
beneficiaries and to all patients by
assigning the Efficiency and Cost
Reduction domain to 25 percent of the
Total Performance Score. We note that
the MSPB measure is still relatively new
to the Hospital VBP Program, and
represents the incorporation of
efficiency metrics for the first time in
the program. We view that step as
important, and we continue to believe it
merits significant domain weighting in
order to ensure that hospitals monitor
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50083
the costs of the care they provide to
Medicare beneficiaries during the
inpatient hospitalization and are
involved in the coordination of
beneficiaries’ care immediately prior to
a hospitalization and post-discharge.
However, we thank the commenters
for their thoughts and intend to
continue examining domain weighting
and will consider revisiting this issue in
the future.
Comment: A few commenters wanted
to decrease the PEC/CC weight. One
commenter stated that anecdotal
evidence shows significant variation in
HCAHPS survey scores due to
differences in acuity level and region.
The commenter also noted that a recent
study found that patient satisfaction was
independent of hospital compliance
with surgical processes and with
hospitals’ safety culture.
One commenter urged CMS to retain
the PEC/CC domain’s weighting at 25
percent, stating that the patient’s
experience is a critical component of
quality health care. The commenter
stated that, if CMS retains the Safety
domain, CMS should not increase its
allocated domain weighting, and should
leave the Clinical Care—Process
domain’s weighting at 10 percent.
A few commenters suggested adding
additional measures to the PEC/CC
domain, in order to strengthen those
domains.
Response: We disagree with
commenters that suggested that we
consider lower weighting for the PEC/
CC domain. We continue to believe that
the patient’s experience is an important
component of high-quality health care,
and we believe that allocating
significant domain weighting to the
PEC/CC domain reflects that priority
appropriately. As described further
above, we also believe that the
Consistency Points are properly set at 20
points within the domain. We believe
the PEC/CC domain’s weighting
appropriately provides hospitals with
strong incentives to improve their
patients’ experience during acute care
hospitalizations.
Comment: A few commenters urged
that CMS remove the Safety domain
from the Hospital VBP Program and
consider the HAC Reduction Program as
its Safety domain, redistributing the
weight to the other domains. In the
alternative, one commenter suggested
that CMS leave the Clinical Care—
Process domain’s weighting at 10
percent.
One commenter suggested that CMS
increase the Safety or Clinical Care—
Outcomes domain weights.
Response: We consider measures of
patient safety to be of critical
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importance to the Hospital VBP
Program, and we believe that their
inclusion in the program with
significant domain weighting
appropriately provides hospitals with
substantial incentives to protect their
patients during acute care episodes.
Comment: A few commenters
suggested that CMS replace the Clinical
Care—Outcome measures or develop a
plan to improve the measures’
reliability. One commenter expressed
concern that three mortality measures in
the Clinical Care—Outcomes domain do
not reliably assess hospital performance
and could have negative unintended
consequences for certain hospitals.
One commenter urged CMS to modify
the domain weights so that more
emphasis is placed on achieving
outcomes, providing quality clinical
processes, and improving patient
experience. Commenters expressed
support for the goal of improving
quality and cost outcomes within the
system, which means achieving better
outcomes at lower total health costs,
rather than simply and crudely cutting
costs.
Response: We believe that we have
taken appropriate steps to increase the
reliability of the 30-day mortality
measures that we have placed into the
Clinical Care—Outcomes domain by
extending the performance periods for
those measures. We believe that the
measures appropriately receive
substantial domain weighting in order
to ensure that hospitals focus quality
improvement efforts on patients with
these harmful conditions. In addition,
we believe that, our future measure set
should evolve to emphasizing outcomes,
safety cost and efficiency, population
health, and patient experience of care as
noted in the HHS National Quality
Strategy. We continue to evaluate
measures that assess these critical
components of the HHS National
Quality Strategy, and as we add more
measures in this area, we intend to
increase the weight of this domain.
We also believe that safety and the
patient experience of care is important
in assessing quality. As we note above,
because we are adding two new
measures to the Safety domain, we are
increasing this domain’s weight by 5
percent, we believe that this increase
appropriately balances the importance
of patient safety while balancing the
need for excellence in the remaining
domains. Likewise, we believe that a 25
percent weight for the Patient and
Caregiver Centered Experience of Care/
Care Coordination domain appropriately
balances the need to address the patient
experience with the importance of
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stressing quality clinical processes,
outcomes, efficiency and safety.
After consideration of the public
comments we received, we are
finalizing the revised domain weighting
for the FY 2017 Hospital VBP Program
as proposed.
c. Domain Weighting for the FY 2017
Hospital VBP Program for Hospitals
Receiving Scores on Fewer than Four
Domains
In prior program years, we finalized a
policy that hospitals must have received
domain scores on all finalized domains
in order to receive a TPS. However,
because the Hospital VBP Program has
evolved from its initial two domains to
an expanded measure set with
additional domains, we considered
whether it was appropriate to continue
this policy.
Therefore, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53606 through
53607), we finalized our proposal that,
for the FY 2015 Hospital VBP Program
and subsequent years, hospitals with
sufficient data to receive at least two out
of the four domain scores that existed
for the FY 2015 Hospital VBP Program
(that is, sufficient cases and measures to
receive a domain score on at least two
domains) will receive a TPS. We also
finalized our proposal that, for hospitals
with at least two domain scores, TPSs
would be reweighted proportionately to
the scored domains to ensure that the
TPS is still scored out of a possible 100
points and that the relative weights for
the scored domains remain equivalent
to the weighting which occurs when
there are scores in all four domains. We
believe that this approach allows us to
include relatively more hospitals in the
Hospital VBP Program while continuing
to focus on reliably scoring hospitals on
their quality measure performance.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50701 through 50702), we
continued this approach for the FY 2016
Hospital VBP Program and subsequent
fiscal years for purposes of eligibility for
the program even though, based on the
NQS, we adopted four NQS-based
domains for the FY 2017 Hospital VBP
Program (78 FR 50702 through 50704),
which include the subdivided Clinical
Care domain.
In light of the four NQS-based
domains we have adopted, we have
reconsidered the appropriate minimum
number of domains (that is, the number
of domains on which hospitals must
receive scores) in order to receive a TPS.
We are concerned that requiring just
two out of the four NQS-based domains
in order to receive a TPS may be
insufficient to ensure robust quality
measurement under the Hospital VBP
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Program. Further, given the transition to
NQS-based domains that we have
adopted, we believe an additional
independent analysis of appropriate
minimum numbers of domains under
the new domain structure is
appropriate. We commissioned that
analysis from our Reports & Analytics
contractor for the Hospital VBP
Program. The results of that analysis
informed our proposal below, and we
stated that we intended to post a
summary of the reliability and
minimum numbers analysis on the CMS
Web site during the public comment
period. We believe that requiring three
out of the four NQS-based domains
appropriately balances our desire to be
as inclusive as possible with Hospital
VBP Program requirements while
ensuring that TPSs under the program
are sufficiently reliable.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28132) we
proposed to require that, for the FY
2017 Hospital VBP Program and
subsequent years, hospitals must receive
domain scores on at least three quality
domains in order to receive a TPS. For
purposes of the Clinical Care domain
score, we proposed to consider either
the Clinical Care—Process or Clinical
Care—Outcomes subdomains as one
domain in order to meet this proposed
requirement. By adopting this policy,
we believe we will continue to allow as
many hospitals as possible may
participate in the program while
ensuring that reliable TPSs result.
However, we would only reweight
hospitals’ TPSs once and would
therefore not reallocate the Clinical
Care—Process and Clinical Care—
Outcomes subdomains’ weighting
within the Clinical Care domain if a
hospital does not have sufficient data
for one of the subdomains. For example,
a hospital receiving domain scores on
all domains except the Clinical Care—
Process subdomain would not have the
5 percent weighting from the Clinical
Care—Process subdomain reallocated
entirely to the Clinical Care—Outcomes
subdomain. Instead, the 5 percent
weighting from the Clinical Care—
Process subdomain would be
proportionately reallocated across all
domains.
We welcomed public comments on
this proposal.
Comment: One commenter supported
CMS’ proposal to require hospitals to
have sufficient data on at least three
domains in order to receive a Total
Performance Score in FY 2017.
Response: We thank the commenter
for their support.
Comment: One commenter expressed
concern that CMS’ proposal would
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result in lower participation rates in the
program. The commenter recommended
that CMS retain the minimum number
of domain scores at two.
Response: As described above, we are
concerned that requiring just two
domains to receive a Total Performance
Score for FY 2017 may provide an
insufficient basis in quality data for
robust performance scoring. We believe
that the proposed requirement
appropriately balances our desire to
include as many hospitals as possible in
the Hospital VBP Program while
ensuring that Total Performance Scores
are based on reliable quality data.
After consideration of the public
comments we received, we are
finalizing the requirement that hospitals
have sufficient data on at least three of
the four domains for the FY 2017
Program as proposed. We also are
finalizing that hospitals with sufficient
data on at least three of four domains for
FY 2017 will have their Total
Performance Scores proportionately
reweighted, and for purposes of that
reweighting, we will not reallocate the
Clinical Care—Process and Clinical
Care—Outcomes subdomains’ weighting
within the Clinical Care domain if a
hospital does not have sufficient data
for one of the subdomains.
12. Minimum Numbers of Cases and
Measures for the FY 2016 and FY 2017
Hospital VBP Program’s Quality
Domains
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a. Previously Adopted Minimum
Numbers of Cases and FY 2016
Minimum Numbers of Cases
In the Hospital Inpatient VBP Program
final rule (76 FR 26527 through 26531),
we adopted minimum numbers of at
least 10 cases on at least 4 measures for
hospitals to receive a Clinical Process of
Care domain score. In the same final
rule, we adopted a minimum number of
100 HCAHPS surveys for a hospital to
receive a Patient Experience of Care
domain score. In the CY 2012 OPPS/
ASC final rule with comment period (76
FR 74532 through 74534), we adopted a
minimum number of 10 cases for the
mortality measures that we adopted for
FY 2014. In the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53608 through
53609), we adopted a new minimum
number of 25 cases for the mortality
measures for FY 2015. In the same final
rule, we adopted a minimum number of
25 cases for the MSPB measure (77 FR
53609 through 53610), a minimum of
three cases for any underlying indicator
for the PSI–90 measure based on
AHRQ’s measure methodology (77 FR
53608 through 53609), and a minimum
of one predicted infection for NHSN-
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based surveillance measures based on
CDC’s minimum case criteria (77 FR
53608 through 53609). However, we
noted that we adopted these case
minimums for FY 2015 only, although
we intended to adopt them for FY 2015
and subsequent years. We continue to
believe that the finalized minimum
numbers of cases described above are
appropriate and provide sufficiently
reliable data for scoring purposes under
the Hospital VBP Program. Therefore, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28132), we proposed to
adopt the specified case minimums for
the FY 2016 Hospital VBP Program and
subsequent years.
We welcomed public comment on
this proposal. We noted that we
proposed below to specify minimum
numbers of measures for the FY 2017
Hospital VBP Program and subsequent
years based on the new domain
structure.
We did not receive any specific public
comments on this proposal. Therefore,
we are finalizing this policy as
proposed.
b. Minimum Number of Measures—
Safety Domain
As described in more detail above, we
proposed to adopt six quality measures
in the Safety domain for the FY 2017
Hospital VBP Program. Of these
measures, five are NHSN-based
surveillance measures and one is the
PSI–90 measure. After consideration of
these measures and of previous
independent analyses of the necessary
minimum number of measures adopted
for the Outcomes domain, whose
measures formed the basis for part of the
new Safety domain, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28133) we proposed to adopt a
minimum number of three measures for
the Safety domain for FY 2017 and
subsequent years. We believe this
proposal balances our desire to be as
inclusive as possible with the Hospital
VBP Program and the need for reliable
quality measurement data on which to
base TPSs. We also clarified that we will
continue to score hospitals on NHSN
measures if, as we discussed with
respect to the CLABSI measure (77 FR
53608) and the SSI measure (78 FR
50684), the hospital has met CDC’s
minimum case criteria of one predicted
infection during the applicable period.
We welcomed public comment on
this proposal.
We did not receive any specific public
comments on this proposal, and
therefore are finalizing this policy as
proposed.
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c. Minimum Number of Measures—
Clinical Care Domain
(1) Background
In the FY 2014 IPPS/LTCH PPS final
rule, we adopted a new domain
structure for the FY 2017 Hospital VBP
Program and subsequent years based on
the NQS. In that final rule, we adopted
a Clinical Care domain that was
subdivided into the Clinical Care—
Process and Clinical Care—Outcome
subdomains. We adopted these
subdomains in order to ensure that we
place the appropriate domain weighting
on measures of clinical processes and
measures of clinical outcomes. We
believe the same consideration is
appropriate for determining minimum
numbers of measures for each
subdomain, and, based on prior
independent analyses conducted of the
appropriate minimum numbers for the
Clinical Process of Care and Outcomes
domains whose measures formed the
basis for the new Clinical Care domain,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28133), we
proposed separate minimum numbers
for each of these subdomains below. As
described further above, we also
attempted to balance our desire to be as
inclusive as possible with the Hospital
VBP Program and the need for reliable
quality measurement data on which to
base TPSs.
(2) Clinical Care—Outcomes Subdomain
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50707), we adopted a
minimum number of two measures in
the former Outcome domain. We stated
our belief that this minimum number is
appropriate for the expanded Outcome
domain that formed the basis for the
Clinical Care—Outcomes subdomain
because adding measure scores beyond
the minimum number of measures has
the effect of enhancing the domain
score’s reliability.
As noted above, the Clinical Care—
Outcomes subdomain now contains the
three 30-day mortality measures, and
based on previous independent analysis
of the appropriate minimum number of
measures for the Outcomes domain that
formed the basis for the Clinical Care—
Outcomes subdomain (available on our
Web site at: http://cms.hhs.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/hospital-valuebased-purchasing/Downloads/HVBP_
Measure_Reliability-.pdf), we continue
to believe that a minimum number of
two measures within the subdomain
appropriately balances scoring
reliability with inclusiveness under the
program. As noted above, we stated our
intent to post a summary of the
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reliability and minimum numbers
analysis on the CMS Web site during the
public comment period. Therefore, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 281333), we proposed to
adopt a minimum number of two
measures in the Clinical Care—Outcome
subdomain for FY 2017 and subsequent
years.
We welcomed public comment on
this proposal.
We did not receive any specific public
comments on this proposal, and
therefore are finalizing this policy as
proposed.
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(3) Clinical Care—Process Subdomain
We have reconsidered the finalized
minimum number of measures given the
significant reduction in Clinical Care—
Process measures due to ‘‘topped-out’’
removals that we proposed in the
proposed rule. We are concerned that
requiring hospitals to report on all three
proposed Clinical Care—Process
measures for the FY 2017 Hospital VBP
Program, or even requiring two out of
three measures, could prevent a
significant proportion of participating
hospitals from receiving a Clinical
Care—Process subdomain score. We are
aware that relatively few hospitals
report data for the AMI–7a measure, and
the proposed PC–01 measure will only
include hospitals that provide maternity
services. In accordance with our
preference for including as many
hospitals as possible in the Hospital
VBP Program while ensuring the
reliability of the domain score, and
based on a prior independent analysis
that formed the basis for the Clinical
Care—Process domain, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28133) we proposed to require hospitals
to report a minimum of one measure in
the Clinical Care—Process domain for
the FY 2017 Hospital VBP Program and
subsequent years to receive a domain
score.
We welcomed public comment on
this proposal.
We did not receive any specific public
comments on this proposal, and
therefore are finalizing this policy as
proposed.
d. Minimum Number of Measures—
Efficiency and Cost Reduction Domain
Because the MSPB measure remains
the only measure within the Efficiency
and Cost Reduction domain for FY
2017, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28133) we
proposed to require that hospitals
receive a MSPB measure score in order
to receive an Efficiency and Cost
Reduction domain score. If we adopt
additional measures for this domain in
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the future, we will consider if we
should revisit this policy.
We welcomed public comments on
this proposal.
We did not receive any specific public
comments on this proposal, and
therefore are finalizing this policy as
proposed.
e. Minimum Number of Measures—
PEC/CC Domain
As with the MSPB measure adopted
for the Efficiency and Cost Reduction
domain described further above, we
have not adopted additional measures
for the PEC/CC domain. Because the
HCAHPS survey measure remains the
only measure within the PEC/CC
domain for FY 2017, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28133), we proposed to require that
hospitals receive an HCAHPS survey
measure score in order to receive a PEC/
CC domain score. If we adopt additional
measures for this domain in the future,
we will consider if we should revisit
this policy.
We welcomed public comments on
this proposal.
We did not receive any specific public
comments on this proposal, and
therefore are finalizing this policy as
proposed.
13. Applicability of the Hospital VBP
Program to Maryland Hospitals
Section 1886(o)(1)(C) of the Act
specifies the hospitals for which the
Hospital VBP Program applies.
Specifically, the term ‘‘hospital’’ is
defined under section 1886(o)(1)(C)(i) of
the Act as a ‘‘subsection (d) hospital (as
defined in section 1886(d)(1)(B) [of the
Act]).’’ Section 1886(o)(1)(C)(ii) of the
Act sets forth a list of exclusions to the
definition of the term ‘‘hospital’’ with
respect to a fiscal year. Section
1886(o)(1)(C)(iv) of the Act states that in
the case of a hospital that is paid under
section 1814(b)(3) of the Act, the
Secretary may exempt the hospital from
the Hospital VBP Program if the State
submits an annual report to the
Secretary describing how a similar
program in the State for a participating
hospital or hospitals achieves or
surpasses the measured results in terms
of patient health outcomes and cost
savings established under the Hospital
VBP Program. We have interpreted the
reference to section 1814(b)(3) of the Act
to mean those Maryland hospitals that
were paid under section 1814(b)(3) of
the Act and that, absent the ‘‘waiver’’
provided by section 1814(b)(3) of the
Act, would have been paid under the
IPPS.
The State of Maryland entered into an
agreement with CMS, effective January
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1, 2014, to participate in CMS’ new
Maryland All-Payer Model, a 5-year
hospital payment model. This model is
being implemented under section
1115A of the Act, as added by section
3021 of the Affordable Care Act, which
authorizes the testing of innovative
payment and service delivery models,
including models that allow States to
‘‘test and evaluate systems of all-payer
payment reform for the medical care of
residents of the State, including dualeligible individuals.’’ Section 1115A of
the Act authorizes the Secretary to
waive such requirements of Titles XI
and XVIII of the Act as may be
necessary solely for purposes of carrying
out section 1115A of the Act with
respect to testing models.
Under the agreement with CMS,
Maryland will limit per capita total
hospital cost growth for all payers,
including Medicare. In order to
implement the new model, effective
January 1, 2014, Maryland elected to no
longer have Medicare pay Maryland
hospitals in accordance with section
1814(b)(3) of the Act. Maryland also
represented that it is no longer in
continuous operation of a
demonstration project reimbursement
system since July 1, 1977, as specified
under section 1814(b)(3) of the Act.
Because Maryland hospitals are no
longer paid under section 1814(b)(3) of
the Act, they are no longer subject to
those provisions of the Act and related
implementing regulations that are
specific to hospitals paid under section
1814(b)(3) of the Act, including but not
limited to section 1886(o)(1)(C)(iv) of
the Act, which provides an exemption
for hospitals paid under section
1814(b)(3) of the Act from the
application of the Hospital VBP Program
if the State which is paid under that
section meets certain requirements.
In order to implement the Maryland
All-Payer Model, we have waived
certain provisions of the Act, and the
corresponding implementing
regulations, as set forth in the agreement
between CMS and Maryland and subject
to Maryland’s compliance with the
terms of the agreement. The effect of
Maryland hospitals no longer being paid
under section 1814(b)(3) of the Act is
that they are not entitled to be exempted
from the Hospital VBP Program under
section 1886(o)(1)(C)(iv) of the Act and,
but for the model, would be included in
the Hospital VBP Program. In other
words, although the exemption from the
Hospital VBP Program no longer
applies, Maryland hospitals will not be
participating in the Hospital VBP
Program because section 1886(o) of the
Act and its implementing regulations
have been waived for purposes of the
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model, subject to the terms of the
agreement.
Accordingly, in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28133
through 28134) we proposed to make
conforming revisions to section 412.160,
in the definition of ‘‘base-operating DRG
payment amount’’ and to section
412.161, which describes the
applicability of the Hospital VBP
Program. We proposed to delete
references in these regulations to
hospitals paid under section 1814(b)(3)
of the Act because, at this time, there are
no hospitals paid under that section.
We welcomed public comment on
these proposals. After receiving no
specific public comment on these
proposals, we are finalizing our
proposed regulation text changes to
delete references in the regulation text
to hospitals paid under section
1814(b)(3) of the Act because no
hospitals are paid under that section.
14. Disaster/Extraordinary Circumstance
Exception Under the Hospital VBP
Program
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50704 through 50706), we
adopted a disaster/extraordinary
circumstance exception. We refer
readers to that final rule for the policy’s
details.
We note that we are currently in the
process of revising the Extraordinary
Circumstances/Disaster Extension or
Waiver Request form, previously
approved under OMB control number
0938–1171.
J. Changes to the Hospital-Acquired
Condition (HAC) Reduction Program
1. Background
We refer readers to section V.I.1.a. of
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50707 through 50708) for a
general overview of the HAC Reduction
Program.
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2. Statutory Basis for the HAC
Reduction Program
Section 3008 of the Affordable Care
Act added section 1886(p) to the Act to
provide an incentive for certain
hospitals to reduce the incidence of
HACs. Section 1886(p) of the Act
requires the Secretary to make an
adjustment to payments to ‘‘applicable
hospitals’’ effective beginning on
October 1, 2014 and for subsequent
program years. Section 1886(p)(1) of the
Act sets forth the requirements by
which payments to ‘‘applicable
hospitals’’ will be adjusted to account
for HACs with respect to discharges
occurring during FY 2015 or later. For
hospitals with HAC scores in the worst
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performing quartile relative to other
applicable hospitals for a given fiscal
year, the amount of Medicare payment
is reduced to 99 percent of the amount
of payment that would otherwise apply
to discharges under section 1886(d) or
1814(b)(3) of the Act, as applicable.
Section 1886(p)(2)(A) of the Act defines
‘‘applicable hospitals’’ as subsection (d)
hospitals that meet certain criteria.
Section 1886(p)(2)(B)(i) of the Act
defines these criteria and specifies that
the payment adjustment would apply to
an applicable hospital that ranks in the
top quartile (25 percent) of all
subsection (d) hospitals, relative to the
national average, of conditions acquired
during the applicable period, as
determined by the Secretary. Section
1886(p)(2)(B)(ii) of the Act requires the
Secretary to establish and apply a riskadjustment methodology in calculating
HAC scores for each hospital.
Sections 1886(p)(3) and (p)(4) of the
Act define ‘‘hospital-acquired
conditions’’ and ‘‘applicable period,’’
respectively. The term ‘‘hospitalacquired condition’’ means ‘‘a condition
identified in subsection
1886(d)(4)(D)(iv) of the Act and any
other condition determined appropriate
by the Secretary that an individual
acquires during a stay in an applicable
hospital, as determined by the
Secretary.’’ The term ‘‘applicable
period’’ means, with respect to a fiscal
year, a period specified by the Secretary.
Section 1886(p)(5) of the Act requires
that, prior to FY 2015 and each
subsequent fiscal year, the Secretary
provides confidential reports to each
applicable hospital with respect to the
HAC Reduction Program scores for the
applicable period, to give the hospitals
an opportunity to review and correct the
data. Section 1886(p)(6)(A) of the Act
sets forth the reporting requirements by
which the Secretary would make
information available to the public
regarding HACs for each applicable
hospital. Section 1886(p)(6)(B) of the
Act requires the Secretary to ensure that
an applicable hospital has the
opportunity to review, and submit
corrections for, the information to be
made public with respect to the HAC
scores of the applicable hospital prior to
such information being made public.
Section 1886(p)(6)(C) of the Act requires
that, once corrected, the HAC scores be
posted on the Hospital Compare Web
site on the Internet in an easily
understandable format.
Section 1886(p)(7) of the Act limits
administrative and judicial review of
certain determinations made pursuant
to section 1886(p) of the Act. These
determinations include: what qualifies
as an applicable hospital; the
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50087
specifications of a HAC; the Secretary’s
determination of the ‘‘applicable
period’; the provision of confidential
reports submitted to the applicable
hospital; and the information publicly
reported on the Hospital Compare Web
site.
3. Implementation of the HAC
Reduction Program for FY 2015
a. Overview
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50707 through 50729), we
presented the general framework for
implementation of the HAC Reduction
Program for the FY 2015
implementation. We included the
following provisions for the program: (a)
The relevant definitions applicable to
the program; (b) the payment
adjustment under the program; (c) the
measure selection and conditions for the
program, including a risk-adjustment
and scoring methodology; (d)
performance scoring; (e) the process for
making hospital-specific performance
information available to the public,
including the opportunity for a hospital
to review the information and submit
corrections; and (f) limitation of
administrative and judicial review.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50967), we established the
rules governing the payment adjustment
under the HAC Reduction Program at
Subpart I of 42 CFR Part 412 (§§ 412.170
and 412.172). We also amended existing
§ 412.150 (the section that describes the
basis and scope of Subpart I of Part 412,
which contains the regulations
governing adjustments to the base
operating DRG payment amounts under
the IPPS for inpatient operating costs) to
incorporate the basis and scope of
§§ 412.170 and 412.172 for the HAC
Reduction Program.
In accordance with the provisions of
section 1886(p) of the Act, in the FY
2014 IPPS/LTCH PPS final rule, we
included, under § 412.170, definitions
for the terms ‘‘hospital-acquired
condition,’’ ‘‘applicable hospital,’’ and
‘‘applicable time period’’ (78 FR 50967).
In § 412.170, we defined ‘‘hospitalacquired condition’’ as a condition as
described in section 1886(d)(4)(D)(iv) of
the Act and any other condition
determined appropriate by the Secretary
that an individual acquires during a stay
in an applicable hospital, as determined
by the Secretary. We defined an
‘‘applicable hospital’’ as ‘‘a hospital
described in section 1886(d)(1)(B) of the
Act (including a hospital in Maryland
that is paid under section 1814(b)(3) of
the Act and that, absent the waiver
specified by section 1814(b)(3) of the
Act, would have been paid under the
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hospital inpatient prospective payment
system) as long as the hospital meets the
criteria specified under § 412.172(e)’’
(78 FR 50967). We specified that this
definition does not include hospitals
and hospital units excluded from the
IPPS, such as LTCHs, cancer hospitals,
children’s hospitals, IRFs, IPFs, CAHs,
and Puerto Rico hospitals. We defined
the ‘‘applicable period’’ as, with respect
to a fiscal year, the 2-year period (as
specified by the Secretary) from which
data are collected in order to calculate
the Total HAC Score for the HAC
Reduction Program.
Comment: Commenters supported the
HAC Reduction Program as a
mechanism to identify hospitals that
underperform in preventing wellidentified, measurable, and preventable
adverse events.
Response: We appreciate the
commenters’ support. We are committed
to reduce HACs, which are important
markers of quality of care and whose
reduction can positively impact patient
outcomes and the cost of care.
Comment: Several commenters
suggested changing the terminology of
‘‘hospital-acquired conditions’’ to
‘‘hospital-acquired complications’’ to
signal more clearly the intent of the
program is to focus on complications
that arise from inappropriate delivery of
care.
Response: The name of the HAC
Reduction Program is specified in
section 1886(d) of the Act. We believe
that the name of the program reflects
Congress’ intent in passing this
provision of the Affordable Care Act.
b. Payment Adjustment Under the HAC
Reduction Program, Including
Exemptions
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(1) Basic Payment Adjustment
Section 1886(p)(1) of the Act sets
forth the requirements by which
payments to ‘‘applicable hospitals’’ are
to be adjusted for hospitals in the worst
performing quartile relative to other
applicable hospitals beginning on
October 1, 2014. Section 1886(p)(1) of
the Act specifies that the amount of
payment shall be equal to 99 percent of
the amount of payment that would
otherwise apply to such discharges
under section 1886(d) or 1814(b)(3) of
the Act, as applicable. As specified in
the statute, this payment adjustment is
calculated and made after payment
adjustments under sections 1886(o) and
1886(q) of the Act, the Hospital VBP
Program and the Hospital Readmissions
Reduction Program respectively, are
calculated and made. (We note that the
Hospital VBP Program is discussed in
section IV.I. of the preamble of this final
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rule and the Hospital Readmissions
Reduction Program is discussed in
section IV.H. of the preamble of this
final rule.) Section 1886(p)(2)(A) of the
Act defines ‘‘applicable hospitals’’ as
subsection (d) hospitals that meet
certain criteria. Section 1886(p)(2)(B)(i)
of the Act defines these criteria and
specifies that the payment adjustment
would apply to an applicable hospital
that ranks in the top quartile (25
percent) of all subsection (d) hospitals,
relative to the national average of
hospitals that report conditions
acquired during the applicable period,
as determined by the Secretary.
Therefore, in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50967), we
specified in § 412.172(b) of the
regulations that, for applicable
hospitals, beginning with discharges
occurring during FY 2015, the amount
of payment under § 412.172, or section
1814(b)(3) of the Act, as applicable, for
such discharges shall be equal to 99
percent of the amount of payment that
would otherwise apply to such
discharges under § 412.172, or section
1814(b)(3) of the Act. This amount of
payment will be determined after the
application of the payment adjustment
under the Hospital Readmissions
Reduction Program under § 412.154,
and the adjustment made under the
Hospital VBP Program under § 412.162,
and section 1814(l)(4) of the Act but
without regard to this section 1886(p) of
the Act.
Comment: Many commenters noted
that the proposed 1-percent reduction in
payment for the top quartile of lower
performing hospitals will provide a
stronger penalty than the current DRA
HAC policy and has the potential to
stimulate improvements in safety. The
commenters supported CMS’ efforts to
reduce HACs by paying less to hospitals
for instances involving patients
contracting HACs during a hospital stay.
These commenters noted that quality
payment adjustments continue to
positively affect provider performance.
Commenters further noted that several
commercial health plans have
implemented similar actions, processes,
and guidelines to align their payment
policies with CMS to adjust payment for
reasonably preventable errors made by
hospitals and health care facilities.
Response: We appreciate the
commenters’ support and agree that the
HAC Reduction Program, along with the
other CMS quality initiatives set forth
under the Affordable Care Act (for
example, the Hospital VBP and Hospital
Readmissions Reduction Programs), will
lead to improvements in patient care,
safety and outcomes.
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Comment: Some commenters
indicated that it was not clear in the FY
2015 IPPS/LTCH PPS proposed rule
how the HAC Reduction Program
payment adjustment would specifically
be applied. The commenters stated that
the HAC Reduction Program penalty
appears to apply to all hospital
payments (for example, outliers, DSH,
uncompensated care, and IME) and they
questioned why the policy should apply
to IME and DSH payments that they
asserted are not related to the
underlying quality policy the provision
enforces.
These commenters urged CMS to use
administrative authority under section
1886(d)(5)(I)(i) of the Act to limit the
HAC penalty to the base operating DRG
payment only, which they reported
would be consistent with Congressional
intent and with the Hospital VBP and
Hospital Readmissions Reduction
Programs. The commenters noted that
by restricting the penalty to the base
operating DRG payment it could ensure
consistency across the programs and
reduce any confusion because under the
Hospital VBP and Hospital
Readmissions Reduction Programs the
payment adjustment applies to the base
operating DRG payment, not the base
DRG rate and the additional add-on
payments of outliers, DSH,
uncompensated care, and IME.
Response: We did not propose to
change the application of the payment
adjustment that we finalized in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50711). As we discussed in that rule, the
statutory requirements for the HAC
Reduction Program payment adjustment
differ from those for the Hospital VBP
and Hospital Readmissions Reduction
Programs. In accordance with section
1886(q)(1) of the Act, the Hospital
Readmissions Reduction Program
adjustment is applied to the base
operating DRG payment amount, which
is defined at section 1886(q)(2) of the
Act to exclude certain payments under
subsection (d). Similarly, in accordance
with sections 1886(o)(7)(A) and
1886(o)(7)(B) of the Act, the Hospital
VBP Program applies adjustments to the
base operating DRG payment amount,
which is defined at section
1886(o)(7)(D) of the Act to exclude
certain payments under subsection (d).
For the HAC Reduction Program, no
such statutory exclusion exists and
section 1886(p)(1) of the Act states that
the payment for applicable hospitals
‘‘shall be equal to 99 percent of the
amount of payment that would
otherwise apply.’’ Therefore, the HAC
Reduction Program payment adjustment
will be applied after the application of
the other program adjustments
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including add-on payments consisting
of outliers, DSH, uncompensated care,
and IME.
As we have stated previously, our
goal for the HAC Reduction Program is
to heighten the awareness of HACs and
reduce the number of incidences that
occur through implementing the
adjustments required by section 1886(p)
of the Act. We believe that our efforts
in using payment adjustments and our
measurement authority will encourage
hospitals to eliminate the incidence of
HACs that could be reasonably
prevented by applying evidence-based
clinical guidelines. Given this goal, and
the statutory language in 1886(p) of the
Act, we do not believe this is an
appropriate situation for us to exercise
our authority under 1886(d)(5)(I)(i) of
the Act.
(2) Applicability to Maryland Hospitals
Section 1886(p)(2)(c) of the Act
specifies that the Secretary may exempt
hospitals paid under 1814(b)(3) ‘‘from
the application of this subsection if the
State which is paid under such section
submits an annual report to the
Secretary describing how a similar
program in the state for a participating
hospital or hospitals achieves or
surpasses the measured results in terms
of patient health outcomes and cost
savings established under this
subsection.’’ Accordingly, a program
established by the State of Maryland
that could serve to exempt hospitals in
the State from the HAC Reduction
Program would focus on hospitals
operating under the waiver provided by
section 1814(b)(3) of the Act, that is,
those hospitals that would otherwise
have been paid by Medicare under the
IPPS, absent this provision. As we
stated in section IV.J.3.b of the preamble
of this final rule, because hospitals paid
under section 1814(b)(3) of the Act are
subsection (d) hospitals, unless the
Secretary exempts these hospitals from
the application of payment adjustments
under the HAC Reduction Program
under the authority of section
1886(p)(2)(C) of the Act, they are
considered to be ‘‘applicable hospitals’’
(subject to the payment adjustments in
the HAC Reduction Program) under the
HAC Reduction Program.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50967 through 50968), we
established criteria for evaluation to
determine whether Maryland would be
exempted from the application of the
payment adjustments under the HAC
Reduction Program for a given fiscal
year, under § 412.172(c). Pursuant to our
rule, if the State submitted an annual
report to the Secretary describing how a
similar program to reduce hospital
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acquired conditions in that State
achieves or surpasses the measured
results in terms of health outcomes and
cost savings for the HAC Reduction
Program as applied to hospitals
described in section 1886(d)(1)(B) of the
Act, the State would be exempt from the
HAC Reduction Program. We specified
in the regulations that ‘‘CMS will
establish criteria for evaluation of
Maryland’s annual report to the
Secretary to determine whether
Maryland will be exempted from the
application of payment adjustments
under this program for a given fiscal
year.’’ We also specified that Maryland’s
annual report to the Secretary and
request for exemption from the HAC
Reduction Program must be resubmitted
and reconsidered annually. We
provided that, for FY 2015, Maryland
must submit a preliminary report to us
by January 15, 2014 and a final report
to us by June 1, 2014.
We noted that our criteria to evaluate
Maryland’s program is for FY 2015, the
first year of the payment adjustment
under the HAC Reduction Program, and
that our evaluation criteria may change
through notice and comment
rulemaking as this program evolves.
The State of Maryland entered into an
agreement with CMS, effective January
1, 2014, to participate in CMS’ new
Maryland All-Payer Model, a 5-year
hospital payment model. This model is
being implemented under section
1115A of the Social Security Act
(‘‘Act’’), as added by section 3021 of the
Affordable Care Act, which authorizes
the testing of innovative payment and
service delivery models, including
models that allow states to ‘‘test and
evaluate systems of all-payer payment
reform for the medical care of residents
of the State, including dual eligible
individuals.’’ Section 1115A of the Act
authorizes the Secretary to waive such
requirements of titles XI and XVIII of
the Act as may be necessary solely for
purposes of carrying out Section 1115A
with respect to testing models.
Under the agreement with CMS,
Maryland will limit per capita total
hospital cost growth for all payers,
including Medicare. In order to
implement the new model, effective
January 1, 2014, Maryland elected to no
longer have Medicare reimburse
Maryland hospitals in accordance with
section 1814(b)(3) of the Act. Maryland
also stipulated that it is no longer in
continuous operation of a
demonstration project reimbursement
system since July 1, 1977, as specified
under Section 1814(b)(3) of the Act.
Because Maryland hospitals are no
longer paid under section 1814(b)(3) of
the Act, they are no longer subject to
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those provisions of the Act and related
implementing regulations that are
specific to section 1814(b)(3) hospitals,
including but not limited to section
1886(p)(2)(C) of the Act, which provides
exemptions for hospitals paid under
section 1814(b)(3) from the application
of the HAC Reduction Program.
However, in order to implement the
Maryland All-Payer Model, CMS has
waived certain provisions of the Act for
Maryland hospitals, including section
1886(p), and the corresponding
implementing regulations, as set forth in
the agreement between CMS and
Maryland and subject to Maryland’s
compliance with the terms of the
agreement. In other words, although
section 1886(p)(2)(C) of the Act no
longer applies to Maryland hospitals,
Maryland hospitals will not be
participating in the HAC Reduction
Program because section 1886(p) of the
Act and its implementing regulations
have been waived for purposes of the
model, subject to the terms of the
agreement. Consequently, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28135), we proposed that the Total
HAC Scores for Maryland hospitals
would not be included when identifying
the top quartile of all hospitals with
respect to their Total HAC Score during
the applicable period.
As a result of changes to the status of
Maryland hospitals under 1814(b)(3) of
the Act described above, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28136), we proposed conforming
changes to these regulations and sought
public comment on this proposal.
Specifically, we proposed to remove the
entire contents of paragraph (c) under
§ 412.172 and reserve the paragraph (c)
designation.
No commenters opposed our proposal
to exclude the Total HAC Scores for
Maryland hospitals when identifying
the top quartile of all hospitals and no
commenters opposed CMS’ proposed
changes to the regulations regarding
Maryland hospitals. Therefore, we are
finalizing our proposal to exclude the
Total HAC Scores for Maryland
hospitals when identifying the top
quartile of all hospitals and our
proposed changes to the regulations
regarding Maryland hospitals.
c. Measure Selection and Conditions,
Including Risk-Adjustment Scoring
Methodology
(1) General Selection of Measures
We did not propose any new
measures for the HAC Reduction
Program in the FY 2015 IPPS/LTCH PPS
proposed rule. Although we are not
required under section 1886(p) of the
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Act to address specific measure scoring
methodologies and domain weights
regarding the HAC Reduction Program
in notice-and-comment rulemaking, as
required under the Hospital VBP
program, we believe that it is important
to set forth such scoring methodologies
for each individual HAC measure, in
order for the public to understand how
the measures adopted in previous
rulemaking relate to the performance
methodology used to determine the
applicable hospitals subject to the
payment adjustment under the HAC
Reduction Program. Below we set forth
the specific measure scoring
methodology and domain weights
regarding the HAC Reduction Program
for FY 2015 as finalized in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50712
through 50719).
Comment: A few commenters thanked
CMS for not adding any new measures
to the HAC program for FY 2015 and FY
2016. One commenter encouraged CMS
to fill measure gaps as soon as possible
to ensure that this program provides the
greatest possible value for quality
improvement and consumer education.
Several commenters suggested that CMS
identify new measures for the HAC
Reduction Program that would address
a variety of quality and safety issues
relevant to the broadest possible range
of hospitals and affect a greater number
of patients, as commenters asserted that
this approach is more fair and would
ensure hospitals are not penalized for
the type of patients they treat. In
addition, the commenters believed this
approach would help improve the
ability of the program to identify the
real poor performers. One commenter
recommended that these new measures
should not be entirely claims-based.
Commenters made additional
recommendations for future new
measures including PSI–4: Death rate
among surgical inpatients with serious,
treatable complications (NQF #0351),
PSI–16: Transfusion reaction count
(NQF #0349), surgical site infections
(SSIs) following hip and knee
arthroplasty and SSIs following highvolume procedures such as caesarean
section surgery. One commenter
recommended expanding the iatrogenic
pneumothorax rate (PSI–6), which
currently addresses iatrogenic
pneumothorax with venous
catheterization, to also include
iatrogenic pneumothorax with
paracentesis and thoracentesis. One
commenter recommended that new
measures of infection be developed that
incorporate infection rates per thousand
discharges in order to inform patients of
their likelihood of acquiring an
infection at a given hospital.
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Response: We did not propose new
measures in this rulemaking as we
intend to allow time for providers to
gain experience with the finalized
measures. We are continuously
evaluating the program and working to
identify new, potentially suitable
measures to fill measure gaps. We
appreciate the commenters’ input for
measure selection and will take this
feedback into consideration in future
rulemaking.
Comment: Many commenters
suggested that all HAC Reduction
Program measures should be NQFendorsed and, while recognizing it is
not a requirement for the HAC
Reduction Program, commenters also
recommended that CMS use the formal
pre-rulemaking process of the Measure
Applications Partnership (MAP) for any
measures being considered for the
program.
Response: While we note that section
1886(p)(3) of the Act does not require
NQF endorsement for a measure to be
considered for the HAC Reduction
Program, we are aware of the value of
the NQF endorsement and MAP
processes in facilitating information
exchange and agreement among
stakeholders. We also note that all of the
measures adopted for the HAC
Reduction Program went through the
pre-rulemaking process and were either
recommended for inclusion by the
MAP, or represent 1 of the 12 HACs that
have been identified by the Secretary
and which are referenced in section
1886(p) of the Act for the HAC
Reduction Program.
(2) Updates on AHRQ PSI–90, and CDC
NHSN CLABSI and CAUTI Measures
For FY 2015, we will keep the AHRQ
PSI–90 composite measure (in Domain
1) that we adopted in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50717)
because it is currently endorsed by
NQF. However, we note that the AHRQ
PSI–90 composite measure is currently
undergoing NQF maintenance review.
The PSI–90 composite measure consists
of eight component indicators: PSI–3
Pressure ulcer rate; PSI–6 Iatrogenic
pneumothorax rate; PSI–7 Central
venous catheter-related blood stream
infections rate; PSI–8 Postoperative hip
fracture rate; PSI–12 Postoperative
Pulmonary Embolism/Deep Vein
Thrombosis rate; PSI–13 Postoperative
sepsis rate; PSI–14 Wound dehiscence
rate; and PSI–15 Accidental puncture &
laceration rate. AHRQ is considering the
addition of PSI–9 (Perioperative
hemorrhage rate), PSI–10 (Perioperative
physiologic metabolic derangement rate)
and PSI–11 (Post-operative respiratory
failure rate) or a combination of these
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three measures into the PSI–90
composite measure. We consider the
inclusion of additional component
measures in the PSI–90 composite
measure to be a significant change to the
PSI–90 composite measure that we
finalized in the FY 2014 IPPS/LTCH
PPS final rule. If the changes are
significant, we will engage in noticeand-comment rulemaking prior to
requiring reporting of this revised
composite.
Similarly, the CDC NHSN CatheterAssociated Urinary Tract Infection
(CAUTI) and Central Line-Associated
Blood Stream Infection (CLABSI)
measures in Domain 2 that we adopted
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717) for FY 2015 also are
currently undergoing NQF maintenance
review. If there are significant changes
to these measures, we will engage in
notice-and-comment rulemaking prior
to requiring reporting of the changes
made to CDCs NHSN CLABSI and
CAUTI measures. For FY 2015, we will
keep CDC’s NHSN CAUTI and CLABSI
measures in Domain 2 as they are
currently endorsed.
Comment: Several commenters
supported CMS’ commitment to use the
notice-and-comment rulemaking
process for any HAC measure with
significant changes made during the
NQF review process.
One commenter specifically
recommended that the AHRQ PSI–90
measure and the CDC NHSN CLABSI
and CAUTI measures currently
undergoing NQF maintenance review
only be included for FY 2016 and
beyond contingent upon continued NQF
endorsement and any updates
recommended for continued
endorsement.
Response: We appreciate the
commenters’ support of our rulemaking
process. As for the comments regarding
NQF endorsement of the measures, we
refer readers to our response in section
IV.J.3.c. of the preamble of this final
rule.
(3) Measure Selection
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717), we finalized the
following measures for selection: (i) the
AHRQ PSI–90 composite measure for
Domain 1 and the CDC NHSN measures
CAUTI and CLABSI for Domain 2 for FY
2015; (ii) addition of the CDC NHSN
Surgical Site Infection (SSI) measure for
FY 2016; and (iii) addition of the CDC
NHSN Methicillin-Resistant
Staphylococcus aureus (MRSA)
Bactremia and C. difficile measures for
FY 2017. Several of these measures are
already part of the Hospital IQR
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Program and are reported on the
Hospital Compare Web site.
Comment: One commenter supported
the implementation schedule of quality
measures for the program, specifically
stating that the AHRQ PSI–90 composite
measure and the CDC NSHN CLABSI
and CAUTI measures are sufficient
starting points for the HAC Reduction
Program. A few commenters also
supported the addition of the CDC
NHSN SSI, MRSA and C. difficile
measures which they believed would
address the increasing incidence of
these infections in hospital settings. A
few commenters supported the adoption
of the NHSN SSI measure in Domain 2
for FY 2016.
Response: We thank the commenters
for the recognition of the significance of
potential patient harms in hospitals as
well as for their support of our
proposals for the implementation of the
HAC Reduction Program. We emphasize
that patient safety is our primary
objective for the HAC Reduction
Program.
Comment: A few commenters
supported maintaining claims-based
measures such as the PSI–90 composite
measure in quality reporting programs
because they are the least burdensome,
least costly and most widely accessible
and available reporting method.
Response: We agree that claims-based
measures have the advantages of being
minimally burdensome to providers
while providing data covering a large
proportion of the Medicare population.
We consider several factors when
selecting measures for quality programs,
including but not limited to
measurement gap areas, opportunities
for quality improvement, and feasibility
and burden for implementation. Claimsbased measures, including AHRQ PSIs,
are collected and widely accepted by
States and other health care purchasers
for payment purposes.
In addition to the claims-based
measure in the FY 2015 HAC Reduction
Program, we also adopt chart-abstracted
measures as appropriate. There are
currently two chart-abstracted measures
in the program and the number of chartabstracted measures will increase in
subsequent years (three in FY2016 and
five in FY 2017). We also are exploring
options for new measures, including
electronically specified measures, that
could be incorporated into the HAC
Reduction Program in future years.
Comment: Many commenters believed
that coding biases result in unacceptable
levels of reliability and validity for the
PSI–90 composite measure and thus the
measure fails to accurately and
meaningfully reflect hospital
performance. A few commenters
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expressed concerns that the PSI
measures are not clinically validated
against medical records.
Response: We have previously
addressed commenters’ specific
concerns regarding validity and coding
issues of PSI–90 composite measure,
and we refer readers to our responses to
these comments in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50715). We
also note that there are validation
studies examining the relationship
between billing or claims data and
medical records.55
Comment: Many commenters
expressed a lack of confidence about the
PSI–90 composite measure due to recent
discussions at the NQF Patient Safety
Standing Committee (‘‘Patient Safety
Committee’’ or ‘‘Committee’’). Some
commenters stated that the Patient
Safety Committee did not recommend
the measure for endorsement and other
commenters noted that NQF Patient
Safety Committee requested changes to
the weighting of the individual
components in the composite measure
to better reflect their relative importance
or preventability. One way the
Committee suggested this reweighting
could be achieved is through including
three additional component measures
(PSI–9—Perioperative Hemorrhage or
Hematoma Rate, PSI–10—Postoperative
Physiologic and Metabolic Derangement
Rate and PSI–11—Postoperative
Respiratory Failure Rate) in the
composite. A few commenters
expressed support for the potential
inclusion of PSI–9, 10 and 11 in the
PSI–90 composite measure. However,
one commenter did not support the
addition of any new components to the
composite measure, while a few
commenters opposed the inclusion of
PSI–9 and PSI–10 in particular because
they claimed that these components had
a high false-positive rate due to lack of
clarity on the coding criteria.
In the event that the composite
measure is not re-endorsed by NQF,
some commenters recommended that
55 (1) Zrelak PA, Romano PS, Tancredi DJ,
Geppert JJ, Utter GH. Validity of the AHRQ Patient
Safety Indicator for Postoperative Physiologic and
Metabolic Derangement based on a national sample
of medical records. Medical Care 2013; 51(9):806–
11. (2) Utter GH, Zrelak PA, Baron R, Tancredi DJ,
Sadeghi B, Geppert JJ, Romano PS. Detecting
postoperative hemorrhage or hematoma from
administrative data: The performance of the AHRQ
Patient Safety Indicator. Surgery 2013; 154(5):1117–
25. (3) Borzecki AM, Cevasco M, Chen Q, Shin M,
Itani KM, Rosen AK. How valid is the AHRQ
Patient Safety Indicator ‘‘postoperative physiologic
and metabolic derangement’’? J Am Coll Surg. 2011
Jun;212(6):968–976. (4) Borzecki AM, Kaafarani H,
Cevasco M, Hickson K, Macdonald S, Shin M, Itani
KM, Rosen AK. How valid is the AHRQ Patient
Safety Indicator ‘‘postoperative hemorrhage or
hematoma’’? J Am Coll Surg. 2011 Jun;212(6):946–
953.
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CMS not consider using individual PSI–
90 component measures that may still
be endorsed. They also recommended
that additional testing for consistency
between individual components and the
composite scores be undertaken and the
results released. Other commenters had
concerns that several of the PSI–90
component measures are not NQFendorsed. Some commenters supported
and understood that CMS may need to
retain the PSI–90 composite measure,
regardless of NQF endorsement status.
Response: We would like to clarify
the status of the PSI–90 measure with
regard to NQF endorsement. As part of
the routine NQF measure maintenance
process, the Patient Safety Committee
expressed concerns about the weighting
of the PSI–90 component measures and
requested to see additional measure
information related to re-weighting of
PSI–90 with three additional
components (PSI–9, PSI 10 and PSI 11)
before deciding if the measure would be
recommended for continued
endorsement. AHRQ has submitted the
requested data for the NQF Patient
Safety Committee’s consideration in
making their decision regarding
continued endorsement of the
composite. As we stated earlier, if
during the NQF review process,
substantive changes are made to the
measure, we will go through a noticeand-comment rulemaking process.
Regarding the concern for the claimed
high false-positive rate of some of the
PSI–90 component measures, we
conferred with AHRQ which noted that
most of the studies that examine
positive predictive values predate the
use of Present on Admission (POA)
coding that is now integral to the PSIs.
Detailed reviews of these studies
indicate that most of the false positives
were due to events that were POA. POA
coding for IPPS hospitals was required
by CMS beginning October 1, 2007 with
a payment penalty beginning October 1,
2008. Studies that use data prior to 2009
would not have captured POA
information. Therefore, we believe that
proper coding will address the
commenters’ concerns.
In addition, AHRQ noted that the
NQF convened a group of 12 experts to
determine what criteria should be used
for evaluating composite performance
measurement for NQF endorsement.
The Technical Expert Panel provided
clear guidance on the relationship
between the individual component
indicators and the composite in the
Composite Performance Measure
Evaluation Guidance document (NQF,
April 2013). Specifically, individual
component measures that are included
in the composite performance measure:
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(1) should be justified based on the
clinical evidence; (2) do not need to be
NQF endorsed; (3) generally should
demonstrate a gap in performance; and
(4) may not be sufficiently reliable
independently, but contribute to the
reliability of the composite performance
measure.
AHRQ convened a Composite
Measure Workgroup of experts in the
field to determine the best weighting
strategy. The methodology of the PSI–90
composite measure is detailed in the
original technical report by the AHRQ
Composite Measure Workgroup: http://
qualityindicators.ahrq.gov/Downloads/
Modules/PSI/PSI_Composite_
Development.pdf. Several alternative
approaches were discussed with the
AHRQ Composite Measure Workgroup
and the first NQF Composite Measure
Steering Committee. Factor analysis was
considered as one approach and was
deemed to have no clear advantages
over less complex, more intuitively
clear weighting schemes. In brief,
numerator weighting that is used in the
PSI–90 composite measure was
preferred due to its greater simplicity
and clarity.
Comment: A few commenters stated
that many of the AHRQ PSI–90
composite component measures are rare
events and do not meet the high-volume
requirement for the HAC Reduction
Program.
Response: We note that section
1886(d)(4) (D)(iv) of the Act defines a
hospital-acquired condition for the HAC
Reduction Program as one that is high
cost, high volume or both or any other
conditions determined appropriate by
the Secretary. We believe the PSI–90
composite measure and its components
meet the statutory requirement for
inclusion in the program.
Comment: Some commenters asserted
that composite measures such as PSI–90
do not provide actionable information to
hospitals.
Response: We disagree and note that
hospitals have access to their results on
the individual PSI–90 component
measures and how they compare to the
national risk adjusted rate on their
Hospital Specific Reports which are
issued during the review and
corrections period. In addition, the
component measure scores are available
to hospitals and the public on our Web
site at: http://www.medicare.gov/.
Therefore, hospitals can use the
individual component measure results
to identify specific areas for
improvement efforts.
Comment: Based on the belief that the
PSI–90 composite measure has
significant flaws as described above,
many commenters recommended
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identifying alternatives to the PSI–90
composite measure and phasing it out of
the HAC Reduction Program as soon as
possible. Some commenters suggested
that the alternative measure(s) be
derived from the NQF portfolio of safety
measures.
Response: In the FY 2014 IPPS/LTCH
PPS proposed rule (78 FR 27625
through 27626), we explained the
rationale for including the PSI–90
composite measure in the HAC
Reduction Program. We continue to
believe the PSI–90 is an appropriate tool
for calculation of HAC scores.
Nonetheless, we will continue to
explore options for new measures,
including electronically specified
measures that could be incorporated
into the HAC Reduction Program to
supplement or replace the PSI–90
composite measure. We also note that
the PSI–90 is one of three measures
included in the Program for FY 2015.
The other two measures are chartabstracted and we are increasing the
number of chart-abstracted measures in
subsequent years of the program (three
in FY 2016 and five in FY 2017).
Comment: One commenter suggested
revisions to four of the PSI–90
composite component measures. For
PSI–6, the commenter recommended
exclusion of high frequency outliers,
such as iatrogenic pneumothorax in
patients with a lack of intravenous
access; acuity; and cases where
iatrogenic pneumothorax is secondary
to a life-saving procedure. The
commenter also recommended that CMS
not apply this measure if clinicians have
used all available means of avoiding
iatrogenic pneumothorax, such as
ultrasound guidance. For PSI–7, the
commenter recommended exclusions
for trauma. For PSI–12, the commenter
recommended clear definition of the
inclusion criteria in order to avoid
misclassification of providers and
subsequent inappropriate penalties. For
PSI–14, the commenter requested
adding exclusions for trauma cases and
patients in shock that require emergency
procedures.
Another commenter recommended
that PSI–7 be removed from the HAC
calculation because it is not as wellvalidated as the NSHN CLABSI
measure, the transition from ICD–9 to
ICD–10 coding which some hospitals
have already undergone could
compromise the validity of this
component and that, as it currently
exists, some vascular catheter infections
might be double counted.
Response: AHRQ’s Quality Indicator
program continually updates and refines
measures to provide the best possible
quality indicators to the public. We
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conferred with AHRQ, which welcomed
the commenters’ suggestions and will
examine the feasibility of including
these exclusions. All of the AHRQ
quality indicators go through a rigorous
testing process prior to changes being
made to the indicators. It should be
noted that NQF policy and guidance
generally has favored risk adjustment
approaches over exclusion of high-risk
patients, when possible, to optimize the
generalizability and value of quality
measures. Suggestions regarding
potential PSI measure revisions can be
made directly to QIsupport@
ahrq.hhs.gov.
With regard to the commenter’s
specific suggestion for PSI–6—
Iatrogenic Pneumothorax Rate, it is
impossible to identify patients who lack
peripheral intravenous access using
ICD–9–CM coded data. However, given
exclusions for trauma and respiratory
disease, it is assumed that all patients
who experienced this event had some
type of procedure (such as central
venous catheter placement or
thoracentesis) that placed them at risk
for iatrogenic (hospital-acquired)
pneumothorax. For PSI–7—Central
Venous Catheter-Related Blood Stream
Infection Rate, ICD–10 implementation
will take effect no sooner than October
1, 2015 and may be subject to additional
delays. AHRQ will conduct extensive
testing on the ICD–10 specified
measures to ensure events are not
double counted.
For PSI–12—Perioperative Pulmonary
Embolism or Deep Vein Thrombosis
Rate, inclusion criteria are clearly
defined and have been narrowed as a
result of changes in ICD–9–CM codes
and user feedback. For example, the
numerator inclusion criteria no longer
include upper extremity or thoracic
venous thrombosis, due to concern
about the uncertain preventability of
these events among patients who
require long-term use of central venous
catheters. The numerator inclusion
criteria also no longer include
superficial venous thrombosis, due to
concern about the uncertain
preventability of these events.
Comment: One commenter was
concerned that several of the PSI
composite component measures in the
HAC Reduction Program—including
PSI–6, PSI–12 and PSI–15—were
finalized for removal from the Hospital
IQR Program after FY 2014 in the FY
2013 IPPS/LTCH PPS final rule. The
commenter contended that because
these measures have been deemed unfit
for use in a public reporting application,
they are equally unsuitable for use in a
payment penalty program.
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Response: As we stated in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53507 through 53509), to avoid
duplication, we removed PSI–6, PSI–12
and PSI–15 from Hospital IQR Program
as these individual measures are already
included in the PSI–90 composite
measure which is currently part of the
Hospital IQR Program measure set. The
measures were not deemed to be unfit,
as characterized by the commenter.
Comment: One commenter described
its experience with the AHRQ Quality
Indicator Software not allowing its
organization to identify specific patient
encounters included in the measure
components and not always accurately
reflecting POA. This commenter
recommended that CMS ask AHRQ to
update the software outputs to provide
accurate case level patient information
for patients in the numerator, to update
the software to define which ICD code
triggers the measure, to include
simultaneous SAS and MonAHRQ
releases and to include the PSI–90
outputs in the AHRQ process the same
way as other measures.
Response: AHRQ informed us that
they are constantly improving the
AHRQ QI software and welcomes this
and other suggestions for improvements.
The AHRQ QI software and the
MonAHRQ software are under different
timelines for release for a variety of
external reasons. Additional suggestions
for improvements can be made directly
to [email protected].
Comment: One commenter
recommended revisions to the CAUTI
measure to minimize the potential for
the possible unintended consequence of
premature urinary catheter removal. The
commenter’s recommended revisions
included adding exclusions for
bedridden elderly patients whose urine
output cannot be monitored otherwise,
those who have had complex pelvic
surgery, and those with a history of
urinary retention; and inclusion of a
data capture point for catheter
reinsertion to capture the rate of repeat
instrumentation and infection risk for
those with early catheter removal.
Response: We refer readers to the FY
2014 IPPS/LTCH PPS final rule (78 FR
50716) for our discussion of the issue of
potential unintended consequences of
the CAUTI measure. In regard to the
addition of a data capture point in the
NHSN system, we conferred with CDC,
which stated that they weigh each
datum piece that is required for NHSN
surveillance very carefully, considering
the burden required to capture and
collect the information and the benefits
of the data collected. Individuals
performing validation of CAUTI data
have stated that locating insertion
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documentation is very difficult, if not
impossible in many cases. For this
reason, NHSN does not require the
documentation of the date of insertion
of indwelling urinary catheters. The
NHSN UTI data collection form and
system do allow for voluntary collection
of this information and NHSN
encourages facilities to utilize these
capabilities to inform their CAUTI
prevention efforts as they deem
necessary. However, it is not
appropriate to require such
documentation by all facilities.
Comment: Several commenters
contended that the MRSA and C.
difficile measures do not adequately
distinguish between communityacquired and hospital-acquired
infections and suggested the measures
not be included in the HAC Reduction
Program for that reason. Another
commenter had the same concern and
supported the inclusion of the MRSA
measure but not the C. difficile measure.
A commenter noted that rates of C.
difficile are generally higher in patient
with surgical procedures (particularly
with gastrointestinal surgical
procedures) versus non-surgical patients
and that there are known regional
variations in MRSA and C. difficile
infection rates. For these reasons, this
commenter recommended that process
measures focusing on best practices and
guidelines for patients who contract
MRSA or C. difficile as inpatients would
be more appropriate than outcome
measures tracking MRSA and C. difficile
infection rates. A few commenters
recommended that the C. difficile
measure be included in the Hospital
VBP program, and not in the HAC
Reduction Program.
Response: With respect to some
commenters’ concerns about MRSA and
C. difficile measures, we note that these
measures do enable differentiation
between community-acquired and
health care-associated events based on
date of admission and date(s) of
specimen collection. Therefore, we do
not believe the measures need to be
revised. While we appreciate the
recommendations for process measures,
we note that process measures are not
usually risk adjusted and current statute
requires risk-adjustment for the HAC
Reduction Program. The issue of the
same measures being included in
multiple programs is addressed below.
Comment: Many commenters urged
CMS to eliminate the overlap of
measures between the Hospital VBP and
HAC Reduction Programs. The
commenters understood CMS’ desire to
align the programs in order to draw
more attention to these important
patient safety issues and to spur quicker
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and more meaningful change in patient
care. However, the commenters believed
that this approach creates multiple
operational challenges, results in the
potential for double payment penalties,
and sends conflicting signals about the
true state of hospital performance (a
hospital could incur a penalty under the
HAC Reduction Program but receive an
incentive under the Hospital VBP
Program). Commenters overwhelmingly
recommended that the HAC Reduction
Program measures should only be
included in either the HAC Reduction
Program or the Hospital VBP program
but not in both programs. One
commenter recommended that either
the HAC Reduction Program or the
Hospital VBP program be eliminated
completely.
Response: We acknowledge that there
is overlap in measures between the
Hospital VBP Program and the HAC
Reduction Program and refer readers to
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50716) for our discussion of the
rationale for this overlap. As for
elimination of these programs, they are
statutory requirements and eliminating
them is beyond the scope of the
Secretary’s authority.
Comment: Several commenters
recommended that CMS consider a
comprehensive strategy in which
measures are placed into pay-forperformance programs using a staged
approach: the Hospital IQR Program
would be the basis for selection into the
pay-for-performance programs; the
Hospital VBP Program would be the
next step and would include measures
covering important safety issues but
ones for which it is unclear if effective
strategies exist to improve performance;
and the HAC Reduction Program would
be the final stop and would include
measures that have generally good but
not topped out performance with a
limited performance gap to close and a
set of highly effective, proven strategies
that are widely implementable. Many
commenters also suggested that
measures should be publicly reported
for at least one year before they are
included in the HAC Reduction Program
so that any unintended consequences of
measurement and reporting can be
addressed.
Response: We appreciate the
commenters’ feedback and will consider
these suggestions in future rulemaking.
(4) Measure Risk-Adjustment
Methodology
In the FY 2014 IPPS/LTCH PPS final
rule, we established that we would use
the existing measure-level riskadjustment that is already part of the
risk-adjustment methodology for the
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individual measures in Domains 1 and
2 in order to fulfill this requirement (78
FR 50719). We codified the use of this
methodology under § 412.172(d) of the
regulations. The AHRQ PSI–90
composite measure and the CDC NHSN
measures selected for the program are
risk-adjusted and reliability-adjusted.
Links to the measure specification
documents can be found in section
IV.J.4. of the preamble of this final rule.
Specifically, risk factors such as the
patient’s age, gender, comorbidities, and
complications will be considered in the
calculation of the measure rates so that
hospitals serving a large proportion of
sicker patients are not unfairly
penalized. We noted that the riskadjustment methodology for these
measures meets current NQF
endorsement criteria. We believe that
such risk-adjustment is appropriate,
pursuant to section 1886(p) of the Act.
We will continue to examine the
impact of the additional measures in the
program, and propose refinements to the
program if necessary. Should changes to
the risk-adjustment models for the
measures be adopted during NQF
endorsement maintenance processes, we
will propose adopting these changes as
soon as possible through rulemaking.
Comment: Many commenters had
concerns about the PSI–90 riskadjustment methodology. Most
commenters believed that inadequate
risk-adjustment results in a
disproportionate impact on teaching
hospitals or hospitals that treat many
sick and vulnerable patients, perform a
high volume of emergency trauma and
burn care, and perform a large number
of surgical procedures. Another
commenter expressed the opposite
concern—that small hospitals might
have artificially inflated HAC scores as
a result of the risk-adjustment
methodology algorithm, which gives
hospitals with poor data reliability a
low reliability weight therefore skewing
their rates closer to the national mean.
Response: Each of the PSI–90
composite measure component
measures includes detailed riskadjustment for clinical factors (for
example, modified diagnostic related
groupings, major diagnostic categories,
comorbidities), age, and gender that
influence the risk for experiencing a
patient safety event during
hospitalization. The three risk factors
mentioned explicitly above—trauma,
burns, and surgical discharges—are
accounted for in the PSI risk-adjustment
models. For example, acknowledging
that some hospitals do more transplants
and trauma care than others, the models
account for this heterogeneity of risk.
AHRQ’s Quality Indicator program
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continually updates and refines
measures to provide the best possible
quality indicators to the public.
Comment: Several commenters
expressed concerns that the HAC
Reduction Program does not contain
adequate adjustment for socioeconomic
(SES) factors that influence HAC rates.
Commenters recommended comparing
providers to their peers, adjusting
provider penalties based on SES of
patients served, incorporating a
provider’s annual improvement into
performance calculations, and adopting
new measures that better adjust for
socioeconomic factors. One commenter
specifically recommended complying
with the recommendations of the NQF’s
Expert Panel on Risk-Adjustment for
Sociodemographic Factors (Draft Report
available at: http://www.quality
forum.org/Risk_Adjustment_SES.aspx).
Response: We appreciate the
commenters’ suggestions on the
importance of addressing
socioeconomic status in the HAC
Reduction Program and have continued
to consider and evaluate these
stakeholder concerns. We also note that
these concerns were addressed in the
FY 2014 IPPS/LTCH PPS final rule (79
FR 50653 through 50654, 50673 through
50674) and again in section IV.H.4. of
the preamble of this final rule. While
these discussions in section IV.H.4. of
the preamble of this final rule are in
response to comments regarding the
Hospital Readmissions Reduction
Program, we have received similar
comments with respect to other quality
reporting programs and our responses
address considerations which also apply
to the HAC Reduction Program.
To the extent that these commenters
were requesting that CMS mitigate the
HAC Reduction Program payment
adjustment despite a hospital being in
the top quartile, section 1886(p) of the
Act specifies that the amount of
payment for such a hospital ‘‘shall be
equal to 99 percent of the amount of
payment that would otherwise apply’’
and we refer readers to the earlier
discussion of the payment adjustment in
section IV.J.3.b. of the preamble of this
final rule.
(5) Measure Calculations
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717 through 50719), we
established that we will perform
measure calculations for the AHRQ PSI–
90 composite measure under Domain 1
and the CDC NHSN measures under
Domain 2. We stated that measure
calculations for the AHRQ PSI–90
composite measure included using ICD–
9–CM diagnosis and/or procedure codes
and, for the principal and secondary
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diagnoses, a present on admission
(POA) indicator value associated with
all diagnoses on the claim. As noted in
section IV.J.3.b. of the preamble of this
final rule, in order to implement the
new Maryland All-Payer Model,
Maryland elected to no longer have
Medicare payment made to Maryland
hospitals in accordance with section
1814(b)(3) of the Act, effective January
1, 2014. Although CMS has waived
certain provisions of the Act for
Maryland hospitals as set forth in the
agreement between CMS and Maryland
and subject to Maryland’s compliance
with the terms of the agreement, CMS
has not waived the POA indicator
reporting requirement. In other words,
the changes to the status of Maryland
hospitals under section 1814(b)(3) of the
Act as described above do not in any
way change the POA indicator reporting
requirement for Maryland hospitals. We
also finalized that the same rules under
the Hospital IQR Program be applied to
determine how the AHRQ PSI–90
composite measure and CDC NHSN
measures are applied and calculated.
(6) Applicable Time Period
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717), we adopted a 2-year
applicable period to collect data that
would be used to calculate the Total
HAC Score for FY 2015. For Domain 1
(AHRQ PSI–90 composite measure), we
established a 2-year data period to
calculate the measures based on
recommendations from AHRQ, the
measure developer, as we believed that
the 24-month data period will provide
hospitals and the general public the
most current data available. The 24month data period also will allow time
to complete the complex calculation
process for these measures, to perform
comprehensive quality assurance to
enhance the accuracy of measure
results, and to disseminate confidential
reports on hospital-level results to
individual hospitals.
As such, for FY 2015, we will use the
24-month period from July 1, 2011
through June 30, 2013 as the applicable
time period for the AHRQ PSI–90
composite measure. The claims for all
Medicare FFS beneficiaries discharged
during this period will be included in
the calculation of measure results for FY
2015. This includes claims data from
the 2011, 2012, and 2013 Inpatient
Standard Analytic Files (SAFs).
The CDC NHSN measures, CAUTI and
CLABSI, are currently collected and
calculated on a quarterly basis.
However, for the purpose of the HAC
Reduction Program, we will use 2 years
of data to calculate the Domain 2 score.
For FY 2015, we will use calendar years
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2012 and 2013 for the HAC Reduction
Program. As noted above, we codified
the definition of ‘‘applicable time
period’’ in the FY 2014 IPPS/LTCH PPS
final rule at § 412.170.
Comment: One commenter supported
use of the 2-year applicable time periods
for the collection of Domain 1 and 2
measures for FY 2015. A few
commenters suggested aligning the
duration of performance periods for
Hospital VBP and the HAC Reduction
Programs, in particular suggesting using
1 year of data for the CDC NHSN
measures. A few additional commenters
had concerns that the data are
retrospective and therefore do not
provide actionable information.
One commenter disagreed with the
finalized 2-year data collection period
for the CDC measures for CAUTI and
CLABSI and requested that CMS
reconsider quarterly collection and
calculation of these measures for
Domain 2. The commenter stated that
quarterly data would be more useful for
providers in addressing areas in which
they would like to improve, and would
also allow consumers and purchasers to
have timely information regarding areas
of care that are meaningful and
important to them.
Response: We refer readers to our
response to the applicable time period
comments in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50717). We
understand that hospitals might find
quarterly data more useful and for that
purpose, we refer stakeholders to
Hospital Compare that includes
quarterly updates of the measures
included in the HAC Reduction
Program.
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d. Criteria for Applicable Hospitals and
Performance Scoring Policy
The HAC Reduction Program does not
contain specific statutory directives on
scoring methods, as found with other
programs. Therefore, our main concern
when establishing scoring methods for
the HAC Reduction Program was to
align with existing scoring
methodologies in similar hospital
programs. Accordingly, in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50721), we finalized a scoring
methodology that aligns with the
achievement scoring methodology
currently used under the Hospital VBP
Program (78 FR 27629). We believe
aligning the scoring methodologies
reduces confusion associated with
multiple scoring methodologies. In
addition, we note that alignment
benefits the hospital stakeholders who
have prior experience with the Hospital
VBP Program.
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In the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27629), we
proposed to implement a methodology
for assessing the top quartile of
applicable hospitals for HACs based on
performance standards, where we
would score each hospital based on
whether they fall in the top quartile for
each applicable measure and where in
the top quartile they fall. In addition, we
proposed to calculate a Total HAC Score
for each hospital by summing the
hospital’s performance score on each
measure within a domain to determine
a score for each domain, then
multiplying each domain score by a
proposed weight (Domain 1—AHRQ
Patient Safety Indicators 50 percent,
Domain 2—CDC NHSN Measures 50
percent), and adding together the
weighted domain scores to determine
the Total HAC Score.
We reviewed the public input on the
proposed 75th percentile benchmark.
Several commenters requested that a
change to the proposed minimum
benchmark for scoring each measure be
made. We agreed with these
commenters, and in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50722), we
modified our proposal and established
that the scoring will begin at the
minimum value for each measure rather
than the 75th percentile. The
methodology finalized in the FY 2014
IPPS/LTCH PPS final rule will assess
the top quartile of applicable hospitals
for HACs based on the Total HAC Score.
The support for Domain 2 measures in
general, coupled with multiple
recommendations, and specifically
those from MedPAC, to provide more
weight to Domain 2 measures led us to
conclude that such scoring changes
were necessary. Therefore, we finalized
a different weight for each Domain than
originally proposed (78 FR 50721).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50722), we further specified
that we will calculate a Total HAC Score
for each hospital by using the hospital’s
performance score on each measure
within a domain to determine a score
for each domain, then multiply each
domain score by the following weights:
Domain 1—(AHRQ PSI–90 composite
measure), 35 percent; and Domain 2—
(CDC NHSN measures), 65 percent; and
combine the weighted domain scores to
determine the Total HAC Score
(§ 412.172(e)(3)). We use each hospital’s
Total HAC Score to determine the top
quartile of subsection (d) hospitals
(applicable hospitals) that are subject to
the payment adjustment beginning with
discharges on or after October 1, 2014.
With respect to a subsection (d)
hospital, we identify the top quartile of
all hospitals that are subsection (d)
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50095
hospitals with respect to their rate of
HACs during the applicable period
(§ 412.172(e)(1)). We use a Total HAC
Score to identify applicable hospitals
and identify the 25 percent of hospitals
with the highest Total HAC Scores as
applicable hospitals (§ 412.172(e)(2)).
We finalized the PSI–90 composite
measure for Domain 1. Because
hospitals may not have complete data
for every AHRQ indicator in the
composite measure for this Domain 1
measure, we finalized the same
methodology used for the Hospital VBP
Program to determine the minimum
number of indicators with complete
data to be included in the calculation of
the Domain measure.
In addition, we finalized the
following rules to determine the number
of AHRQ indicators to be included in
the calculation for a hospital’s Domain
1 score. In this discussion, ‘‘complete
data’’ refers to whether a hospital has
enough eligible discharges to calculate a
rate for a measure. Complete data for the
AHRQ PSI–90 composite measure
means the hospital has three or more
eligible discharges for at least one
component indicator. Specifically—
If a hospital does not have ‘‘complete
data’’ for the PSI–90 composite measure,
we will not calculate a Domain 1 score
for that hospital.
If a hospital has ‘‘complete data’’ for
at least one indicator for the AHRQ PSI–
90 composite measure, we will calculate
a Domain 1 score.
The calculation of the SIR for the CDC
measures requires that the facility have
a ≥ 1 predicted HAI event. The predicted
number of events is calculated using the
national HAI rate and the denominator
counts (that is, number of device days,
procedure days, or patient days
depending on the HAI). In the event the
SIR cannot be calculated for any domain
2 measures because the facility has < 1
predicted infection for each measure,
Domain 1 scores exclusively will be
used to calculate a HAC score. In other
words, we will exclude from the overall
HAC score calculation any measure for
which an SIR cannot be calculated for
the reason set out above.
Because of the differences among the
measures for the HAC Reduction
Program and the distribution of measure
results, simply adding up the measure
results to calculate the domain or Total
HAC Score will make the scores less
meaningful to hospitals and the general
public. As a result, as we indicated in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50720 through 50725), points
will be assigned to hospitals’
performance for each measure. This
approach aligns with the Hospital VBP
Program for measuring hospital
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achievement. In particular, the Hospital
VBP Program assigns up to 10 points for
each measure based on a hospital’s
performance result for that measure for
a given time period. We note that, for
the HAC Reduction Program, unlike the
Hospital VBP Program where a higher
score means better performance, the
more points a hospital receives on a
measure corresponds with a poorer
score performance. For the HAC
Reduction Program, we finalized use of
a slightly different methodology for
scoring points, depending on the
specific measure (Table C in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50723), which is also included below).
Specifically—
• For the AHRQ Patient Safety for
Selected Condition (PSI–90) composite
in Domain 1, point assignment will be
based on a hospital’s score for the
composite measure.
• For the PSI–90 composite measure,
1 to 10 points will be assigned to the
hospital.
• For the CDC NHSN measures in
Domain 2, point assignment for each
measure will be based on the SIR for
that measure.
• For each SIR, 1 to 10 points will be
assigned to the hospital for each
measure (CAUTI and CLABSI for FY
2015).
• The Domain 2 score will consist of
the average of points assigned to the SIR
(CAUTI and CLABSI for FY 2015).
TABLE C—CALCULATION OF DOMAIN 1 AND 2 MEASURES FOR FY 2015
Individual measure score
(points)
Measure name
Measure result
Scenario
Domain 1 AHRQ PSI–90 *** ..........
Weighted average of rates of
component indicators.
Standard Infection Ratio (SIR) .....
Composite value ...........................
1–10.
SIR ................................................
1–10 (refer to Figure A).
Domain 2 CDC NHSN CAUTI
CLABSI.
*** These measure rates are risk-adjusted and reliability-adjusted.
CDC NHSN for the Hospital IQR
Program. The CDC NHSN HAI measures
capture adverse events that occurred
within intensive care units (ICUs),
including pediatric and neonatal units.
For the Hospital IQR Program, hospitals
that elected to participate in the
reporting program (that is, have an
active IQR pledge), but do not have an
ICU, can apply for ICU waivers so that
the hospitals will not be subject to the
2-percent payment reduction for
nonsubmission of quality reporting data.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50723), we noted in the
second quarter of 2012, among the 3,321
IPPS hospitals with active IQR pledges
FIGURE A—POINT ASSIGNMENT FOR
for data submission, 377 (or 10.1
HOSPITAL A’S PSI–90 SCORE
percent) applied and received an ICU
waiver. At the same time, 2,939
If Hospital A’s PSI–90
hospitals (88.5 percent) of the IPPS
Then assign this
rate falls into this
hospitals did not have an ICU waiver
number
of
points
percentile
and submitted data for the CDC HAI
1st–10th ..........................
1 CLABSI measure, while 4 hospitals (0.1
11th–20th ........................
2 percent) that had no ICU waiver failed
21st–30th ........................
3 to submit data to the NHSN. For the
31st–40th ........................
4 same quarter, of the 3,321 IPPS
41st–50th ........................
5 hospitals with active IQR pledges, 2,935
51st–60th ........................
6
(88.4 percent) that did not have an ICU
61st–70th ........................
7
71st–80th ........................
8 waiver submitted data for the CDC HAI
81st–90th ........................
9 CAUTI measure, whereas 8 hospitals
91st–100th ......................
10 (0.2 percent) did not submit data.
Because data availability for the two
For Domain 2, we will obtain measure CDC HAI measures impact the score for
results that hospitals submitted to the
Domain 2 and eventually the Total HAC
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For all measures finalized for the HAC
Reduction Program, we will use the
following rules to determine the number
of points assigned to a measure (78 FR
50723 through 50725). Based on the
distribution for PSI–90 rates for all the
hospitals, we will divide the results into
percentiles in increments of 10 with the
lowest percentile ranges meaning better
performance. Hospitals with PSI–90
rates within the lowest tenth percentile
will be given one point; those with PSI–
90 rates within the second lowest
percentile range (between the 11th and
20th percentile) will be given 2 points,
and so forth.
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Score, we aim to encourage hospitals
with an ICU that did not submit data to
begin data submission, and to encourage
hospitals that have already submitted
data to continue data submission for all
the CDC HAI measures. To this end, we
finalized the following rules (Figure B
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50724), which is included
below):
• If a hospital has an ICU waiver for
the CDC HAI measures, we will use only
the Domain 1 score to calculate its Total
HAC Score.
• If a hospital does not have an ICU
waiver for a CDC HAI measure:
Æ If the hospital does not submit data
for the CDC HAI measures, we will
assign 10 points to that measure for that
hospital.
Æ If the hospital does submit data for
at least one CDC NHSN measure:
D If there are ‘‘complete data’’ (that is,
enough adverse events to calculate the
SIR) for at least one measure, we will
use those data to calculate a Domain 2
score and use the hospital’s Domain 1
and Domain 2 scores to calculate the
Total HAC Score.
D If there are not enough adverse
events to calculate the SIR for any of the
measures, we will use only the
hospital’s Domain 1 score to calculate
its Total HAC Score.
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Comment: Several commenters
supported the use of a scoring
methodology for the HAC Reduction
Program that aligns with the
achievement methodology of the
Hospital VBP Program and agreed that
this scoring alignment reduces
confusion.
Response: We appreciate the
commenters’ support.
Comment: A few commenters stated
that CMS implemented as reasonable a
scoring methodology as was permitted
by statute. A few commenters expressed
support for the creation of two domains
of measures using measures that are risk
adjusted at the patient, unit and hospital
levels and expressed support for the
weighted contributions of Domain 1 and
Domain 2 measures to the Total HAC
score. Another commenter found the
scoring to be very complex and detailed,
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making it difficult for hospitals to
replicate.
Response: We acknowledge that the
scoring methodology is complex. The
scoring methodology was described in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50719 through 50725) and is
clarified later in the preamble to this
final rule. During the review and
correction period that will occur prior to
assessment of the HAC Reduction
Program penalty or posting of the data
on Hospital Compare, hospitals will be
given access to their HAC Reduction
Program measure scores, domain scores
and total HAC score accompanied by a
document that describes how the scores
were calculated.
Comment: One commenter questioned
whether the HAC Reduction Program
scores reflect meaningful differences in
quality between hospitals. The
commenter specifically stated that the
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HAC scoring methodology makes
distinctions between hospitals whose
performance is not statistically different
from one another which results in
payment adjustments being levied on
hospitals whose performance is not
statistically different from the national
benchmarks. The commenter also
believed that there will be
inconsistencies between results for the
CMS programs using the same measures
but different scoring methodologies.
Response: We note that HAC
Reduction Program does not have
national benchmarks in the current
scoring methodology. We also recognize
the possibility for inconsistencies
between our programs when measures
like the AHRQ PSI–90 composite
measure and the CDC NHSN HAI
measures are used in multiple programs;
we refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50728)
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where we addressed this issue. We note
that different CMS programs have
different purposes and thus it is not
unexpected that programs use different
approaches to score hospitals’
performance. For example, the Hospital
IQR Program, which publicly reports
measure performance on Hospital
Compare, is intended to provide
consumers with the information needed
to allow them to make informed
decisions about hospital quality when
seeking care.
The HAC Reduction Program is
intended to motivate hospitals to reduce
the incidence of HACs. We will
continue to monitor the HAC Reduction
Program and take the commenter’s
concerns under consideration as we
strive to improve the program.
Comment: A few commenters
supported using the same method of
determining if a hospital has enough
data to calculate a PSI–90 score in both
the Hospital VBP and HAC Reduction
Programs and the same inclusion
criteria for the CDC NHSN measures as
is used in the Hospital IQR Program.
Response: We appreciate the
commenters’ support. This alignment
was described in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50722).
Comment: One commenter requested
the posting of more HAC Reduction
Program measure thresholds and
benchmark data in advance as has been
accomplished with the Hospital VBP
Program.
Response: We note that the HAC
Reporting Program is not required by
law to create measure thresholds and
benchmarks, as is the Hospital VBP
Program. By statute, the payment
adjustments for the HAC Reporting
Program are applied to hospitals with a
Total HAC score in the 75th percentile.
Based on the differing statutory
approaches, we do not believe that the
commenter’s requests are applicable to
this program.
(1) Clarification of Finalized Measure
Result Scoring for FY 2015 and
Subsequent Years
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50723), we finalized for the
HAC Reduction Program a scoring
methodology that divides the measure
results into percentiles in increments of
10 and assigns points (1 to 10) in
accordance with the percentile into
which the hospital’s measure result
falls. Our preliminary analysis of the
measures showed that multiple
hospitals had the same measure results,
and that in certain instances, the
number of hospitals with the same
measure results exceeded the number of
hospitals for their appropriate
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percentile. Consequently a few hospitals
with the same measure results fall into
the next higher percentile. In these
instances, we will assign the same point
for all hospitals with the same measure
results, and that point will be based on
the prior or the lowest appropriate
percentile.
For example, if, for the CAUTI
measure, 13 percent of hospitals have an
SIR of 0, we will assign a point of 1 to
all 13 percent of hospitals, even though,
arguably, 10 percent of them fall into
the first percentile, and 3 percent of the
13 percent fall into the second
percentile. Because each percentile
range ideally represents 10 percent of
hospitals, we will assign a point of 2 to
the remaining 7 percent of hospitals in
the second percentile because their SIR
is larger than 0. We believe this is the
most favorable method for scoring
measure results for hospitals. We note
that randomly assigning some hospitals
with the same SIR a higher (for example,
less favorable) score would be both
arbitrary and capricious, which are
prohibited by the Administrative
Procedure Act.
Comment: A few commenters
applauded CMS for clarifying the
process by which measure scores will be
assigned in the case of hospitals with
tied measure results spanning multiple
deciles.
Response: We appreciate the
commenters’ support for the clarified
process and believe it makes clear that
we are applying the scoring criteria in
a manner that is most equitable to
hospitals.
(2) Clarification of FY 2015 Finalized
Narrative of Rules to Calculate the Total
HAC Score
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized a series of rules to
determine how to calculate the Domain
2 score and ultimately the Total HAC
Score when there were waivers for the
collection of CDC NHSN HAI measures
(78 FR 50723). We also illustrated and
finalized these rules in Figure B of the
final rule (78 FR 50724). In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28141), we proposed to clarify that the
narrative for Figure B should also
include ‘‘other waivers’’ that waive
hospitals from collecting CDC HAI
measure data. The clarified rules that
we proposed are as follows for the
collection of CDC HAI measures:
• If a hospital has an ICU waiver or
other waiver for the CDC NHSN HAI
measures, we will use only the Domain
1 score to calculate its Total HAC Score.
• If a hospital does not have an ICU
waiver or other waiver for the CDC HAI
measures:
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Æ If the hospital does not submit data
for the CDC HAI measures, we will
assign 10 points to that measure for that
hospital.
Æ If the hospital does submit data for
at least one CDC NHSN measure:
■ If there are ‘‘complete data’’ (that
is, enough adverse events to calculate
the SIR) for at least one measure, we
will use those data to calculate a
Domain 2 score and use the hospital’s
Domain 1 and Domain 2 scores to
calculate the Total HAC Score.
■ If there are not enough adverse
events to calculate the SIR for any of the
measures, we will use only the
hospital’s Domain 1 score to calculate
its Total HAC Score.
As discussed earlier, if a hospital has
enough data to calculate the PSI–90
composite measure score for Domain 1
and ‘‘complete data’’ for at least one
measure in Domain 2, the scores of the
two domains will contribute to the Total
HAC Score at 35 percent for Domain 1
and 65 percent for Domain 2. However,
if a hospital does not have enough data
to calculate the PSI–90 composite
measure score for Domain 1 but it has
‘‘complete data’’ for at least one measure
in Domain 2, its Total HAC Score will
depend entirely on its Domain 2 score.
Similarly, if a hospital has ‘‘complete
data’’ to calculate the PSI–90 composite
measure score in Domain 1 but none of
the measures in Domain 2, its Total
HAC Score will be based entirely on its
Domain 1 score. If the hospital does not
have ‘‘complete data’’ to calculate the
PSI–90 composite measure score for
Domain 1 or any of the measures in
Domain 2, we will not calculate a Total
HAC Score for this hospital.
Comment: A few commenters were
concerned that a hospital without any
Domain 2 measure scores would have
their Total HAC score based entirely on
Domain 1, which comprises claimsbased data. Because this situation could
happen when a hospital does not have
enough data to reliably calculate an SIR
for the CDC NHSN HAI measures, one
commenter recommended that CMS
collaborate with CDC to determine if
there are analytic approaches besides
the SIR that would allow more hospitals
to meet the minimum data criteria for
reliable measure results for the CDC
NHSN HAI measures.
Response: We understand the
commenters’ concern and point out that
the intention of the scoring rules
described above for calculating a Total
HAC score is to make use of the
available data for each hospital and
encourage hospitals to report HAI data
to CDC NHSN, even if they do not have
enough data to reliably calculate an SIR
for the CDC NHSN HAI measures in
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Domain 2. In section IV.J.3.c. of the
preamble of this final rule, we address
stakeholders concerns about using
claims data in general and the PSI–90
measure in particular, for the HAC
Reduction Program.
We conferred with CDC, which
indicated that they continuously
evaluate the data reported to NHSN and
consider the best measures for
monitoring and comparative purposes.
Currently the SIR is the best measure to
allow for risk adjustment and
production of a facility-level and/or
CCN-level metric that can be used for
comparison across similar facility types.
This provides the opportunity to most
accurately represent a facility’s success.
If the data are insufficient (for example,
too few device days) to produce the SIR,
CDC indicated that any calculation
produced from such low numbers
would be imprecise. CDC continues to
review the data and evaluate options for
metric development, including
situations where facilities have low
denominator volume and/or few
infections.
After consideration of the public
comments we received, we are
finalizing the scoring clarifications for
the HAC Reduction Program as
proposed.
e. Reporting Hospital-Specific
Information, Including the Review and
Correction of Information
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(1) Confidential Reports to Applicable
Hospitals
Section 1886(p)(5) of the Act requires
the Secretary to provide confidential
reports to the applicable hospitals with
respect to HACs. To meet the
requirements under section 1886(p)(5)
of the Act, in the FY 2014 IPPS/LTCH
PPS final rule, we finalized the
provision of confidential reports for the
HAC Reduction Program to include
information related to claims-based
measure data for the PSI measures, the
measure scores, the domain score for
each domain, and the Total HAC Score
(78 FR 50725). We noted that we use
chart-abstracted measures in the HAC
Reduction Program, and such
information will be contained in the
reports hospitals currently receive as
part of the Hospital IQR Program and
can be reviewed and corrected through
the process specified for that program.
We stated that we believe that this
method would reduce the burden on
hospitals, by alleviating the need to
correct data present in two different
programs.
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(2) Availability of Information to the
Public
Section 1886(p)(6)(A) of the Act
requires the Secretary to ‘‘make
information available to the public
regarding HAC rates of each subsection
(d) hospital’’ under the HAC Reduction
Program. Section 1886(p)(6)(C) of the
Act requires the Secretary to post the
HAC information for each applicable
hospital on the Hospital Compare Web
site in an easily understood format.
Section 1886(p)(6)(B) of the Act also
requires the Secretary to ‘‘ensure that an
applicable hospital has the opportunity
to review, and submit corrections for,
the HAC information to be made public
for each hospital.’’
To meet the requirements under
section 1886(p)(6)(C) of the Act, in the
FY 2014 IPPS/LTCH PPS final rule, we
finalized policies that the following
information will be made public on the
Hospital Compare Web site relating to
the HAC Reduction Program: (1)
hospital scores with respect to each
measure; (2) each hospital’s domain
specific scores; and (3) the hospital’s
Total HAC Score (78 FR 50725).
Comment: One commenter supported
the public availability of facility-specific
data on HACs. The commenter was
concerned that these data had
previously been available on Hospital
Compare but were no longer posted
there and urged that CMS repost these
data. One commenter recommended
that, at a minimum, in spite of the
absence of measures for some HACs,
CMS should make the raw counts of
HACs publicly available on Hospital
Compare or https://data.medicare.gov/.
Response: We appreciate the
commenter’s recognition of the
importance of having facility level HAC
data available publicly. Although the
commenter did not specify which data
were being referenced, we interpret this
comment to refer to the eight HAC
measures that were removed from the
Hospital IQR Program (Air Embolism,
Blood Incompatibility, CAUTI, Falls and
Trauma, Foreign Object Retained After
Surgery, Manifestation of Poor Glycemic
Control, Pressure Ulcer Stages III or IV,
and Vascular Catheter Associated
Infections). The rationale for removing
these measures from the Hospital IQR
Program can be found in the FY 2013
IPPS/LTCH PPS final rule (77 FR 53506
through 53507). The measures included
in the HAC Reduction Program (PSI–90
composite, CLABSI and CAUTI) have
been available on Hospital Compare
since December 2010, January 2012 and
January 2013, respectively. The HAC
Reduction Program scores will also be
publicly available later this year.
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(3) Review and Correction of
Information
Section 1886(p)(6)(B) of the Act
requires the Secretary to ensure that
each hospital has the opportunity to
review and submit corrections for the
information to be made available to the
public with respect to each hospital
under section 1886(p)(6)(A) of the Act
prior to such information being made
available to the public.
In the FY 2014 IPPS/LTCH PPS final
rule, we codified our regulation
regarding the reporting of hospitalspecific information at § 412.172(f) (78
FR 50968). CMS will make information
available to the public regarding HAC
rates of all hospitals described in
section 1886(d)(1)(B) of the Act,
including hospitals in Maryland
previously paid under section
1814(b)(3) of the Act, under the HAC
Reduction Program (paragraph (f)). As
noted in section IV.J.3.b. of the
preamble of this final rule, in order to
implement the new Maryland All-Payer
Model, Maryland elected to no longer
have Medicare pay Maryland hospitals
in accordance with section 1814(b)(3) of
the Act, effective January 1, 2014.
In summary, we established that CMS
will provide each hospital with
confidential hospital-specific reports
and discharge level information used in
the calculation of its Total HAC Score
(paragraph (f)(1) of § 412.172). Hospitals
will have a period of 30 days after
receipt of the information provided
under paragraph (f)(1) to review and
submit corrections for the HACs
measure scores, domain scores, and the
Total HAC Score for the fiscal year. The
administrative claims data used to
calculate a hospital’s Total HAC Score
for those conditions for a fiscal year will
not be subject to review and correction
(paragraph (f)(2)). CMS will post the
HAC Reduction Program scores for the
applicable conditions for a fiscal year
for each applicable hospital on the
Hospital Compare Web site. We refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50725 through 50728)
for detailed discussions of the above
provisions.
CMS provided hospitals with their
confidential hospital-specific reports
and discharge level information used in
the calculation of their Total HAC Score
in late July 2014 on the Quality Net Web
site. In order to have access to their
hospital-specific report, hospitals must
register for a Quality Net Secure Portal
account. Hospitals have a period of 30
days after the information is posted on
Quality Net to review and submit
corrections for the calculation of their
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HACs measure scores, domain scores,
and Total HAC Score for the fiscal year.
(4) Preliminary Analysis of the HAC
Reduction Program
In order to model estimated payment
changes for the FY 2015 IPPS/LTCH
PPS proposed rule, we conducted a
preliminary analysis of the HAC
Reduction Program using currently
available historical data as a proxy for
the actual data that will be used to
determine hospital performance under
the program. The results of this
preliminary analysis can be found on
the CMS Web site at: http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
AcuteInpatientPPS/index.html under
the FY 2015 IPPS/LTCH PPS proposed
rule Home Page link as Table 17.—FY
2015 Preliminary Analysis of the
Hospital-Acquired Condition Reduction
Program. We stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28142) that when the actual data for the
performance periods finalized in the FY
2014 IPPS/LTCH PPS final rule for each
measure are available, hospitals will
have an opportunity to review and
submit corrections as discussed in
section IV.J.3.e. of the preamble of the
proposed rule and this final rule.
Comment: One commenter objected to
CMS making Table 17—FY 2015
Preliminary Analysis of the HospitalAcquired Condition Reduction Program,
publicly available via the CMS Web site
at http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html under
the FY 2015 IPPS/LTCH PPS proposed
rule Home Page link. This commenter
stated that the data had not yet been
reviewed and its sources auditable and
in compliance with the requirements of
the law. The commenter stated that the
Table did not provide insight into how
the Composite Score was developed.
The commenter acknowledged that
there was a methodology included in
the proposed rule preamble, however,
also noted that any attempts to
recalculate and confirm the scores in the
Table with other information available
to the public (such as CMS’ Hospital
Compare Web site) were not possible.
Lastly, the commenter stated that the
reporting periods used to calculate the
Score in Table 17 (both for Domain 1
(Patient Safety) and Domain 2 (CLASBI
and CAUTI) are not those that are set in
law.
Response: We acknowledge the
commenter’s objection and point out
that as stated in the FY 2015 IPPS/LTCH
PPS proposed rule, we conducted a
preliminary analysis of the HAC
Reduction Program using currently
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available historical data as a proxy for
the actual data that will be used to
determine hospital performance under
the program to model estimated
payments. In addition, as stated earlier
in this section, we established that we
will provide each hospital with
confidential hospital-specific reports
and discharge level information used in
the calculation of its Total HAC Score
(paragraph (f)(1) of § 412.172). Hospitals
will have a period of 30 days after
receipt of the information provided
under paragraph (f)(1) to review and
submit corrections for the HACs
measure scores, domain scores, and
Total HAC Score for the fiscal year. The
administrative claims data used to
calculate a hospital’s Total HAC Score
for those conditions for a fiscal year will
not be subject to review and correction
(paragraph (f)(2)). CMS will post the
HAC Reduction Program scores for the
applicable conditions for a fiscal year
for each applicable hospital on the
Hospital Compare Web site. We refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50725 through 50728)
for detailed discussions of the above
provisions.
Providing a preliminary analysis of
the HAC Reduction Program using
currently available historical data as a
proxy for the actual data is consistent
with the law. We clearly indicated that
these were not the final data. However,
because this is the first year of the HAC
Reduction Program, we wish to gain
some initial experience under the
review and correction process discussed
in section IV.J.3.e. of the preamble of
this final rule and determine to what
extent the review and corrections
process in this first year changes the
preliminary hospital level data we
provided in Table 17 of the proposed
rule before providing updated hospital
level data. Updated hospital level data
will be made publicly available
following the review and corrections
process.
f. Limitation on Administrative and
Judicial Review
Section 1886(p)(7) of the Act provides
that there will be no administrative or
judicial review under Section 1869 of
the Act, under Section 1878 of the Act,
or otherwise for any of the following:
• The criteria describing an
applicable hospital under section
1886(p)(2)(A) of the Act.
• The specification of hospital
acquired conditions under section
1886(p)(3) of the Act.
• The specification of the applicable
period under section 1886(p)(4) of the
Act.
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• The provision of reports to
applicable hospitals under section
1886(p)(5) of the Act.
• The information made available to
the public under section 1886(p)(6) of
the Act.
In the FY 2014 IPPS/LTCH PPS final
rule, we included these statutory
provisions under § 412.172(g) of the
regulations (78 FR 50729 and 50968).
We note that section 1886(p)(6) of the
Act requires the Secretary to make
information available to the public
regarding HAC scores of each applicable
hospital under the HAC Reduction
Program. Section 1886(p)(6)(B) of the
Act also requires the Secretary to ensure
that an applicable hospital has the
opportunity to review, and submit
corrections for, the information to be
made available to the public, prior to
that information being made public. We
believe that the review and correction
process explained above in section
IV.J.3.e. of the preamble of this final rule
will provide hospitals with the
opportunity to correct data prior to its
release on the Hospital Compare Web
site.
4. Maintenance of Technical
Specifications for Quality Measures
Technical specifications of the HAC
measures for the Agency for Health
Research and Quality (AHRQ) Patient
Safety Indicator 90 (PSI–90) in Domain
1 can be found at AHRQ’s Web site at:
http://qualityindicators.ahrq.gov/
Modules/PSI_TechSpec.aspx. Technical
specifications for the CDC NHSN’s HAI
measures in Domain 2 can be found at
CDC’s NHSN Web site at: http://
www.cdc.gov/nhsn/acute-care-hospital/
index.html. Both Web sites provide
measure updates and other information
necessary to guide hospitals
participating in the collection of HAC
Reduction Program data.
Many of the quality measures used in
different Medicare and Medicaid
reporting programs are NQF-endorsed.
As part of its regular maintenance
process for NQF-endorsed performance
measures, the NQF requires measure
stewards to submit annual measure
maintenance updates and undergo
maintenance of endorsement review
every 3 years. 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
NQF on an annual basis. NQF solicits
information from measure stewards for
annual reviews, and it reviews measures
for continued endorsement in a specific
3-year cycle.
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We note that NQF’s annual or
triennial maintenance processes for
endorsed measures may result in the
NQF requiring updates to the measures.
We believe that it is important to have
in place a subregulatory process to
incorporate nonsubstantive updates
required by the NQF into the measure
specifications we have adopted for the
HAC Reduction Program, so that these
measures remain up-to-date.
For the HAC Reduction Program, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28142), we proposed to
follow the finalized processes outlined
for addressing changes to adopted
measures in the Hospital IQR Program
‘‘Maintenance of Technical
Specifications for Quality Measures’’
section found in section IX.A.1.b. of the
preamble of this final rule.
We believe this proposal adequately
balances our need to incorporate
updates to HAC Reduction Program
measures in the most expeditious
manner possible while preserving the
public’s ability to comment on updates
that so fundamentally change an
endorsed measure that it is no longer
the same measure that we originally
adopted. We invited public comments
on this proposal.
Comment: One commenter supported
the proposed method of maintaining
and updating the technical
specifications for the quality measures,
including adoption of a subregulatory
process for nonsubstantive changes
released by measure developers.
Response: We appreciate the
commenter’s support.
Comment: A few commenters
believed that nonsubstantive changes
identified during routine measure
maintenance processes and during NQF
measure maintenance review should all
be subject to the annual notice-andcomment rulemaking process.
Response: We disagree with the
recommendation to have all measure
changes subject to notice-and-comment
rulemaking. As previously noted in FY
2014 IPPS/LTCH PPS final rule (78 FR
50776) we believe that the maintenance
of technical specifications for quality
measure policy for the Hospital IQR
Program also is applicable to the HAC
Reduction Program. We believe this
policy adequately balances our need to
incorporate nonsubstantive NQF
updates to NQF-endorsed measures in
the most expeditious manner possible,
while preserving the public’s ability to
comment on updates that so
fundamentally change an endorsed
measure that it is no longer the same
measure that we originally adopted. We
also note that the NQF process
incorporates an opportunity for public
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comment and engagement in the
measure maintenance process. These
policies regarding what is considered
substantive versus nonsubstantive apply
to all measures in the Hospital IQR
Program and the HAC Reductions
Program.
Comment: One commenter indicated
that any changes to a measure
developed for adults but now including
those less than 18 years of age should
be considered nonsubstantive.
Response: We refer the reader to our
response to a similar suggestion in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50776). We will make a decision as
to whether such changes constitute
substantive changes on a case-by-case
basis.
After consideration of the public
comments we received, we are
finalizing the maintenance of technical
specifications for quality measures in
the HAC Reduction Program as
proposed.
advantage on their HAC scores long
after a disaster period has ended. Other
commenters recommended that
hospitals be given 90 calendar days
from the date of the disaster to request
an exemption and that the exemption
apply for at least 2 payment years
because the HAC Reduction Program
currently uses a 2-year performance
period.
Response. We appreciate the
commenters’ support. We will take into
consideration these recommendations as
we consider whether an exemption
process for the HAC Reduction Program
should be implemented.
5. Extraordinary Circumstances
Exceptions/Exemptions
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50711), we indicated that we
had received public comments
requesting a potential waiver or
exemption process for hospitals located
in areas that experience disasters or
other extraordinary circumstances (EC),
even though we did not propose an
extraordinary circumstance exceptions/
exemptions (ECE) policy for the HAC
Reduction Program. We stated in the FY
2014 IPPS/LTCH PPS final rule that we
were reviewing this issue and might
consider such a proposal in future
rulemaking. We also noted that should
we consider a policy we intend to focus
on several policy and operational
considerations in developing a disaster
exemption process for the HAC
Reduction Program. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28142), we welcomed public comments
on whether an exemption process
should be implemented and the policy
and operational considerations for a
potential HAC Reduction Program ECE
policy.
Comment: Many commenters
supported the creation of an
extraordinary circumstance exemption
process for hospitals that experience a
natural disaster. Some commenters
recommended that CMS consider
adopting several aspects of the Hospital
VBP waiver process for the HAC
Reduction Program, including allowing
hospitals to have 60 days from the
occurrence of the extraordinary
circumstance to file for an exemption.
The commenters believed this would
ensure that hospitals do not seek an
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized measures for FY 2015
and onwards, but only finalized a
scoring methodology for FY 2015 for the
HAC Reduction Program (78 FR 50712
through 50713). In the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28143),
we did not propose any new additional
measures for the HAC Reduction
Program for FY 2016. We note that
AHRQ’s PSI–90 composite measure and
CDC’s NHSN CLABSI (NQF #0138) and
CAUTI (NQF #0139) measures were
submitted in January 2014 and
December 2013, respectively, as part of
the NQF maintenance endorsement
process. As noted in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50719),
should changes to the risk-adjustment
models for the measures be adopted
during NQF endorsement maintenance
processes, CMS will adopt these
changes as soon as possible. Finally, as
we stated in the FY 2015 IPPS/LTCH
PPS proposed rule, although we are not
required under section 1886(p) of the
Act to address specific measure scoring
methodologies regarding the HAC
Reduction Program in notice-andcomment rulemaking, as required under
the Hospital VBP Program, we believe
that it is important to set forth such
scoring methodologies for each
individual HAC measure, in order for
the public to understand how the
measures discussed and finalized in this
FY 2015 IPPS/LTCH PPS final rule
relate to the performance methodology
used to determine the applicable
hospitals subject to the payment
adjustment under the HAC Reduction
Program.
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6. Implementation of the HAC
Reduction Program for FY 2016
a. Measure Selection and Conditions,
Including Risk-Adjustment Scoring
Methodology
(1) General Selection of Measures
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(2) Measure Selection and Scoring
Methodology for FY 2016
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717), we finalized for FY
2016 and onwards CDC’s NHSN
Surgical Site Infection (SSI) measure
(NQF #0753) and its measure
methodology. The SSI and other
measure specifications are available at:
http://www.qualityforum.org/QPS/
QPSTool.aspx. To locate a specific
measure, search by the NQF number: (1)
for the SSI measure use NQF #0753; (2)
for the CLABSI measure use NQF #0139;
and (3) for the CAUTI measure use NQF
#0138. For SSI updates related to CMS
programs and the use of CDC’s NHSN
measures, we refer readers to the Web
site at: http://www.cdc.gov/nhsn/acutecare-hospital/ssi. The SSI measure
explanation of SIR in the NHSN enewsletter is available at: http://
www.cdc.gov/nhsn/PDFs/Newsletters/
NHSN_NL_OCT_2010SE_final.pdf.
CDC’s SSI measure was finalized as a
Domain 2 measure in the calculation of
the Total HAC Score (78 FR 50717). In
the FY 2015 IPPS/LTCH PPS proposed
rule, we did not propose to change
CDC’s measure methodology for the SSI
measure.
b. Measure Risk-Adjustment
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized the measure riskadjustment for AHRQ’s PSI–90
composite measure for Domain 1 and
the risk-adjustment for CDC’s NHSN
measures for Domain 2 (78 FR 50718
through 50719). In the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28143),
we did not propose any risk-adjustment
changes for any of the measures
finalized in the FY 2014 IPPS/LTCH
PPS final rule.
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c. Measure Calculations
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized the measure
calculations for AHRQ’s PSI–90
composite measure for Domain 1 and
the measure calculations for CDC’s
NHSN measures for Domain 2 (78 FR
50718 through 50719). In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28143), we did not propose any measure
calculation changes for any of the
measures finalized in the FY 2014 IPPS/
LTCH PPS final rule.
d. Applicable Time Period
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized and codified policy at
§ 412.170 that there will be a 2-year
applicable time period to collect data
used to calculate the Total HAC Score
(78 FR 50717).
For the Domain 1 AHRQ PSI–90
composite measure, in the FY 2015
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IPPS/LTCH PPS proposed rule (79 FR
28143), we proposed for FY 2016 a 24month period from July 1, 2012 through
June 30, 2014 as the applicable time
period. The claims for all Medicare FFS
beneficiaries discharged during this
period would be included in the
calculation of measure results for FY
2016. This includes claims data from
the 2012, 2013, and 2014 Inpatient
Standard Analytic Files (SAFs).
The Domain 2 CDC NHSN measures
(CAUTI, CLABSI, and SSI) are currently
collected and calculated on a quarterly
basis. However, for the purpose of the
HAC Reduction Program, we finalized
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50717) that we will use 2
years of data to calculate the Domain 2
score for FY 2015 for the CAUTI and
CLABSI measures. For FY 2016, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28143), we proposed to use
calendar years 2013 and 2014 for all
three Domain 2 measures in the HAC
Reduction Program.
e. Criteria for Applicable Hospitals and
Performance Scoring
For FY 2016, in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28143),
we proposed a change to the scoring
methodology of the Total HAC Score.
This proposal, which is discussed
below, was intended to address the
implementation of CDC’s NHSN SSI
measure in Domain 2 finalized for
implementation in FY 2016.
(1) Finalized Scoring Methodology for
Domains 1 and 2 for FY 2015
We finalized a scoring methodology
for the Total HAC Score in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50722). This finalized scoring
methodology is similar to the
achievement scoring methodology
currently used under the Hospital VBP
Program. With respect to an applicable
hospital, we finalized that CMS will
identify the top quartile of all hospitals
with respect to their Total HAC Score
during the applicable period (§ 412.170).
In addition, we finalized that the Total
HAC Score will be determined by the
following three steps: (1) each measure
result will be scored as outlined in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50723); (2) domain scores will be
determined by the scores assigned to the
measures within the domain; and (3) the
Total HAC Score will be determined by
the sum of the weighted domain scores.
For FY 2015, the Total HAC Score is the
sum of the Domain 1 score multiplied
by 35 percent plus the Domain 2 score
multiplied by 65 percent. For further
details of the general scoring
methodology finalized for the HAC
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Reduction Program, we refer readers to
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50719 through 50725).
(2) Scoring Methodology of Domain 2
and New Weighting of Domains 1 and
2 for FY 2016
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28143), we
proposed to adjust the scoring
methodology of Domain 2 and the
weighting of Domains 1 and 2 beginning
in FY 2016 due to the addition of CDC’s
NHSN SSI measure. We would like to
clarify that the scoring methodology for
Domain 1 in FY2016 is unchanged from
the scoring methodology for Domain 1
in FY 2015. This methodology is
described above under our discussion of
Criteria for Applicable Hospitals and
Performance Scoring Policy. For the
scoring of CDC’s NHSN SSI measure, we
proposed an identical process of
assigning points to the SSI measure
results. We note that the SSI measure,
reported via CDC’s NHSN, is currently
specified under the Hospital IQR
program and is restricted to colon
procedures (including incision,
resection or anastomosis of the large
intestine and large-to-small and smallto-large bowel anastomosis), and
abdominal hysterectomy procedures
including those performed by
laparoscope. The SSI measure assesses
SSIs based on the type of surgery
procedures (that is, the SSI measure is
stratified into infections that occur with
colonic procedures and those that occur
in abdominal hysterectomy procedures).
We also note that patient age and a
preoperative health score are risk factors
taken into account using the
Standardized Infection Ratio (SIR) (78
FR 20625). Use of an SIR is consistent
with CDC’s NHSN CLABSI and CAUTI
measures that also report SIRs. In order
to calculate an SSI measure score for
Domain 2, we proposed to calculate an
abdominal hysterectomy procedure SSI
SIR and a colonic procedure SSI SIR
and pool both SIRs for each hospital.
We proposed pooling the abdominal
hysterectomy SSI SIR and colonic
procedure SSI SIR as this would provide
a single SSI SIR, which is consistent
with reporting a single SSI SIR as meant
by design of the NQF endorsed measure
(NQF #0753), and would allow a riskadjusted weighting of the surgical
volume among the two procedures. We
proposed that a pooled SSI SIR for an
applicable hospital is the sum of all
observed infections among abdominal
hysterectomy and colonic procedures
divided by the sum of all predicted
infections among abdominal
hysterectomy and colonic procedures
performed at the applicable hospital.
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The pooled SSI SIR would be scored in
the same manner as all measures
finalized for the HAC Reduction
Program (refer to Figure A in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50723), which is also included above in
this final rule). To determine a Domain
2 score, we proposed taking the average
of the three CDC HAI SIR scores. We
noted in the FY 2014 IPPS/LTCH PPS
final rule that there will be instances in
which applicable hospitals may not
have data on all four measures and
therefore a set of rules was finalized to
determine how to score each Domain.
We proposed to follow the same
finalized rules used to determine
scoring of Domains 1 and 2 (FY 2014
IPPS/LTCH PPS final rule (78 FR 50723
through 50725)), and the proposed
changes in section IV.J.6.e. of the
preamble of the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28144), which
are included in section IV.J.6.e. of the
preamble of this final rule. We invited
public comments on this proposal.
In addition, for FY 2016 we proposed
to weight Domain 1 at 25 percent and
Domain 2 at 75 percent. We proposed to
decrease the weight of Domain 1 from
35 percent to 25 percent for two reasons.
First, with the implementation of CDC’s
SSI measure, we believed the weighting
of both domains needed to be adjusted
to reflect the addition of a fourth
measure; and second, in keeping with
public comments from the FY 2014
IPPS/LTCH PPS final rule, MedPAC and
others stated that Domain 2 should be
weighted more than Domain 1. Finally,
we proposed for FY 2016 that the Total
HAC Score for applicable hospitals
would be the sum of the weighted
scores from Domain 1 (weighted at 25
percent) and Domain 2 (weighted at 75
percent). We invited public comments
on this proposal.
Comment: Several commenters
supported the proposed approach of
creating a pooled SIR for the SSI
measure that includes colon surgeries
and abdominal hysterectomy surgeries
because this is consistent with how CDC
currently reports the measure. A few
commenters noted that this approach
allows for risk adjusted weighting of the
surgical volume between the two
procedures. One commenter
recommended that CMS collaborate
with NHSN leadership and professional
organization representing surgeons to
develop a profile of surgical procedures
that are high volume across the
spectrum of acute care hospitals that
might be added to the existing
procedures in the SSI measure. The
commenters suggested that an
expansion of the number of procedures
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may increase the likelihood that the SSI
SIR is reliable.
Response: We appreciate the
commenters’ support for the approach
of creating a pooled SIR for the SSI
measure. We note that CDC maintains
ongoing collaborations with a number of
professional surgical organizations and
is currently in process of developing
additional SSI metrics for higher
volume surgical procedures. Once these
measures are finalized, we may consider
them for future rulemaking.
Comment: A few commenters
suggested that CMS and CDC monitor
the impact of the consolidated SIR for
hospitals that perform a higher volume
of hysterectomies. The commenters
pointed out that based on Hospital
Compare data, where the SSI rates for
the two procedures are reported
separately, hysterectomies have a higher
infection rate compared to colon
surgeries, and fewer hospitals have a
reported hysterectomy SIR. Commenters
recommended that when the
consolidated SIR adversely impacts
hospitals that perform more
hysterectomies, then the SIR should be
modified to account for the different
mix of services. One commenter
recommended CMS weigh each
individual SSI metric separately as they
believe the combined SIR is a
complicated, burdensome composite
metric.
Response: We will consider these
suggestions in future rulemaking.
Comment: A few commenters were
concerned that adding the SSI measure
to Domain 2 could lead to an average
score that lacks specificity in
determining a hospital’s true HAI
scores. In addition, one commenter
stated that adding the MRSA bacteremia
and C. difficile measures to Domain 2
score would further dilute the domain.
The commenters suggested assigning
each CDC NHSN HAI measure a
separate percentage to total the domain
weight versus averaging all HAIs in
Domain 2. A few commenters stated
that, with only two procedures in the
SSI measure, it is reasonable to continue
equally weighting the measures in
Domain 2. However, if more procedures
are added to the SSI measure, the
commenters recommended that CMS
consider providing a higher weight to
the SSI measure.
Response: We note that the purpose of
the domain scores is to provide a
summary of a hospital’s performance
with regard to patient safety (Domain 1)
and HAI (Domain 2) measures. A
hospital’s performance with regard to
the individual measures is available on
Hospital Compare and is updated
quarterly for hospitals that participate in
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50103
the Hospital IQR Program. We
appreciate the suggestion for weighting
the CDC NHSN HAI measures separately
and will take this into consideration in
future rulemaking.
Comment: One commenter
recommended that the weighting of
measures in the Total HAC Score
correspond to the relative amounts of
harm found in the patient population
based on what is reported in peerreviewed literature.
Response: We will take this feedback
into consideration as we add more
measures to the program and evaluate if
changes to the scoring methodology are
needed.
Comment: Many commenters
supported the CMS proposal to increase
the weight given to Domain 2 and
decrease the weight given to Domain 1
because Domain 2 includes the chart
abstracted NHSN measures which the
commenters believed to be more reliable
and actionable than the claims-based
PSI–90 composite measure in Domain 1.
One commenter recommended that
CMS continue to decrease the Domain 1
weight in future years. A few
commenters believed that the overlap of
measures between the Hospital VBP
Program and the HAC Reduction
Program should be eliminated, but
expressed their support for the domain
weight change if CMS retained all
measures that overlap despite the
commenters’ objections.
Response: We agree that an increase
in the Domain 2 weight is warranted,
given that the number of measures in
the domain is increasing.
Comment: A few commenters did not
support the proposal to change the
weight of Domain 1 to 25 percent from
35 percent and Domain 2 to 75 percent
from 65 percent. One commenter stated
that this approach would promote an
overly narrow definition of HACs that
places too much emphasis on infections
alone and not enough on other patient
safety risks. The commenter added that
CMS should take a more balanced
approach to weighting the existing
domains in order to place a high bar for
hospitals to avoid both infections and
harmful complications that can be
prevented, and seek and develop
measures for hospital safety problems
that have the most prevalence and
impact.
Response: We agree that both patient
safety events and infections are
important components of the HAC
Reduction Program. In the FY 2014
IPPS/LTCH PPS proposed rule (79 FR
28143 through 29144), we explain the
rationale for assigning a higher weight
to Domain 2. We believe that the AHRQ
PSI–90 measure plays a vital role in
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patient safety and it continues to
comprise an integral part of the HAC
Reduction Program with a weight of 25
percent of the Total HAC Score.
After consideration of the public
comments we received, we are
finalizing the scoring methodology of
Domain 2 and new weighting of
Domains 1 and 2 for FY 2016 as
proposed.
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f. Rules To Calculate the Total HAC
Score for FY 2016
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28141, 28144), and
in section IV.J.3.d. of the preamble of
this final rule, we discuss our proposal
to adopt the ‘‘Clarification of FY 2015
Finalized Narrative of Rules to Calculate
the Total HAC Score.’’ We invited
public comments on this proposal.
After consideration of the public
comments we received, we finalized the
proposed clarification of the FY 2015
rules to calculate the Total HAC Score.
We received no public comments on
this specific proposal for FY 2016;
therefore, we are finalizing the
clarification for FY 2016 as well.
7. Future Considerations for the Use of
Electronically Specified Measures
We believe that collection and
reporting of data through health
information technology will greatly
simplify and streamline reporting for
many CMS quality reporting programs.
Through electronic reporting, hospitals
will be able to leverage EHRs to capture,
calculate, and electronically submit
quality data submitted to CMS for the
Hospital IQR Program. CMS has become
aware of some hospitals and health
systems that have developed or adopted
a methodology to identify and measure
all-cause harm through their electronic
health record (EHR) systems. Some
hospitals and health systems are able to
use the results of these electronic
measures to address adverse events at
the point of care and to track
improvement over time. Many of these
measures capture a broad range of
common hospital-acquired conditions
that may not be captured by existing
national measures (examples include
measures of adverse drug events and
hypoglycemia). Given that these
measures are captured using clinical
data from EHR systems, collection of
HAC data will allow CMS to align
measures across multiple settings.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28144), we sought
comment as to whether the use of a
standardized electronic composite
measure of all-cause harm should be
used in the HAC Reduction Program in
future years in addition to, or in place
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of, claims-based measures assessing
HACs. We welcomed any suggestions of
specific all-cause harm electronic
measures, including detailed measure
specifications. Specifically, we invited
public comments on the feasibility and
the perceived value of such a measure,
and what would be the most appropriate
weighting of this measure in the Total
HAC Score. In addition, we requested
suggestions on the timeframe for which
such a standardized electronic
composite measure of all-cause harm
should be proposed.
We intend for the future direction of
electronic quality measure reporting to
significantly enhance the tracking of
HACs under the HAC Reduction
Program. We stated in the FY 2015
IPPS/LTCH PPS proposed rule that we
will continue to work with measure
stewards and developers to develop new
measure concepts, and conduct pilot,
reliability and validity testing as part of
efforts to promote the adoption of
Certified Electronic Health Record
Technology in hospitals.
Comment: Many commenters
supported leveraging electronic
technology to capture, calculate, and
submit data. Commenters recommended
that ultimately electronic measures
could replace claims-based measures
and could provide information in a
timelier manner. Several commenters
cautioned that electronic measures must
undergo careful testing and that
implementation occur in a phased
manner and not mandated until
technically feasible for all hospitals to
comply. One commenter recommended
that an e-measure related to
antimicrobial stewardship be
considered. One commenter
recommended that, beginning in FY
2015, hospitals be given a waiver from
complying with existing Domain 1
requirements, provided that they
demonstrate transition toward or
current use of an approach utilizing
electronic measures in a manner
supported by the peer reviewed
literature.
Response: We appreciate the
commenters’ feedback and support for
the use of electronic measures in
general. We will take the suggestions
into account in future rulemaking.
Comment: Many commenters
supported the development of an allcause harm measure derived from
electronic health records. Some
commenters believed that all-cause
harm measures could capture
information on never events, adverse
drug events, ventilator-associated
events, diagnostic errors, hypoglycemia,
transfusion reactions, and medication
reconciliation (unintentional
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medication discrepancies per patient
(NQF #2456)). Another commenter
encouraged innovative approaches and
collaboration with organizations,
hospitals and the CMS Innovation
Center when developing all-cause
patient harm measures derived from
electronic health records. One
commenter recommended an all cause
harm measure be incorporated as a third
domain.
Several other commenters expressed
concern about use of composite
measures in general stating that they do
not provide actionable data and that
inappropriate weighting of measure
components may skew results. If a
composite measure is used, commenters
recommended that data on the
component measures and the weighting
methodology also be reported.
Response: We thank commenters for
their viewpoints on the use of an
electronic all-cause harm measure for
inclusion in the HAC Reduction
Program and will take them into
consideration in future rule making.
Comment: One commenter requested
more insight into what CMS envisions
for the measure and how the measure
will be reported through the EHR
system, in order to provide feedback to
CMS.
Response: At this time, we do not
have a specific measure in mind but
rather are soliciting feedback on the
feasibility and perceived value of a
standardized electronic composite
measure of all-cause harm in the HAC
Reduction Program. As we develop a
more specific plan we will share that
information in future rulemaking.
K. Payments for Indirect and Direct
Graduate Medical Education (GME)
Costs (§§ 412.105 and 413.75 Through
413.83)
1. Background
Section 1886(h) of the Act, as added
by section 9202 of the Consolidated
Omnibus Budget Reconciliation Act
(COBRA) of 1985 (Pub. L. 99–272) and
as currently implemented in the
regulations at 42 CFR 413.75 through
413.83, establishes a methodology for
determining payments to hospitals for
the direct costs of approved graduate
medical education (GME) programs.
Section 1886(h)(2) of the Act sets forth
a methodology for the determination of
a hospital-specific base-period per
resident amount (PRA) that is calculated
by dividing a hospital’s allowable direct
costs of GME in a base period by its
number of full-time equivalent (FTE)
residents in the base period. The base
period is, for most hospitals, the
hospital’s cost reporting period
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beginning in FY 1984 (that is, October
1, 1983 through September 30, 1984).
The base year PRA is updated annually
for inflation. In general, Medicare direct
GME payments are calculated by
multiplying the hospital’s updated PRA
by the weighted number of FTE
residents working in all areas of the
hospital complex (and at nonprovider
sites, when applicable), and the
hospital’s Medicare share of total
inpatient days.
Section 1886(d)(5)(B) of the Act
provides for a payment adjustment
known as the indirect medical
education (IME) adjustment under the
hospital inpatient prospective payment
system (IPPS) for hospitals that have
residents in an approved GME program,
in order to account for the higher
indirect patient care costs of teaching
hospitals relative to nonteaching
hospitals. The regulations regarding the
calculation of this additional payment
are located at 42 CFR 412.105. The
hospital’s IME adjustment applied to the
DRG payments is calculated based on
the ratio of the hospital’s number of FTE
residents training in either the inpatient
or outpatient departments of the IPPS
hospital to the number of inpatient
hospital beds.
The calculation of both direct GME
and IME payments is affected by the
number of FTE residents that a hospital
is allowed to count. Generally, the
greater the number of FTE residents a
hospital counts, the greater the amount
of Medicare direct GME and IME
payments the hospital will receive.
Therefore, Congress, through the
Balanced Budget Act of 1997 (Pub. L.
105–33), established a limit on the
number of allopathic and osteopathic
residents that a hospital may include in
its FTE resident count for direct GME
and IME payment purposes. Under
section 1886(h)(4)(F) of the Act, for cost
reporting periods beginning on or after
October 1, 1997, a hospital’s
unweighted FTE count of residents for
purposes of direct GME may not exceed
the hospital’s unweighted FTE count for
direct GME in its most recent cost
reporting period ending on or before
December 31, 1996. Under section
1886(d)(5)(B)(v) of the Act, a similar
limit based on the FTE count for IME
during that cost reporting period is
applied effective for discharges
occurring on or after October 1, 1997.
Dental and podiatric residents are not
included in this statutorily mandated
cap.
The Affordable Care Act made a
number of statutory changes relating to
the determination of a hospital’s FTE
resident count for direct GME and IME
payment purposes and the manner in
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which FTE resident limits are calculated
and applied to hospitals under certain
circumstances. Regulations
implementing these changes are
discussed in the November 24, 2010
final rule (75 FR 72133) and the FY
2013 IPPS/LTCH PPS final rule (77 FR
53416).
2. Changes in the Effective Date of the
FTE Resident Cap, 3-Year Rolling
Average, and Intern- and Resident-toBed (IRB) Ratio Cap for New Programs
in Teaching Hospitals
Section 1886(h)(4)(H)(i) of the Act
requires the Secretary to establish rules
for calculating the direct GME caps for
new teaching hospitals that are training
residents in new medical residency
training programs established on or after
January 1, 1995. Under section
1886(d)(5)(B)(viii) of the Act, such rules
also apply to the establishment of a
hospital’s IME cap on the number of
FTE residents training in new programs.
We implemented these statutory
requirements in rules published in the
August 29, 1997 Federal Register (62 FR
46002 through 46008) and in the May
12, 1998 Federal Register (63 FR 26323
through 26325 and 26327 through
26336). Generally, under existing
regulations at 42 CFR 413.79(e)(1) (for
direct GME) and 42 CFR
412.105(f)(1)(vii) (for IME), if a hospital
did not train any allopathic or
osteopathic residents in its most recent
cost reporting period ending on or
before December 31, 1996, and it begins
to participate in training residents in a
new medical residency training program
(allopathic or osteopathic) on or after
January 1, 1995, the hospital’s
unweighted FTE resident cap (which
would otherwise be zero) may be
adjusted based on the sum of the
product of the highest number of FTE
residents in any program year during
the third year of the first new program’s
existence, for each new residency
training program established during that
3-year period, and the minimum
accredited length for each type of
program. The number of FTE resident
cap slots that a teaching hospital
receives for each new program may not
exceed the number of accredited slots
that are available for each new program.
Once a hospital’s FTE resident cap is
established, no subsequent cap
adjustments may be made for new
programs, unless the teaching hospital
is a rural hospital. A rural hospital’s
FTE resident caps may be adjusted for
participation in subsequent new
residency training programs. A hospital
that did not train any allopathic or
osteopathic residents in its most recent
cost reporting period ending on or
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before December 31, 1996, may only
receive a permanent FTE resident cap
adjustment for training residents in a
truly ‘‘new’’ residency training program;
no permanent cap adjustment would be
given for training residents associated
with an existing program. That is, if a
hospital that did not train any allopathic
or osteopathic residents in its most
recent cost reporting period ending on
or before December 31, 1996, serves as
a training site for residents in a program
that exists or existed previously at
another teaching hospital that remains
open, that ‘‘new’’ teaching hospital does
not receive a ‘‘new program’’ cap
adjustment because it is not
participating in training residents in a
truly ‘‘new’’ program. However, it may
be possible for that ‘‘new’’ teaching
hospital to receive a temporary cap
adjustment if it enters into a Medicare
GME affiliation agreement with the
existing teaching hospital as specified at
§ 413.79(f) (for direct GME) and
§ 412.105(f)(1)(vi) (for IME). (For a
detailed discussion of the distinctions
between a new medical residency
training program and an existing
medical residency training program, we
refer readers to the August 27, 2009
final rule (74 FR 43908 through 43920).
For a detailed discussion regarding
participation in Medicare GME
affiliation agreements, we refer readers
to 74 FR 43574.)
For new programs started prior to
October 1, 2012, hospitals that did not
yet have an FTE resident cap
established had a ‘‘3-year window’’ in
which to participate in and ‘‘grow’’ new
programs, before the FTE resident caps
for IME and direct GME were
permanently set for the hospital
beginning with the fourth program year
of the first new program started. In the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53415 through 53425), we revised
the regulations at § 413.79(e) to increase
the cap-building period for new
programs from 3 years to 5 years. That
is, for a hospital that did not yet have
an FTE resident cap established, the
hospital’s FTE resident cap is effective
beginning with the sixth program year
of the first new program’s existence.
This revised policy is effective for urban
hospitals that first begin to participate
in training residents in their first new
program on or after October 1, 2012, and
for rural hospitals that start a new
program on or after October 1, 2012. In
that final rule, we also finalized a
methodology used to calculate a cap
adjustment for an individual hospital if
residents in a new program rotate to
more than one hospital (or hospitals).
The methodology is based on the sum
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of the products of the following three
factors: (1) the highest total number of
FTE residents trained in any program
year, during the fifth year of the first
new program’s existence at all of the
hospitals to which the residents in that
program rotate; (2) the number of years
in which residents are expected to
complete the program, based on the
minimum accredited length for each
type of program; and (3) the ratio of the
number of FTE residents in the new
program that trained at the hospital over
the entire 5-year period to the total
number of FTE residents that trained at
all hospitals over the entire 5-year
period. Finally, we made minor
revisions to the regulation text at
§§ 413.79(e)(2) through (e)(4) for
purposes of maintaining consistency
throughout § 413.79(e). We refer readers
to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53415 through 53425) for
further details regarding the
methodology for calculating the FTE
resident caps.
While the FY 2013 IPPS/LTCH PPS
final rule discussed the methodology for
calculating the FTE resident caps to be
effective beginning with the sixth
program year of the first new program’s
existence, for hospitals that do not yet
have FTE resident caps established, that
final rule did not discuss when the 3year rolling average for IME and direct
GME or the intern- and resident-to-bed
(IRB) ratio cap for IME is effective for
FTE residents training in new programs.
The regulations regarding the 3-year
rolling average and the IRB ratio cap
with respect to new medical residency
training programs were established in
the following Federal Register rules: the
FY 1998 IPPS final rule with comment
period (62 FR 46002 through 46008); the
May 12, 1998 final rule (63 FR 26323
through 26325 and 26327 through
26336); FY 2000 IPPS final rule (64 FR
41518 through 41523); and the FY 2002
IPPS final rule (66 FR 39878 through
39883). Specifically, the regulations at
§ 412.105(f)(1)(v) regarding the 3-year
rolling average and new medical
residency training programs for IME
states that if a hospital qualified for an
adjustment to the limit established
under paragraph (f)(1)(iv) of the section
for new medical residency programs
created under paragraph (f)(1)(vii) of the
section, the count of residents
participating in new medical residency
training programs above the number
included in the hospital’s FTE count for
the cost reporting period ending during
calendar year 1996 is added after
applying the averaging rules in
paragraph (f)(l)(v) for a period of years.
Residents participating in new medical
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residency training programs are
included in the hospital’s FTE count
before applying the averaging rules after
the period of years has expired. For
purposes of this paragraph, for each new
program started, the period of years
equals the minimum accredited length
for each new program. The period of
years for each new program begins
when the first resident begins training
in each new program. In addition, the
regulations for the interaction of the IRB
ratio cap and new medical residency
training programs for IME at
§ 412.105(a)(1)(ii) states that the
exception for new programs described
in paragraph (f)(1)(vii) of the section
applies to each new program
individually for which the full-time
equivalent cap may be adjusted based
on the period of years equal to the
minimum accredited length of each new
program.
The regulations at § 413.79(d)(5)
regarding the interplay of the 3-year
rolling average with new medical
residency training programs for direct
GME similarly states that if a hospital
qualifies for an adjustment to the limit
established under paragraph (c)(2) of the
section for new medical residency
programs created under paragraph (e) of
the section, the count of the residents
participating in new medical residency
training programs above the number
included in the hospital’s FTE count for
the cost reporting period ending during
calendar year 1996 is added after
applying the averaging rules in
paragraph (d), for a period of years.
Residents participating in new medical
residency training programs are
included in the hospital’s FTE count
before applying the averaging rules after
the period of years has expired. For
purposes of paragraph (d), for each new
program started, the period of years
equals the minimum accredited length
for each new program. The period of
years begins when the first resident
begins training in each new program.
Therefore, the FTE resident caps for
IME and direct GME are always effective
beginning with the start of the sixth
program year of the first new program
started for urban hospitals that do not
yet have FTE resident caps established
(§ 413.79(e)(1)(iii)), and for rural
hospitals, beginning with the start of the
sixth program year of each new
individual program started
(§ 413.79(e)(3)), regardless of the fact
that other new programs may have
started after the start of the first new
program. However, the timing of when
the 3-year rolling average for IME and
direct GME and the IRB ratio cap for
IME are first applied is dependent upon
the minimum accredited length of each
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new program started within the 5-year
window. For example, new teaching
Hospital A participates in training
residents in new medical residency
training programs for the first time
beginning on July 1, 2013. On July 1,
2013, Hospital A participates in training
residents in a new family medicine
program (minimum accredited length is
3 years), on July 1, 2014, it also
participates in training residents in a
new sports medicine fellowship
(minimum accredited length is 1 year),
and on July 1, 2015, it also participates
in training residents in a new general
surgery program (minimum accredited
length is 5 years). For the purpose of
establishing Hospital A’s FTE resident
caps, the 5-year growth window for
Hospital A closes on June 30, 2018, and
the IME and direct GME FTE resident
caps for Hospital A are effective on July
1, 2018, the beginning of the sixth
program year of the first new program’s
existence; that is, family medicine.
However, the 3-year rolling average and
the IRB ratio cap are effective at
different points in time. Because the
family medicine residency is 3 years in
length, FTE residents in the new family
medicine program are subject to the 3year rolling average and the IRB ratio
cap beginning on July 1, 2016. Because
the sports medicine fellowship is a 1year program, and it started on July 1,
2014, the number of sports medicine
FTE residents must be included in the
3-year rolling average and is subject to
the IRB ratio cap effective on July 1,
2015. Lastly, the FTE residents in the
new general surgery program would
only be subject to the rolling average
and the IRB ratio cap effective July 1,
2020. The Medicare cost report
worksheets on CMS Form 2552–10 for
IME (Worksheet E, Part A) and for direct
GME (Worksheet E–4) currently can
accommodate reporting of FTE residents
separately based on whether those FTE
residents are in new medical residency
training programs and are not subject to
the FTE resident cap (line 16 of
Worksheet E, Part A, and line 15 of
Worksheet E–4). However, these cost
report worksheets are not designed to
accommodate reporting of FTE residents
that are exempt from the FTE resident
cap, but are subject to the rolling
average and IRB ratio cap, because the
‘‘period of years’’ equal to the minimum
accredited length of each new program
started has already expired. The reverse
also may occur, as in the example above
with the new general surgery program
started by Hospital A, where the FTE
resident caps are effective July 1, 2018,
but the number of FTE residents in the
general surgery program would not be
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subject to the rolling average or the IRB
ratio cap until July 1, 2020.
Complicating matters further is the fact
that, while the effective dates of these
policies associated with new medical
residency training program FTE
residents are effective on a program year
basis (that is, July 1), many teaching
hospitals do not have a fiscal year that
begins on July 1. Therefore, under the
existing policy, the number of FTE
residents needs to be prorated, and
special accommodations need to be
made to calculate the portion of FTE
residents that are subject to the FTE
resident cap, the 3-year rolling average,
and the IRB ratio cap for the respective
portions of the hospital’s cost reporting
period occurring on and after July 1.
Integrating the rolling average, the IRB
ratio cap, and the FTE resident caps for
residents in new medical residency
training programs in an accurate manner
on the Medicare cost report has proved
challenging to the point where we have
had to deal with each instance brought
to our attention by the new teaching
hospital or by a Medicare contractor on
an individual and manual basis (in
order to ensure application of a
consistent methodology). In fact, the
Medicare cost report instructions direct
the hospital to do the following: for
CMS Form 2552–10, Worksheet E, Part
A, line 10—‘‘. . . Contact your
contractor for instructions on how to
complete this line if you have a new
program for which the period of years
is less than or more than three years.
. . .’’; for CMS Form 2552–10,
Worksheet E–4, line 6—‘‘. . . Contact
your contractor for instructions on how
to complete this line if you have a new
program for which the period of years
is less than or greater than 3 years. . . .’’
The MACs, in turn, have been
instructed to contact CMS for
instructions on how to report the
number of FTE residents that are still
within the ‘‘period of years’’ of the new
program. The ‘‘three years’’ referenced
in the Form 2552–10 cost report
instructions are based on the 3-year
growth window for new medical
residency training programs that is in
effect for new programs started prior to
October 1, 2012, when, within the 3year growth window, new teaching
hospitals also may have started new
medical residency training programs
with different minimum accredited
lengths. (We note that while the
previous Form 2552–96 cost report did
not include the same instructions, CMS
did deal with the reporting of the
number of FTE residents in new
medical residency training programs on
an individual basis when requests for
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assistance were brought to its attention.)
However, these instructions also apply
for new medical residency training
programs started with different
minimum accredited lengths on and
after October 1, 2012.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28147), we
proposed to simplify and streamline the
timing of when FTE residents in new
medical residency training programs are
subject to the FTE resident cap, the 3year rolling average, and the IRB ratio
cap, both for urban teaching hospitals
that have not yet had FTE resident caps
established under § 413.79(e)(1) and for
rural teaching hospitals that may or may
not have FTE resident caps established
under § 413.79(e)(3). That is, we
proposed that the methodology for
calculating the FTE resident caps for
hospitals that participate in training
residents in new medical residency
training programs would continue to be
the same methodology instituted in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53415 through 53425) for new
medical residency training programs
started on or after October 1, 2012,
specified at § 413.79(e)(1). However,
once the FTE resident caps are
calculated, we proposed to change the
timing of when the FTE resident caps
would be effective, to synchronize the
effective dates and the application of the
3-year rolling average and the IRB ratio
cap with each applicable hospital’s
fiscal year begin date. Specifically, we
proposed that the FTE resident caps
would continue to be calculated as
finalized in the FY 2013 IPPS/LTCH
PPS final rule—the methodology is
based on the sum of the products of the
following three factors: (1) the highest
total number of FTE residents trained in
any program year, during the fifth year
of the first new program’s existence at
all of the hospitals to which the
residents in that program rotate; (2) the
number of years in which residents are
expected to complete the program,
based on the minimum accredited
length for each type of program; and (3)
the ratio of the number of FTE residents
in the new program that trained at the
hospital over the entire 5-year period to
the total number of FTE residents that
trained at all hospitals over the entire 5year period. However, once calculated
in this manner, we proposed that,
instead of the FTE resident caps being
effective beginning with the sixth
program year of the first new program
started, those FTE resident caps, the 3year rolling average, and the IRB ratio
cap would be effective beginning with
the applicable hospital’s cost reporting
period that precedes the start of the
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sixth program year of the first new
program started. Using the example of
Hospital A that we presented earlier,
assume Hospital A has a January 1 to
December 31 cost reporting year. The
first new program started, family
medicine, was started on July 1, 2013.
A sports medicine fellowship and a
general surgery program also were
started timely within the 5-year growth
window. Hospital A has 5 program
years to grow its FTE resident caps,
from July 1, 2013 through June 30, 2018.
The FTE resident caps would be
calculated based on the 5 program years
in accordance with the methodology
established at § 413.79(e)(1) in the FY
2013 IPPS/LTCH PPS final rule;
therefore, the hospital would wait until
after June 30, 2018 to obtain the FTE
counts to calculate the FTE resident
caps. However, we proposed that those
IME and direct GME FTE resident caps,
once calculated after June 30, 2018,
instead of being effective on July 1,
2018, would be effective at the
beginning of Hospital A’s cost reporting
period that precedes July 1, 2018; that
is, the FTE resident caps for Hospital A
would be effective permanently on
January 1, 2018, the start of Hospital A’s
cost reporting period that precedes the
start of the sixth program year of the
first new program started. The hospital
could file its fiscal year end December
31, 2018 cost report including the FTE
resident caps applicable to the entire
cost reporting period accordingly.
As noted earlier, we proposed that, for
all new medical residency training
programs in which the hospital
participates during the 5-year growth
window, the FTEs in those new
programs also would be subject to the 3year rolling average and the IRB ratio
cap simultaneously with the effective
date of the FTE resident caps, at the
beginning of the applicable hospital’s
cost reporting period that precedes the
beginning of the sixth program year of
the first new program started. Again,
using the example of Hospital A that we
presented earlier, the FTE residents in
the family medicine program, the sports
medicine fellowship, and the general
surgery program would all be subject to
the 3-year rolling average and IRB ratio
cap beginning on January 1, 2018. With
regard to reporting on the Medicare cost
report, for Hospital A’s fiscal year end
dates of December 31, 2013 through and
including December 31, 2017, we
proposed that the number of FTE
residents in the family medicine
program, the sports medicine
fellowship, and the general surgery
program would be reported so as not to
be included in the IME rolling average
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or the IRB ratio cap, and so as not to be
included in the direct GME rolling
average. (On the CMS Form 2552–10, for
Hospital A’s fiscal year end dates of
December 31, 2013 through and
including December 31, 2017, this
means that the number of FTE residents
in the family medicine program, the
sports medicine fellowship, and the
general surgery program would be
reported on Worksheet E, Part A, line
16, and on Worksheet E–4, line 15).
However, on Hospital A’s cost report for
fiscal year ending December 31, 2018,
the number of FTE residents in these
three programs would be subject to the
FTE resident cap, the 3-year rolling
average, and the IRB ratio cap and
would be reported accordingly. (On the
CMS Form 2552–10, for Hospital A’s
cost report for fiscal year ending
December 31, 2018, this means that
none of the FTE residents in these three
programs would be reported on
Worksheet E, Part A, line 16 for IME,
and Worksheet E–4, line 15 for direct
GME. Instead, all of the FTE residents
would be reported on Worksheet E, Part
A, line 10 for IME, and Worksheet E–4,
line 6 for direct GME, in order to be
subject to the FTE resident cap, the 3year rolling average, and the IRB ratio
cap.) We note that once the 3-year
rolling average is effective in that cost
reporting period that includes the sixth
program year of the first new program
started, the number of FTE residents in
the new programs also must be reported
both as part of the prior year FTE
resident counts and the penultimate
FTE resident counts, in order to
effectuate the 3-year rolling average
calculation on the IME Worksheet E,
Part A, and the direct GME Worksheet
E–4, respectively.
In the example that we presented
earlier, Hospital A has a fiscal year that
begins on January 1. If Hospital A’s
fiscal year begin date would have been
October 1, then, while the sixth program
year of the first new program started
would still be July 1, 2018, the FTE
residents caps, the 3-year rolling
average, and the IRB ratio cap would be
effective on October 1, 2017, the fiscal
year begin date that precedes July 1,
2018, the sixth program year. If Hospital
A’s fiscal year begin date would have
been July 1, the FTE residents caps, the
3-year rolling average, and the IRB ratio
cap would instead be effective on July
1, 2017, the fiscal year begin date that
precedes July 1, 2018, the sixth program
year.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28148), we stated
that we understood that this proposal, if
finalized, would reduce the amount of
time that the new medical residency
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training programs would be exempt
from the FTE resident caps. However,
even though we proposed to make the
effective date of the FTE resident caps
earlier than under current policy,
because we also proposed that the
calculation of the FTE resident caps
would still be based on the highest total
number of FTE residents trained in any
program year, during the fifth year of
the first new program’s existence at all
of the hospitals to which the residents
in that program rotate, a new teaching
hospital would still have the full 5
program years to grow its program(s),
and its FTE resident caps would reflect
a full 5 years of growth. Therefore,
because, by the fifth program year, a
program should, in most typical
circumstances, have grown to its full
capacity, barring unusual
circumstances, the FTE resident caps
that would take effect under the
proposed policy at the beginning of the
fiscal year that precedes the sixth
program year should accommodate the
FTE resident count training in the fifth
and subsequent program years.
Therefore, we stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28148) that we believe that this proposal
to streamline and synchronize the
effective dates of the FTE resident caps,
the 3-year rolling average, and the IRB
ratio cap not only is easier to
comprehend and to implement, but also
is reasonable and equitable in its effect
on the IME and direct GME payments of
hospitals establishing FTE resident
caps. Specifically, we indicated that if
the proposal is finalized, there would no
longer be a need for CMS Form 2552–
10, Worksheet E, Part A, line 10 and
Worksheet E–4, line 6 to instruct
hospitals to contact their MACs for
instructions on how to complete those
lines, as both hospitals and MACs
would understand how to report the
number of FTE residents in new
programs, even when those programs
have different accredited lengths.
Instead, hospitals and MACs would
follow the methodology instituted in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53415 through 53425) to calculate
the FTE resident caps for new medical
residency training programs started on
or after October 1, 2012, and once the
FTE resident caps are calculated,
hospitals and MACs would implement
the FTE resident caps, the 3-year rolling
average, and the IRB ratio cap effective
beginning with the applicable hospital’s
cost reporting period that precedes the
start of the sixth program year of the
first new program started. Under the
proposed methodology, FTE residents
and FTE resident caps would no longer
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need to be prorated, and we would no
longer need to make special
accommodations to calculate the
portion of FTE residents that are subject
to the FTE resident cap, the 3-year
rolling average, and the IRB ratio cap for
the respective portions of the hospital’s
cost reporting period occurring on and
after July 1. The existing CMS Form
2552–10 already accommodates the
proposed methodology, unlike the
complicated process currently in place.
Therefore, clarity, efficiency, and
payment accuracy would be improved
for hospitals, MACs, and CMS.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28148), we stated
that with regard to rural hospitals that,
under § 413.79(e)(3) of the regulations,
may receive FTE resident cap
adjustments at any time for participating
in training residents in new programs,
we proposed a similar policy, with
modifications reflecting the fact that
each new program in which the rural
hospital participates receives its own 5year growth window before the rural
hospital’s FTE resident cap is adjusted
based on that new program. That is, we
proposed that, for rural hospitals, the
FTE resident caps, the 3-year rolling
average, and the IRB ratio cap for each
new program started would be effective
beginning with the applicable hospital’s
cost reporting period that precedes the
start of the sixth program year of each
new program started. For example, rural
Hospital B has a fiscal year that begins
on January 1. It starts a family medicine
program on July 1, 2013, and a general
surgery program on July 1, 2016. The
sixth program year for the family
medicine program begins on July 1,
2018. The sixth program year for the
general surgery program begins on July
1, 2021. With regard to Medicare cost
reporting, during Hospital B’s fiscal year
end dates of December 31, 2013 through
and including December 31, 2017, the
number of family medicine FTE
residents would be reported so as not to
be included in the IME 3-year rolling
average or the IRB ratio cap, and so as
not to be included in the direct GME 3year rolling average. (This means that on
CMS Form 2552–10, during Hospital B’s
fiscal year end dates of December 31,
2013 through and including December
31, 2017, the number of family medicine
FTE residents would be reported on
Worksheet E, Part A, line 16 for IME,
and on Worksheet E–4, line 15, for
direct GME. Instead, the number of
family medicine FTE residents would be
reported on Worksheet E, Part A, line
16, and Worksheet E–4, line 15.) Then,
beginning with Hospital B’s cost report
for fiscal year ending December 31,
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2018, the number of FTE residents in
only the family medicine program
would be subject to the FTE residents
caps, the 3-year rolling average, and the
IRB ratio cap, and would be reported
accordingly in order to be subject to the
FTE resident cap, the 3-year rolling
average, and the IRB ratio cap. (This
means that on CMS Form 2552–10,
beginning with Hospital B’s cost report
ending December 31, 2018, the number
of family medicine FTE residents would
be reported on Worksheet E, Part A, line
10 for IME, and Worksheet E–4, line 6
for direct GME.) Because the general
surgery program started on July 1, 2016,
for Hospital B’s fiscal year end dates of
December 31, 2016 through and
including fiscal year end date of
December 31, 2020, the number of
general surgery FTE residents would be
reported (on Worksheet E, Part A, line
16) so as not to be included in the IME
3-year rolling average or the IRB ratio
cap, and (on Worksheet E–4, line 15), so
as not to be included in the direct GME
3-year rolling average. Then, beginning
with Hospital B’s cost report for fiscal
year ending December 31, 2021, the
number of FTE residents in the general
surgery program would be subject to the
FTE resident caps, the 3-year rolling
average, and the IRB ratio cap, and
would be reported accordingly (on
Worksheet E, Part A, line 10 for IME,
and Worksheet E–4, line 6 for direct
GME), in order to be subject to the FTE
resident cap, the 3-year rolling average,
and the IRB ratio cap. We note that once
the 3-year rolling average is effective in
that cost reporting period that includes
the sixth program year of each new
program started, the number of FTE
residents in the new programs also must
be reported as part of the prior year FTE
resident counts, and the penultimate
FTE resident counts, in order to
effectuate the 3-year rolling average
calculation on the IME Worksheet E,
Part A, and the direct GME Worksheet
E–4, respectively.
We proposed that this policy
regarding the effective dates of the FTE
residency caps, the 3-year rolling
average, and the IRB ratio cap for FTE
residents in new medical residency
training programs would be consistent
with the methodology for calculation of
the FTE resident caps as described in
the FY 2013 IPPS/LTCH PPS final rule,
and implemented in the regulations at
§§ 413.79(e)(1) and (e)(3). That is,
because the policy providing a 5-year
growth period for establishing the FTE
resident caps (§§ 413.79(e)(1) and (e)(3))
is effective for new programs started on
or after October 1, 2012, this proposal
would be effective for urban hospitals
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that first begin to participate in training
residents in their first new medical
residency training program, and for
rural hospitals, on or after October 1,
2012. We also proposed to revise the
regulations for IME and direct GME,
respectively, at § 412.105(a)(1)(ii) for the
IME IRB ratio cap, at § 412.105(f)(1)(v)
for the IME 3-year rolling average, and
at § 413.79(d)(5) for the direct GME 3year rolling average to reflect that the
exception from the IRB ratio cap and the
3-year rolling average for new programs
applies to each new program
individually during the cost reporting
periods prior to the beginning of the
applicable hospital’s cost reporting
period that precedes the start of the
sixth program year of the first new
program started, for hospitals for which
the FTE cap may be adjusted in
accordance with § 413.79(e)(1), and
prior to the beginning of the applicable
hospital’s cost reporting period that
precedes the start of the sixth program
year of each individual new program
started, for hospitals for which the FTE
cap may be adjusted in accordance with
§ 413.79(e)(3). After the applicable
hospital’s cost reporting period that
precedes the start of the sixth program
year of the first new program started for
hospitals for which the FTE cap may be
adjusted in accordance with
§ 413.79(e)(1), and after the applicable
hospital’s cost reporting period that
precedes the start of the sixth program
year of each individual new program
started for hospitals for which the FTE
cap may be adjusted in accordance with
§ 413.79(e)(3), FTE residents
participating in new medical residency
training programs are included in the
hospital’s IRB ratio cap and the 3-year
rolling average.
Comment: Many commenters
supported CMS’ proposal to simplify
and synchronize the timing of when
FTE residents in new medical residency
training programs are subject to the FTE
resident caps, the 3-year rolling average,
and the IRB ratio cap. However, the
commenters believed that the specific
part of the proposal related to making
the FTE resident caps effective
beginning with the applicable hospital’s
cost reporting period that precedes the
start of the sixth program year of the
first new program started would result
in premature application of the FTE
resident cap while the hospital would
still be within the 5-year cap building
window, thereby reducing the number
of FTEs to which the new teaching
hospital would otherwise be entitled to
payment. The commenters disputed
CMS’ suggestion in the proposed rule
that the effect on a hospital’s payment
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would be inconsequential or
nonexistent ‘‘in most typical
circumstances.’’ The commenters
provided examples of where they
believed CMS’ proposal would result in
the loss of payment for new teaching
hospitals establishing an FTE resident
cap. The commenters acknowledged
CMS’ statement in the proposed rule
that a new teaching hospital could
experience a payment benefit from the
proposed changes related to the
synchronized implementation of the 3year rolling average and the IRB ratio
cap. However, the commenters did not
believe this ‘‘benefit justifies an
imposition of the FTE resident cap
within the 5-year cap building
window.’’ The commenters urged CMS
to finalize an alternative effective date
that would be the start of the hospital’s
cost reporting period that follows the
start of the sixth program year of the
start of the first new program. The
commenters believed this alternative
would achieve the simplicity that CMS
seeks in its proposal, yet would also
permit new teaching hospitals to retain
the payments they are ‘‘entitled’’ to
receive for at least a full 5 program years
under existing regulations.
Response: We appreciate the
commenters’ support of the proposal,
and the commenters’ concern that, by
proposing that the effective date would
be the applicable hospital’s cost
reporting period that precedes the start
of the sixth program year of the first
new program started, this earlier
application of the FTE resident cap
might result in reduced payment
because some amount of FTE residents
would be in excess of the hospital’s
newly calculated FTE resident caps. We
also agree that the streamlining and
simplification that we are seeking
would be achieved by revising the
proposal to instead take effect, as the
commenters suggested, with the
beginning of the hospital’s cost
reporting period that follows the start of
the sixth program year of the first new
program started. Therefore, in this final
rule, we are modifying our proposal as
follows, both for urban teaching
hospitals that have not yet had FTE
resident caps established under
§ 413.79(e)(1), and for rural teaching
hospitals that may or may not have FTE
resident caps established under
§ 413.79(e)(3). That is, the FTE resident
caps would continue to be calculated as
finalized in the FY 2013 IPPS/LTCH
PPS final rule—the methodology is
based on the sum of the products of the
following three factors: (1) the highest
total number of FTE residents trained in
any program year, during the fifth year
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of the first new program’s existence at
all of the hospitals to which the
residents in that program rotate; (2) the
number of years in which residents are
expected to complete the program,
based on the minimum accredited
length for each type of program; and (3)
the ratio of the number of FTE residents
in the new program that trained at the
hospital over the entire 5-year period to
the total number of FTE residents that
trained at all hospitals over the entire 5year period. However, once calculated
in this manner, we are finalizing a
policy that, instead of the FTE resident
caps being effective beginning with the
sixth program year of the first new
program started, those FTE resident
caps, the 3-year rolling average, and the
IRB ratio cap would be effective
beginning with the applicable hospital’s
cost reporting period that coincides with
or follows the start of the sixth program
year of the first new program started.
(We are specifying ‘‘that coincides with
or follows’’ the start of the sixth
program year of the first new program
started, rather than only specifying ‘‘that
follows’’ the start of the sixth program
year of the first new program started as
the commenters suggested, in
consideration of hospitals that have a
fiscal year begin date of July 1, for
whom the cost reporting period that
starts after completion of the 5-year cap
building window coincides with the
beginning of the sixth program year of
the first new program started. Under
this finalized policy, hospitals with a
fiscal year begin date of July 1 would
not wait an entire 12 months after
completion of their 5-year cap building
window for their next cost reporting
period to start in order for the FTE
resident caps, the 3-year rolling average,
and the IRB ratio cap to take effect.
Rather, for hospitals with a fiscal year
begin date of July 1, the FTE resident
caps, the 3-year rolling average, and the
IRB ratio cap would be effective
beginning with the applicable hospital’s
cost reporting period that coincides with
the start of the sixth program year of the
first new program started.)
Using the example of Hospital A that
we presented in the proposed rule,
assume Hospital A has a January 1 to
December 31 cost reporting year. The
first new program started, family
medicine, was started on July 1, 2013.
A sports medicine fellowship and a
general surgery program also were
started timely within the 5-year growth
window. Hospital A has 5 program
years to grow its FTE resident caps,
from July 1, 2013 through June 30, 2018.
The FTE resident caps would be
calculated based on the 5 program years
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in accordance with the methodology
established at § 413.79(e)(1) in the FY
2013 IPPS/LTCH PPS final rule.
Therefore, the hospital would wait until
after June 30, 2018, to obtain the FTE
counts to calculate the FTE resident
caps. However, those IME and direct
GME FTE resident caps, once calculated
after June 30, 2018, instead of being
effective on July 1, 2018, would be
effective at the beginning of Hospital A’s
cost reporting period that follows July 1,
2018; that is, the FTE resident caps for
Hospital A would be effective
permanently on January 1, 2019, the
start of Hospital A’s cost reporting
period that follows the start of the sixth
program year of the first new program
started. The hospital would file its fiscal
year end December 31, 2019 cost report
including the FTE resident caps
applicable to the entire cost reporting
period accordingly.
Regarding the application of the 3year rolling average and the IRB ratio
cap, using the example of Hospital A,
the FTE residents in the family
medicine program, the sports medicine
fellowship, and the general surgery
program would all be subject to the 3year rolling average and the IRB ratio
cap beginning on January 1, 2019. With
regard to reporting on the Medicare cost
report, for Hospital A’s fiscal year end
dates of December 31, 2013 through and
including December 31, 2018, the
number of FTE residents in the family
medicine program, the sports medicine
fellowship, and the general surgery
program would be reported so as not to
be included in the IME rolling average
or the IRB ratio cap, and so as not to be
included in the direct GME rolling
average. (On the CMS Form 2552–10, for
Hospital A’s fiscal year end dates of
December 31, 2013 through and
including December 31, 2018, this
means that the number of FTE residents
in the family medicine program, the
sports medicine fellowship, and the
general surgery program would be
reported on Worksheet E, Part A, line
16, and on Worksheet E–4, line 15.)
However, on Hospital A’s cost report for
fiscal year ending December 31, 2019,
the number of FTE residents in these
three programs would be subject to the
FTE resident caps, the 3-year rolling
average, and the IRB ratio cap, and
would be reported accordingly. (On the
CMS Form 2552–10, for Hospital A’s
cost report for fiscal year ending
December 31, 2019, this means that
none of the FTE residents in these three
programs would be reported on
Worksheet E, Part A, line 16 for IME,
and Worksheet E–4, line 15 for direct
GME. Instead, all of the FTE residents
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would be reported on Worksheet E, Part
A, line 10 for IME, and Worksheet E–4,
line 6 for direct GME, in order to be
subject to the FTE resident caps, the 3year rolling average, and the IRB ratio
cap.) We note that once the 3-year
rolling average is effective, the number
of FTE residents in the new programs
also must be reported both as part of the
prior year FTE resident counts and the
penultimate FTE resident counts, in
order to effectuate the 3-year rolling
average calculation on the IME
Worksheet E, Part A, and the direct
GME Worksheet E–4, respectively.
In the example that we presented
earlier, Hospital A has a fiscal year that
begins on January 1. If Hospital A’s
fiscal year begin date would have been
October 1, while the sixth program year
of the first new program started would
still be July 1, 2018, the FTE residents
caps, the 3-year rolling average, and the
IRB ratio cap would be effective on
October 1, 2018, the fiscal year begin
date that follows July 1, 2018, the sixth
program year. If Hospital A’s fiscal year
begin date would have been July 1, the
FTE residents caps, the 3-year rolling
average, and the IRB ratio cap would be
effective on July 1, 2018, the fiscal year
begin date that follows completion of
the fifth program year, and coincides
with July 1, 2018, the sixth program
year.
With regard to rural hospitals that,
under § 413.79(e)(3) of the regulations,
may receive FTE resident cap
adjustments at any time for participating
in training residents in new programs,
we are finalizing a similar policy, with
modifications reflecting the fact that
each new program in which the rural
hospital participates receives its own 5year growth window before the rural
hospital’s FTE resident cap is adjusted
based on that new program. That is, we
are finalizing that, for rural hospitals,
the FTE resident caps, the 3-year rolling
average, and the IRB ratio cap for each
new program started would be effective
beginning with the applicable hospital’s
cost reporting period that coincides with
or follows the start of the sixth program
year of each new program started. For
example, rural Hospital B has a fiscal
year that begins on January 1. It starts
a family medicine program on July 1,
2013, and a general surgery program on
July 1, 2016. The sixth program year for
the family medicine program begins on
July 1, 2018. The sixth program year for
the general surgery program begins on
July 1, 2021. With regard to Medicare
cost reporting, during Hospital B’s fiscal
year end dates of December 31, 2013
through and including December 31,
2018, the number of family medicine
FTE residents would be reported so as
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not to be included in the IME 3-year
rolling average or the IRB ratio cap, and
so as not to be included in the direct
GME 3-year rolling average. (This means
that on CMS Form 2552–10, during
Hospital B’s fiscal year end dates of
December 31, 2013 through and
including December 31, 2018, the
number of family medicine FTE
residents would be reported on
Worksheet E, Part A, line 16 for IME,
and on Worksheet E–4, line 15, for
direct GME.) Beginning with Hospital
B’s cost report for fiscal year ending
December 31, 2019, the number of FTE
residents in only the family medicine
program would be subject to the FTE
residents caps, the 3-year rolling
average, and the IRB ratio cap, and
would be reported accordingly in order
to be subject to the FTE resident caps,
the 3-year rolling average, and the IRB
ratio cap. (This means that on CMS
Form 2552–10, beginning with Hospital
B’s cost report ending December 31,
2019, the number of family medicine
FTE residents would be reported on
Worksheet E, Part A, line 10 for IME,
and Worksheet E–4, line 6 for direct
GME.) Because the general surgery
program started on July 1, 2016, for
Hospital B’s fiscal year end dates of
December 31, 2016 through and
including fiscal year end date of
December 31, 2021, the number of
general surgery FTE residents would be
reported on Worksheet E, Part A, line 16
so as not to be included in the IME 3year rolling average or the IRB ratio cap,
and on Worksheet E–4, line 15, so as not
to be included in the direct GME 3-year
rolling average. Beginning with Hospital
B’s cost report for fiscal year ending
December 31, 2022, the number of FTE
residents in the general surgery program
would be subject to the FTE resident
caps, the 3-year rolling average, and the
IRB ratio cap, and would be reported
accordingly (on Worksheet E, Part A,
line 10 for IME, and Worksheet E–4, line
6 for direct GME), in order to be subject
to the FTE resident caps, the 3-year
rolling average, and the IRB ratio cap.
We note that once the 3-year rolling
average is effective, the number of FTE
residents in the new programs also must
be reported as part of the prior year FTE
resident counts, and the penultimate
FTE resident counts, in order to
effectuate the 3-year rolling average
calculation on the IME Worksheet E,
Part A, and the direct GME Worksheet
E–4, respectively.
After consideration of the public
comments we received, we are
finalizing our proposal with certain
modifications. Specifically, the policy
regarding the effective dates of the FTE
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residency caps, the 3-year rolling
average, and the IRB ratio cap for FTE
residents in new medical residency
training programs will be consistent
with the methodology for calculation of
the FTE resident caps as described in
the FY 2013 IPPS/LTCH PPS final rule,
and implemented in the regulations at
§§ 413.79(e)(1) and (e)(3). That is,
because the policy providing a 5-year
growth period for establishing the FTE
resident caps (§§ 413.79(e)(1) and (e)(3))
is effective for new programs started on
or after October 1, 2012, this policy will
be effective for urban hospitals that first
begin to participate in training residents
in their first new medical residency
training program, and for rural
hospitals, on or after October 1, 2012.
We also are revising the regulations for
IME and direct GME, respectively, at
§ 412.105(a)(1)(ii) for the IME IRB ratio
cap, at § 412.105(f)(1)(v) for the IME 3year rolling average, and at
§ 413.79(d)(5) for the direct GME 3-year
rolling average, to reflect that the
exception from the IRB ratio cap and the
3-year rolling average for new programs
applies to each new program
individually during the cost reporting
periods prior to the beginning of the
applicable hospital’s cost reporting
period that coincides with or follows
the start of the sixth program year of the
first new program started, for hospitals
for which the FTE cap may be adjusted
in accordance with § 413.79(e)(1), and
prior to the beginning of the applicable
hospital’s cost reporting period that
coincides with or follows the start of the
sixth program year of each individual
new program started, for hospitals for
which the FTE cap may be adjusted in
accordance with § 413.79(e)(3).
Beginning with the applicable hospital’s
cost reporting period that coincides
with or follows the start of the sixth
program year of the first new program
started for hospitals for which the FTE
cap may be adjusted in accordance with
§ 413.79(e)(1), and beginning with the
applicable hospital’s cost reporting
period that coincides with or follows
the start of the sixth program year of
each individual new program started for
hospitals for which the FTE cap may be
adjusted in accordance with
§ 413.79(e)(3), FTE residents
participating in new medical residency
training programs are included in the
hospital’s IRB ratio cap and the 3-year
rolling average.
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50111
3. Changes to IME and Direct GME
Policies as a Result of New OMB Labor
Market Area Delineations
a. New Program FTE Resident Cap
Adjustment for Rural Hospitals
Redesignated as Urban
As stated earlier in this final rule,
under existing regulations, a new
teaching hospital that starts training
residents for the first time on or after
October 1, 2012, has 5 years from when
it first begins training residents in its
first new program to build its FTE
resident cap. If the teaching hospital is
a rural teaching hospital, it can continue
to receive permanent cap adjustments
for training residents in new programs
after the initial 5-year cap-building
period that applies to new teaching
hospitals ends. (We refer readers to
section IV.K.2. of the preamble of this
final rule for a discussion of our
proposal and final policy to change the
effective dates for when the FTE
resident cap, the 3-year rolling average,
and the IRB ratio cap are applied to new
teaching hospitals and to new programs
at rural teaching hospitals.)
In section III.B. of the preamble of this
final rule, we discuss the final policies
we are implementing as a result of the
new OMB labor market area
delineations announced in the February
28, 2013 OMB Bulletin No. 13–01. As a
result of the new OMB delineations,
some teaching hospitals may be
redesignated from being located in a
rural area to an urban area, thereby
losing their ability to increase their FTE
resident caps for new programs started
after their initial 5-year cap-building
period ends. We have been asked
whether a rural teaching hospital that
already has a cap and is redesignated as
urban while it is in the process of
establishing another new program(s) can
still receive a permanent cap adjustment
for that new program(s). We believe that
because the hospital had already started
training residents in the new program(s)
while it was rural, the former rural
hospital should be permitted to
continue building its new program(s)
and receive a permanent FTE resident
cap adjustment for that new program(s).
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28149
through 28150), we proposed to revise
the regulations to allow a hospital that
was rural as of the time it started
training residents in a new program(s)
and is redesignated as urban for
Medicare payment purposes during its
cap-building period for that program(s)
to be able to continue building that
program(s) for the remainder of the capbuilding period and receive a
permanent FTE resident cap adjustment
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for that new program(s). Once the capbuilding period for the new program(s)
that was started while the hospital was
still rural expires, the teaching hospital
that has been redesignated as urban
would no longer be able to receive any
additional permanent cap adjustments.
We proposed that the teaching hospital
must be actively training residents in
the new program while it is still rural,
that is, prior to the redesignation taking
effect, in order for the hospital to
continue receiving a cap adjustment for
the new program. For example, if a rural
hospital begins training residents in a
new internal medicine program on July
1, 2013, and begins training residents in
a new general surgery program on July
1, 2014, and the rural hospital is
redesignated as urban effective on
October 1, 2014, the teaching hospital
would be able to continue receiving a
cap adjustment for both the new
internal medicine program and the new
general surgery program after it has been
redesignated as urban. However, if the
rural hospital is redesignated as urban
effective on October 1, 2014, and started
training residents in a new internal
medicine program on July 1, 2013, but
did not start training residents in a new
general surgery program while it was
still rural, that is, prior to October 1,
2014, the teaching hospital would
receive a permanent cap adjustment for
the new internal medicine program, but
would not receive a cap adjustment for
the new general surgery program. We
proposed to revise the regulations at
§ 412.105(f)(1)(iv)(D) for IME and
§ 413.79(c)(6) for direct GME to
implement this proposed change. We
proposed that these regulatory revisions
be effective for cost reporting periods
beginning on or after October 1, 2014.
Comment: Commenters supported the
proposal to allow a rural hospital that
was training residents in a new program
when it was redesignated as urban due
to the most recent OMB delineations, to
be able to continue with the capbuilding period for that new program
and receive a permanent cap adjustment
for that new program. Commenters
stated that rural hospitals develop and
build their new programs with the
expectation that they will have a 5-year
cap building period in which to grow
these new programs. Commenters stated
that the proposal is fair and equitable
and helps address physician shortages
in rural areas by promoting residency
training in these areas. However, several
commenters requested that CMS take
the proposal one step further. These
commenters stated that if a rural
hospital has received a letter of
accreditation for a new program prior to
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the hospital being redesignated as
urban, the hospital should be able to
receive a permanent cap adjustment for
that new program. One commenter
stated that there are substantial
resources and upfront costs that go into
starting a new family medicine program.
The commenter noted it may take some
time for the program to begin training
residents because the hospital must
receive an initial letter of accreditation
and then the program may have to wait
for up to a year until it can participate
in the match for residents to begin the
following July 1.
Response: We thank the commenters
for their support of our proposal. We
appreciate that significant resources go
into developing a brand new residency
training program and that there may be
a lag between when a program is
accredited and when residents begin
training in that program. We are
persuaded by these comments and,
therefore, we are finalizing our
proposed policy with a modification,
such that a rural hospital that has been
redesignated as urban can receive a
permanent cap adjustment for a new
program (after a 5-year cap building
period for that new program), if it
received a letter of accreditation for the
new program, and/or started training
residents in the new program, prior to
being redesignated as urban. Expanding
upon the example that was included in
the proposed rule, if a rural hospital is
redesignated as urban effective on
October 1, 2014, and started training
residents in a new internal medicine
program on July 1, 2013, but did not
start training residents in a new general
surgery program while it was still rural,
that is, prior to October 1, 2014, but did
receive a letter of accreditation for the
general surgery program prior to
October 1, 2014, the rural hospital
would receive a permanent cap
adjustment for the new internal
medicine program, and would receive a
permanent cap adjustment for the new
general surgery program. We are
amending the regulations at
§ 412.105(f)(1)(iv)(D) and § 413.79(c)(6)
to implement this policy. Consistent
with the effective date of the
implementation of the new OMB
delineations, we are making this final
policy effective October 1, 2014.
Comment: Several commenters
requested that CMS propose a policy
through an interim final rule that would
permit hospitals that remain rural
referral centers (RRCs), even if they are
no longer in a labor market designated
as rural, to receive a cap increase for
residents training in new programs. The
commenters stated that RRCs are highvolume hospitals that treat complex
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cases, which may be referred to them
from significant geographic distances.
The commenters stated that RRCs meet
important health care needs of rural
communities because residency
programs in RRCs train physicians who
are equipped to deal with rural
populations. The commenters requested
that CMS specify that grandfathered
RRCs are able to increase their caps for
new programs so long as during the
current Federal fiscal year, they
continue to meet all RRC requirements
other than being located in a rural area.
Response: Section 1886(h)(4)(H)(i) of
the Act states in part, ‘‘[i]n promulgating
such rules for purposes of subparagraph
(F), the Secretary shall give special
consideration to facilities that meet the
needs of underserved rural areas.’’
Subparagraph (F) refers to the
establishment of a hospital’s FTE
resident cap. We read this statutory
language as providing special
consideration only to rural hospitals for
purposes of establishing their FTE
resident caps, not that special
consideration be provided to hospitals
that are either not physically located in
rural areas or have not reclassified as
rural facilities (for IME payment
purposes). Therefore, we are not making
any special exceptions specific to RRCs
that are no longer in rural areas in this
final rule. As we have stated above for
other hospitals that lose their rural
status due to the new OMB delineations,
an RRC that has been redesignated as
urban may receive a permanent cap
adjustment for a new program (after a 5year cap building period for that new
program), if it received a letter of
accreditation for the new program, and/
or started training residents in the new
program, prior to being redesignated as
urban. We note that if the redesignated
RRC subsequently reclassified back to
rural, it would be able to receive
additional adjustments to its IME FTE
resident cap for training residents in
new programs.
Comment: One commenter stated that
it operates a rural teaching hospital that
received the 30-percent cap increase
applicable to rural teaching hospitals.
The commenter stated that, due to the
most recent OMB delineations proposed
to be implemented, the hospital will be
located in an urban area. The
commenter asked whether the 30percent cap increase would carry over
with the hospital’s urban status.
Response: The regulations at
§ 412.105(f)(1)(iv)(D) and § 413.79(c)(6)
implemented in this final rule state in
part that effective October 1, 2014, if a
rural hospital is redesignated as urban
due to the most recent OMB standards
for delineating statistical areas adopted
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by CMS, the redesignated urban hospital
may retain any existing increases to its
FTE resident cap that it had received
prior to when the redesignation became
effective. Therefore, in the situation the
commenter described, the hospital that
is redesignated from rural to urban may
retain the 30-percent cap increase it
received while it was still rural.
After consideration of the public
comments we received, we are
finalizing the proposed policy with a
modification, such that a rural hospital
that has been redesignated as urban can
receive a permanent cap adjustment for
a new program (after a 5-year cap
building period for that new program),
if it received a letter of accreditation for
the new program, and/or started training
residents in the new program, prior to
being redesignated as urban. The
finalized regulations at
§ 412.105(f)(1)(iv)(D) state the following:
• A rural hospital redesignated as
urban after September 30, 2004, as a
result of the most recent census data
and implementation of the new labor
market area definitions announced by
OMB on June 6, 2003, may retain the
increases to its full-time equivalent
resident cap that it received under
paragraphs (f)(1)(iv)(A) and (f)(1)(vii) of
the section while it was located in a
rural area.
• Effective October 1, 2014, if a rural
hospital is redesignated as urban due to
the most recent OMB standards for
delineating statistical areas adopted by
CMS, the redesignated urban hospital
may retain any existing increases to its
FTE resident cap that it had received
prior to when the redesignation became
effective.
• Effective October 1, 2014, if a rural
hospital is redesignated as urban due to
the most recent OMB standards for
delineating statistical areas adopted by
CMS, the redesignated urban hospital
may receive an increase to its FTE
resident cap for a new program, in
accordance with paragraph (e) of the
section, if it received a letter of
accreditation for the new program and/
or started training residents in the new
program, prior to the redesignation
becoming effective.
The finalized regulations at
§ 413.79(c)(6) state the following:
• A rural hospital redesignated as
urban after September 30, 2004, as a
result of the most recent census data
and implementation of the new MSA
definitions announced by OMB on June
6, 2003, may retain the increases to its
FTE resident cap that it received under
paragraphs (c)(2)(i), (e)(1)(iii), and (e)(3)
of the section while it was located in a
rural area.
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• Effective October 1, 2014, if a rural
hospital is redesignated as urban due to
the most recent OMB standards for
delineating statistical areas adopted by
CMS, the redesignated urban hospital
may retain any existing increases to its
FTE resident cap that it had received
prior to when the redesignation became
effective.
• Effective October 1, 2014, if a rural
hospital is redesignated as urban due to
the most recent OMB standards for
delineating statistical areas adopted by
CMS, the redesignated urban hospital
may receive an increase to its FTE
resident cap for a new program, in
accordance with paragraph (e) of the
section, if it received a letter of
accreditation for the new program and/
or started training residents in the new
program prior to the redesignation
becoming effective.
b. Participation of Redesignated
Hospital in Rural Training Track
To encourage the training of residents
in rural areas, section 407(c) of Public
Law 106–113 amended
section1886(h)(4)(H) of the Act to add a
provision (subsection (iv)) that, in the
case of a hospital that is not located in
a rural area (an urban hospital) that
establishes separately accredited
approved medical residency training
programs (or rural tracks) in a rural area
or has an accredited training program
with an integrated rural track, the
Secretary shall adjust the urban
hospital’s cap on the number of FTE
residents under subparagraph (F), in an
appropriate manner in order to
encourage training of physicians in rural
areas. Section 407(c) of Public Law 106–
113 was made effective for direct GME
payments to hospitals for cost reporting
periods beginning on or after April 1,
2000, and for IME payments applicable
to discharges occurring on or after April
1, 2000. We refer readers to the August
1, 2000 interim final rule with comment
period (65 FR 47033 through 47037) and
the FY 2002 IPPS final rule (66 FR
39902 through 39909) where we
implemented section 407(c) of Public
Law 106–113.
The regulations at § 413.79(k) specify
that, subject to certain criteria, an urban
hospital may count the FTE residents in
the rural track in addition to those FTE
residents subject to its cap up to a ‘‘rural
track FTE limitation’’ for that hospital.
In the FY 2006 IPPS final rule, we
revised the regulations at § 413.79(k) to
add a new paragraph (7) to state that if
an urban hospital had established a
rural track program with a rural hospital
and that hospital subsequently becomes
urban due to the implementation of the
new labor market area definitions
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announced by OMB on June 6, 2003, the
urban hospital may continue to adjust
its FTE resident limit for rural track
programs established before the
implementation of the new labor market
area definitions. We also stated that, in
order for the urban hospital to receive
a cap adjustment for a new rural track
program, the urban hospital must
establish a rural track program with
hospitals that are designated rural based
on the most recent geographical location
designations adopted by CMS (70 FR
47456; 47489).
As discussed earlier in this section, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28054), we proposed to
implement, effective October 1, 2014,
the new OMB labor market area
delineations announced in the February
28, 2013 OMB Bulletin No. 13–01. As a
result of the new delineations, certain
areas are redesignated from urban to
rural or from rural to urban, which may,
in turn, affect GME policies that require
the participation of rural teaching
hospitals. For example, as noted above,
in order for an urban teaching hospital
to receive a FTE resident cap adjustment
for training residents in a rural track, the
residents must rotate for more than onehalf of the duration of the program to a
rural hospital(s) or rural nonprovider(s)
site. We have received a question as to
what happens to a rural track when a
rural hospital that is participating as the
rural site is redesignated as urban, while
the rural track for the urban hospital is
in the process of being established. That
is, what happens to the rural track when
the rural hospital is redesignated as
urban during the period that is used to
establish the urban hospital’s rural track
FTE limitation, prior to the effective
date of the urban hospital’s rural track
FTE limitation being established?
Existing regulations at § 413.79(k)(7)
address the scenario where a rural
hospital that is participating as the rural
site is redesignated as urban, after the
rural track FTE limitation for the urban
hospital has already become effective.
Specifically, the regulations at
§ 413.79(k)(7) state that if an urban
hospital had established a rural track
with a hospital located in a rural area
and that rural area subsequently
becomes an urban area due to the most
recent census data and implementation
of new labor market area definitions
announced by OMB June 6, 2003, the
urban hospital may continue to adjust
its FTE resident limit for the rural track
programs established prior to the
adoption of the new labor market area
definitions. Therefore, consistent with
the existing regulations at § 413.79(k)(7)
and with our proposal to allow rural
hospitals redesignated as urban to
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continue receiving a FTE resident cap
adjustment for new programs that
started while the redesignated hospital
was still rural, we proposed to revise the
existing regulations applicable to urban
hospitals generally. Specifically, we
proposed to address the status of the
‘‘original’’ urban hospital’s (throughout
this preamble, ‘‘original’’ urban hospital
refers to the hospital that is the urban
participant in the rural track program)
rural track FTE limitation, in the
situation where a rural hospital that is
participating in the original urban
hospital’s rural track is located in an
area redesignated by OMB as urban
during the 3-year period that is used to
calculate the ‘‘original’’ urban hospital’s
rural track FTE limitation. We proposed
that, in these situations, the ‘‘original’’
urban hospital’s opportunity to receive
a rural track FTE limitation would not
be negatively impacted by the fact that
the rural hospital with which it has
partnered to be the rural site for its rural
training track is located in an area
redesignated by OMB as urban during
the 3-year period that is used to
calculate the ‘‘original’’ urban hospital’s
rural track FTE limitation. That is, we
proposed that the ‘‘original’’ urban
hospital may receive a rural track FTE
limitation for that new rural track
program.
With regard to the status of the rural
hospital that is partnered with the
‘‘original’’ urban hospital to serve as a
rural training site for the rural training
track program, as mentioned earlier,
existing regulations at § 413.79(k)(7)
address the scenario where a rural
hospital that is participating as the rural
site is redesignated as urban, after the
rural track FTE limitation for the
‘‘original’’ urban hospital has already
become effective. (We note that we
proposed to apply the existing policy at
§ 413.79(k)(7), which applies to
redesignations that occurred on June 6,
2003, in a similar manner, to
redesignations announced by OMB after
June 6, 2003, as well.) In addition, we
proposed that once the rural hospital is
redesignated as located in an urban area
due to the implementation of the new
OMB labor market area delineations,
regardless of whether that redesignation
occurs during the 3-year period that is
used to establish the rural track FTE
limitation for the ‘‘original’’ urban
hospital, or after the 3-year period that
is used to establish the rural track FTE
limitation for the ‘‘original’’ urban
hospital, the redesignated urban
hospital can no longer qualify as the
rural site and the ‘‘original’’ urban
hospital would not be able to count
those residents under its rural track FTE
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limitation if it continues to use the
redesignated urban hospital as the rural
site for purposes of the rural track.
However, because the redesignated
urban hospital was rural when residents
started training in the rural track, we
proposed to provide for a 2-year
transition period during which either of
the following two conditions must be
met in order for the ‘‘original’’ urban
hospital to be able to count the residents
under its rural track FTE limitation
when the 2-year transition period ends:
(1) The redesignated newly urban
hospital must reclassify back to rural
under § 412.103 of the regulations; or (2)
the ‘‘original’’ urban hospital must find
a new geographically rural site to
participate as the rural site for purposes
of the rural track. We note that we
proposed to apply these two criteria
both in the case where the rural hospital
is redesignated as urban after the
‘‘original’’ urban hospital already has its
rural track FTE limit established, and
also in the case where the rural hospital
is redesignated as urban during the 3year period when the rural track
program is still growing, prior to the
rural track FTE limit being established.
This 2-year transition period would
begin when new OMB labor market area
delineations take effect for Medicare
payment purposes and would end
exactly 2 years from that date. During
this 2-year transition period, we would
hold the ‘‘original’’ urban hospital
harmless and would pay the ‘‘original’’
urban hospital for the FTE residents in
the rural track. At the end of the 2-year
transition period, in order for the
‘‘original’’ urban hospital to receive
payment for a rural track program under
§ 413.79(k)(1) or (k)(2), either the
redesignated urban hospital must be
granted reclassification as rural under
§ 412.103 or the ‘‘original’’ urban
hospital must already be training FTE
residents at a geographically rural site.
We note that, because the rural
reclassification provision of § 412.103
only applies to IPPS hospitals and for
purposes of section 1886(d) of the Act,
it only applies to IPPS hospitals for IME
payment purposes and not for direct
GME payment purposes because direct
GME is authorized under section
1886(h) of the Act. Therefore, if the
redesignated hospital reclassifies as
rural under § 412.103, the ‘‘original’’
urban hospital would only be able to
count FTE residents towards its rural
track FTE limitation for IME payment
purposes, but not for direct GME
payment purposes. In addition, we note
that this discussion has centered on the
scenario where a rural hospital that is
the rural site for purposes of the rural
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track has been redesignated as urban.
Under such a scenario, the redesignated
urban hospital does have an option to
reclassify as rural. However, as noted
above, the reclassification only applies
to IPPS hospitals for IME payment
purposes. If a nonprovider site is
functioning as the rural site under
§ 413.79(k)(2) for purposes of the rural
track and the area where that
nonprovider site is located is
redesignated as urban, the nonprovider
site would not have the option of
reclassifying as rural and, therefore, the
‘‘original’’ urban hospital would be
required to find a new geographically
rural site within the 2-year transition
period in order for the ‘‘original’’ urban
hospital to receive payment for a rural
track program under § 413.79(k)(1) or
(k)(2).
The following examples illustrate
how the proposed policy would be
applied to a rural track in which the
rural site is a hospital and the rural
hospital has been redesignated as urban:
• An urban teaching hospital and a
rural teaching hospital are participating
in training residents in a new rural track
program that begins July 1, 2014.
Effective October 1, 2014, the rural
hospital is redesignated as urban. We
proposed that the timeframe for the
‘‘original’’ urban hospital to build the
rural track program for purposes of
calculating its rural track FTE limitation
would continue to be through June 30,
2017. During the time period of October
1, 2014 to September 30, 2016, the
redesignated urban hospital would
continue participating as a rural
hospital and the ‘‘original’’ urban
hospital would count FTE residents it is
training that are in the rural track for
IME and direct GME. However, in order
for the ‘‘original’’ urban hospital to
continue to get paid for its rural track
program after September 30, 2016, then,
by September 30, 2016, the redesignated
urban hospital must either reclassify as
rural under § 412.103 of the regulations
for purposes of IME payment only, or
the ‘‘original’’ urban hospital must find
a new geographically rural hospital or
nonprovider site to train the residents in
the rural track for more than one-half of
their training. If neither of these
conditions is met, by September 30,
2016, the ‘‘original’’ urban hospital
would not able to receive payment for
that specific program as a rural training
track under § 413.79(k)(1) or (k)(2)
because it would no longer meet the
requirement that more than one-half of
the training must be provided in a rural
setting.
• Another scenario could be one in
which the rural hospital is redesignated
as urban after the 3-year cap-building
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period for the rural track has passed. For
example, the rural track program began
July 1, 2007, but effective October 1,
2014, the rural hospital is redesignated
as urban. We proposed in this scenario
that, by September 30, 2016, either the
redesignated urban hospital must
reclassify to rural under § 412.103 for
purposes of IME payment only, or the
‘‘original’’ urban hospital must find a
new geographically rural site that can
participate as the rural site for purposes
of the rural track. If neither of these
conditions is met by September 30,
2016, the ‘‘original’’ urban hospital
would not be able to receive payment
for that specific program as a rural track
under § 413.79(k)(1) or (k)(2) because it
would no longer meet the requirement
that more than one-half of the training
must be provided in a rural setting.
We noted that if the ‘‘original’’ urban
hospital was not able to meet one of the
two proposed conditions noted earlier
in this section by the end of the 2-year
transition period, but at some point later
is able to meet one of the two proposed
conditions, we proposed that the
‘‘original’’ urban hospital would be able
to ‘‘revive’’ and use its already
established rural track FTE limitation
from that point forward. In the instance
where the ‘‘original’’ urban hospital’s
rural track FTE limitation was not set
because the hospital was not able to
meet one of the two proposed
conditions by the end of the 2-year
transition period, which fell within the
3-year cap-building timeframe, but at
some point later is able to meet one of
the two proposed conditions, we
proposed that the ‘‘original’’ urban
hospital would be able to have a rural
track FTE limitation calculated and
established based on the highest number
of FTE residents in any program year
training in the rural track in the third
year of the program, even if during the
third year of the program, the ‘‘original’’
urban hospital was not in compliance
with the two proposed conditions.
Consistent with similar policy discussed
in the FY 2002 IPPS final rule (66 FR
39905), it would be the responsibility of
the hospitals involved to provide the
necessary information regarding the
rotations of the residents in the third
program year to the MAC in order for
the calculation to be completed and the
rural track FTE limit to be set.
In summary, we proposed that any
time a rural hospital participating in a
rural track is in an area redesignated by
OMB as urban after residents started
training in the rural track and during the
3-year period that is used to calculate
the ‘‘original’’ urban hospital’s rural
track FTE limitation, the ‘‘original’’
urban hospital may receive a cap
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adjustment for that rural track after the
rural hospital has been redesignated as
urban. Furthermore, we proposed that,
regardless of whether the redesignation
of the rural hospital occurs during the
3-year period that is used to calculate
the urban hospital’s rural track FTE
limitation, or after the 3-year period
used to calculate the ‘‘original’’ urban
hospital’s rural track FTE limitation, the
redesignated urban hospital can
continue to be considered a rural
hospital for purposes of the rural track
for up to 2 years. However, by the end
of those 2 years, either the redesignated
urban hospital must reclassify as rural
under § 412.103 for purposes of IME
payment only (in addition, this
reclassification option only applies to
IPPS hospitals, not nonprovider sites) or
the ‘‘original’’ urban hospital must have
found a new site in a geographically
rural area that will serve as the rural site
for purposes of the rural track in order
for the ‘‘original’’ urban hospital to
receive payment under § 413.79(k)(1) or
(k)(2).
We proposed to revise the regulations
at § 413.79(k)(7) to implement these
provisions and to establish that these
changes would be effective for cost
reporting periods beginning on or after
October 1, 2014.
Comment: In general, commenters
supported the rural track proposals.
Some commenters requested that,
instead of providing for a 2-year
transition period, CMS provide a 3-year
transition period for the original urban
hospital to find a new rural site.
Commenters stated that it usually takes
3 years of financial and operational
planning in order to develop a new
training site and that it may take more
time in rural areas where staffing is
limited. Commenters stated that the
program would also need time to
request approval from the ACGME or
the AOA to move its training site.
Response: We appreciate the
commenters’ support of our proposals
related to rural track programs. As a
result of commenters’ concerns that 2
years is not a sufficient transition period
to allow the ‘‘original’’ urban hospital to
find another rural hospital to participate
as the rural site for purposes of the rural
track, we are finalizing a policy
providing for an alternative transition
period. The transition period will begin
effective with the date of the
implementation of the new OMB
delineations and extend through the end
of the second residency training year
following the implementation date of
the new OMB delineations. For
example, if as a result of the OMB
delineations implemented effective
October 1, 2014, the rural hospital
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participating in a rural track program is
redesignated as urban, the transition
period for the ‘‘original’’ urban hospital
to find a new rural site or for the
redesignated hospital to reclassify back
to rural for IME payment purposes,
would last from October 1, 2014 through
June 30, 2017. In addition, consistent
with the effective date of the new OMB
delineations, we are making these final
policies effective October 1, 2014. We
are revising the regulations at
§ 413.79(k)(7) to implement this change.
The following examples illustrate
how the policy finalized in this rule
would be applied to an urban hospital
that is training residents as part of a
rural track program in the case where
the rural hospital participating in the
rural track program is redesignated as
urban.
• In this scenario, the rural hospital is
redesignated as urban during the capbuilding period for the urban hospital’s
rural track FTE limitation. The urban
hospital (referred to as the ‘‘original’’
urban hospital) and the rural hospital
are participating in training residents in
a rural track program that begins July 1,
2014. Effective October 1, 2014, the
rural hospital is redesignated as urban.
Because urban teaching hospitals have a
3-year cap-building period in which to
grow their rural track FTE limitation,
the timeframe for the ‘‘original’’ urban
hospital to build the rural track program
for purposes of calculating its rural track
FTE limitation will be July 1, 2014
(when the program begins) through June
30, 2017. In addition, for purposes of
meeting the requirement that residents
in a rural track program spend more
than one-half of their time training at a
rural site, the ‘‘original’’ urban hospital
will have a transition period that lasts
from October 1, 2014 (the
implementation date of the new OMB
delineations) through June 30, 2017 (the
end of the second residency training
year following the implementation date
of the new OMB delineations, instead of
September 30, 2016, as proposed).
During the time period of October 1,
2014 through June 30, 2017, the
redesignated urban hospital would
continue participating as a rural
hospital and the ‘‘original’’ urban
hospital would count FTE residents it is
training that are in the rural track for
IME and direct GME. However, in order
for the ‘‘original’’ urban hospital to
receive a rural track FTE limitation
effective July 1, 2017, and to continue
to get paid for its rural track program
after June 30, 2017, by June 30, 2017,
the redesignated urban hospital must
either reclassify as rural under § 412.103
of the regulations for purposes of IME
payment only, or the ‘‘original’’ urban
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hospital must find a new geographically
rural hospital or nonprovider site to
train the residents in the rural track for
more than one-half of their training. If
neither of these conditions is met, by
June 30, 2017, the ‘‘original’’ urban
hospital would not able to receive
payment for that specific program as a
rural training track under § 413.79(k)(1)
or (k)(2) because it would no longer
meet the requirement that more than
one-half of the training be provided in
a rural setting. If at some point later, the
‘‘original’’ urban hospital is able to find
a new rural site to participate in the
rural track program, the ‘‘original’’
urban hospital would be able to receive
a rural track FTE limitation based on the
training that occurred from July 1, 2014
through June 30, 2017, and be paid for
residents training in the rural track.
• Another scenario could be one in
which the rural hospital is redesignated
as urban after the 3-year cap-building
period for the ‘‘original’’ urban
hospital’s rural track FTE limitation has
passed. For example, the rural track
program began July 1, 2007, but
effective October 1, 2014, the rural
hospital is redesignated as urban. Again,
in this example, the ‘‘original’’ urban
teaching hospital has a transition period
that runs from October 1, 2014 through
June 30, 2017 (instead of September 30,
2016, as proposed). In this scenario, by
June 30, 2017, either the redesignated
urban hospital must reclassify to rural
under § 412.103 for purposes of
receiving IME payment only, or the
‘‘original’’ urban hospital must find a
new geographically rural site that can
participate as the rural site for purposes
of the rural track. If neither of these
conditions is met by June 30, 2017, the
‘‘original’’ urban hospital would not be
able to receive payment for that specific
program as a rural track under
§ 413.79(k)(1) or (k)(2) because it would
no longer meet the requirement that
more than one-half of the training must
be provided in a rural setting. If at some
point later, the ‘‘original’’ urban hospital
is able to find a new rural site to
participate in the rural track program,
the ‘‘original’’ urban hospital would be
able to use its rural track FTE limitation
and be paid for residents training in the
rural track.
Comment: Several commenters had
concerns regarding rural tracks in
general and concerns about what they
believed would be unintended
consequences resulting from the
proposed policies. Commenters
recommended that changes to OMB
delineations be carefully managed with
respect to rural track programs.
Commenters stated that rural track
programs are one of the best ways to
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expose residents to practicing in rural
areas which, in turn, helps to address
physician shortages in those areas.
Commenters stated that if a rural
hospital is the rural site for a rural track
program and that rural hospital is
subsequently redesignated as urban, it
may not want to reclassify back to rural
for a variety of reasons. Commenters
stated that if the newly redesignated
urban hospital does not want to
reclassify back to rural and the
‘‘original’’ urban hospital wants to train
residents in another rural area, the
‘‘original’’ urban hospital does not have
any means by which to grow its cap.
Commenters stated that even if the rural
track program would be able to find and
move to a different rural site, because
the program would usually have the
same staff and program director, CMS’
policies would consider the program to
be an existing program rather than a
new program, and therefore, a rural
hospital that is a new site for purposes
of the rural track program would not be
able to receive a cap adjustment for
training residents in that program.
Commenters stated that it is within
CMS’ purview to address this problem
by changing the definition of a ‘‘new’’
program through the authority provided
to the Secretary under section
1886(h)(4)(H)(i) of the Act, which states,
‘‘[in] promulgating such rules for
purposes of subparagraph (F), the
Secretary shall give special
consideration to facilities that meet the
needs of underserved rural areas.’’
Commenters believed CMS could use
this authority to allow rural hospitals
that are new rural track participants to
receive a cap adjustment for training
residents in the existing rural track
program.
One commenter expressed concern
that CMS, in its rulemaking, has not
provided enough consideration to the
promoting of physician training in rural
areas. The commenter referred to a
study by Candice Chen, MD, et al, in
Academic Medicine, which ‘‘reports
that only 4.8% of all graduates of 759
sponsoring institutions practiced in
rural areas and 198 of those 759
institutions produced no rural
physicians. This percentage compares
extremely unfavorably to the 19.3% of
the population classified as rural by the
2010 census.’’ The commenter stated
that it expects that hospitals that have
been reclassified as urban will still have
a focus on training residents to practice
in rural areas. The commenter stated
that CMS should realize that the
training these hospitals provide is more
important than the location of these
hospitals, and therefore, CMS should
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give special consideration to residents
training in programs at these hospitals
by changing its definition of ‘‘new’’
programs. The commenter included
comments it previously submitted on
the clarification of the definition of new
residency training programs in the rule
in the May 22, 2009 Federal Register.
Response: We appreciate the
commenters’ support of residency
training in rural areas, and we may
consider their general concerns
regarding CMS’ policies related to new
programs and training in rural areas for
future rulemaking. However, because
we did not specifically propose any
changes to our existing policy regarding
what constitutes a ‘‘new’’ versus an
‘‘existing’’ program, we are not
addressing those comments at this time.
Instead, we wish to focus on several of
the commenters’ concerns specifically
related to our proposals in the FY 2015
IPPS/LTCH PPS proposed rule.
In response to the commenters’
concerns that if the ‘‘original’’ urban
hospital wishes to establish training in
another rural area, there is no way for
the ‘‘original’’ urban hospital to grow its
cap, we believe that the commenters
have misunderstood our proposal. We
proposed that if the ‘‘original’’ urban
hospital does find a new rural hospital
for its existing rural track program, the
original urban hospital would be able to
apply its existing rural track FTE
limitation to the residents that train at
its hospital as part of that rural track. In
addition, if the ‘‘original’’ urban
hospital was not able to receive a rural
track FTE limitation because either the
redesignated urban hospital did not
reclassify back to rural for IME payment
purposes during the transition period or
the ‘‘original’’ urban hospital was not
able to find a new rural site during the
transition period, but either of these
conditions is met in the future, the
‘‘original’’ urban hospital would receive
a rural track FTE limitation at that time,
based on the training that occurred
during the 3-year cap-building period
for the rural track FTE limitation. We
also point out that if the ‘‘original’’
urban hospital moves the rural portion
of its training to a nonprovider site that
is located in a geographically rural area,
under existing regulations at 42 CFR
413.79(k)(2), the ‘‘original urban’’
hospital may continue to count the FTE
residents training in the rural
nonprovider site for more than one-half
the duration of the program up to its
own existing rural track FTE limitation.
In addition, if in the future, the
‘‘original’’ urban hospital would want to
develop a rural track program in a
different specialty, it would be able to
receive a separate rural track FTE
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limitation for that rural track program in
a different specialty.
In terms of any potential cap
adjustment for a rural hospital that
trains residents as part of the rural track,
if the rural track is considered a new
program for Medicare payment
purposes, and if at the time that the
‘‘original’’ urban hospital moves the
program to the new rural hospital, the
new rural training track is still within
its cap-building period, any rural
hospital that trains residents in that new
program during the cap-building period
for that new program will receive a
permanent cap adjustment. Therefore, if
the ‘‘original’’ urban hospital is able to
find a new rural hospital to participate
in the rural track during the capbuilding period for the new rural track
program, that new rural hospital will, in
fact, also be able to receive a cap
adjustment and receive direct GME and
IME payments for training residents in
the new rural track program.
After consideration of the public
comments we received, we are
finalizing a policy that if a rural hospital
is training residents in a rural training
track and is in an area redesignated by
OMB as urban during the 3-year period
that is used to calculate the ‘‘original’’
urban hospital’s rural track FTE
limitation, the ‘‘original’’ urban hospital
may receive a cap adjustment for that
rural track after the rural hospital has
been redesignated as urban. However,
regardless of whether the redesignation
of the rural hospital occurs during the
3-year period that is used to calculate
the ‘‘original’’ urban hospital’s rural
track FTE limitation, or even after the 3year period used to calculate the
‘‘original’’ urban hospital’s rural track
FTE limitation, the redesignated urban
hospital may continue to be considered
a rural hospital for purposes of the rural
track for the term of a transition period.
That transition period begins effective
with the date the new OMB delineations
are implemented by CMS and lasts
through the end of the second residency
training year following the
implementation date of the new OMB
delineations. By the end of the
transition period, either the
redesignated urban hospital must
reclassify as rural under § 412.103 for
purposes of IME payment only (in
addition, this reclassification option
only applies to IPPS hospitals, not
nonprovider sites), or the ‘‘original’’
urban hospital must have found a new
site in a geographically rural area that
will serve as the rural site for purposes
of the rural track in order for the
‘‘original’’ urban hospital to receive
payment under § 413.79(k)(1) or (k)(2).
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The finalized regulations at
§ 413.79(k)(7) state the following:
• Effective prior to October 1, 2014, if
an urban hospital had established a
rural track training program under the
provisions of paragraph (k) with a
hospital located in a rural area and that
rural area subsequently becomes an
urban area due to the most recent
census data and implementation of the
new labor market area definitions
announced by OMB on June 6, 2003, the
urban hospital may continue to adjust
its FTE resident limit in accordance
with paragraph (k) for the rural track
programs established prior to the
adoption of such new labor market area
definitions. In order to receive an
adjustment to its FTE resident cap for a
new rural track residency program, the
urban hospital must establish a rural
track program with hospitals that are
designated rural based on the most
recent geographical location
designations adopted by CMS.
• Effective October 1, 2014, if an
urban hospital started a rural track
training program under the provisions
of paragraph (k) with a hospital located
in a rural area and, during the 3-year
period that is used to calculate the
urban hospital’s rural track FTE limit,
that rural area subsequently becomes an
urban area due to the most recent OMB
standards for delineating statistical
areas adopted by CMS and the most
recent Census Bureau data, the urban
hospital may continue to adjust its FTE
resident limit in accordance with
paragraph (k) and subject to paragraph
(k)(7)(iii) for the rural track programs
started prior to the adoption of such
new OMB standards for delineating
statistical areas.
• Effective October 1, 2014, if an
urban hospital started a rural track
training program under the provisions
of paragraph (k) with a hospital located
in a rural area and that rural area
subsequently becomes an urban area
due to the most recent OMB standards
for delineating statistical areas adopted
by CMS and the most recent Census
Bureau data, regardless of whether the
redesignation of the rural hospital
occurs during the 3-year period that is
used to calculate the urban hospital’s
rural track FTE limit, or after the 3-year
period used to calculate the urban
hospital’s rural track FTE limit, the
urban hospital may continue to adjust
its FTE resident limit in accordance
with paragraph (k) based on the rural
track programs started prior to the
change in the hospital’s geographic
designation. In order for the urban
hospital to receive or use the adjustment
to its FTE resident cap for training FTE
residents in the rural track residency
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50117
program that was started prior to the
most recent OMB standards for
delineating statistical areas adopted by
CMS, one of the following two
conditions must be met by the end of a
period that begins when the most recent
OMB standards for delineating
statistical areas are adopted by CMS and
continues through the end of the second
residency training year following the
date the most recent OMB delineations
are adopted by CMS: the hospital that
has been redesignated from rural to
urban must reclassify as rural under
§ 412.103, for purposes of IME only; or
the urban hospital must find a new site
that is geographically rural consistent
with the most recent geographical
location delineations adopted by CMS.
In order to receive an adjustment to its
FTE resident cap for an additional new
rural track residency program, the urban
hospital must participate in a rural track
program with sites that are
geographically rural based on the most
recent geographical location
delineations adopted by CMS.
We also have determined that there is
an outdated, incorrect reference
included in the definition of ‘‘Rural
track FTE limitation’’ under § 413.75(b).
The reference included in the definition
is ‘‘§ 413.79(l)’’. The correct reference is
‘‘§ 413.79(k)’’. Therefore, as we
proposed, we are making a technical
correction to the definition of ‘‘Rural
track FTE limitation’’ so that it means
the maximum number of residents (as
specified in § 413.79(k)) training in a
rural track residency program that an
urban hospital may include in its FTE
count and that is in addition to the
number of FTE residents already
included in the hospital’s FTE cap.
4. Clarification of Policies on Counting
Resident Time in Nonprovider Settings
Under Section 5504 of the Affordable
Care Act
In the November 24, 2010 final rule
with comment period (75 FR 71808,
72134 through 72141, and 72153), we
implemented section 5504 of the
Affordable Care Act regarding counting
resident time in nonprovider settings.
We also mentioned the scope of section
5504 of the Affordable Care Act in the
FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27638) and final rule (78 FR
50735). Section 5504(a) of the
Affordable Care Act made changes to
section 1886(h)(4)(E) of the Act to
reduce the costs that hospitals must
incur for residents training in
nonprovider sites in order to count the
FTE residents for purposes of Medicare
direct GME payments, but did so only
on a prospective basis in connection
with certain specified cost reporting
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periods. Notably and more specifically,
section 5504(a)(3) of the Affordable Care
Act amended the Act effective only for
‘‘cost reporting periods beginning on or
after July 1, 2010,’’ for direct GME, to
permit hospitals to count the time that
a resident trains in activities related to
patient care in a nonprovider site in its
FTE count if the hospital incurs the
costs of the residents’ salaries and fringe
benefits for the time that the resident
spends training in the nonprovider site.
Section 5504(b)(2) of the Affordable
Care Act made similar changes to
section 1886(d)(5)(B)(iv) of the Act for
IME payment purposes, with the
provision being effective only for
discharges occurring on or after July 1,
2010, for IME. In connection with those
periods and discharges, if more than one
hospital incurs the residency training
costs in a nonprovider setting, under
certain circumstances, sections
5504(a)(3) and (b)(2) of the Affordable
Care Act allow each hospital to count a
proportional share of the training time
that a resident spends training in that
setting, as determined by a written
agreement between the hospitals. When
Congress enacted section 5504 of the
Affordable Care Act, it retained the
statutory language which provides that
a hospital can only count the time so
spent by a resident under an approved
medical residency training program in
its FTE count if that one single hospital
by itself ‘‘incurs all, or substantially all,
of the costs for the training program in
that setting.’’ In doing so, Congress also
revised the statutory language in
sections 5504(a)(1) and (b)(1) to
explicitly make this longstanding
substantive standard and requirement
applicable to ‘‘cost reporting periods
beginning before July 1, 2010’’ for direct
GME, and to ‘‘discharges occurring on
or after October 1, 1997, and before July
1, 2010,’’ for IME (sections
1886(d)(5)(B)(iv)(I) and 1886(h)(4)(E)(i)
of the Act). Beginning at least as early
as 1988, the Secretary consistently
noted in the preamble of various rules
that the statute only allowed a hospital
to count the time that its residents spent
training in a nonprovider site in the FTE
resident count for direct GME and IME
purposes if that single hospital incurred
‘‘all of substantially all’’ of the costs of
the training program in that setting.
Indeed, in Borgess Medical Center v.
Sebelius (966 F.Supp.2d at *6–*7
(D.D.C. 2013)), a court noted that CMS
had done so in 1998, 2003, and 2007
preambles of rules. For a full discussion
of the longstanding substantive standard
and requirement that a hospital can only
count residents training if that one
single hospital incurs all or
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substantially all of the costs for the
training, we refer readers to the
discussion in the November 24, 2010
final rule with comment period (75 FR
72134 through 72141), the May 11, 2007
final rule (72 FR 26953 and 26969), the
August 1, 2003 final rule (68 FR 45439),
the July 31, 1998 final rule (63 FR 40954
and 40995), the September 29, 1989
final rule (54 FR 40286 and 40288), and
the September 21, 1988 proposed rule
(53 FR 36589 and 36591).
Section 5504(c) of the Affordable Care
Act specifies that the amendments made
by the provisions of sections 5504(a)
and (b) ‘‘shall not be applied in a
manner that requires reopening of any
settled hospital cost reports as to which
there is not a jurisdictionally proper
appeal pending as of the date of the
enactment of this Act on the issue of
payment for indirect costs of medical
education . . . or for direct graduate
medical education costs. . . .’’ The date
of enactment of the Affordable Care Act
was March 23, 2010.
In the November 24, 2010 final rule
with comment period, we revised the
regulations at § 412.105(f)(1)(ii)(E) for
IME and §§ 413.78(f) and (g) for direct
GME to reflect the changes made by
section 5504 of the Affordable Care Act.
Section 413.78(g) is the implementing
regulation that corresponds to the
statutory amendments set forth in
sections 5504(a)(3) and (b)(2) of the
Affordable Care Act. The introductory
regulatory language of § 413.78(g)
explicitly states that paragraph (g)
governs only ‘‘cost reporting periods
beginning on or after July 1, 2010.’’
Paragraph (g)(5) of § 413.78 also
expressly states that the paragraph is
limited to ‘‘cost reporting periods
beginning on or after July 1, 2010.’’
Accordingly, we have repeatedly stated,
and we believe that the existing
regulation makes plain, that paragraph
(g) of § 413.78 ‘‘is explicitly made
applicable only to ‘cost reporting
periods beginning on or after July 1,
2010,’ whereas earlier cost reporting
periods are governed by other preceding
paragraphs of § 413.78’’ (78 FR 50735).
In addition, we also revised the
definition of ‘‘all or substantially all of
the costs for the training program in the
nonhospital setting’’ in the regulations
at § 413.75(b) to reflect that both the
statute and regulations require that, for
cost reporting periods beginning on and
after July 1, 2007 and before July 1,
2010, one hospital must by itself incur
‘‘all or substantially all of the costs’’ of
the residents training in the
nonprovider site in order for the
hospital to receive Medicare IME and
direct GME payment for that training.
Finally, we also revised the IME
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regulations at § 412.105 to reflect these
statutory amendments, by incorporating
by reference § 413.78(g).
Despite the fact that sections 5504(a)
and (b) of the Affordable Care Act
provide clear effective dates with
respect to the amendments provided
therein to sections 1886(h)(4)(E) and
1886(d)(5)(B)(iv) of the Act, and that the
preamble discussion of the
implementation of these provisions and
further discussion of the statutory
amendments in the November 24, 2010
final rule with comment period and in
the August 19, 2013 final rule provide
further explanation that, specifically,
nothing in section 5504(c) overrides
those effective date (75 FR 72136), we
have received questions about the
applicability of section 5504(c) and the
associated regulation text at
§ 413.78(g)(6). Specifically, questions
have been raised with respect to the
applicability of sections 5504(c) of the
Affordable Care Act and § 413.78(g)(6)
of the regulations to periods prior to
July 1, 2010, particularly if a hospital
had, as of March 23, 2010, appealed an
IME or direct GME issue for a settled
cost reporting period occurring prior to
July 1, 2010. As noted earlier, section
5504(c) of the Affordable Care Act
provides that the amendments made by
the provisions of sections 5504(a) and
(b) ‘‘shall not be applied in a manner
that requires reopening of any settled
hospital cost reports as to which there
is not a jurisdictionally proper appeal
pending as of . . . [March 23, 2010] on
the issue of payment for indirect costs
of medical education . . . or for direct
graduate medical education costs. . . .’’
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28153), we stated
that upon revisiting the existing
regulation text, we determined that
§ 413.78(g)(6) was not written in a
manner that is as consistent with
section 5504(c) of the Affordable Care
Act and reflective of our reading of
section 5504 and our policy as it could
be. Specifically, § 413.78(g)(6) states that
the provisions of paragraphs (g)(1)(ii),
(g)(2), (g)(3), and (g)(5) of the section
cannot be applied in a manner that
would require the reopening of settled
cost reports, except those cost reports on
which there is a jurisdictionally proper
appeal pending on direct GME or IME
payments as of March 23, 2010. In the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28152 through 28154 and 28307),
we reiterated our existing interpretation
of the statutory amendments made by
sections 5504(a), (b), and (c) of the
Affordable Care Act and also proposed
to clarify the regulation text
implementing these provisions by
revising the language at § 413.78(g)(6) to
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read more consistently with our reading
of section 5504 and the language in
section 5504(c) of the Affordable Care
Act and to ensure no further confusion
with respect to the applicability of
section 5504(c) of the Affordable Care
Act and § 413.78(g)(6) of the regulations.
We believe that sections 5504(a) and
(b) of the Affordable Care Act contained
three primary directives (a fourth
regarding recordkeeping requirement is
tangential to this discussion): (1) under
sections 5504(a)(1) and (b)(1) of the
Affordable Care Act (sections
1886(h)(4)(E)(i) and 1886(d)(5)(B)(iv)(I)
of the Act), for ‘‘cost reporting periods
beginning before July 1, 2010’’ for direct
GME, and for ‘‘discharges occurring on
or after October 1, 1997, and before July
1, 2010’’ for IME, these sections
explicitly retained the statutory
language that provides that a hospital
can only count the time so spent by a
resident under an approved medical
residency training program in its FTE
count if a hospital by itself ‘‘incurs all,
or substantially all, of the costs for the
training program in that setting’’; (2)
under sections 5504(a)(3) and (b)(2) of
the Affordable Care Act (sections
1886(h)(4)(E)(ii) and 1886(d)(5)(B)(iv)(II)
of the Act), for ‘‘cost reporting periods
beginning on or after July 1, 2010’’ for
direct GME, and for ‘‘discharges
occurring on or after July 1, 2010’’ for
IME, these sections eliminated the ‘‘all
or substantially all’’ requirement,
instead requiring a hospital to incur the
residents’ salaries and fringe benefits for
the time spent at the nonprovider site;
and (3) under sections 5504(a)(3) and
(b)(2) of the Affordable Care Act
(sections 1886(h)(4)(E)(ii) and
1886(d)(5)(B)(iv)(II) of the Act), for ‘‘cost
reporting periods beginning on or after
July 1, 2010’’ for direct GME, and for
‘‘discharges occurring on or after July 1,
2010’’ for IME, these sections created a
new provision with regard to allowing
more than one hospital to share the
costs of residents training in a
nonprovider setting under certain
circumstances, in order for each
hospital to count a proportional share of
the FTE training time in the
nonprovider setting.
Separately from sections 5504(a) and
(b) of the Affordable Care Act, section
5504(c) of the Affordable Care Act, as
mentioned earlier, specifies that the
amendments made by the provisions of
sections 5504(a) and (b) ‘‘shall not be
applied in a manner that requires
reopening of any settled hospital cost
reports as to which there is not a
jurisdictionally proper appeal pending
as of’’ March 23, 2010, the date of the
enactment of the Affordable Care Act,
on the issue of payment for IME and
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direct GME. When we proposed to
implement section 5504(c) in the
August 3, 2010 proposed rule (75 FR
46385) and when we implemented
section 5504(c) in the November 24,
2010 final rule with comment period (75
FR 72136), we had to consider what
new meaning it was adding to sections
5504(a) and (b) of the Affordable Care
Act because unlike, for example, section
5505 of the Affordable Care Act which
has an effective date prior to enactment
of the Affordable Care Act and,
therefore, would apply to prior cost
reporting periods, section 5504’s
applicable effective date for the new
standards it creates was July 1, 2010, a
date that came after enactment of the
Affordable Care Act and was fully
prospective. As we stated in the
November 24, 2010 final rule with
comment period (75 FR 72136),
‘‘Section 5504 is fully prospective with
an explicit effective date of July 1, 2010,
for the new standards it creates. Nothing
in section 5504(c) overrides that
effective date. Section 5504(c) merely
notes that the usual discretionary
authority of Medicare contractors to
reopen cost reports is not changed by
the provisions of section 5504; it simply
makes clear that Medicare contractors
are not required by reason of section
5504 to reopen any settled cost report as
to which a provider does not have a
jurisdictionally proper appeal pending.
It does not require reopening in any
circumstance; and the new substantive
standard is, in any event, explicitly
prospective. We believe if Congress had
wanted to require such action or to
apply the new standards to cost years or
discharges prior to July 1, 2010, it
would have done so in far more explicit
terms.’’ We also noted in that rule (75
FR 72139) that ‘‘[the] statute does not
provide CMS discretion to allow the
counting of resident time spent in
shared nonprovider site rotations for
cost reporting periods beginning prior to
July 1, 2010.’’ We continue to believe
that Congress was clear in amending
sections 1886(h)(4)(E) and
1886(d)(5)(B)(iv) of the Act to provide
for new standards to be applied only
prospectively, effective for cost
reporting periods beginning on or after,
and discharges occurring on or after,
July 1, 2010. We also continue to believe
that the plain meaning of section
5504(c) of the Affordable Care Act is
that the Secretary is not required to
reopen a cost report when there is no
jurisdictionally proper appeal pending
as of March 23, 2010, the date of the
enactment of the Affordable Care Act,
on the issue of payment for IME and
direct GME. Therefore, we believe that
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50119
section 5504(c) of the Affordable Care
Act is merely a confirmation of the
Secretary’s existing discretionary
authority in one particular context, and
that sections 5504(a) and (b) of the
Affordable Care Act and their effective
dates become all the more prominent,
and are not affected by section 5504(c).
As noted earlier, we revised the
regulations at § 412.105(f)(1)(ii)(E) for
IME, and § 413.78(g) for direct GME, to
reflect the changes made by section
5504 of the Affordable Care Act in the
November 24, 2010 final rule with
comment period. We reiterate here that
the introductory language of § 413.78(g)
explicitly states that paragraph (g)
governs only ‘‘cost reporting periods
beginning on or after July 1, 2010’’ and
paragraph (g)(5) also expressly states
that the paragraph is limited to ‘‘cost
reporting periods beginning on or after
July 1, 2010’’ (78 FR 50735 and 78 FR
27639). As we noted before, we believe
that the paragraphs of the regulations
which precede paragraph (g),
particularly paragraphs (c) through (f),
consistent with the statute, make clear
that a hospital may only count the time
so spent by a resident under an
approved medical residency training
program in its FTE count, in connection
with its pre-July 1, 2010 cost reporting
periods and pre-July 1, 2010 patient
discharges, if that one single hospital by
itself ‘‘incurs all, or substantially all, of
the costs for the training program in that
setting.’’ Separately, we believe that the
new standards set forth in sections
5504(a)(3) and (b)(2) of the Affordable
Care Act and implemented by regulation
at §§ 413.78(g) and 412.105(f)(1)(ii)(E),
allowing cost sharing under certain
circumstances do not ever apply to preJuly 1, 2010 cost reporting periods and
pre-July 1, 2010 patient discharges.
Moreover, we continue to believe the
language in paragraph (g)(6) (along with
the remainder of paragraph (g)) only
applies to cost reporting periods
beginning on or after July 1, 2010 and
does not apply retroactively to cost
reporting periods beginning before July
1, 2010. We had intended that the
language under § 413.78(g)(6) do no
more than simply paraphrase the
language in section 5504(c) of the
Affordable Care Act.
Accordingly, we believe that it is
apparent that the provisions of sections
5504(a)(3) and (b)(2) of the Affordable
Care Act are not to be applied prior to
July 1, 2010, irrespectively of whether a
hospital may have had a jurisdictionally
proper appeal pending as of March 23,
2010, on an IME or direct GME issue
from a cost reporting period occurring
prior to July 1, 2010.
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In the FY 2015 IPPS/LTCH PPS
proposed rule, we reiterated our existing
interpretation of the statutory
amendments made by sections 5504(a)
and (b) of the Affordable Care Act and
also proposed to clarify the regulatory
text that implements these provisions by
revising the § 413.78(g)(6) to be more
consistent with the language at section
5504(c) of the Affordable Care Act. We
proposed to revise the regulatory
language to read as follows: ‘‘The
provisions of paragraphs (g)(1)(ii), (g)(2),
(g)(3), and (g)(5) of this section shall not
be applied in a manner that requires
reopening of any settled cost reports as
to which there is a jurisdictionally
proper appeal pending as of March 23,
2010, on direct GME or IME payments.
Cost reporting periods beginning before
July 1, 2010 are not governed by
paragraph (g) of this section.’’ The IME
regulation at § 412.105(f)(1)(ii)(E)
includes a reference to § 413.78(g)(6);
therefore, no proposed change was
needed to this section.
Comment: One commenter supported
CMS’ proposed changes with regard to
implementation of section 5504 of the
Affordable Care Act. Other commenters
objected to CMS’ interpretation that
section 5504 is fully prospective with an
effective date of July 1, 2010, and that
CMS’ proposed revision of § 413.78(g)(6)
would be with a ‘‘retroactive effective
date.’’ The commenters asserted that
CMS’ interpretation is contrary to the
plain meaning of the statute because
Congress expected that cost reports that
were settled prior to 2010 would not be
reopened, thereby explicitly adding
under section 5504(c) that if the cost
report was not settled, and if there was
a jurisdictionally proper appeal pending
as of the date of the enactment of the
Affordable Care Act, the provisions of
section 5504 would apply. One
commenter noted that an interpretation
must ‘‘give effect, if possible, to every
clause and word of the statute’’ (United
States v. Menasche, 348 U.S. 528, 538–
39 (1955)). The commenter therefore
believed that subsection (c) would be
superfluous if section 5504 were only
prospective, particularly considering
that Congress had no need to instruct
the Secretary not to do something that
she would not have done anyway (that
is, reopen cost reports without a
statutory mandate). The commenters
asserted that CMS, in the August 3, 2010
proposed rule (75 FR 46385), initially
interpreted section 5504(c) to effectively
override the directives in sections
5504(a) and (b) and to require reopening
and application of the new standards set
forth in section 5504(a)(3) and section
5504(b)(2) to pre-July 1, 2010 cost
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reporting periods and patient discharges
whenever a hospital had a pending,
jurisdictionally proper appeal pending
on a direct GME or IME issue as of
March 23, 2010. The commenters also
did not believe it is appropriate for CMS
to contend that section 5504 is strictly
prospective but, at the same time,
propose to clarify an amendment to the
regulations at § 413.78(g)(6) ‘‘with
retroactive effect to 2010.’’ One
commenter argued that a final rule must
be a ‘‘logical outgrowth’’ of the
proposed rule, and the final regulation
implemented in the November 24, 2010
final rule with comment period was the
same as that proposed. The commenter
surmised that CMS ‘‘likely did not
revise the final codified regulation in
order to avoid a challenge that the final
rule was not the ‘logical outgrowth’ of
the proposed rule,’’ and asserted that
CMS’ proposed clarification of
§ 413.78(g)(6) in the FY 2015 IPPS/
LTCH PPS proposed rule cannot be
applied prior to October 1, 2014. The
commenters suggested that the Secretary
and CMS reconsider its proposal to
change § 413.78(g)(6), and acknowledge
that, as promulgated in the November
24, 2010 final rule with comment
period, § 413.78(g)(6) required
reopening of a hospital cost report for
which a jurisdictionally proper appeal
was pending regarding GME and/or IME
as of the date of enactment of the
Affordable Care Act.
Response: We agree with the
commenters that some meaning must be
attributed to the statutory language at
section 5504(c) of the Affordable Care
Act that the amendments made by the
provisions of sections 5504(a) and (b)
‘‘shall not be applied in a manner that
requires reopening of any settled
hospital cost reports as to which there
is not a jurisdictionally proper appeal
pending as of the date of the enactment
of this Act on the issue of payment for
indirect costs of medical education . . .
or for direct graduate medical education
costs. . . .’’ Congress knows how to
explicitly provide for retroactive
application or apply new standards to
pending appeals when it so desires.
Indeed, the same statute at issue here,
the Affordable Care Act, contains
numerous sections that, unlike section
5504 of the Affordable Care Act, are
either explicitly retroactive or expressly
apply new standards to pending
appeals. For example, section 5505 of
the Affordable Care Act (unlike section
5504) contains explicitly retroactive
language. Section 5505 (c)(1) of the
Affordable Care Act states, ‘‘[e]xcept as
otherwise provided, the Secretary . . .
shall implement the amendments made
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by this section in a manner so as to
apply to cost reporting periods
beginning on or after January 1, 1983’’;
section 5505(c)(2) instructs that a
subsection ‘‘shall apply to cost reporting
periods beginning on or after July 1,
2009’’); section 5505(c)(3) instructs that
another subsection ‘‘shall apply to cost
reporting periods beginning on or after
October 1, 2001’’. Section 5504 has
nothing comparable to the express
retroactive language which is to be
found in section 5505. As another
example, section 1556(c) is explicitly
retroactively and expressly applies a
standard to pending appeals, unlike
section 5504 of the Affordable Care Act.
Section 1556(c) of the Affordable Care
Act states, ‘‘[t]he amendments made by
this section shall apply with respect to
claims filed under [a 1976 statute] after
January 1, 2005, that are pending on or
after the date of enactment of this Act’’.
The fact that Congress was explicit
when it intended for particular
provisions of the Affordable Care Act to
apply retroactively and/or to apply to
pending proceedings, but section 5504
of the Affordable Care Act contains no
such statements, suggests that Congress
did not intend for the new substantive
standards set forth in sections 5504(a)(3)
and (b)(2) of the Affordable Care Act to
apply to earlier periods and discharges
and/or to pending appeals. Instead, we
can presume that Congress acted
intentionally and purposely by omitting
such language in section 5504 of the
Affordable Care Act. As we explained in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28152 through 28154), when
we proposed to implement section
5504(c) in the August 3, 2010 proposed
rule (75 FR 46385), and when we
implemented section 5504(c) in the
November 24, 2010 final rule with
comment period (75 FR 72136), we had
to consider what new meaning it was
adding to sections 5504(a) and (b) of the
Affordable Care Act because unlike, for
example, section 5505 of the Affordable
Care Act, which has an effective date
prior to enactment of the Affordable
Care Act and, therefore, would apply to
prior cost reporting periods, section
5504’s applicable effective date for the
new standards it creates was July 1,
2010, a date that came after enactment
of the Affordable Care Act and was fully
prospective (the new standards being
that hospitals would be permitted to
count the time that a resident trains in
activities related to patient care in a
nonprovider site in its FTE count if the
hospital incurs the costs of the
residents’ salaries and fringe benefits for
the time that the resident spends
training in the nonprovider site, and if
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more than one hospital incurs the
residency training costs in a
nonprovider setting, under certain
circumstances, each hospital could
count a proportional share of the
training time that a resident spends
training in that setting). As we stated in
the November 24, 2010 final rule with
comment period (75 FR 72136),
‘‘Section 5504 is fully prospective with
an explicit effective date of July 1, 2010,
for the new standards it creates. Nothing
in section 5504(c) overrides that
effective date. Section 5504(c) merely
notes that the usual discretionary
authority of Medicare contractors to
reopen cost reports is not changed by
the provisions of section 5504; it simply
makes clear that Medicare contractors
[MACs] are not required by reason of
section 5504 to reopen any settled cost
report as to which a provider does not
have a jurisdictionally proper appeal
pending. It does not require reopening
in any circumstance; and the new
substantive standard is, in any event,
explicitly prospective. We believe if
Congress had wanted to require such
action or to apply the new standards to
cost years or discharges prior to July 1,
2010, it would have done so in far more
explicit terms.’’
Therefore, we believe we were clear
in the November 24, 2010 final rule
with comment period that we did not
interpret section 5504(c) to override the
clear directives in sections 5504(a) and
(b) concerning the substantive standards
that would apply to pre- and post-July
1, 2010 cost reporting periods and
discharges. We rejected the notion there
that section 5504(c) requires reopening
and application of the new, more
generous standard (which sections
5504(a)(3) and (b)(2) created and
expressly made ‘‘effective’’ only for cost
reporting periods beginning and
discharges occurring ‘‘on or after July 1,
2010’’) to earlier periods and discharges
whenever a hospital had a
jurisdictionally proper appeal pending
on direct or indirect GME as of the
Affordable Care Act’s enactment. Since
that time, we have maintained our
position that the new, more generous
standard set forth in sections 5504(a)(3)
and (b)(2) only apply to cost reporting
periods beginning, and discharges
occurring, ‘‘on or after July 1, 2010.’’ We
have at the same time noted that
Congress chose in sections 5504(a) and
(b) to explicitly and pointedly retain the
longstanding statutory substantive
standard (that requires a single hospital
to incur ‘‘all, or substantially all’’ of the
costs of the nonprovider residency
training before it may receive Medicare
direct GME and IME payment for that
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training), and make it applicable to preJuly 1, 2010 cost reporting periods and
discharges, while creating a new, more
generous standard which it directed
would apply to later periods and
discharges. It is Congress who decided
that the July 1, 2010 date would be
significant, and we are honoring the
choice Congress made. Therefore, we
disagree with the commenters that it is
inappropriate for CMS to propose to
clarify an amendment to the regulations
at § 413.78(g)(6) ‘‘with retroactive effect
to 2010.’’ Moreover, we have
consistently expressed our position that
the new substantive standards which
sections 5504(a)(3) and (b)(2) added to
the Medicare statute apply only to cost
reporting periods beginning, and
discharges occurring, on or after July 1,
2010 (75 FR 46385) and 75 FR 72136).
Accordingly, our proposed clarification
of § 413.78(g)(6) reiterating our existing
interpretation of the statutory
amendments made by sections 5504(a)
and (b) of the Affordable Care Act is
appropriate.
Commenters argued that CMS’
statements in the August 3, 2010
proposed rule initially interpreted
section 5504(c) to mean that section
5504 could be applied retroactively to
hospitals that indeed had a pending,
jurisdictionally proper appeal pending
on a direct GME or IME issue as of
March 23, 2010. However, the
commenters misapprehended the
position we took in the August 3, 2010
proposed rule. While it is true that the
proposed rule defined the meaning of
the term ‘‘pending, jurisdictionally
proper appeal’’ that appears in section
5504(c) of the Affordable Care (75 FR
46385), it did not state that reopening
was required when a hospital had such
an appeal pending as of the date of
enactment or in other circumstances. In
addition, it never stated that the new
standard set forth in sections 5504(a)
and (b) could ever apply to a cost
reporting period beginning prior to July
1, 2010 for direct GME purposes, or to
a discharge occurring before July 1, 2010
for IME purposes. Quite to the contrary,
the proposed rule noted that ‘‘[f]or
direct GME payments, [section 5504] is
effective for cost reporting periods
beginning on or after July 1, 2010; for
IME payments, the provision is effective
for discharges occurring on or after July
1, 2010’’ (75 FR 46385 and 46386 (along
similar lines)), and advised that: ‘‘We
are proposing to revise our regulation at
§ 413.75(b) accordingly to conform to
these new statutory requirements [in
section 5504 of the Affordable Care Act].
Specifically, we are proposing to revise
the existing definition of ‘‘all or
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50121
substantially all of the costs for the
training program in the nonhospital
setting’’ to be effective for cost reporting
periods beginning on or after July 1,
2007, and before July 1, 2010. We also
are proposing to add a new § 413.78(g)
that details how hospitals should count
residents that train in nonhospital sites
for cost reporting periods beginning on
or after July 1, 2010.’’
Therefore, the August 3, 2010
proposed rule recognized that section
5504 required pre-July 1, 2010 cost
reporting periods and discharges to be
subject to the longstanding requirement
that a single hospital incur all or
substantially all of the costs of residents
training in a nonprovider site, not the
new, more generous standard set forth
in section 5504(a) and (b) of the
Affordable Care Act. As noted, in the
November 24, 2010 final rule, in
response to comments, the Secretary
only made it even more explicit that she
did not read section 5504(c) to require
her to retroactively apply the new
substantive standard in sections 5504(a)
and (b) to pre-July 1, 2010 cost reporting
periods and discharges (75 FR 72136
and 72153).
At least one court has held that our
reading of section 5504 and the
implementing regulation is reasonable
and has rejected many of the arguments
that the commenters made. The Eastern
District of Michigan has recognized that
‘‘while section 5504(c) [of the
Affordable Care Act] establishes that if
there was not a pending appeal
concerning a final cost report when the
Affordable Care Act was enacted, that
cost report will not be reopened, section
5504(c) does not establish that if there
was a pending appeal concerning a final
cost report when the Affordable Care
Act was enacted, that cost report must
be reopened; on this point the statute is
silent,’’ and ‘‘Congress expressly
indicated in the statute itself what
standards apply to what cost periods’’ in
sections 5504(a) and (b) of the
Affordable Care Act (Covenant Medical
Center v. Sebelius, No. 12–12901, 2014
WL 340247, at *8–*10 (E.D. Mich. Jan.
30, 2014)). The district court also noted
that our reading of section 5504 gives
effect to every clause and word of the
provision as it honors the effective dates
and standards prescribed in sections
5504(a) and (b). The court further noted
that the current version of 42 CFR
413.78(g)(6) is ‘‘almost identical to
section 5504(c)’’ and held that CMS’
‘‘interpretation of § 5504(c) is not
undermined by her identical conclusion
regarding section 413.78(g)(6)’’
(Covenant Medical Center v. Sebelius,
No. 12–12901, 2014 WL 340247, at *11–
12 (E.D. Mich. Jan. 30, 2014)). Therefore,
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we disagree with the commenter that
surmised that, in the November 24, 2010
final rule with comment period, CMS
‘‘likely did not revise the final codified
regulation in order to avoid a challenge
that the final rule was not the ‘logical
outgrowth’ of the proposed rule.’’
Rather, as the court noted, the current
version of 42 CFR 413.78(g)(6) is
‘‘almost identical to section 5504(c)’’
and held that CMS’ ‘‘interpretation of
§ 5504(c) is not undermined by her
identical conclusion regarding section
413.78(g)(6)’’ (Covenant Medical Center
v. Sebelius, No. 12–12901, 2014 WL
340247, at *11–12 (E.D. Mich. Jan. 30,
2014)). We had intended that the
language under § 413.78(g)(6) do no
more than simply paraphrase the
language in section 5504(c) of the
Affordable Care Act. Accordingly, we
did not believe that it was necessary to
revise the final regulation in the
November 24, 2010 final rule with
comment period. Nevertheless, as stated
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28153), because
we have received questions about the
applicability of section 5504(c) and the
associated regulation text at
§ 413.78(g)(6), we took the opportunity
to revisit the regulations and clarify
them so that they would be even more
consistent with the language at section
5504(c).
Comment: One commenter asked that
CMS clarify that section 5504 ‘‘filled a
gap in the law’’ regarding funding of
residency training occurring in a
nonprovider setting ‘‘by establishing for
the first time the definitive law
regarding Medicare payment for medical
education to hospitals jointly funding
training in a nonprovider setting,’’ and
that section 5504 applies to hospitals
with jurisdictionally proper appeals
regarding that issue that were pending
as of the date of the enactment of the
Affordable Care Act.
Response: We do not agree with the
commenter that section 5504 ‘‘filled a
gap in the law’’ regarding more than one
hospital incurring the costs of training
residents in a nonprovider setting.
Beginning at least as early as 1988, the
Secretary has consistently noted in the
preamble of various rules that the
statute only allowed a hospital to count
the time that its residents spent training
in a nonprovider site in the FTE
resident count for direct GME and IME
purposes if that single hospital incurred
‘‘all of substantially all’’ of the costs of
the training program in that setting.
Indeed, in Borgess Medical Center v.
Sebelius (966 F.Supp.2d 1 at *6–*7
(D.D.C. 2013)), a court noted that CMS
had done so in 1998, 2003, and 2007
preambles of rules. For a full discussion
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of the longstanding substantive standard
and requirement that a hospital can only
count residents training if that one
single hospital incurs all or
substantially all of the costs for the
training, we refer readers to the
discussion in the November 24, 2010
final rule with comment period (75 FR
72134 through 72141), the May 11, 2007
final rule (72 FR 26953 and 26969), the
August 1, 2003 final rule (68 FR 45439),
the July 31, 1998 final rule (63 FR 40954
and 40995), the September 29, 1989
final rule (54 FR 40286 and 40288), and
the September 21, 1988 proposed rule
(53 FR 36589 and 36591). We continue
to believe that Congress was clear in
amending sections 1886(h)(4)(E) and
1886(d)(5)(B)(iv) of the Act to provide
for new standards to be applied only
prospectively, effective for cost
reporting periods beginning on or after,
and discharges occurring on or after,
July 1, 2010. Moreover, we continue to
believe the language in paragraph (g)(6)
of § 413.78 (along with the remainder of
paragraph (g)) only applies to cost
reporting periods beginning on or after
July 1, 2010, and does not apply
retroactively to cost reporting periods
beginning before July 1, 2010. We
believe that the new standards set forth
in sections 5504(a)(3) and (b)(2) of the
Affordable Care Act and implemented
by regulation at §§ 413.78(g) and
412.105(f)(1)(ii)(E), allowing cost
sharing under certain circumstances, do
not ever apply to pre-July 1, 2010 cost
reporting periods and pre-July 1, 2010
patient discharges. We had intended
that the language under § 413.78(g)(6)
do no more than simply paraphrase the
language in section 5504(c) of the
Affordable Care Act.
Accordingly, after consideration of
the comments we received, we are not
making any changes to our proposed
clarification to the regulatory language
at § 413.78(g)(6). The regulatory
language at § 413.78(g)(6) states that the
provisions of paragraphs (g)(1)(ii), (g)(2),
(g)(3), and (g)(5) of the section shall not
be applied in a manner that requires
reopening of any settled cost reports as
to which there is not a jurisdictionally
proper appeal pending as of March 23,
2010, on direct GME or IME payments.
Cost reporting periods beginning before
July 1, 2010 are not governed by
paragraph (g) of the section. The IME
regulations at § 412.105(f)(1)(ii)(E)
include a reference to § 413.78(g)(6);
therefore, no change is needed to this
section of the IME regulations.
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5. Changes to the Review and Award
Process for Resident Slots Under
Section 5506 of the Affordable Care Act
In the past, if a teaching hospital
closed, its direct GME and IME FTE
resident cap slots would be ‘‘lost’’
because those cap slots are associated
with a specific hospital’s Medicare
provider agreement, which would be
retired upon the hospital’s closure.
Under existing regulations at § 413.79(h)
for direct GME and § 412.105(f)(1)(ix)
for IME, a hospital that is training FTE
residents at or in excess of its FTE
resident caps and takes in residents
displaced by the closure of another
teaching hospital may receive a
temporary increase to its FTE resident
caps so that it may receive direct GME
and IME payment associated with those
displaced FTE residents. However,
those temporary FTE resident caps are
tied to those specific displaced FTE
residents, and the temporary caps expire
when those displaced residents
complete their training program.
Section 5506 of the Affordable Care
Act amended section 1886(h)(4)(H) of
the Act to add a new clause (vi) that
instructs the Secretary to establish a
process by regulation under which, in
the event a teaching hospital closes, the
Secretary will permanently increase the
FTE resident caps for hospitals that
meet certain criteria up to the number
of the closed hospital’s FTE resident
caps. The Secretary is directed to ensure
that the aggregate number of FTE
resident cap slots distributed shall be
equal to the aggregate number of slots in
the closed hospital’s direct GME and
IME FTE resident caps, respectively. For
a detailed discussion of the regulations
implementing section 5506 of the
Affordable Care Act, we refer readers to
the November 24, 2010 final rule with
comment period (75 FR 72212 through
72238) and the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53434 through 53448).
a. Effective Date of Slots Awarded
Under Section 5506 of the Affordable
Care Act
In distributing slots permanently
under the provisions of section 5506 of
the Affordable Care Act, section 5506(d)
provides that ‘‘the Secretary shall give
consideration to the effect of the
amendments made by this section on
any temporary adjustment to a
hospital’s FTE cap under § 413.79(h)
. . . (as in effect on the date of
enactment of this Act) in order to ensure
that there is no duplication of FTE slots
. . .’’ In consideration of this statutory
language, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53437), we stated
that in distributing slots permanently
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under section 5506, we would be
cognizant of the number of FTE
residents for whom a temporary FTE
cap adjustment was provided under
existing regulations at § 413.79(h), and
when those residents will complete
their training, at which point the
temporary slots associated with those
displaced residents would then be
available for permanent redistribution.
Therefore, in initially developing
ranking criteria and application
materials that we would use to award
available slots, we considered how to
interpret this statutory language at
section 5506(d) of the Affordable Care
Act within the context of our existing
GME regulations and section 5506’s
amendment to section 1886(h) of the
Act generally.
In the November 24, 2010 final rule
with comment period and the FY 2013
IPPS/LTCH PPS final rule (75 FR 72216
and 77 FR 53436, respectively), we
discussed the various ranking criteria
that we would use for hospitals
applying for slots from closed hospitals.
Currently, if after distributing the slots
from a closed hospital to increase the
FTE caps for applying hospitals that fall
within Ranking Criteria One, Two, and
Three, there are still excess slots
available and any of those excess slots
are associated with displaced residents
for whom temporary cap adjustments
under § 413.79(h) are in place, any slots
awarded to hospitals that fall within
Ranking Criteria Four through Eight are
permanently assigned only once the
displaced residents have completed
their training and the temporary cap
adjustments associated with those
residents have expired. That is, in
applying the requirement for ‘‘no
duplication of FTE slots’’ set forth in
section 5506(d), we currently consider
all temporary cap adjustments received
by hospitals on a national basis and not
specifically the hospital that is applying
for cap slots under section 5506, when
deciding the effective date for slots
permanently awarded to hospitals
applying under Ranking Criteria Four
through Eight. Specifically, in the
November 24, 2010 final rule with
comment period, we stated that we
believe the ‘‘no duplication of FTE
slots’’ requirement applies across all
hospitals. Therefore, although a hospital
may not have received a temporary cap
adjustment under § 413.79(h), other
hospitals may have taken in residents
and received temporary cap adjustments
for the same program, and we believed
that the appropriate policy was to delay
the slots associated with that program
from being permanently distributed
until it is known that any and all
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temporary cap adjustments for those
slots have expired (75 FR 72227)
Applying this policy to an example, if
Hospital A is training displaced
residents and is receiving a temporary
cap adjustment under § 413.79(h) for
training those residents and Hospital B,
which is not receiving a temporary cap
adjustment for training any displaced
residents, has applied under Ranking
Criterion Five to expand its internal
medicine program, as explained in the
November 24, 2010 final rule with
comment period, we would only award
permanent slots under section 5506 to
Hospital B on a flow basis; that is,
effective after each displaced resident
completes his/her training, and,
therefore, the temporary cap
adjustments associated with that
resident expire at Hospital A.
However, the policy of applying the
‘‘no duplication of FTE slot’’
requirement at section 5506(d) of the
Affordable Care Act to all hospitals
rather than simply to each specific
hospital that is applying for slots has
thus far proven to be a very complex
process due to the number of displaced
residents and the timing of multiple
graduation dates which must be tracked
and considered when awarding slots on
a permanent basis. We believe this
practice has delayed the awarding of
slots and is also unnecessarily
burdensome for hospitals applying
under Ranking Criteria Four through
Eight that are not receiving any cap
adjustments for training displaced
residents under § 413.79(h). We believe
the current policy that we apply for ‘‘no
duplication of FTE slots’’ is
unnecessarily burdensome for these
hospitals because, instead of receiving
their permanent slots under section
5506 as soon as possible, the hospitals
may receive their section 5506 awards
with staggered effective dates due to the
graduation dates of displaced FTE
residents training at other hospitals that
did receive temporary adjustments
under § 413.79(h). While we believe that
awarding permanent slots to a hospital
that is simultaneously receiving a
temporary cap adjustment for training
displaced FTE residents under
§ 413.79(h) would clearly be a
duplication of FTE slots and contrary to
the statutory directive, we believe there
is flexibility in interpreting this
statutory language and that the statute
does not require such a policy to be
applied to hospitals that are not
receiving temporary cap adjustments
under § 413.79(h). Furthermore, in
considering the specific statutory
language regarding ‘‘no duplication of
FTE slots,’’ section 5506(d) in part
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50123
provides that ‘‘The Secretary of Health
and Human Services shall give
consideration to the effect of the
amendments made by this section on
any temporary adjustment to a
hospital’s FTE cap under section
413.79(h) of title 42, Code of Federal
Regulations (as in effect on the date of
enactment of this Act) in order to ensure
that there is no duplication of FTE
slots.’’ Because this language refers to ‘‘a
hospital,’’ we believe the statute
provides us with the flexibility to apply
the ‘‘no duplication of FTE slots’’
requirement on a hospital-specific basis,
considering separately whether each
hospital did or did not receive a
temporary cap adjustment under
§ 413.79(h), rather than on a national
all-hospital basis. Bearing in mind the
statutory language and our experience to
date in awarding slots as well as the
unnecessary burden placed on hospitals
that are receiving section 5506 slots, but
are not receiving temporary cap
adjustments under § 413.79(h), we
stated in the FY 2015 IPPS/LTCH PPS
proposed rule our belief that it was
appropriate to propose a policy that
would provide for a more efficient and
faster method for awarding of slots to
hospitals applying under Ranking
Criteria Four through Eight. Therefore,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28155), we
proposed that, effective for section 5506
application rounds announced on or
after October 1, 2014, for purposes of
applying the requirement for ‘‘no
duplication of FTE slots,’’ we would
only require that there be no duplication
of FTE slots on a hospital-specific basis.
That is, in determining the effective date
for slots awarded permanently under
section 5506, we would only be
concerned with whether the hospital
that is applying for slots is also
receiving a temporary cap adjustment
under § 413.79(h) for training displaced
residents. When awarding slots to the
applying hospital, we would not be
concerned whether any other hospital is
receiving a temporary cap adjustment
for training displaced residents under
§ 413.79(h). For example, if Hospital A
is receiving a temporary cap adjustment
under § 413.79(h) for training displaced
residents in its general surgery program
but is applying under Ranking Criterion
Five to start a pediatrics program and
Hospital B is not receiving a temporary
cap adjustment for training displaced
residents and is applying under Ranking
Criterion Eight to expand a cardiology
program, in awarding section 5506 slots,
we would only allow Hospital A to
receive a permanent adjustment to its
FTE cap for training residents in its
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pediatrics program once its temporary
adjustments for the displaced residents
training in the general surgery program
have expired. We would not consider
displaced residents when awarding
section 5506 slots to Hospital B.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28156), we stated
that, in conjunction with our proposal
to interpret the ‘‘no duplication of FTE
slots’’ requirement to apply on a
hospital-specific basis to hospitals that
are receiving temporary cap adjustments
under § 413.79(h), we proposed to
amend the effective dates of section
5506 slots received under Ranking
Criteria Four through Eight for those
hospitals that are not receiving
temporary cap adjustments under
§ 413.79(h). (We refer readers to section
IV.K.5.c. of the preamble of this final
rule where we discuss our proposal and
final policy to amend Ranking Criteria
Seven and Eight.) Existing policy
requires that slots awarded under
Ranking Criteria Four through Eight for
expanding an existing residency
training program or starting a new
residency training program are effective
the later of when a hospital can
demonstrate to the MAC that the slots
associated with a new program or
program expansion are actually filled
and, therefore, are needed as of a
particular date (usually July 1, possibly
retroactive), or the July 1 after displaced
residents complete their training. If a
hospital is awarded slots under Ranking
Criterion Eight for cap relief, slots are
effective the date of CMS’ award
announcement, or the July 1 after
displaced residents complete their
training, whichever is later. However,
because we proposed an alternative
approach to interpreting section 5506(d)
that would permit us to apply the ‘‘no
duplication of FTE slots’’ requirement
on a hospital-specific basis, we
proposed to change the effective date for
slots received under Ranking Criteria
Four through Eight so that if a hospital
is not receiving a temporary cap
adjustment under § 413.79(h), the slots
awarded under section 5506 would be
effective when the hospital can
demonstrate to its MAC that the slots
needed for a new program or program
expansion are actually filled and,
therefore, are needed as of a particular
date (usually July 1, possibly
retroactive). If a hospital is awarded
slots under Ranking Criteria Four
through Eight and is receiving a
temporary cap adjustment to train
displaced residents under § 413.79(h),
the existing policy would apply such
that the slots are awarded on a
permanent basis, the later of when a
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hospital can demonstrate to the MAC
that the slots associated with a new
program or program expansion are
actually filled and, therefore, are needed
as of a particular date (usually July 1,
possibly retroactive), or the July 1 after
an equivalent amount of displaced FTE
residents complete their training. In the
proposed rule (79 FR 28156), we stated
that, assume in a hypothetical situation
that there is a closed teaching hospital
and that another hospital takes in two
displaced FTE residents for which the
hospital is receiving a temporary cap
adjustment under § 413.79(h). One
resident is graduating on June 30, 2016,
and the second resident is graduating on
June 30, 2018. Assume that when the
section 5506 Round is announced, the
hospital also applies for two slots to
expand an internal medicine program
under Ranking Criterion Five. In
January 2017, CMS awards two
permanent slots to the hospital under
Ranking Criterion Five. For the program
year starting July 1, 2017, the hospital
successfully demonstrates to the MAC
that it filled the two additional internal
medicine positions. Because one
displaced FTE resident already
graduated on June 30, 2016, the MAC
may approve one slot on a permanent
basis effective July 1, 2017. However,
the hospital would have to wait until
July 1, 2018, to receive from the MAC
the permanent slot for the second
displaced internal medicine resident
because the second displaced FTE
resident is not graduating until June 30,
2018.
Comment: Several commenters
supported the proposal and agreed that
applying the ‘‘no duplication of slots’’
policy on a national level, as opposed to
a hospital-specific level, results in a
very complex and unnecessarily
burdensome review process which
further delays the permanent
distribution of slots from a closed
hospital.
Response: We appreciate the
commenters’ support.
Comment: Two commenters opposed
the proposal because they believed it
added an unnecessary restriction to the
effective dates of permanent section
5506 awards received under Ranking
Criteria Four through Eight for hospitals
that have temporary cap adjustments
under § 413.79(h) and are training
displaced residents from the closed
hospital. The commenters noted that the
proposal would require a hospital that
has a temporary cap adjustment and is
training a displaced resident from the
closed hospital and is awarded slots
under Ranking Criteria Four through
Eight to wait until the displaced
resident graduates in order to receive
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the permanent cap slot. On the other
hand, if a hospital does not have a
temporary cap adjustment and is
awarded slots under Ranking Criteria
Four through Eight, those slots would be
effective when the hospital can
demonstrate to its MAC that the slots
needed for a new program or program
expansion are actually filled without
consideration of any temporary cap
adjustment at another hospital. The
commenters asserted that only Ranking
Criteria One and Three are specifically
tied to the training of displaced
residents, and if a hospital applies
under Ranking Criteria Four through
Eight, they are, in fact, acknowledging
that they do not qualify under Ranking
Criterion One or Three and therefore
should not be subject to limitations of
the effective date of its award related to
a temporary cap adjustment associated
with a displaced resident. The
commenters suggested that the revised
effective date of slots awarded under
Ranking Criteria Four through Eight
apply for all hospitals and award slots,
regardless of whether the hospitals
received a temporary cap adjustment
under § 413.79(h), and that the ‘‘no
duplication of slots’’ policy should not
apply when section 5506 slots are being
awarded for a completely different
program or purpose than the program
for which the hospital was awarded a
temporary cap adjustment.
Response: We appreciates the
commenters’ concerns and suggestions
regarding our application of the ‘‘no
duplication of slots’’ policy as it applies
to the effective dates for Ranking
Criterion Four through Eight. However,
we continue to believe that allowing a
hospital to receive a permanent cap slot
under section 5506 while at the same
time receiving a temporary cap
adjustment under § 413.79(h) would be
contrary to the statutory directive of the
‘‘no duplication of slots’’ policy because
as long as the displaced resident is still
training and the hospital has a
temporary cap adjustment for that
resident and is receiving IME and direct
GME payments, that slot is still in use
by the hospital. Section 5506(d) in part
provides that ‘‘The Secretary of Health
and Human Services shall give
consideration to the effect of the
amendments made by this section on
any temporary adjustment to a
hospital’s FTE cap under section
413.79(h) of title 42, Code of Federal
Regulations (as in effect on the date of
enactment of this Act) in order to ensure
that there is no duplication of FTE
slots’’ (emphasis added). Thus, we
disagree with the commenters’ overly
broad interpretation of the statutory
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language, and continue to believe that
the statute does not allow for
duplication of slots within a hospital
overall, even when those slots are
awarded for completely different
programs or purposes. In addition, prior
to our proposal, our existing policy
regarding effective dates for slots
awarded under Ranking Criteria Four
through Eight has been that where a
temporary cap adjustment was in effect
for displaced residents from a closed
hospital, the effective dates for awards
under Ranking Criteria Four through
Eight are tied to the graduation dates of
the displaced residents because as long
as a hospital was awarded a temporary
cap adjustment for a particular
displaced resident, the slot associated
with that resident is not yet available,
regardless of the ranking criteria or the
program or purpose for which the
permanent section 5506 FTE cap slot
was awarded. We believe that our
proposed policy strikes the necessary
balance of avoiding unnecessary
complexity in the review of section
5506 applications and maintaining a
policy that conforms to the statutory
requirement for ‘‘no duplication of
slots’’ under section 5506.
Consistent with policy implemented
in subregulatory guidance in Change
Request 7746, Transmittal 1171 (issued
January 31, 2013; http://www.cms.gov/
Regulations-and-Guidance/Guidance/
Transmittals/downloads/
R1171OTN.pdf) where we stated that
slots awarded under a given round may
only replace temporary FTE cap
adjustments associated with residents
displaced from that same round, we
would like to clarify that our proposed
application of the ‘‘no duplication of
slots’’ policy would only apply for
temporary cap adjustments and
permanent section 5506 FTE cap slots
associated with the same closed hospital
(§ 413.79(h)). In addition, we note that,
as we stated in the proposed rule (79 FR
28156), if a hospital is awarded slots
under Ranking Criteria Four through
Eight and is receiving a temporary cap
adjustment to train displaced residents
under § 413.79(h), the existing policy
would apply such that the slots are
awarded on a permanent basis, the later
of when a hospital can demonstrate to
the MAC that the slots associated with
a new program or program expansion
are actually filled and, therefore, are
needed as of a particular date (usually
July 1, possibly retroactive), or the July
1 after an equivalent amount of
displaced FTE residents complete their
training. That is, so long as a hospital
continues to receive a temporary cap
adjustment under § 413.79(h) for
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residents displaced from a specific
closed hospital, that hospital’s section
5506 award under Ranking Criteria Four
through Eight associated with that
specific closed hospital would also not
be fully effective. Stating it simply, if a
hospital has a temporary FTE cap
adjustment of three FTEs due to the
closure of Hospital Z, and the hospital
is also awarded three permanent FTE
cap slots under the section 5506 Round
associated with Hospital Z, this
hospital’s permanent FTE cap
adjustment of three would not take full
effect until all three displaced FTEs
from Hospital Z graduate, when the
hospital’s temporary FTE cap would go
down to zero (§ 413.79(h)). When
determining the effective dates of
section 5506 FTE cap slots awarded
under Ranking Criteria Four through
Eight for a given Round of section 5506
from a given closed hospital, the
hospital receiving the section 5506 slots
would consider (1) whether it has a
temporary cap adjustment associated
with residents displaced from the closed
hospital associated with that Round of
section 5506, and (2) the difference (if
any) between its section 5506 FTE cap
slot award from that closed hospital,
and the temporary cap adjustment
associated with the same closed
hospital. If a hospital is receiving a
temporary cap adjustment for training
displaced residents and its section 5506
award is less than or equal to the
temporary cap adjustment, the section
5506 slots would become effective the
later of when the hospital can
demonstrate to the MAC that the slots
associated with a new program or
program expansion are actually filled
and, therefore, are needed, or the July 1
after displaced residents complete their
training. If a hospital is receiving a
temporary cap adjustment for training
displaced residents and its section 5506
award is greater than the temporary cap
adjustment, the number of slots by
which the section 5506 award exceeds
the temporary cap adjustment would be
available for use when the hospital can
demonstrate to its MAC that the slots
associated with the new program or
program expansion are filled and,
therefore, are needed as of a particular
date (usually July 1, possibly
retroactive). The effective dates for those
slots in excess of the hospital’s
temporary cap adjustment in a given
round would not hinge on whether a
displaced resident has completed his/
her training and, therefore, the
temporary cap adjustment associated
with that resident expires because there
would be no duplication of slots for that
hospital with respect to the slots
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50125
awarded in excess of the hospital’s
temporary cap adjustment. However, the
portion of the hospital’s section 5506
award that is equal to or less than its
temporary cap adjustment for displaced
residents associated with the closed
hospital from the same round would be
subject to the ‘‘no duplication of FTE
slots’’ requirement, and those section
5506 slot awards would become
available only as an equivalent amount
of temporary cap adjustment expires.
The following examples illustrate the
interplay between section 5506 slots
awarded and temporary cap adjustments
under § 413.79(h) associated with the
same closed hospital:
Example 1: Hospital A takes in two
displaced FTE residents from a closed
teaching hospital for which the hospital is
receiving a temporary cap adjustment of 2.0
FTEs under § 413.79(h). One resident is
graduating on June 30, 2016, and the second
resident is graduating on June 30, 2018.
When the section 5506 Round is announced,
Hospital A also applies for two slots to
expand an internal medicine program under
Ranking Criterion Five. In January 2017, CMS
awards two permanent slots to the hospital
under Ranking Criterion Five. Hospital A
would consider (1) whether it has a
temporary cap adjustment associated with
residents displaced from the closed hospital
associated with that Round of section 5506
(yes, 2.0 FTEs), and (2) the difference (if any)
between its section 5506 FTE cap slot award
from that closed hospital, and the temporary
cap adjustment associated with the same
closed hospital (2.0 temporary cap—2.0
section 5506 award = 0, no difference).
Because Hospital A’s section 5506 award is
(less than or) equal to the temporary cap
adjustment, the section 5506 slots would
become effective on a flow basis; that is,
effective after each displaced resident
completes his/her training, and as the
temporary cap adjustment associated with
that resident expires. For the program year
starting July 1, 2017, Hospital A successfully
demonstrates to the MAC that it filled the
two additional internal medicine positions.
Because one displaced FTE resident already
graduated on June 30, 2016, the MAC may
approve one slot on a permanent basis
effective July 1, 2017. However, Hospital A
would have to wait until July 1, 2018, to
receive from the MAC the permanent slot for
the second displaced internal medicine
resident because the second displaced FTE
resident is not graduating until June 30, 2018.
Example 2: Hospital B takes in two
displaced FTE residents from a closed
teaching hospital for which Hospital B is
receiving a temporary cap adjustment of 2.0
FTEs under § 413.79(h). One resident is
graduating on June 30, 2018, and the second
resident is graduating on June 30, 2019.
When the section 5506 Round is announced,
Hospital B applies for five slots to expand a
geriatrics program under Ranking Criterion
Four. In January 2017, CMS awards five
permanent slots to Hospital B under Ranking
Criterion Four. Hospital B would consider (1)
whether it has a temporary cap adjustment
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associated with residents displaced from the
closed hospital associated with that Round of
section 5506 (yes, 2.0 FTEs), and (2) the
difference (if any) between its section 5506
FTE cap slot award from that closed hospital,
and the temporary cap adjustment associated
with the same closed hospital (2.0 temporary
cap—5.0 section 5506 award = 3, absolute
value). Because Hospital B’s section 5506
award is greater than the temporary cap
adjustment, then the number of slots by
which the section 5506 award exceeds the
temporary cap adjustment would be available
for use when the hospital can demonstrate to
its MAC that the slots associated with the
new program or program expansion are filled
and, therefore, are needed. For the program
year starting July 1, 2017, Hospital B
successfully demonstrates to the MAC that it
filled all five additional geriatrics positions.
Even though the displaced residents did not
yet graduate, the MAC may approve three
slots on a permanent basis effective July 1,
2016 because Hospital B’s section 5506
award exceeds its temporary cap adjustment
and Hospital B can use up to three of its five
slots while the displaced residents are still
training. However, Hospital B would have to
wait until July 1, 2018, to receive from the
MAC the fourth slot for the geriatrics
program because the first displaced FTE
resident is not graduating until June 30, 2018,
and would then have to wait until July 1,
2019, to receive from the MAC the fifth slot
for the geriatrics program because the second
displaced resident is not graduating until
June 30, 2019.
Example 3: Hospital C does not take in
any displaced residents and does not receive
a temporary cap adjustment under
§ 413.79(h). When the section 5506 Round is
announced, Hospital C applies for five slots
to expand geriatrics program under Ranking
Criterion Four. In January 2017, CMS awards
five permanent slots to Hospital C under
Ranking Criterion Four. For the program year
starting July 1, 2017, Hospital C successfully
demonstrates to the MAC that it filled all five
additional geriatrics positions. Because
Hospital C did not receive a temporary cap
adjustment, there would be no need to
consider displaced residents at other
hospitals when awarding permanent slots
and determining effective dates under section
5506 for Hospital C. Therefore, Hospital C
could receive a permanent adjustment of five
FTEs to its cap for training residents in its
geriatrics program effective July 1, 2017.
With regard to a hospital that is training
displaced FTE residents, has a temporary cap
adjustment under § 413.79(h), and also
applies both under Ranking Criteria One or
Three, and under Ranking Criteria Four
through Eight, the current policy with regard
to the effective date of slots awarded under
Ranking Criteria One and Three would still
apply, and would not impact the policy
described above for Ranking Criteria Four
through Eight. That is, as stated in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53443), slots awarded under Ranking Criteria
One or Three would continue to become
permanent (or effective) on a flow basis as
displaced FTEs finish their training
programs. If a hospital has a temporary cap
adjustment under § 413.79(h) and is awarded
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slots under Ranking Criteria One or Three for
training those displaced residents, then as
the displaced FTE residents graduate, an
equivalent amount of permanent section
5506 slots can become effective under
Ranking Criterion One or Three (thereby
avoiding duplication of FTE cap slots). If the
amount of section 5506 slots awarded under
Ranking Criterion One or Three is equal to
the amount of the temporary cap adjustment,
there would be no concern of duplication of
FTE slots with respect to a hospital’s other
awards under Ranking Criteria Four through
Eight because ‘‘no duplication’’ would
already be addressed with regard to slots
awarded within Ranking Criterion One or
Three. Accordingly, other slots that the
hospital is awarded under Ranking Criteria
Four through Eight would not depend on
whether a displaced resident has completed
his/her training and, therefore, would be
made available for use when the hospital can
demonstrate to its MAC that the slots
associated with the new program or program
expansion are filled and, therefore, are
needed. The following example illustrates
this policy:
Example Four: Hospital D takes in two
displaced FTE residents from a closed
teaching hospital for which Hospital D is
receiving a temporary cap adjustment of 2.0
FTEs under § 413.79(h). One resident is
graduating on June 30, 2018, and the second
resident is graduating on June 30, 2019.
When the section 5506 Round is announced,
Hospital D applies for two slots under
Ranking Criterion Three, and also applies for
five slots to expand a geriatrics program
under Ranking Criterion Four. In January
2017, CMS awards to Hospital D two
permanent slots under Ranking Criterion
Three, and five permanent slots under
Ranking Criterion Four. With regard to the
effective dates of the slots awarded under
Ranking Criteria Four through Eight, Hospital
D would consider (1) whether it has a
temporary cap adjustment associated with
residents displaced from the closed hospital
associated with that Round of section 5506
(yes, 2.0 FTEs), and (2) the difference (if any)
between its section 5506 FTE cap slot award
from that closed hospital, and the temporary
cap adjustment associated with the same
closed hospital (2.0 temporary cap—7.0
section 5506 award = 5, absolute value).
Because Hospital D’s section 5506 award is
greater than the temporary cap adjustment,
the number of slots by which the section
5506 award exceeds the temporary cap
adjustment (5 slots) would be available for
use when Hospital D can demonstrate to its
MAC that the slots associated with the new
program or program expansion are filled and,
therefore, are needed. For the program year
starting July 1, 2017, Hospital D successfully
demonstrates to the MAC that it filled all five
additional geriatrics positions. Even though
the displaced residents did not yet graduate,
the MAC may approve all five slots on a
permanent basis effective July 1, 2017,
because Hospital D’s section 5506 award
exceeds its temporary cap adjustment by five
slots and the amount of section 5506 slots
awarded under Ranking Criterion Three is
equal to the amount of the temporary cap
adjustment. Therefore, ‘‘no duplication’’ is
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already addressed with regard to slots
awarded within Ranking Criterion Three. On
July 1, 2018, one displaced FTE graduated,
and if Hospital D can demonstrate to the
MAC that it filled a slot to replace the
displaced resident under Ranking Criterion
Three, Hospital D may receive from the MAC
one permanent slot awarded under Ranking
Criterion Three effective on that date.
Similarly, on July 1, 2019, when the second
displaced resident graduates, and Hospital
D’s temporary cap adjustment goes down to
zero, if Hospital D recruits an additional
resident to replace that second displaced
resident, Hospital D may receive from the
MAC its final permanent slot awarded under
Ranking Criterion Three effective on that
date.
However, if a hospital’s number of
permanent slots awarded under section
5506 Ranking Criterion One or Three is
less than its temporary cap adjustment,
and the hospital is also awarded slots
under Ranking Criteria Four through
Eight, the amount of the section 5506
slots awarded under Ranking Criterion
Four through Eight that is equal to the
remaining portion of the temporary cap
adjustment would become effective the
later of when the hospital can
demonstrate to the MAC that the slots
associated with a new program or
program expansion are actually filled
and, therefore, are needed on the July 1
after the appropriate amount of
displaced residents complete their
training.
After consideration of the public
comments we received, we are
finalizing, as proposed, the policy that
effective for section 5506 application
rounds announced on or after October 1,
2014, the statutory provision at section
5506(d) requiring the Secretary when
awarding slots under section 5506 to
consider any temporary cap adjustment
to a hospital’s FTE cap under
§ 413.79(h) to ensure no duplication of
FTE slots, be interpreted in a manner
such that the requirement for ‘‘no
duplication of FTE slots’’ is applied on
a hospital-specific basis rather than
across all hospitals receiving temporary
cap adjustments under § 413.79(h).
Consistent with this change, we are
finalizing our proposal to amend the
effective date for slots received under
Ranking Criteria Four through Eight so
that if a hospital is not receiving a
temporary cap adjustment under
§ 413.79(h), the slots awarded under
section 5506 would be effective when
the hospital can demonstrate to its MAC
that the slots needed for a new program
or program expansion are actually filled
and, therefore, are needed as of a
particular date (usually July 1, possibly
retroactive). However, if a hospital is
receiving a temporary cap adjustment
under § 413.79(h), we would consider
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the number of displaced residents in
determining the effective date of the
slots awarded under section 5506 such
that as long as a hospital continues to
receive a temporary cap adjustment
under § 413.79(h) for residents
displaced from a specific closed
hospital, that hospital’s section 5506
award under Ranking Criteria Four
through Eight associated with that
specific closed hospital would also not
be fully effective. When determining the
effective date of section 5506 FTE cap
slots awarded under Ranking Criteria
Four through Eight for a given round of
section 5506 from a given closed
hospital, the hospital receiving the
section 5506 slots would consider (1)
whether it has a temporary cap
adjustment associated with residents
displaced from the closed hospital
associated with that round of section
5506, and (2) the difference (if any)
between its section 5506 FTE cap slot
award from that closed hospital, and the
temporary cap adjustment associated
with the same closed hospital. If a
hospital is receiving a temporary cap
adjustment for training displaced
residents and its section 5506 award is
less than or equal to the temporary cap
adjustment, the section 5506 slots
would become effective the later of
when the hospital can demonstrate to
the MAC that the slots associated with
a new program or program expansion
are actually filled and, therefore, are
needed or the July 1 after displaced
residents complete their training. If a
hospital is receiving a temporary cap
adjustment for training displaced
residents, and its section 5506 award is
greater than the temporary cap
adjustment, the number of slots by
which the section 5506 award exceeds
the temporary cap adjustment would be
available for use when the hospital can
demonstrate to its MAC that the slots
associated with the new program or
program expansion are filled and,
therefore, are needed as of a particular
date (usually July 1, possibly
retroactive). The effective dates for those
slots in excess of the hospital’s section
5506 award in a given round would not
depend on whether a displaced resident
has completed his/her training.
However, the portion of the hospital’s
section 5506 award that is equal to or
less than its temporary cap adjustment
for displaced residents associated with
the closed hospital from the same round
would continue to be subject the ‘‘no
duplication of FTE slots’’ requirement,
and the section 5506 slots would
become available only as an equivalent
amount of temporary cap adjustment
expires.
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We did not propose any changes to
the effective date for slots awarded
under Ranking Criterion One, Ranking
Criterion Two, or Ranking Criterion
Three. Consistent with existing policy,
if a hospital is applying under Ranking
Criterion One or Ranking Criterion
Three and is not receiving a temporary
cap adjustment for training displaced
residents under § 413.79(h), the effective
date of the section 5506 slots is the date
of the hospital closure. If a hospital is
applying under Ranking Criterion One
or Ranking Criterion Three and is
receiving a temporary cap for training
displaced residents under § 413.79(h),
the effective date of the section 5506
slots is after the displaced resident(s)
graduate. If a hospital is receiving a
temporary cap for training displaced
residents under § 413.79(h), and is
applying under Ranking Criterion One
or Ranking Criterion Three and is also
separately applying under Ranking
Criterion Four or subsequent Ranking
Criteria, for slots awarded under
Ranking Criteria One or Three, the
effective date of the section 5506 slots
is after the displaced resident(s)
graduate. For slots awarded under
Ranking Criteria Four or subsequent
Ranking Criteria, the slots are awarded
the later of when a hospital can
demonstrate to the MAC that the slots
associated with a new program or
program expansion are actually filled
and, therefore, are needed as of a
particular date (usually July 1, possibly
retroactive), or the July 1 after an
equivalent amount of a displaced FTE
resident(s) at the hospital complete their
training. Therefore, for such a hospital,
the effective dates of slots awarded
under Ranking Criteria One/Three, and
Ranking Criteria Four through Eight
might coincide. Also, consistent with
existing policy, if a hospital is applying
under Ranking Criterion Two, the
effective date of the permanent award of
section 5506 slots is the date of the
hospital closure. We discuss these
existing policies in greater detail in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53437 through 53445).
b. Removal of Seamless Requirement
Under current policy, if a hospital is
applying under Ranking Criterion One
or Three, the hospital must show that it
is seamlessly replacing displaced FTE
residents with new FTE residents once
the displaced residents graduate (75 FR
72219 and 72221 through 72222). We
have stated that in instances where a
hospital seamlessly operates an entire
program or part of a program from the
closed hospital (or takes over an entire
program prior to the hospital’s closure),
such a hospital is demonstrating a
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strong commitment to maintain GME
programs in the community for the long
term and should be awarded slots under
higher ranking criteria (75 FR 72216).
Therefore, we required that, in order to
receive slots under Ranking Criterion
One and Three, the applying hospital
must demonstrate that upon graduation
of the displaced FTE residents that it is
training, the slots held by those
displaced FTEs are seamlessly replaced
with new FTE residents (75 FR 72219
and 72221 through 72222). In the FY
2013 IPPS/LTCH PPS final rule (77 FR
53441), in response to concerns
associated with the seamless
requirement and timeline used by the
National Resident Match Program and
other resident match services, we
revised the seamless requirement. We
stated that, in the instance where a
teaching hospital closed after December
31 of an academic year, in order for a
hospital to qualify under Ranking
Criterion One or Three for cap slots
associated with displaced FTE residents
who will graduate June 30 of the
academic year in which the applying
hospital took in the displaced FTE
residents, the applying hospital must be
able to demonstrate that it will fill slots
vacated by displaced FTE residents by
July 1 of the second academic year
following the hospital closure. However,
in the instance where a teaching
hospital closed before December 31 of
an academic year, in order for a hospital
to qualify under Ranking Criterion One
or Three for cap slots associated with
displaced FTE residents who will
graduate June 30 of the academic year
in which the applying hospital took in
the displaced FTE residents, the
applying hospital must be able to
demonstrate that it will seamlessly fill
slots vacated by displaced FTE residents
by that July 1; that is, the day
immediately after the June 30 that the
displaced FTE residents graduate (77 FR
53441 through 53442). We also revised
the CMS Application Form to instruct a
hospital applying under Ranking
Criterion One or Three to list the names
and graduation dates of specific
displaced residents who, upon their
graduation, have been or will be
seamlessly replaced by new residents
(77 FR 53446). Because Ranking Criteria
One and Three fall under Demonstrated
Likelihood Criterion 2, the hospital is
taking over all of part of an existing
residency program from the closed
hospital, or expanding an existing
residency training program, the
requirement to include a list with the
names and graduation dates of specific
displaced residents who have been or
will be seamlessly replaced was added
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under Demonstrated Likelihood
Criterion 2 on the CMS Application
Form.
In addition to the match deadlines
associated with the National Resident
Matching Program and match deadlines
associated with matching into
osteopathic programs, we have recently
been made aware of other match
deadlines associated with certain
fellowship programs. From the
experience we have had so far in
reviewing section 5506 applications,
where we have observed the complexity
of tracking various match deadlines as
well as the intersection between these
deadlines and when the section 5506
awards are announced by CMS, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28158), we proposed to remove
the seamless requirement for slots
awarded under Ranking Criterion One
and Three effective for section 5506
application rounds announced on or
after October 1, 2014. We did not
propose to make any other additional
changes to Ranking Criterion One or
Three; that is, the hospital must still be
training displaced residents and must
either take over or have taken over an
entire program from the closed hospital
and continue operating that program in
the same manner in which it was
operated by the closed hospital or the
hospital must take over part of a closed
hospital’s program and permanently
expand its own program as a result of
training displaced residents. Hospitals
would continue to be required to submit
supporting documentation when
applying under Ranking Criterion One
or Three that indicates that they have
made a commitment to take over the
closed hospital’s program or that they
have made the commitment to
permanently expand their own
residency training program resulting
from taking over part of a closed
hospital’s program.
In determining the effective date of
slots awarded under Ranking Criterion
One or Three where the hospital has
been training residents that were
displaced by the closed hospital and
receiving a temporary cap adjustment
under § 413.79(h), the hospital would
work with its MAC to determine when
it could be permanently awarded the
slots based on the graduation dates of
the displaced residents it is training.
Consistent with our proposal, we
proposed to remove the following
requirement under Demonstrated
Likelihood Criterion 2 on the CMS
Application Form: ‘‘Hospitals applying
for slots under option (a) which
correlates to Ranking Criterion 1 or (b)
which correlates to Ranking Criterion 3
must list the names and graduation
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dates of specific displaced residents
who, upon their graduation, have been
or will be seamlessly replaced by new
residents. The list may be added as an
attachment to this application.’’ We
proposed to replace this requirement
with the following requirement under
Demonstrated Likelihood Criteria 1 and
2’’ ‘‘Please indicate Y or N: As of the
time of submitting this application, are
you receiving a temporary cap
adjustment for IME and/or direct GME
under 42 CFR 413.79(h) for residents
displaced by the closure of the hospital
subject to this Round of section 5506?
(Y/N)’’ so that we are aware which
hospitals are receiving temporary cap
adjustments for training displaced
residents under § 413.79(h), and when
we award slots, we would know which
hospitals to instruct to work with their
MACs to determine when the slots
could be permanently awarded to them
based on the graduation dates of the
displaced residents they are training.
In summary, we proposed to remove
the seamless requirement currently
included as part of Ranking Criterion
One or Three. We also proposed to
remove from the CMS Application
Form, the following requirement:
‘‘Hospitals applying for slots under
option a) which correlates to Ranking
Criterion 1 or b) which correlates to
Ranking Criterion 3 must list the names
and graduation dates of specific
displaced residents who, upon their
graduation, have been or will be
seamlessly replaced by new residents.
This list may be added as an attachment
to this application.’’
Comment: Commenters supported the
proposal to remove the seamless
requirement for slots awarded under
Ranking Criteria One and Three
effective for section 5506 application
rounds announced on or after October 1,
2014. One commenter stated that, in
addition to complicating the CMS
review process of section 5506
applications, the seamless requirement
created an administrative burden for
hospitals applying under Ranking
Criteria One and Three. Another
commenter stated it supported removing
the seamless requirement because it has
become very complicated and
burdensome for hospitals that
legitimately plan to continue training
residents in a program once the
displaced residents training in that
program graduate. However,
commenters requested that CMS
‘‘provide clear and consistent guidance’’
to explain the type of documentation
that would meet the requirement that a
hospital has made a commitment to take
over the closed hospital’s program or
has made the commitment to
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permanently expand their own
residency training program resulting
from taking over part of a closed
hospital’s program.
Response: We thank the commenters
for their support of our proposed policy
to remove the seamless requirement
under Ranking Criteria One and Three.
We are finalizing the policy as
proposed. Effective for section 5506
rounds announced on or after October 1,
2014, we are removing the seamless
requirement previously required as part
of Ranking Criterion One and Three. We
are removing from the CMS Application
Form the following language: ‘‘Hospitals
applying for slots under option a) which
correlates to Ranking Criterion 1 or b)
which correlates to Ranking Criterion 3
must list the names and graduation
dates of specific displaced residents
who, upon their graduation, have been
or will be seamlessly replaced by new
residents. This list may be added as an
attachment to this application.’’ We are
adding to the CMS Application Form
the following language under
Demonstrated Likelihood Criteria 1 and
2 ‘‘Please indicate Y or N: As of the time
of submitting this application, are you
receiving a temporary cap adjustment
for IME and/or direct GME under 42
CFR 413.79(h) for residents displaced by
the closure of the hospital subject to this
Round of section 5506? (Y/N).’’
In response to the commenters’
request that CMS ‘‘provide clear and
consistent guidance’’ to explain the type
of documentation that would meet the
requirement under Ranking Criterion
One or Three, commenters should
submit documentation as part of their
application which indicates a
commitment to take over the closed
hospital’s program or permanently
expand their own residency training
program resulting from taking over part
of a closed hospital’s program. We
believe that the documentation that the
hospital submits to demonstrate the
likelihood that it would fill the
requested slots under Demonstrated
Likelihood Criterion 2 is sufficient.
Demonstrated Likelihood Criterion 2 is
for taking over all or part of an existing
residency program from the closed
hospital, or expanding an existing
residency program. Applicants should
refer to the description of
documentation included on the CMS
Application Form under ‘‘Demonstrated
Likelihood Criterion 2: Taking Over All
or Part of an Existing Residency
Program from the Closed Hospital, or
Expanding an Existing Residency
Program,’’ for examples of acceptable
documentation. For example, if a
hospital is applying under Ranking
Criterion Three because it is
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permanently expanding its surgery
program as a result of training residents
displaced from a closed hospital’s
surgery program and it has submitted
documentation to the accrediting body
requesting approval of additional
positions, or it has already received
approval from the accrediting body for
the expansion, such documentation
would meet the requirement that a
hospital applying under Ranking
Criterion Three has made the
commitment to permanently expand its
own surgery program as a result of
training displaced residents.
c. Revisions to Ranking Criteria One,
Seven, and Eight for Applications under
Section 5506
In the November 24, 2010 final rule
with comment period (75 FR 72223), we
finalized the Ranking Criteria within
each of the three first statutory priority
categories (that is, same or contiguous
CBSAs, same State, and same region) to
be used to rank applications for
assignment of slots under section 5506
of the Affordable Care Act. For each
application, we assigned slots based on
Ranking Criteria, with Ranking Criterion
One being the highest ranking and
Ranking Criterion Seven being the
lowest. For a detailed discussion of the
ranking categories, we refer readers to
the November 24, 2010 final rule with
comment period (75 FR 72212 through
72240).
After reviewing applications
submitted during the first section 5506
application process (those applications
that were due to CMS on April 1, 2011),
we observed that the overwhelming
majority of applications fell under
Ranking Criterion Seven; that is, the
applying hospital seeks the slots for
purposes that do not fit into any of
Ranking Criterion One through Ranking
Criterion Six. These applications
included applications from hospitals
that applied for FTE cap slots for both
primary care and/or general surgery and
for nonprimary care specialties as well
as applications for general cap relief.
The sheer number of applications we
received under Ranking Criterion Seven
indicated a need to further prioritize
among the applicants that would have
qualified under Ranking Criterion
Seven. Therefore, in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53434
through 53437), we finalized changes to
the Ranking Criteria, replacing Ranking
Criterion Seven with two separate
Ranking Criteria (Ranking Criterion
Seven and Ranking Criterion Eight)
resulting in a total of eight Ranking
Criteria. Under the Ranking Criteria, as
modified by the FY 2013 IPPS/LTCH
PPS final rule, a hospital that is
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applying both for the purpose of
establishing or expanding primary care
or general surgery programs, and in
addition is requesting slots for the
purpose of establishing or expanding
nonprimary care or nongeneral surgery
programs and/or for cap relief must
submit an application requesting
additional FTE slots for its primary care
or general surgery programs under
Ranking Criterion Seven. The hospital’s
request for additional FTE slots to
establish or expand a nonprimary care
or nongeneral surgery program and/or
for additional FTE slots for cap relief
would then be made under Ranking
Criterion Eight. Prior to this change, if
a hospital applied for additional FTE
slots to establish or expand both a
primary care or general surgery program
in addition to a nonprimary care or
nongeneral surgery program and/or for
additional FTE slots for cap relief, all of
its applications (with the exception of
Ranking Criteria One through Three)
would fall under Ranking Criteria
Seven. For a complete list of the
Ranking Criteria, we refer readers to
section IV.K.5.a. of the preamble of this
final rule, which discusses the
background for preservation of resident
cap positions from closed hospitals
under section 5506 of the Affordable
Care Act.
After reviewing applications and
making awards under several more
rounds of section 5506 applications, we
have observed that, as hospital closings
continue to occur, there has been a
significant increase in the time between
a hospital’s closure and the
announcement of section 5506 awards
by CMS. We believe that this delay is
partly due to the administratively
burdensome task of processing,
reviewing, and responding to such a
large number of applications for each
hospital closure, or each round of
section 5506 awards. When
implementing section 5506 in the
November 24, 2010 final rule with
comment period (75 FR 72212 through
72249), we initially envisioned the
reviewing of applications and awarding
of section 5506 FTE slots as being a
more streamlined and expedient
process. However, as a practical matter,
we have found that the process has been
much more resource and time intensive
than we had originally anticipated. This
is partly due to the time and resources
needed to properly apply the process
established by CMS in reviewing section
5506 applications and awarding FTE
cap slots. Since the initial
implementation of section 5506, we
have attempted to be responsive to these
unexpected delays by refining the
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50129
ranking criteria to make the review
process less administratively
burdensome. However, these changes
did not alleviate the process to the
desired extent. Furthermore, we have
observed that, while many of the
applications submitted to CMS are
applications requesting FTE slots for
purposes of general cap relief, we have
more often than not awarded no slots at
all for cap relief. This is due in large
part to the limited number of slots
available (many of the closed teaching
hospitals did not have large FTE
resident caps) and an overwhelming
demand for those slots from applicants
who apply for FTE slots for reasons
other than cap relief. Since we finalized
the modified Ranking Criterion Seven
and added Ranking Criterion Eight in
the FY 2013 IPPS/LTCH PPS final rule,
and as of the issuance of the FY 2015
IPPS/LTCH PPS proposed rule, we had
announced three new rounds of section
5506 applications due to the closures of
six hospitals. We have received a total
of 424 applications from hospitals
seeking cap relief. Of those 424
applications, only 6 applications were
ultimately awarded FTE slots, which is
only 1.42 percent of the total cap relief
applications. We believe that the ratio of
cap relief awardees to cap relief
applications does not warrant the
administrative burden and the delay in
announcements of section 5506 awards
that result from the large number of cap
relief applications submitted to CMS
that are invariably denied. Therefore, in
an effort to streamline the review
process and to facilitate publishing
section 5506 awards in a more timely
manner, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28159 through
28160), we proposed to modify Ranking
Criterion Eight so that Ranking Criterion
Eight would only apply to hospitals
seeking FTE slots to establish or expand
a nonprimary care or nongeneral surgery
program. Ranking Criterion Eight would
no longer be applicable to hospitals
seeking FTE cap slots for cap relief. Our
proposal to eliminate section 5506
awards of FTE slots for cap relief is
consistent with current policy goals to
increase training in primary care and
general surgery. By proposing to
eliminate awarding of FTE slots for
residents that are already being trained
by a hospital, there will be more FTE
resident slots available to award to other
hospitals seeking to establish or expand
a primary care or general surgery
program under Ranking Criteria Four
through Seven.
Accordingly, we proposed to revise
Ranking Criterion Eight so that it reads
as follows:
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Proposed Ranking Criterion Eight:
The program does not meet Ranking
Criteria 1 through 7, and the applying
hospital will use additional slots to
establish or expand a nonprimary care
or a nongeneral surgery program. In
light of the modifications we proposed
to Ranking Criterion Eight, we believe it
is also necessary to modify the language
of proposed Ranking Criterion Seven to
specify the types of applications that
would properly be made under this
Ranking Criterion; that is, we proposed
to remove the reference to cap relief
from Ranking Criterion Seven so that it
read as follows:
Proposed Ranking Criterion Seven:
The applying hospital will use
additional slots to establish or expand a
primary care or general surgery
program, but the program does not meet
Ranking Criterion 5 or 6 because the
hospital is also separately applying
under Ranking Criterion 8 for slots to
establish or expand a nonprimary care
or nongeneral surgery program.
Comment: One commenter supported
CMS’ proposal to eliminate awarding of
FTE slots for cap relief because doing so
would increase the chance for a rural
hospital that is located near very few
teaching hospitals in the same or
contiguous CBSA to apply under Level
Priority Category One, to be awarded
slots from a closed teaching hospital in
the same state or region. One
commenter supported the proposal
because it would make more FTE
resident slots available to award to other
hospitals seeking to establish or expand
a primary care or general surgery
program.
Many commenters opposed CMS’
proposal to eliminate awarding of FTE
slots for cap relief. They asserted that
hospitals are, in fact, being awarded
slots under Ranking Criterion Eight for
cap relief, albeit sparingly, and therefore
CMS should not remove hospitals’ one
and only opportunity to receive funding
for training residents above their caps.
Several commenters offered suggestions
and alternate ways to modify Ranking
Criterion Eight in order to ease CMS’
administrative burden. One commenter
noted that under section 5506, the only
requirement that Congress mandated
was that hospitals need to demonstrate
the likelihood of filling the slots within
3 years, and that hospitals applying for
cap relief meet this requirement.
Response: We appreciate the
commenters’ support and the numerous
comments and suggestions regarding the
awarding of FTE slots under section
5506 for cap relief. One of the objectives
behind our proposal to eliminate
awarding of slots for cap relief was to
find a way to reduce the number of
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applications submitted to CMS, most of
which are not approved for awards due
to the limited number of slots available
for redistribution. By eliminating the
possibility of applying for cap relief, the
volume of applications that CMS would
receive, process, and review would be
reduced, allowing CMS to award slots in
a more timely fashion.
While we appreciate that hospitals are
training residents above their caps and
that being awarded section 5506 slots
for general cap relief would be a
welcome opportunity to receive some
funding for these positions, we believe
that general cap relief is inconsistent
with the intent of section 5506 and
incompatible with the underlying
principles of section 5506. We continue
to believe that Congress intended that
section 5506 be used to maintain the
level of residents training in the area
after the closure of a hospital by
awarding permanent FTE cap slots to
the hospital that take in and continue to
train displaced residents from the
closed hospital. In addition, the
regulations promulgated under section
5506 are consistent with current policy
goals to focus on increasing training in
primary care and general surgery. By
eliminating cap relief for residents that
are already being trained by a hospital,
more slots would be available to award
to other hospitals in the same State as
the closed hospital seeking to establish
or expand a primary care or general
surgery program. Moreover, we believe
awarding slots for cap relief is contrary
to the historical premise of Medicare
GME payments, as it allows hospitals to
shift costs borne by other means to the
Medicare Trust Fund. Furthermore, we
continue to believe that Congress did
not intend for section 5506 awards to be
used to pay hospitals for residents that
they were already training, possibly
even before the closure of the hospital
whose slots are being redistributed.
For the reasons mentioned above,
coupled with our efforts to streamline
the review process and facilitate
publishing section 5506 awards in a
more timely manner, we are finalizing
our proposal to modify Ranking
Criterion Eight so that Ranking Criterion
Eight would only apply to hospitals
seeking FTE slots to establish or expand
a nonprimary care or nongeneral surgery
program, and would no longer be
applicable to hospitals seeking cap slots
for cap relief. In light of the
modifications to Ranking Criterion
Eight, we also are finalizing our
proposed change to Ranking Criteria
Seven to correctly specify the types of
applications that would properly be
made under this Ranking Criterion by
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removing the reference to cap relief
from Ranking Criterion Seven.
Accordingly, we are finalizing
Ranking Criterion Seven and Ranking
Criterion Eight as follows:
Ranking Criterion Seven: The
applying hospital will use additional
slots to establish or expand a primary
care or general surgery program, but the
program does not meet Ranking
Criterion 5 or 6 because the hospital is
also separately applying under Ranking
Criterion 8 for slots to establish or
expand a nonprimary care or
nongeneral surgery program.
Ranking Criterion Eight: The program
does not meet Ranking Criteria 1
through 7, and the applying hospital
will use additional slots to establish or
expand a nonprimary care or a
nongeneral surgery program.
We are making changes to the Section
5506 Application Form to remove
language associated with cap relief,
including removal of the existing
Demonstrated Likelihood Criterin 3,
which was for cap relief.
Separately, we also proposed a change
related to Ranking Criterion One.
Current ranking Criterion One is for an
applying hospital that assumed an
entire program or programs from the
hospital that closed. We proposed to
revise Ranking Criterion One to provide
priority to hospitals in one scenario.
Section 5503 of the Affordable Care Act
amended section 1886(h) of the Act by
adding new paragraph (8), which
provided for the permanent reduction
and distribution of residency slots.
Section 1886(h)(8)(A)(ii) of the Act
provides specific exceptions to the
application of the reduction at section
1886(h)(8)(A)(i) of the Act, and
expressly states: ‘‘Exceptions—This
subparagraph shall not apply to (I) a
hospital located in a rural area (as
defined in subsection (d)(2)(D)(ii)) with
fewer than 250 acute care inpatient
beds.’’ The November 24, 2010 final rule
with comment period (75 FR 72147)
describes the agency’s interpretation of
this statutory provision. As of the time
that the proposed rule was posted on
the CMS Web site, we were aware of one
instance in which CMS erroneously
reduced a hospital’s FTE resident cap
contrary to this statutory exception. We
proposed to amend Ranking Criterion
One under section 5506 to provide
priority to a hospital which had FTE
resident cap slots erroneously removed
under section 5503 contrary to the
statutory exception at section
1886(h)(8)(A)(ii)(I) of the Act. We
proposed to revise Ranking Criterion
One as follows:
b Ranking Criterion One. The
applying hospital is requesting the
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increase in its FTE resident cap(s)
because it is assuming (or assumed) an
entire program (or programs) from the
hospital that closed, and the applying
hospital is continuing to operate the
program(s) exactly as it had been
operated by the hospital that closed
(that is, same residents, possibly the
same program director, and possibly the
same (or many of the same) teaching
staff). The applying hospital’s FTE
resident caps were erroneously reduced
by CMS under section 1886(h)(8)(A)(i) of
the Act, contrary to the statutory
exception at section 1886(h)(8)(A)(ii)(I)
of the Act, and CMS Central Office was
made aware of the error prior to posting
of the FY 2015 IPPS proposed rule on
the CMS Web site.
Comment: One commenter asked that
CMS clarify that this modification to
Ranking Criterion One does not override
the statutory priority of the categories
included in the text of section 5506. The
commenter suggested that CMS clarify
this by indicating that the applying
hospitals located within or contiguous
to the same CBSA as the closed hospital
would be eligible to receive cap slots,
regardless of their ranking criteria before
an applying hospital that meets the new
second clause included within Ranking
Criterion One but is not located within
the same or contiguous CBSA as the
closed hospital.
Response: We are clarifying, as the
commenter requested, that the applying
hospitals located within or contiguous
to the same CBSA as the closed hospital
would be eligible to receive cap slots,
regardless of their ranking criteria,
before an applying hospital that meets
the new second clause included within
Ranking Criterion One but is not located
within the same or contiguous CBSA as
the closed hospital.
Comment: One commenter expressed
concern that the proposed change to
Ranking Criterion One does not ensure
that a hospital that is located more than
70 miles from any other medical
education program, and whose FTE
resident caps were erroneously reduced
by CMS under section 1886(h)(8)(A)(i)
of the Act, can regain its lost slots when
a teaching hospital closes in another
part of its State. The commenter noted
that CMS must follow the statutory
categories in distributing slots under
section 5506, and that, generally, the
number of slots requested under the first
priority category (same or contiguous
CBSA as the closed hospital) far exceeds
the number of slots available from the
closed hospital, leaving no slots
available for hospitals in the second or
other priority category levels. The
commenter cautioned that unless CMS
takes steps to ensure that slots are
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awarded not only to hospitals in the
first priority category, but also to
hospitals in the second (same state) or
third (same region) priority categories,
the proposed change to Ranking
Criterion One will not help a hospital
that is located more than 70 miles from
the nearest medical education program.
The commenter stated that ‘‘CMS has
several options in the FY 2015 IPPS
final rule to ensure that hospitals
located in the same State, and not just
the same or contiguous CBSA as the
closed hospital, have an opportunity to
add new resident slots under section
5506.’’ The commenter made the
following recommendations for CMS to
finalize:
(1) In addition to finalizing the
proposal to eliminate cap relief from
Ranking Criterion Eight, CMS could
further revise Ranking Criteria Seven
and Eight so that even fewer hospitals
located in the same or contiguous CBSA
can satisfy either criterion. CMS could
further narrow its Demonstrated
Likelihood Criteria to achieve the same
result.
(2) CMS could construe the language
at section 1886(h)(4)(H)(vi)(II) of the Act
to require the agency to follow the
statutory priority categories, but to do so
in a manner that at least some slots are
awarded to hospitals within each of the
first three priority categories, such as
making a large proportion of slots
available for the first priority category,
and then successively smaller
proportions of the slots available for the
second and third priority categories.
(3) CMS could balance the competing
statutory importance expressed within
the statutory priority categories with the
need to maintain and grow primary care
residency programs in rural and
underserved areas and maintain an
adequate distribution of physicians, in
general. CMS could conclude that one
way to recognize this balance is to
ensure that a hospital that had less than
250 beds and that was located in a rural
area and had its FTE resident cap
erroneously reduced by CMS would be
awarded some of those slots after
another teaching hospital in its State
closes, even if the closed hospital is not
located in the same or contiguous CBSA
as such a hospital.
(4) CMS could conclude that section
1886(h)(4)(H)(vi)(II) of the Act did not
contemplate the exact scenario where a
hospital’s FTE resident caps were
erroneously reduced by CMS under
section 1886(h)(8)(A)(i) of the Act, and
that the hospital’s remote location
means it almost certainly will never be
in the first priority level category.
Response: We regret that the
commenter believes that CMS’ proposed
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50131
revision to Ranking Criterion One is not
sufficient to rectify the scenario where
a hospital’s FTE resident caps were
erroneously reduced by CMS under
section 1886(h)(8)(A)(i) of the Act. We
do not agree with the commenter’s
options because each of the options that
the commenter recommended would
have an impact on other hospitals and
stakeholders with an interest in how
CMS implements section 5506. That is,
the commenter’s suggestions could
potentially reduce the amount of slots
available to other stakeholders.
Moreover, accepting any such suggested
options would require notice-andcomment rulemaking on each
recommendation, respectively. We
continue to believe that it is appropriate
to provide priority to a hospital which
had FTE resident cap slots erroneously
removed under section 5503 contrary to
the statutory exception at section
1886(h)(8)(A)(ii)(I) of the Act, and for
which CMS CentralOffice was made
aware of the error prior to posting of the
FY 2015 IPPS/LTCH PPS proposed rule
on the CMS Web site. Therefore, we are
finalizing this policy, as proposed, in
this final rule.
Comment: One commenter stated that
the proposed language revising Ranking
Criterion One could lead one to believe
that a hospital must satisfy both
conditions to qualify under this
criterion. To clarify that this is not the
case, the commenter recommended that
CMS modify the language within
Ranking Criterion One by adding an
‘‘or’’ as follows:
Ranking Criterion One. The applying
hospital is requesting the increase in its
FTE resident cap(s) because it is
assuming (or assumed) an entire
program (or programs) from the hospital
that closed, and the applying hospital is
continuing to operate the program(s)
exactly as it had been operated by the
hospital that closed (that is, same
residents, possibly the same program
director, and possibly the same (or
many of the same) teaching staff); or,
the applying hospital’s FTE resident
caps were erroneously reduced by CMS
under section 1886(h)(8)(A)(i) of the
Act, contrary to the statutory exception
at section 1886(h)(8)(A)(ii)(I) of the Act,
and CMS Central Office was made
aware of the error prior to posting of the
FY 2015 IPPS/LTCH PPS proposed rule
on the CMS Web site.
Response: We agree with the
commenter that the conditions in the
revised Ranking Criterion One are
separate and distinct, and a hospital
applying for slots under Ranking
Criterion One would need to satisfy
only one of the requirements, not both.
Therefore, we are adopting the
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commenter’s suggestion of adding ‘‘or’’
between the two conditions, and we are
modifying the language of Ranking
Criterion One in the CMS Application
Form as well.
After consideration of the public
comments we received, we are
finalizing the following change to the
text of Ranking Criterion One:
Ranking Criterion One. The applying
hospital is requesting the increase in its
FTE resident cap(s) because it is
assuming (or assumed) an entire
program (or programs) from the hospital
that closed, and the applying hospital is
continuing to operate the program(s)
exactly as it had been operated by the
hospital that closed (that is, same
residents, possibly the same program
director, and possibly the same (or
many of the same) teaching staff); OR,
the applying hospital’s FTE resident
caps were erroneously reduced by CMS
under section 1886(h)(8)(A)(i) of the
Act, contrary to the statutory exception
at section 1886(h)(8)(A)(ii)(I) of the Act,
and CMS Central Office was made
aware of the error prior to posting of the
FY 2015 IPPS proposed rule on the CMS
Web site.
d. Clarification to Ranking Criterion
Two Regarding Emergency Medicare
GME Affiliation Agreements
Ranking Criterion Two gives
preference to applying hospitals that
received slots under the terms of a
Medicare GME affiliation agreement
from the closed hospital. Under section
1886(h)(4)(H)(ii) of the Act, hospitals
may form a Medicare GME affiliated
group and elect to aggregate their
respective FTE resident caps and apply
them on an aggregate basis. The
regulations at 42 CFR 413.75(b) and
413.79(f) implemented this statutory
provision, providing specific rules for
sharing FTE resident cap slots among
members of the Medicare GME affiliated
group, one such rule being that member
hospitals must have a ‘‘shared rotational
arrangement.’’ A ‘‘shared rotational
arrangement’’ is defined at 42 CFR
413.75(b) as a residency training
program under which a resident(s)
participates in training at two or more
hospitals in that program. Specifically,
Ranking Criterion Two states the
following:
Ranking Criterion Two. The applying
hospital was listed as a participant of a
Medicare GME affiliated group on the
most recent Medicare GME affiliation
agreement of which the closed hospital
was a member before the hospital
closed, and under the terms of that
Medicare GME affiliation agreement, the
applying hospital received slots from
the hospital that closed, and the
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applying hospital will use the additional
slots to continue to train at least the
number of FTE residents it had trained
under the terms of the Medicare GME
affiliation agreement. If the most recent
Medicare GME affiliation agreement of
which the closed hospital was a member
before the hospital closed was with a
hospital that itself has closed or is
closing, preference would be given to an
applying hospital that was listed as a
participant in the next most recent
Medicare GME affiliation agreement
(but not one which was entered into
more than 5 years prior to the hospital’s
closure) of which the first closed
hospital was a member before the
hospital closed, and that applying
hospital received slots from the closed
hospital under the terms of that
affiliation agreement.
A question has been raised as to
whether hospitals that were members of
an emergency Medicare GME affiliation
agreement with the closed hospital prior
to its closure may be considered under
Ranking Criterion Two as well. The
regulations at 42 CFR 413.79(f)(7)
govern emergency Medicare GME
affiliation agreements, which are
applicable in the instance where a
statutory section 1135 waiver is
invoked. In this situation, due to
emergency conditions, the ‘‘home’’
hospital is unable to continue to train its
residents. Therefore, under the terms of
the emergency Medicare GME affiliation
agreement, the ‘‘home’’ hospital may
agree to temporarily transfer FTE
resident cap slots to ‘‘host’’ hospitals
that would train the displaced residents
during the emergency period.
In the November 24, 2010 final rule
with comment period (75 FR 72216), we
stated that ‘‘section 1886(h)(4)(H)(vi) of
the Act, as added by section 5506(a) of
the Affordable Care Act, directs the
Secretary to give preference to hospitals
that are members of the same affiliated
group as the hospital that closed. We
believe that, generally, if the applying
hospital was affiliated to receive slots
from the hospital that closed, then the
applying hospital was relying on that
number of FTE resident slots that it
received in order to maintain its fair
share of the cross-training of the
residents in the jointly operated
programs. In the absence of those slots
received from the closed hospital, the
applying hospital may not be able to
continue training that number of FTE
residents, and those same residents
would not only be displaced from the
closed hospital, but might essentially
become ‘displaced’ from the affiliated
hospitals in which they were used to
doing a portion of their training.
Accordingly, we proposed this ranking
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criterion to allow hospitals that were
affiliated with the closed hospitals to at
least maintain their fair share of the
training of the residents in the programs
that they had jointly operated with the
closed hospital.’’
In determining whether Ranking
Criterion Two may encompass
emergency Medicare GME affiliation
agreements, we considered the key
differences and similarities between
regular Medicare GME affiliation
agreements and emergency Medicare
GME affiliation agreements. Regarding
the differences, in the case of emergency
affiliations, there may not have been
historical cross-training or jointly
operated programs between the
applicant hospital and the hospital that
closed. Furthermore, after the natural
disaster that precipitates the section
1135 waiver, the ‘‘home’’ hospital
would be in no condition to train its
share of residents, which is why the
‘‘shared rotational arrangement’’
requirements at 42 CFR 413.79(f)(2) for
regular Medicare GME affiliation
agreements are waived for emergency
Medicare GME affiliation agreements.
However, it is often true with
emergency affiliations that a hospital
agrees to take over the training of the
hospital in need, ‘‘receiving’’ FTE cap
slots and residents from the ‘‘home’’
hospital, thereby creating the training
relationship. In the event where,
following the disaster that triggers the
section 1135 waiver, a hospital should
actually close, the ‘‘host’’ hospital that
accepted the residents perhaps might
even continue to train its share of the
residents in the program after the
hospital closes. Therefore, emergency
affiliation agreements are similar to
regular affiliation agreements in that the
‘‘host’’ hospital received FTE cap slots
from the ‘‘home’’ hospital to train the
‘‘home’’ hospital’s residents. Further, in
the event that the ‘‘home’’ hospital
closes, triggering a Round of section
5506, the ‘‘host’’ hospital also would
need those FTE cap slots in order to
continue training the share of its
program for which it had taken
responsibility under the emergency
Medicare GME affiliation agreement
before the ‘‘home’’ hospital closed.
As we stated in the November 24,
2010 final rule with comment period (75
FR 72219 through 72220), ‘‘we believe
the intent of section 5506 is to promote
continuity and limit disruption in
residency training. In that light, we
believe it is logical to give preference to
a hospital that received slots under the
terms of the Medicare GME affiliation
agreement so that the hospital could
continue to train at least the number of
FTE residents it had trained under the
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terms of the Medicare GME affiliation
agreement, avoiding the displacement of
even more residents. . . .’’ We further
stated that we ‘‘. . . are only giving
preference to hospitals that received
slots from the closed hospital under the
terms of the Medicare GME affiliation
agreement, so that the hospital could
continue to train at least the number of
FTE residents it had trained under the
terms of the Medicare GME affiliation
agreement. . . .’’ Finally, we stated
‘‘that the hospital or hospitals that were
most recently affiliated with and
received slots from the closed hospital
would have the most immediate need
for those slots.’’
While the circumstances may vary,
we believe that ‘‘host’’ hospitals under
emergency Medicare GME affiliation
agreements could fulfill much of the
same role as hospitals that received slots
from the hospital that closed under
regular Medicare GME affiliation
agreements. That is, continuity of
training would be encouraged and
disruption would be mitigated, to the
extent that the ‘‘host’’ hospital could
document to CMS that it would
continue to ‘‘train at least the number of
FTE residents it had trained under the
terms of the’’ emergency Medicare GME
affiliation agreement, and in doing so,
would demonstrate it has the ‘‘most
immediate need for those slots’’ as
compared to another hospital. Given
these similarities between regular
Medicare GME affiliation agreements
and emergency Medicare GME
affiliation agreements, we believe that
the existing Ranking Criterion Two may
be read to already encompass
emergency Medicare GME affiliation
agreements. Accordingly, we are
clarifying the existing Ranking Criterion
Two to include emergency Medicare
GME affiliation agreements, to read as
follows:
b Ranking Criterion Two. The
applying hospital was listed as a
participant of a Medicare GME affiliated
group on the most recent Medicare GME
affiliation agreement or emergency
Medicare GME affiliation agreement of
which the closed hospital was a member
before the hospital closed, and under
the terms of that Medicare GME
affiliation agreement or emergency
Medicare GME affiliation agreement, the
applying hospital received slots from
the hospital that closed, and the
applying hospital will use the additional
slots to continue to train at least the
number of FTE residents it had trained
under the terms of the Medicare GME
affiliation agreement, or emergency
Medicare GME affiliation agreement. If
the most recent Medicare GME
affiliation agreement or emergency
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Medicare GME affiliation agreement of
which the closed hospital was a member
before the hospital closed was with a
hospital that itself has closed or is
closing, preference would be given to an
applying hospital that was listed as a
participant in the next most recent
Medicare GME affiliation agreement or
emergency Medicare GME affiliation
agreement (but not one which was
entered into more than 5 years prior to
the hospital’s closure) of which the first
closed hospital was a member before the
hospital closed, and that applying
hospital received slots from the closed
hospital under the terms of that
affiliation agreement.
We are making these changes to
Ranking Criterion Two in the Section
5506 Application Form.
Comment: Commenters supported
CMS’ clarification that the existing
Ranking Criterion Two includes
emergency Medicare GME affiliation
agreements.
Response: We thank the commenters
for their support. The revised
description of Ranking Criterion Two on
the CMS Application Form refers to
both Medicare GME affiliation
agreements and emergency Medicare
GME affiliation agreements.
The following list includes the final
ranking criteria along with the final
effective dates.
• Ranking Criterion One: The
applying hospital is requesting the
increase in its FTE resident cap(s)
because it is assuming (or assumed) an
entire program (or programs) from the
hospital that closed, and the applying
hospital is continuing to operate the
program(s) exactly as it had been
operated by the hospital that closed
(that is, same residents, possibly the
same program director, and possibly the
same (or many of the same) teaching
staff); OR, the applying hospital’s FTE
resident caps were erroneously reduced
by CMS under section 1886(h)(8)(A)(i)
of the Act, contrary to the statutory
exception at section 1886(h)(8)(A)(ii)(I)
of the Act, and CMS Central Office was
made aware of the error prior to posting
of the FY 2015 IPPS/LTCH PPS
proposed rule on the CMS Web site.
(This language reflects the finalized
modification of Ranking Criterion One.
We refer readers to section IV.K.5.c. of
the preamble of this final rule where we
discuss this proposed modification.)
• Effective Date: If the hospital is
receiving a temporary cap adjustment,
slots are effective the day after the
graduation date(s) of actual displaced
resident(s). If the hospital is not
receiving a temporary cap adjustment,
slots are effective with the date of the
hospital closure.
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50133
• Clarified Ranking Criterion Two:
The applying hospital was listed as a
participant of a Medicare GME affiliated
group on the most recent Medicare GME
affiliation agreement or emergency
Medicare GME affiliation agreement of
which the closed hospital was a member
before the hospital closed, and under
the terms of that Medicare GME
affiliation agreement or emergency
Medicare GME affiliation agreement, the
applying hospital received slots from
the hospital that closed, and the
applying hospital will use the
additional slots to continue to train at
least the number of FTE residents it had
trained under the terms of the Medicare
GME affiliation agreement, or
emergency Medicare GME affiliation
agreement. If the most recent Medicare
GME affiliation agreement or emergency
Medicare GME affiliation agreement of
which the closed hospital was a member
before the hospital closed was with a
hospital that itself has closed or is
closing, preference would be given to an
applying hospital that was listed as a
participant in the next most recent
Medicare GME affiliation agreement or
emergency Medicare GME affiliation
agreement (but not one which was
entered into more than 5 years prior to
the hospital’s closure) of which the first
closed hospital was a member before the
hospital closed, and that applying
hospital received slots from the closed
hospital under the terms of that
affiliation agreement.
(This language reflects our
clarification in the proposed rule and
this final rule regarding inclusion of
emergency Medicare GME affiliation
agreements in Ranking Criterion Two.
We refer readers to section IV.K.5.d. of
the preamble of this final rule where we
discuss this clarification.)
• Effective Date: Slots are effective
with the date of the hospital closure.
• Ranking Criterion Three: The
applying hospital took in residents
displaced by the closure of the hospital,
but is not assuming an entire program
or programs, and will use the additional
slots to continue training residents in
the same programs as the displaced
residents, even after those displaced
residents complete their training (that
is, the applying hospital is permanently
expanding its own existing programs).
• Effective Date: If the hospital is
receiving temporary cap adjustment,
slots are effective the day after the
graduation date(s) of actual displaced
resident(s). If the hospital is not
receiving a temporary cap adjustment,
slots are effective with the date of the
hospital closure.
• Ranking Criterion Four: The
program does not meet Ranking Criteria
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1, 2, or 3, and the applying hospital will
use additional slots to establish a new
or expand an existing geriatrics
residency program.
• Ranking Criterion Five: The
program does not meet Ranking Criteria
1 through 4, the applying hospital is
located in a HPSA, and will use all the
additional slots to establish or expand a
primary care or general surgery
residency program.
• Ranking Criterion Six: The program
does not meet Ranking Criteria 1
through 5, and the applying hospital is
not located in a HPSA, and will use all
the additional slots to establish or
expand a primary care or general
surgery residency program.
• Ranking Criterion Seven: The
applying hospital will use additional
slots to establish or expand a primary
care or general surgery program, but the
program does not meet Ranking
Criterion 5 or 6 because the hospital is
also separately applying under Ranking
Criterion 8 for slots to establish or
expand a nonprimary care or nongeneral
surgery program.
(This language reflects our proposal in
this proposed rule to revise Ranking
Criteria Seven and Eight. We refer
readers to section IV.K.5.c. of the
preamble of this final rule where we
discuss our proposals and final policies
to amend Ranking Criteria Seven and
Eight.)
• Ranking Criterion Eight: The
program does not meet Ranking Criteria
1 through 7, and the applying hospital
will use additional slots to establish or
expand a nonprimary care or a
nongeneral surgery program.
(This language reflects our proposal in
the proposed rule to revise Ranking
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Criterion Eight. We refer readers to
section IV.K.5.c. of the preamble of this
final rule where we discuss our
proposals and final policies to amend
Ranking Criterion Eight.)
Æ Effective Date Policy for Ranking
Criterion Four through Ranking
Criterion Eight: If the hospital is
receiving a temporary cap adjustment
for training displaced residents and its
section 5506 award is less than or equal
to the temporary cap adjustment, the
section 5506 slots would become
effective the later of when the hospital
can demonstrate to the MAC that the
slots associated with a new program or
program expansion are actually filled,
and therefore, are needed, or the July 1
after displaced residents complete their
training. If the hospital is receiving a
temporary cap adjustment for training
displaced residents and its section 5506
award is greater than the temporary cap
adjustment, the number of slots by
which the section 5506 award exceeds
the temporary cap adjustment would be
available for use when the hospital can
demonstrate to its MAC that the slots
associated with the new program or
program expansion are filled and,
therefore, are needed as of a particular
date (usually July 1, possibly
retroactive). If the hospital is not
receiving a temporary cap adjustment,
slots would become effective when the
hospital can demonstrate to the MAC
that the slots needed for a new program
or program expansion are actually filled
and, therefore, are needed as of a
particular date (usually July 1, possibly
retroactive).
At the end of this GME section, we are
including a revised Section 5506
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Application Form that reflects all of the
final changes discussed above.
Out of Scope GME Comments
We received several comments that
were not related to the GME proposals
in the FY 2015 IPPS/LTCH PPS
proposed rule. Some commenters urged
CMS to be more transparent and provide
data on the effects of the section 5503
and the section 5506 redistributions.
One commenter asked that CMS
consider changing the calculation of the
FTE cap for new teaching hospitals so
that it is based on the final 1-year period
of the 5-year growth window, as
opposed to the entire 5 years. Another
commenter stated that policies to
redirect funding from specialty to
primary care do not take into
consideration the serious consequences
of a potential shortage of specialty
physicians, and that Medicare GME
should fully fund the entire length of
training required for initial board
certification for neurosurgery, which is
6 to 7 years. Several commenters urged
CMS to publish a clear statement that
neither a hospital’s PRA nor its capbuilding window is triggered by the
presence of a small number of residents
performing brief rotations at the
hospital. Another commenter asserted
that second-year pharmacy residencies
should receive Medicare pass-through
reimbursement.
We appreciate these comments.
However, because we did not propose
any changes related to these issues in
the proposed rule, we consider these
comments to be outside the scope of the
proposed rule and are not addressing
these comments at this time.
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50135
CMS Application Form
As Part of the Application for the Increase in a Hospital's FTE Cap(s) under
Section 5506 of the Affordable Care Act: Preservation of FTE Cap Slots from
Teaching Hospitals that Close
Directions: Please fill out the information below for each residency program for
which the applicant hospital intends to use the increase in its FTE cap(s).lfthe
hospital is applying for slots for a particular program, but the requested slots in that
program qualify under two different ranking criteria, submit two separate
application forms accordingly. If the hospital is applying for slots associated with a
Medicare GME affiliation agreement with a hospital that closed, that application
must be submitted separately from an individual program request.
NAME OF H O S P I T A L : - - - - - - - - - - - - - - - - - - MEDICARE PROVIDER NUMBER (CCN): _ _ _ _ _ _ _ _ _ _ __
NAME OF MEDICARE ADMINISTRATIVE
CONTRACTOR: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ___
CORE-BASED STATISTICAL AREA (CBSA in which the hospital is physically
located--write the 5 digit code here): - - - - - - - - - - - - - - - COUNTY NAME (in which the hospital is physically located): _ _ _ _ _ __
Indicate the following, as applicable:
1. Name of Specialty Training Program: _ _ _ _ _ _ _ _ _ _ _ _ _ __
2. Medicare GME Affiliated Group: _ _ _ _ _ _ _ _ _ _ _ _ __
(Check one): o Allopathic Program o Osteopathic Program
NUMBER OF FTE SLOTS REQUESTED FOR SPECIFIC PROGRAM (OR
OVERALL IF SEEKING SLOTS ASSOCIATED WITH A MEDICARE GME
AFFILIATED GROUP) AT YOUR HOSPITAL:
Direct GME:- - - - - - - IME: - - - - - - -
The applicant hospital must provide documentation to demonstrate the likelihood of
filling requested slots under section 5506 within the 3 academic years immediately
following the application deadline to receive slots after a particular hospital closes. Please
indicate the specific use for which you are requesting an increase in your hospital's FTE
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Section A: Demonstrated Likelihood Criteria (DLC) of Filling the FTE Slots
50136
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cap(s). If you are requesting an increase in the hospital's FTE cap(s) for a combination of
DLCl, DLC2, or DLC3, you must complete a separate CMS Application Form for each
DLC and specify the distinct criterion from the list below within each Form.
Demonstrated Likelihood Criterion 1: Establishing a New Residency Program
The hospital does not have sufficient room under its direct GME FTE cap or IME FTE
cap, or both, and will establish a new residency program in the specialty.
Please indicate Y or N: As of the time of submitting this application, are you
receiving a temporary cap adjustment for IME and/or direct GME under 42 CFR
413.79(h) for residents displaced by the closure of the hospital subject to this Round
of section 5506? (YIN) _ _ _ __
The hospital must check at least one of the following:
Application for approval of the new residency program has been submitted to the
ACGME, AOA or the ABMS (The hospital must attach a copy.)
---
___The hospital has submitted an institutional review document or program
information form concerning the new program in an application for approval of the
new program. (The hospital must attach a copy.)
___The hospital has received written correspondence from the ACGME, AOA or
ABMS acknowledging receipt of the application for the new program, or other types
of communication from the accrediting bodies concerning the new program approval
process (such as notification of site visit). (The hospital must attach a copy.)
___The hospital has other documentation demonstrating that it has made a
commitment to start a new program (The hospital must attach a copy.)
Demonstrated Likelihood Criterion 2: Taking Over All or Part ofan Existing Residency
Program from the Closed Hospital, or Expanding an Existing Residency Program
Please indicate Y or N: As of the time of submitting this application, are you
receiving a temporary cap adjustment for IME and/or direct GME under 42 CFR
413.79(h) for residents displaced by the closure of the hospital subject to this Round
of section 5506? (YIN) _ _ _ __
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The hospital does not have sufficient room under its direct GME FTE cap or IME FTE
cap, or both, and (a) has permanently taken over the closed hospital's entire residency
program, or (b) is permanently expanding its own previously established and approved
residency program resulting from taking over part of a residency program from the
closed hospital, or (c) is permanently expanding its own existing residency program.
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
50137
The hospital must check at least one of the following:
_ __:Application for approval to take over the closed hospital's residency program has
been submitted to the ACGME, AOA, or the ABMS, or approval has been received from
the ACGME, AOA, or the ABMS. (The hospital must attach a copy.)
___~Application for approval of an expansion of the number of approved positions in
its residency program resulting from taking over part of a residency program from the
closed hospital has been submitted to the ACGME, AOA or the ABMS, or approval has
been received from the ACGME, AOA, or the ABMS. (The hospital must attach a
copy.)
___.Application for approval of an expansion of the number of approved positions in
its residency program has been submitted to the ACGME, AOA or the ABMS, or
approval has been received from the ACGME, AOA, or the ABMS. (The hospital must
attach a copy.)
___The hospital currently has unfilled positions in its residency program that have
previously been approved by the ACGME, AOA, or the ABMS, and is now seeking to
fill those positions. (The hospital must attach documentation clearly showing its
current number of approved positions, and its current number of filled positions).
___The hospital has submitted an institutional review document or program
information form concerning the program in an application for approval of an expansion
to the program (The hospital must attach a copy).
The hospital was listed as a participant of a Medicare GME affiliated group on the most
recent Medicare GME affiliation agreement or emergency Medicare GME affiliation
agreement of which the closed hospital was a member before the hospital closed, and
under the terms of that Medicare GME affiliation agreement or emergency Medicare
GME affiliation agreement, the applying hospital received slots from the hospital that
closed, and the applying hospital will use the additional slots to continue to train at least
the number of FTE residents it had trained under the terms of the Medicare GME
affiliation agreement or emergency Medicare GME affiliation agreement. If the most
recent Medicare GME affiliation agreement or emergency Medicare GME affiliation
agreement of which the closed hospital was a member before the hospital closed was
with a hospital that itself has closed or is closing, the applying hospital was listed as a
participant in the next most recent Medicare GME affiliation agreement or emergency
Medicare GME affiliation agreement (but not one which was entered into more than 5
years prior to the hospital's closure) of which the first closed hospital was a member
before the hospital closed, and that applying hospital received slots from the closed
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Demonstrated Likelihood Criterion 3: Receiving Slots by Virtue ofMedicare GME Affiliated
Group Agreement or Emergency Medicare GME Affiliated Group Agreement with Closed
Hospital
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hospital under the terms of that affiliation agreement. (Copies of EACH of the following
must be attached.)
Copies of the recent Medicare GME affiliation agreement (or emergency Medicare GME
affiliation agreement) of which the applying hospital and the closed hospital were a
member of before the hospital closed.
For regular Medicare GME affiliation agreements, copies of the most recent accreditation
letters for all of the hospital's training programs in which the hospital had a shared
rotational arrangement (as defined at §413.75(b)) with the closed hospital.
Section B. Level Priority Category
(Place an "X" in the appropriate box that is applicable to the level priority category
that describes the applicant hospital.)
o First, to hospitals located in the same core-based statistical area (CBSA) as, or in
CBSA contiguous to, the hospital that closed.
a
o Second, to hospitals located in the same State as the closed hospital.
o Third, to hospitals located in the same region as the hospital that closed.
o Fourth, if the slots have not yet been fully distributed, to qualifying hospitals in
accordance with the criteria established under section 5503, "Distribution of Additional
Residency Positions"
Section C. Ranking Criteria
(Place an "X" in the box for each criterion that is appropriate for the applicant
hospital and for the program for which the increase in the FTE cap is requested.)
o Ranking Criterion Two. The applying hospital was listed as a participant of a Medicare
GME affiliated group on the most recent Medicare GME affiliation agreement or
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o Ranking Criterion One. The applying hospital is requesting the increase in its FTE
resident cap(s) because it is assuming (or assumed) an entire program (or programs)
from the hospital that closed, and the applying hospital is continuing to operate the
program (s) exactly as it had been operated by the hospital that closed (that is, same
residents, possibly the same program director, and possibly the same (or many of the
same) teaching staff); OR, the applying hospital's FTE resident caps were erroneously
reduced by CMS under section 1886(h)(8)(A)(i) of the Act, contrary to the statutory
exception at section 1886(h)(8)(A)(ii)(I) of the Act, and CMS Central Office was made
aware of the error prior to posting of the FY 2015 IPPS/LTCH PPS proposed rule on the
CMS Web site.
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
50139
emergency Medicare GME affiliation agreement of which the closed hospital was a
member before the hospital closed, and under the terms of that Medicare GME affiliation
agreement or emergency Medicare GME affiliation agreement, the applying hospital
received slots from the hospital that closed, and the applying hospital will use the
additional slots to continue to train at least the number ofFTE residents it had trained
under the terms of the Medicare GME affiliation agreement, or emergency Medicare
GME affiliation agreement. If the most recent Medicare GME affiliation agreement or
emergency Medicare GME affiliation agreement of which the closed hospital was a
member before the hospital closed was with a hospital that itself has closed or is closing,
preference would be given to an applying hospital that was listed as a participant in the
next most recent Medicare GME affiliation agreement or emergency Medicare GME
affiliation agreement (but not one which was entered into more than 5 years prior to the
hospital's closure) of which the first closed hospital was a member before the hospital
closed, and that applying hospital received slots from the closed hospital under the terms
of that affiliation agreement.
o Ranking Criterion Three. The applying hospital took in residents displaced by the
closure of the hospital, but is not assuming an entire program or programs, and will use
the additional slots to continue training residents in the same programs as the displaced
residents, even after those displaced residents complete their training (that is, the
applying hospital is permanently expanding its own existing programs).
o Ranking Criterion Four. The program does not meet Ranking Criteria 1,2, or 3,
and the applying hospital will use additional slots to establish a new or expand an
existing geriatrics residency program.
o Ranking Criterion Five: The program does not meet Ranking Criteria 1 through 4, the
applying hospital is located in a HPSA, and will use all the additional slots to establish or
expand a primary care or general surgery residency program.
o Ranking Criterion Six: The program does not meet Ranking Criteria 1 through 5, and
the applying hospital is not located in a HPSA, and will use all the additional slots to
establish or expand a primary care or general surgery residency program.
o Ranking Criterion Seven: The applying hospital will use additional slots to establish or
expand a primary care or general surgery program, but the program does not meet
Ranking Criterion 5 or 6 because the hospital is also separately applying under Ranking
Criterion 8 for slots to establish or expand a nonprimary care or non-general surgery
program.
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o Ranking Criterion Eight: The program does not meet Ranking Criteria 1 through 7,
and the applying hospital will use additional slots to establish or expand a nonprimary
care or a nongeneral surgery program.
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Application Process and CMS Central Office Mailing Address for
Receiving Increases in FTE Resident Caps
In order for hospitals to be considered for increases in their FTE resident caps, each
qualifying hospital must submit a timely application. The following information must be
submitted on applications to receive an increase in FTE resident caps:
• The name and Medicare provider number, and Medicare administrative contractor (to
which the hospital submits its cost report) of the hospital.
• The total number of requested FTE resident slots for direct GME or IME, or both.
• A completed copy of the CMS Application Form for each residency program for which
the hospital intends to use the requested increase in FTE residents.
• Source documentation to support the assertions made by the hospital on the CMS
Application Form.
• FTE resident counts for direct GME and IME and FTE resident caps for direct GME
and IME reported by the hospital in the most recent as-filed cost report. Include copies of
Worksheets E, Part A, and E-4.
An attestation, signed and dated by an officer or administrator of the hospital who signs
the hospital's Medicare cost report, with the following information:
"I hereby certify that I understand that misrepresentation or falsification of any
information contained in this application may be punishable by criminal, civil, and
administrative action, fine and/or imprisonment under federal law. Furthermore, I
understand that if services identified in this application were provided or procured
through payment directly or indirectly of a kickback or were otherwise illegal, criminal,
civil, and administrative action, fines and/or imprisonment may result. I also certify that,
to the best of my knowledge and belief, it is a true, correct, and complete application
prepared from the books and records of the hospital in accordance with applicable
instructions, except as noted. I further certify that I am familiar with the laws and
regulations regarding Medicare payment to hospitals for the training of interns and
residents."
6. Clarification and Policy Change
Applicable to Direct GME Payments to
Federally Qualified Health Centers
(FQHCs) and Rural Health Clinics
(RHCs) for Training Residents in
Approved Programs
Under section 1886(k) of the Act, and
as implemented in the regulations at 42
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CFR 405.2468(f), federally qualified
health centers (FQHCs) and rural health
clinics (RHCs) may receive payment for
the costs of direct GME for training
residents in an approved program under
certain circumstances. Specifically, the
regulations at § 405.2468(f)(1) state that
effective for that portion of cost
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reporting periods occurring on or after
January 1, 1999, if an RHC or an FQHC
incurs ‘‘all or substantially all’’ of the
costs for the training program in the
nonhospital setting as defined in
§ 413.75(b), the RHC or FQHC may
receive direct graduate medical
education payment for those residents.
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CMS Central Office Mailing Address
Centers for Medicare & Medicaid Services (CMS)
Director, Division of Acute Care
7500 Security Boulevard
Mailstop C4-08-06
Baltimore, MD 21244-1850
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We refer readers to the July 31, 1998
final rule (63 FR 40986) for a detailed
discussion of this longstanding policy.
As noted earlier, the regulatory text of
§ 405.2468(f)(1) incorporates the
definition of ‘‘all or substantially all of
the costs for the training program in a
nonhospital setting’’ that is defined at
§ 413.75(b), as part of a number of
definitions applicable generally to
hospital direct GME payments and those
regulations at § 413.76 through § 413.83.
Section 413.75(b) is based on the
statutory provision at section
1886(h)(4)(E) of the Act, which
establishes the requirements that
hospitals must meet in order to receive
direct GME payment for residents
training in nonprovider settings.
The statutory use of the phrase ‘‘all or
substantially all of the costs for the
training program in that setting’’ is
located in section 1886(h)(4)(E) of the
Act, as added by section 9314 of the
Omnibus Budget Reconciliation Act of
1986 (Pub. L. 99–509) (OBRA ‘86). For
a detailed discussion of the
implementation of section 9314 of
OBRA ‘86, we refer readers to the
September 29, 1989 final rule (54 FR
40292). Section 1886(h)(4)(E) of the Act,
as added by OBRA ’86, established the
requirements that hospitals must meet
in order to receive direct GME payment
for residents training in nonprovider
settings. However, section 5504(a) of the
Affordable Care Act made changes to
section 1886(h)(4)(E) of the Act to
reduce the costs that hospitals must
incur for residents training in
nonprovider sites in order to count the
FTE residents for purposes of direct
GME payments. In making these
changes to section 1886(h)(4)(E) of the
Act, section 5504(a) of the Affordable
Care Act amended the Act
prospectively, effective with ‘‘cost
reporting periods beginning on or after
July 1, 2010’’ for direct GME, by
removing the phrase ‘‘all or
substantially all of the costs for the
training program in that setting’’ and
instead permitting hospitals to count the
time that residents train in activities
related to patient care in a nonprovider
site if the hospital incurs the costs of the
residents’ salaries and fringe benefits for
the time that the resident spends
training in the nonprovider site. In
effect, this amendment reduced the
costs that hospitals must incur for
residents training in nonprovider
settings.
Based on this statutory amendment,
in the November 24, 2010 final rule
with comment period (75 FR 72134), we
revised the regulations at
§ 412.105(f)(1)(ii)(E) for IME and
§§ 413.78(f) and (g) for direct GME to
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reflect the changes made by section
5504(a) of the Affordable Care Act. In
addition, we revised the regulatory
definition of ‘‘all or substantially all of
the costs for the training program in the
nonhospital setting’’ in order to
implement the statutory amendment
and apply the effective date as set forth
in the statute to cost reporting periods
beginning on or after July 1, 2010.
Specifically, the regulations at
§ 413.75(b), which define ‘‘all or
substantially all of the costs for the
training program in the nonhospital
setting’’ were revised to state:
• Effective on or after January 1, 1999
and for cost reporting periods beginning
before July 1, 2007, the residents’
salaries and fringe benefits (including
travel and lodging where applicable)
and the portion of the cost of teaching
physicians’ salaries and fringe benefits
attributable to direct graduate medical
education (GME); and
• Effective for cost reporting periods
beginning on or after July 1, 2007 and
before July 1, 2010, at least 90 percent
of the total of the costs of the residents’
salaries and fringe benefits (including
travel and lodging where applicable)
and the portion of the cost of teaching
physicians’ salaries attributable to
nonpatient care direct GME activities.
Ultimately, with regard to the costs
that hospitals must incur for residents
training in nonprovider sites in order to
count the FTE residents for purposes of
direct GME payments, the phrase ‘‘all or
substantially all of the costs for the
training program in the nonhospital
setting’’ no longer applies, effective for
cost reporting periods beginning on and
after July 1, 2010.
In the November 24, 2010 final rule
with comment period (75 FR 72134), we
amended the regulations applicable to
direct GME payments to hospitals at
§§ 413.75(b) and 413.78(g) to reflect the
changes made by section 5504(a) of the
Affordable Care Act. However, at that
time, we inadvertently did not make
conforming changes to the regulations at
§ 405.2468(f)(1) to clarify the
requirements that FQHCs and RHCs
must meet in order to receive direct
GME payment for training residents in
their facilities. Therefore, in compliance
with our longstanding policy that
FQHCs and RHCs must meet the same
requirements applicable to teaching
hospitals for direct GME payments with
respect to training residents in
nonprovider settings, as we did in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28164), we are providing
clarification that, based on statutory
amendments discussed earlier, the
applicable policy cross-referenced in
§ 405.2468(f)(1) has changed for cost
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50141
reporting periods beginning on or after
July 1, 2010. In addition, to ensure
statutory and regulatory consistency, we
proposed to revise the regulations at
§ 405.2468(f)(1) to add a sentence at the
end of the paragraph that stated that in
connection with cost reporting periods
for which ‘‘all or substantially all of the
costs for the training program in the
nonhospital setting’’ is not defined in
§ 413.75(b), if an RHC or an FQHC
incurs the salaries and fringe benefits
(including travel and lodging where
applicable) of residents training at the
RHC or FQHC, the RHC or FQHC may
receive direct graduate medical
education payment for those residents.
We did not receive any public
comments regarding our proposed
clarification and policy change
applicable to direct GME payments to
FQHCs and RHCs for training residents
in approved programs. Therefore, we are
finalized this policy as proposed.
L. Rural Community Hospital
Demonstration Program
1. Background
Section 410A(a) of Public Law 108–
173 required the Secretary to establish
a demonstration program to test the
feasibility and advisability of
establishing ‘‘rural community’’
hospitals to furnish covered inpatient
hospital services to Medicare
beneficiaries. The demonstration pays
rural community hospitals under a
reasonable cost-based methodology for
Medicare payment purposes for covered
inpatient hospital services furnished to
Medicare beneficiaries. A rural
community hospital, as defined in
section 410A(f)(1), is a hospital that—
• Is located in a rural area (as defined
in section 1886(d)(2)(D) of the Act) or is
treated as being located in a rural area
under section 1886(d)(8)(E) of the Act;
• Has fewer than 51 beds (excluding
beds in a distinct part psychiatric or
rehabilitation unit) as reported in its
most recent cost report;
• Provides 24-hour emergency care
services; and
• Is not designated or eligible for
designation as a CAH under section
1820 of the Act.
Section 410A(a)(4) of Public Law 108–
173 specified that the Secretary was to
select for participation no more than 15
rural community hospitals in rural areas
of States that the Secretary identified as
having low population densities. Using
2002 data from the U.S Census Bureau,
we identified the 10 States with the
lowest population density in which
rural community hospitals were to be
located in order to participate in the
demonstration: Alaska, Idaho, Montana,
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Nebraska, Nevada, New Mexico, North
Dakota, South Dakota, Utah, and
Wyoming. (Source: U.S. Census Bureau,
Statistical Abstract of the United States:
2003).
CMS originally solicited applicants
for the demonstration in May 2004; 13
hospitals began participation with cost
reporting periods beginning on or after
October 1, 2004. In 2005, 4 of these 13
hospitals withdrew from the program
and converted to CAH status. This left
nine hospitals participating at that time.
In 2008, we announced a solicitation for
up to six additional hospitals to
participate in the demonstration
program. Four additional hospitals were
selected to participate under this
solicitation. These four additional
hospitals began under the
demonstration payment methodology
with the hospital’s first cost reporting
period starting on or after July 1, 2008.
At that time, 13 hospitals were
participating in the demonstration.
Five hospitals (3 of the hospitals were
among the 13 hospitals that were
original participants in the
demonstration program and 2 of the
hospitals were among the 4 hospitals
that began the demonstration program
in 2008) withdrew from the
demonstration program during CYs
2009 and 2010. (Three of these hospitals
indicated that they would be paid more
for Medicare inpatient hospital services
under the rebasing option allowed
under the SCH methodology provided
for under section 122 of the Medicare
Improvements for Patients and
Providers Act of 2008 (Pub. L. 110–275).
One hospital restructured to become a
CAH, and one hospital closed.) In CY
2011, one hospital that was among the
original set of hospitals that participated
in the demonstration withdrew from the
demonstration. These actions left seven
of the originally participating hospitals
(that is, hospitals that were selected to
participate in either 2004 or 2008)
participating in the demonstration
program as of June 1, 2011.
Sections 3123 and 10313 of the
Affordable Care Act (Pub. L. 111–148)
amended section 410A of Public Law
108–173, which established the rural
community hospital demonstration
program. Sections 3123 and 10313 of
the Affordable Care Act changed the
rural community hospital
demonstration program in several ways.
First, the Secretary is required to
conduct the demonstration program for
an additional 5-year period that begins
on the date immediately following the
last day of the initial 5-year period.
Further, the Affordable Care Act
requires, in the case of a rural
community hospital that is participating
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in the demonstration program as of the
last day of the initial 5-year period, the
Secretary to provide for the continued
participation of such rural hospital in
the demonstration program during the
5-year extension, unless the hospital
makes an election, in such form and
manner as the Secretary may specify, to
discontinue participation (section
410A(g)(4)(A) of Pub. L. 108–173, as
added by section 3123(a) of the
Affordable Care Act and further
amended by section 10313 of such Act).
In addition, the Affordable Care Act
provides that, during the 5-year
extension period, the Secretary shall
expand the number of States with low
population densities determined by the
Secretary to 20 (section 410A(g)(2) of
Public Law 108–173, as added by
section 3123(a) and amended by section
10313 of the Affordable Care Act).
Further, the Secretary is required to use
the same criteria and data that the
Secretary used to determine the States
under section 410A(a)(2) of Public Law
108–173 for purposes of the initial 5year period. The Affordable Care Act
also allows not more than 30 rural
community hospitals in such States to
participate in the demonstration
program during the 5-year extension
period (section 410A(g)(3) of Public Law
108–173, as added by section 3123(a) of
the Affordable Care Act and as further
amended by section 10313 of such Act).
We published a solicitation for
applications for additional participants
in the rural community hospital
demonstration program in the Federal
Register on August 30, 2010 (75 FR
52960). Applications were due on
October 14, 2010. The 20 States with the
lowest population density that were
eligible for the demonstration program
are: Alaska, Arizona, Arkansas,
Colorado, Idaho, Iowa, Kansas, Maine,
Minnesota, Mississippi, Montana,
Nebraska, Nevada, New Mexico, North
Dakota, Oklahoma, Oregon, South
Dakota, Utah, and Wyoming (Source:
U.S. Census Bureau, Statistical Abstract
of the United States: 2003). We
approved 19 new hospitals for
participation in the demonstration
program. We determined that each of
these new hospitals would begin
participating in the demonstration with
its first cost reporting period beginning
on or after April 1, 2011.
Three of these 19 hospitals declined
participation prior to the start of the cost
reporting periods for which they would
have begun the demonstration. In
addition to the 7 hospitals that were
selected in either 2004 or 2008, the new
selection led to a total of 23 hospitals in
the demonstration. During CY 2013, one
additional hospital among the set
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selected in 2011 withdrew from the
demonstration, similarly citing a
relative financial advantage to returning
to the customary SCH payment
methodology, which left 22 hospitals
participating in the demonstration.
In addition, section 410A(c)(2) of
Public Law 108–173 required that, ‘‘[i]n
conducting the demonstration program
under this section, the Secretary shall
ensure that the aggregate payments
made by the Secretary do not exceed the
amount which the Secretary would have
paid if the demonstration program
under this section was not
implemented.’’ This requirement is
commonly referred to as ‘‘budget
neutrality.’’ Generally, when we
implement a demonstration program on
a budget neutral basis, the
demonstration program is budget
neutral in its own terms; in other words,
the aggregate payments to the
participating hospitals do not exceed
the amount that would be paid to those
same hospitals in the absence of the
demonstration program. Typically, this
form of budget neutrality is viable
when, by changing payments or aligning
incentives to improve overall efficiency,
or both, a demonstration program may
reduce the use of some services or
eliminate the need for others, resulting
in reduced expenditures for the
demonstration program’s participants.
These reduced expenditures offset
increased payments elsewhere under
the demonstration program, thus
ensuring that the demonstration
program as a whole is budget neutral or
yields savings. However, the small scale
of this demonstration program, in
conjunction with the payment
methodology, makes it extremely
unlikely that this demonstration
program could be viable under the usual
form of budget neutrality.
Specifically, cost-based payments to
participating small rural hospitals are
likely to increase Medicare outlays
without producing any offsetting
reduction in Medicare expenditures
elsewhere. Therefore, a rural
community hospital’s participation in
this demonstration program is unlikely
to yield benefits to the participant if
budget neutrality were to be
implemented by reducing other
payments for these same hospitals.
In the past 10 IPPS final regulations,
spanning the period for which the
demonstration program has been
implemented, we have adjusted the
national inpatient PPS rates by an
amount sufficient to account for the
added costs of this demonstration
program, thus applying budget
neutrality across the payment system as
a whole rather than merely across the
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participants in the demonstration
program. As we discussed in the FYs
2005 through 2014 IPPS final rules (69
FR 49183; 70 FR 47462; 71 FR 48100;
72 FR 47392; 73 FR 48670; 74 FR 43922;
75 FR 50343; 76 FR 51698; 77 FR 53449;
and 78 FR 50740; respectively), we
believe that the language of the statutory
budget neutrality requirements permits
the agency to implement the budget
neutrality provision in this manner. In
light of the statute’s budget neutrality
requirement, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28166
through 28167), we proposed to
continue to use the methodology we
finalized in FY 2013 to calculate a
budget neutrality adjustment factor to
the FY 2015 national IPPS rates.
In general terms, in each of these
previous years, we used available cost
reports for the participating hospitals to
derive an estimate of the additional
costs attributable for the demonstration.
Prior to FY 2013, we used finalized, or
settled, cost reports, as available, and
‘‘as submitted’’ cost reports for hospitals
for which finalized cost reports were not
available. Annual market basket
percentage increase amounts provided
by the CMS Office of the Actuary
reflecting the growth in the prices of
inputs for inpatient hospitals were
applied to these cost amounts. In the FY
2013 IPPS/LTCH PPS final rule (77 FR
53452), we used ‘‘as submitted’’ cost
reports (for cost reporting periods
ending in CY 2010) for each hospital
participating in the demonstration in
estimating the costs of the
demonstration. In addition, in FY 2013,
we incorporated different update factors
(the market basket percentage increase
and the applicable percentage increase,
as applicable, to several years of data as
opposed to solely using the market
basket percentage increase) for the
calculation of the budget neutrality
offset amount. Finally, in each of the
previous years, an annual update factor
provided by the CMS Office of the
Actuary reflecting growth in the volume
of inpatient operating services was also
applied. For the budget neutrality
calculations in the IPPS final rules for
FYs 2005 through 2011, the annual
volume adjustment applied was 2
percent; for the IPPS final rules for FYs
2012, 2013, and 2014, it was 3 percent.
For a detailed discussion of our budget
neutrality offset calculations, we refer
readers to the IPPS final rule applicable
to the fiscal year involved.
In general, for FYs 2005 through 2009,
we based the budget neutrality offset
estimate on the estimated cost of the
demonstration in an earlier given year.
For these periods, we derived that
estimated cost by subtracting the
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estimated amount that would otherwise
be paid without the demonstration in an
earlier given year from the estimated
amount for the same year that would be
paid under the demonstration under the
reasonable cost-based methodology
authorized by section 410A of Public
Law 108–173. (We note that section
410A of Public Law 108–173 was later
amended by the Affordable Care Act.)
The reasonable cost-based methodology
authorized by section 410A of Public
Law 108–173, as amended, is hereafter
referred to as the ‘‘reasonable cost
methodology.’’ (We ascertained the
estimated amount that would be paid in
an earlier given year under the
reasonable cost methodology and the
estimated amount that would otherwise
be paid without the demonstration in an
earlier given year from ‘‘as submitted’’
cost reports that were submitted by the
hospitals prior to the inception of the
demonstration.) We then updated the
estimated cost described above to the
current year by multiplying it by the
market basket percentage increases
applicable to the years involved and the
applicable annual volume adjustment.
For the FY 2010 IPPS/RY 2010 LTCH
PPS final rule, data from finalized cost
reports reflecting the participating
hospitals’ experience under the
demonstration were available.
Specifically, the finalized cost reports
for the first 2 years of the
demonstration, that is, cost reports for
cost reporting years beginning in FYs
2005 and 2006 (CYs 2004, 2005, and
2006) were available. These data
showed that the actual costs of the
demonstration for these years exceeded
the amounts originally estimated in the
respective final rules for the budget
neutrality adjustment. In the FY 2010
IPPS/RY 2010 LTCH PPS final rule, we
included in the budget neutrality offset
amount an amount in addition to the
estimate of the demonstration costs in
that fiscal year. This additional amount
was based on the amount that the costs
of the demonstration for FYs 2005 and
2006 exceeded the budget neutrality
offset amounts finalized in the IPPS
rules applicable for those years.
Following upon the FY 2010 IPPS/RY
2010 LTCH PPS final rule, we continued
to propose and use a methodology for
calculating the budget neutrality offset
amount to account for both the
estimated demonstration costs in the
upcoming fiscal year and an amount by
which the actual demonstration costs
corresponding to an earlier, given year
(which would be known once finalized
cost reports became available for that
year) exceeded the budget neutrality
offset amount finalized in the
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corresponding year’s IPPS final rule.
However, we noted in the FYs 2011,
2012, and 2013 IPPS final rules that,
because of a delay affecting the
settlement process for cost reports for
IPPS hospitals occurring on a larger
scale than merely for the demonstration,
we were unable to finalize this
component of the budget neutrality
offset amount accounting for the amount
by which the actual demonstration costs
in a given year exceeded the budget
neutrality offset amount finalized in the
corresponding year’s IPPS final rule for
cost reports of demonstration hospitals
dating to those beginning in FY 2007.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53449 through 53453), we
adopted changes to the methodology for
calculating the budget neutrality offset
amount in an effort to further improve
and refine it. We noted that the revised
methodology varied, in part, from that
finalized in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51698 through
51705). Specifically, in adopting
refinements to the methodology, our
objective was to simplify the calculation
so that it included as few steps as
possible. In addition, we incorporated
different update factors (the market
basket percentage increase and the
applicable percentage increase, as
applicable, to several years of data as
opposed to solely using the market
basket percentage increase) for the
calculation of the budget neutrality
offset amount. We stated that we
believed this approach would maximize
the precision of our calculation because
it would more closely replicate
payments made with and without the
demonstration. We refer readers to the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53449 through 53453) for a detailed
discussion of the methodology we used
for FY 2013. We noted that, although we
were making changes to certain aspects
of the budget neutrality offset amount
calculation for FY 2013, several core
components of the methodology would
remain unchanged. For example, we
continued to include in the budget
neutrality offset amount methodology
the estimate of the demonstration costs
for the upcoming fiscal year and the
amount by which the actual
demonstration costs corresponding to an
earlier year (which would be
determined once we have finalized cost
reports for that year) exceeded the
budget neutrality offset amount
finalized in the corresponding year’s
IPPS final rule. However, finalized cost
reports for the hospitals participating in
the demonstration were not available for
FYs 2007, 2008, 2009, and 2010 at the
time of development of the FY 2013
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IPPS/LTCH PPS final rule. Therefore,
we were unable to finalize this
component of the budget neutrality
offset calculation. We stated in the final
rule that we expected settled cost
reports for all of the demonstration
hospitals that participated in the
applicable fiscal year (FYs 2007, 2008,
2009, and 2010) to be available prior to
the FY 2014 IPPS/LTCH PPS proposed
rule.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50739 through 50744), we
determined the final budget neutrality
offset amount to be applied to the FY
2014 IPPS rates to be $52,589,741. This
amount was comprised of two distinct
components: (1) the final resulting
difference between the estimated
reasonable cost amount to be paid under
the demonstration to the 22
participating hospitals in FY 2014 for
covered inpatient hospital services and
the estimated amount that would
otherwise be paid to such hospitals in
FY 2014 without the demonstration
(this amount was $46,549,861); and (2)
the amount by which the actual costs of
the demonstration for FY 2007, as
shown in the finalized cost reports for
the hospitals that participated in the
demonstration during FY 2007,
exceeded the budget neutrality offset
amount that was finalized in the FY
2007 IPPS final rule (this amount,
$6,039,880, was derived from finalized
cost reports for cost reporting periods
beginning in FY 2007 for the 9 hospitals
that participated in the demonstration
during that year).
2. FY 2015 Budget Neutrality Offset
Amount
For the reasons discussed in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53449 through 53453), we proposed in
the FY 2015 IPPS/LTCH PPS proposed
rule (78 FR 28167) to continue to use
the methodology finalized in the FY
2013 IPPS/LTCH PPS final rule to
calculate a budget neutrality adjustment
factor to be applied to the FY 2015
national IPPS payment rates. As we
stated in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53451), we revised our
methodology in that final rule to further
improve and refine the calculation of
the budget neutrality offset amount and
to simplify the methodology so that it
includes only a few steps. Consistent
with the methodology finalized in the
FY 2013 IPPS/LTCH PPS final rule, the
methodology proposed for calculating
the estimated FY 2015 demonstration
cost for the participating hospitals was
as follows:
Step 1: For each of the participating
hospitals, we proposed to identify the
general reasonable cost amount
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calculated under the reasonable cost
methodology for covered inpatient
hospital services (as indicated on the
‘‘as submitted’’ cost report for the
hospital’s cost reporting period ending
in CY 2012). The general reasonable cost
amount calculated under the reasonable
cost methodology is hereafter referred to
as the ‘‘reasonable cost amount.’’ As we
explained in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53451), we believe
that a way to streamline our
methodology for calculating the budget
neutrality offset amount would be to use
cost reports with the same status and
from the same time period for all
hospitals participating in the
demonstration. Because ‘‘as submitted’’
cost reports ending in CY 2012 are the
most recent available cost reports, we
believe they would be an accurate
predictor of the costs of the
demonstration in FY 2015 because they
give us a recent picture of the
participating hospitals’ costs.
Because section 410A of Public Law
108–173 stipulates swing-bed services
are to be included among the covered
inpatient hospital services for which the
demonstration payment methodology
applies, we proposed to include the cost
of these services, as reported on the cost
reports for the hospitals that provide
swing-bed services, within the general
total estimated FY 2012 reasonable cost
amount for covered inpatient hospital
services under the demonstration. As
indicated above, we proposed to use ‘‘as
submitted’’ cost reports for the
hospital’s cost reporting period ending
in CY 2012 for this calculation.
We proposed to sum the two abovereferenced amounts to calculate the
general total estimated FY 2012
reasonable cost amount for covered
inpatient hospital services for all
participating hospitals.
We proposed to multiply this sum
(that is, the general total estimated FY
2012 reasonable cost amount for
covered inpatient hospital services for
all participating hospitals) by the FY
2013, FY 2014, and FY 2015 IPPS
market basket percentage increases,
which are formulated by the CMS Office
of the Actuary. In this final rule, we are
using the current estimate of the FY
2015 IPPS market basket percentage
increase provided by the CMS Office of
the Actuary as specified in section
IV.B.1. of the preamble of this final rule.
We then multiply the product of the
general total estimated FY 2012
reasonable cost amount for all
participating hospitals and the market
basket percentage increases applicable
to the years involved by a 3-percent
annual volume adjustment for FYs 2013
through 2015—the result is the general
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total estimated FY 2015 reasonable cost
amount for covered inpatient hospital
services for all participating hospitals.
We proposed to apply the IPPS
market basket percentage increases
applicable for FYs 2013 through 2015 to
the FY 2012 reasonable cost amount
described above to model the estimated
FY 2015 reasonable cost amount under
the demonstration. We proposed to use
the IPPS market basket percentage
increases because we believe that these
update factors appropriately indicate
the trend of increase in inpatient
hospital operating costs under the
reasonable cost methodology for the
years involved. The 3-percent annual
volume adjustment was stipulated by
the CMS Office of the Actuary and is
being used because it is intended to
accurately reflect the tendency of
hospitals’ inpatient caseloads to
increase. On account of the possibility
that inpatient caseloads for small
hospitals may fluctuate, we are
incorporating into the estimate of
demonstration costs a factor to allow for
a potential increase in inpatient hospital
services.
Step 2: For each of the participating
hospitals, we proposed to identify the
general estimated amount that would
otherwise be paid in FY 2012 under
applicable Medicare payment
methodologies for covered inpatient
hospital services (as indicated on the
‘‘as submitted’’ cost report for cost
reporting periods ending in CY 2012) if
the demonstration was not
implemented. Similarly, as in Step 1, for
the hospitals that provide swing-bed
services, we proposed to identify the
estimated amount that generally would
otherwise be paid for these services (as
indicated on the ‘‘as submitted’’ cost
report for cost reporting periods ending
in CY 2012) and include it in the total
FY 2012 general estimated amount that
would otherwise be paid for covered
inpatient hospital services without the
demonstration. We proposed to sum
these two amounts in order to calculate
the estimated FY 2012 total payments
that generally would otherwise be paid
for covered inpatient hospital services
for all participating hospitals without
the demonstration.
We proposed to multiply the above
amount (that is, the estimated FY 2012
total payments that generally would
otherwise be paid for covered inpatient
hospital services for all participating
hospitals without the demonstration) by
the FYs 2013 through 2015 IPPS
applicable percentage increases. For the
proposed rule, the estimate of the FY
2015 applicable percentage increase was
specified in section IV.B. of the
preamble. This methodology differs
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from Step 1, in which we proposed to
apply the market basket percentage
increases to the sum of the hospitals’
general total FY 2012 estimated
reasonable cost amount for covered
inpatient hospital services. We believe
that the IPPS applicable percentage
increases are appropriate factors to
update the estimated amounts that
generally would otherwise be paid
without the demonstration. This is
because IPPS payments would
constitute the majority of payments that
would otherwise be made without the
demonstration and the applicable
percentage increase is the factor used
under the IPPS to update the inpatient
hospital payment rates. Hospitals
participating in the demonstration
would be participating under the IPPS
payment methodology if they were not
in the demonstration. Then we
proposed to multiply the product of the
estimated FY 2012 total payments that
generally would otherwise be made
without the demonstration and the
applicable IPPS percentage increases for
the years involved by a 3-percent annual
volume adjustment for FYs 2013
through 2015. The result represents the
general total estimated FY 2015 costs
that would otherwise be paid without
the demonstration for covered inpatient
hospital services to the participating
hospitals.
Step 3: We proposed to subtract the
amount derived in Step 2 (representing
the sum of estimated amounts that
generally would otherwise be paid to
the participating hospitals for covered
inpatient hospital services for FY 2015
if the demonstration were not
implemented) from the amount derived
in Step 1 (representing the sum of the
estimated reasonable cost amount that
generally would be paid under the
demonstration to all participating
hospitals for covered inpatient hospital
services for FY 2015). We proposed that
the resulting difference would be one
component of the estimated amount for
which an adjustment to the national
IPPS rates would be calculated (as
further discussed below).
For the proposed rule, the resulting
difference was $53,673,008. This
estimated amount is based on the
specific assumptions identified
regarding the data sources used, that is,
‘‘as submitted’’ recently available cost
reports.
We did not receive any public
comments on our proposed budget
neutrality offset methodology, as
discussed above. Therefore, we are
finalizing the budget neutrality offset
methodology as proposed in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28165 through 28168).
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In the FY 2015 IPPS/LTCH PPS
proposed rule, we noted that if updated
data became available prior to the FY
2015 IPPS/LTCH PPS final rule, we
would use them to the extent
appropriate to estimate the costs of the
demonstration program in FY 2015.
Therefore, we noted that the estimated
budget neutrality offset amount might
change in the final rule, depending on
the availability of updated data. In this
final rule, we have used the market
basket update and applicable percentage
increase that have been finalized for FY
2015. Using these updated data, the
difference between the total estimated
FY 2015 reasonable cost amount to be
paid under the demonstration to the 22
participating hospitals for covered
inpatient hospital services and the total
estimated amount that would otherwise
be paid to the participating hospitals in
FY 2015 without the demonstration is
$54,177,144.
In addition, similar to previous years,
we proposed to include in the budget
neutrality offset amount the amount by
which the actual demonstration costs
corresponding to an earlier given year
(which would be determined once we
had finalized cost reports for that year)
exceeded the budget neutrality offset
amount finalized in the corresponding
year’s IPPS final rule. In the FY 2015
IPPS/LTCH PPS proposed rule, we
calculated the amount by which the
actual costs of the demonstration in FY
2008 (that is, the costs of the
demonstration for the 10 hospitals that
participated in FY 2008, as shown in
these hospitals’ finalized cost reports for
the cost report period beginning in that
fiscal year), exceeded the budget
neutrality offset amount that was
finalized in the FY 2008 IPPS final rule.
The amount calculated for the FY 2015
IPPS/LTCH PPS proposed rule,
$10,389,771, remains unchanged for this
final rule. We did not receive any public
comments on this aspect of the
proposed budget neutrality offset
methodology, and therefore, are
finalizing this aspect of the
methodology as proposed. We continue
to examine the cost report data for FY
2009, and to work with the MACs that
service the hospitals participating in the
demonstration to obtain finalized cost
reports for FYs 2010, 2011, and 2012.
We note that if settled cost reports for
all of the demonstration hospitals that
participated in an applicable year (FYs
2009, 2010, 2011, or 2012) are available
prior to the FY 2016 IPPS/LTCH PPS
proposed rule, we intend to adjust the
budget neutrality offset amount for FY
2016 for any amounts by which the final
settled costs of the demonstration for
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50145
the year (FYs 2009, 2010, 2011, or 2012)
differ from the budget neutrality offset
amount applicable to such year as
finalized in the respective year’s IPPS
final rule.
Therefore, the total budget neutrality
offset amount that we are applying to
the FY 2015 IPPS rates is $64,566,915.
This is the sum of two separate
components: (1) the difference between
the total estimated FY 2015 reasonable
cost amount to be paid under the
demonstration to the 22 participating
hospitals for covered inpatient hospital
services and the total estimated amount
that would otherwise be paid to the
participating hospitals in FY 2015
without the demonstration
($54,177,144); and (2) the amount by
which the actual costs of the
demonstration for FY 2008 (as shown in
the finalized cost reports for cost
reporting periods beginning in FY 2008
for the hospitals that participated in the
demonstration during FY 2008) exceed
the budget neutrality offset amount that
was finalized in the FY 2008 IPPS final
rule ($10,389,771)). In this final rule, we
are adjusting the national IPPS rates by
this total amount ($64,566,915). We
discuss the final payment rate
adjustment that is required to ensure the
budget neutrality of the demonstration
program for FY 2015 (the budget
neutrality adjustment factor) in section
II. of the Addendum to this final rule.
M. Requirement for Transparency of
Hospital Charges Under the Affordable
Care Act
1. Overview
Hospitals determine their charges for
items and services provided to patients
and are responsible for those charges.
While Medicare does not pay billed
charges, hospital reported charges are
used in determining Medicare’s national
payment rates (for example, billed
charges are adjusted to cost to determine
how much to pay for one type of case
relative to another). Although the
Medicare payment amount for a
discharge under the IPPS or a service
furnished under the OPPS is not based
directly on the hospital’s charges for the
individual services provided, we believe
that hospital charges nevertheless
remain an important component of our
healthcare system. For example,
hospital charges are often billed, in full,
to uninsured patients who cannot
benefit from discounts negotiated by
insurance companies. Hospital charges
also vary significantly by hospital,
making it challenging for patients to
compare the cost of similar services
across hospitals.
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In 2013, we released data that
demonstrated significant variation
across the country and within
communities in what hospitals charge
for a number of common inpatient and
outpatient services. These data also
showed that hospital charges for
services furnished in both the inpatient
setting and the outpatient setting were,
in general, significantly higher than the
amount paid by Medicare under the
IPPS or the OPPS. The data that we
released are posted on the Web site at:
https://www/cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/Medicare-ProviderCharge-Data/index.html. Our intent in
releasing these data was to enable the
public to examine the relationship
between the amounts charged by
individual hospitals for comparable
services and Medicare’s payment for
that inpatient or outpatient care. We
believe that providing charge data
comparisons is introducing both
transparency and accountability to
hospital pricing, and we are continuing
to pursue opportunities to report on
hospital charging practices.
2. Transparency Requirement Under the
Affordable Care Act
The Affordable Care Act contains a
provision that is consistent with our
effort to improve the transparency of
hospital charges. As a result of the
Affordable Care Act, section 2718(e) of
the Public Health Service Act requires
that ‘‘[e]ach hospital operating within
the United States shall for each year
establish (and update) and make public
(in accordance with guidelines
developed by the Secretary) a list of the
hospital’s standard charges for items
and services provided by the hospital,
including for diagnosis-related groups
established under section 1886(d)(4) of
the Social Security Act.’’
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28169), we
reminded hospitals of their obligation to
comply with the provisions of section
2718(e) of the Public Health Service Act.
We appreciate the widespread public
support we received for including the
reminder in the proposed rule. We
reiterate that our guidelines for
implementing section 2718(e) of the
Public Health Service Act are that
hospitals either make public a list of
their standard charges (whether that be
the chargemaster itself or in another
form of their choice), or their policies
for allowing the public to view a list of
those charges in response to an inquiry.
MedPAC suggested that hospitals be
required to post the list on the Internet,
and while we agree that this would be
one approach that would satisfy the
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guidelines, we believe hospitals are in
the best position to determine the exact
manner and method by which to make
the list public in accordance with the
guidelines.
We encourage hospitals to undertake
efforts to engage in consumer friendly
communication of their charges to help
patients understand what their potential
financial liability might be for services
they obtain at the hospital, and to
enable patients to compare charges for
similar services across hospitals. We
expect that hospitals will update the
information at least annually, or more
often as appropriate, to reflect current
charges.
We are confident that hospital
compliance with this statutory
transparency requirement will improve
the public accessibility of charge
information. As hospitals continue to
make data publicly available in
compliance with section 2718(e) of the
Public Health Service Act, we also will
continue to review and post relevant
charge data in a consumer friendly way,
as we previously have done by posting
on the CMS Web site the following
hospital and physician charge
information: May and June 2013
hospital charge data releases; 2013
physician data requests for information;
and the April 2014 physician data
releases and data provided on
geographic variation in payments and
payments per beneficiary.
N. Medicare Payment for Short
Inpatient Hospital Stays
As discussed in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28169),
some members of the hospital
community have expressed support for
the general concept of an alternative
payment methodology under the
Medicare program for short inpatient
hospital stays. We sought public
comments on such a payment
methodology, specifically how it might
be designed. We outlined some specific
questions and considerations that we
identified as critical for developing such
a methodology. We noted that this list
of questions and considerations was not
exhaustive, and we welcomed
additional questions, suggestions, and
input from stakeholders.
• Defining short or low cost inpatient
hospital stays:
One issue would be how to define a
short inpatient hospital stay for the
purpose of determining the appropriate
Medicare payment. For instance, would
a short inpatient hospital stay be one
where the average length of stay for the
MS–DRG is short or would it be
atypically short or low cost cases
relative to other cases within same MS–
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DRG? There are significant differences
in mean lengths of stay among MS–
DRGs. For example, many frequently
billed MS–DRGs have historically had
mean lengths of stay of approximately 2
days, such as MS–DRG 313 (Chest Pain).
Other MS–DRGs such as MS–DRG 871
(Septicemia or Severe Sepsis without
Mechanical Ventilation 96+ hours with
MCC) have had longer lengths of stay.
If we adopted a policy that paid less
for atypically low-cost or short-stay
cases relative to the average case in the
same MS–DRG, we believe such a policy
is more likely to affect an MS–DRG like
MS–DRG 871 that has a longer average
length of stay or higher average cost
associated with the typical patient. Such
a policy is less likely to apply to MS–
DRG 313 because the typical case is
already low cost or short stay.
• Determining appropriate payment
for short inpatient hospital stays:
Another issue would be how to
determine the appropriate payment
once a short stay has been identified.
Some have suggested a per diem based
payment amount, perhaps modelled on
the existing transfer payment policy.
Again, such a policy is far more likely
to affect payment for an atypically shortstay or low-cost case in an MS–DRG
with a longer average length of stay. For
short-stay cases in an MS–DRG where
the average length of stay for the MS–
DRG is short, this methodology would
be unlikely to affect payment as the full
IPPS payment would be made in 1 or 2
days.
For these types of short-stay cases,
one relevant issue to address may be
that payment for the same case will be
very different under the OPPS and the
IPPS depending upon whether the
patient has been formally admitted to
the hospital as an inpatient, pursuant to
a physician order. Under what
circumstances should the IPPS payment
amount be limited to the OPPS payment
amount and under what circumstances
might it be appropriate for the payment
amount to be higher? If it were
appropriate for the payment amount to
be higher, how would the amount of the
additional payment be determined?
In the proposed rule, we welcomed
input on these and other issues related
to an alternative payment methodology
under the Medicare program for short
inpatient hospital stays.
Comment: Many commenters
indicated that any short-stay policy
should adhere to certain general
principles, specifically citing some or
all of the following: a short-stay policy
should provide more appropriate and
adequate payment for medically
necessary inpatient services that span
less than 2 midnights—payment should
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be higher than the outpatient PPS rate
for the service, but should not exceed
the full IPPS payment; a short-stay
policy should not apply to those
procedures on the ‘‘inpatient only’’ list;
a short-stay policy should be budget
neutral; hospitals should be eligible for
all add-on payments they would
otherwise receive (for example, DSH
and IME), either in full or on a pro rata
basis; beneficiaries requiring short
inpatient hospital stays paid under a
short-stay policy should be considered
inpatients and cost-sharing obligations
should be calculated under Medicare
Part A; a short-stay policy should be
developed in a way that would not
increase administrative burden for
hospitals, physicians, or other medical
providers; and CMS should provide
clear and consistent guidance and allow
adequate time for hospitals to
implement the short-stay policy prior to
its effective date.
Other commenters indicated that CMS
could or should consider approaches
such as a per diem approach modeled
after the existing transfer policy,
creating separate MS–DRG weights for
short-stay cases and nonshort-stay cases,
or allowing the full MS–DRG payment
on an interim basis while the issue is
studied further.
Some commenters also stated that the
MS–DRG system is predicated on the
understanding that there will be a
diversity of treatment patterns and
individual patient circumstances for any
given clinical condition, and that this
diversity balances out—high-intensity
cases are balanced by low-intensity
cases. These commenters contended
that creating a new category of ‘‘short
stays’’ and paying for them differentially
undermines the MS–DRG system.
Many commenters stated that
additional research and collaboration
were needed before a formal short-stay
policy proposal could be made.
MedPAC indicated that it intended to
explore alternative short-stay policies in
its upcoming work cycle.
Almost all commenters provided their
comments on Medicare payment for
short hospital stays in the context of
broader comments on the current 2midnight policy.
Response: We thank commenters for
the many comments submitted on this
issue, and we will take these into
account in any potential future
rulemaking. Although there was no
consensus among the commenters, we
look forward to continuing to actively
work with stakeholders to address the
complex question of how to further
improve payment policy for short
inpatient hospital stays.
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O. Suggested Exceptions to the 2Midnight Benchmark
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50943 through 50954), we
modified and clarified CMS’
longstanding policy on how Medicare
contractors review inpatient hospital
and CAH admissions for payment
purposes. Under that final rule, we
established a 2-midnight benchmark for
determining the appropriateness of an
inpatient hospital admission versus
treatment on an outpatient basis. We
provided in regulations at § 412.3(e)(1)
that, in addition to services designated
as inpatient only, surgical procedures,
diagnostic tests, and other treatments
are generally appropriate for inpatient
hospital admission and payment under
Medicare Part A when the physician (1)
expects the beneficiary to require a
medically necessary hospital stay that
crosses at least 2 midnights and (2)
admits the beneficiary to the hospital
based upon that expectation. In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50944), we stated that the medical
judgment of the physician and the
physician’s order for inpatient
admission should be based on the
expectation of care surpassing 2
midnights, with both the expectation of
time and the determination of the
underlying need for medical care at the
hospital supported by complex medical
factors such as history and
comorbidities, the severity of signs and
symptoms, current medical needs, and
the risk of an adverse event. We also
indicated that, in accordance with
longstanding policy, factors that may
result in an inconvenience to a
beneficiary or family would not justify
an inpatient hospital admission. The
factors that lead a physician to admit a
particular beneficiary based on the
physician’s clinical expectation are
significant clinical considerations and
must be clearly and completely
documented in the medical record.
Medicare review contractors consider
complex medical factors that support a
reasonable expectation of the needed
duration of the stay relative to the 2midnight benchmark. The FY 2014
policy responded to both hospital calls
for more guidance about when an
inpatient admission and Part A payment
are appropriate, and beneficiaries’
concerns about increasingly long stays
as outpatients due to hospital
uncertainties about payment.
In the FY 2014 IPPS/LTCH PPS final
rule, at § 412.3(e)(2), we recognized that
if an unforeseen circumstance, such as
a beneficiary’s death or transfer, results
in a shorter beneficiary stay than the
physician’s expectation of at least 2
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midnights, the patient may be
considered to be appropriately treated
on an inpatient basis and hospital
inpatient payment may be made under
Medicare Part A. We also clarified, in
both the final rule and subsequent
subregulatory guidance, that the
unforeseen circumstances specified at
§ 412.3(e)(2) are not all-inclusive and
could include additional circumstances
such as unexpected clinical
improvement, election of hospice care,
or departure against medical advice.
The FY 2014 IPPS/LTCH PPS final
rule also indicated that there are
exceptions to the 2-midnight
benchmark. In other words, there will
be cases in which an admitting
practitioner expects the beneficiary’s
length of stay to last less than 2
midnights and yet inpatient admission
would still be appropriate. For example,
we specified that procedures on the
OPPS inpatient only list are always
appropriately inpatient, regardless of
the actual time expected at the hospital,
so long as the procedure is medically
necessary and performed pursuant to a
physician order and formal admission.
In addition to procedures contained
on the OPPS inpatient only list, we
noted in the FY 2014 IPPS/LTCH PPS
final rule that there may be other rare
and unusual circumstances in which a
hospital stay expected to last less than
2 midnights would nonetheless be
appropriate for inpatient hospital
admission and Part A payment. We
indicated that we would explore other
potential exceptions to the generally
applicable benchmark and would detail
any such rare and unusual
circumstances in subregulatory
guidance. As part of this process,
throughout the year, we have accepted
and considered suggestions from
stakeholders on this topic.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 280170), we
described the process for submitting
suggestions regarding potential
additional exceptions to the 2-midnight
benchmark. Such suggestions may be
sent to CMS via written correspondence
or via email to SuggestedExceptions@
cms.hhs.gov. As noted in the proposed
rule, CMS will notify providers of any
additional guidance regarding 2midnight exceptions through
subregulatory means, such as postings
on the CMS Web site or manual
instruction.
Although the FY 2015 IPPS/LTCH
PPS proposed rule did not include any
proposed regulatory changes relating to
the 2-midnight benchmark, we
nonetheless received a number of public
comments regarding the current
regulation. Commenters opined on the
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usefulness of the 2-midnight benchmark
for making inpatient admission
decisions and provided suggestions for
improving the policy. During the
summer and fall of 2014, CMS plans to
evaluate the results of the ‘‘probe &
educate’’ process (a process by which
MACs are reviewing a prepayment,
provider-specific probe sample of
inpatient Part A claims for
appropriateness of inpatient admission
under the revised 2-midnight
benchmark and providing providerspecific education, as necessary, to
correct improper payments) and issue
additional subregulatory guidance to
our claim review contractors, if
necessary, to ensure consistency in
application of the 2-midnight policy.
We will consider all suggestions as we
develop this subregulatory guidance.
We also will continue to maintain open
communication with stakeholders to
ensure that the inpatient classification
and payment policies provide a uniform
process for beneficiary treatment and
claim submission.
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P. Finalization of Interim Final Rule
With Comment Period on the Extension
of the Payment Adjustment for LowVolume Hospitals and the MedicareDependent, Small Rural Hospital (MDH)
Program for FY 2014 Discharges
Through March 31, 2014
1. Background
In the interim final rule with
comment period (IFC) that appeared in
the Federal Register on March 18, 2014
(79 FR 15022) (hereinafter referred to as
the March 2014 IFC), we implemented
the extension of temporary changes to
the payment adjustment for low-volume
hospitals and the MDH program under
the IPPS for FY 2014 discharges through
March 31, 2014, in accordance with
sections 1105 and 1106, respectively, of
the Pathway for SGR Reform Act of 2013
(Pub. L. 113–67) enacted on December
26, 2013. In this final rule, we are
providing a brief summary of the
provisions of that IFC, responding to the
public comments we received, and
stating our final policy.
Section 1105 of the Pathway for SGR
Reform Act extended changes to the
payment adjustment for low-volume
hospitals for an additional 6 months,
through March 31, 2014, of FY 2014.
Section 1106 of the Pathway for SGR
Reform Act extended the MDH program
for an additional 6 months, through
March 31, 2014, of FY 2014. (As
discussed previously in sections IV.D.
and IV.G. of the preamble of this final
rule, the provisions of the PAMA,
enacted on April 1, 2014, further
extended changes to the payment
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adjustment for low-volume hospitals
and the MDH program for an additional
year, through March 31, 2015.)
2. Summary of the Provisions of the
Interim Final Rule With Comment
Period
a. Extension of the Payment Adjustment
for Low-Volume Hospitals
(1) Background
Section 1886(d)(12) of the Act
provides for an additional payment to
each qualifying low-volume hospital
under the IPPS beginning in FY 2005.
The regulations describing the payment
adjustment for low-volume hospitals are
at 42 CFR 412.101.
Sections 3125 and 10314 of the
Affordable Care Act provided for a
temporary change in the low-volume
hospital payment policy for FYs 2011
and 2012. Section 605 of the American
Taxpayer Relief Act of 2012 (ATRA)
extended, for FY 2013, the temporary
changes in the low-volume hospital
payment policy provided for in FYs
2011 and 2012 by the Affordable Care
Act. Prior to the enactment of the
Pathway for SGR Reform Act, for FY
2014 (and subsequent years), the lowvolume hospital qualifying criteria and
payment adjustment returned to the
statutory requirements under section
1886(d)(12) of the Act that were in effect
prior to the amendments made by the
Affordable Care Act and the ATRA. (As
previously noted, the provisions of the
PAMA, enacted on April 1, 2014,
further extended changes to the
payment adjustment for low-volume
hospitals and the MDH program for an
additional year, through March 31,
2015. The extension of the temporary
changes to the low-volume hospital
payment adjustment for FY 2014
discharges occurring on or after April 1,
2014 through September 30, 2014 was
announced in a notice that appeared in
the Federal Register on June 17, 2014
(79 FR 34444). The extension of the
temporary changes to the low-volume
hospital payment adjustment for FY
2015 discharges occurring on or after
October 1, 2014 through March 31,
2015, is discussed in section IV.D. of the
preamble of this final rule.
The Affordable Care Act expanded the
definition of low-volume hospital and
modified the methodology for
determining the payment adjustment for
hospitals meeting that definition for FYs
2011 and 2012. In general, the
amendments made by the Affordable
Care Act modified the qualifying criteria
for low-volume hospitals such that a
hospital qualifies as a low-volume
hospital if it is more than 15 road miles
from another subsection (d) hospital and
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has less than 1,600 Medicare discharges
during the fiscal year. In addition, the
amendments made by the Affordable
Care Act provide that the low-volume
hospital payment adjustment (that is,
the percentage increase) is determined
‘‘using a continuous linear sliding
scale’’ that ranges from 25 percent for
low-volume hospitals with 200 or fewer
Medicare discharges in the fiscal year to
0 percent for low-volume hospitals with
greater than 1,600 Medicare discharges.
For additional information on the
implementation of the temporary
changes in the low-volume hospital
payment policy provided by the
Affordable Care Act, we refer readers to
the FY 2011 IPPS/LTCH PPS final rule
(75 FR 50238 through 50275) and the FY
2012 IPPS/LTCH PPS final rule (76 FR
51677 through 51680).
Section 605 of the ATRA extended the
temporary changes in the low-volume
hospital payment policy provided for in
FYs 2011 and 2012 by the Affordable
Care Act for FY 2013, that is, for
discharges occurring before October 1,
2013. For additional information on the
extension of the temporary changes in
the low-volume hospital payment policy
for FY 2013 as provided by the ATRA,
we refer readers to the notice that
appeared in the Federal Register on
March 7, 2013 (78 FR 14689 through
14694). Additional information on the
expiration of the temporary changes in
the low-volume hospital payment policy
for FYs 2011 through 2013 provided for
by the Affordable Care Act and the
ATRA can be found in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50610
through 50613).
(2) Summary of the Implementation of
the Extension of the Low-Volume
Hospital Payment Adjustment for FY
2014 (through March 31, 2014)
Section 1105 of the Pathway for SGR
Reform Act extended the changes made
by the Affordable Care Act and
extended by the ATRA by amending
sections 1886(d)(12)(B), (C)(i), and (D) of
the Act. In the March 2014 IFC (79 FR
15023 through 15025), we amended the
regulations text at 42 CFR 412.101 to
make conforming changes to the
qualifying criteria and the payment
adjustment for low-volume hospitals
according to the amendments made by
section 1105 of the Pathway for SGR
Reform Act as discussed in that rule.
To implement the extension of the
temporary change in the low-volume
hospital payment policy through the
first half of FY 2014 (that is, for
discharges occurring through March 31,
2014) provided for by the Pathway for
SGR Reform Act, we updated the
discharge data source used to identify
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qualifying low-volume hospitals and
calculate the payment adjustment
(percentage increase) for FY 2014
discharges occurring before April 1,
2014. This approach was consistent
with the existing regulations at
§ 412.101(b)(2)(ii) and with our
implementation of the changes in FYs
2011 and 2012 and the extension of
those changes in FY 2013. Specifically,
for FY 2014 discharges occurring before
April 1, 2014, consistent with our
historical policy, we established that
qualifying low-volume hospitals and
their payment adjustment are
determined using Medicare discharge
data from the March 2013 update of the
FY 2012 MedPAR file, as these data
were the most recent data available at
the time of the development of the FY
2014 payment rates and factors
established in the FY 2014 IPPS/LTCH
PPS final rule. Table 14 of the March
2014 IFC (which is available only
through the Internet on the CMS Web
site at http://www.cms.hhs.gov/
AcuteInpatientPPS/01_overview.asp)
lists the ‘‘subsection (d)’’ hospitals with
fewer than 1,600 Medicare discharges
based on the March 2013 update of the
FY 2012 MedPAR files and their FY
2014 low-volume payment adjustment
(if eligible). However, that list of
hospitals with fewer than 1,600
Medicare discharges in Table 14 does
not reflect whether or not the hospital
meets the distance criterion for FY 2014
discharges occurring before April 1,
2014.
We explained in the March 2014 IFC
(79 FR 15024 through 15025) that in
order to receive a low-volume hospital
payment adjustment under § 412.101, in
accordance with our previously
established procedure, a hospital must
notify and provide documentation to its
MAC that it meets the distance criterion.
We explained that the MAC would refer
to the hospital’s Medicare discharge
data determined by CMS (as provided in
Table 14) to determine whether or not
the hospital meets the discharge
criterion, and the amount of the
payment adjustment for FY 2014
discharges occurring before April 1,
2014, once it is determined that the
distance criterion has been met.
Consistent with our previously
established procedure, we implemented
a procedure for a hospital to request
low-volume hospital status for FY 2014
discharges occurring before April 1,
2014. Specifically, we established that
in order for the applicable low-volume
percentage increase to be applied to
payments for its discharges beginning
on or after October 1, 2013 (that is, the
beginning of FY 2014), a hospital must
make its request for low-volume
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hospital status in writing and this
request must be received by its MAC no
later than March 31, 2014. We also
stated that a hospital that qualified for
the low-volume payment adjustment in
FY 2013 may continue to receive a lowvolume payment adjustment for FY
2014 discharges occurring before April
1, 2014 without reapplying if it
continues to meet the Medicare
discharge criterion based on the March
2013 update of the FY 2012 MedPAR
data (shown in Table 14 of the March
2014 IFC), and the distance criterion.
However, the hospital must send
written verification that was received by
its MAC no later than March 31, 2014,
that it continued to be more than 15
miles from any other ‘‘subsection (d)’’
hospital. We noted that this procedure
is similar to the policy we established
when we implemented the extension of
the temporary changes to the lowvolume hospital payment adjustment for
FY 2013 provided by the ATRA, as well
as the procedure for a hospital to
request low-volume hospital status for
FYs 2011 and 2012 under the provisions
of the Affordable Care Act.
b. Extension of the MDH Program
Section 1106 of the Pathway for SGR
Reform Act of 2013 provided for a 6month extension of the MDH program,
effective from October 1, 2013 to March
31, 2014. Specifically, section 1106 of
the Pathway for SGR Reform Act
amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act by
striking ‘‘October 1, 2013’’ and inserting
‘‘April 1, 2014’’. Section 1106 of the
Pathway for SGR Reform Act also made
conforming amendments to sections
1886(b)(3)(D)(i) and 1886(b)(3)(D)(iv) of
the Act.
In the March 2014 IFC (79 FR 15025
through 15027), we stated that, in
general, as a result of the extension of
the MDH program under the Pathway
for SGR Reform Act, a provider that was
classified as an MDH as of the
September 30, 2013 expiration of the
MDH program, would be reinstated as
an MDH effective October 1, 2013
through March 31, 2014, subject to the
requirements of the regulations at
§ 412.108, with no need to reapply for
MDH classification. In that same IFC,
we amended the regulations at
§ 412.108(a)(1) and (c)(2)(iii) to reflect
the statutory extension of the MDH
program through March 31, 2014, as
provided for by section 1106 of the
Pathway for SGR Reform Act. We also
discussed that, while generally hospitals
that previously qualified for MDH status
would be reinstated as an MDH
retroactively to October 1, 2013, there
were two situations where the effective
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50149
date of MDH status may not have been
retroactive to October 1, 2013 (that is,
MDHs that classified as SCHs on or after
October 1, 2013, and MDHs that
requested a cancellation of their rural
classification under § 412.103(b)). We
provided examples of various scenarios
that illustrate how and when MDH
status under section 1106 of the
Pathway to SGR Reform Act would be
determined for hospitals that were
MDHs as of the September 30, 2013
expiration of the MDH program, subject
to the timing considerations described
in that IFC.
c. Summary of Public Comments,
Responses, and Statements of Final
Policies
We received approximately four
timely pieces of correspondence in
response to the March 2014 IFC.
Comment: Commenters generally
supported CMS’ implementation of the
extension of the temporary changes to
the payment adjustment for low-volume
hospitals and the MDH program through
March 31, 2014. However, they
expressed concern that the March 31,
2014 deadline for hospitals to submit a
written request for low-volume hospital
status to the MAC did not allow
sufficient and reasonable time period for
hospitals to submit the documentation
necessary to qualify for the low-volume
payment adjustment during the 6-month
extension. Therefore, the commenters
urged CMS to extend this deadline to
allow hospitals a minimum of 30 days
to submit the documentation necessary
to qualify for the low-volume payment
adjustment for FY 2014 discharges
through March 31, 2014.
Response: We appreciate the
commenters’ general support for our
implementation of the extension of the
temporary changes to the payment
adjustment for low-volume hospitals
and the MDH program through March
31, 2014. While we understand the
commenters’ concern regarding the time
available for hospitals to request lowvolume hospital status for FY 2014
discharges occurring before April 1,
2014, we note that, at this time, we are
not aware of any hospitals that were
unable to meet the March 31, 2014
deadline for hospitals to request the
low-volume hospital payment
adjustment for FY 2014 discharges
occurring before April 1, 2014.
Furthermore, as we stated in the March
2014 IFC, a hospital that qualified for
the low-volume payment adjustment in
FY 2013 did not need to reapply for FY
2014 if it continues to meet the
applicable discharge and the distance
criteria (that is, such a hospital did not
have to resubmit a low-volume hospital
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request with supporting documentation
to demonstrate that it continues to meet
the distance criterion). Rather, such a
hospital was only required to send
written verification to its MAC that it
continues to meet the distance criterion
(that is, that it continues to be more than
15 miles from any other ‘‘subsection
(d)’’ hospital) by the March 31, 2014
notification deadline. As in prior years,
a short letter to the MAC stating that the
hospital continues to meet the lowvolume hospital distance criterion as
documented in a prior low-volume
hospital status request would be
considered sufficient for this
verification requirement.
For hospitals newly eligible for the
low-volume hospital payment
adjustment, in the March 2014 IFC, we
included guidance, consistent with our
previously established procedure, to
provide focus to their request
preparation efforts. Specifically, we
stated that the use of a Web-based
mapping tool, such as MapQuest, as part
of documenting that the hospital meets
the distance criterion for low-volume
hospitals, is acceptable for the lowvolume hospital request, along with
providing other relevant information
such as the name and street address of
the nearest hospitals, location on a map,
and distance from the hospital
requesting low-volume hospital status.
We also stated that the MAC may follow
up with the hospital to obtain additional
necessary information to determine
whether or not the hospital meets the
low-volume hospital status distance
criterion.
Given the limited nature of the
information required to satisfy the
request and notification requirement,
and the opportunity to provide
additional information if needed, we
believe that the March 31, 2014
deadline allowed for sufficient and
reasonable time for hospitals to submit
their requests. In addition, as we noted
in the March 2014 IFC, the process for
requesting and obtaining the lowvolume hospital payment adjustment for
FY 2014 discharges occurring before
April 1, 2014 was similar to the policy
we established when we implemented
the extension of the temporary changes
to the low-volume hospital payment
adjustment for FY 2013 provided by the
ATRA. For the reasons stated above, we
are not adopting the commenters’
request to allow hospitals a minimum of
30 days to submit the documentation
necessary to qualify for the low-volume
payment adjustment for FY 2014
discharges occurring before April 1,
2014.
Comment: One commenter opposed
using Medicare discharge data from the
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March 2013 update of the FY 2012
MedPAR file (as listed in Table 14 of the
March 2014 IFC) to assess the discharge
criterion for low-volume hospital
eligibility (that is, to determine if the
hospital had less than 1,600 Medicare
discharges) and to determine the
amount of the payment adjustment for
FY 2014 discharges occurring before
April 1, 2014. The commenter believed
certain scenarios were not accounted for
by using historical Medicare discharge
data in the MedPAR file to
prospectively determine low-volume
hospital eligibility and payment. For
example, a hospital that became an IPPS
hospital (either as a newly participating
hospital or conversion from another
provider type, like a CAH) would not be
included in the historical MedPAR
discharge data, or a hospital that
previously did not meet the discharge
criterion based on the historical
Medicare discharge data in the MedPAR
file that now has fewer than 1,600
Medicare discharges in the current year.
The commenter requested that CMS
modify its established policy of using
historical MedPAR discharge data to
determine if a hospital meets the
discharge criterion to allow for
scenarios such as the ones described
above, and noted that CMS could
develop a settlement procedure on the
Medicare cost report for hospitals that
did not have fewer than 1,600 Medicare
discharges in the historical Medicare
discharge data in the MedPAR file but
have fewer than 1,600 Medicare
discharges in the payment year.
Response: As explained in the March
2014 IFC (79 FR 15024), under the
existing regulations at
§ 412.101(b)(2)(ii), for FYs 2011, 2012
and 2013, a hospital’s Medicare
discharges from the most recently
available MedPAR data, as determined
by CMS, are used to determine if the
hospital meets the discharge criteria to
receive the low-volume payment
adjustment in the current year. Since its
initial implementation in FY 2005, we
established a policy of using historical
discharge data to determine if the
hospital meets the discharge criterion to
receive the low-volume payment
adjustment in the current year. Prior to
the temporary changes to the lowvolume hospital payment adjustment
policy under the amendments made by
the Affordable Care Act, discharges from
a prior cost reporting period were used
to determine if the hospital qualified for
the low-volume payment adjustment in
the current year. We adopted the use of
historical Medicare discharge data from
the MedPAR files when we
implemented the amendments made by
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the Affordable Care Act because
MedPAR data are the most recent
available data that provide the number
of discharges for individuals that are
entitled to or enrolled for Medicare Part
A, as required by statute (75 FR 50241).
The most recent Medicare discharge
data are generally available in the
MedPAR files before the corresponding
Medicare discharges from the cost
report data are available due to the
established timeframes for completion
and submission of the Medicare cost
report. (We note that the MedPAR file
contains only Medicare discharge
information, and does not contain
discharge information for non-Medicare
patients. Therefore, hospital cost report
data are the best available data source
for total discharges under the discharge
criterion in § 412.101(b)(2)(i).)
As we discussed when we initially
implemented the low-volume hospital
payment adjustment in the FY 2005
IPPS final rule (69 FR 49100 through
49101), if the determination of whether
hospitals qualify for low-volume
payment adjustments and the
computation of the payment adjustment
amount are based on the number of
discharges in the current fiscal year,
neither CMS nor the hospital will know
with certainty whether a hospital
qualifies for the adjustment, or what the
amount of the adjustment would be,
until after the end of the payment year
(probably not until the time of final cost
report settlement for the year). In such
circumstances, CMS could be faced with
the prospect of recouping large
overpayments in some cases or
reimbursing for large underpayments in
others, and hospitals would face similar
uncertainties. On the other hand, if
these determinations are based on
discharge counts from a prior fiscal
year, hospitals will know in advance
whether they will be receiving a
payment adjustment and what the size
of the adjustment will be, which
provides fiscal stability by allowing
both hospitals and CMS to plan
accordingly. Therefore, we established
that the count of discharges, for
purposes both of meeting the qualifying
definition of a low-volume hospital and
determining the amount of the lowvolume hospital payment adjustment, is
based on the number of discharges
occurring during the cost reporting
period for the most recent submitted
cost report. In that same final rule, we
also recognized that this policy may
temporarily disadvantage certain
hospitals, such as the situations
mentioned by the commenter. However,
we believe that the fiscal stability
provided under a policy based on
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historical data offsets any temporary
disadvantage hospitals in such
situations may experience until their
historical data are used to meet the lowvolume hospital payment adjustment
discharge criterion in a future year, and
for these reasons we believe a settlement
process on the Medicare cost report is
not needed. Therefore, we are not
adopting the commenter’s suggestion to
modify our established policy of using
historical MedPAR discharge data to
determine if a hospital meets the lowvolume hospital discharge criterion or
to determine the amount of the lowvolume hospital payment adjustment for
FY 2014 discharges occurring before
April 1, 2014.
After consideration of the public
comments we received, we are
finalizing all of the provisions set forth
in the March 2014 IFC without
modification. We note that the revisions
to the low-volume hospital payment
adjustment regulations at § 412.101 and
the MDH program regulations at
§ 412.108 under the March 2014 IFC are
superseded by the final conforming
changes to these same regulatory
provisions to reflect the subsequent
extension of the changes to the
qualifying criteria and the payment
adjustment methodology for lowvolume hospitals and the MDH program
through March 31, 2015 under the
PAMA. We refer readers to sections
IV.D. and IV.G. of the preamble of this
final rule, respectively, for more
information on these final conforming
changes.
For information on the estimated
change in payments to IPPS hospitals in
FY 2014 as a result of the
implementation of sections 1105 and
1106 of the Pathway for SGR Reform
Act, we refer readers to the regulatory
impact section of the March 2014 IFC
(79 FR 15028 through 15030).
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Q. Finalization of Interim Final Rule
With Comment Period Relating to
Changes to Certain Cost Reporting
Procedures for Medicare
Disproportionate Share Hospital (DSH)
Uncompensated Care Payments
1. Background
Section 3133 of the Patient Protection
and Affordable Care Act, as amended by
section 10316 of the same Act and
section 1104 of the Health Care and
Education Reconciliation Act (Pub. L.
111–152), added a new section 1886(r)
to the Social Security Act (the Act) that
modified the methodology for
computing the Medicare
disproportionate share hospital (DSH)
payment adjustment beginning in FY
2014. We implemented section 1886(r)
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of the Act in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50620 through
50647). For a detailed discussion of the
background on the reduction in DSH
payments under section 1886(d)(5)(F) of
the Act and the uncompensated care
payment under section 1886(r) of the
Act, we refer readers to section IV.F.3.a.
of the preamble of this final rule.
Following the publication of the FY
2014 IPPS/LTCH PPS final rule, we
issued an interim final rule with
comment period (CMS–1599–IFC) in
which we revised certain policies and
processes described in the FY 2014
IPPS/LTCH PPS final rule. The interim
final rule with comment period
appeared in the Federal Register on
October 3, 2013 (78 FR 61191 through
61197). In the interim final rule with
comment period, we revised certain
operational considerations for hospitals
with Medicare cost reporting periods
that span more than one Federal fiscal
year and also made changes to the data
that will be used in the uncompensated
care payment calculation in order to
ensure that data from Indian Health
Service (IHS) hospitals are included in
Factor 1 and Factor 3 of that calculation.
We found that there was good cause to
waive prior notice and comment and the
delay in effective date with respect to
the revisions discussed in the interim
final rule with comment period (78 FR
61195 through 61196). Accordingly, the
provisions of the interim final rule with
comment period went into effect on
October 1, 2013.
We received 12 timely pieces of
correspondence in response to the
interim final rule with comment period.
Below we summarize the provisions of
the interim final rule with comment
period and the public comments we
received, present our responses, and
finalize the policies that were originally
implemented in the interim final rule
with comment period.
2. Summary of Provisions of the Interim
Final Rule With Comment Period,
Public Comments Received, Responses,
and Finalized Policy
a. Operational Considerations for
Hospitals With Medicare Cost Reporting
Periods That Span More Than One
Federal Fiscal Year
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50645), we finalized ‘‘a
process to distribute interim
uncompensated care payments under
the IPPS on a per-discharge basis
through our claims processing system,
with a reconciliation of the hospitals’
[uncompensated care] payments at cost
report settlement to ensure that
hospitals receive no more than the
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50151
estimated amount included in this final
rule’’. We described that process as
follows (78 FR 50646):
‘‘[A]t cost report settlement, the . . .
fiscal intermediary/MAC will issue a
notice of program reimbursement that
includes a determination concerning
whether each hospital is eligible for
empirically justified Medicare DSH
payments and, therefore, eligible for
uncompensated care payments in FY
2014 and each subsequent year. In the
case where a hospital received interim
payments for its empirically justified
Medicare DSH payments and
uncompensated care payments for FY
2014 or a subsequent year on the basis
of estimates prior to the payment year,
but is determined to be ineligible for the
empirically justified Medicare DSH
payment at cost report settlement, the
hospital would no longer be eligible for
either payment and CMS would recoup
those monies. For a hospital that did not
receive interim payments for its
empirically justified Medicare DSH
payments and uncompensated care
payments for FY 2014 or a subsequent
year, but at cost report settlement is
determined to be eligible for DSH
payments, the uncompensated care
payment for such a hospital is
calculated based on the Factor 3 value
determined prospectively for that fiscal
year. . . . The reconciliations at cost
report settlement would be based on the
values for Factor 1, Factor 2, and Factor
3 that we have finalized prospectively
for a Federal fiscal year.’’
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50646), we provided an
example in which a DSH eligible
hospital has a cost reporting period of
January 1, 2014 through December 31,
2014. We stated that this hospital would
receive interim payments for its
uncompensated care payments
beginning on October 1, 2013. For cost
reporting purposes, we stated that the
uncompensated care payments for
federal FY 2014 would be assigned to
cost reporting periods beginning on or
after October 1, 2013, and would be
reconciled on those cost reports. Thus,
in the example of the hospital with a
cost reporting period beginning on
January 1, 2014, if the hospital remained
eligible for empirically justified DSH
payments at cost report settlement, it
would receive its full FY 2014
uncompensated care payment on its cost
report for the cost reporting period
beginning on January 1, 2014. Although
we acknowledged that it is possible to
align interim and final payments for the
uncompensated care payment with an
individual hospital’s cost reporting
periods, we believed it would be
administratively efficient and practical
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to pay the uncompensated care payment
on the basis of the Federal fiscal year
because that is how it is determined,
and to reconcile that amount in the cost
reporting period that begins in the
respective Federal fiscal year. We stated
in the final rule (78 FR 50647) that we
believed this methodology would not
delay the full payment of FY 2014
payments to hospitals with cost
reporting periods that begin after
October 1, 2013.
However, as we prepared to
implement the FY 2014 IPPS/LTCH PPS
final rule, several difficulties regarding
this approach that we had not
previously considered came to our
attention. We initially proposed to make
interim uncompensated care payments
on a biweekly basis, finalizing a
different process to make interim
uncompensated care payments on a per
discharge basis in response to
comments. In addition to proposing and
finalizing a process for making interim
uncompensated care payments, we also
proposed and finalized a reconciliation
process that would reconcile the
uncompensated care payment for a
given fiscal year, such as FY 2014, on
the cost report for the cost reporting
period beginning in that fiscal year (that
is, for FY 2014, the cost report for the
cost reporting period beginning in FY
2014). We proposed and finalized this
approach because we believed it would
be administratively efficient and
practical. As indicated previously and
in the FY 2014 IPPS/LTCH PPS final
rule, we initially believed that this
policy would neither delay nor
substantially affect the disbursement of
final uncompensated care payments;
but, since the final rule was issued, we
came to doubt these conclusions.
In the interim final rule with
comment period, we stated that we had
come to believe that the policy we
adopted in the FY 2014 IPPS/LTCH PPS
final rule was inconsistent with
longstanding cost reporting
requirements. As a general rule,
payments for discharges are reported in
the cost reporting period in which they
occur, and all payments made for
discharges during a cost reporting
period are reconciled on the cost report
for that period (PRM–I, Section 2805
and 42 CFR 412.1(a)). We did not
specifically address or propose to
change the cost reporting rules in either
the FY 2014 IPPS/LTCH PPS proposed
or final rules. However, for hospitals
with cost reporting periods that were
not concurrent with the Federal fiscal
year, the policy adopted in the FY 2014
IPPS/LTCH PPS final rule departed from
these cost reporting requirements by
reconciling interim uncompensated care
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payments made for discharges occurring
during the hospital’s 2013 cost reporting
period on the hospital’s 2014 cost
report. Under ordinary cost reporting
requirements, those payments (having
been made during the hospital’s 2013
cost reporting period) would have to be
treated as an overpayment on the
hospital’s 2013 cost report and therefore
recouped. However, as finalized in the
FY 2014 IPPS/LTCH PPS final rule, if
the hospital was found to be eligible for
DSH payments for its cost reporting
period that began during FY 2014, we
would pay the hospital its full FY 2014
uncompensated care payment during
the settlement of the hospital’s 2014
cost report (that is, we would repay the
previously recouped uncompensated
care payments when we reconciled the
hospital’s 2014 cost report). We stated
that these administrative issues would
effectively delay uncompensated care
payments, frustrate our policy of making
uncompensated care payments
promptly, and would likely lead to
serious cash flow difficulties for some
hospitals. In summary, we did not
believe the policy we finalized in the FY
2014 IPPS/LTCH PPS final rule of
reconciling uncompensated care
payments for hospitals with cost
reporting periods that begin after
October 1, 2013 would work as intended
for the large majority of IPPS hospitals
that have cost reporting periods that are
not concurrent with the Federal fiscal
year.
To effectuate a revised process, in the
interim final rule with comment period,
we sought to align final payments for
the uncompensated care payment with
each individual hospital’s cost reporting
periods and to reconcile interim
uncompensated care payment amounts
on the hospital’s cost report for the
proportion of the cost reporting period
that overlaps a Federal fiscal year and
in which the interim payments were
made or should have been made.
Therefore, the final uncompensated care
payment amounts that would be
included on a cost report spanning 2
Federal fiscal years would be the pro
rata share of the uncompensated care
payment associated with each Federal
fiscal year. This pro rata share would be
determined based on the proportion of
the applicable Federal fiscal year that is
included in that cost reporting period.
We considered the same example from
the FY 2014 IPPS/LTCH PPS final rule,
where a hospital is estimated to be
eligible for the empirically justified DSH
payment and also an uncompensated
care payment in FY 2014 and has a cost
reporting period of January 1, 2014
through December 31, 2014. Under the
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revised process we adopted in the
interim final rule with comment period,
in that example, that hospital would
still begin to receive interim payments
for its uncompensated care on October
1, 2013. However, instead of having the
entire FY 2014 payment reconciled on
its cost report for the cost reporting
period beginning on January 1, 2014
(which ends on December 31, 2014, and
would therefore require the hospital to
pay back monies received for the
portion of its cost reporting period
beginning on January 1, 2013, that
occurs in Federal fiscal year 2014), we
would reconcile the interim FY 2014
uncompensated care payments received
for discharges from October 1, 2013
through December 31, 2013 on the
hospital’s cost report for the cost
reporting period beginning on January 1,
2013 against a pro rata share of its FY
2014 uncompensated care payment. If
this hospital were eligible for DSH on its
cost report for the cost reporting period
ending on December 31, 2013, it would
receive a pro rata share of its FY 2014
uncompensated care payment. This pro
rata share would be approximately
three-twelfths (that is, the period of time
from October 1, 2013 through December
31, 2013, divided by the period of time
from January 1, 2013 through December
31, 2013) of the hospital’s FY 2014
uncompensated care payment. If the
hospital’s subsequent cost reporting
period is January 1, 2014 through
December 31, 2014, we also would
reconcile the interim FY 2014
uncompensated care payments received
for discharges from January 1, 2014
through September 30, 2014 on the
hospital’s cost report for the cost
reporting period beginning on January 1,
2014 against a pro rata share of its FY
2014 uncompensated care payment. We
also would reconcile the interim FY
2015 uncompensated care payments
received for discharges from October 1,
2014 through December 31, 2014 (that
is, discharges occurring in FY 2015
during that hospital’s cost reporting
period) on the hospital’s cost report for
the cost reporting period beginning on
January 1, 2014 against a pro rata share
of its FY 2015 uncompensated care
payment. Accordingly, for the hospital
in this example, if it remained eligible
for Medicare DSH on its cost report for
the cost reporting period beginning on
January 1, 2014, it would receive the
sum of two pro rata shares of
uncompensated care payments, one pro
rata share equal to approximately ninetwelfths (that is, the period of time from
January 1, 2014 through September 30,
2014 divided by the period of time from
January 1, 2014 through December 31,
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2014) of the hospital’s FY 2014
uncompensated care payment and one
pro rata share equal to approximately
three-twelfths (that is, the period of time
from October 1, 2014 through December
31, 2014 divided by the period of time
from January 1, 2014 through December
31, 2014) of the hospital’s FY 2015
uncompensated care payment.
Under the interim final rule with
comment period, and in accordance
with the policies we finalized in the FY
2014 IPPS/LTCH PPS final rule
regarding eligibility for the
uncompensated care payment, hospitals
with cost reporting periods that span
more than one Federal fiscal year will
be eligible for the respective pro rata
shares of their uncompensated care
payment if they were eligible for DSH in
that cost reporting period. If they were
ineligible for DSH in that cost reporting
period, they would be ineligible to
receive the respective pro rata share of
the uncompensated care payment for
the respective Federal fiscal year (or
years). We stated that we believed this
approach remained fundamentally
consistent with the policy we finalized
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50622) where we stated that
‘‘our final determination on the
hospital’s eligibility for uncompensated
care payments would be based on the
hospital’s actual DSH status on the cost
report for that payment year.’’ However,
it avoided the cost reporting difficulties
that would have arisen from the
reconciliation process originally
adopted in the final rule.
Comment: Several commenters
supported the modifications to align
uncompensated care payments based on
the Federal fiscal year, instead of based
on a hospital’s cost reporting period.
Commenters supported the change in
policy such that the final
uncompensated care payment amounts
that would be included on a hospital’s
cost report that spans 2 Federal fiscal
years will be the pro rata share of the
uncompensated care payment
associated with each Federal fiscal year.
Response: We appreciate the
commenters’ support.
Comment: One commenter
recommended that when CMS
reconciles uncompensated care
payments on a pro rata basis based on
the portion of a hospital’s cost reporting
period that falls in the Federal fiscal
year, CMS prorate on a calendar month
basis as opposed to calendar day basis
for administrative simplicity.
Response: We appreciate the
commenter’s recommendation. Under
the policy finalized in the interim final
rule with comment period, we
determine a pro rata share based on the
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proportion of the applicable Federal
fiscal year that is included in that cost
reporting period. We intend to establish
the pro rate share on a calendar day
basis, as opposed to a calendar month
basis. We believe we can more
accurately account for the
uncompensated care payment amounts
when we reconcile on a calendar day
basis, as we can easily obtain the
number of days from a hospital’s cost
reporting period on the hospital’s
Medicare Hospital Cost Report.
Therefore, this process will not be
administratively burdensome.
Furthermore, we disagree that it would
be administratively easier or simpler to
prorate on a monthly basis, particularly
in cases where a hospital’s cost report
may end in the middle of the month.
b. Treatment of Indian Health Service
Hospitals
In the FY 2014 IPPS/LTCH PPS final
rule, we discussed the hospitals that are
eligible to receive the uncompensated
care payments under section 1886(r)(2)
of the Act. Specifically, we stated (78 FR
50622) that the ‘‘new payment
methodology under subsection (r)
applies to ‘subsection (d) hospitals’ that
would otherwise receive a
‘disproportionate hospital share
payment . . . made under subsection
(d)(5)(F).’ ’’ Therefore, eligibility for
empirically justified Medicare DSH
payments is unchanged under this new
provision. Consistent with the law,
hospitals must receive empirically
justified Medicare DSH payments in FY
2014 or a subsequent year to receive an
additional Medicare uncompensated
care payment for that year.
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized our methodology for
calculating the new uncompensated
care payments. As we discussed in that
final rule, section 1886(r)(2) of the Act
provides that for each eligible hospital
in FY 2014 and subsequent years, the
new uncompensated care payment is
the product of three factors. Factor 1 of
that methodology is the ‘‘difference
between our estimates of: (1) the amount
that would have been paid in Medicare
DSH payments for FY 2014 and
subsequent years, in the absence of the
new payment provision; and (2) the
amount of empirically justified
Medicare DSH payments that are made
for FY 2014 and subsequent years,
which takes into account the
requirement to pay 25 percent of what
would have otherwise been paid under
section 1886(d)(5)(F) of the Act. In other
words, this factor represents our
estimate of 75 percent (100 percent
minus 25 percent) of our estimate of
Medicare DSH payments that would
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50153
otherwise be made, in the absence of
section 1886(r) of the Act, for FY 2014
and subsequent years’’ (78 FR 50627).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50630), we finalized our
proposal to use the most recently
available estimates, as calculated by the
CMS Office of the Actuary, to determine
both the aggregate amount of
empirically justified DSH payments
under section 1886(r)(1) of the Act and
the aggregate amount of payments that
would otherwise have been made under
section 1886(d)(5)(F) of the Act. In order
to calculate these estimates, the Office
of the Actuary used the March 2013
update of the Medicare Hospital Cost
Report Information System (HCRIS) and
the proposed rule’s IPPS Impact file.
The estimate excluded Maryland
hospitals, SCHs paid under their
hospital-specific rate, and hospitals in
the Rural Community Hospital
Demonstration Program, as these
hospitals do not receive a Medicare DSH
payment. The CMS Office of the
Actuary’s final estimate for Medicare
DSH payments for FY 2014 without
regard to the application of section
1886(r)(1) of the Act, was approximately
$12.772 billion. The estimate for
empirically justified Medicare DSH
payments for FY 2014, with the
application of section 1886(r)(1) of the
Act, was approximately $3.193 billion.
Factor 1 is the difference of these two
estimates by our Office of the Actuary;
therefore, in the FY 2014 IPPS/LTCH
PPS final rule, we calculated Factor 1 to
be approximately $9.579 billion.
IHS hospitals are subsection (d)
hospitals that can receive empirically
justified Medicare DSH payments under
section 1886(r)(1) of the Act if they meet
the eligibility requirements under
subsection (d)(5)(F). Therefore, eligible
IHS hospitals also receive the new
uncompensated care payment under
subsection (r)(2). However, following
the issuance of the FY 2014 IPPS/LTCH
PPS final rule, it came to our attention
that, although IHS hospitals can receive
Medicare DSH payments, they submit
Medicare hospital cost reports to CMS
that are not uploaded in the HCRIS
database. Therefore, their Medicare DSH
payments were not included in the
estimates by our Office of the Actuary
that were used to calculate Factor 1. We
stated in the interim final rule with
comment period that because IHS
hospitals are eligible to receive
Medicare DSH payments and the new
uncompensated care payments, we
believe it is inappropriate to exclude the
Medicare DSH payments to IHS
hospitals from the estimates used to
calculate Factor 1. In addition, we
acknowledged that we did not intend to
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finalize a policy that specifically
excludes DSH payments to IHS
hospitals from our estimate of Medicare
DSH payments for purposes of
calculating Factor 1 in the calculation of
the uncompensated care payment.
Therefore, in the interim final rule
with comment period, we revised the
policy originally adopted in the FY 2014
IPPS/LTCH PPS final rule in order to
change the data that will be considered
in calculating Factor 1 for FY 2014 and
subsequent years. Specifically, in
addition to the March 2013 update of
HCRIS, we will also consider cost report
data provided by IHS hospitals to CMS
as of March 2013. We also will
recalculate Factor 1, to reflect the Office
of the Actuary’s estimate of Medicare
DSH payments to IHS hospitals, based
on these cost report data. With the
inclusion of the Medicare DSH
payments to IHS hospitals, our Office of
the Actuary’s revised estimate of
Medicare DSH payments for FY 2014
without regard to the application of
1886(r)(1) of the Act was approximately
$12.791 billion (this revised estimate
also includes the correction for Factor 1
made in the correcting document for the
FY 2014 IPPS/LTCH PPS final rule that
also appeared in the Federal Register on
October 3, 2013 (78 FR 61198)). The
CMS Office of the Actuary’s revised
estimate of empirically justified
Medicare DSH payments for FY 2014,
with the application of section
1886(r)(1) of the Act, was approximately
$3.198 billion (this revised estimate also
includes the correction for Factor 1
made in the correcting document for the
FY 2014 IPPS/LTCH PPS final rule (78
FR 61198)). Factor 1 is the difference of
these two estimates of our Office of the
Actuary; therefore, in the interim final
rule with comment period, we
recalculated Factor 1 to be
approximately $9.593 billion (this
revised estimate also includes the
correction for Factor 1 made in the
correcting document for the FY 2014
IPPS/LTCH PPS final rule (78 FR
61198)). We noted that, based on the
recalculation of Factor 1, the amount
available for uncompensated care
payments for FY 2014 would be
approximately $9.046 billion (our
determination of Factor 2 as finalized in
the FY 2014 IPPS/LTCH PPS final rule
of 0.943 times our revised Factor 1
estimate of $9.593 billion).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50634 through 50643), we
discussed the methodology used to
calculate Factor 3 in the calculation of
the uncompensated care payment.
Under the final policy adopted in that
final rule, for FY 2014 we determined a
DSH hospital’s Factor 3 as the sum of its
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Medicaid days and SSI days (numerator)
relative to the total number of Medicaid
days and SSI days for all DSH hospitals
(denominator). We determined a
hospital’s SSI days based on the most
recent SSI fraction. As we stated in the
FY 2014 IPPS/LTCH PPS final rule, the
most recent SSI fractions available for
making this determination for FY 2014
were the FY 2011 SSI fractions. The FY
2011 SSI fractions for each subsection
(d) hospital were published on the CMS
Web site on June 27, 2013. In addition,
under the final policy adopted in the FY
2014 IPPS/LTCH PPS final rule, we
determine a hospital’s Medicaid days
based on the Medicaid days reported on
the 2011, or if not available, the 2010
Medicare Hospital Cost Report, using
the March 2013 update of HCRIS.
Because the cost reports submitted by
IHS hospitals are not uploaded into
HCRIS, we did not include their
Medicaid days in our calculation of
Factor 3. Specifically, Medicaid days for
IHS hospitals were excluded from the
numerator of Factor 3 for those IHS
hospitals and from the denominator of
Factor 3 for all hospitals. As a result, in
the interim final rule with comment
period, we indicated that we believed
that the Factor 3 that was calculated for
each IHS hospital under the policies
adopted in the 2014 IPPS/LTCH PPS
final rule, based only on FY 2011 SSI
days, significantly understated the
actual amount of uncompensated care
furnished by these hospitals. The
uncompensated care payment amounts
calculated for these hospitals were also
significantly lower than they would
have been had these days been
included. We were concerned that,
under the policy originally adopted in
the FY 2014 IPPS/LTCH PPS final rule,
IHS hospitals that serve a significant
low income population would be
subject to the 75-percent reduction to
their Medicare DSH payments under
section 1886(r)(1) of the Act but would
receive reduced uncompensated care
payments under section 1886(r)(2) of the
Act due to their cost reports not being
included in the HCRIS database. Given
that we intended to base our estimate of
the uncompensated care provided by
IHS hospitals, in part, on the care they
provide to Medicaid patients, we
believed it was appropriate to make a
change to the data that are considered
in determining Factor 3 of the new
uncompensated care payment to allow
the Medicaid days for IHS hospitals to
be included. This change would also
help to ensure that eligible IHS
hospitals receive an uncompensated
care payment that does not significantly
understate the amount of
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uncompensated care they provide.
Accordingly, in the interim final rule
with comment period, we revised the
policy adopted in the FY 2014 IPPS/
LTCH PPS final rule to permit us to
consider cost report data submitted to
CMS as of March 2013 only by IHS
hospitals in addition to data reflected in
the March 2013 update of HCRIS, in
calculating Factor 3 of the
uncompensated care payment. The
Medicaid days for IHS hospitals that are
reflected in the cost report data would
be included in the numerator of the
Factor 3 calculation for IHS hospitals
and would be included in the
denominator of Factor 3 for all hospitals
eligible to receive the uncompensated
care payment.
Comment: Several commenters
supported the change in policy to
incorporate hospital cost report data for
IHS hospitals that was not included in
the HCRIS database in the calculation of
Factor 1 and Factor 3. Commenters
agreed that it was inappropriate to
exclude cost report data for IHS
hospitals from the calculation of Factor
1 and supported the inclusion of cost
report data for these hospitals in the
calculation of Factor 1, which
represents the Secretary’s estimate of 75
percent of Medicare DSH payments in
FY 2014. In addition, commenters
supported using IHS cost report data to
identify Medicaid days to incorporate
into the calculation of Factor 3 for these
IHS hospitals. One commenter sought
clarification of the definition of an IHS
hospital in order to clarify what
category of hospitals are subject to the
policies finalized in the interim final
rule with comment period. The
commenters sought confirmation that an
IHS hospital includes ‘‘any hospital
operated by an Indian Tribe or Tribal
health program carrying out IHS
programs under the Indian SelfDetermination and Education
Assistance Act (ISDEAA).’’ In other
words, the commenters sought
clarification that IHS hospitals include
facilities that are either owned or leased
by IHS or are deemed by CMS to be IHS
facilities because they are operated by
an Indian Tribe or Tribal organization
under the ISDEAA. The commenters
also sought clarification that CMS will
treat cost reports from all such
qualifying hospitals in the same way
that it treats IHS directly operated
hospitals in determining the amount of
uncompensated care payments.
Response: We appreciate the
commenters’ support of our policy
change. An IHS hospital is defined
under section 1880 of the Act as a
‘‘hospital or skilled nursing facility of
the Indian Health Service, whether
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operated by such Service or by an
Indian tribe or tribal organization (as
those terms are defined in section 4 of
the Indian Health Care Improvement
Act) . . . .’’ Therefore, with regard to
the policies in the interim final rule
with comment period related to IHS
hospitals, we do not make a distinction
with respect to whether the hospital is
owned or operated by the Indian Health
Service or by an Indian tribe or tribal
organization. Cost report data submitted
both by hospitals operated by the IHS
and by hospitals operated by an Indian
tribe or tribal organization are excluded
from HCRIS. Therefore, the policies
described in the interim final rule with
comment period regarding the use of
cost report data submitted by IHS
hospitals in order to calculate Factor 1
and Factor 3 apply to all IHS hospitals
whether they are owned or operated by
the Indian Health Service or by an
Indian tribe or tribal organization.
Comment: Several commenters raised
concerns that CMS did not adequately
address mergers in the calculation of the
uncompensated care payment. The
commenters disagreed with CMS’
treatment of mergers under the policy
finalized in the FY 2014 IPPS/LTCH
PPS final rule that if one DSH-eligible
hospital merges with another DSHeligible hospital, only the data
associated with the surviving hospital is
used to calculate the hospital’s share of
uncompensated care payments.
Commenters asserted that the policy on
mergers understates uncompensated
care payments for merged providers and
does not accurately reflect the merged
hospital’s uncompensated care costs.
Response: We thank the commenters
for these comments. However, we
consider these comments to be out of
the scope of the policies addressed in
the interim final rule with comment
period. We discuss our policies
regarding the treatment of mergers in
the calculation of the Factor 3 in section
IV.F. of the preamble of this FY 2015
IPPS/LTCH PPS final rule.
Comment: One commenter suggested
that, for hospitals that had low-income
insured days calculated using a cost
report for a cost reporting period that
was less than 12 months, CMS should
use low-income insured days based on
an older cost reporting period that was
12 months.
Response: We thank the commenter
for this comment. However, we consider
this comment to be out of the scope of
the policies addressed in the interim
final rule with comment period. We
discuss our methodology to calculate
Factor 3, including our treatment of
short cost reporting periods, in section
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IV.F. of the preamble of this FY 2015
IPPS/LTCH PPS final rule.
Comment: One commenter addressed
the calculation of the interim per claim
uncompensated care payment amounts
that are paid to hospitals projected to be
eligible to receive DSH payments in a
Federal fiscal year; the per claim
amount is based on a hospital’s total
uncompensated care amount divided by
the hospital’s average number of claims
from the most recent 3 years of data.
Specifically, the commenter requested
that CMS use the claims published in
the case-mix files to calculate the 3-year
average because, in the commenter’s
view, CMS’ data source understates the
average number of claims potentially
resulting in an overpayment on a per
claim basis. The commenter also
recommended that CMS use a growth
factor to account for new enrollees that
may increase the number of claims in
the calculation of the three year average
number of claims. The commenter also
noted the wide variation in per claim
amounts from approximately $9 to
$167,000 and requested that CMS place
a cap on the per claim amount to
minimize swings in cash flow at cost
report settlement and because it did not
make sense that Medicare or MA plans
pay such a high amount.
Response: We thank the commenter
for this comment. However, we consider
the issues raised in the comment to be
out of the scope of the policies
addressed in the interim final rule with
comment period. We received a similar
comment on the FY 2015 IPPS/LTCH
PPS proposed rule and address the
comment in section IV.F. of the
preamble of this FY 2015 IPPS/LTCH
PPS final rule.
After consideration of the public
comments we received, we are
finalizing all of the provisions set forth
in the interim final rule with comment
period without modification, to allow
final uncompensated care payments to
be paid on the same schedule as
Medicare DSH payments, so that both
the uncompensated care payment and
Medicare DSH payments will be paid
and reconciled on a hospital’s cost
report, based on the applicable Federal
fiscal year(s) and to allow information
included in the cost reports submitted
by IHS hospitals to be used in the
calculation of Factor 1 and Factor 3. For
information on the estimated change in
payments to hospitals in FY 2014 as a
result of the provisions set forth in the
interim final rule with comment period,
we refer readers to the regulatory impact
statement in the interim final rule with
comment period (78 FR 61197). We note
that the impact of our decision to
finalize the interim final rule with
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50155
comment period is included in the
regulatory impact statement in
Appendix A of this FY 2015 IPPS/LTCH
PPS final rule as part of the discussion
of the estimated change in payments to
hospitals in FY 2015 as a result of the
policies regarding Medicare DSH
payments and uncompensated care
payments that we are adopting in the
final rule.
V. Changes to the IPPS for CapitalRelated Costs
A. Overview
Section 1886(g) of the Act requires the
Secretary to pay for the capital-related
costs of inpatient acute hospital services
‘‘in accordance with a prospective
payment system established by the
Secretary.’’ Under the statute, the
Secretary has broad authority in
establishing and implementing the IPPS
for acute care hospital inpatient capitalrelated costs. The IPPS for capitalrelated costs was initially implemented
in the Federal fiscal year (FY) 1992 IPPS
final rule (56 FR 43358), in which we
established a 10-year transition period
to change the payment methodology for
Medicare hospital inpatient capitalrelated costs from a reasonable costbased methodology to a prospective
methodology (based fully on the Federal
rate).
FY 2001 was the last year of the 10year transition period established to
phase in the IPPS for hospital inpatient
capital-related costs. For cost reporting
periods beginning in FY 2002, capital
IPPS payments are based solely on the
Federal rate for almost all acute care
hospitals (other than hospitals receiving
certain exception payments and certain
new hospitals). (We refer readers to the
FY 2002 IPPS final rule (66 FR 39910
through 39914) for additional
information on the methodology used to
determine capital IPPS payments to
hospitals both during and after the
transition period.)
The basic methodology for
determining capital prospective
payments using the Federal rate is set
forth in § 412.312 of the regulations. For
the purpose of calculating capital
payments for each discharge, the
standard Federal rate is adjusted as
follows:
(Standard Federal Rate) × (DRG
Weight) × (Geographic Adjustment
Factor (GAF)) × (COLA for hospitals
located in Alaska and Hawaii) × (1 +
Capital DSH Adjustment Factor +
Capital IME Adjustment Factor, if
applicable).
In addition, under § 412.312(c),
hospitals also may receive outlier
payments under the capital IPPS for
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extraordinarily high-cost cases that
qualify under the thresholds established
for each fiscal year.
B. Additional Provisions
1. Exception Payments
The regulations at § 412.348 provide
for certain exception payments under
the capital IPPS. The regular exception
payments provided under §§ 412.348(b)
through (e) were available only during
the 10-year transition period. For a
certain period after the transition
period, eligible hospitals may have
received additional payments under the
special exceptions provisions at
§ 412.348(g). However, FY 2012 was the
final year hospitals could receive
special exceptions payments. For
additional details regarding these
exceptions policies, we refer readers to
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51725).
Under § 412.348(f), a hospital may
request an additional payment if the
hospital incurs unanticipated capital
expenditures in excess of $5 million due
to extraordinary circumstances beyond
the hospital’s control. Additional
information on the exception payment
for extraordinary circumstances in
§ 412.348(f) can be found in the FY 2005
IPPS final rule (69 FR 49185 and 49186).
2. New Hospitals
Under the capital IPPS, § 412.300(b)
of the regulations defines a new hospital
as a hospital that has operated (under
previous or current ownership) for less
than 2 years and lists examples of
hospitals that are not considered new
hospitals. In accordance with
§ 412.304(c)(2), under the capital IPPS a
new hospital is paid 85 percent of its
allowable Medicare inpatient hospital
capital-related costs through its first 2
years of operation, unless the new
hospital elects to receive full
prospective payment based on 100
percent of the Federal rate. We refer
readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51725) for additional
information on payments to new
hospitals under the capital IPPS.
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3. Hospitals Located in Puerto Rico
Section 412.374 of the regulations
provides for the use of a blended
payment amount for prospective
payments for capital-related costs to
hospitals located in Puerto Rico.
Accordingly, under the capital IPPS, we
compute a separate payment rate
specific to Puerto Rico hospitals using
the same methodology used to compute
the national Federal rate for capitalrelated costs. In general, hospitals
located in Puerto Rico are paid a blend
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of the applicable capital IPPS Puerto
Rico rate and the applicable capital IPPS
Federal rate. Capital IPPS payments to
hospitals located in Puerto Rico are
computed based on a blend of 25
percent of the capital IPPS Puerto Rico
rate and 75 percent of the capital IPPS
Federal rate. For additional details on
capital IPPS payments to hospitals
located in Puerto Rico, we refer readers
to the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51725).
C. Annual Update for FY 2015
The annual update to the capital PPS
Federal and Puerto Rico-specific rates,
as provided for at § 412.308(c), for FY
2015 is discussed in section III. of the
Addendum to this final rule.
We note that, in section II.D. of the
preamble of this final rule, we present
a discussion of the MS–DRG
documentation and coding adjustment,
including previously finalized policies
and historical adjustments, as well as
the recoupment adjustment to the
standardized amounts under section
1886(d) of the Act that we are finalizing
for FY 2015 in accordance with the
amendments made to section 7(b)(1)(B)
of Public Law 110–90 by section 631 of
the ATRA. As we discussed in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28171), because section 631 of the
ATRA requires CMS to make a
recoupment adjustment only to the
operating IPPS standardized amount, we
are not making a similar adjustment to
the national or Puerto Rico capital IPPS
rates (or to the operating IPPS hospitalspecific rates or Puerto Rico-specific
standardized amount). This approach is
consistent with our historical approach
regarding the application of the
recoupment adjustment authorized by
section 7(b)(1)(B) of Public Law 110–90.
In section II.D.7. of the preamble of
this final rule, we also note our
discussion in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50747) of the
possibility of applying an additional
prospective adjustment to account for
the cumulative MS–DRG documentation
and coding effect through FY 2010. In
that same final rule (78 FR 50515
through 50517 and 50747), we stated
that if we were to apply an additional
prospective adjustment for the
cumulative MS–DRG documentation
and coding effect through FY 2010, we
believe the most appropriate additional
adjustment is ¥0.55 percent. We did
not apply an additional prospective
adjustment in FY 2014 for the
cumulative MS–DRG documentation
and coding effect through FY 2010,
consistent with the approach taken for
the operating IPPS standardized amount
(and hospital-specific rates). We
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continue to believe that if we were to
apply an additional prospective
adjustment for the cumulative MS–DRG
documentation and coding effect
through FY 2010, the most appropriate
additional adjustment is ¥0.55 percent.
However, we did not propose such an
adjustment to the capital Federal rate in
FY 2015, consistent with the approach
taken for the operating IPPS
standardized amount (and hospitalspecific rates) as discussed in section
II.D.7. of the preamble of this final rule.
We will consider whether such an
adjustment to the capital IPPS Federal
rate is appropriate in future years’
rulemaking.
VI. Changes for Hospitals Excluded
From the IPPS
A. Rate-of-Increase in Payments to
Excluded Hospitals for FY 2015
Certain hospitals excluded from a
prospective payment system, including
children’s hospitals, 11 cancer
hospitals, and hospitals located outside
the 50 States, the District of Columbia,
and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands,
and American Samoa) receive payment
for inpatient hospital services they
furnish on the basis of reasonable costs,
subject to a rate-of-increase ceiling. A
per discharge limit (the target amount as
defined in § 413.40(a) of the regulations)
is set for each hospital based on the
hospital’s own cost experience in its
base year, and updated annually by a
rate-of-increase percentage. For each
cost reporting period, the updated target
amount is multiplied by total Medicare
discharges during that period and
applies as an aggregate upper limit (the
ceiling as defined in § 413.40(a)) of
Medicare reimbursement for total
inpatient operating costs for a hospital’s
cost reporting period. In accordance
with § 403.752(a) of the regulations,
RNHCIs also are subject to the rate-ofincrease limits established under
§ 413.40 of the regulations discussed
above.
As explained in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50747),
beginning with FY 2006, we have used
the percentage increase in the IPPS
operating market basket to update the
target amounts for children’s hospitals,
cancer hospitals, and RNHCIs.
Consistent with §§ 412.23(g),
413.40(a)(2)(ii)(A), and
413.40(c)(3)(viii), we also have used the
percentage increase in the IPPS
operating market basket to update the
target amounts for short–term acute care
hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana
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Islands, and American Samoa. For the
reasons explained in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50747), we
proposed in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28171) to
continue to use the percentage increase
in the IPPS operating market basket to
update the target amounts for children’s
hospitals, cancer hospitals, RNHCIs, and
short-term acute care hospitals located
in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and
American Samoa for FY 2015 and
subsequent fiscal years.
In addition, because we have revised
and rebased the IPPS operating market
basket to a FY 2010 base year, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28172) we proposed to continue to
use the percentage increase in the FY
2010-based IPPS operating market
basket to update these target amounts
for FY 2015 and subsequent fiscal years.
(We refer readers to the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50596
through 50603) for a further discussion
of the revision and rebasing of the IPPS
operating market to a FY–2010 base
year.)
We did not receive any public
comments on these proposals.
Therefore, we are finalizing our
proposals as discussed above and in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28171 through 28172).
Accordingly, for FY 2015, the rate-ofincrease percentage to be applied to the
target amount for these children’s
hospitals, cancer hospitals, RNHCIs, and
short-term acute care hospitals located
in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and
American Samoa is the FY 2015
percentage increase in the FY 2010based IPPS operating market basket.
For the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28172), based on
IHS Global Insight, Inc.’s 2014 first
quarter forecast, we estimated that the
FY 2010-based IPPS operating market
basket update for FY 2015 was 2.7
percent (that is, the estimate of the
market basket rate-of-increase). We
indicated in the proposed rule that if
more recent data became available for
the final rule, we would use them to
calculate the IPPS operating market
basket update for FY 2015. For this FY
2015 IPPS/LTCH PPS final rule, based
on IHS Global Insight, Inc.’s 2014
second quarter forecast (which is the
most recent data available), we
calculated the FY 2010-based IPPS
operating market basket update for FY
2015 to be 2.9 percent. Therefore, the
FY 2015 rate-of-increase percentage that
is applied to the FY 2014 target amounts
in order to calculate the final FY 2015
target amounts for children’s hospitals,
cancer hospitals, RNHCIs, and shortterm acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa
is 2.9 percent, in accordance with the
applicable regulations at 42 CFR 413.40.
B. Report on Adjustment (Exceptions)
Payments
Section 4419(b) of Public Law 105–33
requires the Secretary to publish
annually in the Federal Register a
report describing the total amount of
adjustment payments made to excluded
hospitals and hospital units by reason of
section 1886(b)(4) of the Act during the
previous fiscal year.
The process of requesting, adjusting,
and awarding an adjustment payment is
likely to occur over a 2-year period or
longer. First, generally, an excluded
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Class of hospital
50157
hospital must file its cost report for a
fiscal year in accordance with
§ 413.24(f)(2). The MAC reviews the cost
report and issues a notice of program
reimbursement (NPR). Once the hospital
receives the NPR, if its operating costs
are in excess of the ceiling, the hospital
may file a request for an adjustment
payment. After the MAC receives the
hospital’s request in accordance with
applicable regulations, the MAC or
CMS, depending on the type of
adjustment requested, reviews the
request and determines if an adjustment
payment is warranted. This
determination is sometimes not made
until more than 180 days after the date
the request is filed because there are
times when the applications are
incomplete and additional information
must be requested in order to have a
completed application. However, in an
attempt to provide interested parties
with data on the most recent
adjustments for which we do have data,
we are publishing data on adjustment
payments that were processed by the
MAC or CMS during FY 2013.
The table below includes the most
recent data available from the MACs
and CMS on adjustment payments that
were adjudicated during FY 2013. As
indicated above, the adjustments made
during FY 2013 only pertain to cost
reporting periods ending in years prior
to FY 2012. Total adjustment payments
given to excluded hospitals during FY
2013 are $1,829,578. The table depicts
for each class of hospitals, in the
aggregate, the number of adjustment
requests adjudicated, the excess
operating costs over the ceiling, and the
amount of the adjustment payments.
Excess cost
over ceiling
Number
Adjustment
payments
Children’s .....................................................................................................................................
Cancer .........................................................................................................................................
Religious Nonmedical Health Care Institution (RNHCI) ..............................................................
4
0
3
$2,032,227
N/A
1,056,142
$1,182,011
N/A
647,567
Total ......................................................................................................................................
........................
........................
1,829,578
C. Updates to the Reasonable
Compensation Equivalent (RCE) Limits
on Compensation for Physician Services
Provided in Providers (§ 415.70)
1. Background
Under section 1848 of the Act and 42
CFR Parts 414 and 415, medical or
surgical services furnished by
physicians to individual Medicare
beneficiaries generally are billed and
paid under Medicare Part B on a fee-forservice basis under the Medicare
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Physician Fee Schedule (MPFS). As
required by section 1887(a)(2)(B) of the
Act, the amount of allowable
compensation for services furnished by
physicians to providers that are paid by
Medicare on a reasonable cost basis is
subject to reasonable compensation
equivalent (RCE) limits. Under these
limits, Medicare recognizes as
reasonable, for purposes of payment to
the provider, the lower of the actual cost
of the services furnished by the
physician to the provider (that is, any
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form of compensation to the physician)
or an RCE. The allowable compensation
costs for physicians’ services to a
provider are described in § 415.55 of the
regulations. Under § 415.60(a) of the
regulations, for purposes of applying the
RCE limits, physician compensation
costs means monetary payments, fringe
benefits, deferred compensation, and
any other items of value (excluding
office space and billing and collection
services) that a provider or other
organization furnishes a physician in
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return for the physician’s services to the
provider.
On March 2, 1983, we published a
final rule in the Federal Register that
codified regulations to implement
section 1887(a)(2)(B) of the Act
(currently at 42 CFR 415.70) and
established the first set of RCE limits (48
FR 8902). In accordance with
§ 415.70(a)(2), RCE limits do not apply
to the costs of physician compensation
attributable to furnishing inpatient
hospital services for which payment is
made under the IPPS or to the costs of
physician compensation attributable to
approved GME programs that are
payable under §§ 413.75 through 413.83
of the regulations. In addition, under
§ 415.70(a)(3), compensation that a
physician receives for activities that
may not be paid for under either
Medicare Part A or Part B is not
considered in applying these RCE
limits. Furthermore, in accordance with
§ 413.70, RCE limits are not used in
determining the reasonable costs that
CAHs incur in compensating physicians
for services furnished to the CAH.
The RCE limits apply equally to all
physicians’ services to providers that
are payable on a reasonable cost basis
under Medicare. If a physician receives
any compensation from one or more
providers for his or her services to the
provider (that is, those services that
benefit patients generally), payment to
those providers for the costs of such
compensation is subject to the RCE
limits. The RCE limits are not applied
to payment for services that are
identifiable medical or surgical services
to individual patients and paid under
the MPFS, even if the physician agrees
to accept compensation (for example,
from a hospital) for those services.
Payments to teaching hospitals that
have elected cost reimbursement for
their physicians’ direct medical and
surgical services in accordance with
section 1861(b)(7) of the Act are subject
to the RCE limits (68 FR 45458).
2. Overview of the Current RCE Limits
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a. Application of the RCE Limits
Currently, we use the RCE limits to
compute Medicare payments when a
physician is compensated by a provider
that is subject to the RCE limits. We also
use these limits when the physician is
compensated by any other providerrelated organization for physician
administrative, supervisory, and other
services to the provider under Medicare.
In applying the RCE limits, we compute
the Medicare payments using
information submitted on the cost
report, and ensure that each
compensated physician is assigned to
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the most appropriate specialty category.
The current physician specialty
categories for RCE limits are General/
Family Practice, Internal Medicine,
Surgery, Pediatrics, OB/GYN,
Radiology, Psychiatry, Anesthesiology,
Pathology, and Total. If there is no
specific specialty category (for example,
for an emergency room physician), we
use the ‘‘Total’’ category, for which the
RCE limits are calculated based on mean
annual income data for all physicians.
If the physician’s contractual
compensation covers all duties,
activities, and services furnished to the
provider and, under a reassignment, all
physicians’ services furnished to
individual patients of the provider, and
the physician is employed by the
provider full time, we use the RCE limit
for the appropriate specialty, adjusted
by the physician’s allocation agreement
(which reflects the percentage of total
time spent performing services
furnished to the provider) to arrive at
the Medicare program’s share of the
provider’s allowable physician
compensation costs (§ 415.60). In the
absence of an allocation agreement, we
would assume that 100 percent of the
compensation paid to the physician by
the provider is related to physicians’
services for which payment is made
under the MPFS and that there are no
allowable physician compensation costs
to the provider (§ 415.60(f)(2)).
If a physician’s compensation from
the provider represents payment only
for services that benefit patients
generally (that is, the physician bills for
all services furnished to individual
patients), we use the appropriate
specialty RCE limit. If a physician is
employed by a provider to furnish
services of general benefit to patients on
other than a full-time basis, the RCE
limit will be adjusted to reflect the
hours the physician actually worked, as
reported on the provider’s cost report,
related to a full work year of 2,080
hours.
b. Exceptions to the RCE Limits
Some providers such as small or rural
hospitals may be unable to recruit or
maintain an adequate number of
physicians at a compensation level
within the prescribed RCE limits. In
accordance with section 1887(a)(2)(C) of
the Act and § 415.70(e) of the
regulations, if a provider can
demonstrate to the MAC its inability to
recruit or maintain physicians at a
compensation level allowable under the
RCE limits (as documented, for
example, by unsuccessful advertising
through national medical or health care
publications), the MAC may grant the
provider an exception to the RCE limits
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established under these rules. Such
exceptions would allow the provider to
be paid based on costs for compensation
higher than the RCE limit.
c. Methodology for Establishing the RCE
Limits
In the March 2, 1983 final rule with
comment period (48 FR 8902), we
published the initial RCE limits, along
with the methodology used to calculate
those limits, that were applicable to cost
reporting periods beginning during CYs
1982 and 1983. As part of that same
rule, we established regulations that
outline our general authority to develop,
publish, and apply RCE limits (currently
at § 415.70). Section 415.70(b) of the
regulations specifies that we establish
the methodology for determining annual
RCE limits, considering, to the extent
possible, average physician incomes by
specialty and type of location, using the
best available data.
The methodology for establishing the
initial RCE limits was based on the
analysis contained in an internal
working paper, ‘‘A Methodology for
Determination of Reasonable FTE
Compensation for Hospital-Based
Physicians.’’ 56 (Copies of this working
paper are available on the CMS Web site
at: http://www.cms.gov/Medicare-Feefor-Service-Payment/
AcuteInpatientPPS/index.html.) As
outlined in this working paper, our
methodology for establishing the initial
reasonable levels of compensation
includes the following five steps (for
additional discussion of this
methodology, we refer readers to the
March 2, 1983 final rule with comment
period (48 FR 8902)):
Step 1: We estimated the national
average (mean) income for all
physicians using 1979 physician net
incomes from the American Medical
Association (AMA) Periodic Survey of
Physicians (PSP), published by the
AMA in its Profile of Medical Practices,
1981.
Step 2: We projected physicians’ 1979
base net income levels to the
appropriate future year to account for
changes in net income levels occurring
after the period for which we have data
using the Consumer Price Index for All
Urban Consumers (CPI–U), and
projected the results using forecasts of
the CPI–U for future years.
Step 3: We determined the
relationship between average net
income for all physicians (estimated in
the first step above) and net income of
56 Cantwell, James R. and Sobaski, William J., A
Methodology for Determination of Reasonable FTE
Compensation for Hospital-Based Physicians,
Working Paper No. OR–32, revised December 1982.
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certain categories of specialist
physicians that are commonly
compensated by providers for services
that generally benefit Medicare
beneficiaries resulting in separate
specialty adjusters for nine physician
specialties as well as the adjuster for the
‘‘Total’’ category.
Step 4: We also adjusted each of these
specialty (including the ‘‘Total’’)
adjusters for differences in costs
between types of geographic locations
using Standard Metropolitan Statistical
Areas (SMSAs) as defined by the Office
of Management and Budget (OMB).
Step 5: Using the AMA PSP data, we
calculated the average hours practiced
per year for each specialty and location
adjuster combination, which we then
related to a standard full-time
equivalent (FTE) work year of 2,080
hours. We used these ratios to weight
the specialty-location adjusters from the
previous step.
This same methodology was used to
update the RCE limits published in a
notice in the Federal Register on May
5, 1997 (62 FR 24483). These updated
RCE limits were effective for cost
reporting periods beginning on or after
May 5, 1997.
For RCE limits established prior to
January 1, 1998, we used the CPI–U to
update the RCE limits. In a final rule
with comment period published in the
Federal Register on October 31, 1997
(62 FR 59075), we finalized a policy to
use the Medicare Economic Index (MEI)
to update the RCE limits (rather than the
CPI–U), effective for cost reporting
periods beginning on or after January 1,
1998. We adopted the MEI as the
applicable update factor in order to
achieve a measure of consistency in the
methodologies used to determine
payments to physicians for direct
medical and surgical services furnished
to individual patients and reasonable
compensation levels for services that are
of general benefit to a provider’s
patients. However, we did not update
the RCE limits at that time.
In the FY 2004 IPPS final rule
published in the Federal Register on
August 1, 2003 (68 FR 45458), we
published updated RCE limits that were
effective for cost reporting periods
beginning on or after January 1, 2004.
We updated the RCE limits using the
CPI–U to adjust the data to 1997, and
the MEI to adjust the data from 1998 to
2004. In addition, we continued to
adjust the RCE limits to account for
differences in salary levels by location,
as well as by specialty. For the location
adjustment, we continued to base the
geographical classifications of the
providers on Metropolitan Statistical
Areas (MSAs) (the OMB changed the
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area name to describe metropolitan
areas in the 1980’s from SMSAs to
MSAs, but the definition of MSAs
differed only slightly from the
previously used SMSAs).
3. Changes to the RCE Limits
In accordance with § 415.70(b), when
establishing the methodology to
determine the RCE limits, we consider,
to the extent possible, the average
physician incomes by specialty and type
of location using the best available data.
Since the initial RCE limits were
developed, we have adjusted the RCE
data to account for specialty and
location (as discussed earlier in this
section). In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28173), we
proposed to use the most recent MEI
data to update the RCE limits and to
replace the RCE limits that have been in
effect since January 1, 2004. We
believed that doing so will enhance the
accuracy of the RCE limits. In addition,
for the reasons discussed below, we
proposed to eliminate the location
adjustment to the RCE data, while
continuing to adjust the RCE limits by
specialty. We did not propose changes
to any of the other existing policies with
respect to the application of and
exceptions to the RCE limits.
We invited public comments on our
proposals to update the RCE limits and
to eliminate the location adjustment for
the RCE limits for cost reporting periods
beginning on or after January 1, 2015. In
addition, we invited public comments
on our proposal to revise § 415.70(b) of
the regulations to eliminate
consideration of the type of location as
part of the methodology to establish
RCE limits for cost reporting periods
beginning on or after January 1, 2015.
Comment: One commenter expressed
appreciation that CMS is updating the
RCE limits and suggested that CMS
update the RCEs on an annual basis.
The commenter also requested that the
proposed RCEs be effective for cost
reporting periods beginning on or after
January 1, 2014, instead of cost
reporting periods beginning on or after
January 1, 2015.
Response: We will continue to review
the RCE limits on a regular basis by
applying the most recent economic
index data and publish updates as
necessary. We plan to keep the
proposed effective date for the updated
RCEs, as we do not believe it would be
appropriate in this situation to make
this provision retroactively effective.
As discussed in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28173
through 28175), in establishing the
initial and subsequently updated RCE
limits, we included an adjustment to
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50159
account for differences in salary levels
based on the location of the provider
using geographic classifications based
on the MSAs as defined by the OMB.
We assigned an appropriate MSA
designation based on the State/county
in which the provider is located. We
included a table in each of the previous
RCE limit notices and rules, whereby
each MSA designation was grouped into
one of three categories: Metropolitan
areas with a population greater than 1
million, metropolitan areas with a
population less than 1 million, and
nonmetropolitan areas. The MSA
designation of the provider is then used
to identify the appropriate RCE limit.
To update the current RCE limits by
location under the current methodology,
we would need to use, as in past
updates, the MSA designations that
correspond with the update period.
However, since 2003, the OMB no
longer updates or uses MSAs. We
considered continuing to use the MSA
designations, as we have in the past, but
we would have no way to account for
shifts in populations among MSAs
because the OMB no longer updates
geographic classifications based on
MSA designations. The OMB regularly
updates the geographic definitions, and
the counties included in each area, to
account for population shifts due to
migrations, birth, and death rates but
currently the OMB uses Core-Based
Statistical Area (CBSA) designations
rather than MSAs. If we were to
continue to use the MSA designation,
providers could potentially be
underpaid or overpaid if the population
of their MSA changed significantly from
2004. Therefore, we determined that,
because the MSA designations are no
longer updated, it would not be
appropriate to continue using the
previous location adjustment
methodology. The most recent
geographic delineations used by the
OMB are CBSAs, a term used to refer to
both Metropolitan and Micropolitan
Statistical Areas. However, CBSA
delineations do not match the MSA
definitions that were used to develop
the initial and subsequently updated
RCE limits. As noted above, we have
used the AMA PSP data to develop
previous and current RCE limits. The
AMA PSP data were collected from
1970 to 1980 and included physicians’
income, hours worked, and MSA-based
population information. The data that
have been used to develop and update
the RCE limits were developed using
MSAs as the geographic unit. It is not
possible to exactly crosswalk the MSA
designations to the CBSA designations
in order to update the RCE limits using
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the current location adjustment
methodology. Even if it was possible to
crosswalk the MSAs to the CBSAs, it
would not be appropriate to use the
MSA-based AMA PSP data to develop
CBSA-based RCE limits. There have
been significant changes in the
populations of the MSA-based locations
contained in the AMA PSP data that
could not be translated into CBSAs. As
such, that data would no longer be valid
as the basis to develop RCE limits based
on CBSAs.
The OMB has cautioned users about
using the new CBSA designations. For
instance, in OMB’s 2010 ‘‘Standards for
Delineating Metropolitan and
Micropolitan Statistical Areas (CBSAs)’’
published on June 28, 2010 in the
Federal Register (75 FR 37246), OMB
states:
‘‘OMB establishes and maintains
these areas solely for statistical
purposes. In reviewing and revising
these areas, OMB does not take into
account or attempt to anticipate any
public or private sector nonstatistical
uses that may be made of the
delineations. These areas are not
designed to serve as a general-purpose
geographic framework applicable for
nonstatistical activities or for use in
program funding formulas.
‘‘Furthermore, the Metropolitan and
Micropolitan Statistical Area Standards
do not produce an urban-rural
classification, and confusion of these
concepts can lead to difficulties in
program implementation. Counties
included in Metropolitan and
Micropolitan Statistical Areas and many
other counties may contain both urban
and rural territory and populations. . . .
OMB urges agencies, organizations, and
policy makers to review carefully the
goals of nonstatistical programs and
policies to ensure that appropriate
geographic entities are used to
determine eligibility for the allocation of
Federal funds.’’ (Emphasis in original.)
For CMS to accurately update the
location-adjusted RCE limits using the
CBSAs, as we stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28174), we believe it would be
necessary to use a new data source for
information on physician salaries,
specialties, location, and hours worked;
and the data would need to be allocated
to different geographic areas based on
CBSAs. The AMA PSP collected data
from a large sample of office-based
physicians. We considered using data
that are currently collected and publicly
available. We could not find a reliable
dataset that contained all of the
necessary data elements needed to
update the location-adjusted RCE limits
based on CBSAs. The most reliable data
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we could find came from the Bureau of
Labor Statistics (BLS) Occupational
Employment Statistics (OES). The BLS
OES data are collected annually, and
capture a large and diverse population
of physicians and corresponding
CBSAs. We believe the BLS OES data
are the most current, reliable source of
income data for physicians. Although,
the BLS OES is very reliable and
collects data points for physician
specialties, salary, and location, it does
not collect detailed information for all
10 specialties; the ‘‘Radiology’’ and
‘‘Pathology’’ specialties are not
separately captured. As such, we did
not believe it was appropriate to use the
BLS OES data to create an updated RCE
limit if we would not have data
available for two specialties.
We also weighed the benefit of
collecting updated information from
physicians (through use of a new
nationwide survey) in order to obtain
the data necessary for application of an
appropriate locality adjustment based
on CBSAs against the burden placed on
such physicians in providing such data.
In order to have a dataset that could
accurately capture all the necessary
information, we would need to collect
data from a large population of
physicians, including a sufficient
sample size for each physician specialty
in each CBSA. We weighed the burden
that such a nationwide survey would
entail for all physicians, including
office-based physicians, to be asked to
respond to an in-depth survey regarding
their salary, specialty, location, hours
worked, and other practice information
against the benefit of using updated,
CBSA-based information to include a
location adjustment for the providers
that are subject to the RCE limits.
When the RCE limits were developed
in 1983, other than inpatient acute care
hospitals paid under the IPPS, most
provider types were reimbursed on a
reasonable cost basis. Since then,
providers such as skilled nursing
facilities (SNFs), long-term care
hospitals (LTCHs), inpatient
rehabilitation facilities (IRFs), inpatient
psychiatric facilities (IPFs), and home
health agencies (HHAs) that previously
were paid on a reasonable cost basis
have transitioned to prospective
payment systems and are no longer
subject to the RCE limits. As of FY 2011
(the most recent cost report year for
which we have complete data), our data
show that there were only 59 children’s
hospitals and cancer hospitals and 46
teaching hospitals (that have elected
cost reimbursement for their physicians’
direct medical and surgical services)
that are subject to the RCE limits. As
such, we believe the benefit that could
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be gained by gathering the new data that
would be necessary to maintain a
location adjustment for the RCE limits is
outweighed by the burden of conducting
such a comprehensive survey of
physicians.
Furthermore, we analyzed how the
elimination of the location adjustment
would affect the accuracy and
appropriateness of the proposed RCE
limits. To perform this analysis, we
needed a reliable source of physician
income data (without a location
adjustment) which could be compared
to the RCE limits without a location
adjustment. We determined that the best
available source of physician income
data is the mean annual income data for
similar RCE physician specialties
collected by the BLS OES. As
mentioned above, the BLS OES data are
collected annually and capture a large
and diverse population of physicians.
These data are the most current, reliable
source of income data by physician
specialties. In addition, when
comparing salaries, it is important to
compare salary amounts that reflect the
same number of hours worked per year.
Because many physicians do not work
a 2,080 hour work year, their salary may
seem higher or lower due to the number
of hours actually worked. The RCE
limits are based on physicians who
worked a 2,080 hour work year. The
BLS OES data also are based on a 2,080
hour work year; therefore, we believe
that comparing the RCE limits to these
BLS OES data is appropriate for
purposes of our analysis.
We performed an analysis comparing
RCE limits for 2012, calculated without
a location adjustment and solely for
purposes of the analysis, to the most
recently published (at the time of the
analysis) BLS OES physician mean
annual income data for the same year,
to determine whether RCE limits based
on the AMA PSP data, but without a
location adjustment, would continue to
reasonably reflect mean annual
physician income data. For 2012, the
BLS OES had income information for 8
of the 10 RCE specialties, which include
the ‘‘Total’’ category; the BLS OES data
did not capture the ‘‘Radiology’’ and
‘‘Pathology’’ specialties. We searched
for another reliable data source for
‘‘Radiology’’ and ‘‘Pathology’’ but we
could not find one with sufficient data
elements to compare with the RCE
limits. We used the MEI to update the
RCE limits for these eight specialties to
2012 without including the location
factor. We then compared these 2012
RCE limits to the 2012 BLS OES data for
these same eight specialties. As shown
in the table below, we found that the
RCE limits ranged from 10.41 percent
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above the BLS OES mean annual
income data to 3.58 percent below the
BLS OES data. Only three of the eight
specialties had RCE limits slightly less
than the then-current BLS OES mean
annual wages for their specialty. The
50161
remaining five specialties had RCE
limits above the current BLS OES mean
annual wages for the specialties.
ANALYSIS CHART
RCE Limits
updated to
2012*
Specialty
Total .............................................................................................................................................
General/Family Practice ..............................................................................................................
Internal Medicine .........................................................................................................................
Surgery ........................................................................................................................................
Pediatrics .....................................................................................................................................
OB/GYN .......................................................................................................................................
Radiology .....................................................................................................................................
Psychiatry ....................................................................................................................................
Anesthesiology .............................................................................................................................
Pathology .....................................................................................................................................
$206,300
174,600
192,700
240,300
165,500
231,200
265,200
176,800
233,500
253,900
BLS OES
Mean 2012
annual wage
$184,820
180,850
191,520
230,540
167,640
216,760
N/A
177,520
232,820
N/A
Percent
difference
10.41%
¥3.58%
0.61%
4.06%
¥1.29%
6.25%
N/A
¥0.41%
0.29%
N/A
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
* These limits were calculated using the methodology only for purposes of this impact analysis.
The RCE amounts updated to 2012
and the BLS OES numbers for 2012
varied only slightly, and in most cases,
the RCE limit was higher than the BLS
OES mean annual wage. Based on this
analysis, as we stated in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28175), we believe that RCE limits
calculated using the AMA PSP data, and
our proposed elimination of the location
adjustment for the updated RCE limits,
would result in RCE limits that are a
reasonable reflection of mean annual
physician income and would continue
to ensure that providers subject to the
RCE limits are paid in a fair and
accurate manner.
Because there are a relatively small
number of providers currently affected
by the RCE limits and because, as
discussed above, we believe the revised
RCE limits without a location
adjustment would continue to ensure
appropriate payment to such providers,
we believe that eliminating the location
adjustment would have a minimal
overall effect on providers subject to the
RCE limits and on the industry as a
whole.
For the reasons discussed above, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28175), we proposed to
eliminate the location adjustment under
the RCE limit methodology, and to
revise § 415.70(b) of the regulations to
remove consideration of the ‘‘type of
location’’ as part of the methodology
used to establish RCE limits.
Comment: One commenter suggested
CMS work with the BLS to obtain the
information needed to calculate the RCE
limits with a location adjustment. One
commenter suggested that CMS develop
an alternative method of establishing a
location adjustment.
Response: We plan to evaluate the
BLS Occupational Employment
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Statistics and any other alternative data
sources to further determine if a
location adjustment is a viable option
for future RCE updates.
Comment: A few commenters
suggested that CMS keep the location
adjustment as part of the RCE limits.
They stated that location-adjusted RCE
limits continue to be important in
capturing accurate physician salary
costs for all providers because all
hospitals apply the RCE limits to
physician salaries on Worksheet A–8–2
of the Medicare cost report. A few
commenters expressed concern over the
accuracy of costs, such as GME costs,
that would result from applying RCE
limits without a location adjustment.
Response: RCE limits currently have a
payment impact on 105 Medicare
providers, including 8 cancer hospitals,
51 children’s hospitals and 46 electing
teaching amendment (ETA) hospitals
that elected cost reimbursement for their
physicians’ direct medical and surgical
services. While it is true that all
hospitals use the RCE limits on
Worksheet A–8–2, for hospitals paid
under the IPPS, the application of the
RCE limits on Worksheet A–8–2 does
not have a Medicare payment impact.
Specifically, Worksheet C that is used
for payment purposes calculates cost-tocharge ratios for IPPS hospitals using
data prior to the application of the RCE
limits on Worksheet A–8–2. Therefore,
RCE limits have no effect on payments
to providers paid under the IPPS. For
the 46 ETA hospitals, Worksheet D–5 is
used to apply the RCE limits to
determine the proper payment on a
reasonable cost basis of direct medical
and surgical services of the physician.
Given the current limitations of the
location designation data described in
the proposed rule, we believe it is
appropriate to eliminate the location
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adjustment to the RCE limits. Based on
the analysis discussed above and in the
proposed rule, we believe that the RCE
limits calculated without a location
adjustment are a reasonable reflection of
mean annual physician income and will
continue to ensure that providers
subject to the RCE limits are paid in a
fair and accurate manner. Because of
this, and because the RCE limits impact
a relatively small number of providers,
we believe that eliminating the location
adjustment will have a minimal overall
effect on providers subject to the RCE
limits and on the industry as a whole.
While a few commenters expressed
concern over the accuracy of GME costs,
we note that, under § 415.70(a)(2) of the
regulations, RCE limits do not apply to
costs of physician compensation
attributable to approved GME programs
that are payable under §§ 413.75
through 413.83.
After consideration of the public
comments we received, in this final
rule, we are adopting as final the
proposed methodology for establishing
the RCE limits. We are setting forth the
final updated RCE limits on the amount
of allowable compensation for services
furnished by physicians to providers
(and for ETA hospitals, for direct
medical and surgical services of
physicians) for cost reporting periods
beginning on or after January 1, 2015.
To calculate these final RCE limits, we
used the same methodology that was
used to calculate the original and
previous updates to the RCE limits, but
did not apply an adjustment based on
geographical classification. As noted
earlier, this methodology was derived
from the 1982 working paper. We used
the mean physician income by specialty
from that working paper to calculate the
RCE limits without adjusting for
geographical classification. We then
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2. Proposed and Final Policy Changes
Related to Reclassification as Rural for
CAHs
Under section 1820(c)(2)(B)(i) of the
Act, a facility is eligible for designation
as a CAH only if it is located in a county
or equivalent unit of local government
in a rural area (as defined in section
1886(d)(2)(D) of the Act), or is being
treated as being located in a rural area
in accordance with section 1886(d)(8)(E)
of the Act. The regulations
implementing this location requirement
are located at § 485.610(b). The
regulations governing the process for a
facility located in an urban area to apply
for reclassification as a rural facility
under section 1886(d)(8)(E) of the Act
are located at § 412.103.
As discussed in the FY 2015 IPPS/
LTCH
PPS proposed rule (79 FR 28054
FINAL CY 2015 RCE LIMITS
through 28064), we proposed to
implement the most recently published
Total ......................................
$211,500
OMB delineations announced in OMB
General/Family Practice .......
179,000
Internal Medicine ..................
197,500 Bulletin No. 13–01. (We refer readers to
Surgery .................................
246,400 section III.B. of the preamble of this
Pediatrics ..............................
169,700 final rule for a discussion of our final
OB/GYN ................................
237,100 decision to implement the new OMB
Radiology ..............................
271,900 delineations announced in OMB
Psychiatry .............................
181,300 Bulletin No. 13–01.) As previously
Anesthesiology .....................
239,400 stated, a facility must be located in a
Pathology ..............................
260,300 rural area in order to be eligible for
designation as a CAH. Therefore, a new
OMB delineation that redesignates an
In addition, we are adopting as final
area from rural to urban, affects the
our proposed revision of § 415.70(b) of
status of a facility that is currently a
the regulations to eliminate
CAH and had met the CAH location
consideration of the type of location as
requirements prior to implementation of
part of the methodology to establish
the new OMB delineation. A facility
RCE limits for cost reporting periods
that is located in an urban area cannot
beginning on or after January 1, 2015.
remain a CAH unless it is reclassified as
rural under § 412.103 of the regulations.
D. Critical Access Hospitals (CAHs)
In both the FY 2005 IPPS final rule (69
1. Background
FR 49221 through 49222 and 69 FR
60242 and 60252) and the FY 2010
Sections 1820 and 1861(mm) of the
IPPS/LTCH PPS final rule (74 FR 43939
Act, as amended by section 4201 of the
through 43940), we amended the
Balanced Budget Act (BBA) of 1997,
regulations at § 412.103(a) and
replaced the Essential Access
§ 485.610(b) to provide for a transition
Community Hospitals and Rural
period during which CAHs that had
Primary Care Hospitals (EACH/RPCH)
previously been located in rural areas
program with the Medicare Rural
but, as a result of new OMB
Hospital Flexibility Program (MRHFP),
delineations, were now located in urban
under which a qualifying facility can be areas, could reclassify as rural under
designated as a CAH. CAHs
§ 412.103. Specifically, in both the FY
participating in the MRHFP must meet
2005 IPPS final rule and the FY 2010
the conditions for designation by the
IPPS/LTCH PPS final rule, we provided
State and be certified by the Secretary
for a 2-year period during which a CAH
in accordance with section 1820 of the
located in an urban area as a result of
Act. Further, in accordance with section the new OMB delineations could
1820(e)(3) of the Act, a CAH must meet
continue participating without
other criteria that the Secretary
interruption as a CAH, thereby allowing
specifies.
the CAH sufficient time to reclassify as
The regulations that govern the
rural under § 412.103. If the facility did
conditions of participation (CoPs) for
not reclassify as a rural facility by the
CAHs under the statutory requirements
end of that 2-year period, the CAH
of section 1820 are codified at 42 CFR
would not be able to retain its CAH
Part 485, Subpart F.
status beyond that 2-year period.
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updated these data by the CPI–U (from
1982 to 1997) and then by the MEI (from
1998 to 2015) to compute the updated
RCE limits. The RCE limits
implemented by this final rule vary
slightly from those in the proposed rule
due to a more recent estimate of the MEI
for 2015.
The chart below sets forth the final
updated RCE limits on the amount of
allowable compensation for services
furnished by physicians to providers for
cost reporting periods beginning on or
after January 1, 2015, established using
the same methodology that was used to
calculate the original and previous
updates to the RCE limits, but not
applying an adjustment based on
geographical classification.
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However, under the FY 2005 IPPS final
rule and the FY 2010 IPPS/LTCH PPS
final rule, the application of the
regulation was limited to October 1,
2004 through September 30, 2006, and
October 1, 2009 through September 30,
2011, respectively. As a result, in the
absence of a new amendment to the
regulations each time there are new
OMB delineations, a CAH that becomes
located in an urban area as a result of
those OMB delineations would not be
given 2 years to reclassify as rural under
§ 412.103 of the regulations.
In the FY 2010 IPPS/LTCH PPS final
rule (74 FR 43940), we stated that we
would consider whether it would be
appropriate to propose, in future IPPS
rulemaking, to revise § 485.610 and
§ 412.103 to provide for a transition
period any time a CAH that was
formerly located in a rural area is
designated as being located in an urban
area as a result of the redesignation of
its county from rural to urban. In the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28176), we stated that after further
consideration, we believe that it is
appropriate to propose to change the
regulations to provide for a transition
period that is not restricted to a
timeframe, but rather can be applied any
time a facility that is currently
designated as a CAH becomes located in
an urban area as a result of a new OMB
delineation.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28176), we
proposed that, effective October 1, 2014,
a CAH that was previously located in a
rural area but is now located in an urban
area as a result of a new OMB labor
market area delineation will continue to
be treated as rural for 2 years from the
date the OMB delineation is
implemented. Accordingly, we stated in
the proposed rule that if the OMB
delineations announced in OMB
Bulletin No. 13–01 on February 28, 2013
discussed in section III.B. of the
preamble of the proposed rule are
implemented in this FY 2015 IPPS/
LTCH PPS final rule, effective October
1, 2014, any CAH affected by the new
OMB delineations in OMB Bulletin No.
13–01 would retain its rural status
through September 30, 2016. An
affected CAH would be required to
reclassify as a rural facility under
§ 412.103 within that 2-year period in
order to continue participating in the
Medicare program as a CAH after the 2year transition period ends. Therefore,
taking into consideration the example
above, any CAH affected by a new OMB
delineation that is implemented in this
FY 2015 IPPS/LTCH PPS final rule
would be required to reclassify as rural
by September 30, 2016, in order to
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retain its CAH status after September 30,
2016.
To implement this proposed change,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28176), we
proposed to revise § 412.103 by adding
a new paragraph (a)(6), and to revise
§ 485.610 by making a conforming
change to the introductory text of
paragraph (b) and adding a new
paragraph (b)(5) to provide for a 2-year
transition period that will apply any
time a new OMB delineation causes a
facility that was previously located in a
rural area and is designated as a CAH to
be located in an urban area. We stated
we believe that this proposal to revise
the regulations to automatically provide
for a 2-year transition period following
the implementation of new OMB
delineations is more efficient than
providing for a regulatory change
limited to a timeframe, and, as a result,
will be more effective in reducing any
disruption caused by new OMB
delineations.
Comment: Commenters supported
CMS’ proposal to provide for a 2-year
transition period to allow CAHs affected
by the implementation of new OMB
delineations time to reclassify as rural
in order to retain their CAH status after
the 2-year transition period ends.
Several commenters requested that CMS
work with and provide notification to
affected CAHs to alert them to the need
to reclassify as rural in order to retain
their CAH status. One commenter asked
how new OMB delineations would
impact necessary provider CAHs
previously reclassified under prior
updates.
Another commenter requested that
CMS provide for a 3-year transition
period to allow affected CAHs
additional time to reclassify as rural or
to prepare to transition to urban PPS
facilities. The commenter stated that the
size of CAHs and the number of
regulations they must follow make it
difficult for these facilities to process
and respond to new requirements. The
commenter stated that although only a
small number of CAHs are affected by
the new OMB delineations, those
affected require considerable time to
locate applicable State law, examine
Rural Urban Commuting Area (RUCA)
scores, and in general determine
whether they are eligible to reclassify as
rural facilities. The commenter stated
that CMS has a precedent for providing
a 3-year transition period because it
proposed to apply such a grace period
to urban facilities redesignated as rural
so that these facilities have time to
prepare for lower reimbursement
resulting from several factors, including
a lower wage index. The commenter
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stated that CAHs that lose their CAH
status would also be subject to these
lower payment rates and therefore
would also benefit from being provided
with a 3-year transition period.
Response: We appreciate the
commenters’ support of our proposal to
provide CAHs affected by new OMB
delineations with a 2-year transition
period to reclassify as rural in order to
retain their CAH status after the 2-year
transition period ends. In response to
the commenters’ request that CMS
notify each CAH affected by a change in
OMB delineations, we encourage CAHs
to contact CMS if they have questions
regarding their rural status and whether
this status has changed as a result of the
implementation of the new OMB
delineations as discussed in section
III.B. of the preamble of this final rule.
In response to the question
concerning necessary provider CAHs,
section 1820(c)(2)(B)(i) of the Act
requires that in order for a facility to be
certified as a CAH, it must be located in
a rural area or have reclassified as a
rural facility. Therefore, if a necessary
provider CAH is located in an urban
area as a result of the new OMB
delineations implemented in this final
rule effective October 1, 2014, that CAH
must now reclassify as rural in order to
keep its CAH status after September 30,
2016. If a necessary provider CAH had
previously reclassified as rural due to a
prior change in OMB delineations, that
CAH’s rural status remains unchanged.
In response to the request to provide
affected CAHs with a 3-year transition
period during which they could either
reclassify as rural or prepare to
transition to an PPS facility, we
continue to believe that 2 years is the
appropriate amount of time for such a
transition period. Consistent with the
regulation changes made in FY 2005
and FY 2010 final rules (69 FR
49221through 49222, 69 FR 60242 and
60252, and 74 FR 43939 through 43940),
we believe 2 years is a sufficient period
of time in order for the CAH to work
with its State to be designated as rural
and engage in any other research it
believes is necessary to determine
whether it should reclassify as rural.
Therefore, we are finalizing our
proposal to provide CAHs affected by
our implementation of the new OMB
delineations with a 2-year transition
period during which they must
reclassify as rural in order to retain their
CAH status after the 2-year period ends.
Comment: Commenters requested
that, in addition to providing CAHs
affected by the implementation of a new
OMB delineation with a 2-year
transition period to reclassify as rural,
SCHs and MDHs affected by the
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implementation of a new OMB
delineation also be provided with a
transition period to reclassify as rural.
One commenter requested that CMS
clarify that a hospital’s SCH status
would not be affected by a CAH that is
now located in an urban area as a result
of a new OMB delineation while that
CAH is in its 2-year transition period to
reclassify as rural. Specifically, the
commenter requested that a CAH not be
considered a ‘‘like hospital’’ as defined
at § 412.92(c)(2) during its transition
period.
Response: We are clarifying that
during an affected CAH’s 2-year
transition period, the facility will
continue to be considered a CAH. We
respond to the public comments related
to transition periods for SCHs and
MDHs in sections IV.G.4. and IV.G.5. of
the preamble of this final rule.
After consideration of the public
comments we received, we are
finalizing our policy as proposed to
provide for a 2-year transition period for
CAHs affected by the implementation of
a new OMB delineation during which
the CAH must reclassify as rural in
order to retain its CAH status after the
2-year transition period ends. To
implement this change, we are revising
§ 412.103 by adding a new paragraph
(a)(6), and revising § 485.610 by making
a conforming change to the introductory
text of paragraph (b) and adding a new
paragraph (b)(5) to provide for a 2-year
transition period that will apply any
time the implementation a new OMB
delineation causes a facility that was
previously located in a rural area and is
designated as a CAH to be located in an
urban area. These regulation changes are
effective October 1, 2014. For purposes
of applying these regulation changes to
the new OMB delineations implemented
in this final rule effective October 1,
2014, CAHs affected by these most
recent OMB delineations will be treated
as CAHs through September 30, 2016
and will have until September 30, 2016,
to reclassify as rural in order to keep
their CAH status after September 30,
2016.
3. Revision of the Requirements for
Physician Certification of CAH Inpatient
Services
For inpatient CAH services to be
payable under Medicare Part A, section
1814(a)(8) of the Act requires that a
physician certify ‘‘that the individual
may reasonably be expected to be
discharged or transferred to a hospital
within 96 hours after admission to the
critical access hospital.’’ The regulations
implementing this statutory requirement
are located at § 424.15.
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Prior to FY 2014, this physician
certification was required no later than
1 day before the date on which the
claim for payment for the inpatient CAH
service is submitted. In the FY 2014
IPPS/LTCH PPS final rule, we revised
the CAH regulations concerning the
timing requirements for certification of
inpatient CAH services. Specifically, we
revised § 424.15(b) to state that
certification begins with the order for
inpatient admission. The certification
must be completed, signed, and
documented in the medical record prior
to discharge (78 FR 50970). This change
was effective October 1, 2013.
However, in order to provide CAHs
with greater flexibility in meeting this
certification requirement, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28176 through 28177), we proposed
to amend the regulations governing the
timing of the 96-hour certification
requirement at § 424.15(b) such that
physician certification is required no
later than 1 day before the date on
which the claim for payment for the
inpatient CAH service is submitted.
That is, we proposed to remove the
requirement that certification of the 96hour requirement must be completed
prior to discharge and we proposed to
reinstate the timing requirement that
was in place prior to October 1, 2013.
We proposed to revise § 424.15(b) to
remove the phrase ‘‘prior to discharge’’
and replace it with ‘‘no later than 1 day
before the date on which the claim for
payment for the inpatient CAH service
is submitted’’. In addition, we proposed
to make a conforming amendment to
§ 424.11(d)(5). Section 424.11(d)(5)
states that for all inpatient hospital or
critical access hospital inpatient
services, including inpatient psychiatric
facility services, a delayed certification
may not extend past discharge. Because
we proposed to change the timing
requirement for physician certification
of CAH inpatient services at § 424.15(b),
such that the certification could be
completed past discharge, we proposed
to revise § 424.11(d)(5) to remove the
phrase ‘‘or critical access hospital
inpatient’’. We sought public comment
on these proposed changes to the
regulations governing the requirement
for physician certification of CAH
inpatient services.
Comment: Most commenters
supported the proposed change to allow
physician certification to be completed
1 day prior to when the claim for the
inpatient service is submitted.
Commenters requested that CMS
provide additional flexibility and avoid
further confusion by clarifying that
CAHs have until no later than 1 day
prior to the day on which the claim for
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the inpatient service is submitted to
complete all certification requirements.
One commenter stated that the proposed
change could cause inaccurate and
delayed chart entries because the
certification may take place 30, 60, or 90
days after the inpatient is discharged.
The commenter recommended that
physician certification be completed
within 24 hours of admission and that
the medical record be used to meet all
certification requirements. One
commenter stated that asking a
physician to certify his or her
expectation for an individual’s length of
stay after the individual’s inpatient stay
has exceeded 96 hours will create
additional confusion and will be met
with greater resistance from physicians.
Commenters asked for clarification in
understanding how the proposal would
help CAHs if the certification is still
required to state that the individual will
be discharged or transferred to another
hospital within 96 hours after admission
to the CAH.
Response: We appreciate the
commenters’ support of our proposal. In
response to commenters who requested
that CMS clarify that all certification
requirements can be met no later than
1 day prior to when the claim is
submitted, we are revising our proposed
amendment to § 424.15(b) to provide
that a CAH has until 1 day prior to
when the claim for the inpatient service
is submitted to complete all certification
requirements. In order to finalize this
policy, we are amending the regulation
text at § 424.11(d)(5) to remove the
phrase ‘‘or critical access hospital
inpatient.’’ In addition we are revising
the regulations at § 424.15(b) to state
that certification begins with the order
for inpatient admission. All certification
requirements must be completed,
signed, and documented in the medical
record no later than 1 day before the
date on which the claim for payment for
the inpatient CAH service is submitted.
We believe these changes are consistent
with the 96-hour certification
requirement and the existing CoP
requirements.
In response to commenters’ concerns
about providing a delayed certification,
the policy finalized in this rule requires
that all certification requirements be
completed no later than 1 day prior to
when the claim for the inpatient service
is submitted. Therefore, CAHs are not
precluded from completing these
certification requirements in advance of
this deadline if they believe an earlier
completion of certification requirements
is appropriate. We note that we are not
making any changes related to the order
requirements for admission and that in
accordance with § 412.3, an order is
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required before or at the time of
admission to admit an individual as an
inpatient. In addition, we refer readers
to the CY 2015 OPPS/ASC proposed
rule, specifically section ‘‘XVI. Proposed
Revision of the Requirements for
Physician Certification of Hospital
Inpatient Services Other Psychiatric
Inpatient Services’’ (79 FR 41056
through 41058). In the CY 2015 OPPS/
ASC proposed rule, we proposed to
require inpatient admission 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. In
addition, in the CY 2015 OPPS/ASC
proposed rule, we proposed to change
our interpretation of section 1814(a)(3)
of the Act to require a physician
certification only for long-stay cases and
outlier cases. In that rule, we proposed
that 20 days is an appropriate minimum
threshold for physician certification and
we proposed to define long-stay cases as
cases with stays of 20 days or longer.
These proposed changes refer to the
general physician certification
requirements under section 1814(a)(3) of
the Act and do not address the 96-hour
certification requirement at section
1814(a)(8) of the Act
Comment: Although many
commenters supported the proposed
change, many commenters indicated
that they continue to have significant
concerns with the 96-hour certification
requirement and that the proposed
change does not do enough to alleviate
these concerns. Commenters stated they
continue to support the Critical Access
Hospital Relief Act of 2014, which
would remove the 96-hour certification
requirement for payment. Commenters
requested that CMS exercise its
discretion and make clear it will not
enforce the 96-hour certification
requirement because as long as this
requirement is enforced, CAHs may not
be eligible for Medicare payment. One
commenter stated that occasionally
admitting a patient who is expected to
stay longer than 96 hours is permissible
and should be paid. Commenters stated
that physicians have been given the
impossible task of coordinating the 96hour certification requirement for
payment with the 2-midnight policy and
that, in some cases, the physician must
certify that the patient will be
transferred or discharged within a 49hour timeframe. Another commenter
stated that the 96-hour certification
requirement is obsolete and does not
recognize advancements in services
which CAHs provide, including
telehealth services. Commenters
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requested that CMS seek a legislative
change that would align the certification
requirement for payment with the CAH
CoP requirement, which requires an
annual average length of stay of 96
hours. Commenters stated that the
certification requirement for payment
could be met by requiring that the CAH
certify that it has the appropriate
resources and staff to treat the inpatient.
Commenters stated that the CAH
program was established to provide
individuals living in rural areas with
access to critical health care services so
that these individuals can receive high
quality and cost efficient care close to
home even though providing this type
of care may prove to be unprofitable for
a CAH. Commenters stated that CAHs
provide services that may require longer
lengths of stay, and while the provision
of these services does not violate the
CoP requirement for an annual average
length of stay of 96 hours, CAHs are
prevented from providing these types of
services because they cannot meet the
96-hour certification requirement for
payment. Commenters stated they are
concerned about their ability to treat
patients, employ new providers, and
maintain services essential to their
community.
Commenters expressed concern about
the impact of the 96-hour certification
requirement for payment on surgical
procedures. Commenters stated CAHs
have put much effort into providing
these procedures so that beneficiaries,
particularly elderly individuals, can
receive these services close to home.
One commenter stated that surgeons
who practice in rural areas rely on
performing specific surgical procedures
such as colon resections. The
commenter stated that if these surgeons
are only able to provide short-stay
procedures and can no longer provide
procedures that require longer lengths of
stay, they would likely discontinue
practicing at CAHs. One commenter
stated that delaying the 96-hour
certification requirement is not a
resolution because it does not eliminate
the fact that a surgeon will be unable to
admit an individual to a CAH if he or
she ethically believes that the
individual will need 5 days as an
inpatient.
One commenter recommended CMS
withdraw the policy related to the 96hour certification requirement for
payment in the final rule for several
reasons. The commenter stated that the
policy jeopardizes a physician’s ability
to care for his or her patient as required
by the patient’s condition because
admission should be based on medical
judgment once an individual’s
condition and symptoms are evaluated.
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The commenter stated that
implementation of the policy will result
in dissatisfaction and confusion because
patients will have to become
accustomed to new hospitals and new
medical staff and a decline in patient
satisfaction scores is something from
which a hospital may not be able to
recover. The commenter stated that
although the 96-hour certification
requirement is in statute, it was not
enforced by CMS until FY 2014 and that
CAHs were not given advance
notification of the enforcement and
there has been little preparation,
training or guidance from CMS until
very recently. The commenter noted
that medical staff of its member CAHs
are angry and frustrated especially
because of the detrimental effect of the
96-hour certification requirement on
their patients.
Response: As stated earlier in this
preamble, we believe the policy we are
finalizing in this rule is consistent with
the 96-hour certification requirement
and the existing CoP requirements. The
remainder of this response provides a
review of the 96-hour certification
requirement.
For inpatient CAH services, section
1814(a)(8) of the Act requires for
Medicare Part A payment that ‘‘in the
case of inpatient critical access hospital
services, a physician certifies that the
individual may reasonably be expected
to be discharged or transferred to a
hospital within 96 hours after admission
to the critical access hospital.’’ Because
this statutory requirement is based on
an expectation, if a physician certifies in
good faith, that an individual may
reasonably be expected to be discharged
or transferred to a hospital within 96
hours after admission to the CAH and
then something unforeseen occurs that
causes the individual to stay longer at
the CAH, Medicare will pay for the costs
of treating that patient and there would
not be a problem with regard to the CAH
designation as long as that individual’s
stay does not cause the CAH to exceed
its 96-hour annual average CoP
requirement. However, if a physician
cannot in good faith certify that an
individual may reasonably be expected
to be discharged or transferred within
96 hours after admission to the CAH,
the CAH will not receive Medicare Part
A payment for any portion of that
individual’s inpatient stay.
In addition, time as an outpatient at
the CAH is not included in applying the
96-hour requirement, nor does time in a
CAH swing bed, which is being used to
provide skilled nursing services, count
towards the 96-hour requirement. The
clock for the 96 hours only begins once
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50165
the individual is admitted to the CAH
as an inpatient.
After consideration of the public
comments we received, we are
finalizing a policy that a CAH is
required to complete all physician
certification requirements no later than
1 day before the date on which the
claim for the inpatient service is
submitted. In order to finalize this
change, we are amending the regulation
text at § 424.11(d)(5) to remove the
phrase ‘‘or critical access hospital
inpatient.’’ In addition, we are revising
the regulations at § 424.15(b) to state
that certification begins with the order
for inpatient admission. All certification
requirements must be completed,
signed, and documented in the medical
record no later than 1 day before the
date on which the claim for payment for
the inpatient CAH service is submitted.
These changes are effective October 1,
2014.
VII. Changes to the Long-Term Care
Hospital Prospective Payment System
(LTCH PPS) for FY 2015
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
Section 123 of the Medicare,
Medicaid, and SCHIP (State Children’s
Health Insurance Program) Balanced
Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106–113) as amended by
section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits
Improvement and Protection Act of
2000 (BIPA) (Pub. L. 106–554) provides
for payment for both the operating and
capital-related costs of hospital
inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part
A based on prospectively set rates. The
Medicare prospective payment system
(PPS) for LTCHs applies to hospitals
that are described in section
1886(d)(1)(B)(iv) of the Act, effective for
cost reporting periods beginning on or
after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act
defines a LTCH as ‘‘a hospital which has
an average inpatient length of stay (as
determined by the Secretary) of greater
than 25 days.’’ Section
1886(d)(1)(B)(iv)(II) of the Act also
provides an alternative definition of
LTCHs: specifically, a hospital that first
received payment under section 1886(d)
of the Act in 1986 and has an average
inpatient length of stay (LOS) (as
determined by the Secretary of Health
and Human Services (the Secretary)) of
greater than 20 days and has 80 percent
or more of its annual Medicare inpatient
discharges with a principal diagnosis
that reflects a finding of neoplastic
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disease in the 12-month cost reporting
period ending in FY 1997.
Section 123 of the BBRA requires the
PPS for LTCHs to be a ‘‘per discharge’’
system with a diagnosis-related group
(DRG) based patient classification
system that reflects the differences in
patient resources and costs in LTCHs.
Section 307(b)(1) of the BIPA, among
other things, mandates that the
Secretary shall examine, and may
provide for, adjustments to payments
under the LTCH PPS, including
adjustments to DRG weights, area wage
adjustments, geographic reclassification,
outliers, updates, and a disproportionate
share adjustment.
In the August 30, 2002 Federal
Register, we issued a final rule that
implemented the LTCH PPS authorized
under the BBRA and BIPA (67 FR
55954). For the initial implementation
of the LTCH PPS (FYs 2003 through FY
2007), the system used information from
LTCH patient records to classify
patients into distinct long-term care
diagnosis-related groups (LTC–DRGs)
based on clinical characteristics and
expected resource needs. Beginning in
FY 2008, we adopted the Medicare
severity long-term care diagnosis-related
groups (MS–LTC–DRGs) as the patient
classification system used under the
LTCH PPS. Payments are calculated for
each MS–LTC–DRG and provisions are
made for appropriate payment
adjustments. Payment rates under the
LTCH PPS are updated annually and
published in the Federal Register.
The LTCH PPS replaced the
reasonable cost-based payment system
under the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA)
(Pub. L. 97–248) for payments for
inpatient services provided by a LTCH
with a cost reporting period beginning
on or after October 1, 2002. (The
regulations implementing the TEFRA
reasonable cost-based payment
provisions are located at 42 CFR Part
413.) With the implementation of the
PPS for acute care hospitals authorized
by the Social Security Amendments of
1983 (Pub. L. 98–21), which added
section 1886(d) to the Act, certain
hospitals, including LTCHs, were
excluded from the PPS for acute care
hospitals and were paid their reasonable
costs for inpatient services subject to a
per discharge limitation or target
amount under the TEFRA system. For
each cost reporting period, a hospitalspecific ceiling on payments was
determined by multiplying the
hospital’s updated target amount by the
number of total current year Medicare
discharges. (Generally, in section VII. of
the preamble of this final rule, when we
refer to discharges, we describe
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Medicare discharges.) The August 30,
2002 final rule further details the
payment policy under the TEFRA
system (67 FR 55954).
In the August 30, 2002 final rule, we
provided for a 5-year transition period
from payments under the TEFRA system
to payments under the LTCH PPS.
During this 5-year transition period, a
LTCH’s total payment under the PPS
was based on an increasing percentage
of the Federal rate with a corresponding
decrease in the percentage of the LTCH
PPS payment that is based on
reasonable cost concepts, unless a LTCH
made a one-time election to be paid
based on 100 percent of the Federal rate.
Beginning with LTCHs’ cost reporting
periods beginning on or after October 1,
2006, total LTCH PPS payments are
based on 100 percent of the Federal rate.
In addition, in the August 30, 2002
final rule, we presented an in-depth
discussion of the LTCH PPS, including
the patient classification system,
relative weights, payment rates,
additional payments, and the budget
neutrality requirements mandated by
section 123 of the BBRA. The same final
rule that established regulations for the
LTCH PPS under 42 CFR Part 412,
Subpart O, also contained LTCH
provisions related to covered inpatient
services, limitation on charges to
beneficiaries, medical review
requirements, furnishing of inpatient
hospital services directly or under
arrangement, and reporting and
recordkeeping requirements. We refer
readers to the August 30, 2002 final rule
for a comprehensive discussion of the
research and data that supported the
establishment of the LTCH PPS (67 FR
55954).
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51733
through 51743) for a chronological
summary of the main legislative and
regulatory developments affecting the
LTCH PPS through the annual update
cycles prior to the FY 2014 rulemaking
cycle. In addition, in this final rule, we
discuss the provisions of the Pathway
for SGR Reform Act of 2013 (Pub. L.
113–67), enacted on December 26, 2013,
that affect the LTCH PPS. In section
VII.I.2. of the preamble of this final rule,
we discuss the provisions of section
1206(a) of Public Law 113–67, which
amended section 1886(m) of the Act by
adding paragraph (6) and established,
among other things, patient-level
criteria for payments under the LTCH
PPS for implementation beginning with
FY 2016. In section VII.E. of the
preamble of this final rule, we discuss
the provisions of section 1206(b)(1) of
Public Law 113–67, which provide for
the retroactive reinstatement and
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extension, for an additional 4 years, of
the moratorium on the full
implementation of the 25-percent
threshold payment adjustment policy
(except for ‘‘grandfathered’’ hospitalswithin-hospitals (HwHs), which are
permanently exempt from this policy).
In section VII.G. of the preamble of this
final rule, we discuss the provisions of
section 1206(b)(2) of Public Law 113–67
(as amended by section 112(b) of the
Protecting Access to Medicare Act (Pub.
L. 113–93), which, subject to certain
defined exceptions, provide for
statutory moratoria on the establishment
of new LTCHs and LTCH satellite
facilities and a new statutory
moratorium on the increase in the
number of hospital beds in LTCHs or
LTCH satellite facilities for the period
beginning April 1, 2014 and ending
September 30, 2017. In section IX.C. of
the preamble of this final rule, we
discuss the provisions of section 1206(c)
of Public Law 113–67, which amended
the LTCH Quality Reporting Program
established under section 1886(m)(5) of
the Act by requiring the Secretary to
establish a functional status quality
measure to evaluate the in mobility
among inpatients requiring ventilator
support no later than October 1, 2015.
In section VII.H. of the preamble of this
final rule, we discuss the findings of a
review of payments to certain LTCHs
(that is, LTCHs classified under
subclause (II) of section
1886(d)(1)(B)(iv) of the Act) that was
conducted in accordance with section
1206(d) of Public Law 113–67, and
finalize a policy to apply a payment
adjustment under the LTCH PPS to
‘‘subclause (II)’’ LTCHs beginning in FY
2015 that will result in payments to this
type of LTCH resembling payments
under the reasonable cost TEFRA
payment system model.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
Under the regulations at
§ 412.23(e)(1), to qualify to be paid
under the LTCH PPS, a hospital must
have a provider agreement with
Medicare. Furthermore, § 412.23(e)(2)(i),
which implements section
1886(d)(1)(B)(iv)(I) of the Act, requires
that a hospital have an average Medicare
inpatient length of stay of greater than
25 days to be paid under the LTCH PPS.
Alternatively, § 412.23(e)(2)(ii) states
that, for cost reporting periods
beginning on or after August 5, 1997, a
hospital that was first excluded from the
PPS in 1986 and can demonstrate that
at least 80 percent of its annual
Medicare inpatient discharges in the 12month cost reporting period ending in
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FY 1997 have a principal diagnosis that
reflects a finding of neoplastic disease
must have an average inpatient length of
stay for all patients, including both
Medicare and non-Medicare inpatients,
of greater than 20 days.
b. Hospitals Excluded From the LTCH
PPS
The following hospitals are paid
under special payment provisions, as
described in § 412.22(c) and, therefore,
are not subject to the LTCH PPS rules:
• Veterans Administration hospitals.
• Hospitals that are reimbursed under
State cost control systems approved
under 42 CFR Part 403.
• Hospitals that are reimbursed in
accordance with demonstration projects
authorized under section 402(a) of the
Social Security Amendments of 1967
(Pub. L. 90–248) (42 U.S.C. 1395b–1) or
section 222(a) of the Social Security
Amendments of 1972 (Pub. L. 92–603)
(42 U.S.C. 1395b–1 (note)) (Statewide
all-payer systems, subject to the rate-ofincrease test at section 1814(b) of the
Act).
• Nonparticipating hospitals
furnishing emergency services to
Medicare beneficiaries.
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3. Limitation on Charges to Beneficiaries
In the August 30, 2002 final rule, we
presented an in-depth discussion of
beneficiary liability under the LTCH
PPS (67 FR 55974 through 55975). In the
RY 2005 LTCH PPS final rule (69 FR
25676), we clarified that the discussion
of beneficiary liability in the August 30,
2002 final rule was not meant to
establish rates or payments for, or define
Medicare-eligible expenses. Under
§ 412.507, if the Medicare payment to
the LTCH is the full LTC–DRG payment
amount, consistent with other
established hospital prospective
payment systems, a LTCH may not bill
a Medicare beneficiary for more than the
deductible and coinsurance amounts as
specified under §§ 409.82, 409.83, and
409.87 and for items and services
specified under § 489.30(a). However,
under the LTCH PPS, Medicare will
only pay for days for which the
beneficiary has coverage until the shortstay outlier (SSO) threshold is exceeded.
Therefore, if the Medicare payment was
for a SSO case (§ 412.529) that was less
than the full LTC–DRG payment amount
because the beneficiary had insufficient
remaining Medicare days, the LTCH
could also charge the beneficiary for
services delivered on those uncovered
days (§ 412.507).
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4. Administrative Simplification
Compliance Act (ASCA) and Health
Insurance Portability and
Accountability Act (HIPAA)
Compliance
Claims submitted to Medicare must
comply with both the Administrative
Simplification Compliance Act (ASCA)
(Pub. L. 107–105), and the Health
Insurance Portability and
Accountability Act of 1996 (HIPAA)
(Pub. L. 104–191). Section 3 of the
ASCA requires that the Medicare
Program deny payment under Part A or
Part B for any expenses incurred for
items or services ‘‘for which a claim is
submitted other than in an electronic
form specified by the Secretary.’’
Section 1862(h) of the Act (as added by
section 3(a) of the ASCA) provides that
the Secretary shall waive such denial in
two specific types of cases and may also
waive such denial ‘‘in such unusual
cases as the Secretary finds appropriate’’
(68 FR 48805). Section 3 of the ASCA
operates in the context of the HIPAA
regulations, which include, among other
provisions, the transactions and code
sets standards requirements codified
under 45 CFR Parts 160 and 162
(generally known as the Transactions
Rule). The Transactions Rule requires
covered entities, including covered
health care providers, to conduct certain
electronic health care transactions
according to the applicable transactions
and code sets standards.
The Department of Health and Human
Services has a number of initiatives
designed to encourage and support the
adoption of health information
technology and promote nationwide
health information exchange to improve
health care. The Office of the National
Coordinator for Health Information
Technology (ONC) leads these efforts in
collaboration with other agencies,
including CMS and the Office of the
Assistant Secretary for Planning and
Evaluation (ASPE). Through a number
of activities, including several open
government initiatives, HHS is
promoting the adoption of electronic
health record (EHR) technology certified
under the ONC Health Information
Technology (HIT) Certification Program
developed to support secure,
interoperable, health information
exchange. The HIT Policy Committee (a
Federal Advisory Committee) has
recommended areas in which HIT
certification under the ONC HIT
Certification Program would help
support providers that are eligible for
the Medicare and Medicaid EHR
Incentive Programs, such as long-term
and postacute care (including LTCHs)
and behavioral health care providers.
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50167
We believe that the use of certified
EHRs by LTCHs (and other types of
providers that are ineligible for the
Medicare and Medicaid EHR Incentive
Programs) can effectively and efficiently
help providers improve internal care
delivery practices, support the exchange
of important information across care
partners and during transitions of care,
and could enable the reporting of
electronically specified clinical quality
measures (eCQMs) (as described
elsewhere in this rule). More
information on the ONC HIT
Certification Program and efforts to
develop standards applicable to LTCHs
can be found by accessing the following
Web sites and resources:
• http://www.healthit.gov/sites/
default/files/
generalcertexchangeguidance_final_9-913.pdf;
• http://www.healthit.gov/facas/
FACAS/health-it-policy-committee/
hitpc-workgroups/certificationadoption;
• http://wiki.siframework.org/
LCC+LTPAC+Care+Transition+SWG;
and
• http://wiki.siframework.org/
Longitudinal+Coordination+of+Care.
B. Medicare Severity Long-Term Care
Diagnosis-Related Group (MS–LTC–
DRG) Classifications and Relative
Weights for FY 2015
1. Background
Section 123 of the BBRA requires that
the Secretary implement a PPS for
LTCHs (that is, a per discharge system
with a diagnosis-related group (DRG)based patient classification system
reflecting the differences in patient
resources and costs). Section 307(b)(1)
of the BIPA modified the requirements
of section 123 of the BBRA by requiring
that the Secretary examine ‘‘the
feasibility and the impact of basing
payment under such a system [the longterm care hospital (LTCH) PPS] on the
use of existing (or refined) hospital
DRGs that have been modified to
account for different resource use of
LTCH patients, as well as the use of the
most recently available hospital
discharge data.’’
When the LTCH PPS was
implemented for cost reporting periods
beginning on or after October 1, 2002,
we adopted the same DRG patient
classification system (that is, the CMS
DRGs) that was utilized at that time
under the IPPS. As a component of the
LTCH PPS, we refer to this patient
classification system as the ‘‘long-term
care diagnosis-related groups (LTC–
DRGs).’’ Although the patient
classification system used under both
the LTCH PPS and the IPPS are the
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same, the relative weights are different.
The established relative weight
methodology and data used under the
LTCH PPS result in relative weights
under the LTCH PPS that reflect ‘‘the
differences in patient resource use . . .’’
of LTCH patients (section 123(a)(1) of
the BBRA (Pub. L. 106–113)).
As part of our efforts to better
recognize severity of illness among
patients, in the FY 2008 IPPS final rule
with comment period (72 FR 47130), the
MS–DRGs and the Medicare severity
long-term care diagnosis-related groups
(MS–LTC–DRGs) were adopted under
the IPPS and the LTCH PPS,
respectively, effective beginning
October 1, 2007 (FY 2008). For a full
description of the development,
implementation, and rationale for the
use of the MS–DRGs and MS–LTC–
DRGs, we refer readers to the FY 2008
IPPS final rule with comment period (72
FR 47141 through 47175 and 47277
through 47299). (We note that, in that
same final rule, we revised the
regulations at § 412.503 to specify that
for LTCH discharges occurring on or
after October 1, 2007, when applying
the provisions of 42 CFR Part 412,
Subpart O applicable to LTCHs for
policy descriptions and payment
calculations, all references to LTC–
DRGs would be considered a reference
to MS–LTC–DRGs. For the remainder of
this section, we present the discussion
in terms of the current MS–LTC–DRG
patient classification system unless
specifically referring to the previous
LTC–DRG patient classification system
that was in effect before October 1,
2007.)
The MS–DRGs adopted in FY 2008
represent an increase in the number of
DRGs by 207 (that is, from 538 to 745)
(72 FR 47171). The MS–DRG
classifications are updated annually.
There are currently 751 MS–DRG
groupings. After finalizing the proposed
changes to the MS–DRG groupings
described in section II.G. of this
preamble, there are a total of 753 MS–
DRG groupings for FY 2015. Consistent
with section 123 of the BBRA, as
amended by section 307(b)(1) of the
BIPA, and § 412.515 of the regulations,
we used information derived from
LTCH PPS patient records to classify
LTCH discharges into distinct MS–LTC–
DRGs based on clinical characteristics
and estimated resource needs. We then
assigned an appropriate weight to the
MS–LTC–DRGs to account for the
difference in resource use by patients
exhibiting the case complexity and
multiple medical problems
characteristic of LTCHs. Below we
provide a general summary of our
existing methodology for determining
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the FY 2015 MS–LTC–DRG relative
weights under the LTCH PPS.
In a departure from the IPPS, and as
discussed in greater detail below in
section VII.B.3.f. of this preamble, we
are continuing to use low-volume MS–
LTC–DRGs (that is, MS–LTC–DRGs with
less than 25 LTCH cases) in determining
the MS–LTC–DRG relative weights
because LTCHs do not typically treat the
full range of diagnoses as do acute care
hospitals. For purposes of determining
the relative weights for the large number
of low-volume MS–LTC–DRGs, we
grouped all of the low-volume MS–
LTC–DRGs into five quintiles based on
average charge per discharge. (A
detailed discussion of the initial
development and application of the
quintile methodology appears in the
August 30, 2002 LTCH PPS final rule
(67 FR 55978).) Under our existing
methodology, we accounted for
adjustments to payments for short-stay
outlier (SSO) cases (that is, cases where
the covered length of stay at the LTCH
is less than or equal to five-sixths of the
geometric average length of stay for the
MS–LTC–DRG). Furthermore, we made
adjustments to account for
nonmonotonically increasing weights,
when necessary. That is, theoretically,
cases under the MS–LTC–DRG system
that are more severe require greater
expenditure of medical care resources
and will result in higher average charges
such that, in the severity levels within
a base MS–LTC–DRG, the relative
weights should increase monotonically
with severity from the lowest to highest
severity level. (We discuss
nonmonotonicity in greater detail and
our methodology to adjust the MS–LTC–
DRG relative weights to account for
nonmonotonically increasing relative
weights in section VII.B.3.g. (Step 6) of
this preamble.)
2. Patient Classifications into MS–LTC–
DRGs
a. Background
The MS–DRGs (used under the IPPS)
and the MS–LTC–DRGs (used under the
LTCH PPS) are based on the CMS DRG
structure. As noted above in this
section, we refer to the DRGs under the
LTCH PPS as MS–LTC–DRGs although
they are structurally identical to the
MS–DRGs used under the IPPS.
The MS–DRGs are organized into 25
major diagnostic categories (MDCs),
most of which are based on a particular
organ system of the body; the remainder
involve multiple organ systems (such as
MDC 22, Burns). Within most MDCs,
cases are then divided into surgical
DRGs and medical DRGs. Surgical DRGs
are assigned based on a surgical
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hierarchy that orders operating room
(O.R.) procedures or groups of O.R.
procedures by resource intensity. The
GROUPER software program does not
recognize all ICD–9–CM procedure
codes as procedures affecting DRG
assignment. That is, procedures that are
not surgical (for example, EKGs), or
minor surgical procedures (for example,
a biopsy of skin and subcutaneous
tissue (procedure code 86.11)) do not
affect the MS–LTC–DRG assignment
based on their presence on the claim.
Generally, under the LTCH PPS, a
Medicare payment is made at a
predetermined specific rate for each
discharge and that payment varies by
the MS–LTC–DRG to which a
beneficiary’s stay is assigned. Cases are
classified into MS–LTC–DRGs for
payment based on the following six data
elements:
• Principal diagnosis;
• Additional or secondary diagnoses;
• Surgical procedures;
• Age;
• Sex; and
• Discharge status of the patient.
Through FY 2010, the number of
diagnosis and procedure codes
considered for MS–DRG assignment was
limited to nine and six, respectively.
However, for claims submitted on the
5010 format beginning January 1, 2011,
we increased the capacity to process
diagnosis and procedure codes up to 25
diagnoses and 25 procedures. This
includes one principal diagnosis and up
to 24 secondary diagnoses for severity of
illness determinations. We refer readers
to section II.G.11.c. of the preamble of
the FY 2011 IPPS/LTCH PPS final rule
for a complete discussion of this change
(75 FR 50127).
Under HIPAA transactions and code
sets regulations at 45 CFR Parts 160 and
162, covered entities must comply with
the adopted transaction standards and
operating rules specified in Subparts I
through S of Part 162. Among other
requirements, by January 1, 2012,
covered entities were required to use the
ASC X12 Standards for Electronic Data
Interchange Technical Report Type 3—
Health Care Claim: Institutional (837),
May 2006, ASC X12N/005010X223, and
Type 1 Errata to Health Care Claim:
Institutional (837) ASC X12 Standards
for Electronic Data Interchange
Technical Report Type 3, October 2007,
ASC X12N/005010X233A1 for the
health care claims or equivalent
encounter information transaction (45
CFR 162.1102).
HIPAA requires covered entities to
use the applicable medical data code set
requirements when conducting HIPAA
transactions (45 CFR 162.1000).
Currently, upon the discharge of the
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patient, the LTCH must assign
appropriate diagnosis and procedure
codes from the most current version of
the Internal Classification of Diseases,
Ninth Revision, Clinical Modification
(ICD–9–CM). For additional information
on the ICD–9–CM coding system, we
refer readers to the FY 2008 IPPS final
rule with comment period (72 FR 47241
through 47243 and 47277 through
47281). We also refer readers to the
detailed discussion on correct coding
practices in the August 30, 2002 LTCH
PPS final rule (67 FR 55981 through
55983). Additional coding instructions
and examples are published in the
Coding Clinic for ICD–9–CM, a product
of the American Hospital Association.
(We refer readers to section II.G.13. of
the preamble of this final rule for
additional information on the annual
revisions to the ICD–9–CM codes.)
Providers use the code sets under the
ICD–9–CM coding system to report
diagnoses and procedures for Medicare
hospital inpatient services under the
MS–DRG system. We have been
discussing the conversion to the ICD–10
coding system for many years. In the FY
2015 IPPS/LTCH PPS proposed rule, we
referred readers to section II.G.1. of the
preamble of that proposed rule for
additional information on the
implementation of the ICD–10 coding
system.
Comment: One commenter requested
that CMS develop a crosswalk between
ICD–9–CM codes and ICD–10 codes to
specifically assist LTCH providers in
determining the appropriate MS–LTC–
DRGs that are affected as a result of the
transition to ICD–10–PCS. The
commenter stated that additional
guidance is needed regarding the
specific MS–LTC–DRGs that LTCHs
should concentrate their efforts on
during the delay in the implementation
of ICD–10–PCS.
Response: As noted above, the MS–
LTC–DRGs under the LTCH PPS are
structurally identical to the MS–DRGs
used under the IPPS. For a detailed
discussion of the conversion from the
ICD–9–CM to the ICD–10–PCS code set
and the ICD–9–CM to ICD–10 MS–
DRGs, we refer readers to section
II.G.1.a. of the preamble of this FY 2015
IPPS/LTCH PPS final rule. Included in
this discussion are all the ICD–10
resources publicly available via the
Internet on the CMS ICD–10 Web site:
http://www.cms.gov/Medicare/Coding/
ICD10/index.html. For example, the
General Equivalence Mappings (GEMs)
that consist of forward and backward
mappings of ICD–9–CM and ICD–10–
PCS coding sets are available for
providers to review their current list of
ICD–9–CM codes and map (or
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crosswalk) them to the appropriate
available ICD–10–PCS codes. However,
we note that the GEMs are not a
substitute for coding from actual
medical record documentation using the
ICD–10–PCS code set. We also have
held several ICD–10–PCS National
Provider Calls where interested parties
can listen to past presentations and
review the accompanying slide
presentations available. We refer readers
to the following Web site: http://
www.cms.gov/Medicare/Coding/ICD10/
CMS-Sponsored-ICD-10Teleconferences.html.
To create the MS–DRGs (and by
extension, the MS–LTC–DRGs), base
DRGs were subdivided according to the
presence of specific secondary
diagnoses designated as complications
or comorbidities (CCs) into one, two, or
three levels of severity, depending on
the impact of the CCs on resources used
for those cases. Specifically, there are
sets of MS–DRGs that are split into 2 or
3 subgroups based on the presence or
absence of a CC or a major complication
or comorbidity (MCC). We refer readers
to section II.D. of the FY 2008 IPPS final
rule with comment period for a detailed
discussion about the creation of MS–
DRGs based on severity of illness levels
(72 FR 47141 through 47175).
Medicare administrative contractors
(MACs) enter the clinical and
demographic information submitted by
LTCHs into their claims processing
systems and subject this information to
a series of automated screening
processes called the Medicare Code
Editor (MCE). These screens are
designed to identify cases that require
further review before assignment into a
MS–LTC–DRG can be made. During this
process, certain cases are selected for
further development (74 FR 43949).
After screening through the MCE,
each claim is classified into the
appropriate MS–LTC–DRG by the
Medicare LTCH GROUPER software on
the basis of diagnosis and procedure
codes and other demographic
information (age, sex, and discharge
status). The GROUPER software used
under the LTCH PPS is the same
GROUPER software program used under
the IPPS. Following the MS–LTC–DRG
assignment, the Medicare contractor
determines the prospective payment
amount by using the Medicare PRICER
program, which accounts for hospitalspecific adjustments. Under the LTCH
PPS, we provide an opportunity for
LTCHs to review the MS–LTC–DRG
assignments made by the Medicare
contractor and to submit additional
information within a specified
timeframe as provided in § 412.513(c).
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The GROUPER software is used both
to classify past cases to measure relative
hospital resource consumption to
establish the MS–LTC–DRG relative
weights and to classify current cases for
purposes of determining payment. The
records for all Medicare hospital
inpatient discharges are maintained in
the MedPAR file. The data in this file
are used to evaluate possible MS–DRG
and MS–LTC–DRG classification
changes and to recalibrate the MS–DRG
and MS–LTC–DRG relative weights
during our annual update under both
the IPPS (§ 412.60(e)) and the LTCH PPS
(§ 412.517), respectively.
b. Changes to the MS–LTC–DRGs for FY
2015
As specified by our regulations at
§ 412.517(a), which require that the MS–
LTC–DRG classifications and relative
weights be updated annually, and
consistent with our historical practice of
using the same patient classification
system under the LTCH PPS as is used
under the IPPS, we proposed to update
the MS–LTC–DRG classifications
effective October 1, 2014, through
September 30, 2015 (FY 2015)
consistent with the proposed changes to
specific MS–DRG classifications (that is,
proposed GROUPER Version 32.0). We
did not receive any public comments on
this proposal. Therefore, we are
adopting the proposal without
modification in this final rule. In
accordance with § 412.517(a) and
consistent with our historical practice,
we are updating the MS–LTC–DRG
classifications effective October 1, 2014,
through September 30, 2015 (FY 2015)
consistent with the changes to specific
MS–DRG classifications presented in
section II.G. of this preamble (that is,
GROUPER Version 32.0). Therefore, the
MS–LTC–DRGs for FY 2015 presented
in this final rule are the same as the
MS–DRGs that are being used under the
IPPS for FY 2015. In addition, because
the MS–LTC–DRGs for FY 2015 are the
same as the MS–DRGs for FY 2015, the
other changes that affect MS–DRG (and
by extension MS–LTC–DRG)
assignments under GROUPER Version
32.0 as discussed in section II.G. of the
preamble of this final rule, including the
changes to the MCE software and the
ICD–9–CM coding system, also are
applicable under the LTCH PPS for FY
2015.
3. Development of the FY 2015 MS–
LTC–DRG Relative Weights
a. General Overview of the Development
of the MS–LTC–DRG Relative Weights
One of the primary goals for the
implementation of the LTCH PPS is to
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pay each LTCH an appropriate amount
for the efficient delivery of medical care
to Medicare patients. The system must
be able to account adequately for each
LTCH’s case-mix in order to ensure both
fair distribution of Medicare payments
and access to adequate care for those
Medicare patients whose care is more
costly (67 FR 55984). To accomplish
these goals, we have annually adjusted
the LTCH PPS standard Federal
prospective payment system rate by the
applicable relative weight in
determining payment to LTCHs for each
case.
The basic methodology used to
develop the MS–LTC–DRG relative
weights is generally consistent with the
general methodology established when
the LTCH PPS was implemented in the
August 30, 2002 LTCH PPS final rule
(67 FR 55989 through 55991), with the
exception of some modifications of our
historical procedures for assigning
relative weights in cases of zero volume
and/or nonmonotonicity resulting from
the adoption of the MS–LTC–DRGs. (For
details on the modifications to our
historical procedures for assigning
relative weights in cases of zero volume
and/or nonmonotonicity, we refer
readers to the FY 2008 IPPS final rule
with comment period (72 FR 47289
through 47295) and the FY 2009 IPPS
final rule (73 FR 48542 through 48550).)
Under the LTCH PPS, relative weights
for each MS–LTC–DRG are a primary
element used to account for the
variations in cost per discharge and
resource utilization among the payment
groups (§ 412.515). To ensure that
Medicare patients classified to each
MS–LTC–DRG have access to an
appropriate level of services and to
encourage efficiency, we calculate a
relative weight for each MS–LTC–DRG
that represents the resources needed by
an average inpatient LTCH case in that
MS–LTC–DRG. For example, cases in a
MS–LTC–DRG with a relative weight of
2 will, on average, cost twice as much
to treat as cases in a MS–LTC–DRG with
a relative weight of 1.
b. Development of the MS–LTC–DRG
Relative Weights for FY 2015
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50755 through 50760), we
presented our policies for the
development of the MS–LTC–DRG
relative weights for FY 2014. The basic
methodology we used to develop the FY
2014 MS–LTC–DRG relative weights
was the same as the methodology we
used to develop the FY 2013 MS–LTC–
DRG relative weights in the FY 2013
IPPS/LTCH PPS final rule and was
consistent with the general methodology
established when the LTCH PPS was
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implemented in the August 30, 2002
LTCH PPS final rule (67 FR 55989
through 55991). In the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28181
through 28187), we proposed to
continue to use our existing
methodology to determine the MS LTC–
DRG relative weights for FY 2015,
including the application of established
policies related to the data, the hospitalspecific relative value methodology, the
treatment of severity levels in the MS
LTC–DRGs, low-volume and no-volume
MS–LTC–DRGs, adjustments for
nonmonotonicity, and the steps for
calculating the proposed MS–LTC–DRG
relative weights with a budget neutrality
factor.
Beginning with the FY 2008 update,
we established a budget neutrality
requirement for the annual update to the
MS–LTC–DRG classifications and
relative weights at § 412.517(b) (in
conjunction with § 412.503), such that
estimated aggregate LTCH PPS
payments would be unaffected, that is,
would be neither greater than nor less
than the estimated aggregate LTCH PPS
payments that would have been made
without the classification and relative
weight changes (72 FR 26882 through
26884). Consistent with § 412.517(b), we
proposed to continue to apply our
established two-step budget neutrality
methodology. As such, the proposed
update to the MS–LTC–DRG
classifications and relative weights for
FY 2015 was based on the FY 2014 MS–
LTC–DRG classifications and relative
weights established in Table 11 listed in
section VI. of the Addendum to the FY
2014 IPPS/LTCH PPS final rule (78 FR
51002).
Comment: A few commenters
recommended that CMS review its
calculation of the proposed FY 2015
MS–LTC–DRG relative weights with the
proposed budget neutrality factor to
confirm that the those weights resulted
in no change in aggregate LTCH PPS
payments under § 412.517. The
commenters made this request after
performing their own analysis of the
proposed relative weight calculations.
One commenter performed a
comparative analysis using the LTCH
discharges from the MedPAR data and
its estimate of LTCH PPS payments
using the FY 2014 MS–LTC–DRGs
relative weights and the proposed FY
2015 MS–LTC–DRGs relative weights,
and found an aggregate reduction in
LTCH PPS payments, in which the
majority of that reduction was due to
the proposed decrease in the relative
weight for MS–LTC–DRG 207. Another
commenter’s analysis found a reduction
in the proposed relative weight for 11 of
the 20 most frequently utilized MS–
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LTC–DRGs, which the commenter
believed suggested that the proposed
MS–LTC–DRGs relative weights result
in an aggregate decrease in LTCH PPS
payments. Because these commenters
believed that their analyses revealed an
estimated aggregate decrease in LTCH
PPS payments, they further believed
that the proposed MS–LTC–DRGs
relative are not ‘‘budget neutral’’ and,
therefore, are not consistent with the
requirement under § 412.517(b) that
CMS ensure that estimated LTCH PPS
payments are not affected by the annual
update to the MS–LTC–DRGs
classifications and relative weights. We
note that the commenters did not
comment specifically on any of our
specific proposals related to the
determination of the MS–LTC–DRGs
relative weights for FY 2015, which
includes our calculation of the
normalization factor and the budget
neutrality factor determined under the
proposed application of our two-step
budget neutrality methodology
(discussed in Step 7 of section VII.B.3.g.
of the proposed rule).
Response: We appreciate the
commenters’ analysis of the
determination of the proposed MS–
LTC–DRG relative weight calculations.
In consideration of these public
comments, we have reviewed the
application of our methodology and the
calculation of the MS–LTC–DRGs
relative weights for FY 2015. We found
no methodological or computational
errors. In particular, in light of the
commenter’s focus on MS–LTC–DRG
207, we reviewed our budget neutrality
calculations to ensure that the proposed
decrease in the relative weight for MS–
LTC–DRG 207 was accurately reflected
in our aggregate LTCH PPS payment
estimates. As described in step 7 under
section VII.B.3.g. of the proposed rule,
after determining and applying the
normalization factor, we compared
estimated aggregate LTCH PPS
payments using the FY 2014 MS–LTC–
DRGs and relative weights to estimate
aggregate LTCH PPS payments using the
proposed FY 2015 MS–LTC–DRGs and
relative weights using LTCH claims data
from the December 2013 update of the
FY 2013 MedPAR file. Prior to the
application of the proposed budget
neutrality factor, we estimated that
aggregate LTCH PPS payments using the
proposed FY 2015 MS–LTC–DRGs and
normalized relative weights would have
resulted in an increase in aggregate
LTCH PPS payments in FY 2015. To
remove this estimated increase in
aggregate LTCH PPS payments, we
determined that a factor of 0.995275
needed to be applied to each of the
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proposed normalized FY 2015 MS–
LTC–DRG relative weights. Therefore,
we disagree with the commenters that
the proposed MS LTC DRG relative
weights are not ‘‘budget neutral,’’ and
are not consistent with the budget
neutrality requirement under
§ 412.517(b). As noted above, the
commenters did not comment
specifically on our calculation of the
normalization factor and the budget
neutrality factor determined under the
proposed application of our two-step
budget neutrality methodology.
The budget neutrality provision under
§ 412.517(b) requires that estimated
aggregate LTCH PPS payments would be
unaffected, that is, would be neither
greater than nor less than the estimated
aggregate LTCH PPS payments that
would have been made without the
classification and relative weight
changes (72 FR 26882 through 26884).
Consistent with § 412.517(b), we
proposed to continue to apply our
established two-step budget neutrality
methodology. Under both steps of this
methodology, based on the best data
available, we assess the aggregate effects
of the annual classification and relative
weight changes. Specifically, as
described in the proposed rule, in the
first step we determine a normalization
factor to ensure that estimated payments
are not affected by changes in the
composition of case types or the
changes to the classification system
using a ratio of average CMIs calculated
across all LTCH PPS cases used for
recalibration. Similarly, in the second
step, the comparison of estimated
aggregate LTCH PPS payments used to
determine the budget neutrality factor is
based on the sum of the estimated
payments for all LTCH claims in the
specified database. While the
commenter is correct that the proposed
relative weights for 11 of the 20 most
frequently utilized MS–LTC–DRGs (or
approximately 55 percent) are
decreasing (which includes MS–LTC–
DRG 207), the LTCH cases in those MS–
LTC–DRGs only includes less than 60
percent of the LTCH claims. When the
analysis is expanded to the 50 most
frequently utilized MS–LTC–DRGs,
which includes over 80 percent of the
LTCH claims, the percentage of MS–
LTC–DRGs with a proposed decrease in
its relative weight drops to
approximately 45 percent. This
demonstrates that the number of MS–
LTC–DRGs included in such an analysis
can show contrary results. Therefore, we
disagree with the commenter’s assertion
that its analysis of the proposed relative
weights for 11 of the 20 most frequently
utilized MS–LTC–DRGs is an indication
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that the proposed MS–LTC–DRG
relative weights will result in an
aggregate decrease in LTCH PPS
payments and, therefore, are not budget
neutral.
In this FY 2015 IPPS/LTCH PPS final
rule, after consideration of public
comments we received, as proposed, we
are continuing to apply our established
methodology to develop the MS–LTC–
DRG relative weights for FY 2015.
Specifically, we are finalizing our
proposed methodology for developing
the FY 2015 MS–LTC–DRG relative
weights without modification, including
the proposed application of established
policies related to the data, hospitalspecific relative value methodology, the
treatment of severity levels in the MS–
LTC–DRGs, low-volume and no-volume
MS–LTC–DRGs, adjustments for
nonmonotonicity, and the proposed
steps for calculating the MS–LTC–DRG
relative weights with a budget neutrality
factor. Below we present the
methodology that we are continuing to
use to determine the MS–LTC–DRG
relative weights for FY 2015, which is
consistent with the methodology
presented in the FY 2014 IPPS/LTCH
PPS final rule. In addition, after
consideration of the public comments
we received, we are adopting as final
the continued application our
established two-step budget neutrality
methodology, which is based on the
current year MS–LTC–DRG
classifications and relative weights (that
is, the annual update to the MS–LTC–
DRG classifications and relative weights
for FY 2015 are based on the FY 2014
MS–LTC–DRG classifications and
relative weights established in Table 11
listed in section VI. of the Addendum to
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 51002)). For additional
information on the established two-step
budget neutrality methodology, we refer
readers to the FY 2008 IPPS final rule
(72 FR 47295 through 47296).
c. Data
For the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50755), to calculate the MS–
LTC–DRG relative weights for FY 2014,
we obtained total charges from FY 2012
Medicare LTCH bill data from the
December 2012 update of the FY 2012
MedPAR file, which were the best
available data at that time, and used the
finalized Version 31.0 of the GROUPER
to classify LTCH cases. As stated
previously in this section, this approach
is consistent with our proposals
regarding the continued application of
established policies related to the data
as presented in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28181
through 28182), which we are finalizing
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without modification in this final rule.
Consistent with our historical practice,
to calculate the MS–LTC–DRG relative
weights for FY 2015 in this final rule,
we obtained total charges from the FY
2013 Medicare LTCH bill data from the
March 2014 update of the FY 2013
MedPAR file, which are the best
available data at this time, and used
Version 32.0 of the GROUPER to classify
LTCH cases.
In this final rule and consistent with
our historical methodology, we
excluded the data from LTCHs that are
all-inclusive rate providers and LTCHs
that are reimbursed in accordance with
demonstration projects authorized
under section 402(a) of Public Law 90–
248 or section 222(a) of Public Law 92–
603. Furthermore, consistent with our
historical practice, we excluded
Medicare Advantage (Part C) claims,
which are now included in the MedPAR
files, in the calculations for the relative
weights under the LTCH PPS that are
used to determine payments for
Medicare fee-for-service claims.
Specifically, we did not use any claims
from the MedPAR files that had a GHO
Paid indicator value of ‘‘1,’’ which
effectively removed Medicare
Advantage claims from the relative
weight calculations. Accordingly, in the
development of the FY 2015 MS–LTC–
DRG relative weights in this final rule,
we excluded the data of 12 all-inclusive
rate providers and one LTCH that is
paid in accordance with demonstration
projects that had claims in the March
2014 update of the FY 2013 MedPAR
file, as well as any Medicare Advantage
claims.
d. Hospital-Specific Relative Value
(HSRV) Methodology
By nature, LTCHs often specialize in
certain areas, such as ventilatordependent patients and treatment of
infections and wound care. Some case
types (MS–DRGs) may be treated, to a
large extent, in hospitals that have, from
a perspective of charges, relatively high
(or low) charges. This nonrandom
distribution of cases with relatively high
(or low) charges in specific MS–LTC–
DRGs has the potential to
inappropriately distort the measure of
average charges. As stated previously in
this section, this approach is consistent
with our proposals regarding the
continued use of the HSRV
methodology as presented in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28182), which we are finalizing
without modification in this final rule.
Therefore, in this final rule, to account
for the fact that cases may not be
randomly distributed across LTCHs,
consistent with the methodology we
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have used since the implementation of
the LTCH PPS, we are continuing to use
a hospital-specific relative value (HSRV)
methodology to calculate the MS–LTC–
DRG relative weights for FY 2015. We
believe this method removes this
hospital-specific source of bias in
measuring LTCH average charges (67 FR
55985). Specifically, under this
methodology, we reduce the impact of
the variation in charges across providers
on any particular MS–LTC–DRG relative
weight by converting each LTCH’s
charge for a case to a relative value
based on that LTCH’s average charge.
Under the HSRV methodology, we
standardize charges for each LTCH by
converting its charges for each case to
hospital-specific relative charge values
and then adjusting those values for the
LTCH’s case-mix. The adjustment for
case-mix is needed to rescale the
hospital-specific relative charge values
(which, by definition, average 1.0 for
each LTCH). The average relative weight
for a LTCH is its case-mix, so it is
reasonable to scale each LTCH’s average
relative charge value by its case-mix. In
this way, each LTCH’s relative charge
value is adjusted by its case-mix to an
average that reflects the complexity of
the cases it treats relative to the
complexity of the cases treated by all
other LTCHs (the average case-mix of all
LTCHs).
In accordance with our established
methodology, we are continuing to
standardize charges for each case by
first dividing the adjusted charge for the
case (adjusted for SSOs under § 412.529
as described in section VII.B.3.g. (Step
3) of this preamble) by the average
adjusted charge for all cases at the LTCH
in which the case was treated. SSO
cases are cases with a length of stay that
is less than or equal to five-sixths the
average length of stay of the MS–LTC–
DRG (§ 412.529 and § 412.503). The
average adjusted charge reflects the
average intensity of the health care
services delivered by a particular LTCH
and the average cost level of that LTCH.
The resulting ratio is multiplied by that
LTCH’s case-mix index to determine the
standardized charge for the case (67 FR
55989).
Multiplying the resulting ratio by the
LTCH’s case-mix index accounts for the
fact that the same relative charges are
given greater weight at a LTCH with
higher average costs than they would at
a LTCH with low average costs, which
is needed to adjust each LTCH’s relative
charge value to reflect its case-mix
relative to the average case-mix for all
LTCHs. Because we standardize charges
in this manner, we count charges for a
Medicare patient at a LTCH with high
average charges as less resource
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intensive than they would be at a LTCH
with low average charges. For example,
a $10,000 charge for a case at a LTCH
with an average adjusted charge of
$17,500 reflects a higher level of relative
resource use than a $10,000 charge for
a case at a LTCH with the same casemix, but an average adjusted charge of
$35,000. We believe that the adjusted
charge of an individual case more
accurately reflects actual resource use
for an individual LTCH because the
variation in charges due to systematic
differences in the markup of charges
among LTCHs is taken into account.
e. Treatment of Severity Levels in
Developing the MS–LTC–DRG Relative
Weights
For purposes of determining the MS–
LTC–DRG relative weights, under our
historical methodology, there are three
different categories of MS–DRGs based
on volume of cases within specific MS–
LTC–DRGs: (1) MS–LTC–DRGs with at
least 25 cases are each assigned a
unique relative weight; (2) low-volume
MS–LTC–DRGs (that is, MS–LTC–DRGs
that contain between 1 and 24 cases
based on a given year’s claims data) are
grouped into quintiles (as described
below) and assigned the relative weight
of the quintile; and (3) no-volume MS–
LTC–DRGs (that is, no cases in the given
year’s claims data are assigned to those
MS–LTC–DRGs) are cross-walked to
other MS–LTC–DRGs based on the
clinical similarities and assigned the
relative weight of the cross-walked MS–
LTC–DRG (as described in greater detail
below). As stated previously in this
section, this approach is consistent with
our proposals regarding the continued
use of our existing methodology related
to the treatment of severity levels as
presented in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28182), which
we are finalizing without modification
in this final rule.
Therefore, in this final rule, we are
continuing to utilize these same three
categories of MS–LTC–DRGs for
purposes of the treatment of severity
levels in determining the MS–LTC–DRG
relative weights for FY 2015. (We
provide in-depth discussions of our
policy regarding weight-setting for lowvolume MS–LTC–DRGs in section
VII.B.3.f. of the preamble of this final
rule and for no-volume MS–LTC–DRGs,
under Step 5 in section VII.B.3.g. of the
preamble of this final rule.)
Furthermore, in determining the FY
2015 MS–LTC–DRG relative weights,
when necessary, we made adjustments
to account for nonmonotonicity, as
discussed in greater detail below in Step
6 of section VII.B.3.g. of this preamble.
We refer readers to the discussion in the
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FY 2010 IPPS/RY 2010 LTCH PPS final
rule for our rationale for including an
adjustment for nonmonotonicity (74 FR
43953 through 43954).
f. Low-Volume MS–LTC–DRGs
In order to account for MS–LTC–
DRGs with low volume (that is, with
fewer than 25 LTCH cases), consistent
with our existing methodology for
purposes of determining the FY 2015
MS–LTC–DRG relative weights, we are
continuing to employ the quintile
methodology for low-volume MS–LTC–
DRGs, such that we grouped the ‘‘lowvolume MS–LTC–DRGs’’ (that is, MS–
LTC–DRGs that contained between 1
and 24 cases annually) into one of five
categories (quintiles) based on average
charges (67 FR 55984 through 55995
and 72 FR 47283 through 47288). As
stated previously in this section, this
approach is consistent with our
proposals regarding the continued use
of our existing methodology for the
treatment of low-volume MS–LTC–
DRGs as presented in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28182
through 28183), which we are finalizing
without modification in this final rule.
Therefore, in determining the FY 2015
MS–LTC–DRG relative weights in this
final rule, in cases where the initial
assignment of a low-volume MS–LTC–
DRG to a quintile results in
nonmonotonicity within a base-DRG, in
order to ensure appropriate Medicare
payments, consistent with our historical
methodology, we made adjustments to
the treatment of low-volume MS–LTC–
DRGs to preserve monotonicity, as
discussed in detail below in section
VII.B.3.g. (Step 6) of the preamble of this
final rule.
In this final rule, using LTCH cases
from the March 2014 update of the FY
2013 MedPAR file (which is currently
the best available data), we identified
295 MS–LTC–DRGs that contained
between 1 and 24 cases. This list of MS–
LTC–DRGs was then divided into one of
the 5 low-volume quintiles, each
containing 59 MS–LTC–DRGs (295/5 =
59). We assigned a low-volume MS–
LTC–DRG to a specific low-volume
quintile by sorting the low-volume MS–
LTC–DRGs in ascending order by
average charge in accordance with our
established methodology. Based on the
data available for this final rule, the
number of MS–LTC–DRGs with less
than 25 cases was evenly divisible by 5,
and therefore, it was not necessary to
employ our historical methodology for
determining which of the low-volume
quintiles contain an additional lowvolume MS–LTC–DRG. Specifically for
this final rule, after organizing the MS–
LTC–DRGs by ascending order by
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average charge, we assigned the first
fifth (1st through 59th) of low-volume
MS–LTC–DRGs (with the lowest average
charge) into Quintile 1. The MS–LTC–
DRGs with the highest average charge
cases were assigned into Quintile 5.
Table 13A, which is listed in section VI.
of the Addendum to this final rule and
is available via the Internet, lists the
composition of the low-volume
quintiles for MS–LTC–DRGs for FY
2015.
Accordingly, in order to determine
the FY 2015 relative weights for the
MS–LTC–DRGs with low volume, we
used the five low-volume quintiles
described above. We determined a
relative weight and (geometric) average
length of stay for each of the five lowvolume quintiles using the methodology
that we applied to the MS–LTC–DRGs
(25 or more cases), as described below
in section VII.B.3.g. of the preamble of
this final rule. We assigned the same
relative weight and average length of
stay to each of the low-volume MS–
LTC–DRGs that made up an individual
low-volume quintile. We note that, as
this system is dynamic, it is possible
that the number and specific type of
MS–LTC–DRGs with a low volume of
LTCH cases will vary in the future.
Furthermore, we note that we will
continue to monitor the volume (that is,
the number of LTCH cases) in the lowvolume quintiles to ensure that our
quintile assignments used in
determining the MS–LTC–DRG relative
weights result in appropriate payment
for such cases and do not result in an
unintended financial incentive for
LTCHs to inappropriately admit these
types of cases.
g. Steps for Determining the FY 2015
MS–LTC–DRG Relative Weights
In this final rule, we determined the
FY 2015 MS–LTC–DRG relative weights
based on our existing methodology. (For
additional information on the original
development of this methodology, and
modifications to it since the adoption of
the MS–LTC–DRGs, we refer readers to
the August 30, 2002 LTCH PPS final
rule (67 FR 55989 through 55995) and
the FY 2010 IPPS/RY 2010 LTCH PPS
final rule (74 FR 43951 through 43966).)
As stated previously in this section, this
approach is consistent with our
proposals regarding the continued use
of our existing methodology to
determine the FY 2015 MS–LTC–DRG
relative weights as presented in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28183 through 28187), which we are
finalizing without modification in this
final rule.
In summary, to determine the FY
2015 MS–LTC–DRG relative weights, we
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grouped LTCH cases to the appropriate
MS–LTC–DRG, while taking into
account the low-volume quintile (as
described above). After grouping the
cases to the appropriate MS–LTC–DRG
(or low-volume quintile), we calculated
the FY 2015 relative weights by first
removing statistical outliers and cases
with a length of stay of 7 days or less
(Steps 1 and 2 below). Next, we adjusted
the number of cases in each MS–LTC–
DRG (or low-volume quintile) for the
effect of SSO cases (Step 3 below). After
removing statistical outliers (Step 1
below) and cases with a length of stay
of 7 days or less (Step 2 below), the SSO
adjusted discharges and corresponding
charges were then used to calculate
‘‘relative adjusted weights’’ for each
MS–LTC–DRG (or low-volume quintile)
using the HSRV method. Below we
discuss in detail the steps for
calculating the FY 2015 MS–LTC–DRG
relative weights. We note that, as we
discussed in section VII.B.3.c. of the
preamble of this final rule, we excluded
the data of all-inclusive rate LTCHs,
LTCHs that are paid in accordance with
demonstration projects, and any
Medicare Advantage claims in the
March 2014 update of the FY 2013
MedPAR file.
Step 1—Remove statistical outliers.
The first step in the calculation of the
FY 2015 MS–LTC–DRG relative weights
is to remove statistical outlier cases.
Consistent with our historical relative
weight methodology, we are continuing
to define statistical outliers as cases that
are outside of 3.0 standard deviations
from the mean of the log distribution of
both charges per case and the charges
per day for each MS–LTC–DRG. These
statistical outliers were removed prior to
calculating the relative weights because
we believe that they may represent
aberrations in the data that distort the
measure of average resource use.
Including those LTCH cases in the
calculation of the relative weights could
result in an inaccurate relative weight
that does not truly reflect relative
resource use among the MS–LTC–DRGs.
(For additional information on this step
of the relative weight methodology, we
refer readers to 67 FR 55989 and 74 FR
43959.)
Step 2—Remove cases with a length
of stay of 7 days or less.
The MS–LTC–DRG relative weights
reflect the average of resources used on
representative cases of a specific type.
Generally, cases with a length of stay of
7 days or less do not belong in a LTCH
because these stays do not fully receive
or benefit from treatment that is typical
in a LTCH stay, and full resources are
often not used in the earlier stages of
admission to a LTCH. If we were to
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include stays of 7 days or less in the
computation of the FY 2015 MS–LTC–
DRG relative weights, the value of many
relative weights would decrease and,
therefore, payments would decrease to a
level that may no longer be appropriate.
We do not believe that it would be
appropriate to compromise the integrity
of the payment determination for those
LTCH cases that actually benefit from
and receive a full course of treatment at
a LTCH by including data from these
very short stays. Therefore, consistent
with our historical relative weight
methodology, in determining the FY
2015 MS–LTC–DRG relative weights, we
removed LTCH cases with a length of
stay of 7 days or less. (For additional
information on this step of the relative
weight methodology, we refer readers to
67 FR 55989 and 74 FR 43959.)
Step 3—Adjust charges for the effects
of SSOs.
After removing cases with a length of
stay of 7 days or less, we were left with
cases that have a length of stay of greater
than or equal to 8 days. As the next step
in the calculation of the FY 2015 MS–
LTC–DRG relative weights, consistent
with our historical relative weight
methodology, we adjusted each LTCH’s
charges per discharge for those
remaining cases for the effects of SSOs
(as defined in § 412.529(a) in
conjunction with § 412.503).
In this final rule, we made this
adjustment by counting an SSO case as
a fraction of a discharge based on the
ratio of the length of stay of the case to
the average length of stay for the MS–
LTC–DRG for non-SSO cases. This has
the effect of proportionately reducing
the impact of the lower charges for the
SSO cases in calculating the average
charge for the MS–LTC–DRG. This
process produces the same result as if
the actual charges per discharge of an
SSO case were adjusted to what they
would have been had the patient’s
length of stay been equal to the average
length of stay of the MS–LTC–DRG.
Counting SSO cases as full discharges
with no adjustment in determining the
FY 2015 MS–LTC–DRG relative weights
would lower the FY 2015 MS–LTC–DRG
relative weight for affected MS–LTC–
DRGs because the relatively lower
charges of the SSO cases would bring
down the average charge for all cases
within a MS–LTC–DRG. This would
result in an ‘‘underpayment’’ for nonSSO cases and an ‘‘overpayment’’ for
SSO cases. Therefore, we adjusted for
SSO cases under § 412.529 in this
manner because it results in more
appropriate payments for all LTCH
cases. (For additional information on
this step of the relative weight
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methodology, we refer readers to 67 FR
55989 and 74 FR 43959.)
Step 4—Calculate the FY 2015 MS–
LTC–DRG relative weights on an
iterative basis.
Consistent with our historical relative
weight methodology, we calculated the
FY 2015 MS–LTC–DRG relative weights
using the HSRV methodology, which is
an iterative process. First, for each
LTCH case, we calculated a hospitalspecific relative charge value by
dividing the SSO adjusted charge per
discharge (see Step 3) of the LTCH case
(after removing the statistical outliers
(see Step 1) and LTCH cases with a
length of stay of 7 days or less (see Step
2)) by the average charge per discharge
for the LTCH in which the case
occurred. The resulting ratio was then
multiplied by the LTCH’s case-mix
index to produce an adjusted hospitalspecific relative charge value for the
case. An initial case-mix index value of
1.0 was used for each LTCH.
For each MS–LTC–DRG, we
calculated the FY 2015 relative weight
by dividing the average of the adjusted
hospital-specific relative charge values
(from above) for the MS–LTC–DRG by
the overall average hospital-specific
relative charge value across all cases for
all LTCHs. Using these recalculated
MS–LTC–DRG relative weights, each
LTCH’s average relative weight for all of
its cases (that is, its case-mix) was
calculated by dividing the sum of all the
LTCH’s MS–LTC–DRG relative weights
by its total number of cases. The LTCHs’
hospital-specific relative charge values
(from above) were then multiplied by
the hospital-specific case-mix indexes.
The hospital-specific case-mix adjusted
relative charge values were then used to
calculate a new set of MS–LTC–DRG
relative weights across all LTCHs. This
iterative process was continued until
there was convergence between the
relative weights produced at adjacent
steps, for example, when the maximum
difference was less than 0.0001.
Step 5—Determine a FY 2015 relative
weight for MS–LTC–DRGs with no
LTCH cases.
As we stated above, we determined
the FY 2015 relative weight for each
MS–LTC–DRG using total Medicare
allowable total charges reported in the
best available LTCH claims data (that is,
the March 2014 update of the FY 2013
MedPAR file for this final rule). Using
these data, we identified the MS–LTC–
DRGs for which there were no LTCH
cases in the database, such that no
patients who would have been classified
to those MS–LTC–DRGs were treated in
LTCHs during FY 2013 and, therefore,
no charge data were available for these
MS–LTC–DRGs. Therefore, in the
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process of determining the MS–LTC–
DRG relative weights, we were unable to
calculate relative weights for the MS–
LTC–DRGs with no LTCH cases using
the methodology described in Steps 1
through 4 above. However, because
patients with a number of the diagnoses
under these MS–LTC–DRGs may be
treated at LTCHs, consistent with our
historical methodology, we assigned a
relative weight to each of the no-volume
MS–LTC–DRGs based on clinical
similarity and relative costliness (with
the exception of ‘‘transplant’’ MS–LTC–
DRGs and ‘‘error’’ MS–LTC–DRGs, as
discussed below). (For additional
information on this step of the relative
weight methodology, we refer readers to
67 FR 55991 and 74 FR 43959 through
43960.)
In general, we determined FY 2015
relative weights for the MS–LTC–DRGs
with no LTCH cases in the March 2014
update of the FY 2013 MedPAR file
used in this final rule (that is, ‘‘novolume’’ MS–LTC–DRGs) by crosswalking each no-volume MS–LTC–DRG
to another MS–LTC–DRG with a
calculated relative weight (determined
in accordance with the methodology
described above). Then, the ‘‘novolume’’ MS–LTC–DRG was assigned
the same relative weight (and average
length of stay) of the MS–LTC–DRG to
which it was cross-walked (as described
in greater detail below).
Of the 753 MS–LTC–DRGs for FY
2015, we identified 237 MS–LTC–DRGs
for which there are no LTCH cases in
the database (including the 8
‘‘transplant’’ MS–LTC–DRGs and 2
‘‘error’’ MS–LTC–DRGs). As stated
above, we assigned relative weights for
each of the 237 no-volume MS–LTC–
DRGs (with the exception of the 8
‘‘transplant’’ MS–LTC–DRGs and the 2
‘‘error’’ MS–LTC–DRGs, which are
discussed below) based on clinical
similarity and relative costliness to one
of the remaining 516 (753¥237= 516)
MS–LTC–DRGs for which we were able
to determine relative weights based on
FY 2013 LTCH claims data using the
steps described above. (For the
remainder of this discussion, we refer to
the ‘‘cross-walked’’ MS–LTC–DRGs as
the MS–LTC–DRGs to which we crosswalked one of the 237 ‘‘no volume’’
MS–LTC–DRGs, with the exception of
the 8 ‘‘transplant’’ MS–LTC–DRGs and
the 2 ‘‘error’’ MS–LTC–DRGs, for
purposes of determining a relative
weight.) Then, we assigned the novolume MS–LTC–DRG the relative
weight of the cross-walked MS–LTC–
DRG. (As explained below in Step 6,
when necessary, we made adjustments
to account for nonmonotonicity.)
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For this final rule, we cross-walked
the no-volume MS–LTC–DRG to an MS–
LTC–DRG for which there were LTCH
cases in the March 2014 update of the
FY 2013 MedPAR file, and to which it
was similar clinically in intensity of use
of resources and relative costliness as
determined by criteria such as care
provided during the period of time
surrounding surgery, surgical approach
(if applicable), length of time of surgical
procedure, postoperative care, and
length of stay. We evaluated the relative
costliness in determining the applicable
MS–LTC–DRG to which a no-volume
MS–LTC–DRG was cross-walked in
order to assign an appropriate relative
weight for the no-volume MS–LTC–
DRGs in FY 2015. (For more details on
our process for evaluating relative
costliness, we refer readers to the FY
2010 IPPS/RY 2010 LTCH PPS final rule
(73 FR 48543).) We believe in the rare
event that there would be a few LTCH
cases grouped to one of the no-volume
MS–LTC–DRGs in FY 2015, the relative
weights assigned based on the crosswalked MS–LTC–DRGs would result in
an appropriate LTCH PPS payment
because the crosswalks, which are based
on similar clinical similarity and
relative costliness, generally require
equivalent relative resource use.
We then assigned the relative weight
of the cross-walked MS–LTC–DRG as
the relative weight for the no-volume
MS–LTC–DRG such that both of these
MS–LTC–DRGs (that is, the no-volume
MS–LTC–DRG and the cross-walked
MS–LTC–DRG) have the same relative
weight for FY 2015. We note that if the
cross-walked MS–LTC–DRG had 25
cases or more, its relative weight, which
was calculated using the methodology
described in Steps 1 through 4 above,
was assigned to the no-volume MS–
LTC–DRG as well. Similarly, if the MS–
LTC–DRG to which the no-volume MS–
LTC–DRG was cross-walked had 24 or
less cases and, therefore, was designated
to one of the low-volume quintiles for
purposes of determining the relative
weights, we assigned the relative weight
of the applicable low-volume quintile to
the no-volume MS–LTC–DRG such that
both of these MS–LTC–DRGs (that is,
the no-volume MS–LTC–DRG and the
cross-walked MS–LTC–DRG) have the
same relative weight for FY 2015. (As
we noted above, in the infrequent case
where nonmonotonicity involving a novolume MS–LTC–DRG resulted,
additional adjustments as described in
Step 6 were required in order to
maintain monotonically increasing
relative weights.)
For this final rule, a list of the novolume MS–LTC–DRGs and the MS–
LTC–DRGs to which each was cross-
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walked (that is, the cross-walked MS–
LTC–DRGs) for FY 2015 is shown in
Table 13B, which is listed in section VI.
of the Addendum to this final rule and
is available via the Internet.
To illustrate this methodology for
determining the relative weights for the
FY 2015 MS–LTC–DRGs with no LTCH
cases, we are providing the following
example, which refers to the no-volume
MS–LTC–DRGs crosswalk information
for FY 2015 provided in Table 13B.
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Example: There were no cases in the FY
2013 MedPAR file used for this final rule for
MS–LTC–DRG 61 (Acute Ischemic Stroke
with Use of Thrombolytic Agent with MCC).
We determined that MS–LTC–DRG 70
(Nonspecific Cerebrovascular Disorders with
MCC) was similar clinically and based on
resource use to MS–LTC–DRG 61. Therefore,
we assigned the same relative weight of MS–
LTC–DRG 70 of 0.8632 for FY 2015 to MS–
LTC–DRG 61 (obtained from Table 11, which
is listed in section VI. of the Addendum to
this final rule and is available via the
Internet).
Again, we note that, as this system is
dynamic, it is entirely possible that the
number of MS–LTC–DRGs with no
volume of LTCH cases based on the
system will vary in the future. We used
the most recent available claims data in
the MedPAR file to identify no-volume
MS–LTC–DRGs and to determine the
relative weights in this final rule.
Furthermore, for FY 2015, consistent
with our historical relative weight
methodology, we are establishing a
relative weight of 0.0000 for the
following transplant MS–LTC–DRGs:
Heart Transplant or Implant of Heart
Assist System with MCC (MS–LTC–DRG
1); Heart Transplant or Implant of Heart
Assist System without MCC (MS–LTC–
DRG 2); Liver Transplant with MCC or
Intestinal Transplant (MS–LTC–DRG 5);
Liver Transplant without MCC (MS–
LTC–DRG 6); Lung Transplant (MS–
LTC–DRG 7); Simultaneous Pancreas/
Kidney Transplant (MS–LTC–DRG 8);
Pancreas Transplant (MS–LTC–DRG 10);
and Kidney Transplant (MS–LTC–DRG
652). This is because Medicare will only
cover these procedures if they are
performed at a hospital that has been
certified for the specific procedures by
Medicare and presently no LTCH has
been so certified. At the present time,
we include these eight transplant MS–
LTC–DRGs in the GROUPER program
for administrative purposes only.
Because we use the same GROUPER
program for LTCHs as is used under the
IPPS, removing these MS–LTC–DRGs
would be administratively burdensome.
(For additional information regarding
our treatment of transplant MS–LTC–
DRGs, we refer readers to the RY 2010
LTCH PPS final rule (74 FR 43964).)
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Step 6—Adjust the FY 2015 MS–LTC–
DRG relative weights to account for
nonmonotonically increasing relative
weights.
As discussed earlier in this section,
the MS–DRGs contain base DRGs that
have been subdivided into one, two, or
three severity of illness levels. Where
there are three severity levels, the most
severe level has at least one secondary
diagnosis code that is referred to as an
MCC (that is, major complication or
comorbidity). The next lower severity
level contains cases with at least one
secondary diagnosis code that is a CC
(that is, complication or comorbidity).
Those cases without an MCC or a CC are
referred to as ‘‘without CC/MCC.’’ When
data do not support the creation of three
severity levels, the base MS–DRG is
subdivided into either two levels or the
base MS–DRG is not subdivided. The
two-level subdivisions could consist of
the MS–DRG with CC/MCC and the
MS–DRG without CC/MCC.
Alternatively, the other type of twolevel subdivision may consist of the
MS–DRG with MCC and the MS–DRG
without MCC.
In those base MS–LTC–DRGs that are
split into either two or three severity
levels, cases classified into the ‘‘without
CC/MCC’’ MS–LTC–DRG are expected
to have a lower resource use (and lower
costs) than the ‘‘with CC/MCC’’ MS–
LTC–DRG (in the case of a two-level
split) or both the ‘‘with CC’’ and the
‘‘with MCC’’ MS–LTC–DRGs (in the
case of a three-level split). That is,
theoretically, cases that are more severe
typically require greater expenditure of
medical care resources and will result in
higher average charges. Therefore, in the
three severity levels, relative weights
should increase by severity, from lowest
to highest. If the relative weights
decrease as severity increases (that is, if
within a base MS–LTC–DRG, an MS–
LTC–DRG with CC has a higher relative
weight than one with MCC, or the MS–
LTC–DRG ‘‘without CC/MCC’’ has a
higher relative weight than either of the
others), they are nonmonotonic. We
continue to believe that utilizing
nonmonotonic relative weights to adjust
Medicare payments would result in
inappropriate payments because the
payment for the cases in the higher
severity level in a base MS–LTC–DRG
(which are generally expected to have
higher resource use and costs) would be
lower than the payment for cases in a
lower severity level within the same
base MS–LTC–DRG (which are generally
expected to have lower resource use and
costs). Therefore, in determining the FY
2015 MS–LTC–DRG relative weights in
this final rule, consistent with our
historical methodology, we combined
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MS–LTC–DRG severity levels within a
base MS–LTC–DRG for the purpose of
computing a relative weight when
necessary to ensure that monotonicity
was maintained. For a comprehensive
description of our existing methodology
to adjust for nonmonotonicity, we refer
readers to the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43964
through 43966). Any adjustments for
nonmonotonicity that were made in
determining the FY 2015 MS–LTC–DRG
relative weights in this final rule by
applying this methodology are denoted
in Table 11, which is listed in section
VI. of the Addendum to this final rule
and is available via the Internet.
Step 7—Calculate the FY 2015 budget
neutrality factor.
In accordance with the regulations at
§ 412.517(b) (in conjunction with
§ 412.503), the annual update to the
MS–LTC–DRG classifications and
relative weights is done in a budget
neutral manner such that estimated
aggregate LTCH PPS payments would be
unaffected, that is, would be neither
greater than nor less than the estimated
aggregate LTCH PPS payments that
would have been made without the MS–
LTC–DRG classification and relative
weight changes. (For a detailed
discussion on the establishment of the
budget neutrality requirement for the
annual update of the MS–LTC–DRG
classifications and relative weights, we
refer readers to the RY 2008 LTCH PPS
final rule (72 FR 26881 and 26882).)
The MS–LTC–DRG classifications and
relative weights are updated annually
based on the most recent available
LTCH claims data to reflect changes in
relative LTCH resource use (§ 412.517(a)
in conjunction with § 412.503). Under
the budget neutrality requirement at
§ 412.517(b), for each annual update, the
MS–LTC–DRG relative weights are
uniformly adjusted to ensure that
estimated aggregate payments under the
LTCH PPS would not be affected (that
is, decreased or increased). Consistent
with that provision, we are updating the
MS–LTC–DRG classifications and
relative weights for FY 2015 based on
the most recent available LTCH data,
and applying a budget neutrality
adjustment in determining the FY 2015
MS–LTC–DRG relative weights.
To ensure budget neutrality in the
update to the MS–LTC–DRG
classifications and relative weights
under § 412.517(b), we are continuing to
use our established two-step budget
neutrality methodology. As discussed
previously in this section, this approach
is consistent with our proposals
regarding the continued use of our
existing methodology to calculate the
FY 2015 budget neutrality factor for the
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FY 2015 MS–LTC–DRG relative weights
as presented in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28183
through 28187), which we are finalizing
without modification after consideration
of public comments we received in this
final rule.
In this final rule, in the first step of
our MS–LTC–DRG budget neutrality
methodology, for FY 2015, we
calculated and applied a normalization
factor to the recalibrated relative
weights (the result of Steps 1 through 6
above) to ensure that estimated
payments were not affected by changes
in the composition of case types or the
changes to the classification system.
That is, the normalization adjustment is
intended to ensure that the recalibration
of the MS–LTC–DRG relative weights
(that is, the process itself) neither
increases nor decreases the average CMI.
To calculate the normalization factor
for FY 2015 (the first step of our budget
neutrality methodology), we used the
following three steps: (1.a.) we used the
most recent available LTCH claims data
(FY 2013) and grouped them using the
FY 2015 GROUPER (Version 32.0) and
the recalibrated FY 2015 MS–LTC–DRG
relative weights (determined in Steps 1
through 6 of the Steps for Determining
the FY 2015 MS–LTC–DRG Relative
Weights above) to calculate the average
CMI; (1.b.) we grouped the same LTCH
claims data (FY 2013) using the FY 2014
GROUPER (Version 31.0) and FY 2014
MS–LTC–DRG relative weights and
calculated the average CMI; and (1.c.)
we computed the ratio of these average
CMIs by dividing the average CMI for
FY 2014 (determined in Step 1.b.) by the
average CMI for FY 2015 (determined in
Step 1.a.). In determining the MS–LTC–
DRG relative weights for FY 2015, each
recalibrated MS–LTC–DRG relative
weight was multiplied by 1.12464
(determined in Step 1.c.) in the first step
of the budget neutrality methodology,
which produced ‘‘normalized relative
weights.’’
In the second step of our MS–LTC–
DRG budget neutrality methodology, we
determined a budget neutrality factor to
ensure that estimated aggregate LTCH
PPS payments (based on the most recent
available LTCH claims data) after
reclassification and recalibration (that
is, the FY 2015 MS–LTC–DRG
classifications and relative weights) are
equal to estimated aggregate LTCH PPS
payments before reclassification and
recalibration (that is, the FY 2014 MS–
LTC–DRG classifications and relative
weights). Accordingly, consistent with
our existing methodology, we used FY
2013 discharge data to simulate
payments and compared estimated
aggregate LTCH PPS payments using the
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FY 2014 MS–LTC–DRGs and relative
weights to estimate aggregate LTCH PPS
payments using the FY 2015 MS–LTC–
DRGs and relative weights. Specifically,
for this final rule, as discussed
previously in section VII.B.3.c. of this
preamble, we used LTCH claims data
from the March 2014 update of the FY
2013 MedPAR file, as these are the best
available data at this time.
For this final rule, we determined the
FY 2015 budget neutrality adjustment
factor using the following three steps:
(2.a.) we simulated estimated total
LTCH PPS payments using the
normalized relative weights for FY 2015
and GROUPER Version 32.0 (as
described above); (2.b.) we simulated
estimated total LTCH PPS payments
using the FY 2014 GROUPER (Version
31.0) and the FY 2014 MS–LTC–DRG
relative weights in Table 11 of the
Addendum to the FY 2014 IPPS/LTCH
PPS final rule available on the Internet
(78 FR 51002); and (2.c.) we calculated
the ratio of these estimated total LTCH
PPS payments by dividing the estimated
total LTCH PPS payments using the FY
2014 GROUPER (Version 31.0) and the
FY 2014 MS–LTC–DRG relative weights
(determined in Step 2.b.) by the
estimated total LTCH PPS payments
using the FY 2015 GROUPER (Version
32.0) and the normalized MS–LTC–DRG
relative weights for FY 2015
(determined in Step 2.a.). In
determining the FY 2015 MS–LTC–DRG
relative weights, each normalized
relative weight was multiplied by a
budget neutrality factor of 0.9956326
(determined in Step 2.c.) in the second
step of the budget neutrality
methodology to determine the budget
neutral FY 2015 relative weight for each
MS–LTC–DRG.
Accordingly, in determining the FY
2015 MS–LTC–DRG relative weights in
this final rule, consistent with our
existing methodology, we applied a
normalization factor of 1.12464 and a
budget neutrality factor of 0.9956326
(computed as described above). Table
11, which is listed in section VI. of the
Addendum to this final rule and is
available via the Internet, lists the MS–
LTC–DRGs and their respective relative
weights, geometric mean length of stay,
five-sixths of the geometric mean length
of stay (used to identify SSO cases
under § 412.529(a)), and the ‘‘IPPS
Comparable Thresholds’’ (used in
determining SSO payments under
§ 412.529(c)(3)), for FY 2015 (and reflect
both the normalization factor of 1.12464
and the budget neutrality factor of
0.9956326).
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C. LTCH PPS Payment Rates for FY
2015
1. Overview of Development of the
LTCH Payment Rates
The basic methodology for
determining LTCH PPS Federal
prospective payment rates is set forth at
§ 412.515 through § 412.536. In this
section, we discuss the factors that we
are using to update the LTCH PPS
standard Federal rate for FY 2015, that
is, effective for LTCH discharges
occurring on or after October 1, 2014
through September 30, 2015.
For further details on the
development of the FY 2003 standard
Federal rate when the LTCH PPS was
initially implemented, we refer readers
to the August 30, 2002 LTCH PPS final
rule (67 FR 56027 through 56037). For
subsequent updates to the LTCH PPS
standard Federal rate as implemented
under § 412.523(c)(3), we refer readers
to the following final rules: RY 2004
LTCH PPS final rule (68 FR 34134
through 34140); RY 2005 LTCH PPS
final rule (68 FR 25682 through 25684);
RY 2006 LTCH PPS final rule (70 FR
24179 through 24180); RY 2007 LTCH
PPS final rule (71 FR 27819 through
27827); RY 2008 LTCH PPS final rule
(72 FR 26870 through 27029); RY 2009
LTCH PPS final rule (73 FR 26800
through 26804); FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 44021
through 44030); FY 2011 IPPS/LTCH
PPS final rule (75 FR 50443 through
50444); FY 2012 IPPS/LTCH PPS final
rule (76 FR 51769 through 51773); FY
2013 IPPS/LTCH PPS final rule (77 FR
53479 through 53481); and FY 2014
IPPS/LTCH PPS final rule (78 FR 50760
through 50765).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28187 through
28190), we presented our proposals
related to the update to the LTCH PPS
standard Federal rate for FY 2015,
which included the proposed annual
market basket update to the LTCH PPS
standard Federal rate. Consistent with
our historical practice of using the best
data available, we also proposed to use
more recent data, if available, to
determine the FY 2015 annual market
basket update to the LTCH PPS standard
Federal rate in the final rule. We did not
receive any public comments in
response to these proposals and,
therefore, are adopting the proposals as
final without modification in this final
rule, using the most recent available
data.
The update to the LTCH PPS standard
Federal rate for FY 2015 is presented in
section V.A. of the Addendum to this
final rule. The components of the
annual market basket update to the
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LTCH PPS standard Federal rate for FY
2015 are discussed below, including the
reduction to the annual update for
LTCHs that fail to submit quality
reporting data for fiscal year FY 2015 as
required by the statute (as discussed in
section VII.C.2.c. of the preamble of this
final rule). Furthermore, as discussed in
section VII.C.3. of the preamble of this
final rule, for FY 2015, in addition to
the update factor, under the final year
of the 3-year phase-in under the current
regulations at § 412.523(d)(3), we are
making a one-time prospective
adjustment to the standard Federal rate
for FY 2015 so that the effect of any
significant difference between the data
used in the original computations of
budget neutrality for FY 2003 and more
recent data to determine budget
neutrality for FY 2003 is not
perpetuated in the prospective payment
rates for future years. In addition, as
discussed in section V.A. of the
Addendum of this final rule, we are
making an adjustment to the standard
Federal rate to account for the estimated
effect of the changes to the area wage
level adjustment for FY 2015 on
estimated aggregate LTCH PPS
payments, in accordance with
§ 412.523(d)(4). (We refer readers to the
discussion of the reduction to the
annual update for LTCHs that fail to
submit quality reporting data under
section VII.C.2.c. of the preamble of this
final rule, the application of the onetime prospective adjustment under the
final year of the 3-year phase-in under
section VII.C.3. of this preamble, and
the budget neutrality adjustment for
changes in the area wage levels under
section V.A. of the Addendum of this
final rule.)
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2. FY 2015 LTCH PPS Annual Market
Basket Update
a. Overview
Historically, the Medicare program
has used a market basket to account for
price increases in the services furnished
by providers. The market basket used
for the LTCH PPS includes both
operating and capital-related costs of
LTCHs because the LTCH PPS uses a
single payment rate for both operating
and capital-related costs. As discussed
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53468 through 53476), we
adopted the newly created FY 2009based LTCH-specific market basket for
use under the LTCH PPS beginning in
FY 2013. For additional details on the
historical development of the market
basket used under the LTCH PPS, we
refer readers to the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53467 through
53468) and this preamble.
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Section 3401(c) of the Affordable Care
Act provides for certain adjustments to
any annual update to the standard
Federal rate and refers to the timeframes
associated with such adjustments as a
‘‘rate year’’ (which are discussed in
more detail in section VII.C.2.b. of the
preamble of this final rule.) We note that
because the annual update to the LTCH
PPS policies, rates, and factors now
occurs on October 1, we adopted the
term ‘‘fiscal year’’ (FY) rather than ‘‘rate
year’’ (RY) under the LTCH PPS
beginning October 1, 2010, to conform
with the standard definition of the
Federal fiscal year (October 1 through
September 30) used by other PPSs, such
as the IPPS (75 FR 50396 through
50397). Although the language of
sections 3004(a) 3401(c), 10319, and
1105(b) of the Affordable Care Act refers
to years 2010 and thereafter under the
LTCH PPS as ‘‘rate year,’’ consistent
with our change in the terminology used
under the LTCH PPS from ‘‘rate year’’ to
‘‘fiscal year,’’ for purposes of clarity,
when discussing the annual update for
the LTCH PPS, including the provisions
of the Affordable Care Act, we use
‘‘fiscal year’’ rather than ‘‘rate year’’ for
2011 and subsequent years.
b. Revision of Certain Market Basket
Updates as Required by the Affordable
Care Act
Section 1886(m)(3)(A) of the Act, as
added by section 3401(c) of the
Affordable Care Act, specifies that, for
rate year 2010 and each subsequent rate
year through 2019, any annual update to
the standard Federal rate shall be
reduced:
• For rate year 2010 through 2019, by
the ‘‘other adjustment’’ specified in
sections 1886(m)(3)(A)(ii) and (m)(4) of
the Act; and
• For rate year 2012 and each
subsequent year, by the productivity
adjustment (which we refer to as ‘‘the
multifactor productivity (MFP)
adjustment’’) described in section
1886(b)(3)(B)(xi)(II) of the Act.
Section 1886(m)(3)(B) of the Act
provides that the application of
paragraph (3) of section 1886(m) of the
Act may result in the annual update
being less than zero for a rate year, and
may result in payment rates for a rate
year being less than such payment rates
for the preceding rate year.
Section 1886(b)(3)(B)(xi)(II) of the Act
defines the MFP adjustment as equal to
the 10-year moving average of changes
in annual economy-wide, private
nonfarm business multifactor
productivity (as projected by the
Secretary for the 10-year period ending
with the applicable fiscal year, calendar
year, cost reporting period, or other
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50177
annual period). Under our methodology,
the end of the 10-year moving average
of changes in the MFP coincides with
the end of the appropriate FY update
period. In addition, the MFP adjustment
that is applied in determining any
annual update to the LTCH PPS
standard Federal rate is the same
adjustment that is required to be applied
in determining the applicable
percentage increase under the IPPS
under section 1886(b)(3)(B)(i) of the Act
as they are both based on a fiscal year.
The MFP adjustment is derived using a
projection of MFP that is currently
produced by IHS Global Insight, Inc.
(For additional details on the
development of the MFP adjustment
and its application under the LTCH
PPS, we refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51691
through 51692 and 51770 through
51771).)
For FY 2015, as we proposed, we are
continuing to use our methodology for
calculating and applying the MFP
adjustment to determine the annual
update to the LTCH PPS standard
Federal rate for FY 2015. (For details on
the development of the MFP
adjustment, including our finalized
methodology for calculating and
applying the MFP adjustment, we refer
readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51689 through 51692).)
c. Adjustment to the Annual Update to
the LTCH PPS Standard Federal Rate
under the Long-Term Care Hospital
Quality Reporting (LTCHQR) Program
1. Background
In accordance with section 1886(m)(5)
of the Act, as added by section 3004(a)
of the Affordable Care Act, the Secretary
established the Long-Term Care
Hospital Quality Reporting (LTCHQR)
Program. (As noted above, although the
language of section 3004(a) of the
Affordable Care Act refers to years 2011
and thereafter under the LTCH PPS as
‘‘rate year,’’ consistent with our change
in the terminology used under the LTCH
PPS from ‘‘rate year’’ to ‘‘fiscal year,’’ for
purposes of clarity, when discussing the
annual update for the LTCH PPS,
including the provisions of the
Affordable Care Act, we use ‘‘fiscal
year’’ rather than ‘‘rate year’’ for 2011
and subsequent years.) Under the
LTCHQR Program, as required by
section 1886(m)(5)(A)(i) of the Act, for
FY 2014 and each subsequent year, in
the case of an LTCH that does not
submit quality reporting data to the
Secretary in accordance with section
1886(m)(5)(C) of the Act with respect to
such a year, any annual update to a
standard Federal rate for discharges for
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the hospital during the year, and after
application of section 1886(m)(3) of the
Act, shall be reduced by 2.0 percentage
points. Section 1886(m)(5)(A)(ii) of the
Act provides that the application of the
2.0 percentage points reduction may
result in an annual update that is less
than 0.0 for a year, and may result in
LTCH PPS payment rates for a year
being less than such LTCH PPS payment
rates for the preceding year.
Furthermore, section 1886(m)(5)(B) of
the Act specifies that the 2.0 percentage
points reduction is applied in a
noncumulative manner, such that any
reduction made under section
1886(m)(5)(A) of the Act shall apply
only with respect to the year involved,
and shall not be taken into account in
computing the LTCH PPS payment
amount for a subsequent year. For
additional information on the history of
the LTCHQR Program, including the
statutory authority and the selected
measures, we refer readers to section
IX.C. of the preamble of this final rule.
2. Reduction to the Annual Update to
the LTCH PPS Standard Federal Rate
under the LTCHQR Program
Consistent with section
1886(m)(5)(A)(i) of the Act, for FY 2014
and subsequent fiscal years, for LTCHs
that do not submit quality reporting data
under the LTCHQR Program with
respect to such a fiscal year, any annual
update to a standard Federal rate for
discharges for the LTCH during the
fiscal year and after application of the
market basket update adjustments
required by section 1886(m)(3) of the
Act, is further reduced by 2.0 percentage
points. That is, in establishing an
update to the LTCH PPS standard
Federal rate for FY 2014 and subsequent
fiscal years, the full LTCH PPS market
basket increase estimate, subject to an
adjustment based on changes in
economy-wide productivity (‘‘the MFP
adjustment’’) required under section
1886(m)(3)(A)(i) of the Act and an
additional reduction required by
sections 1886(m)(3)(A)(ii) and
1886(m)(4) of the Act, is further reduced
by 2.0 percentage points for LTCHs that
fail to submit quality reporting data
under the LTCHQR Program. The
reduction in the annual update to the
LTCH PPS standard Federal rate for
failure to report quality data under the
LTCHQR Program for FY 2014 and
subsequent fiscal years is codified under
§ 412.523(c)(4) of the regulations.
Specifically, consistent with section
1886(m)(5)(A)(i) of the Act, under
§ 412.523(c)(4)(i), for an LTCH that does
not submit quality reporting data in the
form and manner and at the time
specified by the Secretary under the
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LTCHQR Program, the annual update to
the standard Federal rate under
§ 412.523(c)(3) is further reduced by 2.0
percentage points. In addition,
consistent with section 1886(m)(5)(A)(ii)
of the Act, § 412.523(c)(4)(ii) specifies
that any reduction of the annual update
to the standard Federal rate under
§ 412.523(c)(4)(i) will apply only to the
fiscal year involved and will not be
taken into account in computing the
annual update to the standard Federal
rate for a subsequent fiscal year. Lastly,
consistent with section 1886(m)(5)(B) of
the Act, under § 412.523(c)(4)(iii), the
application of any reduction of the
annual update to the standard Federal
rate under § 412.523(c)(4)(i) may result
in an annual update that is less than 0.0
percent for a fiscal year, and may result
in payment rates for a fiscal year that
would be less than such payment rates
for the preceding rate year.
We discuss the application of the 2.0
percentage point reduction under
§ 412.523(c)(4)(i) in our discussion of
the annual market basket update to the
LTCH PPS standard Federal rate for FY
2015 below in section VII.C.2.e. of the
preamble of this final rule.
d. Market Basket Under the LTCH PPS
for FY 2015
Under the authority of section 123 of
the BBRA as amended by section 307(b)
of the BIPA, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53468), we
adopted a newly created FY 2009-based
LTCH-specific market basket for use
under the LTCH PPS beginning in FY
2013. The FY 2009-based LTCH-specific
market basket is based solely on the
Medicare cost report data submitted by
LTCHs and, therefore, specifically
reflects the cost structures of only
LTCHs. For additional details on the
development of the FY 2009-based
LTCH-specific market basket, we refer
readers to the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53467 through 53476).
For FY 2015, as we proposed, we are
continuing to use the FY 2009-based
LTCH-specific market basket to update
the LTCH PPS for FY 2015. We continue
to believe that the FY 2009-based LTCHspecific market basket appropriately
reflects the cost structure of LTCHs for
the reasons discussed when we adopted
the FY 2009-based LTCH-specific
market basket for use under the LTCH
PPS in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53467 through 53476).
e. Annual Market Basket Update for
LTCHs for FY 2015
Consistent with our historical practice
and as we proposed, we estimate the
market basket update and the MFP
adjustment based on IGI’s forecast using
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the most recent available data. Based on
IGI’s second quarter 2014 forecast, the
FY 2015 full market basket estimate for
the LTCH PPS using the FY 2009-based
LTCH-specific market basket is 2.9
percent. Using our established
methodology for determining the MFP
adjustment, the current estimate of the
MFP adjustment for FY 2015 based on
IGI’s second quarter 2014 forecast is 0.5
percent, as discussed in section IV.B. of
the preamble of this final rule. In
addition, consistent with our historical
practice of using the best available data,
as we proposed, we used the most
recent data available to estimate the
market basket update and the MFP
adjustment for FY 2015 in this final
rule.
For FY 2015, section 1886(m)(3)(A)(i)
of the Act requires that any annual
update to the standard Federal rate be
reduced by the productivity adjustment
(‘‘the MFP adjustment’’) described in
section 1886(b)(3)(B)(xi)(II) of the Act.
Consistent with the statute, we are
reducing the full FY 2015 market basket
update by the FY 2015 MFP adjustment.
To determine the market basket update
for LTCHs for FY 2015, as reduced by
the MFP adjustment, consistent with
our established methodology, as we
proposed, we subtracted the FY 2015
MFP adjustment from the FY 2015
market basket update. Furthermore,
sections 1886(m)(3)(A)(ii) and
1886(m)(4)(E) of the Act requires that
any annual update to the standard
Federal rate for FY 2015 be reduced by
the ‘‘other adjustment’’ described in
paragraph (4), which is 0.2 percentage
point for FY 2015. Therefore, following
application of the productivity
adjustment, as we proposed, we are
reducing the adjusted market basket
update (that is, the full market basket
increase less the MFP adjustment) by
the ‘‘other adjustment’’ specified by
sections 1886(m)(3)(A)(ii) and
1886(m)(4) of the Act. (For additional
details on our established methodology
for adjusting the market basket increase
by the MFP and the ‘‘other adjustment’’
required by the statute, we refer readers
to the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51771).)
As discussed previously in section
VII.C.2.c. of the preamble of this final
rule, for FY 2015, section 1886(m)(5) of
the Act requires that for LTCHs that do
not submit quality reporting data under
the LTCHQR Program, any annual
update to a standard Federal rate, after
application of the adjustments required
by section 1886(m)(3) of the Act, is
further reduced by 2.0 percentage
points. Therefore, the update to the
LTCH PPS standard Federal rate for FY
2015 for LTCHs that fail to submit
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quality reporting data under the
LTCHQR Program, the full LTCH PPS
market basket increase estimate, subject
to an adjustment based on changes in
economy-wide productivity (‘‘the MFP
adjustment’’) as required under section
1886(m)(3)(A)(i) of the Act and an
additional reduction required by
sections 1886(m)(3)(A)(ii) and
1886(m)(4) of the Act, will also be
further reduced by 2.0 percentage
points.
In this final rule, in accordance with
the statute, we are reducing the FY 2015
full market basket estimate of 2.9
percent (based on IGI’s second quarter
2014 forecast of the FY 2009-based
LTCH-specific market basket) by the FY
2015 MFP adjustment (that is, the 10year moving average of MFP for the
period ending FY 2015, as described in
section IV.B. of the preamble of this
final rule) of 0.5 percentage point (based
on IGI’s second quarter 2014 forecast).
Following application of the
productivity adjustment, the adjusted
market basket update of 2.4 percent (2.9
percent minus 0.5 percentage point) is
then reduced by 0.2 percentage point, as
required by sections 1886(m)(3)(A)(ii)
and 1886(m)(4)(E) of the Act. Therefore,
in this final rule, under the authority of
section 123 of the BBRA as amended by
section 307(b) of the BIPA, we are
establishing an annual market basket
update under the LTCH PPS for FY 2015
of 2.2 percent (that is, the most recent
estimate of the LTCH PPS market basket
update of 2.9 percent, less the MFP
adjustment of 0.5 percentage point, and
less the 0.2 percentage point required
under section 1886(m)(4)(E) of the Act),
provided the LTCH submits quality
reporting data in accordance with
section 1886(m)(5) of the Act.
Accordingly, consistent with our
proposal, we are revising § 412.523(c)(3)
by adding a new paragraph (xi), which
specifies that the standard Federal rate
for FY 2015 is the standard Federal rate
for the previous LTCH PPS year updated
by 2.2 percent, and as further adjusted,
as appropriate, as described in
§ 412.523(d). For LTCHs that fail to
submit quality reporting data under the
LTCHQR Program, under
§ 412.523(c)(3)(xi) in conjunction with
§ 412.523(c)(4), we are further reducing
the annual update to the LTCH PPS
standard Federal rate by 2.0 percentage
points in accordance with section
1886(m)(5) of the Act. Accordingly,
consistent with our proposal, we are
establishing an annual update to the
LTCH PPS standard Federal rate of 0.2
percent (that is, 2.2 percent minus 2.0
percentage points) for FY 2015 for
LTCHs that fail to submit quality
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reporting data under the LTCHQR
Program. As stated above, consistent
with our historical practice of using the
best available data, we used the most
recent data available to establish an
annual update to the LTCH PPS
standard Federal rate for FY 2015 under
§ 412.523(c)(3)(xi) in this final rule. (We
note that, we also are adjusting the FY
2015 standard Federal rate by applying
a one-time prospective adjustment
under the final year of the 3-year phasein under § 412.523(d)(3) (discussed in
section VII.C.3. of the preamble of this
final rule) and by an area wage level
budget neutrality factor in accordance
with § 412.523(d)(4) (as discussed in
section V.B.5. of the Addendum of this
final rule).)
3. Adjustment for the Final Year of the
Phase-In of the One-Time Prospective
Adjustment to the Standard Federal
Rate under § 412.523(d)(3)
We set forth regulations implementing
the LTCH PPS, based upon the broad
authority granted to the Secretary, under
section 123 of the BBRA (as amended by
section 307(b) of the BIPA). Section
123(a)(1) of the BBRA required that the
system ‘‘maintain budget neutrality’’ in
the August 30, 2002 LTCH PPS final
rule (67 FR 55954). The statutory budget
neutrality requirement means that
estimated aggregate payments under the
LTCH PPS for FY 2003 would be equal
to the estimated aggregate payments that
would have been made if the LTCH PPS
were not implemented for FY 2003. The
methodology for determining the LTCH
PPS standard Federal rate for FY 2003
that would ‘‘maintain budget neutrality’’
is described in considerable detail in the
August 30, 2002 final rule (67 FR 56027
through 56037). Our methodology for
estimating payments for the purposes of
budget neutrality calculations used the
best available data, and necessarily
reflected several assumptions (for
example, costs, inflation factors, and
intensity of services provided) in
estimating aggregate payments that
would have been made if the LTCH PPS
had not been implemented (without
accounting for certain statutory
provisions that affect the level of
payments to LTCHs in years prior to the
implementation of the LTCH PPS, as
required by the statute).
In the August 30, 2002 final rule, we
also stated our intentions to monitor
LTCH PPS payment data to evaluate
whether later data varied significantly
from the data available at the time of the
original budget neutrality calculations
(for example, data related to inflation
factors, intensity of services provided,
or behavioral response to the
implementation of the LTCH PPS). To
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50179
the extent the later data significantly
differed from the data employed in the
original calculations, the aggregate
amount of payments during FY 2003
based on later data may be higher or
lower than the estimates upon which
the budget neutrality calculations were
based. Therefore, in that same final rule,
under the broad authority conferred
upon the Secretary in developing the
LTCH PPS, including the authority for
establishing appropriate adjustments,
under section 123(a)(1) of the BBRA, as
amended by section 307(b) of the BIPA,
we provided in § 412.523(d)(3) of the
regulations for the possibility of making
a one-time prospective adjustment to
the LTCH PPS rates, so that the effect of
any significant difference between
actual payments and estimated
payments for the first year of the LTCH
PPS would not be perpetuated in the
LTCH PPS rates for future years. We
refer readers to the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53487 through
53488) for a complete discussion of the
history of the development of the onetime prospective adjustment to the
LTCH PPS standard Federal rate at
§ 412.523(d)(3).
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53495), we finalized our
policy to make a one-time prospective
adjustment to the standard Federal rate
so that it will be permanently reduced
by approximately 3.75 percent to
account for the estimated difference
between projected aggregate FY 2003
LTCH PPS payments and the projected
aggregate payments that would have
been made in FY 2003 under the TEFRA
payment system if the LTCH PPS had
not been implemented. Specifically,
using the methodology we adopted in
that same final rule, we determined that
permanently applying a factor of 0.9625
(that is, a permanent reduction of
approximately 3.75 percent) to the
standard Federal rate is necessary to
ensure estimated total FY 2003 LTCH
PPS payments equal estimated total FY
2003 TEFRA payments consistent with
our stated policy goal of the one-time
prospective adjustment under
§ 412.523(d)(3) (that is, to ensure that
the difference between estimated total
FY 2003 LTCH PPS payments and
estimated total FY 2003 TEFRA
payments is not perpetuated in the
LTCH PPS payment rates in future
years). (We refer readers to the FY 2013
IPPS/LTCH PPS final rule (77 FR 53487
through 53502) for a complete
discussion of the evaluation approach,
methodology, and determination of the
one-time prospective adjustment to the
LTCH PPS standard Federal rate at
§ 412.523(d)(3).)
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Given the magnitude of this
adjustment, in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53501 through
53502), under § 412.523(d)(3), we
established a policy to phase-in the
permanent adjustment of 0.9625 to the
standard Federal rate over a 3-year
period. To achieve a permanent
adjustment of 0.9625, under the phasein of this adjustment, in that same final
rule, we explained that we will apply a
factor of 0.98734 to the standard Federal
rate in each year of the 3-year phase-in,
that is, in FY 2013 (which does not
apply to payments for discharges
occurring on or after October 1, 2012,
and on or before December 28, 2012,
consistent with current law), FY 2014,
and FY 2015. By applying a permanent
factor of 0.98734 to the standard Federal
rate in each year for FYs 2013, 2014,
and 2015, we will completely account
for the entire adjustment by having
applied a cumulative factor of 0.9625
(calculated as 0.98734 × 0.98734 ×
0.98734 = 0.9625) to the standard
Federal rate. Accordingly, under
§ 412.523(d)(3), we applied a permanent
factor of 0.98734 to the standard Federal
rate in both FY 2013 and FY 2014 under
the established 3-year phase-in of the
one-time prospective adjustment.
In this final rule, for FY 2015, as we
proposed, we are applying a permanent
one-time prospective adjustment factor
of 0.98734 to the standard Federal rate
for FY 2015 under the last year of the
3-year phase-in of the one-time
prospective adjustment, in accordance
with the existing regulations under
§ 412.523(d)(3).
4. Summary of Other Public Comments
Received on the Proposed LTCH PPS
Payment Rates for FY 2015
We received a number of public
comments that were not within the
scope of the proposed rule, but we
appreciate the commenters for
providing that feedback. We also
received a few public comments on
issues related to the proposed LTCH
PPS payment rates for FY 2015, but
these issues were not specifically
addressed by the proposals and related
discussion presented in the FY 2015
IPPS/LTCH PPS proposed rule.
Comment: One commenter requested
that CMS provide additional payment
for end-stage renal disease (ESRD)
patients under the same circumstances
as under the IPPS under the LTCH PPS,
noting that section 1881(b) of the Act
does not limit the adjustment to
subsection (d) hospitals. The commenter
indicated that included information and
analysis previously provided to CMS
supports their request for this additional
payment amount.
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Response: Despite the fact that this
comment is beyond the scope of the
proposed rule, we note that we have
responded to the issue that this
commenter raised in a detailed response
in the FY 2014 IPPS/LTCH PPS final
rule (79 FR 50767). As discussed in that
final rule, based on an our analysis of
FY 2012 LTCH PPS claims data, we
continue to believe that the costs of
treating ESRD patients in LTCHs are
adequately reflected in data used to
determine the MS–LTC–DRG relative
weights for non-dialysis MS–LTC–
DRGs, and that the additional resources
associated with renal dialysis treatments
are include in the LTCH PPS payments.
Therefore, we are not adopting the
commenters’ request to provide for an
additional payment for ESRD patients
under the LTCH PPS.
D. Revision of LTCH PPS Geographic
Classifications
1. Background
As discussed in the August 30, 2002
LTCH PPS final rule, which
implemented the LTCH PPS (67 FR
56015 through 56019), in establishing
an adjustment for area wage levels, the
labor-related portion of an LTCH’s
standard Federal payment rate is
adjusted by using an appropriate wage
index based on the labor market area in
which the LTCH is located. Specifically,
the application of the LTCH PPS area
wage-level adjustment, which is
codified under existing § 412.525(c) of
the regulations, is based on the location
of the LTCH—either in an ‘‘urban’’ area
or a ‘‘rural’’ area. Currently, under the
LTCH PPS, as codified under § 412.503
of the regulations, an ‘‘urban area’’ is
defined as a Metropolitan Statistical
Area (which includes a Metropolitan
division, where applicable) as defined
by the Executive OMB, and a ‘‘rural
area’’ is defined as any area outside of
an urban area.
In the RY 2006 LTCH PPS final rule
(70 FR 24184 through 24185), we
revised § 412.525(c) to update the labor
market area definitions used under the
LTCH PPS, effective for discharges
occurring on or after July 1, 2005, based
on the Executive OMB’s Core-Based
Statistical Area (CBSA) designations
(‘‘CBSA designations’’), which are based
on 2000 Census data. We made this
revision because we believed that the
CBSA designations (geographic
classifications) would ensure that the
LTCH PPS wage index adjustment most
appropriately accounts for and reflects
the relative hospital wage levels in the
geographic area of the hospital as
compared to the national average
hospital wage level. We noted that these
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were the same CBSA designations
implemented for acute care hospitals
under the IPPS, which were codified
under § 412.64(b) of the regulations,
beginning in FY 2005. (For a further
discussion of the CBSA-based labor
market area designations currently used
under the LTCH PPS, we refer readers
to the RY 2006 LTCH PPS final rule (70
FR 24182 through 24191).) We have
generally updated the LTCH PPS CBSA
designations annually since they were
adopted for RY 2006 when updates from
OMB were available (73 FR 26812
through 26814, 74 FR 44023 through
44204, and 75 FR 50444 through 50445).
In OMB Bulletin No. 10–2, issued on
December 1, 2009, OMB announced that
the CBSA changes in that bulletin
would be the final update prior to the
2010 Census of Population and Housing.
We adopted those changes under the
LTCH PPS in the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50444 through
50445), effective October 1, 2010. We
continued to use these CBSA
designations for FYs 2012 and 2013 (76
FR 51808 and 77 FR 53710,
respectively). New OMB labor market
area delineations (which we refer to in
this section as ‘‘new OMB
delineations’’) based on 2010 standards
and the 2010 Decennial Census data
were announced by OMB on February
28, 2013. OMB issued Bulletin No. 13–
01, which announced revisions to the
delineation of Metropolitan Statistical
Areas, Micropolitan Statistical Areas,
and Combined Statistical Areas, and
provided guidance on the uses of the
delineation of these labor market areas.
(For a copy of this bulletin, we refer
readers to the following Web site:
http://www.whitehouse.gov/sites/
default/files/omb/bulletins/2013/b-1301.pdf. This bulletin specifically
provides the delineations of all
Metropolitan Statistical Areas (MSAs),
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
in the Federal Register on June 28, 2010
(75 FR 37246 through 37252) and 2010
Census data. (We note that, as discussed
in section III.B. of the preamble of this
final rule, consistent with the
terminology used in the OMB Bulletin
No. 13–01 and the standards published
in the Federal Register on June 28,
2010, when referencing the new OMB
geographic boundaries of Metropolitan
Statistical Areas (MSAs) based on 2010
standards, we are using the term ‘‘new
OMB delineations’’ rather than the term
‘‘CBSA-based labor market area
definitions’’ that we have used in the
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past to refer to OMB geographic
boundaries of statistical areas (75 FR
37249).)
As discussed in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50994
through 50995), in order to implement
these changes for the LTCH PPS (as in
the case of the IPPS), it is necessary to
identify the new OMB delineations for
each county and hospital in the country.
While the revisions OMB published on
February 28, 2013, are not as sweeping
as the changes OMB announced in 2003,
the February 28, 2013 bulletin does
contain a number of significant changes.
For example, under the new OMB
delineations, there are new CBSAs,
urban counties that have become rural,
rural counties that have become urban,
and existing CBSAs that have been split
apart and moved to other CBSAs.
Because the update was not issued until
February 28, 2013, and it was necessary
for the changes made by the update and
their ramifications to be extensively
reviewed and verified, we were unable
to undertake such a lengthy process
before publication of the FY 2014
rulemaking cycle. That is, by the time
the update was issued, the FY 2014
IPPS/LTCH PPS proposed rule was in
the advanced stages of development,
and the proposed FY 2014 LTCH PPS
wage indexes based on the CBSA
designations that are currently used
under the LTCH PPS had been
developed. Therefore, we did not
propose to use the changes to the LTCH
PPS CBSA designations for FY 2014
based on the new OMB delineations.
Rather, to allow for sufficient time to
assess the new changes and their
ramifications, we stated that we
intended to propose the adoption of the
new OMB delineations and the
corresponding changes to the wage
index based on those delineations under
the LTCH PPS for FY 2015 through
notice and comment rulemaking,
consistent with the approach used
under the IPPS (78 FR 50994 through
50995). In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28191 through
28194), we proposed to adopt the new
OMB delineations announced in the
February 28, 2013 OMB Bulletin No.
13–01, effective for FY 2015 under the
LTCH PPS. As discussed below, after
consideration of the public comments
we received, in this final rule, under the
authority of section 123 of the BBRA, as
amended by section 307(b) of the BIPA,
we are adopting the new OMB
delineations announced in the February
28, 2013 OMB Bulletin No. 13–01,
effective for FY 2015 under the LTCH
PPS as proposed without modification.
We note that this policy consistent with
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the approach being adopted under the
IPPS as discussed in section III.B. of the
preamble of this final rule.
2. Use of the New OMB Labor Market
Area Delineations (‘‘New OMB
Delineations’’)
Historically, Medicare prospective
payment systems have utilized labor
market area definitions developed by
the OMB. As discussed above, the CBSA
designations currently used under the
LTCH PPS are based on the most recent
market area definitions issued by the
OMB. The OMB reviews its market area
definitions/delineations based on data
from the preceding decennial census to
reflect more recent population changes.
As discussed above and in section III.B.
of the preamble of this final rule, the
new OMB delineations are based on the
OMB’s latest market area delineations
based on the 2010 Decennial Census
data. Because we believe that the OMB’s
latest labor market area delineations are
the best available data that reflect the
local economies and wage levels of the
areas in which hospitals are currently
located, as we proposed, we are
adopting the new OMB delineations
based on the 2010 Decennial Census
data under the LTCH PPS, beginning in
FY 2015, for the reasons discussed
below (which are consistent with the
IPPS policy discussed in section III.B. of
the preamble of this final rule).
When we implemented the wage
index adjustment under § 412.525(c) for
the LTCH PPS, and updated the LTCH
PPS labor market area definitions based
on the CBSA designations beginning in
RY 2006, we explained that the LTCH
PPS wage index adjustment was
intended to reflect the relative hospital
wage levels in the geographic area of the
hospital as compared to the national
average hospital wage level. (We refer
readers to the RY 2003 LTCH PPS final
rule (67 FR 56016) and the RY 2006
LTCH PPS final rule (70 FR 24184).)
Because we believe that the new OMB
delineations based on 2010 Decennial
Census data (reflect the most recent
available geographic classifications
(market area delineations), as we
proposed, we are revising the
geographic classifications used under
the LTCH PPS based on these new OMB
delineations to ensure that the LTCH
PPS wage index adjustment continues to
most appropriately account for and
reflect the relative hospital wage and
wage-related costs in the geographic
area of the hospital as compared to the
national average hospital wage and
wage-related costs. Specifically, as we
proposed, we are adopting the new
OMB delineations (as discussed in
greater detail below), effective for LTCH
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50181
PPS discharges occurring on or after
October 1, 2014 (that is, effective for FY
2015). As we noted in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28191), because the application of the
LTCH PPS area wage-level adjustment
under existing § 412.525(c) is made on
the basis of the location of the LTCH—
either in an ‘‘urban’’ area or a ‘‘rural’’
area as those terms are defined under
existing § 412.503. Under § 412.503, an
‘‘urban area’’ is defined as a
Metropolitan Statistical Area as defined
by the Executive OMB. A ‘‘rural area’’
is defined as any area outside of an
urban area. Therefore, we did not make
any changes to the existing regulations
under this policy.
As discussed in section III.B. of this
preamble, while CMS and other
stakeholders have explored potential
alternatives to the current CBSA-based
labor market system, no consensus has
been achieved regarding how best to
implement a replacement system. While
we recognize that MSAs are not
designed specifically to define labor
market areas, we believe that they do
represent a useful proxy for this
purpose. Consistent with the approach
taken for the IPPS, we have used MSAs
to define labor market areas for
purposes of Medicare wage indices
under the LTCH PPS since its
implementation in FY 2003. MSAs also
are used to define labor market areas for
purposes of the wage index for many of
the other Medicare payment systems
(for example, the IRF PPS, the SNF PPS,
the HHA PPS, the OPPS, and the IPF
PPS). (We refer readers to the RY 2006
LTCH PPS final rule (70 FR 24184).)
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28191
through 28194), under the authority of
section 123 of the BBRA, as amended by
section 307(b) of the BIPA, we proposed
to adopt the new OMB delineations as
described in the February 28, 2013 OMB
Bulletin No. 13–01, effective for FY
2015 under the LTCH PPS. In addition,
we proposed to use the new OMB
delineations to calculate area wage
indexes in a manner that is consistent
with the CBSA-based methodologies
finalized in the RY 2006 LTCH PPS final
rule, as refined in subsequent
rulemaking. We also proposed to
implement a transitional wage index
policy (as discussed in more detail
below) for LTCHs that would experience
a negative payment impact due to the
adoption of the new OMB delineations.
This proposed policy, including the
transitional wage index policy, is
consistent with the policy proposed
under the IPPS for FY 2015, as
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discussed in section III.B. of this
preamble.
Comment: A few commenters
supported the proposal to adopt the new
OMB delineations and to use these new
OMB delineations to calculate area wage
indexes effective for FY 2015 under the
LTCH PPS. We did not receive any
public comments opposing the
proposed adoption of the new OMB
delineations under the LTCH PPS. We
also note that we did not receive any
public comments that specifically
addressed the details of our proposals
with regard to the adoption of the new
OMB labor market area delineations
relating to Micropolitan Statistical
Areas, urban counties that would
become rural, rural counties that would
become urban, or urban counties that
moved to a different urban CBSA. (We
refer readers to the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28192
through 28193) for details regarding
these proposals.) A few commenters
also commented on the proposed
transitional wage index policy, which
we discuss below in section VII.D.2.e. of
this preamble.
Response: We appreciate the
commenters’ support for the proposal to
adopt the new OMB delineations under
the LTCH PPS, as we believe that the
new OMB delineations based on 2010
Decennial Census data reflect the most
recent data available to define
geographic classifications (market area
delineations) for LTCHs and ensure that
the LTCH PPS wage index adjustment
continues to most appropriately account
for and reflect the relative hospital wage
and wage-related costs in the geographic
area of the hospital as compared to the
national average hospital wage and
wage-related costs. Therefore, under the
authority of section 123 of the BBRA, as
amended by section 307(b) of the BIPA,
in this final rule, we are adopting the
new OMB delineations as described in
the February 28, 2013 OMB Bulletin No.
13–01, effective for FY 2015 under the
LTCH PPS, as we proposed without
modification. We also are using these
new OMB delineations to calculate area
wage indexes in a manner that is
consistent with the CBSA-based
methodologies finalized in the RY 2006
LTCH PPS final rule, as refined in
subsequent rulemaking. In addition, as
discussed below in section VII.D.2.e. of
this preamble, after consideration of the
public comments we received, as we
proposed, we are implementing a
budget neutral transitional wage index
policy for LTCHs that will experience a
negative payment impact due to the use
of the new OMB delineations. This
policy, including the transitional wage
index policy, is consistent with the
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policy being adopted under the IPPS
presented in section III.B. of the
preamble of this final rule. The
discussion below focuses on issues
related to the use of the new OMB
delineations to define labor market areas
for purposes of the wage index
adjustment under the LTCH PPS, and as
we explained in the proposed rule, is
consistent with what is being adopted
under the IPPS.
a. Micropolitan Statistical Areas
When we adopted the CBSA
designations under the LTCH PPS in RY
2006, we discussed CMS’ consideration
of whether to use Micropolitan
Statistical Areas to define the labor
market areas for the purpose of the
LTCH PPS wage index. OMB defines a
‘‘Micropolitan Statistical Area’’ as a
Consolidated Metropolitan Statistical
Area (CMSA) ‘‘associated with at least
one urban cluster that has a population
of at least 10,000, but less than 50,000’’
(70 FR 24183). We refer to these areas
as ‘‘Micropolitan Areas.’’ After
conducting an extensive impact
analysis, we determined that the best
course of action would be to treat all
hospitals located in ‘‘Micropolitan
Areas’’ as ‘‘rural,’’ and to include these
hospitals in the calculation of each
State’s rural wage index. Because
Micropolitian Areas tend to encompass
smaller population centers and contain
fewer hospitals than MSAs, we
determined that if Micropolitan Areas
were to be treated as separate labor
market areas, the IPPS wage index
would include drastically more singleprovider labor market areas. This larger
number of labor market areas with fewer
providers could create instability in
year-to-year wage index values for a
large number of hospitals; could reduce
the averaging effect of the wage index,
lessening some of the efficiency
incentive inherent in a system based on
the average hourly wages for a large
number of hospitals; and could arguably
create an inequitable system when so
many hospitals would have wage
indexes based solely on their own wage
data while other hospitals’ wage indexes
would be based on an average hourly
wage across many hospitals. For these
reasons, we adopted a policy to include
Micropolitan Areas in the State’s rural
wage area, and have continued this
policy through the present. (We refer
reader to the RY 2006 LTCH PPS final
rule (70 FR 24187).)
Based upon the 2010 Decennial
Census data, a number of rural and
urban counties have joined or have
become Micropolitan Areas, while other
counties that once were part of a
Micropolitan Area under previous OMB
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CBSA designations, have become either
urban or rural under the new OMB
delineations. Overall, there are fewer
Micropolitan Areas (541) under the new
OMB delineations based on 2010
Decennial Census data than existed
under the data from the 2000 Census
(581). As discussed in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28192), we believe that it is appropriate
to continue the policy established in the
RY 2006 LTCH PPS final rule, and we
are treating Micropolitan Areas as rural
labor market areas under the LTCH PPS.
These areas continue to be defined as
having relatively small urban cores
(populations of 10,000–49,999). We do
not believe that it would be appropriate
to calculate a separate wage index for
areas that typically may include only a
few hospitals for the reasons set forth in
the RY 2006 LTCH PPS final rule, as
discussed above.
As previously noted, we did not
receive any public comments on our
proposals relating to the adoption of the
new OMB labor market area
delineations with regard to Micropolitan
Statistical Areas. Therefore, we are
adopting these policies as final without
modification in this final rule. In
conjunction with our policy to adopt the
new OMB labor market area
delineations, under the authority of
section 123 of the BBRA, as amended by
section 307(b) of the BIPA, for FY 2015,
we are continuing to treat Micropolitan
Areas as ‘‘rural,’’ and will assign the
Micropolitan Area the statewide rural
wage index for the State in which the
LTCH is located. We also are
establishing that, beginning in FY 2015,
the wage data for any IPPS hospitals
located in the Micropolitan Areas will
be included in the calculation of each
State’s LTCH PPS rural area wage index.
(As discussed in section V.B.2. of the
Addendum to this final rule, the LTCH
PPS area wage index values are
calculated using the wage data of IPPS
hospitals.) We note that this policy is
consistent with the policy adopted
under the IPPS discussed in section
III.B.2.a. of the preamble of this final
rule. For a discussion of our policies to
moderate the impact of our adoption of
the new OMB delineations under the
LTCH PPS, we refer readers to section
VII.D.2.e. of the preamble of this final
rule.
b. Urban Counties That Became Rural
under the New OMB Labor Market Area
Delineations
Under the new OMB delineations,
which are based upon 2010 Decennial
Census data, for FY 2015, we found that
there are a number of counties (or
county equivalents) that are defined as
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‘‘urban’’ under the previous CBSA
designations that are now defined as
‘‘rural’’ under the new OMB
delineations. As discussed in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28193) and in section III.B. of this
preamble, an analysis of the new OMB
delineations shows that a total of 37
counties (and county equivalents) that
were considered to be part of an
‘‘urban’’ CBSA will now be considered
to be located in a ‘‘rural’’ area,
beginning in FY 2015, based on the new
OMB delineations. We refer readers to a
table presented in section III.B.2.b. of
the preamble of this final rule that lists
the 37 urban counties that are defined
as rural under our adoption of the new
OMB delineations.
As previously noted, we did not
receive any public comments on our
proposals relating to the adoption of the
new OMB labor market area
delineations with regard to urban
counties that would become rural.
Therefore, we are adopting these
policies as final without modification in
this final rule. Under our adoption of
the new OMB delineations for the LTCH
PPS, we are establishing that LTCHs
located in any of the 37 counties listed
in the table under section III.B.2.b. of
the preamble of this final rule will be
considered ‘‘rural,’’ and will receive
their respective State’s rural area wage
index for FY 2015 under the LTCH PPS.
We note that, currently, there are no
LTCHs located in any of the 37 counties
listed in the table that are currently
considered to be part of an ‘‘urban’’
CBSA and that will be considered to be
located in a ‘‘rural’’ area, beginning in
FY 2015. The wage data for any IPPS
hospitals located in those 37 counties
listed in the table now will be
considered ‘‘rural’’ when calculating the
respective State’s LTCH PPS rural area
wage index beginning in FY 2015. (As
discussed in section V.B.2. of the
Addendum to this final rule, the LTCH
PPS area wage index values are
calculated using the area wage data of
IPPS hospitals.) We note that this policy
is consistent with the policy adopted
under the IPPS discussed in section
III.B.2.b. of the preamble of this final
rule. We refer readers to section
VII.D.2.e. of this preamble for a
discussion of our policies to moderate
the impact of our policy to implement
the new OMB delineations under the
LTCH PPS.
2015, we found that there are a number
of counties (or county equivalents) that
are defined as ‘‘rural’’ under the
previous OMB definitions (that is, CBSA
designations) will be considered
‘‘urban’’ based on the adoption of the
new OMB delineations. As discussed in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28193) and in section
III.B.2.c. of the preamble of this final
rule, an analysis of the new OMB labor
market area delineations shows that a
total of 105 counties (and county
equivalents) that were previously
located in ‘‘rural’’ areas now are located
in an ‘‘urban’’ area under the new OMB
delineations. We refer readers to a table
in section III.B.2.c. of the preamble of
this final rule that lists the 105 ‘‘rural’’
counties that will now be located in an
‘‘urban’’ area, based on our policy to
adopt the new OMB delineations
presented in section III.B.2.c. of the
preamble of this final rule. There are
currently no LTCHs located in the 105
‘‘rural’’ counties listed in that table.
As previously noted, we did not
receive any public comments on our
proposals relating to the adoption of the
new OMB labor market area
delineations with regard to rural
counties that would become urban.
Therefore, we are adopting these
policies as final without modification in
this final rule. Under our adoption of
the new OMB labor market area
delineations, we are establishing that
LTCHs located in any of those 105
counties will now be included in their
new respective ‘‘urban’’ CBSAs and will
receive the respective ‘‘urban’’ CBSA’s
area wage index. We also are
establishing that, beginning in FY 2015,
the wage data for any IPPS hospitals
located within those 105 counties will
now be included in the calculation of
the LTCH PPS area wage index for those
hospitals’ respective ‘‘urban’’ CBSAs.
(As discussed in section V.B.2. of the
Addendum to this final rule, the LTCH
PPS area wage index values are
calculated using the area wage data of
IPPS hospitals.) We note that this policy
is consistent with the policy adopted
under the IPPS discussed in section
III.B.2.c. of the preamble of this final
rule. We refer readers to section
VII.D.2.e. of the preamble of this
preamble for a discussion of our policies
to moderate the impact of our policy to
implement the new OMB delineations
under the LTCH PPS.
c. Rural Counties That Became Urban
under the New OMB Labor Market Area
Delineations
In using the new OMB labor market
area delineations (which are based upon
2010 Decennial Census data) for FY
d. Urban Counties Moved to a Different
Urban CBSA under the New OMB Labor
Market Area Delineations
In addition to ‘‘rural’’ counties that
became ‘‘urban’’ and ‘‘urban’’ counties
that became ‘‘rural’’ under the new
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50183
OMB delineations, we found that
several urban counties shifted from one
urban CBSA to another urban CBSA. In
certain cases, the new OMB delineations
involved a change only in the CBSA
name or code, while the CBSA
continued to encompass the same
constituent counties. However, in other
cases, under the new OMB delineations,
some counties are shifted between
existing urban CBSAs and new urban
CBSAs, changing the constituent
makeup of those CBSAs. For example,
in some cases, entire CBSA are
subsumed by another CBSA. In other
cases, some CBSAs have counties that
are split off as part of a different urban
CBSA, or to form entirely new labor
market areas. We refer readers to section
III.B.2.d. of the preamble of this final
rule for additional information,
including examples, on urban counties
that have moved from one urban CBSA
to a different urban CBSA under the
new OMB delineations. As discussed in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28193), LTCHs located in
these affected counties that will move
from one urban CBSA to a different
urban CBSA under our policy to adopt
the new OMB delineations will
experience both negative and positive
impacts in regard to the LTCH’s specific
area wage index values. We refer readers
to section VII.D.2.e. of this preamble for
a discussion of our policies to moderate
the impact imposed upon hospitals
because of our policy to adopt the new
OMB labor market area delineations
under the LTCH PPS. As previously
noted, we did not receive any public
comments on our proposals relating to
the adoption of the new OMB labor
market area delineations with regard to
urban counties that moved to a different
urban CBSA. Therefore, we are adopting
these policies as final without
modification in this final rule.
e. Transition Period
As indicated above, overall, we
believe that our policy to adopt the new
OMB delineations will result in LTCH
PPS wage index values being more
representative of the actual costs of
labor in a given area. However, as we
discussed in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28193), we
also recognize that some LTCHs would
experience decreases in their area wage
index values as a result of our policy.
We also realize that many LTCHs would
have higher area wage index values
under our policy. To mitigate the impact
imposed upon hospitals, we have in the
past provided for transition periods
when adopting changes that have
significant payment implications,
particularly large negative impacts.
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While we believe that using the new
OMB delineations would create a more
accurate payment adjustment for
differences in area wage levels, we also
recognize that adopting such changes
may cause some short-term instability in
LTCH PPS payments. Therefore, under
the authority of section 123 of the
BBRA, as amended by section 307(b) of
the BIPA, we proposed to implement a
transitional wage index policy for
LTCHs that would experience a
decrease in their area wage index values
due to our proposal to adopt the new
OMB delineations under the LTCH PPS.
Specifically, we proposed a 1-year
transitional wage index policy under
which any LTCH that would experience
a decrease in its area wage index value
solely due to the adoption of the new
OMB delineations would get a ‘‘50/50
blended area wage index’’ value that
would be calculated as the sum of 50
percent of the wage index computed
under the FY 2014 CBSA designations
and 50 percent of the wage index
computed under the new OMB
delineations proposed for FY 2015.
Furthermore, we proposed that this
proposed transitional wage index policy
would be applied in a budget neutral
manner, consistent with the existing
requirement under § 412.525(c)(2) that
any changes to the adjustment for
differences in area wage levels will be
made in a budget neutral manner. We
also presented a proposed methodology
for calculating an area wage level
adjustment budget neutrality factor for
FY 2015 that included the proposed 50/
50 blended wage index as applicable (79
FR 28193 through 28194).
Comment: Commenters that
supported the proposed adoption of the
new OMB delineations under the LTCH
PPS also supported our proposed
transitional wage index policy for
LTCHs that would experience a negative
payment impact due to the adoption of
the new OMB delineations. While the
commenters conveyed their
appreciation for the proposed
transitional wage index policy to help
mitigate any negative financial
ramifications, they requested that the
proposed transitional wage index policy
be extended beyond FY 2015 to allow
hospitals more time to operationally
adjust to the change to their area wage
adjustment. We note that we did not
receive any public comments on our
proposal to apply the proposed
transitional wage index policy in a
budget neutral manner, or on our
proposed methodology for calculating
an area wage level adjustment budget
neutrality factor for FY 2015 that
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included the proposed 50/50 blended
wage index as applicable.
Response: We appreciate the
commenters’ support for the proposed
transitional wage index policy for
LTCHs that would experience a negative
payment impact due to the adoption of
the new OMB delineations. While we
understand the commenters’ concern
regarding the potential financial impact,
as we explained in the proposed rule,
the revisions under the new OMB
delineations are not as extensive as the
changes that OMB announced in 2003
that were adopted under the IPPS in FY
2005 with a 1-year transition and
adopted under the LTCH PPS in RY
2006 with no additional transitional
policy other than the transitional wage
index policy in effect at that time. While
it is our longstanding policy to provide
temporary adjustments to mitigate
negative impacts from the adoption of
new policies or procedures, we continue
to believe that the 1-year ‘‘50/50
blended wage index’’ transitional policy
provides an adequate safeguard against
any significant payment reductions,
allows for sufficient time to make
operational changes for future fiscal
years, and provides a reasonable balance
between mitigating some short-term
instability in LTCH PPS payments and
improving the accuracy of the payment
adjustment for differences in area wage
levels.
While we acknowledge that some
LTCHs will experience a reduction in
their wage index as a result of the
adoption of the new OMB delineations,
we also point out that several LTCHs
will experience an increase in their
wage index based on the adoption of the
new OMB delineations. Because the
new OMB delineations reflect the most
recent data available to define
geographic classifications (market area
delineations) for LTCHs, we believe that
the wage index values computed under
those delineations will result in more
appropriate payments to providers by
more accurately accounting for and
reflecting the differences in area wage
levels (that is, the relative hospital wage
and wage-related costs in the geographic
area of the hospital as compared to the
national average hospital wage and
wage-related costs). Because we believe
that the implementation of the new
OMB delineations will create more
accurate representations of a LTCH’s
labor market areas and result in LTCH
PPS wage index values being more
representative of the actual costs of
labor in a given area, we believe that it
is important to implement the wage
index values calculated under new
OMB delineations with as minimal a
transition as possible. Extending the
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transitional ‘‘50/50 blended wage
index’’ policy beyond FY 2015 would
only further delay the improved
accuracy of area wage level adjustments
to LTCH PPS payments under the new
OMB delineations. In addition, because
the proposed transitional 50/50 blended
wage index policy would be made in a
budget neutral manner, all LTCH PPS
payments are reduced to offset the
additional payments that result under
the transitional policy. For these
reasons, we are not adopting the
commenters’ suggestion to extend the
proposed transitional 50/50 blended
wage index policy beyond FY 2015.
Therefore, in this final rule, under the
authority of section 123 of the BBRA, as
amended by section 307(b) of the BIPA,
we are adopting a 1-year transitional
wage index policy for LTCHs that will
experience a decrease in their area wage
index values due to our policy to adopt
the new OMB delineations under the
LTCH PPS, as we proposed without
modification. In addition, we are
finalizing our proposal to apply the
transitional area wage index policy in a
budget neutral manner, and our
methodology for calculating an area
wage level adjustment budget neutrality
factor for FY 2015, which includes the
proposed 50/50 blended wage index as
applicable, as proposed without
modification.
Under the transitional wage index
policy that we are establishing for FY
2015 we computed a blended area wage
index value for any LTCH that will
experience a decrease in its area wage
index value solely due to the adoption
of the new OMB delineations. That is,
for purposes of determining an LTCH’s
area wage index for FY 2015, we
computed LTCH PPS wage index values
using the area wage data (discussed in
section V.B.4. of the Addendum to this
final rule) under both the FY 2014
CBSA designations and the FY 2015
new OMB delineations based on the
2010 OMB Decennial Census data. For
each LTCH, we compared these two
wage indexes. If an LTCH’s wage index
for FY 2015 under the new OMB
delineations was lower than the LTCH’s
wage index under the FY 2014 CBSA
designations, we are establishing that,
for FY 2015, the LTCH will be paid
based on a blended wage index that is
computed as the sum of 50 percent of
each of the two wage index values
described above (referred to as the 50/
50 blended wage index). If an LTCH’s
wage index for FY 2015 under the new
OMB delineations is higher than the
LTCH’s wage index under the FY 2014
CBSA designations, we are establishing
that, for FY 2015, the LTCH will be paid
based on 100 percent of the wage index
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under the FY 2015 new OMB
delineations (and will not receive the
50/50 blended wage index).
Furthermore, we are establishing that
the transitional area wage index policy
will be adopted in a budget neutral
manner. Under § 412.525(c)(2), any
changes to the adjustment for
differences in area wage levels will be
made in a budget neutral manner such
that estimated aggregate FY 2015 LTCH
PPS payments are unaffected; that is,
will be neither greater than nor less than
estimated aggregate LTCH PPS
payments without such changes to the
area wage level adjustment. Under this
policy, we determine an area wage-level
adjustment budget neutrality factor that
is applied to the standard Federal rate
(under § 412.523(d)(4)) to ensure that
any changes to the area wage level
adjustments are budget neutral such that
any changes to the wage index values or
labor-related share would not result in
any change (increase or decrease) in
estimated aggregate LTCH PPS
payments. Because our transitional
wage index policy for LTCHs that will
experience a decrease in their area wage
index values solely as a result of our
finalized policy to adopt the new OMB
delineations under the LTCH PPS will
result in an increase in estimated
aggregate LTCH PPS payments without
such changes, we are including the
finalized 50/50 blended wage index
values in our calculations for the area
wage level adjustment budget neutrality
factor that is applied to the standard
Federal rate to ensure that any changes
to the area wage level adjustment are
budget neutral. Specifically, consistent
with our established methodology, we
used the following methodology to
determine an area wage level
adjustment budget neutrality factor for
FY 2015:
• Step 1—We simulated estimated
aggregate LTCH PPS payments using the
FY 2014 wage index values as
established in Tables 12A and 12B for
the FY 2014 IPPS/LTCH PPS final rule
(which is available via the Internet on
the CMS Web site) and the FY 2014
labor-related share of 62.537 percent as
established in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50996).
• Step 2—We simulated estimated
aggregate LTCH PPS payments using the
FY 2015 wage index values as shown in
Tables 12A through 12D for this final
rule (which are available via the Internet
on the CMS Web site), including the
transitional 50/50 blended wage index
values, if applicable (as discussed above
and in section V.B.4. of the Addendum
of this final rule), and the FY 2015
labor-related share of 62.306 percent (as
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discussed in section V.B.3. of the
Addendum to this final rule).
• Step 3—We determined the ratio of
these estimated total LTCH PPS
payments by dividing the estimated
total LTCH PPS payments using the FY
2014 area wage level adjustments
(calculated in Step 1) by the estimated
total LTCH PPS payments using the FY
2015 area wage level adjustments
(calculated in Step 2) to determine the
FY 2015 area wage level adjustment
budget neutrality factor.
• Step 4—We applied the FY 2015
area wage level adjustment budget
neutrality factor from Step 3 to the FY
2015 LTCH PPS standard Federal rate
after the application of the FY 2015
annual update as discussed in section
V.A.2. of the Addendum to this final
rule.
As explained above, we are applying
this factor in determining the FY 2015
standard Federal rate to ensure that the
updates to the area wage level
adjustment for FY 2015 will be
implemented in a budget neutral
manner. For this final rule, using the
steps in the methodology described
above, we determined a FY 2015 area
wage level adjustment budget neutrality
factor of 1.0016703.
We note that this transitional wage
index policy under our policy to adopt
the new OMB delineations for FY 2015
under the LTCH PPS is consistent with
the policies adopted under the IPPS
presented in sections III.B.2.e.(5) and (6)
of the preamble of this final rule. As
noted previously in section VII.D.2.b. of
the preamble of this final rule, there are
currently no LTCHs located in an
‘‘urban’’ county that became ‘‘rural’’
under the policy to adopt the new OMB
delineations. Therefore, as we discussed
in the FY 2015 IPPS/LTCH PPS
proposed rule, we are not establishing a
transitional wage index policy that is
consistent with the IPPS policy
presented in section III.B.2.e.(2) of the
preamble of this final rule for hospitals
that are currently located in an ‘‘urban’’
county that became ‘‘rural’’ under the
adoption of the new OMB delineations.
We also note that we are not
establishing any transitional policies
under the LTCH PPS that are consistent
with those presented under the IPPS for
hospitals with a reclassification or
redesignation as discussed in section
III.B.2.e.(3) of the preamble of this final
rule, or for hospitals deemed urban
under section 1886(d)(8)(B) of the Act as
discussed in section III.B.2.e.(4) of the
preamble of this final rule, as those
reclassifications, redesignations, and
statutory deems are not applicable to
LTCHs.
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E. Reinstatement and Extension of
Certain Payment Rules for LTCH
Services—The 25-Percent Threshold
Payment Adjustment
1. Background
Section 1206(b)(1)(A) of the Pathway
for SGR Reform Act of 2013 (Pub. L.
113–67), enacted on December 26, 2013,
provides for the retroactive
reinstatement and extension, for an
additional 4 years, of the moratorium on
the full implementation of the 25percent threshold payment adjustment
(hereinafter referred to as ‘‘the 25percent policy’’) under the LTCH PPS
established under section 114(c) of the
MMSEA, as amended by section 4302(a)
of the ARRA and sections 3106(c) and
10312(a) of the Affordable Care Act. In
addition, section 1206(b)(1)(B) of Pub. L.
113–67 provides for a permanent
exemption from the application of the
25-percent policy for certain
grandfathered co-located LTCHs.
Section 1206(b)(1)(C) of Public Law
113–67 also requires that ‘‘. . . [n]ot
later than 1 year before the end of the
9-year period referred to in section
114(c)(1) of the Medicare, Medicaid, and
SCHIP Extension Act of 2007 (42 U.S.C.
1395ww note), as amended by
subparagraph (B) [of section 1206 of
Pub. L. 113–67], the Secretary of Health
and Human Services shall submit to
Congress a report on the need for any
further extensions (or modifications of
the extensions) of the 25 percent rule
described in sections 412.534 and
412.536 of title 42, Code of Federal
Regulations, particularly taking into
account the application of section
1886(m)(6) of the Social Security Act, as
added by subsection (a)(1) [of section
1206 of Pub. L. 113–67].’’
The 25-percent policy is a payment
adjustment under the LTCH PPS,
originally established in our regulations
at 42 CFR 412.534 for LTCHs and LTCH
satellite facilities and their co-located
referring hospitals in the FY 2005 IPPS
final rule (69 FR 49191), and at 42 CFR
412.536 for all other LTCHs and
referring hospitals in the RY 2007 LTCH
PPS final rule (72 FR 26870), based on
analyses of Medicare discharge data that
indicated that patterns of patient
shifting appeared to be occurring more
for provider financial advantage than for
patient benefit. In order to discourage
such activity, a payment adjustment was
applied for LTCH discharges of patients
who were admitted to the LTCH from
the same referring hospital in excess of
an applicable percentage threshold,
which was to transition to a 25-percent
threshold after specified phase-in
periods. (For rural and single-urban
LTCHs and those with MSA-dominant
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referring hospitals, a 50-percent
threshold was applied.). Under this
policy, discharges in excess of the
threshold are paid at an ‘‘IPPS
equivalent’’ rate, instead of the much
higher LTCH PPS rate. (We refer readers
to detailed discussions of the 25-percent
policy for LTCH HwHs and LTCH
satellite facilities in the FY 2005 IPPS
final rule (69 FR 49191 through 49214)
and its application to all other LTCHs in
the RY 2008 LTCH PPS final rule (72 FR
26919 through 26944).)
The results of the different
rulemaking schedules in effect when
§§ 412.534 and 412.536 were
implemented (FY 2005 (October 1,
2004) and RY 2007 (July 1, 2006),
respectively) are as follows: for colocated LTCHs and LTCH satellite
facilities governed under § 412.534, the
25-percent policy was effective for cost
reporting periods beginning on or after
October 1, 2005 (‘‘October’’ LTCHs); for
LTCHs and LTCH satellite facilities
governed under § 412.536, the 25percent policy was effective for cost
reporting periods beginning on or after
July 1, 2007 (‘‘July’’ LTCHs). In
addition, even though grandfathered
LTCH HwHs and LTCH satellite
facilities are governed under
§ 412.534(h), they are ‘‘July’’ LTCHs
because the 25-percent policy was
applied to these facilities in the RY 2008
LTCH PPS final rule.
Section 114(c) of the MMSEA, as
amended by section 4302(a) of the
ARRA and sections 3106(c) and
10312(a) of the Affordable Care Act,
provided for a 5-year moratorium on the
full application of the 25-percent policy
that expired for some LTCHs and LTCH
satellite facilities for cost reporting
periods beginning on or after October 1,
2012 (‘‘October’’ LTCHs) and for other
LTCHs and LTCH satellite facilities for
cost reporting periods beginning on or
after July 1, 2012 (‘‘July’’ LTCHs). (For
a detailed description of the moratorium
on the application of the 25-percent
policy, we refer readers to the May 22,
2008 Interim Final Rule with Comment
Period (73 FR 29699 through 29704) and
the August 27, 2009 Interim Final Rule
with Comment Period for the ARRA,
which was published in the FY 2010
IPPS final rule and Changes to the LTCH
PPS and Rate Years 2010 and 2009 Rates
final rule (74 FR 43990 through 43992).
The expiration of the statutory
moratorium for both ‘‘July’’ and
‘‘October’’ LTCHs was delayed because
CMS established regulatory extensions
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53483 through 53484), as
amended by the FY 2013 IPPS/LTCH
PPS correcting amendment (77 FR
63751 through 63753). Specifically, we
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established a 1-year extension (that is,
for cost reporting periods beginning on
or after October 1, 2012, and before
October 1, 2013) on the full application
of the 25-percent policy for ‘‘October’’
LTCHs. For those ‘‘July’’ LTCHs that
would have been affected by the ‘‘gap’’
between the expiration of the statutory
moratorium (for cost reporting periods
beginning on or after July 1, 2012) and
our prospective regulatory relief (for
cost reporting periods beginning on or
after October 1, 2012), we also provided
for an additional moratorium based on
LTCH discharges occurring on or after
October 1, 2012 and ending at the start
of the LTCHs’ next cost reporting
period. For those ‘‘July’’ LTCHs with
cost reporting periods beginning on or
after October 1, 2012, the regulatory
extension of the statutory moratorium,
described above, effective for the
hospital’s first cost reporting period
beginning on or after October 1, 2012,
resulted in seamless coverage for that
group. However, for those ‘‘July’’ LTCHs
with cost reporting periods beginning
on or after July 1, 2012, and before
October 1, 2012, that would have
otherwise been subject to the ‘‘gap’’
between the expiration of the statutory
moratorium and the effective date of the
regulatory moratoria, we established a
second regulatory moratorium effective
with discharges occurring beginning
October 1, 2012, through the end of the
LTCH’s cost reporting period (that is,
the end of the cost reporting period that
began on or after July 1, 2012, and
before October 1, 2012). Therefore, by
providing for the above described
regulatory extension for ‘‘July’’ LTCHs,
we eliminated the distinction between
‘‘July’’ and ‘‘October’’ LTCHs, which
resulted in the 25-percent policy being
applied for all cost reporting periods
beginning on or after October 1, 2012,
following the expiration of the
moratorium. For more details about
these moratoria, we refer readers to the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53483 through 53484).
Because we did not extend the
regulatory moratorium on the 25percent policy in the FY 2014 IPPS/
LTCH PPS final rule, the full
application of the payment adjustment
policy was effective for all LTCHs (both
‘‘October’’ and ‘‘July’’ LTCHs) for cost
reporting periods beginning on or after
October 1, 2013 (78 FR 50772).
2. Implementation of Section 1206(b)(1)
of Pub. L. 113–67
As stated earlier, section 1206(b)(1)(A)
of Public Law 113–67 provides an
additional amendment to section 114(c)
of the MMSEA, as amended by section
4302(a) of the ARRA and sections
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3106(c) and 10312(a) of the Affordable
Care Act, that extends the ‘‘original’’
statutory moratorium on the full
implementation of the 25-percent policy
to a total of 9 years from the original
effective dates established by the
MMSEA (July 1 or October 1, 2007, as
applicable). As a result, the lapse of the
regulatory moratorium on the full
implementation of the 25-percent policy
is moot. This ‘‘seamless’’ statutory
moratorium provides relief until cost
reporting periods beginning on or after
July 1, or October 1, 2016, as applicable.
Section 1206(b)(1)(B) provides a
permanent exemption from the 25percent policy for certain grandfathered
co-located LTCHs. In this final rule,
based on the statutory changes made by
sections 1206(b)(1)(A) and (b)(1)(B) of
Public Law 113–67, we are making
conforming amendments to the
regulations governing application of the
25-percent policy. Specifically, we are
revising §§ 412.534(c)(1)(i) and (c)(1)(ii),
(c)(2), (c)(3), (d)(1) and (d)(1)(i), (d)(2),
(d)(3), (e)(1) and (e)(1)(i), (e)(2), (e)(3),
the introductory text of paragraph (h),
(h)(4), and (h)(5) and removing
paragraph (h)(6); and removing
paragraphs (a)(1)(iii) and (a)(2)(ii),
revising (a)(2), and removing paragraph
(a)(3) of § 412.536 to reflect the statutory
changes.
Comment: One commenter suggested
that the costs associated with the new
limitations provided by the application
of the 25-percent policy, that is, any
additional costs to the Medicare
program because of the moratorium on
full implementation of the 25-percent
policy, be absorbed by the hospitals that
receive the benefit from the extension of
this moratorium. The commenter
questioned whether this absorption of
costs could be accomplished by a
hospital-specific adjustment similar to
the one presently used for failure to
submit quality data, and whether the
suggested adjustment amount could be
calculated based on a facility’s
compliance with 25-percent policy.
Response: We appreciate the
commenter’s suggestion, but note that
these suggestions are beyond the scope
of the proposals presented in the FY
2015 IPPS/LTCH PPS proposed rule. We
believe that Congress specified how we
are to implement this policy when it
instructed the Secretary to extend the
relief provided by section 114(c) of the
MMSEA of 2007, and its amendments,
until the moratorium expires, or in the
case of certain grandfathered LTCHs,
indefinitely. The provisions of section
114(c) of the MMSEA of 2007, nor its
amendments, include any measures to
absorb any Medicare program costs
associated with the moratorium on the
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full application of this policy. We do
not believe that further regulatory
initiatives are appropriate at this time.
Comment: Several commenters urged
CMS to repeal the 25-percent policy
immediately. Some commenters
reasoned that ‘‘Congress has not
required the partial implementation of
the 25 percent rule, but rather has
prohibited the full implementation of
the 25 percent rule.’’ Other commenters
believed that applying the 25-percent
policy after patient-level criteria are
implemented would ‘‘violate’’ the
provisions in Public Law 113–67 that
require use of patient-level criteria to
determine which cases receive standard
or site neutral Medicare payments.
Some commenters also believed that the
25-percent policy is unnecessary
recognizing the forthcoming changes to
the LTCH PPS, and stated that the 25percent policy would reduce the
payment distinctions between the
number of cases receiving payments
based on standard payment rates and
the number of cases receiving payments
based on site-neutral payment rates,
thereby ‘‘weakening’’ the incentives that
the commenters believed Congress
intended to impose under the statute.
Response: Although we initially
implemented the 25-percent policy
under §§ 412.534 and 412.536 of the
regulations through our general
rulemaking authority, the 25-percent
policy is now mandated under section
114(c) of the MMSEA, as amended. This
statutory moratorium currently expires
effective with cost reporting periods
beginning on July 1, 2016, or October 1,
2016, as applicable. Therefore, CMS
does not have the authority to ‘‘repeal’’
a statutory provision. As discussed in
the May 22, 2008 interim final rule with
comment period, and as we further
discussed in the FY 2010 IPPS/LTCH
final rule (74 FR 43980 through 43986),
we believe that section 114(c)(1) of the
MMSEA provided a 3-year delay in the
application of §§ 412.534 and 412.536 to
‘‘only two categories of LTCHs . . .
[s]imilarly, the 3-year relief . . . in
section 114(c)(2) in the form of
increased thresholds . . . was narrowly
targeted to only those ‘applicable LTCHs
and LTCH satellite facilities,’ that is,
those ‘subject to the transition rules
under § 412.534(g) of title 42 Code of
Federal Regulations’ ’’ (74 FR 43982). In
fact, with the enactment of the
extension of the original moratorium
under section 1206(b)(1)(B) of Public
Law 113–67, and the extended relief
provided from the 25-percent policy,
Congress added only one specific
change to the provisions of the original
moratorium, that is, the permanent
exemption of grandfathered LTCHs from
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the 25-percent policy. We also note that
there is an additional provision of the
statute that specifies the viability of the
25-percent policy, at least until the
initial implementation of the new
payment framework under the LTCH
PPS. Specifically, section 1206(b)(1)(C)
requires CMS to submit a report to
Congress ‘‘[n]ot later than 1 year before
the end of the 9-year period referred to
in section 114(c) of the Medicare,
Medicaid, and SCHIP Extension Act of
2007 . . . on the need for any further
extensions (or modifications of the
extensions) of the 25 percent rule . . .
particularly taking into account the
application of section 1886(m)(6) of the
Social Security Act as added by
subsection (a)(1).’’ In response to the
commenters expressed concerns relating
to an ‘‘overlapping’’ of the full
implementation of the 25-percent policy
and the new payment framework
specified under section 1206(a) of
Public Law 113–67, we assure the
commenters that any such interplay will
be fully considered during the
development of the required July 2015
Report to Congress. This date is at least
a full year prior to the expiration of the
current moratorium. Furthermore, as the
statutory payment methodology
revisions to the LTCH PPS will be
phased-in under a ‘‘blended’’ payment
methodology effective with LTCH cost
reporting periods beginning during FY
2016, there still may be a need for the
25-percent policy during that phase-in
period, although our study may or may
not conclude that this policy is not
required after full implementation of the
new statutory payment methodology
under the LTCH PPS.
F. Discussion of the ‘‘Greater Than 3Day Interruption of Stay’’ Policy and the
Transfer to Onsite Providers Policies
Under the LTCH PPS
The interrupted stay policy is a
payment adjustment that was included
under the LTCH PPS from the inception;
that is, for cost reporting periods
beginning on or after October 1, 2002
(FY 2003). In this discussion, we use the
terms ‘‘interrupted stay’’ and
‘‘interruption of stay’’ interchangeably.
An ‘‘interruption of stay’’ occurs when,
during the course of an LTCH
hospitalization, a patient is discharged
to an inpatient acute care hospital, an
IRF, or a SNF for treatment or services
not available at the LTCH for a specified
period followed by a readmittance to the
same LTCH. We refer readers to the RY
2003 LTCH PPS final rule (67 FR
56002). When we established this
policy, we believed that the readmission
to the LTCH represented a continuation
of the initial treatment, a stay in which
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50187
an ‘‘interruption’’ occurred, rather than
a new admission if the length of stay at
the intervening facility was within a
specified number of days. If an
‘‘interruption of stay’’ occurred,
payment for both ‘‘halves’’ of the LTCH
discharge were then ‘‘bundled,’’ and
Medicare would make one payment
based on the second date of discharge.
Specifically, under this policy, we
established a fixed-day threshold, which
applied to the specified number of days
a Medicare beneficiary spends as an
inpatient at an acute care hospital, an
IRF, or a SNF. In the RY 2003 LTCH PPS
final rule, we explained that we were
implementing this policy because we
wanted ‘‘. . . to reduce the incentives
inherent in a discharged-based
prospective payment system of ‘shifting’
patients between Medicare-covered sites
of care in order to maximize Medicare
payments. This policy is particularly
appropriate for LTCHs because, as a
group, these hospitals differ
considerably in the range of services
offered such that where some LTCHs
may be able to handle certain acute
conditions, others will need to transfer
their patients to acute care hospitals.
‘‘For instance, some LTCHs are
equipped with operating rooms and
intensive care units and are capable of
performing minor surgeries. However,
other LTCHs are unable to provide those
services and will need to transfer the
beneficiary to an acute care hospital. We
believed that our policy also provided
for a patient . . . ‘‘who no longer
requires hospital-level care, but is not
ready to return to the community,’’ and
who ‘‘. . . could be transferred to a
SNF.’’ (We refer readers to the RY 2003
LTCH PPS final rule (67 FR 56002).)
In the regulations under 42 CFR
412.531, we defined two types of
interruptions of stays. Under
§ 412.531(a)(1), ‘‘[a] 3-day or less
interruption of stay’’ means a stay at a
LTCH during which a Medicare
inpatient is discharged from the LTCH
to an acute care hospital, IRF, SNF, or
the patient’s home and readmitted to the
same LTCH within 3 days of the
discharge from the LTCH. Under the ‘‘3
day or less interruption of stay policy,’’
the fixed-day threshold period begins
with the calendar date of discharge from
the LTCH and ends not later than
midnight of the third day. If an LTCH
patient’s ‘‘interruption’’ exceeds this
threshold, payment is governed by the
‘‘greater than 3-day interruption of stay’’
policy. (We refer readers to the RY 2005
LTCH PPS final rule (69 FR 25690
through 25700), the RY 2006 LTCH PPS
final rule (70 FR 24206), and the RY
2007 LTCH PPS final rule (71 FR 27872
through 27875) for detailed discussions
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of the 3-day or less interruption of stay
policy.) In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28196), we did not
propose to revise the 3-day or less
category of interrupted stays, but we
make mention of the policy for clarity
in making a distinction between the 3day or less interruption of stay policy
and the greater than 3-day interruption
of stay policy that we proposed to revise
in our proposed rule.
The ‘‘greater than 3-day interruption
of stay policy,’’ is defined under
§ 412.531(a)(2) as a stay during which a
Medicare inpatient is transferred upon
discharge to an acute care hospital, an
IRF, or a SNF for treatment or services
that are not available in the long-term
care hospital and returns to the same
long-term care hospital within the
applicable fixed-day period specified in
regulations under § 412.531(a)(2)(i)
through (a)(2)(iii). For a discharge to an
acute care hospital, the applicable fixedday period is between 4 and 9
consecutive days; the counting of the
days begins on the calendar day of
discharge from the LTCH and ends on
the 9th day when the patient is
readmitted to the LTCH. For a discharge
to an IRF, the applicable fixed-day
period is between 4 and 27 consecutive
days; the counting of the days begins on
the calendar day of discharge from the
LTCH and ends on the 27th day. For a
discharge to a SNF, the applicable fixedday period is between 4 and 45
consecutive days; the counting of the
days begins on the calendar day of
discharge from the LTCH and ends on
the 45th day. We refer readers to our
proposed rule for a more detailed
description of the derivation of our day
thresholds (79 FR 28196).
Under the greater than 3-day
interrupted stay policy, if an LTCH
readmission occurs within the fixed-day
period both halves of the LTCH
discharge are treated as a single
discharge for the purposes of payment
under the LTCH PPS. In such instances,
the beneficiary’s readmittance to the
LTCH is paid for with a single MS–
LTC–DRG payment that covers the
initial admission to the LTCH and the
subsequent readmission. That is, a
single Medicare payment is made for the
entire two-part discharge. Payment to
the acute care hospital, the IRF, or the
SNF is then made in accordance with
the applicable payment policies for
those providers when the interruption
of stay exceeds 3 days. Therefore, we
balanced the payment incentives of both
the LTCH and the acute care hospital,
the IRF, or the SNF to which the LTCH
patient might be discharged before being
readmitted to the LTCH.
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As we discussed in the RY 2003
LTCH PPS final rule (67 FR 56007), our
concerns about patient shifting were
significantly increased in the context of
transfers between co-located LTCHs and
LTCH satellite facilities, or for LTCH
hospital-within-hospital transfers.
Collectively, we refer to these
arrangements as transfers to ‘‘onsite’’
providers. In the regulations under
§ 412.532(b), we define a facility that is
‘‘co-located or ‘‘onsite’’ as a hospital,
satellite facility, unit, or SNF that
occupies space in a building also used
by another hospital or unit or in one or
more buildings on the same campus, as
defined in § 413.65(a)(2), as buildings
used by another hospital or unit. Under
this LTCH PPS policy, if more than 5
percent of the Medicare patients
discharged from an LTCH during a cost
reporting period were discharged to an
‘‘onsite’’ SNF, IRF, or psychiatric
facility, or to an ‘‘onsite’’ acute care
hospital, and directly readmitted to the
same LTCH, the LTCH would be paid
one MS–LTC–DRG payment to cover
both LTCH discharges, regardless of the
length of the interrupted stay. As is the
case in regard to the greater than 3-day
interruption of stay policy, payment to
an acute care hospital, an IRF, or a SNF
would not be affected under the 5percent policy.
Our concern about patient shifting
among ‘‘onsite’’ providers did not
originate with the implementation of the
LTCH PPS. The LTCH 5-percent policy
under § 412.532 was recodified from an
earlier regulation under § 413.40(a)(3),
which applied a payment adjustment to
hospitals paid under the TEFRA
payment system, including LTCHs, to
address inappropriate discharges of
patients to a host hospital paid under
the IPPS from an excluded hospitalwithin-a-hospital (such as a LTCH) that
culminated in a readmission to the
hospital-within-a-hospital. We refer
readers to the FY 2000 IPPS final rule,
the RY 2003 LTCH PPS final rule, and
the FY 2015 IPPS/LTCH PPS proposed
rule for a detailed description of the 5percent policy, its initial application
under the TEFRA payment system, and
our policy concerns (64 FR 41535, 67 FR
56007 through 56014, and 79 FR 28196
through 28197).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28196), we
proposed to revise our policies on
interrupted stays. Specifically, we
proposed to modify the fixed-day
thresholds under the greater than 3-day
interruption of stay policy to provide for
a 30-day fixed threshold as an
‘‘acceptable standard’’ for determining a
linkage between an index discharge and
a readmission from an inpatient facility
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as specified under this policy (that is, an
IPPS hospital, an IRF, or a SNF)
consistent with the intervals presently
used in two recently implemented
Medicare initiatives: the Hospital
Readmissions Reductions Program and
the Hospital Inpatient Quality Reporting
Program. (We refer readers to our
proposed rule for a description of these
two policies (79 FR 28197). We also
proposed to remove our regulation at
§ 412.532, Special payment provisions
for patients who are transferred to
onsite providers and readmitted to a
long-term care hospital, stating that as
an ‘‘after the fact’’ payment adjustment
(that is, following cost report
settlement), we believed that this policy
had a limited impact on provider
behavior, and additionally our proposed
changes to the interrupted stay policy
make it unnecessary.
Comment: Commenters objected to
the CMS proposal to modify the fixedday threshold for the greater than 3-day
interrupted stay policy. The
commenters provided many reasons for
their objections to the proposal,
including that:
• CMS should first implement the
new statutory framework under Public
Law 113–67 that applies patient-level
criteria to payments under the LTCH
PPS in FY 2016 and then ‘‘. . . assess
whether any problems related to the
interrupted stay policy exist under the
transformed payment system.’’
• CMS used an ‘‘inappropriate
analogy’’ in its proposal to change the
fixed-day threshold under the greater
than 3-day interrupted stay policy to 30
days because the referenced thresholds
for the Hospital IQR Program and the
Hospital Readmissions Reduction
Program are used under the IPPS, but
not under the LTCH PPS. Therefore, the
commenters believed that 30 days is an
inappropriate benchmark for the LTCH
PPS policy. The commenters further
noted that the LTCH PPS greater than 3day interrupted stay policy applies a
payment adjustment when an LTCH
discharges a patient for access to
clinical services not available at the
LTCH and the patient is readmitted to
the LTCH within the fixed-day
threshold. In contrast, under the
Hospital Readmissions Reduction
Program, a payment reduction is
applied to the hospital’s payment if the
patient returns to the hospital for care
within the fixed-day threshold, and it
was not expected that the patient would
return to the hospital for continuation of
care in relation to the most recent
discharge. The commenters specifically
stated that ‘‘the interrupted stay
thresholds are intended . . . to define a
point at which the care required for a
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current episode of illness changes
significantly enough to warrant ‘resetting the clock’ to an entirely separate
episode of care for the subsequent
readmission . . .’’ to the LTCH. They
added that ‘‘The 30-day readmission
threshold, on the other hand, can be
likened to a 30-day warranty period
during which a readmission could
indicate suboptimal quality of care
during the initial admission.’’ The
commenters believed that comparing
the interrupted stay policy to the
readmissions initiatives would result in
‘‘crucial incongruence’’ because the two
policies address fundamentally different
clinical care scenarios. Furthermore, the
commenters stated that a clinical
threshold is not the same as a quality
initiative. Some commenters stated that
CMS had not demonstrated that an
LTCH stay interrupted by 30 days at an
IPPS hospital followed by a readmission
to the LTCH constitutes a single episode
of care or hospital stay. Several
commenters asserted that ‘‘the agency’s
previous research contradicts this
premise upon which the proposed
policy change is based.’’
• The proposal did not include an
adequate discussion of CMS’ rationale
as an explanation of the Agency’s
proposal. The commenters asserted that
the publically available data sets did not
provide adequate information for
stakeholders to study the potential
impact on hospitals based on this
proposed policy. The commenters noted
that the inclusion of such material in
the FY 2012 proposal enabled LTCH
stakeholders to meaningfully comment
in response to the proposals.
Furthermore, the commenters believed
that as a result of the policy changes
that will be implemented in FY 2016,
LTCHs would be subject to significant
financial and operational upheaval if
this new policy is implemented as well.
• CMS did not offer evidence to
indicate that LTCHs have been overpaid
under the current policy or adequate
data detailing the impact this proposed
policy would have on LTCHs. The
commenters suggested a more detailed
impact analysis for this policy,
including whether patient access to care
would be harmed.
• Given that the potential impact
imposed upon LTCHs based on the
proposal to change the fixed-day
threshold from 9 to 30 days for an
intervening IPPS stay is so ‘‘drastic,’’ if
finalized, there should be 3-year
transition period from the current policy
if CMS were to finalize such a policy,
and CMS should change the MS–LTC–
DRG relative payment weights to
account for the resulting changes in
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LTCH treatment costs and Medicare
payments.
Response: We appreciate the
commenters’ responses. After careful
consideration of the public comments
we received, we agree with the
commenters who indicated that, in light
of the forthcoming modifications to the
LTCH PPS, a major revision to the
existing greater than 3-day interrupted
stay policy may be premature at this
time. We will take the other comments
we received into consideration in
preparation for any potential future
rulemaking on this issue.
Despite our decision to not finalize
our proposal to change the fixed-day
threshold under the LTCH PPS greater
than 3-day interrupted stay policy, our
goal continues to be to help ensure that
readmission decisions are made on a
clinical basis and not based on payment
considerations. During the past several
years, the Office of the Inspector
General (OIG) has been evaluating the
effects of the interrupted stay policies
for LTCHs, primarily focusing on
readmissions from acute care hospitals.
In the OIG’s March 28, 2014 report,
‘‘Vulnerabilities in Medicare’s
Interrupted-Stay Policy’’ (OEI–04–12–
00490), the OIG stated that ‘‘we
identified several vulnerabilities in the
LTCH interrupted-stay policy, including
inappropriate payments (and) financial
incentives to delay readmissions. . . .’’
The report further stated that ‘‘. . . 59
LTCHs had a high number of
readmissions after the fixed-day
period. . . .’’ (We refer readers to the
Executive Summary of the OIG’s March
28, 2014 report for further details.) The
report also noted that ‘‘[f]orty-five of the
59 LTCHs were part of a chain, and 23
of these LTCHs were part of the same
chain . . . For 50 of these 59 LTCHs, the
number of returns doubled immediately
after the fixed-day period.’’ (We refer
readers to page 17 of the OIG’s March
28, 2014 report for further details.) The
OIG recommended, among other things,
that CMS take appropriate action
regarding LTCHs with a high number of
readmissions immediately after the
fixed-day period and LTCHs with a high
number of readmissions following
multiple short intervening facility stays.
In our response to the OIG’s report,
CMS agreed that LTCH readmission
decisions should be based on the
patient’s clinical needs and not the
hospital’s financial benefit. We stated
that if we find evidence that an
individual hospital or chain is making
readmission decisions based on
financial considerations rather than the
patient’s clinical needs, we would take
the appropriate action in those cases to
rectify the inconsistencies in adhering
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to the current policy. In addition, as
noted earlier, we will consider potential
changes to the greater than 3-day
interrupted stay policy as we gain
experience under the new framework
for the LTCH PPS.
Comment: Commenters supported the
proposal to remove the regulation at
§ 412.532 (Special payment provisions
for patients who are transferred to
onsite providers and readmitted to a
long-term care hospital), noting that the
existing greater than 3-day interrupted
stay policy addresses many of CMS’
concerns about patient shifting.
Commenters also indicated that they
believed that the patient-level criteria
that we will be implementing for FY
2016 will result in changes to LTCH PPS
that further reduce the need for this
policy.
Response: We appreciate the
commenters’ support. After
consideration of the public comments
we received, we are finalizing our
proposal to remove the regulatory
requirements under § 412.532 because
we believe that this policy has had a
limited impact on provider behavior.
In summary, in this final rule, we are
not finalizing our proposal to change the
fixed day threshold under the greater
than 3-day interrupted stay policy under
§§ 412.531(a)(2) and (b)(4) of the
regulations. However, we are finalizing
the proposal to remove § 412.532 in its
entirety and to make a conforming
change to § 412.525 by removing and
reserving paragraph (d)(3), which
references payments under § 412.532.
G. Moratoria on the Establishment of
LTCHs and LTCH Satellite Facilities and
on the Increase in the Number of Beds
in Existing LTCHs or LTCH Satellite
Facilities
As previously noted, Public Law 113–
67 was enacted on December 26, 2013.
Section 1206(b)(2) of Public Law 113–67
amended section 114(d) of the MMSEA
of 2007, as previously amended by
section 4302 of the American Recovery
and Reinvestment Act (ARRA) of 2009
(Pub. L. 111–5) and sections 3106(b) and
10312(b) of the Affordable Care Act
(Pub. L. 111–148). As further amended
by section 112(b) of the Protecting
Access to Medicare Act of 2014 (Pub. L.
113–93), section 114(d) of the MMSEA
includes a ‘‘new’’ statutory moratoria on
the establishment of new LTCHs and
LTCH satellite facilities, and on the
increase in the number of hospital beds
in existing LTCHs and LTCH satellite
facilities, ‘‘for the period beginning
April 1, 2014 and ending September 30,
2017, which mirrors nearly identical
provisions of the ‘‘expired’’ moratoria
under section 114(d)(1) of the MMSEA,
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as amended by sections 4302 of the
ARRA and sections 3106(b) and
10312(b) of the Affordable Care Act.
These prior, yet nearly identical,
provisions of section 114(d)(1) of the
MMSEA, as amended by the ARRA and
the Affordable Care Act, expired on
December 28, 2012. For clarity and
brevity, we will refer to the ‘‘expired’’
moratoria or moratorium to reference
those that expired on December 28,
2012, and the ‘‘new’’ moratoria or
moratorium to reference those that
began on April 1, 2014, as applicable,
throughout this discussion.
The primary difference between the
‘‘expired’’ moratoria and the ‘‘new’’
moratoria is that, while the ‘‘expired
moratoria’’ provided for specific
exceptions to both the moratorium on
the establishment of new LTCHs and
LTCH satellite facilities and on
increases in the number of beds in
existing LTCHs and LTCH satellite
facilities, the ‘‘new’’ moratoria only
provides exceptions to the moratorium
on the establishment of new LTCHs and
LTCH satellite facilities. No exceptions
are provided under the ‘‘new’’
moratorium on increases in the number
of hospital beds in existing LTCHs and
LTCH satellite facilities. (For a detailed
description of the ‘‘expired’’ moratoria
provisions (including the applicable
exceptions) that were in effect from
December 29, 2007 through December
28, 2012, we refer readers to the May 22,
2008 Interim Final Rule with Comment
Period (73 FR 29705 through 29708).
In light of the expiration date of the
‘‘expired’’ moratoria on December 28,
2012, and the effective date of the
‘‘new’’ moratoria on April 1, 2014, there
has been a period of time in which new
LTCHs and LTCH satellite facilities
have been allowed to be established,
and during which time there may have
been increases in the number of hospital
beds in LTCHs and LTCH satellite
facilities. In accordance with section
114(d)(1) of the MMSEA, as amended by
section 112(b) of Public Law 113–93, for
the period beginning April 1, 2014
through September 30, 2017, CMS will
be unable to designate any hospital as
an LTCH or recognize a new LTCH
satellite facility as such, unless one of
the exceptions (described below) is met.
Additionally, as of April 1, 2014, in
accordance with sections 114(d)(6) and
(d)(7) of the MMSEA, as amended by
section 112(b) of Public Law 113–93, an
existing LTCH may not increase the
number of its hospital beds. This
moratorium will extend through
September 30, 2017, and is not subject
to any exceptions.
To qualify for an exception under the
‘‘new’’ moratorium to establish a new
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LTCH or LTCH satellite facility during
the timeframe between April 1, 2014,
and September 30, 2017, a hospital or
entity must meet the following criteria:
• The hospital or entity must have
begun its qualifying period for payment
as an LTCH under 42 CFR 412.23(e).
• The hospital or entity must have a
binding written agreement with an
outside, unrelated party for the actual
construction, renovation, lease, or
demolition for an LTCH, and must have
expended before April 1, 2014, at least
10 percent of the estimated cost of the
project or, if less, $2,500,000.
• The hospital or entity must have
obtained an approved certificate of need
in a State where one is required.
While this exception only applies to
the ‘‘new’’ moratorium on the
establishment of new LTCHs and LTCH
satellite facilities under section
114(d)(7) of the MMSEA, as amended by
section 112(b) of Public Law 113–93, the
mechanics of the exception are
analogous to those established under the
‘‘expired’’ moratorium, which ended in
2012. The ‘‘expired’’ moratoria were
implemented in a May 22, 2008 Interim
Final Rule with Comment Period (73 FR
29704 through 29707). As discussed in
that rule, some of the terminology in the
statutory provision was internally
inconsistent. A strictly literal reading of
the statutory language under section
114(d)(2) of the MMSEA, as amended by
section 4302 of the ARRA and sections
3106(b) and 10312(b) of the Affordable
Care Act, presented practical challenges
for implementation in light of the
established LTCH classification criteria
under § 412.23(e) of the regulations.
Therefore, we adopted interpretations
that we believed would reasonably
reconcile seemingly inconsistent
provisions and that would result in a
logical and workable mandate.
Specifically, as drafted, the exception
only applies to a hospital or entity when
it is already classified as an ‘‘LTCH.’’
Such entities will not need an exception
to the moratorium on becoming an
‘‘LTCH’’ because they will already be an
LTCH. As such, we are interpreting this
provision under the new exception as
we interpreted the exceptions to the
‘‘expired’’ moratorium. We discuss our
interpretations below.
At the outset of this discussion, we
want to clarify which provisions of
section 114(d) of the MMSEA, as
amended, were subject to the ‘‘expired’’
moratoria, as distinguished from those
which are subject to the ‘‘new’’
moratoria. Sections 114(d)(2) and
114(d)(3) of the MMSEA, as amended,
only address exceptions under the
‘‘expired’’ moratoria. Section 114(d)(6)
of the MMSEA, as amended, defines
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when the exceptions addressed in
sections 114(d)(2) and 114(d)(3) expired.
Section (d)(7) of the MMSEA addresses
the exception under the ‘‘new’’
moratorium on the establishment of new
LTCHs and LTCH satellite facilities.
There are no exceptions to the ‘‘new’’
moratorium on the increases in the
number of beds in existing LTCHs and
LTCH satellite facilities, as noted above.
Section 114(d)(7)(A) of the MMSEA,
as amended, mirrors the expired
provisions of section 114(d)(2)(A). Both
provisions refer to an LTCH that began
its qualifying period for payment as a
‘‘long-term care hospital’’ on or before a
given date. However, a hospital would
not be classified as an LTCH during that
qualifying period; the facility or entity
would typically be classified as an IPPS
hospital. For a full discussion of our
rationale for interpreting section
114(d)(2)(A) of the MMSEA to refer to
an IPPS hospital meeting the stated
requirements, we refer readers to our
May 22, 2008 Interim Final Rule with
Comment Period (73 FR 20704 through
29707) regarding the implementation of
the ‘‘expired’’ moratorium. In this final
rule, we are applying the same rationale
in regard to the interpretation of section
114(d)(7)(A), that is, we are interpreting
the provision to refer to an acute care
hospital meeting the stated
requirements as the hospital or entity
seeking classification as an LTCH. As
we did when interpreting the same
language under the ‘‘expired’’
moratorium exception under section
114(d)(2)(A) of the MMSEA, as amended
by section 4302 of the ARRA and
sections 3106(b) and 10312(b) of the
Affordable Care Act, we note that the
exception under section 114(d)(7)(A) of
the MMSEA cannot provide any relief to
LTCH satellite facilities because there is
no ‘‘qualifying period’’ for the
establishment of a LTCH satellite
facility for payment as a LTCH under
§ 412.23(e). Therefore, an LTCH satellite
facility cannot meet the stated
requirements for an exception under
section 114(d)(7)(A) of the MMSEA.
Section 114(d)(7)(B) of the MMSEA
specifies the conditions for an exception
to the moratorium on the establishment
of new LTCHs and LTCH satellite
facilities having: (1) a binding written
agreement with an outside, unrelated
party for the actual construction,
renovation, lease, or demolition for an
LTCH; and (2) expended, before the date
of enactment of Public Law 113–93,
April 1, 2014, ‘‘at least 10 percent of the
estimated cost of the project (or, if less,
$2,500,000).’’ As drafted, this provision
is also problematic. In cases in which a
hospital has not yet been built, but there
is a binding written agreement for the
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actual construction of a hospital that
intends to be classified as an LTCH, the
entity hiring those who would complete
the construction would not be classified
as an LTCH. Prior to the designation or
classification of a hospital or an entity
as an LTCH, a hospital must first be
established and certified and must then
complete the procedures specified
under § 412.23(e) in order to qualify as
an LTCH, at which point the hospital
would be reclassified as an LTCH.
In accordance with our interpretation
of section 114(d)(2)(B) of the MMSEA,
as amended by section 4302 of the
ARRA and sections 3106(b) and
10312(b) of the Affordable Care Act, we
are interpreting the contracting and
expenditure provisions under section
114(d)(7)(B) of the MMSEA, as added by
section 112(b) of Public Law 113–93, to
apply to the hospital/entity requesting
an exception to the moratorium on the
establishment of new LTCHs and LTCH
satellite facilities between April 1, 2014,
and September 30, 2017—the entity that
would be classified as an LTCH if it
meets the stated requirements. That
entity must have a binding written
agreement with an outside unrelated
party for the actual construction,
renovation, lease, or demolition for
converting the hospital to an LTCH, and
it must have expended at least 10
percent of the estimated cost of the
project (or, if less, $2,500,000) by the
date of enactment of Public Law 113–
93—April 1, 2014.
Furthermore, with regard to the first
prong, as when we implemented the
‘‘expired’’ moratoria, we continue to
believe that the use of the term ‘‘actual’’
in the context of the ‘‘actual
construction, renovation, lease, or
demolition’’ indicates that the provision
focuses only on the specific actions
cited in the statute, and does not
include those actions that are being
contemplated or are not yet
substantially underway. Although we
are aware that a hospital or some other
type of entity may enter into binding
written agreements regarding services
and items (for example, feasibility
studies or land purchase) and incur
costs for those services and items prior
to actual construction, renovation, lease
or demolition, we believe that those
services or items are not included in
what we are permitted to consider
under the statutory language of the
exception requirements.
With respect to the second prong, the
statute specifies that the hospital or
entity must have ‘‘expended’’ at least 10
percent of the estimated cost of the
project (or, if less, $2,500,000) by April
1, 2014. As we did in regard to the
interpretation of section 114(d)(2)(B) of
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the MMSEA, as amended by section
4302 of the ARRA and section 3106(b)
and 10312(b) of the Affordable Care Act,
we are interpreting the phrase ‘‘cost of
the project’’ to mean the activities
enumerated in the first prong: ‘‘the
actual construction, renovation, lease, or
demolition for a long-term care
hospital.’’ That is, the statute requires
the hospital or entity to have spent the
amount specified in the statute on the
actual construction, renovation, lease, or
demolition for the contemplated LTCH.
Furthermore, as we did previously in
regard to the interpretation of section
114(d)(2)(B) of the MMSEA, as amended
by section 4302 of the ARRA and
sections 3106(b) and 10312(b) of the
Affordable Care Act, because the statute
uses the phrase ‘‘has expended’’ (that is,
a past tense phrase), we are limiting
funds counting toward the 10 percent or
$2,500,000 minimum to those funds that
have actually been transferred as
payment for the stated aspects of the
project prior to April 1, 2014, as
opposed to merely obligating capital
and posting the cost of the project on its
books. We believe that the provision
addressed the concept of ‘‘obligate’’ in
the first prong of the test where the
statute specifies ‘‘a binding written
agreement . . . for the actual
construction, renovation, lease, or
demolition of the long-term care
hospital. . . .’’ and there is no reason to
believe that the second prong of the test,
which requires the ‘‘expenditure’’ of 10
percent of the project or, if less,
$2,500,000, was intended as a
redundancy. The ability to post the
expense on the hospital’s or entity’s
books could be satisfied by merely
having a binding written agreement
under the first prong of section
114(d)(7)(B) of the MMSEA. The fact
that a second requirement is included
that involves an expenditure indicates
that an additional threshold must be
met.
Finally, section 114(d)(7)(C) of the
MMSEA includes an exception to the
moratorium if an LTCH, prior to April
1, 2014, has ‘‘obtained an approved
certificate of need in a State where one
is required’’. As discussed above, we are
applying this exception requirement to
the entity that is requesting approval for
an exception to the moratorium on the
establishment of new LTCHs and LTCH
satellite facilities between April 1, 2014,
and September 30, 2017—the entity that
would be classified as an ‘‘LTCH’’ if the
stated requirements are met.
However, with that said, we are
clarifying what kind of certificate of
need we will accept under the
provisions of section 114(d)(7) of the
MMSEA. We believe that the certificate
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of need exception applies to a
‘‘hospital’’ or entity that was actively
engaged in developing an LTCH, as
evidenced by the fact that either an
entity that wanted to create a LTCH but
did not exist as a hospital prior to April
1, 2014, had obtained a certificate of
need for a hospital by the date of
enactment, or an existing hospital had
obtained a certificate of need to convert
the hospital into a new LTCH by that
date. We are applying this exception
requirement to a hospital that is already
in existence prior to the date of
enactment of Public Law 113–93, and
that had previously obtained an
approved certificate of need for a
hospital (other than a LTCH) prior to
April 1, 2014. We believe that Congress
intended the exception to the
moratorium to save those entities that
were already actively engaged in
becoming an LTCH. The fact that a
hospital may have had a certificate of
need issued to it years before April 1,
2014, to operate a hospital (other than
a LTCH) is not indicative of such active
engagement, and, we believe, is outside
of what is contemplated in these LTCHspecific statutory provisions. We are
only applying this exception
requirement where the certificate of
need is specifically for an LTCH.
Because the certificate of need process
is controlled at the State level, in
determining whether the hospital or
entity has obtained an approved
certificate of need prior to April 1, 2014,
we will consult the applicable State on
a case-by-case basis for that
determination.
Decisions regarding the application of
these moratoria and exceptions
provided within the provisions of
section 114(d) of the MMSEA will be
handled on a case-by-case basis by the
applicant’s MAC and the CMS Regional
Office. ‘‘Final’’ instructions on
implementing the moratoria will be
posted following the publication of this
final rule.
In accordance with these policies, in
this final rule we also are revising our
regulations under § 412.23(e)(6) and
(e)(7) to include a description of the
‘‘new’’ moratoria, which is in effect
from April 1, 2014, through September
30, 2017, on the establishment of new
LTCHs and LTCH satellite facilities
(with specific exceptions), and on
increasing the number of beds in
existing LTCHs and existing LTCH
satellite facilities.
Comment: Several commenters urged
CMS to establish a regulatory exception
to the statutory moratorium on the
increase in the number of beds in
existing LTCHs and LTCH satellite
facilities. The commenters pointed out
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that, unlike the ‘‘expired’’ moratoria, the
‘‘new’’ moratoria under section
1206(b)(2) of Public Law 113–67 do not
provide for such exceptions. The
commenters further stated that when the
statute was further amended by section
112(b) of the PAMA of 2014, Congress
elected to provide an exception for the
establishment of new LTCHs and LTCH
satellite facilities, but not for the
increase in the number of LTCH beds.
Specifically, the commenters requested
that CMS provide two regulatory
exceptions to the moratorium to allow
for the increase in the number of beds
in existing LTCHs and LTCH satellite
facilities if: (1) the LTCH has a binding
written agreement as of the date of the
enactment of this paragraph with an
outside, unrelated party for the actual
construction, renovation, lease or
demolition for long-term care hospital
beds, and has expended, before such
date of enactment, at least 10 percent of
the estimated cost of the project (or, if
less, $2,500,000) (the ‘‘binding written
agreement exception’’); or (2) if the
LTCH has obtained an approved
certificate of need (CON) from the State
where one is required on or before the
date of enactment (the ‘‘CON
exception’’). The commenters believed
that the creation of these exceptions
would be within CMS’ authority
because: (1) the statute is ‘‘ambiguous’’
and, therefore, CMS may exercise its
authority under the general rulemaking
provisions under sections 1102 and
1871 of the Act to ‘‘resolve the
ambiguity’’; (2) with the enactment of
section 112(b) of the PAMA, the
effective date of the new moratorium on
the increase in the number of beds in
existing LTCHs and LTCH satellite
facilities was changed from January 1,
2015, to April 1, 2014, which creates a
disadvantage for those LTCHs that were
in the process of increasing the number
of beds in their facilities based on
‘‘reasonable reliance’’ on the January 1,
2015 effective date; (3) Congress acted
in haste when enacting the PAMA, and
not including a bed number exception
was an error; and (4) the health needs
of the critically ill Medicare beneficiary
population will go unmet without these
additional beds.
Response: We do not agree with the
commenters’ assertion regarding CMS’
authority to establish two regulatory
exceptions to the statutory moratorium
on the increase in the number of beds
in existing LTCHs and LTCH satellite
facilities. Unlike the ‘‘expired’’
moratoria, the ‘‘new’’ moratoria under
section 1206(b)(2) of Public Law 113–67
expressly noted that such exceptions
would not apply under the ‘‘new’’
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moratoria. We refer readers to section
1206(b)(2)(B) of Public Law 113–67.
When further amended by section
112(b) of the PAMA of 2014, Congress
only elected to provide exceptions for
the establishment of new LTCHs and
LTCH satellite facilities, but not for the
increase in the number of LTCH beds.
We do not believe that these two laws,
read in concert, are ambiguous.
Congress explicitly addressed the
former exceptions as they relate to the
‘‘new’’ moratorium. In doing so,
Congress clearly demonstrated its
awareness of the prior exceptions, and
by stating that the exceptions do not
apply under the ‘‘new’’ moratorium
while concurrently not offering new
exceptions, clearly indicated that
Congress intended to offer no such
exceptions. Furthermore, there is no
reason for CMS to presume that the
subsequent provisions for exceptions
under the ‘‘new’’ moratoria on the
establishment of new LTCHs and LTCH
satellite facilities, but not for the
increase in the number of LTCH beds
was anything other than intentional,
absent evidence to the contrary. The
commenters did not present any
evidence of this nature. Therefore, in
the absence of some indication that
Congress intended to reverse its specific
statement under section 1206(b)(2)(B) of
Public Law 113–67 that limits the
application of exceptions, such as it did
in establishing exceptions to the
moratorium on the establishment of new
LTCHs and LTCH satellite facilities, we
see no reason to infer that the absence
of any exceptions in regard to the
moratorium on the increase in the
number of beds in existing LTCHs and
LTCH satellite facilities was anything
other than intentional.
Furthermore, in response to the
commenters’ ‘‘reasonable reliance’’
assertions, while we may understand
the commenters’ concerns regarding
wasted resources, such concerns do not
permit us to offer rulemaking that
would be contrary to the express intent
of Congress. Finally, while we
understand the commenters’ concerns
regarding access to care for Medicare
beneficiaries, we believe that Congress
would have provided exceptions if it
believed that beneficiary access to LTCH
and LTCH satellite facility beds would
be negatively impacted. Furthermore,
we expect that Congress would address
any unanticipated access issues, should
these issues arise. Therefore, we
disagree with the commenters’
assertions.
Comment: One commenter urged
CMS to revise its interpretation of the
exceptions provisions under the
moratorium on the development of new
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LTCHs and LTCH satellite facilities so
as to include ‘‘ownership’’ of the
property in the list of permitted
activities that could be included in the
criteria for qualifying for the ‘‘binding
written agreement’’ exception. The
commenter also urged CMS to include
the purchase of architectural plans as a
necessary element that would count
towards quantifying the total
expenditure amount.
Response: In the FY 2015 IPPS/LTCH
PPS proposed rule, we noted that the
‘‘new’’ moratorium on the development
of new LTCHs and LTCH satellite
facilities provided under section
1206(b)(2) of Public Law 113–67, as
amended by section 112(b) of the
PAMA, and incorporated as section
114(d)(7) of the MMSEA ‘‘. . . mirrors
the expired provisions of section
114(d)(2)(A)’’ of the ‘expired’
moratorium.’’ Because Congress used
the identical wording for these
provisions, we proposed to apply the
same interpretation of the exceptions
provisions that we used for the
‘‘expired’’ moratorium in regard to the
‘‘new moratorium. (We refer readers to
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28198).) The specific
exception provision that the
commenters are questioning is outlined
under section 114(d)(7)(B) of the
MMSEA, as amended, and is defined as
the ‘‘binding written agreement’’
exception. Section 114(d)(7)(B) of the
MMSEA of 2007, as amended, specifies
one of the qualifying criterion for this
exception, namely, the requirement for
the facility to have a binding written
agreement with an outside, unrelated
party for the actual construction,
renovation, lease, or demolition for a
long-term care hospital, and have
expended, before the date of the
enactment of the PAMA, at least 10
percent of the estimated cost of the
project (or, if less, $2,500,000).
After we implemented the provisions
of the ‘‘expired’’ moratorium, published
in the May 22, 2008 interim final rule
with comment period (73 FR 29699), in
response to the FY 2010 IPPS/LTCH
PPS final rule, commenters urged CMS
to revise its interpretation of the
‘‘binding written agreement’’ exception
under section 114(d)(2)(B) of the
MMSEA to include ‘‘. . . feasibility
studies, land purchases, architectural
fees, attorneys’ fees, appraisals,
purchase of rights of way, as well as
other activities that occur during the
development of a hospital . . .’’ At that
time, we stated in our response that,
‘‘. . . Congress expressly specified only
four ‘actual’ activities in the statute.’’
We also believe, as we stated in the May
22, 2008 interim final rule with
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comment period, that the use of the
term ‘‘actual’’ in the context of the
exception provisions terminology of
‘‘actual construction, renovation, lease,
or demolition’’ limits the activities that
Congress considers to represent a
substantial commitment to that
particular project of developing an
LTCH or an LTCH satellite facility. By
using the term ‘‘cost of the project,’’ we
believe that the statute refers to the
activities enumerated in the first prong,
‘‘the ‘actual’ construction, renovation,
lease, or demolition for a long-term care
hospital.’’ (We refer readers to the FY
2010 IPPS/LTCH PPS final rule with
comment period (74 FR 43988).) Our
interpretation of the exception
provisions for a ‘‘binding written
agreement’’ under the ‘‘expired’’
moratorium was implemented in FY
2008 with the publication of the May
22, 2008 interim final rule with
comment period (73 FR 29699), and
finalized in the FY 2010 IPPS/LTCH
PPS final rule with comment period (74
FR 43754). While we understand that
our longstanding interpretation of the
language in this exception may cause
hardship to developing LTCHs and
LTCH satellite facilities that seek to
qualify for the exception under the
‘‘expenditure’’ prong, we continue to
believe that only the specific costs cited
in the statute may be considered in
evaluating and granting exceptions to
the ‘‘new’’ moratorium. Furthermore,
we also believe that by using the same
language in the exceptions provisions
under the ‘‘new’’ moratorium that was
used in the provisions of the ‘‘expired’’
moratorium, Congress had reason to
expect that CMS would apply the same
interpretation under the ‘‘new’’
exception provisions as were applied
under the ‘‘expired’’ moratorium
exception provisions. If Congress
disagreed with our interpretation, or
believed that other costs should be
included or considered in determining
whether an LTCH or LTCH satellite
facility would qualify for this exception
to the moratorium, it could have revised
the language used under section 112(b)
of the PAMA, which applies the
exceptions, accordingly.
H. Evaluation and Treatment of LTCHs
Classified Under Section
1886(d)(1)(B)(iv)(II) of the Act
Section 1206(d) of the Pathway for
SGR Reform Act (Pub. L. 113–67)
instructs the Secretary to evaluate
payments and regulations governing
‘‘hospitals which are classified under
subclause (II) of subsection (d)(1)(B)(iv)
. . .’’ as part of the annual rulemaking
for payment rates under subsection (d)
of section 1886 of the Act for FY 2015
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or FY 2016. (We refer to hospitals
‘‘classified under subclause (II) of
subsection (d)(1)(B)(iv) . . .’’ as
‘‘subclause (II) LTCHs.’’) Based on the
results of this evaluation, the Secretary
is authorized to adjust the payment rates
under section 1886(b)(3) of the Act for
this type of hospital (such as by
applying a payment adjustment such
that the payments resemble those under
a ‘‘TEFRA-payment model’’). To
implement such a payment adjustment,
the Secretary would have to propose
changes to the existing regulations
governing subclause (II) LTCHs.
For this final rule, under the
requirements of section 1206(d)(1) of
Public Law 113–67 to evaluate the
payment rates and regulations governing
subclause (II) LTCHs, we have reviewed
Medicare data from the only hospital
meeting the statutory definition of a
subclause (II) LTCH. As a result of these
analyses, we are applying a payment
adjustment to subclause (II) LTCHs
beginning in FY 2015, which will result
in payments for this category of LTCHs
that resemble a payment based upon a
TEFRA payment model (that is, a
reasonable cost payment, subject to a
ceiling).
Section 4417(b) of the BBA
established the meaning of ‘‘subsection
(d) hospitals,’’ which are paid under the
IPPS, and in doing so, excluded two
categories of hospitals that experience
extended average inpatient length of
stays. It also authorized the Secretary to
define how an average inpatient length
of stay would be calculated for these
excluded hospitals. These provisions
are included under sections
1886(d)(1)(B)(iv)(I) and (d)(1)(B)(iv)(II)
of the Act, and the two categories of
hospitals are generally referred to as
subclause (I) and subclause (II) LTCHs.
Subclause (I) LTCHs are required to
have an average inpatient length of stay
that is greater than 25 days. Subclause
(II) LTCHs are only required to have an
average inpatient length of stay of
greater than 20 days. The subclause (II)
LTCH definition further limited the
classification of a subclause (II) LTCH
by including the requirement that the
LTCH must have been first excluded
from the IPPS in CY 1986, and treated
a Medicare inpatient population in
which 80 percent of the discharges in
the 12-month reporting period ending in
Federal FY 1997 had a principal
diagnosis that reflected a finding of
neoplastic disease. This statutory
requirement is implemented under 42
CFR 412.23(e)(2)(ii).
In establishing the category of
subclause (II) LTCHs, Congress
essentially authorized special treatment
of a hospital that, since 1986, had
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focused on the provision of palliative
care to Medicare beneficiaries diagnosed
with end-stage cancer. In consideration
of the distinction between hospitals
qualifying as LTCHs, either as a
subclause (I) LTCH or a subclause (II)
LTCH, we established different
standards for counting the average
inpatient length of stay values for these
two categories of LTCHs. We calculate
the greater than 25-day average length of
stay criteria using only Medicare claims
data for subclause (I) LTCHs. However,
for subclause (II) LTCHs, we calculate
the average length of stay based on its
entire patient population. We refer
readers to the RY 2003 LTCH PPS final
rule (67 FR 55974) for a full discussion
of our rationale for implementing these
average length of stay calculation
methodologies.
The theoretical foundations of any
PPS are based on a system of averages,
where the costs of some cases may
exceed the payment, while other cases’
costs will be less than the payment,
creating an adequate balance in
payments. Therefore, it is assumed that
a hospital paid under a PPS would be
able to maintain a balance of patients
that will allow the hospital to achieve
fiscal stability. With that said, in
developing the LTCH PPS we were
aware that a per discharge PPS system
that pays the same amount for every
case in a specific MS–LTC–DRG could
encourage hospitals to make decisions
based on financial considerations (such
as prematurely discharging patients to
reduce the cost of such cases). As per
discharge payments under the LTCH
PPS are based on the extended lengths
of stay that characterize LTCHs, at the
outset of the LTCH PPS, we established
a short-stay outlier (SSO) policy under
which we apply a payment adjustment
for LTCH discharges with lengths of stay
that do not exceed 5/6 of the geometric
average length of stay of the MS–LTC–
DRG. Equally, we were aware that there
would be exceptionally expensive cases
that could create financial disincentives
to treat such patients and, therefore, we
adopted a high-cost outlier (HCO) policy
as well. However, given the nature of a
subclause (II) LTCH’s patient
population, it may not be reasonable to
expect a balancing of more and less
costly cases, as these LTCHs are
generally only treating a subset of very
sick patients. As such, we modified our
original SSO payment policy for
subclause (II) LTCHs, and we exempted
this category of LTCHs from additional
changes to the SSO policy to account for
the extremely high percentage of cases
that our data analysis revealed would
have been subject to our SSO policy if
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that policy were to be applied to
subclause (II) LTCHs.
In accordance with the requirements
of section 1206(d)(1) of Public Law 113–
67, we conducted an evaluation of the
payment rates and regulations governing
subclause (II) LTCHs. We analyzed
MedPAR claims data for FY 2010 and
estimated Medicare costs incurred by
the one LTCH currently classified as a
subclause (II) LTCH, a 225-bed LTCH
located in New York. We also evaluated
the same metrics for two comparison
groups of LTCHs, that is, approximately
40 LTCHs located in the same census
region (that is, the Northeast Census
Region, which includes Connecticut,
Maine, New Jersey, and Pennsylvania),
and approximately 25 LTCHs with the
same bed size category (that is, between
150 and 250 beds) in order to assess the
distinctions between a subclause (I)
LTCH and a subclause (II) LTCH. For
purposes of this analysis, LTCH PPS
payments were calculated from the
payment field in the MedPAR claims
data, and the estimated costs for those
claims were calculated using the
covered charges and CCRs in the
Provider-Specific File (PSF) that
correlate to the discharge date on each
claim. We calculated the aggregate
average margins (ratio of payment to
costs) for the subclause (II) LTCH and
for the two sets of comparison groups of
LTCHs using the calculated FY 2010
costs and payments. Our analysis found
that, under current LTCH PPS payment
policy, the subclause (II) LTCH has
much lower margins than comparable
LTCHs located in the Northeast Census
Region or LTCHs with 150–250 beds.
Specifically, the subclause (II) LTCH
had a negative margin for its Medicare
patients paid under LTCH PPS in FY
2010, while both the Northeast Census
Region LTCHs and LTCHs with 150–250
beds had positive aggregate margins for
its Medicare patients paid under LTCH
PPS for the same period.
In our evaluation of subclause (II)
LTCHs under the LTCH PPS, in
accordance with the requirements of
section 1206(d) of Public Law 113–67,
we also compared the types of patients
treated at subclause (I) and subclause
(II) LTCHs. The top five MS–LTC–DRGs
for patients treated at the subclause (II)
LTCH in FY 2010 account for almost
one-third of all of its Medicare
discharges. Four of the top five MS–
LTC–DRGs for the subclause (II) LTCH
involve a neoplastic disease, and its
case-mix differs significantly from the
subclause (I) LTCHs, which had large
proportions of ventilator and respiratory
patients. The five most common MS–
LTC–DRGs for the subclause (I) LTCHs
were: Respiratory system diagnosis with
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ventilator support 96+ hours (MS–LTC–
DRG 207); Pulmonary edema and
respiratory failure (MS–LTC–DRG 189);
Septicemia or severe sepsis without
ventilator support 96+ hours with MCC
(MS–LTC–DRG 870); Skin ulcers with
MCC (MS–LTC–DRG 592); and
Respiratory system diagnosis with
ventilator support < 96 hours (MS–LTC–
DRG 208). In comparison, for the
subclause (II) LTCH, the five most
common MS–LTC–DRGs were:
Respiratory neoplasms with CC (MS–
LTC–DRG 181); Digestive malignancy
with CC (MS–LTC–DRG 375);
Respiratory neoplasms with MCC (MS–
LTC–DRG 180); Organic disturbances &
mental retardation (MS–LTC–DRG 884);
and Malignancy, female reproductive
system w CC (MS–LTC–DRG 755).
These data highlight significant
differences between a subclause (I)
LTCH and a subclause (II) LTCH based
on patient-mix and Medicare margins,
notwithstanding the considerations that
have been made in structuring the
current LTCH regulations to
acknowledge the uniqueness of an
LTCH meeting the statutory definition
of a subclause (II) LTCH.
In evaluating ‘‘both the payment rates
and regulations governing hospitals
which are classified under subclause
(II) . . . ,’’ as required by section
1206(d) of Public Law 113–67, we also
analyzed the impacts of upcoming
changes to the LTCH PPS under section
1206(a) of Public Law 113–67. In
discussing these analyses, we note that,
as discussed in section VII.I.2. of the
preamble of this final rule, we are not
making any specific policy and payment
changes in this final rule to implement
the provisions of section 1206(a) of
Public Law 113–67. We intend to
establish policies related to the types of
LTCH cases expected to meet the
legislative patient-level criteria for the
‘‘standard LTCH PPS payment’’ and
cases expected to meet the criteria for
the ‘‘site neutral’’ payments under the
LTCH PPS in the FY 2016 rulemaking
cycle. Although we are not making any
specific policy or payment changes in
this final rule related to the provisions
of section 1206(a) of Public Law 113–67
at this time, we discuss these provisions
in this section because they relate to our
analysis of the LTCH PPS payment rates
and regulations governing subclause (II)
LTCHs.
Absent the adoption of policies for the
implementation of section 1206(d) of
Public Law 113–67, the payment
changes required by section 1206(a) of
Public Law 113–67 will apply to
subclause (II) LTCHs beginning with
discharges occurring in cost reporting
periods beginning on or after October 1,
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2015 (that is, FY 2016 and beyond). Due
to the changes required by the
provisions of section 1206(a) of Public
Law 113–67 (discussed at greater length
under section VII.I. of the preamble of
this final rule), beginning in FY 2016,
only those LTCH discharges meeting
specified patient-level clinical criteria
will be paid a ‘‘standard LTCH PPS
payment amount.’’ Discharges not
meeting those criteria will be paid based
on a ‘‘site neutral’’ payment amount (the
lesser of the ‘‘IPPS comparable’’
amount, as applied under our SSO
policy at § 412.529, or 100 percent of the
estimated costs of the case). The
statutory requirements to be paid the
‘‘standard LTCH PPS payment amount’’
are that the LTCH discharge does not
have a principal diagnosis relating to a
psychiatric diagnosis or to
rehabilitation, and:
• The stay in the LTCH was
immediately preceded by a discharge
from an acute care hospital that
included at least 3 days in an intensive
care unit (ICU); or
• The stay in the LTCH was
immediately preceded by a discharge
from an acute care hospital and the
patient’s LTCH stay is assigned to an
MS–LTC–DRG based on the receipt of
ventilator services of at least 96 hours.
Furthermore, section
1206(a)(1)(C)(ii)(II) of Public Law 113–
67 specifies that, effective with cost
reporting periods beginning on or after
FY 2020, any LTCH with an ‘‘LTCH
discharge payment percentage’’ that
demonstrates that more than 50 percent
of that LTCH’s discharges were paid for
based on the ‘‘site neutral’’ payment rate
will subsequently be paid for all
discharges at the rate ‘‘. . . that would
apply under subsection (d) for the
discharge if the hospital were a
subsection (d) hospital.’’ We refer
readers to section VII.I. of the preamble
of this final rule for a further discussion
of the provisions of section 1206(a) of
Public Law 113–67.
In light of these forthcoming statutory
changes, we evaluated MedPAR claims
data from the only hospital meeting the
statutory definition of a subclause (II)
LTCH for FY 2010 to project the impact
of the revisions to the LTCH PPS made
by section 1206(a) of Public Law 113–
67. Our simulations included analyses
of the potential financial impact of
applying the patient-level criteria and
‘‘site neutral’’ payment policies to a
subclause (II) LTCH, and the financial
impact on payments if that LTCH were
to be paid for more than 50 percent of
its discharges at the ‘‘site neutral’’
payment rate. In conducting this
analysis in the absence of rules
implementing the changes mandated by
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section 1206(a) of Public Law 113–67,
we assumed that there would be no
changes in LTCH admission patterns in
response to the LTCH PPS payment
changes required by section 1206(a) of
Public Law 113–67. Furthermore, we
used the FY 2010 claims data for the
subclause (II) LTCH and the two LTCH
comparison groups described above in
order to compare the potential effects of
the payment changes under the LTCH
PPS required by section 1206(a) of
Public Law 113–67 between subclause
(I) LTCHs and subclause (II) LTCHs. We
simulated payments for those discharges
that would be expected to meet the
legislative patient-level criteria for the
‘‘standard LTCH PPS payment’’ and for
discharges that would be expected to
receive ‘‘site neutral’’ payments under
the LTCH PPS. Our analysis found that
the subclause (II) LTCH would be
expected to have significantly fewer
(approximately 5 times fewer)
discharges that would be expected to
meet the legislative patient-level criteria
for the ‘‘standard LTCH PPS payment’’
than the comparison groups of
subclause (I) LTCHs (that is, Northeast
Census Region LTCHs and LTCHs with
150–250 beds).
Additionally, we analyzed the
potential effects of the ‘‘LTCH discharge
payment percentage’’ provision under
the requirements of section
1206(a)(1)(C)(ii)(II) of Public Law 113–
67, as noted above. We evaluated FY
2010 claims data from the subclause (II)
LTCH to project the potential impact of
this provision. Based on our simulations
in which we projected which FY 2010
LTCH claims would be expected to
receive ‘‘site neutral’’ payments under
the LTCH PPS (as described above), and
having found a significant number, we
project that a significant negative
financial impact would be imposed
upon the subclause (II) LTCH’s
payments. Without considerable
behavioral changes, the subclause (II)
LTCH would be expected to have more
than 50 percent of its discharges paid
based on a ‘‘site neutral’’ payment and,
therefore, would receive a payment
adjustment under the provisions of
section 1206(a)(1)(C)(ii)(II) of Public
Law 113–67 for all of its discharges.
Furthermore, our analysis revealed that,
given the particular medical profile of
their patient population, that the
‘‘subsection (d)’’ comparable payment
amount under the payment adjustment
required by section 1206(a)(1)(C)(ii)(II)
of Public Law 113–67 would not likely
cover the costs for a significant number
of their discharges. Consequently, our
analysis shows that the subclause (II)
LTCH is projected to experience a large
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negative aggregate average margin for its
Medicare discharges under the payment
changes required by section 1206(a) of
Public Law 113–67.
Based on our findings under our
evaluation of payments to subclause (II)
LTCHs under the LTCH PPS and
consistent with the provisions of section
1206(d) of Public Law 113–67, we
evaluated adjustments that could be
applied to ensure appropriate payments
under the LTCH PPS for a subclause (II)
LTCH under the LTCH PPS. This
analysis included consideration of a
reasonable-cost based model, such as
the TEFRA payment system under
which certain PPS-excluded hospitals
(such as children’s and cancer hospitals)
are currently paid. The TEFRA payment
system, which was established under
the provisions of Public Law 97–248, is
implemented under the regulations at
42 CFR 413.40.
In addition to governing the current
payment of certain PPS-excluded
hospitals, the TEFRA payment system
was also previously used to pay LTCHs
prior to the implementation of the LTCH
PPS. As described in the RY 2003 LTCH
PPS final rule (67 FR 55957), the TEFRA
payment system was ‘‘. . . established
[to make] payments based on hospitalspecific limits for inpatient operating
costs. A ceiling on payments to such
hospitals is determined by calculating
the product of a facility’s base year costs
(the year on which its target
reimbursement limit is based) per
discharge, updated to the current year
by a rate-of-increase percentage, and
multiplied by the number of total
current year discharges.’’ (A detailed
discussion of target amount payment
limits under Public Law 97–248 can be
found in the September 1, 1983 final
rule published in the Federal Register
(48 FR 39746).)’’ Under the TEFRA
payment system, in accordance with
section 1886(g) of the Act, Medicare
allowable capital costs are paid on a
reasonable cost basis. We refer readers
to the FY 2015 IPPS/LTCH PPS
proposed rule for a detailed description
of our analysis and evaluation of the
application of the TEFRA payment
model to a subclause (II) LTCH (78 FR
28202 through 28203). We note that in
describing our estimated operating and
capital payments under the TEFRA
payment system principles in the
proposed rule, we mistakenly stated that
we used FY 2010 cost report data when
those estimates were determined using
FY 2011 cost report data.
Our analysis of the subclause (II)
LTCH’s projected payments under a
TEFRA-payment model indicated that
such payments would reasonably cover
the costs for most of their discharges,
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and consequently, the subclause (II)
LTCH is not projected to experience a
negative aggregate margin for its
Medicare discharges, unlike our
projections under both the current
LTCH PPS and the forthcoming
payment changes to the LTCH PPS
required by section 1206(a) of Public
Law 113–67.
In the above analyses, we evaluated
the current regulations as well as
anticipated payment rates under various
statutorily mandated policies for FY
2016 on a subclause (II) LTCH under the
LTCH PPS based on FY 2010 discharge
data, including payments, costs and
case-mix. As discussed above, our
evaluation indicates that, given the
required patient-mix for a subclause (II)
LTCH, the forthcoming changes to the
LTCH PPS are likely to result in a
financial situation that is not
sustainable for the subclause (II) LTCH
evaluated above. Furthermore, our
analysis also shows that current LTCH
PPS payments for a subclause (II) LTCH,
even with taking into account the
considerations that have been made in
structuring current LTCH PPS policies
to acknowledge the uniqueness of a
subclause (II) LTCH, may not be
sufficient to cover the costs incurred for
the treatment of patients of the
particular medical profile of the
subclause (II) patient population
prescribed by the statute. Furthermore,
we believe that in establishing
subclause (II) LTCHs, Congress
endorsed the support of the unique
mission of this particular category of
hospital. In fact, while mandating a
significant revision to the LTCH PPS
under section 1206(a) of Public Law
113–67, under section 1206(d) of the
same statute, Congress directed the
Secretary to evaluate the impact of the
LTCH PPS on subclause (II) LTCHs, and,
based on those findings, authorized the
Secretary to adjust payment rates and
other regulations, as appropriate, for
this category of LTCHs.
Accordingly, in recognition of the
subclause (II) LTCH’s current estimated
payment-to-cost ratio under the LTCH
PPS and further anticipated losses that
would likely otherwise occur under the
forthcoming statutory changes to the
LTCH PPS, which would render this
type of specially recognized facility
fiscally untenable, we believe that it is
appropriate to exercise the authority
under section 1206(d)(2) of Public Law
113–67. Therefore, in this final rule, for
cost reporting periods beginning on or
after October 1, 2014 (FY 2015 and
beyond), we are applying a payment
adjustment to subclause (II) LTCH
payments under the LTCH PPS such
that these LTCH PPS payments will
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resemble payments made under the
reasonable cost-based TEFRA payment
system. We believe that it is appropriate
to apply this payment adjustment for a
subclause (II) LTCH’s first cost reporting
period beginning on or after October 1,
2014, rather than discharges occurring
on or after October 1, 2014, because it
is consistent with the annual update of
the hospital-specific limits (ceiling) for
inpatient operating costs under the
TEFRA payment system (as described
below). We are implementing this
payment adjustment for subclause (II)
LTCHs in the regulations by adding new
§ 412.526 under 42 CFR Part 412,
Subpart O.
Specifically, in this final rule we are
establishing new regulations under
§ 412.526 that will provide that, for cost
reporting periods beginning on or after
October 1, 2014, payments to a
‘‘subclause (II)’’ LTCH will be made
under the LTCH PPS under Subpart O
of Part 412, as adjusted. This adjusted
payment amount will generally be
equivalent to an amount determined
under the reasonable cost-based
reimbursement rules for both operating
and capital-related costs under 42 CFR
Part 413. As described above, Medicare
payments for inpatient operating costs
under the reasonable-cost based TEFRA
payment system are subject to a
hospital-specific ceiling on payments
that is determined as the product of a
hospital’s base year costs per discharge
(‘‘target amount per discharge’’),
updated to the current year by a rate-ofincrease percentage, and multiplied by
the number of its Medicare discharges
for the year. Medicare allowable
inpatient capital-related costs are paid
on a reasonable cost basis, in
accordance with section 1886(g) of the
Act.
Under this payment adjustment under
new § 412.526 for inpatient operating
costs, the adjusted payment amount will
generally be determined in accordance
with the cited provisions of § 413.40.
Accordingly, we are establishing a
‘‘target amount’’ for a subclause (II)
LTCH for purposes of calculating a
hospital-specific ceiling on payments
for inpatient operating costs under this
payment adjustment. We will determine
such a target amount based on the
subclause (II) LTCH’s target amount that
was used to determine its payments for
inpatient operating costs under the
TEFRA payment system prior to the
implementation of the LTCH PPS,
updated by the TEFRA payment system
rate-of-increase percentages under
§ 413.40(c)(3). Furthermore, in
determining a subclause (II) LTCH’s
target amount for purposes of this
payment adjustment, consistent with
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the statute (as explained below), we are
not including the increases to LTCHs’
TEFRA target amounts and caps
provided for by section 307(a) of the
BIPA. As discussed previously, prior to
the implementation of the LTCH PPS,
section 307(a) of the BIPA provided a 2percent increase to the wage-adjusted
75th percentile cap on the TEFRA target
amounts for existing LTCHs for cost
reporting periods beginning in FY 2001
and a 25-percent increase to the
hospital-specific TEFRA target amounts
for LTCHs, subject to the increased 75th
percentile cap. Section 307(a)(2) of the
BIPA also specifies that the 2-percent
increase to the 75th percentile cap and
the 25-percent increase to the TEFRA
target amounts were not to be taken into
account in the development and
implementation of the LTCH PPS.
Therefore, consistent with the statutory
requirement under section 307(a)(2) of
the BIPA, under new § 412.526, we will
determine a subclause (II) LTCH’s
updated target amount based on its FY
2000 TEFRA payment system target
amount, the year prior to when the
increases under section 307(a) of the
BIPA were effective. Using its FY 2000
TEFRA payment system target amount
will ensure that the increases provided
for by section 307(a) of the BIPA will
not be included in the LTCH PPS
payments to subclause (II) LTCHs under
this LTCH PPS payment adjustment.
This approach for excluding those
increases to the TEFRA payment system
target amounts is consistent with the
methodology that was used to develop
the one-time prospective adjustment to
the standard Federal rate in which we
calculated what amount would have
been paid under the TEFRA payment
system had the LTCH PPS not been
implemented (77 FR 53497 through
53500). Therefore, under the payment
adjustment for subclause (II) LTCHs
under new § 412.526, we will determine
a FY 2015 LTCH PPS target amount by
updating the subclause (II) LTCH’s FY
2000 TEFRA target amount using the
applicable rate-of-increase percentages
for FYs 2001 through 2015 established
under § 413.40(c)(3).
In addition, as with TEFRA payment
system, we will pay for inpatient
capital-related costs in accordance with
the regulations under 42 CFR Part 413,
under which Medicare allowable capital
costs are paid on a reasonable cost basis,
consistent with section 1886(g) of the
Act.
Comment: Several commenters
supported the proposed policy to apply
a payment adjustment to subclause (II)
LTCHs payments modeled on the
TEFRA payment system. In addition,
the commenters suggested that CMS
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provide the authority for this LTCH to
request and receive an adjustment to its
rate-of-increase ceiling, as specified in
our TEFRA regulations at 42 CFR 413.40
(e), (g), and (i) for other hospitals paid
on a TEFRA basis ‘‘. . . to address
circumstances that arise that are beyond
a hospital’s control and render an
applicable TEFRA ceiling amount
inadequate.’’
Response: We have evaluated the
provisions specified by the commenters
and considered the fiscal circumstances
of the one subclause (II) LTCH that will
be affected by the payment system
revisions finalized in this final rule. In
response to the commenters’ concerns,
we believe that it would be reasonable
to consider circumstances that may arise
that are beyond a hospital’s control and
that may render an applicable LTCH
PPS ceiling amount inadequate.
Therefore, we are adding new paragraph
(c)(5)(i) under new § 412.526 entitled
‘‘Adjustments for Extraordinary
circumstances.’’ Paragraph (c)(5)(i)(A)
under new § 412.526 states that CMS
may adjust the ceiling determined under
paragraph (c)(1) of the section for one or
more cost reporting periods when
unusual inpatient operating costs have
resulted in the hospital exceeding its
ceiling imposed under this section due
to extraordinary circumstances beyond
the hospital’s control. These
circumstances include, but are not
limited to, strikes, fire, earthquakes,
floods, or similar unusual occurrences
with substantial cost effects.
The other suggestion recommended
by the commenters deal with the
LTCH’s ability to request an adjustment
to their allowed LTCH PPS rate-ofincrease ceiling, if their costs during a
specific period are no longer
comparable to the base year and the
authority to request a new base year for
its LTCH PPS target amount. Because
our data reveal that, on average, for the
past 6 years, this LTCH’s costs are
considerably below the amount that
OACT calculated as its FY 2015 target
amount, we believe that these additional
features are unnecessary at this time.
Moreover, if future data indicate that a
change is warranted, we will consider
proposing to add these features to our
policy in future rulemaking.
In summary, for cost reporting periods
beginning on or after October 1, 2014,
we are establishing that payment to a
‘‘subclause (II)’’ LTCH will be made
under the LTCH PPS, as adjusted. The
adjusted payment amount will be
comprised of an amount determined
under the reasonable cost-based
reimbursement rules for both operating
and capital-related costs in accordance
with the cited portions of Part 413.
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Under this payment adjustment,
Medicare inpatient operating costs will
be reimbursed on a reasonable cost
basis, subject to a ceiling; that is, subject
to an aggregate upper limit on the
amount of a hospital’s net Medicare
inpatient operating costs that will be
recognized for payment purposes. For
each cost reporting period, the ceiling
on payments for Medicare inpatient
operating costs will be determined by
multiplying the updated target amount
for that period by the number of LTCH
PPS discharges during that period. For
cost reporting periods beginning during
FY 2015, the target amount will be equal
to the hospital’s target amount
determined under § 413.40(c)(4) for its
cost reporting period beginning during
FY 2000, updated by the applicable
annual rate-of-increase percentages
specified in § 413.40(c)(3) to the subject
period (that is, for FYs 2001 through
2015). For subsequent cost reporting
periods, the target amount will equal the
hospital’s target amount for the previous
cost reporting period updated by the
applicable annual rate-of-increase
percentage specified in § 413.40(c)(3) for
the subject cost reporting period.
Payment for Medicare allowable
inpatient capital-related costs under this
payment adjustment will be made on a
reasonable cost basis, in accordance
with the cited portions of 42 CFR Part
413. In this final rule, we are codifying
the provisions of this payment
adjustment to subclause (II) LTCHs
under new § 412.526 of the regulations.
We are adding paragraph (c)(5), which
establishes the general rules for
requesting adjustments and also
includes a provision to provide
adjustments for unusual costs arising
from extraordinary circumstances. In
addition, we are making conforming
changes to § 412.521(a)(2) to cross
reference this payment adjustment
under new § 412.526.
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I. Description of Statutory Framework
for Patient-Level Criteria-Based Payment
Adjustment Under the LTCH PPS Under
Pub. L. 113–67
1. Overview
In the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27668 through
27676), we presented a description of
our research on the development of
patient-level and facility-level criteria
for LTCHs and a potential framework for
developing changes to the LTCH PPS.
The framework was based on the
preliminary findings of two projects
conducted by Kennell and Associates
(Kennell) and its subcontractor, RTI,
under the guidance of CMS’ Center for
Medicare and Medicaid Innovation (the
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Innovation Center). We stated that we
believed that the findings from these
projects, in large part, could be used to
identify the subpopulation of Medicare
beneficiaries that should form the core
group of patients under the LTCH PPS
(that is, a chronically critical ill/
medically complex (CCI/MC) framework
for the LTCH PPS). Although this
research was not completed at the time
of issuance of the FY 2014 IPPS/LTCH
PPS proposed rule, we solicited
feedback from LTCH stakeholders in the
FY 2014 IPPS/LTCH PPS proposed rule
on the description of the interim
framework, and indicated that any
public comments submitted would be
evaluated and considered by our
contractors with the expectation of
formulating a proposal for FY 2015
based on this research (78 FR 27668
through 27676).
Section 1206(a) of Public Law 113–67
amended section 1886(m) of the Act by
adding paragraph (6), which establishes
patient-level criteria for payments under
the LTCH PPS for implementation
beginning in FY 2016. Therefore, our
prior intention to present a proposal for
a CCI/MC framework for the LTCH PPS
(as discussed in the FY 2014 IPPS/LTCH
PPS proposed and final rules) in the FY
2015 IPPS/LTCH PPS proposed rule was
superseded. Accordingly, we did not
propose revisions to the LTCH PPS
based upon the Kennell/RTI framework
for FY 2015. Rather, we stated that we
intend to propose to implement the
requirements established by section
1206(a) of Public Law 113–67 in the FY
2016 LTCH PPS rulemaking cycle. (We
note that the final report on the CCI/MC
framework developed by Kennell/RTI
under our research contract is expected
to be available later this year and will
be made available to the public through
a Web site.)
We refer readers to section VII.I.2. of
the preamble of the proposed rule in
which we summarized the statutory
provisions of section 1206(a) of Public
Law 113–67 (78 FR 28204). In section
VII.I.2. of the preamble of this final rule,
we discuss several significant issues
arising from these statutory changes to
the LTCH PPS, on which we requested
stakeholder feedback prior to
developing our proposals for FY 2016
implementation. We intend to propose
the specific policy and payment changes
that will be necessary to implement the
provisions of Public Law 113–67 for
cost reporting periods beginning on or
after October 1, 2015, during the FY
2016 rulemaking cycle. Although we
did not propose to make any policy and
payment changes mandated by section
1206(a)(1) of Public Law 113–67 in the
FY 2015 IPPS/LTCH PPS proposed rule,
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50197
in light of the degree of the forthcoming
changes, in section VII.I.3. of the
preamble of the proposed rule, we
discussed some of the changes and
requested public feedback to inform our
proposals for FY 2016.
2. Additional LTCH PPS Issues
The LTCH PPS was originally
established for cost reporting periods
beginning on or after October 1, 2002,
by section 123(a) of the BBRA (Pub. L.
106–113) and section 307(b) of the BIPA
(Pub. L. 106–554). (We also refer readers
to section 1886(m) of the Act, as added
by section 114(e) of the MMSEA.)
Section 307(b) of the BIPA granted the
Secretary considerable authority in
developing the LTCH PPS, specifying
that the Secretary shall ‘‘. . . examine
and may provide for appropriate
adjustments to the long-term hospital
payment system, including adjustments
to DRG weights, area wage adjustments,
geographic reclassification, outliers,
updates, and a disproportionate share
adjustment. . . .’’
Accordingly, as we evaluate the
revisions to the LTCH PPS required by
section 1206(a)(1) of Public Law 113–67,
we believe that the broad authority
permitted by the original statutory
mandates continues to grant us the
authority to modify, if appropriate,
methodologies for our payment
determinations under the LTCH PPS.
(We refer readers to the RY 2003 LTCH
PPS final rule (67 FR 55954), which
describes the development and
implementation of the LTCH PPS for FY
2003.) Specifically, section 1206(a) of
Public Law 113–67 establishes two
distinct payment groups for LTCH
discharges under the revised system:
discharges meeting specified patientlevel criteria that will be paid under the
‘‘standard LTCH PPS payment amount’’
and all other patient discharges that will
be paid under the ‘‘site neutral’’
payment rate and methodology
(discussed above). In setting the
payment rates and factors under the
LTCH PPS as required by section
1206(a) of Public Law 113–67 for certain
LTCH PPS payment adjustments, such
as the MS–LTC–DRG relative weights
and high-cost outlier payments, we plan
to evaluate whether it would be
appropriate to modify our historical
methodology to account for the
establishment of the two distinct
payment methodologies for LTCHs. For
example, we intend to examine
whether, beginning in FY 2016, it is still
appropriate to include data for all LTCH
PPS cases, including ‘‘site neutral’’
payment cases, in our methodology for
setting relative payment weights for
MS–LTC–DRGs. We also intend to
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explore the need for changes to the
LTCH PPS high-cost outlier payment
policies. Given the fact that, for a
number of LTCH patients, payment will
be made based on the lower of the ‘‘IPPS
comparable’’ per diem payment and the
estimated cost of the case, we will need
to decide whether to maintain a single
high-cost outlier ‘‘target’’ for all LTCH
PPS cases (including ‘‘site neutral’’
payment cases) or whether it may be
more appropriate to establish separate
high-cost outlier ‘‘targets’’ for each of
the two payment groups under the
revised LTCH PPS. Our existing
methodology for calculating the MS–
LTC–DRG relative weights is discussed
during the annual rulemaking cycle and
was, most recently, included in the FY
2014 IPPS/LTCH final rule (78 FR 50753
through 50760). Our detailed
description of our existing high-cost
outlier payment policy, which has
remained the same since being
implemented, can be found in the RY
2003 LTCH PPS final rule (67 FR 56022
through 56027). (We note that our
methodology for calculating the MS–
LTC–DRG relative payment weights for
FY 2015 can be found in section VII.B.3.
of the preamble of this final rule, and
our policies under the high-cost outlier
payment policy for FY 2015 can be
found in section V.D. of the Addendum
to this final rule.)
In the FY 2015 IPPS/LTCH PPS
proposed rule, we stated that we were
interested in receiving feedback from
LTCH stakeholders on our plans to
evaluate whether it would be
appropriate to modify any of our
historical methodologies as we
implement the payment changes to the
LTCH PPS under section 1206(a) of
Public Law 113–67. In particular, we
were interested in public feedback on
the issues mentioned earlier (that is,
policies relating to establishing the
relative payment weights and high-cost
outliers) so that we may evaluate
various options in preparation for
developing proposals to implement the
statutory changes beginning in FY 2016.
Comment: In response to our request
for feedback from LTCH stakeholders,
numerous commenters addressed the
setting of relative payment weights for
MS–LTC–DRGs and establishing a highcost outlier policy under the new LTCH
PPS framework. MedPAC urged CMS to
establish ‘‘. . . new LTCH base payment
rates and new relative payment weights
for each MS–LTC–DRG based solely on
the most recent available standardized
data associated with discharges meeting
the specified patient-level criteria.’’
MedPAC stated that the change in
methodology required by the new LTCH
PPS framework should not result in
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increased aggregate payments for the
cases paid under the standard LTCH
PPS rate under the new LTCH PPS
framework. MedPAC also recommended
that both standard and site neutral
payments receive high-cost outliers, and
that total outlier payments under the
LTCH PPS continue to account for 8
percent of total LTCH payments for all
cases (both payment types combined)
with the ‘‘same uniform national fixedloss amount . . . applied to both cases
being paid the standard LTCH PPS
payment amount and to cases being
paid the site neutral amount.’’ Most of
the other commenters recommended
that the high-cost outlier threshold and
MS–LTC–DRG relative payment weights
be calculated only using data from cases
that meet the patient-level criteria
established by section 1206 of Public
Law 113–67; that is, cases for whom
Medicare will make standard payments
under the LTCH PPS, without including
data on ‘‘site neutral’’ payments. Some
of the commenters urged CMS to focus
on keeping payments for standard cases
at the same payment level as they have
recently been, and recommended
focusing only on standard cases for the
calculation of the high-cost outlier
threshold and for establishing MS–LTC–
DRG relative payment weights. Other
commenters recommended setting the
fixed-loss threshold for high-cost
outliers at 8 percent initially and then
readjusting the threshold as more data
become available. Several commenters
conducted individual analyses and
specifically recommended setting the
fixed-loss threshold at 8 percent for
each of the two payment types, standard
and site neutral. A number of
commenters made recommendations
regarding specific aspects of the law.
Other commenters opined that site
neutral payments should be based on a
full IPPS payment rather than the lesser
of an IPPS comparable payment and the
estimated costs of the case. Many
commenters expressed concern
regarding the severity of illness of many
LTCH patients for whom site neutral
payments would be made under the
new LTCH PPS framework, and noted
that the costs of treating such patients
would not be covered under the
statutory framework and could result in
patient access problems for LTCH care.
Other commenters suggested that the
patient-level criteria that would have to
be met in order for an LTCH to receive
the standard payment rate be expanded
to include severe wound care patients
and diabetes diagnoses with postsurgical complications. Several
commenters suggested that the statutory
language be clarified regarding the
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application of IPPS ICU and CCU codes
020X and 021X to determine
compliance with the 3-day criteria, and
urged CMS to consider all categories
within those codes. Several commenters
requested that CMS hold public
meetings for stakeholders to address the
issues presented by the implementation
of section 1206 of Public Law 113–67.
Response: We appreciate the
commenters’ thoughtful and detailed
feedback, particularly those comments
received regarding setting relative
payment weights for MS–LTC–DRGs
and establishing a high-cost outlier
policy under the new LTCH PPS
framework. In preparation for proposing
the new LTCH PPS framework in the FY
2016 IPPS/LTCH PPS proposed rule, we
will consider these suggestions and
respond to stakeholders’ concerns with
openness and transparency.
Comment: MedPAC included
additional comments on CMS’ SSO
policy in light of the new LTCH PPS
framework that it believed are
appropriate for inclusion in this final
rule. MedPAC believed that the existing
SSO policy, which pays an adjusted
amount for cases with lengths of stay
less than or equal to five-sixths of the
geometric average length of stay for the
MS–LTC–DRG, provides an incentive
for LTCHs to make discharge decisions
based on financial gain rather than
purely clinical reasons. MedPAC
analyses of LTCH discharge patterns
indicate that the frequency of discharges
rises sharply immediately after the SSO
threshold. Once the statutory changes to
the LTCH PPS are implemented,
MedPAC recommended limiting the
application of the existing SSO policy
solely to cases paid under the standard
LTCH PPS rate, and modifying the SSO
policy to reduce the existing financial
incentives by lowering the payment
penalty for discharging patients before
the SSO threshold. MedPAC
recommended adopting the
methodology used under the IPPS
transfer policy; that is, for the first day
of SSO cases payments would be twice
the per diem rate for the MS–LTC–DRG
with payment for each additional day
set at the per diem rate up to the
maximum of the full standard per
discharge payment, which would only
be reached 1 day before the average
length of stay for the MS–LTC–DRG. For
LTCH cases paid based on the site
neutral payment methodology under the
forthcoming statutory framework,
MedPAC suggested that CMS adopt the
short-stay policies that apply under the
IPPS. Another commenter urged CMS to
consider implementing a number of the
SSO suggestions made by MedPAC.
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Response: We appreciate MedPAC’s
detailed and thoughtful suggestions.
J. Technical Change
In this final rule, we are updating the
legislative authorities cited for the
regulations governing the LTCH PPS
under Subpart O of Part 412.
Specifically, we are adding references
under new paragraphs (a)(4), (a)(5), and
(a)(6) of § 412.500 of the regulations to
the revisions to the Act made by section
4302(a) of Public Law 111–5, sections
3106(a) and 10312(a) of Public Law
111–148, and section 1206 of Public
Law 113–67, respectively.
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VIII. Administrative Appeals by
Providers and Judicial Review
A. Proposed and Final Changes
Regarding the Claims Required in
Provider Cost Reports and for Provider
Administrative Appeals
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978), we
proposed to revise the cost reporting
regulations in 42 CFR Part 413, Subpart
B, by requiring a provider to include an
appropriate claim for a specific item in
its Medicare cost report in order to
receive or potentially qualify for
Medicare payment for the specific item.
If the provider’s cost report does not
include an appropriate claim for a
specific item, we proposed that payment
for the item will not be included in the
notice of program reimbursement (NPR)
issued by the Medicare administrative
contractor (MAC) (formerly known as
fiscal intermediary and herein referred
to as ‘‘contractor’’) or in any decision or
order issued by a reviewing entity (as
defined in 42 CFR 405.1801(a) of the
regulations) in an administrative appeal
filed by the provider. In addition, we
proposed to revise the appeals
regulations in 42 CFR Part 405, Subpart
R, by eliminating the requirement that a
provider must include an appropriate
claim for a specific item in its cost
report in order to meet the
dissatisfaction requirement for
jurisdiction before the Provider
Reimbursement Review Board (Board),
and by specifying the procedures for
Board review of whether the provider’s
cost report meets the proposed
substantive reimbursement requirement
of an appropriate cost report claim for
a specific item. We also proposed
technical revisions to other Board
appeal regulations to conform those
regulations to the main revisions
(described above) to the cost reporting
regulations and the provider appeal
regulations, and proposed similar
revisions to the Part 405, Subpart R
regulations for appeals before the
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contractor hearing officers. We proposed
that these revisions to the cost reporting
regulations and the provider appeals
regulations would apply to provider
cost reporting periods beginning on or
after the effective date of the final IPPS
annual update rule.
We received numerous public
comments of varied legal and
procedural opinions in response to our
proposals to revise the cost reporting
regulations and the provider appeals
regulations. The concerns raised by
commenters about the breadth of the
proposed provisions, and the questions
raised in public comments about the
interpretations we provided in the
preamble to the proposed rule, have
instead provided us with an opportunity
to further and more fully dissect and
digest the public comments. Therefore,
we are not finalizing our proposals to
revise the cost reporting regulations and
the provider appeals regulations as set
forth in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978). We note
that, in this final rule, we are not
addressing public comments received
with respect to the provisions of the
proposed rule that we are not finalizing
at this time. Rather, we will address
them at a later time, in a subsequent
rulemaking document, as appropriate.
B. Proposed and Final Changes To
Conform Terminology From
‘‘Intermediary’’ to ‘‘Contractor’’.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978), we
proposed to conform the terminology in
Part 405, Subpart R and all subparts of
Part 413 from ‘‘intermediary’’ or ‘‘fiscal
intermediary’’ to ‘‘contractor’’ pursuant
to sections 1816, 1874A and 1878 of the
Act.
We did not receive any public
comments on our proposal to conform
the terminology in Part 405, Subpart R
and all subparts of Part 413 from
‘‘intermediary’’ or ‘‘fiscal intermediary’’
to ‘‘contractor’’ pursuant to sections
1816, 1874A and 1878 of the Act.
Therefore, we are finalizing our
proposal to conform the terminology in
Part 405, Subpart R and all subparts of
Part 413 from ‘‘intermediary’’ or ‘‘fiscal
intermediary’’ to ‘‘contractor’’.
C. Technical Correction to § 405.1835 of
the Regulations and Corresponding
Amendment to § 405.1811 of the
Regulations
1. Background and Technical Correction
to §§ 405.1811 and 405.1835 of the
Regulations
Section 1878(a) of the Act allows
providers to appeal to the Provider
Reimbursement Review Board (the
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50199
Board) final determinations of program
reimbursement made by a contractor, as
well as certain final determinations by
the Secretary involving payment under
section 1886(d) (the inpatient hospital
prospective payment system) and
section 1886(b) (commonly known as
the Tax Equity and Fiscal Responsibility
Act of 1982 (TEFRA) payment system)
of the Act. In addition, by regulation,
providers are given the right to appeal
to the Board or to contractor hearing
officers certain other determinations.
Under section 1878(a)(1)(A), (2), and
(3) of the Act, and § 405.1835(a)(1), (2),
and (3)(i) of the regulations, a provider
may obtain a Board hearing if it meets
three jurisdictional requirements: (1) the
provider is dissatisfied with a final
determination of the contractor or the
Secretary; (2) the amount in controversy
is at least $10,000; and (3) the provider
files a request for a hearing to the Board
within 180 days of notice of the final
determination of the contractor or the
Secretary. The same jurisdictional
requirements govern provider appeals to
contractor hearing officers under
§ 405.1811(a)(1), (a)(2), and (a)(3)(i) of
the regulations, except that the amount
in controversy requirement is at least
$1,000 but less than $10,000.
However, the statutory requirements
for Board jurisdiction are somewhat
different if the provider does not receive
a final determination of the contractor
on a timely basis. Under section
1878(a)(1)(B), (a)(2), and (a)(3) of the
Act, a provider may obtain a Board
hearing if: (1) the provider does not
receive a final determination of the
contractor on a timely basis; (2) the
amount in controversy is at least
$10,000; and (3) the provider files a
request for a hearing to the Board within
180 days after notice of the contractor’s
final determination would have been
received if such contractor
determination had been issued on a
timely basis. Moreover,
§ 405.1835(a)(3)(ii) of the regulations
provides that a contractor determination
is not timely if it is not issued, through
no fault of the provider, within 12
months of the contractor’s receipt of the
provider’s perfected cost report or
amended cost report (as specified in
§ 413.24(f) of the regulations). The same
jurisdictional requirements govern
provider appeals to contractor hearing
officers, based on an untimely
contractor determination, under
§ 405.1811(a), except that the amount in
controversy requirement is at least
$1,000 but less than $10,000.
As noted, section 1878(a)(1)(A) of the
Act requires that the provider ‘‘is
dissatisfied with a final determination’’
of the contractor or the Secretary.
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However, section 1878(a)(1)(B) of the
Act does not require provider
dissatisfaction for Board appeals based
on an untimely final contractor
determination.
Before a 2008 final rule (73 FR 30190;
May 23, 2008) substantially amended
the appeals rules, the regulations
tracked fully the statute as to whether
provider dissatisfaction was a
prerequisite for Board jurisdiction. In
the 2007 edition of the appeals
regulations, § 405.1835(a) addressed the
requirements for Board appeals of final
contractor determinations, and referred
to § 405.1841(a), which required the
provider to set forth its dissatisfaction
with specific aspects of the contractor
determination. Thus, consistent with
section 1878(a)(1)(A) of the Act,
§ 405.1835(a) and § 405.1841(a) of the
2007 regulations required provider
dissatisfaction for Board appeals of final
contractor determinations.
By contrast, Board appeals based on
untimely contractor determinations
were addressed in § 405.1835(c), which
did not reference provider
dissatisfaction. Instead, § 405.1835(c)
simply provided that notwithstanding
the provisions of paragraph (a)(1) of the
section, the provider also has a right to
a hearing before the Board if an
intermediary’s determination is not
rendered within 12 months after receipt
of a provider’s perfected cost report or
amended cost report provided such
delay was not occasioned by the fault of
the provider. Thus, as with section
1878(a)(1)(B) of the Act, § 405.1835(c) of
the 2007 regulations did not require
provider dissatisfaction for Board
appeals based on untimely final
contractor determinations.
In the 2008 final rule (73 FR 30190),
§ 405.1835 was substantially revised,
§ 405.1841 was removed, and the prior
provisions in paragraph (c) of
§ 405.1835 for Board appeals based on
untimely contractor determinations
were also eliminated. As amended,
§ 405.1835(a) now states that a provider
has a right to a Board hearing ‘‘only if’’
three criteria are satisfied. First, the
provider must have ‘‘preserved its right
to claim dissatisfaction with the amount
of Medicare payment’’ by making a cost
report claim for the item in dispute, or
by ‘‘self-disallowing’’ the item by listing
it as a ‘‘protested amount’’ in the cost
report. Second, the amount in
controversy must be at least $10,000.
Third, the Board must receive the
provider’s hearing request within 180
days after the provider received the final
determination of the intermediary or the
Secretary. However, if a final contractor
determination is not issued (through no
fault of the provider) within 12 months
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of the contractor’s receipt of the
provider’s perfected cost report or
amended cost report, a Board hearing
must be requested within 180 days after
the expiration of that 12 month period.
Under the existing regulations, provider
dissatisfaction is a requirement for
Board jurisdiction over appeals based
on an untimely contractor
determination, as well as for appeals of
a final determination of the contractor
or the Secretary.
As amended by the 2008 final rule (73
FR 30190), § 405.1835(a)’s provisions for
Board appeals based on untimely
contractor determinations no longer
track fully the provisions for such
appeals in section 1878(a)(1)(B) of the
Act. Specifically, § 405.1835(a) of the
regulations now requires provider
dissatisfaction as a condition for Board
jurisdiction over appeals based on an
untimely contractor determination, but
section 1878(a)(1)(B) of the Act does not
impose a provider dissatisfaction
requirement for such appeals.
When this difference between
§ 405.1835(a) of the regulations and
section 1878(a)(1)(B) of the Act came to
our attention, we looked into this
matter. After reviewing the 2008 final
rule and the corresponding parts of the
2004 proposed rule (69 FR 35716; June
25, 2004), we determined that the
inclusion in § 405.1835(a) of a provider
dissatisfaction requirement for Board
appeals based on an untimely contractor
determination reflects an inadvertent
error in the drafting of the 2008 final
rule and the 2004 proposed rule.
In this final rule, we are revising
§ 405.1835 of the regulations to
eliminate provider dissatisfaction as a
requirement for Board jurisdiction over
appeals based on untimely contractor
determinations. This is simply a
technical correction inasmuch as this
amendment to § 405.1835 conforms the
regulations to the provisions in section
1878(a)(1)(B) of the Act for Board
appeals based on an untimely contractor
determination. In effect, this
amendment to § 405.1835 of the
regulations restores the full conformity
of the regulations with the statutory
requirements for Board jurisdiction over
appeals based on untimely contractor
determinations—a conformity that
obtained before the 2008 final rule (73
FR 30190) inadvertently imposed a
provider dissatisfaction requirement for
Board appeals based on untimely
contractor determinations. Moreover, in
order to maintain consistency between
the regulations for Board appeals and
the rules for contractor hearing officer
appeals, we also are revising § 405.1811
of the regulations to eliminate provider
dissatisfaction as a requirement for
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contractor hearing officer jurisdiction
over appeals based on untimely
contractor determinations.
2. Waiver of Notice of Proposed
Rulemaking
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register to provide a period for public
comment before the provisions of a rule
take effect in accordance with section
553(b) of the Administrative Procedure
Act (APA) (5 U.S.C. 553(b)). However,
we can waive this notice and comment
procedure if the Secretary finds, for
good cause, that the notice and
comment process is impracticable,
unnecessary, or contrary to the public
interest, and incorporates a statement of
the finding and the reasons therefore in
the notice.
We find it unnecessary to undertake
notice-and-comment rulemaking for the
above-described revisions because those
revisions are simply technical
corrections that bring § 405.1835 of the
Board appeals regulations into full
conformity with section 1878(a)(1)(B) of
the Act, and maintain consistency
between § 405.1811 of the intermediary
(contractor) hearing officer appeals
regulations and § 405.1835 of the Board
appeals regulations. The revisions do
not represent changes in policy, nor do
they have a substantive effect, and the
public interest would be best served by
timely correction of these technical
errors. Therefore, we find good cause to
waive notice and comment procedures.
3. Effective Date and Applicability Date;
Finality and Reopening
The technical correction to § 405.1835
of the Board appeals regulations and the
corresponding revision to § 405.1811 of
the intermediary (contractor) hearing
officer appeals regulations is effective
October 1, 2014. The revisions to
§ 405.1835 of the Board appeals
regulations and § 405.1811 of the
intermediary (contractor) hearing officer
appeals regulations are applicable,
subject to the rules of administrative
finality and reopening in § 405.1807 and
§ 405.1885 of the regulations, to appeals
pending or filed on or after the August
21, 2008 effective date of the 2008 final
rule (73 FR 30190).
The technical correction to § 405.1835
of the Board appeals regulations and the
corresponding revision to § 405.1811 of
the intermediary (contractor) hearing
officer appeals regulations apply
automatically to appeals, based on an
untimely contractor determination,
pending or filed on or after the October
1, 2014 effective date of this final rule.
If the Board or the Administrator of
CMS finally dismissed an appeal, based
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on an untimely contractor
determination, due to the provider’s
failure to make an appropriate cost
report claim for the matter at issue, the
provider may ask the Board or the
Administrator, as applicable, to reopen
such decision pursuant to § 405.1885 of
the regulations and apply this technical
correction to § 405.1835 of the Board
appeals regulations, provided that such
final jurisdictional dismissal decision
was issued no more than 3 years before
the October 1, 2014 effective date of this
final rule. Similarly, if the contractor
hearing officer or the CMS reviewing
official finally dismissed an appeal,
based on an untimely contractor
determination, due to the provider’s
failure to make an appropriate cost
report claim for the matter at issue, the
provider may ask the contractor hearing
officer or the CMS reviewing official, as
applicable, to reopen such decision
pursuant to § 405.1885 of the
regulations and apply this technical
correction to § 405.1811 of the
intermediary (contractor) hearing officer
appeals regulations, provided that such
final jurisdictional dismissal decision
was issued no more than 3 years before
the October 1, 2014 effective date of this
final rule.
We believe that, because the abovedescribed regulatory amendments are
simply technical corrections that do not
make substantive changes to the
regulations for appeals to the Board and
the contractor hearing officers, the
public interest is served by correcting
the inadvertent drafting errors in the
2008 final rule’s provisions for appeals
to the Board and the contractor hearing
officers based on untimely contractor
determinations. As technical corrections
to the 2008 final rule, we believe the
above-described amendments to
§ 405.1811 and § 405.1835 should apply
as of the August 21, 2008 effective date
of the 2008 final rule, subject to the
rules of administrative finality and
reopening in § 405.1807 and § 405.1885
of the regulations.
We believe that fixing the
applicability date, subject to the rules of
administrative finality and reopening in
§ 405.1807 and § 405.1885 of the
regulations, of these amendments by
reference to the August 21, 2008
effective date of the 2008 final rule is
not impermissibly retroactive in effect
because the amendments simply correct
and clarify longstanding agency policy
and practice, and are procedural in
nature. For example, we refer readers to
Heimmermann v. First Union Mortgage
Corp., 305 F.3d 1257, 1260–61 (11th Cir.
2002) (a rule clarifying the law,
especially in an unsettled or confusing
area of the law, is not a substantive
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change in the law, and thus the rule
may apply to matters that preceded
issuance of the rule.) However, if the
above-described amendments to
§ 405.1811 and § 405.1835 were deemed
a retroactive application of a substantive
change to a regulation, section
1871(e)(1)(A) of the Act permits
retroactive application of a substantive
change to a regulation if the Secretary
determines that such retroactive
application is necessary to comply with
statutory requirements or that failure to
apply the change retroactively would be
contrary to the public interest. We have
determined that any retroactive
application of these amendments to
§ 405.1811 and § 405.1835 is necessary
to ensure full compliance with the
statutory provisions for Board appeals
based on untimely contractor
determinations (under section
1878(a)(1)(B) of the Act). We have
further determined that it would be in
the public interest to apply these
amendments, subject to the rules of
administrative finality and reopening in
§ 405.1807 and § 405.1885 of the
regulations, to Board appeals and
contractor hearing officer appeals that
were initiated or pending on or after the
August 21, 2008 effective date of the
2008 final rule. The alternative, of not
applying these amendments to
§ 405.1811 and § 405.1835 to Board
appeals and contractor hearing officer
appeals that were initiated or pending
on or after the August 21, 2008 effective
date of the 2008 final rule, would be
inconsistent with the statutory
provisions for Board appeals based on
untimely contractor determinations
(under section 1878(a)(1)(B) of the Act)
and would undermine the public
interest in maintaining consistency
between the requirements for Board
appeals and contractor hearing officer
appeals.
IX. Quality Data Reporting
Requirements for Specific Providers
and Suppliers
We seek to promote higher quality
and more efficient health care for
Medicare beneficiaries. This effort is
supported by the adoption of widely
agreed-upon quality measures. We have
worked with relevant stakeholders to
define quality measures for most
settings and to measure various aspects
of care for most Medicare beneficiaries.
These measures assess structural aspects
of care, clinical processes, patient
experiences with care, care
coordination, and improving patient
outcomes.
We have implemented quality
reporting programs for multiple care
settings, including:
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• Hospital inpatient services under
the Hospital Inpatient Quality Reporting
(IQR) Program (formerly referred to as
the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU)
Program);
• Hospital outpatient services under
the Hospital Outpatient Quality
Reporting (OQR) Program (formerly
referred to as the Hospital Outpatient
Quality Data Reporting Program (HOP
QDRP));
• 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
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
Facilities Quality Reporting (IPFQR)
Program;
• Home health agencies under the
home health quality reporting program
(HH QRP); and,
• Hospice facilities under the Hospice
Quality Reporting Program.
We have also implemented the EndStage Renal Disease Quality Incentive
Program and Hospital Value-Based
Purchasing Program (described further
below) that link payment to
performance.
In implementing the Hospital IQR
Program and other quality reporting
programs, we have focused on measures
that have high impact and support CMS
and HHS priorities for improved quality
and efficiency of care for Medicare
beneficiaries. Our goal for the future is
to align the clinical quality measure
requirements of the Hospital IQR
Program with various other Medicare
and Medicaid programs, including those
authorized by the Health Information
Technology for Economic and Clinical
Health (HITECH) Act, so that the
reporting burden on providers will be
reduced. As appropriate, we will
consider the adoption of clinical quality
measures with electronic specifications
so that the electronic collection of
performance information is part of care
delivery. Establishing such a system
will require interoperability between
EHRs and CMS data collection systems,
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additional infrastructural development
on the part of hospitals and CMS, and
adoption of standards for capturing,
formatting, and transmitting the data
elements that make up the measures.
However, once these activities are
accomplished, adoption of measures
that rely on data obtained directly from
EHRs will enable us to expand the
Hospital IQR Program measure set with
less cost and reporting burden to
hospitals. We believe that in the near
future, collection and reporting of data
elements through EHRs will greatly
simplify and streamline reporting for
various CMS quality reporting
programs, and that hospitals will be able
to switch primarily to EHR-based data
reporting for many measures that are
currently manually chart-abstracted and
submitted to CMS for the Hospital IQR
Program.
We also have implemented a Hospital
Value-Based Purchasing (VBP) Program
under section 1886(o) of the Act. In
2011, we issued the Hospital Inpatient
VBP Program final rule (76 FR 26490
through 26547). We most recently
adopted additional policies for the
Hospital VBP Program in section XIV. of
the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75120 through
75121). We are finalizing additional
policies for this program in section IV.I.
of the preamble of this final rule. Under
the Hospital VBP Program, hospitals
will receive value-based incentive
payments based on their quality
performance with respect to
performance standards for a
performance period for the fiscal year
involved. The measures under the
Hospital VBP Program must be selected
from the measures (other than
readmission measures) specified under
the Hospital IQR Program as required by
section 1886(o)(2)(A) of the Act.
In selecting measures for the Hospital
IQR Program, we are mindful of the
conceptual framework we have
described for the Hospital VBP Program.
The Hospital IQR Program is linked
with the Hospital VBP Program because
many of the measures and the reporting
infrastructure for the programs overlap.
We view the Hospital VBP Program as
the next step in promoting higher
quality care for Medicare beneficiaries
by transforming Medicare from a
passive payer of claims into an active
purchaser of quality healthcare for its
beneficiaries. Value-based purchasing is
an important step to revamping how
care and services are paid for, moving
increasingly toward rewarding better
value, outcomes, and innovations
instead of merely volume.
We also view the Hospital-Acquired
Condition (HAC) payment adjustment
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program authorized by section 1886(p)
of the Act, as added by section 3008 of
the Affordable Care Act, and the
Hospital VBP Program, as related but
separate efforts to reduce HACs. The
Hospital VBP Program is an incentive
program that awards payments to
hospitals based on quality performance
on a wide variety of measures, while the
HAC Reduction Program creates a
payment adjustment resulting in
payment reductions for the lowest
performing hospitals based on their
rates of HACs. Newly finalized policies
for the Hospital VBP Program are
included in section IV.I. of the preamble
of this final rule. Newly finalized
policies for the HAC Reduction Program
are included in section IV.J. of the
preamble of this final rule.
Although we intend to monitor the
various interactions of programs
authorized by the Affordable Care Act
and their overall impact on providers
and suppliers, we also view programs
that could potentially affect a hospital’s
Medicaid payment as separate from
programs that could potentially affect a
hospital’s Medicare payment.
In the preamble of this final rule, we
are finalizing changes to the following
Medicare quality reporting systems:
• In section IX.A., the Hospital IQR
Program.
• In section IX.B., the PCHQR
Program.
• In section IX.C., the LTCHQR
Program.
In addition, in section IX.D. of the
preamble of this final rule, we are
finalizing changes to the Medicare EHR
Incentive Program.
A. Hospital Inpatient Quality Reporting
(IQR) Program
1. Background
a. History of the Hospital IQR Program
We refer readers to the FY 2010 IPPS/
RY 2010 LTCH PPS final rule (74 FR
43860 through 43861) and the FY 2011
IPPS/LTCH PPS final rule (75 FR 50180
through 50181) for detailed discussions
of the history of the Hospital IQR
Program, including the statutory history,
and to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50789 through 50807)
for the measures we have adopted for
the Hospital IQR measure set through
the FY 2016 payment determination and
subsequent years.
b. Maintenance of Technical
Specifications for Quality Measures
The technical specifications for the
Hospital IQR Program measures, or links
to Web sites hosting technical
specifications, are contained in the
CMS/The Joint Commission (TJC)
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Specifications Manual for National
Hospital Quality Measures
(Specifications Manual). This
Specifications Manual is posted on the
QualityNet Web site at http://
www.qualitynet.org/. We generally
update the Specifications Manual on a
semiannual basis and include in the
updates detailed instructions and
calculation algorithms for hospitals to
use when collecting and submitting data
on required measures. These
semiannual updates are accompanied by
notifications to users, providing
sufficient time between the change and
the effective date in order to allow users
to incorporate changes and updates to
the specifications into data collection
systems.
The technical specifications for the
HCAHPS patient experience of care
survey are contained in the current
HCAHPS Quality Assurance Guidelines
manual, which is available at the
HCAHPS On-Line Web site, http://
www.hcahpsonline.org. We maintain the
HCAHPS technical specifications by
updating the HCAHPS Quality
Assurance Guidelines manual annually,
and include detailed instructions on
survey implementation, data collection,
data submission and other relevant
topics. As necessary, HCAHPS Bulletins
are issued to provide notice of changes
and updates to technical specifications
in HCAHPS data collection systems.
Many of the quality measures used in
different Medicare and Medicaid
reporting programs are endorsed by the
National Quality Forum (NQF). As part
of its regular maintenance process for
endorsed performance measures, the
NQF requires measure stewards to
submit annual measure maintenance
updates and undergo maintenance of
endorsement review every 3 years. 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
NQF on an annual basis. NQF solicits
information from measure stewards for
annual reviews, and it reviews measures
for continued endorsement in a specific
3-year cycle.
The NQF regularly maintains its
endorsed measures through annual and
triennial reviews, which may result in
the NQF making updates to the
measures. We believe that it is
important to have in place a
subregulatory process to incorporate
nonsubstantive updates made by the
NQF into the measure specifications we
have adopted for the Hospital IQR
Program so that these measures remain
up-to-date. We also recognize that some
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changes the NQF might make to its
endorsed measures are substantive in
nature and might not be appropriate for
adoption using a subregulatory process.
Therefore, In the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53504 through
53505), we finalized a policy under
which we use a subregulatory process to
make nonsubstantive updates to
measures used for the Hospital IQR
Program. With respect to what
constitutes substantive versus
nonsubstantive changes, we expect to
make this determination on a case-bycase basis. Examples of nonsubstantive
changes to measures might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,
and exclusions for a measure (such as
the addition of a hospice exclusion to
the 30-day mortality measures). We
believe that nonsubstantive changes
may include updates to NQF-endorsed
measures based upon changes to
guidelines upon which the measures are
based.
We will continue to use rulemaking to
adopt substantive updates made to
measures we have adopted for the
Hospital IQR Program. Examples of
changes that we might consider to be
substantive would be those in which the
changes are so significant that the
measure is no longer the same measure,
or when a standard of performance
assessed by a measure becomes more
stringent (for example, changes in
acceptable timing of medication,
procedure/process, or test
administration). Another example of a
substantive change would be where the
NQF has extended its endorsement of a
previously endorsed measure to a new
setting, such as extending a measure
from the inpatient setting to hospice.
These policies regarding what is
considered substantive versus
nonsubstantive would apply to all
measures in the Hospital IQR Program.
We also note that the NQF process
incorporates an opportunity for public
comment and engagement in the
measure maintenance process.
We believe this policy adequately
balances our need to incorporate
updates to Hospital IQR Program
measures in the most expeditious
manner possible while preserving the
public’s ability to comment on updates
that so fundamentally change an
endorsed measure that it is no longer
the same measure that we originally
adopted.
c. Public Display of Quality Measures
Section 1886(b)(3)(B)(viii)(VII) of the
Act, as amended by section 3001(a)(2) of
the Affordable Care Act, requires that
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the Secretary establish procedures for
making information regarding measures
submitted available to the public after
ensuring that a hospital has the
opportunity to review its data before
they are made public. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28218 through 28219), we did not
propose to change our current policy of
reporting data from the Hospital IQR
Program as soon as it is feasible on CMS
Web sites such as the Hospital Compare
Web site (http://www.medicare.gov/
hospitalcompare) and/or the interactive
https://data.medicare.gov Web site, after
a preview period.
The Hospital Compare Web site is an
interactive Web tool that assists
beneficiaries by providing information
on hospital quality of care to those who
need to select a hospital. For more
information on measures reported to
Hospital Compare, please see http://
www.medicare.gov/hospitalcompare.
Other information not reported to
Hospital Compare may be made
available on other CMS Web sites such
as http://www.cms.hhs.gov/
HospitalQualityInits/
data.medicare.gov.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50777 through 50778) we
responded to public comments on what
additional quality measures and
information featured on Hospital
Compare may be highly relevant to
patients and other consumers of health
care, and how we may better display
this information on the Hospital
Compare Web site.
2. Removal and Suspension of Hospital
IQR Program Measures
a. Considerations in Removing Quality
Measures From the Hospital IQR
Program
As discussed further below, we
generally retain measures from the
previous year’s Hospital IQR Program
measure set for subsequent years’
measure sets except when we
specifically propose to remove or
replace them. As we stated in the FY
2011 IPPS/LTCH PPS final rule (75 FR
50185), the criteria that we consider
when determining whether to remove
Hospital IQR Program measures are the
following: (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
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(across settings, populations, or the
availability of a measure that is more
proximal in time to desired patient
outcomes for the particular topic; (5)
performance or improvement on a
measure does not result in better patient
outcomes; (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. We also take
into account the views of the Measure
Applications Partnership (MAP) when
determining when a measure should be
removed, and we strive to eliminate
redundancy of similar measures (77 FR
53505 through 53506).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28219), we
proposed to change the criteria for
determining when a measure is
‘‘topped-out.’’ A measure is ‘‘toppedout’’ 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 53505 through 53506). 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 IQR 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 in the Hospital Inpatient
VBP Program final rule (76 FR 26496
through 26497), to Hospital IQR
Program measures. The second criterion
is a modified version of what was
previously adopted by the Hospital VBP
Program in the above mentioned final
rule, with the change from the ‘‘less
than’’ operator (<) to the ‘‘less than or
equal to’’ operator (≥):
• Statistically indistinguishable
performance at the 75th and 90th
percentiles; and
• Truncated coefficient of variation ≤
0.10.
The coefficient of variation (CV) is a
common statistic that expresses the
standard deviation as a percentage of
the sample mean in a way that is
independent of the units of observation.
Applied to this analysis, a large CV
would indicate a broad distribution of
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individual hospital scores, with large
and presumably meaningful differences
between hospitals in relative
performance. A small CV would
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. By adopting ‘‘less
than or equal to’’ in our ‘‘topped-out’’
test, we are clarifying the interpretation
of the CV when a tie at 0.1 occurs due
to rounding. We believe that the
proposed criteria distinguish measures
with significant variation in
performance among hospitals.
In the Hospital VBP Program context,
we used a modified version of the CV,
namely a truncated CV, for each
measure, in which the 5 percent of
hospitals with the lowest scores, and the
5 percent of hospitals with highest
scores were first truncated (set aside)
before calculating the CV. This was
done to avoid undue effects of the
highest and lowest outlier hospitals,
which if included, would tend to greatly
widen the dispersion of the distribution
and make the measure appear to be
more reliable or discerning.
Comment: A number of commenters
supported the criteria for determining
when a measure is ‘‘topped-out.’’ Some
commenters specifically noted that
removing ‘‘topped-out’’ measures will
reduce hospital reporting burden.
Several commenters supported
removing ‘‘topped-out’’ chart-abstracted
measures. Some commenters
specifically supported the removal of
structural measures.
Response: We appreciate the
commenters’ support for removing
‘‘topped-out’’ measures. We will
consider removal of topped-out
structural measures in future years
consistent with our measure removal
and topped-out status policies.
Comment: A commenter stated that
the process of care measures that are
‘‘topped-out’’ should be removed both
in their chart-abstracted and electronic
clinical quality measure versions. The
commenter believed that interpreting
disparate and incorrect performance
rates for the measures as reported in
their electronic versions is burdensome
to stakeholders, and that the
specifications for the chart-abstracted
and electronic versions of measures
would be misaligned which may lead to
issues in capturing the full range of
patient care. The commenter also
expressed concern about which
electronic versions of these measures
will be submitted to CMS. Finally, the
commenter stated that process of care
measures, whether submitted as chart-
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abstracted or electronic versions,
distract from measures of outcomes and
hospital-acquired conditions.
Response: We would like to clarify
that we consider both the chartabstracted and the electronically
specified versions to be ‘‘topped-out.’’
However, we would like to retain the
electronically specified versions of these
‘‘topped-out’’ measures for the following
reasons: (1) To align the Hospital IQR
Program and the Medicare EHR
Incentive Program, (2) to allow us to
monitor the effectiveness of measure
reporting by EHRs, and (3) to familiarize
hospitals with reporting electronically
specified measures to us.
As we continue aligning the Hospital
IQR Program and the Medicare EHR
Incentive Program, and we believe
collecting this measure on a voluntary
basis enables us to continue collecting
quality data on this topic while working
to minimize reporting burden on
participating hospitals. We believe that
the benefits outweigh the possible
disadvantages to reporting the electronic
clinical quality measure versions of
these measures. Collecting the
electronic version of these measures
would prepare hospitals for data
submission using our electronic
measure specifications prior to
electronic clinical quality measures
becoming a requirement in the Hospital
IQR Program. Retaining of the electronic
versions of these topped-out measures
creates alignment with the Medicare
EHR Incentive Program.
We remind commenters that hospitals
could choose whether to submit the
voluntary electronic clinical quality
measures. We also would allow the
voluntary submission of the chartabstracted version of the ‘‘topped-out’’
measures for those hospitals that prefer
to submit measure data in that format.
In this way, we believe that we are
representing the full range of care
provided to patients and responding to
commenters’ concerns.
We acknowledge the commenter’s
concerns that with multiple versions of
a particular electronic clinical quality
measure creates confusion for hospitals
to determine which one to use. To
address this concern, we are modifying
our proposal to finalize a policy that
hospitals must submit the April 2014
version of the electronic clinical quality
measures as discussed in section
IX.A.2.h.(1) of the preamble of this final
rule.
Comment: Several commenters urged
CMS to consider the broader context
and uses of measures before removing
them based on quantitative data only,
noting that some measures meeting the
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‘‘topped-out’’ criteria may still provide
value to patients and hospitals.
Response: We agree that both
quantitative criteria and clinically-based
qualitative criteria should be used in
assessing ‘‘topped-out’’ measures. These
criteria are part of the existing criteria
available to us to determine whether to
remove a measure from the Hospital IQR
Program. As we stated in the FY 2011
IPPS/LTCH PPS final rule (75 FR
50185), the criteria that we consider
when determining whether to remove
Hospital IQR Program measures are the
following: (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 the
availability of a measure that is more
proximal in time to desired patient
outcomes for the particular topic; (5)
performance or improvement on a
measure does not result in better patient
outcomes; (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.
We also take into account the views
of the Measure Applications Partnership
(MAP) when determining when a
measure should be removed, and we
strive to eliminate redundancy of
similar measures (77 FR 53505 through
53506).
Comment: A few commenters wanted
CMS to continue publicly reporting
topped-out measures used in pay-forperformance or payment penalty
programs or to maintain focus on issues
hospitals achieved high performance.
Response: We will allow those
hospitals that would like to submit the
voluntary measures in chart-abstracted
format or as electronic clinical quality
measures.
After consideration of the public
comments we received, we are
finalizing our proposal to update the
criteria to determine ‘‘topped-out’’
measure status as proposed.
b. Removal of Hospital IQR Program
Measures for the FY 2017 Payment
Determination and Subsequent Years
As we continue moving towards
including more clinical outcomes
measures as opposed to process-of-care
measures in the Hospital IQR Program
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measure set, we have considered
removing additional measures using our
previously-adopted removal criteria. In
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28219 through 28220), we
proposed to remove five measures from
the Hospital IQR Program for the FY
2017 payment determination and
subsequent years, which begins in the
CY 2015 reporting period: (1) AMI–1
Aspirin at arrival (NQF #0132); (2)
AMI–3 ACEI/ARB for left ventricular
systolic dysfunction (NQF #0137); (3)
AMI–5 Beta-blocker prescribed at
discharge (NQF #0160); (4) SCIP Inf-6
Appropriate Hair Removal; and (5)
Participation in a systematic database
for cardiac surgery (NQF #0113).
We proposed to remove the first four
measures because they were previously
determined to be ‘‘topped-out’’ and
suspended (77 FR 53509). We proposed
to remove the fifth measure because the
MAP recommended the measure’s
removal in its MAP Pre-Rulemaking
Report: 2014 Recommendations on
Measures for More than 20 Federal
Programs, which is available at: http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_Report_
2014_Recommendations_on_Measures_
for_More_than_20_Federal_
Programs.aspx. The MAP report states
that the measure’s NQF endorsement
has been placed on reserve status
because the measure is ‘‘topped-out.’’
The purpose of reserve status is to retain
endorsement of reliable and valid
quality performance measures that have
overall high levels of performance with
little variability so that performance
could be monitored in the future if
necessary to ensure that performance
does not decline. This status would
apply only to highly credible, reliable,
and valid measures that have high levels
of performance due to quality
improvement actions (often facilitated
or motivated through public reporting
and other accountability programs).
More information about NQF reserve
status is available at: https://
www.qualityforum.org/docs/Reserve_
Endorsement_Status.aspx.
By removing these measures, we
would 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 would propose to resume
data collection in future rulemaking. In
addition, we would comply with any
requirements imposed by the Paperwork
Reduction Act before re-proposing these
measures.
We also analyzed the remainder of the
Hospital IQR Program measure set for
other potential ‘‘topped-out’’ measures
using the previously adopted criteria.
The analysis was based on the most
recent two quarters of clinical process of
care data available in the CMS Clinical
Data Warehouse for IPPS eligible
hospitals, which covers a measurement
period from 01/01/2013 to 06/30/2013
(Q1 2013–Q2 2013). Based on this
analysis and using the previously
50205
adopted criteria, we noted that an
additional 15 chart-abstracted measures
were ‘‘topped-out,’’ and we proposed to
remove them from the measure set for
the FY 2017 payment determination and
subsequent years.
However, we proposed to retain the
electronic clinical quality measure
version of 10 of these chart-abstracted
measures for Hospital IQR Program
reporting as discussed further in section
IX.A.7.f. of the preamble of this final
rule. As we continue aligning the
Hospital IQR Program and Medicare
EHR Incentive Program, and we believe
collecting this measure on a voluntary
basis enables us to continue collecting
quality data on this topic while working
to minimize reporting burden on
participating hospitals.
Further, allowing hospitals the option
to electronically report topped-out
measures will provide hospitals with an
opportunity to test the accuracy of their
electronic health record reporting
systems. We believe that retaining
‘‘topped-out’’ measures under certain
circumstances enables us to continue
monitoring the clinical topic covered by
the measure to ensure that hospitals
continue to maintain high levels of
performance. Further, we believe the
additional reporting burden associated
with retaining these measures is
mitigated by retaining electronic
versions of those measures, which are
more easily reported by hospitals. These
10 measures are denoted in the chart
below by an asterisk.
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‘‘TOPPED-OUT’’ CHART-ABSTRACTED MEASURES PROPOSED FOR REMOVAL FOR THE FY 2017 PAYMENT DETERMINATION
AMI–1: Aspirin at Arrival (previously suspended)
AMI–3: ACEI or ARB for left ventricular systolic dysfunction—Acute Myocardial Infarction (AMI) Patients (previously suspended) (NQF #0137)
AMI–5: Beta-Blocker Prescribed at Discharge for AMI (previously suspended) (NQF #0160)
AMI–8a: Primary PCI received within 90 minutes of hospital arrival * (NQF #0163)
HF–2: Evaluation of left ventricular systolic function (NQF #0135)
PN–6: Initial antibiotic selection for community-acquired pneumonia (CAP) in immunocompetent patients* (NQF #0147)
SCIP–Card–2: Surgery patients on beta blocker therapy prior to arrival who received a beta blocker during the perioperative period (NQF
#0284)
SCIP–Inf–1: Prophylactic antibiotic received within one hour prior to surgical incision* (NQF #0527)
SCIP–Inf–2: Prophylactic antibiotic selection for surgical patients* (NQF #0528)
SCIP–Inf–3: Prophylactic antibiotics discontinued within 24 hours after surgery end time (48 hours for cardiac surgery) (NQF #0529)
SCIP–Inf–4: Cardiac surgery patients with controlled postoperative blood glucose (NQF #0300)
SCIP–Inf–6: Surgery patients with appropriate hair removal (previously suspended) (NQF #0301)
SCIP–Inf–9: Urinary catheter removed on Postoperative Day 1 (POD1) or Postoperative Day 2 (POD2) with day of surgery being day zero*
(NQF #0453)
SCIP–VTE–2: Surgery Patients Who Received Appropriate Venous Thromboembolism (VTE) Prophylaxis Within 24 Hours Prior to Surgery to
24 Hours After Surgery (NQF #0218)
STK–10: Assessed for rehabilitation* (NQF #0441)
STK–2: Discharged on antithrombotic therapy * (NQF #0435)
STK–3: Anticoagulation therapy for atrial fibrillation/flutter* (NQF #0436)
STK–5: Antithrombotic therapy by the end of hospital day two* (NQF #0438)
VTE–4: Patients receiving un-fractionated Heparin with doses/labs monitored by protocol*
Participation in a systematic database for cardiac surgery (NQF #0113)
* To be retained as an electronic clinical quality measure.
We welcomed public comments on
our proposal to remove these measures.
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Comment: Many commenters
supported the removal of ‘‘topped-out’’
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measures, some saying that by doing so
CMS is reducing hospital burden.
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Response: We thank the commenters
for their support.
Comment: A commenter opposed the
removal of the AMI–1 measure. The
commenter noted that aspirin after a
myocardial infarction is a potentially
life-saving measure and should continue
to be tracked.
Response: We thank the commenter
for their recommendation. We are
removing AMI–1 because the measure is
‘‘topped-out’’ and was previously
suspended in FY 2012 IPPS/LTCH PPS
final rule. We believe that the practice
of providing aspirin to patients on
arrival to the hospital addressed by this
measure continues to be routinely
practiced. As the practice measured by
the AMI–1 measure is standard
procedure among most hospitals, we do
not believe that retaining it as a chartabstracted measure would be a value to
hospitals or for monitoring quality
performance.
Comment: A commenter opposed the
removal of AMI–8a: Primary PCI
Received within 90 Minutes of Hospital
Arrival because it is ‘‘topped-out.’’ The
commenter did not believe that it is
appropriate to retire a measure without
first finding a replacement measure. The
commenter was concerned that the
retirement of numerous AMI and heart
failure measures may unintentionally
shift hospital resources to other
measures and adversely affect the
quality of care received by these
patients.
Response: We respectfully disagree
with the commenter that we should not
remove a measure until a replacement is
found. We believe that we should retire
measures once we determine that there
is no further value to hospitals or
patients because the process of care the
measure is monitoring has become
standard practice. We believe that
removing ‘‘topped-out’’ measures are
appropriate and necessary to improve
patient care. As we stated in the
proposed rule, we believe that quality
measures, once ‘‘topped-out,’’ represent
care standards that have been widely
adopted by hospitals (79 FR 28219).
Therefore, it makes sense to remove the
‘‘topped-out’’ measures and adopt other
measures which may represent care
standards that are not widely adopted
by hospitals, but which we believe
should be widely adopted.
We invite the commenter to
recommend measures for the Hospital
IQR Program through the Measures
Under Consideration process for our
consideration. Information on how to
recommend measures for the Hospital
IQR Program is available at http://
www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-
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Instruments/MMS/
CallForMeasures.html.
Comment: One commenter opposed
the removal of HF–2: Evaluation of Left
Ventricular Systolic Function because it
is ‘‘topped-out.’’ With the removal of
this measure, the commenter noted that
the only heart failure measures left in
the program will be the 30-day
readmission and 30-day mortality
measures. The commenter is concerned
that removing this measure will signal
to hospitals that heart failure is not a
CMS priority.
Response: We respectfully disagree
with the commenter that the removal of
‘‘topped-out’’ measures will result in
hospitals no longer focusing on the
practice the measure is monitoring.
Hospitals are committed to providing
good quality care to patients and we do
not have any indication that they will
stop doing so in these areas for which
the quality of care measured has become
standard practice.
Comment: A commenter suggested
that CMS continue to collect chartabstracted data on SCIP–Inf–3 for
another year because is inappropriate to
assume that the measure will be
‘‘topped-out’’ given that the measure
had significant data definition changes
effective January 1, 2014. SCIP–Inf–3 no
longer excludes for patients on home
antibiotics or that do not receive general
anesthesia.
Response: We acknowledge that
SCIP–Inf–3 no longer excludes for
patients on home antibiotics, however
our analysis showed that these patients
were being excluded by documentation
of infection. For this reason, this change
was not considered to be substantive
enough to withhold removal of the
measure. With regard to the concern
about the exclusion for patients that do
not receive general anesthesia, SCIP–Inf
3 measure has never had an exclusion
for anesthesia type so this would have
no impact on the measure results, and
would not change our topped-out status
analysis. We continue to believe SCIP–
Inf–3 is ‘‘topped-out’’ and should be
removed from the Hospital IQR
Program.
Comment: Several commenters
questioned the removal of SCIP–Inf–4,
stating that CMS cannot assess whether
the measure is topped-out. These
commenters stated that CMS revised the
specifications for the SCIP–Inf–4:
Cardiac Surgery Patients with
Controlled Postoperative Blood Glucose
measure to incorporate the recent NQF
endorsement maintenance decisions,
beginning with January 1, 2014,
discharges. These commenters stated
that the NQF changed the measure from
controlled glucose at 6AM to a more
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comprehensive measure of controlled
glucose 18–24 hours post-cardiac
surgery, and required that corrective
action be documented if post-operative
glucose is over 180mg/dl. These
commenters expressed concern that
these substantial changes would change
the performance scores.
Response: We acknowledge that there
were refinements made to SCIP–Inf–4
that were finalized in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50787
through 50788). The ‘‘topped-out’’
analysis cited in the proposed rule (79
FR 28220) was completed using SCIP–
Inf–4 data before these refinements were
implemented. Because we do not yet
have sufficient data to accurately assess
whether this refined measure meets
‘‘topped-out’’ criteria, we are modifying
our proposal and will not remove this
measure. Instead, we will continue to
require reporting on SCIP–Inf–4 in the
Hospital IQR Program as previously
finalized.
Comment: Several commenters
supported the removal of STK–2, STK–
3, STK–5, and STK–10.
Response: We thank the commenters
for their support. We believe that these
four measures are ‘‘topped-out’’ and will
be removed from the Hospital IQR
Program in their chart-abstracted
measure version. Please note, however,
that we will continue to accept STK–2,
STK–3, STK–5, and STK–10 data as
electronic clinical quality measures.
Comment: A commenter opposed the
removal of STK–2, STK–3, STK–5, and
STK–10 measures because they are
‘‘topped-out.’’ The commenter believed
that CMS should allow hospitals to
choose whether they wish to report
these measures via EHR or via claims
registry. The commenter stated that
providing hospitals with alternate
mechanisms for reporting is important
at this juncture, and can allow for the
measure developer to identify any
issues with the electronic specifications
of the measures.
Response: We note that the
commenter seeks alternative reporting
mechanisms for measures. However,
submission via a claims registry, which
would be such an alternative reporting
mechanism, is not a feasible option at
this time as these measures do not have
claims-based specifications nor do we
have a claims registry for the Hospital
IQR Program. Hospitals may report on
these measures using the electronic
clinical quality measure specifications
and submit using QRDA Category I. We
believe that these four measures are
‘‘topped-out’’ and should be removed as
a requirement from the Hospital IQR
Program in their chart-abstracted
measure versions.
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Comment: A commenter supported
the proposal to remove the six ‘‘toppedout’’ measures noted for permanent
removal and the 4 ‘‘topped-out,’’
previously suspended measures
proposed for permanent removal. This
same commenter did not support the
retention of the electronic version of 10
measures to support the voluntary
electronic reporting option due to the
cost of implementing electronic tools,
and having the loss or convenience of
chart abstracted measures that help the
commenter keep track of their
performance of these medical
conditions. The commenter was also
concerned that without clearly
established goals and expectations for
core measures by CMS and TJC that
there will be discrepancies in
performance.
Response: We thank the commenter
for this feedback. We appreciate how
the commenter is making full use of the
‘‘topped-out’’ measures and applaud
their striving towards constant quality
improvement. We note, however that we
are encouraging, through alignment
with Medicare EHR Incentive Program,
to have all facilities move to electronic
measures. We also believe that aligning
electronic measures across facilities will
minimize confusion between quality
reporting programs. Regarding the
concern that without clearly established
goals and expectations for core
measures by CMS and TJC there will be
discrepancies in performance, we
appreciate this concern and will take
this into consideration during our daily
operations.
Comment: A commenter asked CMS
to clarify how the SCIP measures can be
topped-out for the Hospital IQR Program
but required for PPS-exempt Cancer
Hospitals (PCHs). The commenter asked
whether the measures specifications
will be provided in a manual other than
the Inpatient Specifications Manual if
they are removed from the Hospital IQR
Program. The commenter also asked
whether the measures will still be
programmed into the CMS Abstraction
and Reporting Tool (CART).
Response: Although the SCIP
measures are ‘‘topped-out’’ under the
Hospital IQR Program, for the reasons
discussed in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50840 through
50841), we believe that the SCIP
measures are appropriate for the PCH
setting. At this time, we do not have
sufficient data to determine whether
these SCIP measures are ‘‘topped-out’’
in the PCH setting, given that hospital
inpatient facilities and PCHs treat
different patient populations and the
lack of evidence that the SCIP measures
are ‘‘topped-out’’ in the PCH setting.
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We will assess ‘‘topped-out’’ status of
the SCIP measures as part of our PCHQR
measure analysis in our annual
measures consideration. We believe that
this analysis must focus on evidence
specific to the PCH setting. We
recognize that the PCHQR patient
population is exclusively comprised of
cancer patients, unlike ‘‘subsection (d)’’
hospitals included in the Hospital IQR
Program. We will, however, continue to
monitor and evaluate the PCHQR SCIP
measures. In addition, we will consider
adopting the ‘‘topped-out’’ criteria and
measure removal policies for the
PCHQR Program similar to those
adopted by other quality reporting
programs, including the Hospital IQR
Program, in future years. We will also
support PCHQR program reporting of
patient level data to QualityNet by
updating the CART tool to reflect the
current SCIP measure specifications.
We intend to post SCIP and other
PCHQR measures in the PCHQR
Specifications Manual. As a result, the
existing information technology
infrastructure will be available for the
PCHQR Program.
Comment: A commenter supported
the transition of SCIP–Inf–1, SCIP–Inf–
2, and SCIP–Inf–9 to voluntary
electronic clinical quality measures.
Response: We thank the commenter
for their support.
Comment: Some commenters opposed
the proposal to retain the electronic
versions of 10 of the ‘‘topped-out’’ chartabstracted measures to support the
voluntary electronic measure reporting
option. A commenter stated that the
proposed modification in the voluntary
electronic reporting program holds the
form of the data collected for quality
measurement to a higher scientific
significance than the data collected as a
metric to assess the delivery of care. The
commenter stated that this proposal
would neither lead to improved hospital
quality nor offer us insight on how to
improve electronic clinical quality
measures. The commenter
recommended that CMS work with the
Office of the National Coordinator
(ONC) and the Agency for Healthcare
Research and Quality (AHRQ) to study
the feasibility, reliability and validity of
electronic clinical quality measures to
effectively calculate and report clinical
quality measures that are at least as
accurate as chart-abstracted measures.
Response: As discussed above, we
believe that retaining electronic versions
of chart-abstracted measures in certain
circumstances enables us to continue
monitoring the covered clinical topic
while reducing hospitals’ reporting
burden, and we view both of those
actions as desirable. We note further
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50207
that we are encouraging hospitals to
familiarize themselves with the
electronic measure submission process
by retaining electronic versions of
certain measures, and we will also be
able to assess differences in clinical
quality measure data between the two
data capture methods. We believe that
understanding any discrepancies
between the two data capture methods
will help us as we transition to
electronic reporting of clinical quality
measures. This also will lead to
hospitals improving how they report
clinical quality data electronically,
which can be used to improve patient
care.
We respectfully disagree that the
proposed measures lack scientific
significance. Each measure, as it is fully
described, provides evidence of its
significance.
We thank the commenter for their
suggestion to work with the ONC and
AHRQ to study the feasibility, reliability
and validity of electronic clinical
quality measures to effectively calculate
and report clinical quality measures that
are at least as accurate as chartabstracted measures. We will take this
suggestion under consideration.
Comment: Some commenters asked
CMS to delay adopting ‘‘topped-out’’
measures as voluntary electronic
clinical quality measures for one year to
allow hospitals time to prepare to
collect the measure electronically.
Another commenter suggested that
including these measures sends the
wrong message about the goals of the
Hospital IQR Program and the Stage 3
Meaningful Use Program and
inappropriately distracts resources from
areas that would more readily benefit
from targeted attention. Instead, the
commenter recommended that we
address further alignment through the
advancement of electronic quality
measures required for the Medicare EHR
Incentive Program. If CMS decide to
move forward with this policy, the
commenter urged CMS to publicly
report the measures somewhere other
than Hospital Compare to leave the
space for measures that are more
meaningful to consumers and
purchasers.
Response: We respectfully disagree
with the commenters. We do not agree
that delaying by one year the adoption
of ‘‘topped-out’’ measures as voluntary
electronic clinical quality measures
would be useful because reporting is
voluntary. Any hospital can choose not
to report these ‘‘topped-out’’ measures
as electronic clinical quality measures.
By retaining ‘‘topped-out’’ chartabstracted measures as voluntary
electronic clinical quality measures, we
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are encouraging hospital to familiarize
themselves with the electronic measure
submission process and we can assess
differences in clinical quality measure
data between the two data capture
methods. Allowing voluntary
submission of the ‘‘topped-out’’
measures will help us monitor for
declines in performance.
We also disagree with the commenter
that the removal of ‘‘topped-out’’
measures will result in hospitals no
longer focusing on the practice the
measure is monitoring. We believe that
hospitals are committed to providing
good quality care to patients and we do
not have any indication that they will
stop doing so in these areas for which
the quality of care measured has become
standard practice.
We thank the commenter for their
suggestion to publicly report the
measures somewhere other than
Hospital Compare. We will take this
suggestion under consideration. We
welcome any suggestions commenters
have on further aligning the Hospital
IQR Program with the EHR Incentive
Program.
Comment: A few commenters advised
that although CMS may no longer
require hospitals to submit data on
topped-out measures, hospitals will be
required to submit data on measures
required by TJC for accreditation. The
commenters stated that this lack of
alignment creates a burden for hospitals
and does not allow hospitals to plan for
the future. A commenter encouraged us
to work with TJC when proposing
measures to remove from the Hospital
IQR Program because many of these
measures remain core measure reporting
requirements for TJC.
Response: We wish to reduce burden
on hospitals for reporting ‘‘topped-out’’
measures to us, and believe that our
proposal accomplishes that intent and
focuses measurement on quality areas
that can be improved. We invite the
commenter to relay their concerns to
TJC as to why TJC requires hospitals to
report ‘‘topped-out’’ measures.
Comment: A commenter asked that
CMS move cautiously with respect to
removing measures and adopting more
clinical outcome measures noting it
should be done with ample opportunity
for public comment to ensure these
measures are tested and validated prior
to adoption. The commenter noted that
vetting is important, as hospitals need
sufficient lead in time to implement
measures, especially those with
information technology requirements.
Response: We thank the commenter
for the suggestion and will provide the
public the necessary time period to
comment. We have six criteria for
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determining whether to remove a
measure from the Hospital IQR Program,
including a measure’s ‘‘topped-out’’
status as described above in section
IX.A.2.a. of the preamble of this final
rule.
We would like to clarify that the
public has many opportunities to
comment on potential measures through
the measure adoption process, which
includes the public posting of the MUC
(Measures Under Consideration) list, the
NQF measure endorsement process, and
comments on the annual rulemaking
process for the Hospital IQR Program.
Comment: A commenter requested
clarification regarding why CMS is
proposing to remove all of the
suspended/voluntary measures except
IMM–1 and if IMM–1 will continue to
be suspended for FY 2017.
Response: We proposed to remove the
suspended voluntary measures because
of their ‘‘topped-out’’ status. IMM–1 was
not proposed for removal because this
measure will be reported in another
program and we are responding to the
need for more harmonized and global
clinical quality measures. This measure
was finalized for reporting in the PQRS
in the CY 2013 Medicare Physician Fee
Schedule final rule with comment
period (see Table 95 at 77 FR 69215). As
we stated above in section IXA.2.(a),
‘‘topped-out’’ status is only one of the
six considerations we use in
determining whether to remove a
clinical quality measure from the
Hospital IQR Program.
Comment: One commenter expressed
concern that CMS may use a
subregulatory process to make
‘‘nonsubstantive’’ updates to measures
and that CMS may consider changes to
age groups to be ‘‘nonsubstantive.’’ The
commenter recommended that any
review of changes to include
individuals under the age of 18 in
measures that were initially developed
for adult populations include a process
for review by a panel of pediatric
experts, opportunity for broad
stakeholder comment and appropriate
testing of the revised measure.
Response: We thank the commenter
for the suggestion. We will consider the
suggestion to include a pediatric expert
review process when considering the
inclusion of the under 18 population to
measures exclusively including the
adult population.
After consideration of the public
comments we received, we are
finalizing our policy as proposed with
one modification. We are finalizing
removal of 19 measures for the FY 2017
payment determination and subsequent
years as noted in the chart above with
the exception of the SCIP–Inf–4
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measure, which we are retaining in the
Hospital IQR Program measure set in its
chart-abstracted form as previously
finalized.
We are also finalizing our proposal to
retain reporting for 10 of these ‘‘toppedout’’ measures as electronic clinical
quality measures as noted in the chart
above. We believe this approach
provides CMS an opportunity to
monitor topped-out measures for
performance decline. This policy
simplifies alignment between the
Hospital IQR and Medicare EHR
Incentive Programs for eligible hospitals
and provides a more straight-forward
approach to educate stakeholders on
electronic reporting options.
3. Process for Retaining Previously
Adopted Hospital IQR Program
Measures for Subsequent Payment
Determinations
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53512
through 53513), for our finalized
measure retention policy. When we
adopt measures for the Hospital IQR
Program beginning with a particular
payment determination, these measures
are automatically adopted for all
subsequent payment determinations
unless we propose to remove, suspend,
or replace the measures.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28220) we did not
propose any changes to our policy for
retaining previously adopted measures
for subsequent payment determinations.
4. Additional Considerations in
Expanding and Updating Quality
Measures Under the Hospital IQR
Program
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53510
through 53512) for a discussion of the
considerations we use to expand and
update quality measures under the
Hospital IQR Program. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28220) we did not propose any changes
to the considerations in expanding or
updating quality measures.
5. Previously Adopted Hospital IQR
Program Measures for the FY 2016
Payment Determination and Subsequent
Years
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28220 through
28221), for currently adopted and future
condition-specific, claims-based
measures, beginning with the FY 2017
payment determination and subsequent
years, we proposed to use 3 years of
data to calculate measures unless
otherwise specified. In other words, this
reporting period would apply to all
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future calculations of condition specific
measures already adopted in the
Hospital IQR Program and any
condition-specific measures that may be
subsequently adopted in future years.
The currently adopted, applicable
measures are:
• Hospital 30-day, all-cause, riskstandardized mortality rate (RSMR)
following acute myocardial infarction
(AMI) hospitalization for patients 18
and older (NQF #0230).
• Hospital 30-day, all-cause, riskstandardized mortality rate (RSMR)
following heart failure (HF)
hospitalization for patients 18 and older
(NQF #0229).
• Hospital 30-day, all-cause, riskstandardized mortality rate (RSMR)
following pneumonia hospitalization
(NQF #0468).
• Stroke 30-day mortality rate.
• Hospital 30-Day, All-Cause, RiskStandardized Mortality Rate (RSMR)
following Chronic Obstructive
Pulmonary Disease (COPD)
Hospitalization (NQF #1893).
• 30-day all-cause, Acute Myocardial
Infarction (AMI) 30-day risk
standardized readmission rate (RSMR)
following Acute Myocardial Infarction
(AMI) hospitalization (NQF #0505).
• 30-day all-cause, risk standardized
readmission rate (RSMR) following
Heart Failure (HF) hospitalization (NQF
#0330).
• 30-day all-cause, risk standardized
readmission rate (RSMR) following
Pneumonia (PN) hospitalization (NQF
#0506).
• 30-day risk standardized
readmission rate (RSMR) following
Total Hip/Total Knee Arthroplasty (NQF
#1551).
• 30-day risk standardized
readmission rate (RSMR) following
Stroke hospitalization.
• 30-day risk standardized
readmission rate (RSMR) following
COPD hospitalization (NQF #1891).
• Hip/Knee Complication: Hospitallevel Risk-Standardized Complication
50209
Rate (RSCR) following Elective Primary
Total Hip Arthroplasty (NQF #1550).
We welcomed public comments on
our proposal to use 3 years of data to
calculate current and future conditionspecific, claims-based measures.
Comment: Several commenters
supported CMS’ proposal to use 3 years
of claim-based data for all currently
adopted and future condition-specific,
claims-based measures, for the FY 2017
payment determination and subsequent
years.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our proposal to use 3 years of
data to calculate current and future
condition-specific, claims-based
measures as proposed.
The following table shows measures
previously adopted for the Hospital IQR
Program, including suspended
measures.
HOSPITAL IQR PROGRAM MEASURES PREVIOUSLY ADOPTED FOR THE FY 2016 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS
Short name
Measure name
NQF No.
AMI–1 ...............
AMI–3 ...............
AMI–5 ...............
AMI–7a .............
Aspirin at Arrival .................................................................
ACEI or ARB for LVSD ......................................................
Beta-Blocker Prescribed at Discharge ...............................
Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival.
Primary PCI Received Within 90 Minutes of Hospital Arrival.
Evaluation of LVS Function ...............................................
Initial Antibiotic Selection for community-acquired pneumonia (CAP) in Immunocompetent Patients.
Prophylactic Antibiotic Received Within One Hour Prior to
Surgical Incision.
Prophylactic Antibiotic Selection for Surgical Patients ......
Prophylactic Antibiotics Discontinued Within 24 Hours
After Surgery End Time—Overall Rate.
Cardiac Surgery Patients with Controlled Postoperative
Blood Glucose.
Surgery Patients with Appropriate Hair Removal ..............
Urinary catheter removed on Postoperative Day 1 (POD
1) or Postoperative Day 2 (POD 2) with day of surgery
being day zero.
Surgery Patients on Beta-Blocker Therapy Prior to Arrival
Who Received a Beta-Blocker During the Perioperative
Period.
Surgery Patients Who Received Appropriate Venous
Thromboembolism Prophylaxis Within 24 Hours Prior
to Surgery to 24 Hours After Surgery.
National Healthcare Safety Network (NHSN) Central lineassociated Bloodstream Infection (CLABSI) Outcome
Measure.
American College of Surgeons—Centers for Disease
Control and Prevention (ACS–CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome
Measure.
Colon procedures ...............................................................
Hysterectomy procedures ..................................................
National Healthcare Safety Network (NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome
Measure.
N/A .......................................
NQF #0137 ..........................
NQF #0160 ..........................
NQF #0164 ..........................
Data collection suspended.
Data collection suspended.
Data collection suspended.
Required.
NQF #0163 ..........................
Required.
NQF #0135 ..........................
NQF #0147 ..........................
Required.
Required.
NQF #0527 ..........................
Required.
NQF #0528 ..........................
NQF #0529 ..........................
Required.
Required.
NQF #0300 ..........................
Refined measure specifications.
NQF #0301 ..........................
NQF #0453 ..........................
Data collection suspended.
Required.
NQF #0284 ..........................
Required.
NQF #0218 ..........................
Required.
NQF #0139 ..........................
Required.
NQF #0753 ..........................
Required.
NQF #0138 ..........................
Required.
AMI–8a .............
HF–2 .................
PN–6 .................
SCIP–Inf–1 .......
SCIP–Inf–2 .......
SCIP–Inf–3 .......
SCIP–Inf–4 .......
SCIP–Inf–6 .......
SCIP–Inf–9 .......
SCIP–Card–2 ....
SCIP–VTE–2 ....
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CLABSI .............
SSI ....................
CAUTI ...............
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HOSPITAL IQR PROGRAM MEASURES PREVIOUSLY ADOPTED FOR THE FY 2016 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS—Continued
Short name
Measure name
NQF No.
MRSA ...............
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure.
National Healthcare Safety Network (NHSN) Facility-wide
Inpatient Hospital-onset Clostridium difficile Infection
(CDI) Outcome Measure.
Influenza vaccination coverage among healthcare personnel (HCP).
Median time from ED arrival to ED departure for admitted
ED patients.
NQF #1716 ..........................
Required.
NQF #1717 ..........................
Required.
NQF #0431 ..........................
Required.
NQF #0495 ..........................
ED–2 .................
Admit Decision Time to ED Departure Time for Admitted
Patients.
NQF #0497 ..........................
Imm-1 ................
Imm-2 ................
Stroke-1 ............
Stroke-2 ............
Pneumoccocal Immunization .............................................
Influenza Immunization ......................................................
Venous thromboembolism (VTE) prophylaxis ...................
Discharged on antithrombotic therapy ...............................
NQF
NQF
NQF
NQF
Stroke-3 ............
Anticoagulation therapy for atrial fibrillation/flutter .............
NQF #0436 ..........................
Stroke-4 ............
Thrombolytic therapy .........................................................
NQF #0437 ..........................
Stroke-5 ............
Antithrombotic therapy by the end of hospital day two .....
NQF #0438 ..........................
Stroke-6 ............
Discharged on statin medication .......................................
NQF #0439 ..........................
Stroke-8 ............
Stroke education ................................................................
N/A .......................................
Stroke-10 ..........
Assessed for rehabilitation .................................................
NQF #0441 ..........................
VTE–1 ...............
Venous thromboembolism prophylaxis ..............................
NQF #0371 ..........................
VTE–2 ...............
Intensive care unit venous thromboembolism prophylaxis
NQF #0372 ..........................
VTE–3 ...............
Venous thromboembolism patients with anticoagulation
overlap therapy.
NQF #0373 ..........................
VTE–4 ...............
Patients receiving un-fractionated Heparin with doses/
labs monitored by protocol.
N/A .......................................
VTE–5 ...............
VTE discharge instructions ................................................
N/A .......................................
VTE–6 ...............
Incidence of potentially preventable VTE ..........................
N/A .......................................
PC–01 ...............
Elective delivery (Collected in aggregate, submitted via
Web-based tool or electronic clinical quality measure).
NQF #0469 ..........................
MORT–30–AMI
Hospital 30-day, all-cause, risk-standardized mortality
rate (RSMR) following acute myocardial infarction
(AMI) hospitalization for patients 18 and older.
Hospital 30-day, all-cause, risk-standardized mortality
rate (RSMR) following heart failure (HF) hospitalization
for patients 18 and older.
Hospital 30-day, all-cause, risk-standardized mortality
rate (RSMR) following pneumonia hospitalization.
NQF #0230 ..........................
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Data collection suspended.
Required.
Required.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required submission, but voluntary electronic clinical quality
measure.
Required.
NQF #0229 ..........................
Required.
NQF #0468 ..........................
Required.
CDI ....................
HCP ..................
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ED–1 .................
MORT–30–HF ..
MORT–30–PN ..
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#1659
#0434
#0435
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..........................
..........................
..........................
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50211
HOSPITAL IQR PROGRAM MEASURES PREVIOUSLY ADOPTED FOR THE FY 2016 PAYMENT DETERMINATION AND
SUBSEQUENT YEARS—Continued
Short name
COPD Mortality
STK Mortality ....
READM–30–AMI
READM–30–HF
READM–30–PN
READM–30–TH/
TKA.
READM–30–
HWR.
COPD READMIT.
STK READMIT
MSPB ................
AMI payment ....
Hip/knee complications.
PSI 4 (PSI/NSI)
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PSI 90 ...............
Database for
Cardiac Surgery.
Registry for
Nursing Sensitive Care.
Registry for
General Surgery.
Safe Surgery
Checklist.
HCAHPS ...........
Measure name
NQF No.
Hospital 30-Day, All-Cause, Risk-Standardized Mortality
Rate (RSMR) following Chronic Obstructive Pulmonary
Disease (COPD) Hospitalization.
Stroke 30-day mortality rate ..............................................
Hospital 30-day all-cause risk-standardized readmission
rate (RSRR) following acute myocardial infarction
(AMI) hospitalization.
Hospital 30-day, all-cause, risk-standardized readmission
rate (RSRR) following heart failure hospitalization.
Hospital 30-day, all-cause, risk-standardized readmission
rate (RSRR) following pneumonia hospitalization.
Hospital-level 30-day, all-cause risk-standardized readmission rate (RSRR) following elective primary total hip
arthroplasty (THA) and/or total knee arthroplasty (TKA).
Hospital-Wide All-Cause Unplanned Readmission (HWR)
NQF #1893 ..........................
Required.
N/A .......................................
NQF #0505 ..........................
Required.
Required.
NQF #0330 ..........................
Required.
NQF #0506 ..........................
Required.
NQF #1551 ..........................
Required.
NQF #1789 ..........................
Required.
NQF #1891 ..........................
Required.
N/A .......................................
Required.
NQF #2158 ..........................
Required.
N/A .......................................
NQF #1550 ..........................
Required.
Required.
NQF #0351 ..........................
Required.
NQF #0531 ..........................
NQF #0113 ..........................
Required.
Required.
Participation in a Systematic Clinical Database Registry
for Nursing Sensitive Care.
N/A .......................................
Required.
Participation in a Systematic Clinical Database Registry
for General Surgery.
N/A .......................................
Required.
Safe Surgery Checklist Use ...............................................
N/A .......................................
Required.
HCAHPS + CTM–3 ............................................................
NQF #0166 ..........................
NQF #0228 ..........................
Required.
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization.
30-day risk standardized readmission rate (RSMR) following Stroke hospitalization.
Payment-Standardized Medicare Spending Per Beneficiary (MSPB).
AMI Payment per Episode of Care ....................................
Hospital-level risk-standardized complication rate (RSCR)
following elective primary total hip arthroplasty (THA)
and/or total knee arthroplasty (TKA).
Death among surgical inpatients with serious, treatable
complications.
Patient safety for selected indicators (composite) .............
Participation in a systematic database for cardiac surgery
6. Refinements and Clarification to
Existing Measures in the Hospital IQR
Program
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28223 through
28226), we proposed to incorporate
refinements for several measures that
were previously adopted in the Hospital
IQR Program. These refinements have
either arisen out of the NQF
endorsement maintenance process, or
during our internal efforts to harmonize
measure approaches. The measure
refinements include the following: (1)
refining the planned readmission
algorithm for all seven readmission
measures included in the Hospital IQR
Program; (2) modifying the hip/knee
readmission and complication measure
cohorts to exclude index admissions
with a secondary fracture diagnosis; and
(3) modifying the hip/knee complication
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measure to not count as complications
coded as ‘‘present on admission’’ (POA)
during the index admission.
We received one general comment on
our proposed refinements.
Comment: One commenter supported
CMS’ continued refinements to the
readmission measures.
Response: We thank the commenter
for their support.
a. Refinement of Planned Readmission
Algorithm for 30-Day Readmission
Measures
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50785 through 50787) we
adopted the CMS Planned Readmission
Algorithm Version 2.1 (the Algorithm)
for the Hospital IQR Program. In the
same final rule (78 FR 50785 through
50787, 50790 through 50792, and 50794
through 50798), we also finalized the
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use of the CMS Planned Readmission
Algorithm Version 2.1 in the AMI, HF,
PN, THA/TKA, HWR, and COPD
measures. This algorithm identifies
readmissions that are planned and occur
within 30 days of discharge from the
hospital. A complete description of the
Algorithm, which includes lists of
planned diagnoses and procedures, is
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html in the ‘‘Planned
Readmission’’ folder. NQF has endorsed
the use of the Algorithm for these
measures.
In that final rule (78 FR 50652) and in
response to comments, we agreed to
continually review the Algorithm and
make updates as needed. Since its
development, we have identified and
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made improvements to the Algorithm.
As a result, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28223
through 28224) we proposed to use an
updated, revised version, the CMS
Planned Readmission Algorithm
Version 3.0, for the AMI, HF, PN, THA/
TKA, HWR, COPD, and Stroke
readmission measures for the FY 2015
payment determination and subsequent
years. As discussed further below, we
also proposed to use Version 3.0 of this
algorithm for the CABG readmission
measure that we proposed to include in
the Hospital IQR Program starting in FY
2017, proposed in section IX.A.7.a. of
the preamble of the proposed rule.
Version 3.0 incorporates
improvements made based on a
validation study of the algorithm.
Researchers reviewed 634 patients’
charts at 7 hospitals, classified
readmission as planned or unplanned
based on the chart review, and
compared the results to the claimsbased algorithm’s classification of the
readmissions. The findings suggested
the algorithm was working well but
could be improved.
Specifically, the study suggested the
need to make small changes to the tables
of procedures and conditions used in
the algorithm to classify readmission as
planned or unplanned. The algorithm
uses AHRQ’s Clinical Classification
Software (CCS) to group thousands of
procedure and diagnosis codes into
fewer categories of related procedures or
diagnoses. The algorithm then uses four
tables of procedures and diagnoses
categories and a flow diagram to classify
tables as planned or unplanned.
Additional information on this software
is available at: http://www.hcupus.ahrq.gov/toolssoftware/ccs/ccs.jsp.
For all measures, the first table
identifies procedures that, if present in
a readmission, classify the readmission
as planned. The second table identifies
primary discharge diagnoses that always
classify readmissions as planned.
Because almost all planned admissions
are for procedures or surgeries, a third
table identifies procedures for which
patients are typically admitted; if any of
these procedures is coded in the
readmission, we classify a readmission
as planned as long as that readmission
does not have an acute (unplanned)
primary discharge diagnosis. The fourth
table lists the acute (unplanned)
primary discharge diagnoses that
disqualify readmissions that include
one or more of the potentially planned
procedure in the third table as planned.
These tables are structured similarly
across all measures, but the specific
procedure and conditions they contain
vary slightly for certain measures based
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on clinical considerations for each
cohort. The current tables for each
measure can be found in the measure
methodology reports at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
Version 3.0 modifies two of these
tables by removing or adding
procedures or conditions to improve the
accuracy of the algorithm. First, the
validation study revealed that the
algorithm could be improved by
removing two procedure CCS categories
from the third table, the potentially
planned procedure table: CCS 211—
Therapeutic Radiation and CCS 224—
Cancer Chemotherapy. Typically,
patients do not require admission for
scheduled Therapeutic Radiation
treatments (CCS 211). The study found
that readmissions that were classified as
planned because they included
Therapeutic Radiation were largely
unplanned.
The algorithm was also more accurate
when CCS 224—Cancer Chemotherapy
was removed from the potentially
planned procedure table. The second
table of the algorithm classifies all
readmissions with a principal diagnosis
of Maintenance Chemotherapy as
planned. Most patients who receive
cancer chemotherapy have both a code
for Cancer Chemotherapy (CCS 224) and
a principal discharge diagnosis of
Maintenance Chemotherapy (CCS 45).
In the validation study, the
readmissions for patients who received
Cancer Chemotherapy (CCS 224), but
who did not have a principal diagnosis
of Maintenance Chemotherapy were
largely unplanned, therefore removing
CCS 224 from the potentially planned
procedure table improved the
algorithm’s accuracy. Therefore, Version
3.0 removes CCS 211 and CCS 224 from
the list of potentially planned
procedures to improve the accuracy of
algorithm.
As noted above, the algorithm uses a
table of acute principal discharge
diagnoses to help identify unplanned
readmissions. Readmissions that have a
principal diagnosis listed in the table
are classified as unplanned, regardless
of whether they include a procedure in
the potentially planned procedure table.
The validation study identified one
diagnosis CCS that should be added to
the table of acute diagnoses to more
accurately identify truly unplanned
admissions as unplanned: Hypertension
with Complications (CCS 99).
Hypertension with complications is a
diagnosis that is rarely associated with
planned readmissions.
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In addition, the validation study
identified a subset of ICD–9 diagnosis
codes within two CCS diagnosis
categories that should be added to the
acute diagnosis table to improve the
algorithm. CCS 149, Pancreatic
Disorders, includes the code for acute
pancreatitis; clinically there is no
situation in which a patient with this
acute condition would be admitted for
a planned procedure. Therefore, Version
3.0 adds the ICD–9 code for acute
pancreatitis, 577.0, to the acute primary
diagnosis table to better identify
unplanned readmissions. Finally, CCS
149, Biliary Tract Disease, is a mix of
acute and non-acute diagnoses. Adding
the subset of ICD–9 codes within this
CCS group that are for acute diagnoses
to the list of acute conditions improves
the accuracy of the algorithm for these
acute conditions while still ensuring
that readmissions for planned
procedures, like cholecystectomies, are
counted accurately as planned. For
more detailed information on how the
algorithm is structured and the use of
tables to identify planned procedures
and diagnoses, we refer readers to CMS’
Planned Readmission Algorithm
Version 2.1: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html. As noted above,
readers can find the specific Version 3.0
tables for each measure in the measure
updates and specifications reports at the
above link.
We invited public comment on our
proposal to use the CMS Planned
Readmission Algorithm Version 3.0, for
the AMI, HF, PN, THA/TKA, HWR,
COPD, and Stroke readmission
measures for the FY 2015 payment
determination and subsequent years.
Comment: One commenter supported
the use of the planned readmission
algorithm for the COPD readmission
measure. Several commenters believed
updates to the COPD readmission rate
calculation will increase the measures
precision.
Response: We thank the commenters
for their support.
Comment: Several commenters did
not support the Cancer Exclusions and
urged CMS to continue excluding
therapeutic radiation and cancer
chemotherapy from readmissions
penalties. Commenters stated that given
the immunosuppression associated with
these conditions and treatments, it is in
the best interest of the patients to be
sent home as soon as possible as it
reduces their chances of getting hospital
acquired infections that are often more
virulent than community-acquired
pathogens. One commenter was
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concerned that the proposed exclusion
may not be able to fully account for the
increased readmissions associated with
this population that are often not
preventable. Another commenter also
noted that some hospitals may treat
more patients who receive these
treatments compared to other hospitals,
which would not be accounted for in
the measures. Another commenter did
not believe that CMS presented
convincing evidence that the cancer
codes proposed for exclusion are
appropriate to exclude at this time. The
commenter urged CMS to report its
findings to NQF for a transparent review
prior to implementation.
Response: We recognize that cancer
care readmissions are often not
preventable. In response to commenters’
concerns regarding the cancer
exclusions and certain hospitals treating
more cancer patients than other
hospitals, we are removing both CCS
211—Therapeutic Radiation and CCS
224—Cancer Chemotherapy from the
potentially planned procedure table of
the planned readmission algorithm to
improve the accuracy of the algorithm.
We are removing Therapeutic Radiation
because patients are not typically
admitted for therapeutic radiation, and
admissions with this treatment in a
validation study we conducted of the
algorithm were generally unplanned.
Further, our validation study showed
admissions for people who receive
cancer chemotherapy, but do not have a
principal diagnosis of maintenance
chemotherapy are typically unplanned
admissions. Therefore, we expect that
removal of CCS 211 and CCS 224 will
improve the algorithm’s accuracy and
we do not anticipate it will have the
unintended consequence of
discouraging needed cancer care.
We acknowledge that in many cases it
is in the best interest of the patients to
be sent home as soon as possible as it
reduces their chances of getting hospital
acquired infections that are often more
virulent than community-acquired
pathogens.
As we are removing these cancer
exclusions, we believe that we would
not need to report additional
information to NQF, as requested by the
commenter.
Comment: Several commenters
believed that the readmission algorithm
is critically important in the appropriate
attribution of readmissions. One
commenter was disappointed that CMS
have not sent the planned readmissions
algorithm back to the NQF and several
suggested that CMS seek an ad hoc
review before proposing changes to the
readmission measures that are used in
the Hospital IQR Program and the
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Hospital Readmissions Reduction
Program.
Response: We would like to reassure
the commenters that our proposed
changes to the readmission algorithm
will have minimal effect on how it
attributes readmissions. We believe the
changes should undergo NQF review as
part of the endorsement maintenance
and annual update processes for
individual measures instead of an ad
hoc review because the changes to the
algorithm have a minimal effect on the
planned readmission rates for each
measure as detailed in the proposed rule
(Table IV.H.1) (79 FR 28107 through
28108) and improve the accuracy of the
algorithm. We have submitted changes
related to the heart failure, pneumonia,
and hip/knee, COPD and CABG
readmission measures with Version 3.0
to NQF, all under annual update review
with the exception of the CABG
readmission measures which are new.
For the AMI measure, endorsement
maintenance occurred in 2013 prior to
CMS’ updating the algorithm to Version
3.0; therefore, we will submit the AMI
readmission measure with the revised
algorithm in the next NQF review cycle.
We acknowledge the commenter’s
view that the readmission algorithm is
critically important in the appropriate
attribution of readmissions.
After consideration of the public
comments we received, we are
finalizing our policy to use the CMS
Planned Readmission Algorithm
Version 3.0, for the AMI, HF, PN, THA/
TKA, HWR, COPD, and Stroke
readmission measures for the FY 2015
payment determination and subsequent
years as proposed.
b. Refinement of Total Hip Arthroplasty
and Total Knee Arthroplasty (THA/
TKA) 30-Day Complication and
Readmission Measures
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28224 through
28225), for the FY 2015 payment
determination and subsequent years, we
proposed to refine: (1) the measure
outcome and cohort for the Elective
Primary THA/TKA All-Cause 30-Day
Risk-Standardized Complication
Measure (NQF #1550); and (2) the
measure cohort for the Elective Primary
THA/TKA All-Cause Unplanned 30-Day
Risk-Standardized Readmission
Measure (NQF #1551).
As part of measure implementation,
we conducted a dry run for both the
THA/TKA readmission and
complication measures in September/
October of 2012. More information on
the dry run is available at: https://
www.qualitynet.org/dcs/
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table=MungoBlobs.
During the dry run, several
commenters suggested that we evaluate
the use of Present on Admission (POA)
codes for both the hip/knee readmission
and complication measures. We agreed
with the suggestion and have been
monitoring POA data collection and
testing its readiness for use in claimsbased measures. We also noted our
intent to evaluate the use of POA codes
in Hospital IQR Program measures, such
as the stroke mortality rate measure, in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50801). We have since tested the
use of the POA codes and proposed to
incorporate POA codes into the hip/
knee complication measure for FY 2015
payment determination and subsequent
years in order to prevent identifying a
condition as a complication of care if it
was present during admission.
In addition, currently, the THA/TKA
Readmission Measure (NQF #1551)
adopted for the Hospital IQR Program is
intended to only include patients who
have an elective THA or TKA.
Currently, this measure excludes
patients who have a principal discharge
diagnosis of femur, hip, or pelvic
fracture on their index admission since
hip replacement for hip fracture is not
an elective procedure. However, after
hospitals reviewed their hospitalspecific THA/TKA Readmission
Measure data during the national dryrun, we learned that hospitals code hip
fractures that occur during the same
admission as a THA as not only a
principal diagnosis, but also
alternatively, a secondary diagnosis,
instead of just a principal diagnosis as
currently specified by the measure.
According to feedback received from
hospitals participating in the dry-run,
the measure methodology failed to
identify, and, appropriately exclude, a
small number of patients (that is, 0.42
percent of patients in 2009–2010 data)
with a hip fracture that had non-elective
total hip arthroplasty as captured by
these secondary diagnoses.
Therefore, to ensure that all such nonelective hip fracture patients are
excluded from the measure, we
proposed to refine the measure to
exclude patients with hip fractures
coded as either a principal or secondary
diagnosis during the index admission
beginning with the FY 2015 payment
determination and subsequent years. We
believe this refinement is responsive to
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comments previously received from
hospitals (78 FR 50709) and will allow
us to accurately exclude patients who
were initially admitted for a hip fracture
and who then subsequently underwent
total hip arthroplasty, making their
procedure non-elective.
We invited public comment on these
proposed refinements.
Comment: Many commenters
supported these refinements.
Specifically, commenters supported
CMS’ proposals to:
• Add POA condition codes to the
THA/TKA measures, contending that
doing so will minimize the
misidentification of pre-existing
conditions as complications related to
the procedure.
• Exclude from this 30-day
readmission measure cohort patients
with hip fracture who had a nonelective total hip anthroplasty.
• Exclude patients who have a hip
fracture coded as either a principal or
secondary diagnosis during the index
admission from the THA/TKA
complication and readmission
measures.
• Remove cases where the hip/knee
complication was present prior to the
relevant admission as such
complications should accrue to the
hospitals furnishing the procedure prior
to follow-up care.
• Evaluate the performance of the
Risk Standardized Readmission and
Complication Rate (RSRR and RSCR)
measures for total hip and total knee
arthroplasty.
Response: We thank the commenters
for their support.
Comment: Several commenters
appreciated CMS’ efforts to make
measure improvements but explained
that they did not support the update
until measures have completed the NQF
measure maintenance process, arguing
that changes should not be made
through the subregulatory process.
Response: To clarify, since we are
using the notice and comment
rulemaking process to make these
measure refinements here, we are not
making these changes using
subregulatory methods. We believe
these refinements are necessary to
ensure that the measure accurately
reflects the care provided to patients.
We do not believe that we should delay
making efforts to improve the measure’s
accuracy.
Comment: One commenter did not
support the modifications to the THA
and TKA readmission and complication
measures, noting that the need to make
corrections reinforces the view that
there should be sufficient
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comprehensive testing before they are
adopted for use.
Response: We agree with the
commenter that the measures should
undergo extensive testing prior to
inclusion in reporting programs. The
modifications here were identified
during field testing of the THA/TKA
readmission and complication measures
and were incorporated prior to
inclusion of the measures in the
Hospital IQR Program. In addition, we
reevaluate our measures on an annual
basis in order to make methodological
refinements required by: (1) Ongoing
changes in clinical practice; (2) coding
update; and (3) evolving input from
stakeholders.
Comment: One commenter was
concerned about the accuracy of
administrative claims data used for the
Hip/Knee Complication measure. The
commenter suggested that the claims
data used for the measure has been
known to underreport significant
comorbidities, particularly obesity.
Response: We believe that the
administrative claims data used for the
Hip/Knee Complication measure are
accurate. We have validated the AMI,
HF, and pneumonia readmission and
mortality measures by building
comparable models using medical
record data for risk adjustment for heart
failure patients (National Heart Failure
data), AMI patients (Cooperative
Cardiovascular Project data), and
pneumonia patients (National
Pneumonia Project dataset). When the
medical record-based models were
applied to the corresponding patient
population, the hospital riskstandardized rates estimated using the
claims-based risk adjustment models
had a high level of agreement with the
results based on the medical record
model. This supports the use of the
claims-based models for public
reporting.
Regarding the commenters’ concern
about under-reporting significant comorbidities, particularly morbid obesity,
we have also conducted a medical
record validation study of the THA/TKA
complications measure. The goal of that
study was to determine the overall
agreement between arthroplasty patients
identified as having a complication (or
no complication) in the claims-based
measure and those who had a
complication (or no complication) also
documented in the medical record.
Overall measure data agreement was 93
percent (598/644 patients) before any
changes were made to the model
specifications. After the measure
specifications were changed based upon
the results of this validation study, the
measure agreement between claims data
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and the medical record was 99 percent
(635/644).
We also acknowledge the
commenters’ concern that obesity is
associated with poorer outcomes after
joint replacement; however, evidence
supports that the potential greatest risk
lies in patients who are morbidly
obese.57 Administrative codes for
morbid obesity have been shown to
have greater sensitivity and specificity
than obesity codes overall, with a
specificity of 99 percent,58 and morbid
obesity (ICD–9–CM code 278.01) is
currently included in the measure risk
model.
Comment: Several commenters
requested that the Hip/Knee
Complication measure be adjusted for
socioeconomic status (SES).
Response: We appreciate the
commenters’ concerns and note that
these concerns were addressed in the
FY 2014 IPPS/LTCH PPS final rule (79
FR 50653 through 50654, 50673 through
50674). As described in prior
rulemaking, we do not currently risk
adjust for SES in the Hospital IQR
Program. However, we do risk adjust for
comorbidities (that is, correlated
illnesses) and other factors to ensure
that hospitals are not penalized for
serving populations that are sicker or
have higher incidences of chronic
disease.
We are aware that there are differing
opinions regarding this approach. We
appreciate the commenters’ suggestions
on the importance of addressing SES in
the Hospital IQR Program. We have
continued to consider and evaluate
stakeholder concerns regarding the
influence of patient socioeconomic
status on clinical quality measures. We
refer readers to section IV.H.4. of the
preamble of this final rule for a
discussion of the use of SES in our
quality programs.
After consideration of the public
comments we received, we are
finalizing the refinements to the THA/
TKA measure as proposed.
c. Anticipated Effect of Refinements to
Existing Measures
Based on our analyses of discharges
between July 2009 and June 2012, our
proposal to use the Planned
Readmission Algorithm Version 3.0
would have the following effects on
measures had these changes been
57 Horan F. Obesity and joint replacement. J Bone
Joint Surg [Br] 2006;88–B:1269–71.
58 Nicholas S. Golinvaux, Daniel D. Bohl, Bryce
A. Basques, Michael C. Fu, Elizabeth C. Gardner,
Jonathan N. Grauer. Limitations of Administrative
Databases In Spine Research: A Study in Obesity.
Spine Journal, In Press, Accepted Manuscript,
Available online 26 April 2014.
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
applied for the FY 2014 payment
determination as an example. We are
sharing this information to provide the
public with a sense of the extent to
which these refinements to the
measures will change the measure
scores. As the results show, while the
refinements improve the accuracy of the
measures, the changes in actual scores
are very slight.
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The proposed 30-day readmission rate
(excluding the planned readmissions)
would increase by 0.1 percentage points
for AMI; 0.2 percentage points for HF;
0.1 percentage points for PN; 0.1
percentage points for COPD; 0.0
percentage points for hip/knee; 0.1
percentage points for HWR; and 0.0
percentage points for stroke.
The new national measure
(unplanned) rate for each condition
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would have been 18.4 percent for AMI;
23.2 percent for HF; 17.7 percent for PN;
21.1 percent for COPD; 5.4 percent for
hip/knee; 16.1 percent for HWR; and
13.8 percent for stroke.
The number of readmissions
considered planned (and, therefore, not
counted as a readmission) would
decrease by 334 for AMI; 1,375 for HF;
981 for PN, 574 for COPD; 309 for hip/
knee; 7,417 for HWR; and 242 for stroke.
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18:25 Aug 21, 2014
ER22AU14.008
Comparison of Planned Readmission Algorithms V 2.1 and 3.0 for AMI!HF/PN/COPD/HK/HWR/Stroke Readmission Measures (Based on
2009-2012 Discharges)
AMI
HF
PN
COPD
Hip/Knee
HWR
Stroke
V3.0 V2.1
V3.0
V2.1
V3.0
V2.1
V3.0 V2.1
V3.0 V2.1
V3.0
V2.1
V3.0 V2.1
Number of 513,33 513,33 1,262,8 1,262,8 1,089,7 1,089,7 989,38 989,38 879,64 879,64 6,918,4 6,918,4 502,37 502,37
1
1
1
1
Discharges 1
1
26
26
58
58
67
67
6
6
Number of
Unplanned
208,75 207,77
1,112,8 1,105,3
94,453 93,940 292,976 290,450 192,887 191,797
47,236 47,236
69,323 69,081
0
Readmissio
85
78
9
ns
Readmissio
18.4% 18.3% 23.2%
23.0%
17.7%
17.6%
21.1% 21.0% 5.4%
5.4%
16.1%
16.0%
13.8% 13.8%
nRate
Number of
Planned
11,947 12,281 16,230
17,605
6,545
7,526
6,447
7,021
2,326 2,635
85,673
93,180
5,750
5,992
Readmissio
ns
Planned
2.4%
1.3%
1.4%
0.6%
0.7%
0.7%
0.7%
0.3%
0.3%
1.2%
1.3%
1.1%
1.2%
Readmissio 2.3%
nRate
%of
Readmissio
11.2% 11.6% 5.3%
5.7%
3.3%
3.8%
3.0%
3.3%
4.7%
5.3%
7.1%
7.8%
7.7%
8.0%
ns that are
Planned
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
d. Clarification Regarding Influenza
Vaccination for Healthcare Personnel
The Influenza Vaccination Coverage
Among Healthcare Personnel (HCP)
(NQF #0431) measure was finalized for
the Hospital IQR Program in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51633) and the Hospital Outpatient
Quality Reporting (HOQR) in the CY
2014 OPPS/ASC final rule with
comment period (78 FR 75099). We
received public comments regarding the
burden of separately collecting and
reporting HCP influenza vaccination
statuses for both the inpatient and
outpatient settings. In response to these
concerns, we clarified that beginning
with the 2014–2015 influenza season
(CY 2014 reporting period and FY 2016
payment determination), facilities
should collect and report a single
vaccination count for each healthcare
facility by CMS Certification Number
(CCN), instead of separately by inpatient
or outpatient setting, in order to reduce
burden. We announced this clarification
regarding how to designate HCP for this
measure in an Operational Guidance
document which can be found on our
on our Web page at: http://
origin.glb.cdc.gov/nhsn/PDFs/HCP/
Operational-Guidance-ACH–HCPFlu.pdf. Using the CCN will allow
healthcare 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-carehospital/hcp-vaccination/ and at http://
www.cdc.gov/nhsn/acute-care-hospital/
index.html.
(We discussed this clarification in
section IX.A.5. of the preamble to the
proposed rule (79 FR 28221).)
Comment: Several commenters
supported the collection and
submission of the influenza vaccination
measure as a single facility count, which
the commenters agreed will reduce the
burden on providers and lead to more
meaningful results. One commenter
specifically supported the healthcare
personnel influenza vaccination
coverage clarification because it
accommodates injectable and nasal
spray vaccines.
Response: We thank the commenters
for their support.
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Comment: A commenter requested
clarification on reporting for the
inpatient and outpatient settings, stating
that it reports to NHSN separately for
these settings through a Facility
Organization Identification (Org ID)
rather than by CCN. The commenter
believed that, after all data have been
submitted by Org ID, the CDC will rollup the data reported by Org ID to the
CCN level, in order to report data to
CMS.
Response: We agree with the
commenter’s assessment and clarify that
hospitals should report by enrolled
facility, according to their NHSN OrgID,
in order to be consistent with CDC
NHSN infrastructure. These data are to
be reported for all patient care units
included within the enrolled facility’s
OrgID that also share the same CCN
(some patient care units within the
OrgID may have separate CCNs and
those should not be included in these
counts). Therefore, data will be
submitted to NHSN by facility Org ID,
not CCN. CDC will then aggregate the
facility level data into a CCN HCP rate
and submit aggregate hospital-level
measure rates at the CCN level to us on
behalf of facilities for Hospital Compare
public reporting purposes.
After consideration of public
comments we received, we are
clarifying that hospitals should report a
single count per enrolled facility, and
not CCN, for the previously finalized
Influenza Vaccination Coverage Among
Healthcare Personnel (HCP) (NQF
#0431) measure. We will require
facilities to collect and submit a single
vaccination count for each health care
facility enrolled in NHSN by facility
OrgID. This modifies our statement in
the proposed rule indicating that
facilities should submit data by CCN,
and better aligns with the FY 2015
OPPS Proposed rule (79 FR 41035) as
well as NHSN guidance documents.
7. Additional Hospital IQR Program
Measures for the FY 2017 Payment
Determination and Subsequent Years
For purposes of the Hospital IQR
Program, section 1886(b)(3)(B)(IX)(aa) of
the Act requires that any measure
specified by the Secretary must have
been endorsed by the entity with a
contract under section 1890(a) of the
Act. However, the statutory
requirements under section
1886(b)(3)(B)(IX)(bb) of the Act provide
an exception that, in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
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50217
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28227 through
28243) we proposed to add a total of 11
measures to measure set for the FY 2017
payment determination and subsequent
years. The first nine new measures are:
(1) Hospital 30-day, all-cause,
unplanned, risk-standardized
readmission rate (RSRR) following
coronary artery bypass graft (CABG)
surgery (claims-based); (2) Hospital 30day, all-cause, risk-standardized
mortality rate (RSMR) following
coronary artery bypass graft (CABG)
surgery (claims-based); (3) Hospitallevel, risk-standardized 30-day episodeof-care payment measure for pneumonia
(claims-based); (4) Hospital-level, riskstandardized 30-day episode-of-care
payment measure for heart failure
(claims-based); (5) Severe Sepsis and
Septic Shock: Management Bundle
(NQF #0500) (chart-abstracted); (6)
EHDI–1a Hearing Screening Prior to
Hospital Discharge (NQF #1354)
(electronic clinical quality measure); (7)
PC–05 Exclusive Breast Milk Feeding
and the subset measure PC–05a
Exclusive Breast Milk Feeding
Considering Mother’s Choice (NQF
#0480) (electronic clinical quality
measure); (8) CAC–3 Home Management
Plan of Care (HMPC) Document Given to
Patient/Caregiver (electronic clinical
quality measure); and, (9) Healthy Term
Newborn (NQF #0716) (electronic
clinical quality measure).
In addition, to align the Hospital IQR
Program with the Medicare EHR
Incentive Program for Eligible Hospitals
and CAHs and allow hospitals as many
measure options as possible that overlap
both programs, we proposed to readopt
two measures previously removed from
the Hospital IQR Program as voluntary
electronic clinical quality measures: (10)
AMI–2 Aspirin Prescribed at Discharge
for AMI (NQF #0142) (electronic clinical
quality measure); and (11) AMI–10
Statin Prescribed at Discharge (NQF
#0639) (electronic clinical quality
measure). These two measures are part
of the Stage 2 Medicare EHR Incentive
Program measure set for eligible
hospitals and CAHs.
The four proposed claims-based
measures (1–4, above) were included on
a publicly available document entitled
‘‘List of Measures Under Consideration
for December 1, 2013’’ in compliance
with section 1890A(a)(2) of the Act, and
they were reviewed by the MAP in its
MAP 2014 Recommendations on
Measures for More Than 20 Federal
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Programs final report, available at:
http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Report__2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
The proposed chart-abstracted
measure (5 above) Severe Sepsis and
Septic Shock: Management Bundle
(NQF #0500) was included in the MAP
Pre-Rulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS final report,
available at: https://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=72738.
The proposed measures 6–9 above
were included on a publicly available
document entitled ‘‘List of Measures
Under Consideration for December 1,
2012’’ in compliance with section
1890A(a)(2) of the Act, and they were
reviewed by the MAP in its MAP PreRulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS final report,
available at: https://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=72738.
Measures 10 and 11 were included on
a publicly available document entitled
‘‘Measures Under Consideration for
Calendar Year 2012’’ in compliance
with section 1890A(a)(2) of the Act, and
they were reviewed by the MAP in its
Pre-Rulemaking Report: Input on
Measures Under Consideration by HHS
for 2012 Rulemaking available at
https://www.qualityforum.org/
Publications/2012/02/MAP_Pre-Rule
making_Report__Input_on_Measures_
Under_Consideration_by_HHS_for_
2012_Rulemaking.aspx.
We received a number of comments
applying across proposed measures and
will address those comments first before
individually addressing comments
related to specific measures.
Comment: One commenter supported
the inclusion of the CABG mortality and
readmission, heart failure payment, and
pneumonia payment measures in the
Hospital IQR Program. The commenter
preferred that the measures be NQFendorsed. Another commenter
supported CMS’ proposal to increase the
number of outcome measures.
Response: We thank the commenters
for their support.
Comment: Several commenters
expressed concern that four of the five
measures proposed for adoption under
the Hospital IQR Program were not
NQF-endorsed and have not been
recommended by the MAP. The most
frequently expressed concerns were in
regards to the CABG mortality, CABG
readmission, heart failure and
pneumonia payment measures, although
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there were several comments addressing
the other proposed measures that are
not NQF-endorsed. A commenter noted
the NQF process is important to the
reliability and validity of the measures
used in the programs and to monitor
adverse events.
Response: As described above, we
may adopt non-NQF-endorsed measures
under the Hospital IQR Program
exception authority in section
1886(b)(3)(B)(IX)(bb) of the Act. This
provision provides that, in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Although we proposed some measures
that are not currently NQF-endorsed,
they are pending NQF endorsement. We
also considered other available
measures that have been endorsed by
the NQF and found no other feasible
and practical measures. In addition, the
MAP has supported or conditionally
supported several of the measures. We
are actively seeking NQF endorsement
for the claims-based measures. More
detailed discussions for individual
measures are below.
Comment: A commenter requested
that CMS outline its standards for
conducting an environmental scan of
available measures in the absence of a
non-NQF-endorsed measure.
Response: We conduct thorough
environmental scans of available
measures using a standardized system
set out in A Blueprint for the CMS
Measures Management System (http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/Measures
ManagementSystemBlueprint.html). We
follow these core processes set out in
the Blueprint as we develop,
implement, and maintain quality
measures. Our process for conducting
an environmental scan of existing or
related measures is set out below.
First we search for similar or related
measures (existing or in development)
that will help achieve the quality goals.
We keep the search parameters broad to
obtain an overall understanding of the
measures in existence, including
measures that closely meet the contract
requirements and other potential
sources of information. We then look for
measures endorsed and recommended
by multi-stakeholder organizations
whenever applicable and include a
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search for measures developed and/or
implemented by the private sector. Then
we determine what types of measures
are needed to promote the quality goals
for a particular topic/condition or
setting and determine what
measurement gaps exist for the topic
area, as well as existing measures that
may be adopted or adapted for the
project. For example, if the objective is
the development of immunization
measures for use in the home health
setting, it will be necessary to identify
and review existing home health
measures. In addition, it might also be
helpful to analyze immunization
measures used in other settings such as
nursing homes and hospitals.
The CMS Measures Management staff
assists in identifying measures in
development to ensure that no
duplication occurs or to ensure related
measures are developed with
harmonization in mind. Search
parameters include: (1) Measures in the
same setting, but for a different topic; (2)
Measures in a different setting, but for
the same topic; (3) Measures that are
constructed in a similar manner; (4)
Quality indicators; (5) Accreditation
standards; and (5) NQF preferred
practices for the same topic.
Searching for existing and related
measures may involve two steps: (1)
searching databases, and (2) searching
for other sources of information, such as
performance indicators, accreditation
standards, or preferred practices. We
use a variety of databases and sources to
search for existing and related measures.
Below are links to a few readily
available sources:
• National Quality Measures
Clearinghouse (http://www.quality
measures.ahrq.gov/);
• HHS Inventory (http://www.quality
measures.ahrq.gov/hhs-measureinventory/browse.aspx);
• CMS Measures Inventory and
Pipeline (http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/QualityMeasures/CMSMeasures-Inventory.html);
• National Quality Forum (http://
www.qualityforum.org/Measures_
List.aspx);
• AHRQ (http://
www.qualityindicators.ahrq.gov/; and,
• American Medical AssociationPhysician Consortium for Performance
Improvement (http://www.amaassn.org/apps/listserv/x-check/
qmeasure.cgi?submit=PCPI).
We also search other HHS agency
pipeline measures. We search for other
sources of information, such as
performance indicators, accreditation
standards, or preferred practices, that
may pertain to the contract topic.
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Though they may not be as fully
developed as a quality measure, quality
indicators could be further developed to
create a quality measure by providing
detailed and precise specifications.
Measures aligned with those standards
may be easier to implement and be more
readily accepted by the providers. These
standards are linked to specific desired
outcomes, and quality measures may be
partially derived from the preferred
practices reflected in the standards.
Comment: Several commenters
believed that all measures should be
risk-adjusted for SES, explaining that
failing to risk adjust for SES factors will
skew our data measurements and
produce inaccurate and unreliable
outcomes. One commenter emphasized
the need for adjusting for SES factors in
all outcomes measures, arguing that
such variables have an impact on
patient outcomes, but are outside of a
hospitals control. The commenter added
that CMS as not provided data that
shows this point to be untrue. One
commenter stated that CMS should
analyze the differences in performance
for safety net providers to other
hospitals by determining if the means of
performance distribution are
significantly different thus resulting in
penalties. If it does, the commenter
believed that SES risk adjustment would
provide incentives for hospitals to
improve as quality differences for
reasons outside of a hospital’s control
would be illuminated.
Another commenter explained that
many studies show reliable statistical
results that SES is a risk factor for
patient outcomes and that we have not
demonstrated otherwise. As a result, the
commenter believed that not adjusting
for this risk factor obscures quality
differences. One commenter believed
that empirical studies demonstrate that
patient SES impacts outcomes and
failure to account for such impact
disadvantages hospitals that treat them.
Another commenter believed that
hospitals should not be accountable for
outcomes attributable to patient risk
factors. Instead, the commenter believed
that risk adjustment should be
performed if data-stratified by SES show
that safety net hospitals are providing
poorer care for reasons unrelated to
quality.
Another commenter suggested that
CMS’ argument for not risk adjusting for
SES factors is that it would hold
hospitals serving these areas to a
different standard than others. The
commenter stated that CMS’ belief that
risk adjusting for SES obscures true
quality differences is based on the
assumption that SES is not a risk factor
beyond the hospital’s control. Another
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commenter listed unintended
consequences that may result from not
risk adjusting for SES which were
echoed by several commenters. These
potential consequences included not
providing care for disadvantaged
patients so as to not be labeled a poor
performer, shifts in funds to hospitals
caring for affluent patients, and
consumers avoiding providers labeled
poor performers when they are not.
Several commenters were concerned
that not risk-adjusting for SES could
result in safety net providers losing
scarce resources that are necessary to
care for vulnerable patients, which
would potentially make disparities
worse.
Further, one commenter stated that
current CMS measures do not improve
quality and weaken the social safety net.
Another commenter believed that the
current policy to exclude ‘‘factors
related to the disparities in care’’ from
all measures creates a ‘‘one size fits all’’
approach that ignores fundamentally the
challenges that many academic health
centers face in delivering high-quality
care to their entire patient population,
regardless of race, income, or other
socioeconomic characteristics.
Commenters urged CMS to review
important studies published about risk
adjustment for SES and revise measure
methodology to account for SES. One
commenter suggested that CMS comply
with the NQF’s recommendations
related to the use of risk adjustment
versus stratification for patient SES.
Response: We have received many
comments regards risk-adjusting
measures for SES in several quality
programs. We appreciate the
commenters’ concerns and note that
these concerns were addressed in the
FY 2014 IPPS/LTCH PPS final rule (79
FR 50653 through 50654, 50673 through
50674). As described in prior
rulemaking, we do not currently risk
adjust for SES in the Hospital IQR
Program. However, we do risk adjust for
comorbidities (that is, correlated
illnesses) and other factors to ensure
that hospitals are not penalized for
serving populations that are sicker or
have higher incidences of chronic
disease.
We are aware that there are differing
opinions regarding this approach. We
appreciate the commenters’ suggestions
on the importance of addressing SES in
the Hospital IQR Program. We have
continued to consider and evaluate
stakeholder concerns regarding the
influence of patient socioeconomic
status on clinical quality measures. We
refer readers to section IV.H.4. of the
preamble of this final rule for further
discussion of this issue.
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50219
Comment: One commenter stated that
‘‘a large proportion of low-income
patients sometimes achieve good quality
scores even as compared the scores for
hospitals that have a lower proportion
of low-income patients. But this is
simply an anecdotal observation. It is
not a statistically acceptable and reliable
analysis.’’
Response: We thank the commenter
for their feedback, we understand this
comment to mean a hospital with a high
proportion of low SES patients can
perform high in comparison with
hospitals with a relatively low
proportion of SES patients. We note
similar findings in our Chartbook that
follows the trends of hospital
performance on readmission, mortality,
and complication (http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook2013.pdf.) The statement referred to was
based on descriptive statistics of the
measure scores that can be found in our
2013 Medicare Hospital Quality
Chartbook at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook2013.pdf.
The risk-adjustment for clinical
factors likely captures much of the
variation due to SES, therefore resulting
in an attenuation of the impact of SES
factors on hospitals’ results. We
continue to monitor related activities at
NQF, such as the July 23, 2014 decision
by the NQF Board to approve a trial
period to test the impact of
sociodemographic factor risk adjustment
of performance measures (available at:
http://www.qualityforum.org/Press_
Releases/2014/NQF_Board_Approves_
Trial_Risk_Adjustment.aspx), and in
Congress. As we stated in the past, we
are committed to working with the NQF
and other stakeholder communities to
continuously refine our measures and to
address the concerns associated with
SES and risk adjustment. We believe
that continued collaboration with the
stakeholder communities will enable us
to identify feasible ways to
appropriately address any unintended
consequences for providers serving high
proportions of low SES patients.
Comment: A commenter was
concerned that CMS proposed several
new measures for the Hospital IQR
Program that the commenter believes
lack the scientific rigor needed for
public reporting. However, the
commenter did not specify which
proposed measures caused concern.
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Response: We respectfully disagree
with the commenter that the proposed
measures lack the scientific rigor
needed for public reporting. We believe
that these measures, as they are detailed
below, are scientifically rigorous as they
are described.
Comment: Several commenters did
not support the use of the pneumonia
payment measure in the Hospital IQR
Program since it is not NQF-endorsed.
One commenter believed that, because
the measure is not NQF endorsed, it is
too soon to finalize the measure for the
FY 2017 Hospital IQR Program.
Response: We received numerous
comments that concerned both the
Hospital-level, risk-standardized 30-day
episode-of-care payment measure for
pneumonia and Hospital-level, riskstandardized 30-day episode-of-care
payment measure for heart failure
payment measures. We are addressing
those comments here first before
addressing the individual measures.
a. Hospital 30-day, All-cause,
Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery
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(1) Background
CABG is a priority area for outcomes
measure development because it is a
common procedure associated with
considerable morbidity, mortality, and
health care spending. In 2007, there
were 114,028 hospitalizations for CABG
surgery and 137,721 hospitalizations for
combined surgeries for CABG and valve
procedures (‘‘CABG plus valve’’
surgeries) in the U.S.59
Readmission rates following CABG
surgery are high and vary across
hospitals. For example, in 2009
Medicare fee-for-service (FFS) data, the
median hospital-level risk-standardized
readmission rate after CABG was 17.2
percent and ranged from 13.9 percent to
22.1 percent.60 This is consistent with
published data as the average 30-day allcause, hospital-level readmission rate in
New York state was 16.5 percent and
ranged from 8.3 percent to 21.1 percent
among all patients who underwent
CABG surgery between January 1, 2005
and November 30, 2007.61 Among
59 Drye E, Krumholz H, Vellanky S, Wang Y.
Probing New Conditions and Procedures for New
Measure Development: Yale New Haven Health
Systems Corporation; Center for Outcomes Research
and Evaluation.; 2009:1–7.
60 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
61 Hannan EL, Zhong Y, Lahey SJ, et al. 30-day
readmissions after coronary artery bypass graft
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patients readmitted within 30 days, 87.3
percent of readmissions were for
reasons related to CABG surgery, with a
30-day rate of readmissions due to
complications of CABG surgery of 14.4
percent. Patients readmitted within 30
days also experienced a 2.8 percent inhospital mortality rate during their
readmission(s), three-fold higher than
the 30-day mortality rate for patients
without readmissions.62 Hence,
addressing the causes of readmission
will improve outcomes for patients.
Readmissions after CABG also impose
significant health care costs. In 2007,
the Medicare Payment Advisory
Committee (MedPAC) published a
report to Congress in which it identified
the seven conditions associated with the
most costly potentially preventable
readmissions in the U.S.63 Among these
seven, CABG ranked as having the
highest potentially preventable
readmission rate within 15 days
following discharge (13.5 percent) and
the second highest average Medicare
payment per readmission ($8,136).64
The annual cost to Medicare for
potentially preventable CABG
readmissions was estimated at $151
million.
High readmission rates and wide
variation in these rates suggest that
there is room for improvement.
Reducing readmissions after CABG
surgery has been identified as a target
for quality measurement. An all-cause
readmission measure for patients who
undergo CABG surgery will provide
hospitals with an incentive to reduce
readmissions through prevention and/or
early recognition and treatment of
postoperative complications, and
improved coordination of peri-operative
care and discharge planning.
The specifics of the measure
methodology are included in the
measure methodology report we have
posted on our Web site at: http://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html. We refer readers to
the report for further details on the riskadjustment statistical model.
We proposed to include this nonNQF-endorsed measure in the Hospital
IQR Program under the exception
authority in section
1886(b)(3)(B)(IX)(bb) of the Act as
previously discussed in section IX.A.7.
of the preamble of this final rule.
surgery in New York State. JACC Cardiovasc Interv.
2011;4(5):569–576.
62 Ibid.
63 Medicare Payment Advisory Committee. Report
to the Congress: Promoting Greater Efficiency in
Medicare, 2007.
64 Ibid.
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Although the proposed measure is not
currently NQF-endorsed, we considered
available measures that have been
endorsed or adopted by the NQF. We
also are not aware of any other 30-day,
all-cause, unplanned, risk-standardized
readmission rate (RSRR) following
coronary artery bypass graft (CABG)
surgery measures that have been
endorsed or adopted by a consensus
organization, and found no other
feasible and practical measures on this
topic. The measure has been reviewed
by the MAP and was conditionally
supported pending NQF endorsement as
detailed in its Pre-Rulemaking 2014
Map Recommendations Report available
at: https://www.qualityforum.org/
Setting_Priorities/Partnership/MAP_
Final_Reports.aspx. This measure was
submitted to NQF on February 5, 2014
and is currently under review.
(2) Overview of Measure
The CABG readmission measure
assesses hospitals’ 30-day, all-cause
risk-standardized rate of unplanned
readmission following admission for a
CABG procedure. In general, the
measure uses the same approach to risk
adjustment and hierarchical logistic
modeling (HLM) methodology that is
specified for CMS’ other readmission
measures previously adopted for this
program. Information on how the
measure employs HLM can be found in
the 2012 CABG Readmission Measure
Methodology Report (available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
(3) Data Sources
The proposed measure is claimsbased. It uses Medicare administrative
data from hospitalizations for Medicare
FFS beneficiaries hospitalized for a
CABG procedure.
(4) Outcome
The outcome for this measure is 30day, all-cause readmission, defined as
an unplanned subsequent inpatient
admission to any applicable acute care
facility for any cause within 30 days of
the date of discharge from the index
hospitalization. This outcome period is
consistent with other NQF-endorsed
publicly reported readmission measures
(AMI, HF, PN, COPD, HWR, and THA/
TKA).
The measure assesses all-cause
unplanned readmissions (excluding
planned readmissions) rather than
readmissions for CABG only for several
reasons. First, from the patient
perspective, a readmission for any
reason is likely to be an undesirable
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outcome of care, even though not all
readmissions are preventable. Second,
limiting the measure to CABG-related
readmissions may limit the effort focus
too narrowly rather than encouraging
broader initiatives aimed at improving
the overall care within the hospital and
transitions from the hospital setting.
Moreover, it is often hard to exclude
quality issues and accountability based
on the documented cause of
readmission. For example, a patient
who underwent a CABG surgery and
develops a hospital-acquired infection
may ultimately be readmitted for sepsis.
It would be inappropriate to consider
such a readmission to be unrelated to
the care the patient received for their
CABG surgery. Finally, while the
measure does not presume that each
readmission is preventable,
interventions generally have shown
reductions in all types of
readmissions.65 66
The measure does not count planned
readmissions as readmissions. Planned
readmissions would be identified in
claims data using the CMS Planned
Readmission Algorithm Version 3.0 that
detects planned readmissions that may
occur within 30 days of discharge from
the hospital. Version 2.1 of the
algorithm was finalized for use in the
current Hospital IQR Program
readmission measures in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50785
through 50787, 50790 through 50792
and 50794 through 50798). However, we
proposed to update the algorithm to
version 3.0, and details on the updates
to this algorithm can be found in section
IX.A.6.a. of the preamble of this final
rule. The proposed CABG readmission
measure uses the planned readmission
algorithm tailored for CABG patients.
We adapted the algorithm for this group
of patients with input from CABG
surgeons and other experts, narrowing
the types of readmissions considered
planned since planned readmissions
following CABG are less common and
less varied than among patients
discharged from the hospital following
a medical admission. More detailed
information on how the CABG measure
incorporates the Planned Readmission
Algorithm Version 3.0 can be found on
the CMS Web site at: http://
www.cms.gov/Medicare/Quality65 Gulshan Sharma, Kou Yong-Fang, Freeman
Jean L, Zhang Dong D, Goodwin James S.:
Outpatient Follow-up Visit and 30-Day Emergency
Department Visit and Readmission in Patients
Hospitalized for Chronic Obstructive Pulmonary
Disease. Arch Intern Med. Oct. 2010;170:1664–
1670.
66 Nelson EA, Maruish ME, Axler JL.: Effects of
Discharge Planning and Compliance with
Outpatient Appointments on Readmission Rates.
Psychiatr Serv. July 1 2000;51(7):885–889.
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Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. Once at the
Web site, users should open the
Coronary Artery Bypass Graft (CABG)
Readmission ZIP file, then open the file
labeled, ‘‘Version10_Readmission_
CABG_Measure_Methodology_Report_3
19 2014’’ and refer to Section 2.3.3. For
the CABG measure, unplanned
readmissions that fall within the 30-day
post-discharge timeframe from the index
admission would not be counted as
readmissions for the index admission if
they were preceded by a planned
readmission.
(5) Cohort
The cohort includes patients aged 65
years and older who received a
qualifying CABG procedure at an acute
care facility. Patients are eligible for
inclusion if they had a qualifying CABG
procedure and continuous enrollment in
Medicare FFS one year prior to the first
day of the index hospital stay and
through 30 days post-discharge. The
index stay is the stay that triggers the
30-day measurement period.
In order to include a clinicallycoherent set of patients in the measure,
we sought input from clinical experts
regarding the inclusion of other
concomitant cardiac and non-cardiac
procedures, such as valve replacement
and carotid endarterectomy. Adverse
clinical outcomes following such
procedures are higher than those
following ‘‘isolated’’ CABG procedures,
that is, CABG procedures performed
without concomitant high-risk cardiac
and non-cardiac procedures.67 Limiting
the measure cohort to ‘‘isolated’’ CABG
patients is consistent with published
reports of CABG outcomes9; therefore,
the measure cohort considers only
patients undergoing isolated CABG as
eligible for inclusion in the measure. We
defined isolated CABG patients as those
undergoing CABG procedures without
concomitant valve or other major
cardiac, vascular or thoracic procedures.
In addition, our clinical experts,
consultants, and Technical Expert Panel
(TEP) members agreed that an isolated
CABG cohort is a clinically coherent
cohort for quality measurement. For
detailed information on the cohort
definition, we refer readers to the 2012
CABG Readmission Measure
Methodology Report on the CMS Web
site at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment67 Hannan EL, Zhong Y, Lahey SJ, et al. 30-day
readmissions after coronary artery bypass graft
surgery in New York State. JACC Cardiovasc Interv.
2011;4(5):569–576.
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Instruments/HospitalQualityInits/
Measure-Methodology.html.
(6) Inclusion and Exclusion Criteria
The measure includes
hospitalizations for patients who are 65
years of age or older at the time of index
admission and for whom there was a
complete 12 months of Medicare FFS
enrollment to allow for adequate risk
adjustment. The measure excludes the
following admissions from the measure
cohort: (1) Admissions for patients who
are discharged against medical advice
(excluded because providers do not
have the opportunity to deliver full care
and prepare the patient for discharge);
(2) admissions for patients who die
during the initial hospitalization (these
patients are not eligible for
readmission); (3) admissions for patients
with subsequent qualifying CABG
procedures during the measurement
period (a repeat CABG procedure during
the measurement period very likely
represents a complication of the original
CABG procedure and is a clinically
more complex and higher risk surgery,
therefore we select the first CABG
admission for inclusion in the measure
and exclude subsequent CABG
admissions from the cohort); and (4)
admissions for patients without at least
30 days post-discharge enrollment in
Medicare FFS (excluded because the 30day readmission outcome cannot be
assessed in this group).
(7) Risk-Adjustment
The measure adjusts for differences
across hospitals in how at risk their
patients are for readmission relative to
patients cared for by other hospitals.
The measure uses claims data to
identify patient clinical conditions and
comorbidities to adjust patient risk for
readmission across hospitals, but does
not adjust for potential complications of
care. We refer readers to section IV.4.H
of the reamble of this final rule for
further discussion of risk-adjustment for
socioeconomic factors.
(8) Calculating the Risk-Standardized
Readmission Ratio (RSRR)
The measure is calculated using
hierarchical logistic modeling (HLM).
This approach appropriately accounts
for the types of patients a hospital treats
(that is, hospital case mix), the number
of patients it treats, and the quality of
care it provides. The HLM is an
appropriate statistical approach to
measuring quality based on patient
outcomes when the patients are
clustered within hospitals (and
therefore the patients’ outcomes are not
statistically independent) and the
number of eligible patients for the
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measure varies from hospital to
hospital. As noted above, the measure
methodology defines hospital case mix
based on the clinical diagnoses
provided in the hospital claims for their
patients’ inpatient and outpatient visits
for the 12 months prior to the CABG
hospitalization, as well as those present
in the claims for care at admission. The
methodology, however, specifically
does not account for diagnoses present
in the index admission that may
indicate complications rather than
patient comorbidities.
The RSRR is calculated as the ratio of
the number of predicted readmissions to
the number of expected readmissions
and then the ratio is multiplied by the
national unadjusted readmission rate.
The ratio is greater than one for
hospitals that have more readmissions
that would be expected for an average
hospital with similar cases and less than
one if the hospital has fewer
readmissions than would be expected
for an average hospital with similar
cases. This approach is analogous to a
ratio of ‘‘observed’’ or ‘‘crude’’ rate to an
‘‘expected’’ or risk-adjusted rate used in
other similar types of statistical
analyses.
The RSRR is a point estimate—the
best estimate of a hospital’s readmission
rate based on the hospital’s case mix.
For displaying the measure for the
Hospital IQR Program, we computed an
interval estimate, which is similar to the
concept of a confidence interval, to
characterize the level of uncertainty
around the point estimate. We use the
point estimate and interval estimate to
determine hospital performance (for
example, higher than expected, as
expected, or lower than expected). For
more detailed information on the
calculation methodology, we refer
readers to our Web site at: http://
cms.gov/Medicare/QualityInitiatives
PatientAssessmentInstruments/
HospitalQualityInits/MeasureMethodology.html.
We invited public comment on this
proposal.
Comment: Several commenters
supported the inclusion of CABG
readmission into the Hospital IQR
Program. One commenter specifically
believes the CABG measure will lead to
increased attention to care after
discharge.
Response: We thank the commenters
for their support.
Comment: Several commenters
recommended that CMS focus on
developing an electronically specified
measure based on the ICD–10–CM/PCS
coding system for future adoption
instead of the current proposed
measure.
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Response: We thank the commenters
and will take this suggestion into
consideration as we move towards use
of electronic clinical quality measures
for CABG measures.
Comment: Several commenters did
not support inclusion of the CABG
readmission measure in the Hospital
IQR Program because the measure is not
NQF-endorsed.
Response: We proposed to include
this non-NQF-endorsed measure under
the Hospital IQR Program exception
authority in section
1886(b)(3)(B)(IX)(bb) of the Act.
Although the proposed measure is not
currently NQF-endorsed, we considered
available measures that have been
endorsed or adopted by the NQF. We
also are not aware of any other similar
measures that have been endorsed or
adopted by a consensus organization,
and found no other feasible and
practical measures on this topic. We
refer readers to section IX.A.7. of the
preamble of this final rule where we
discuss other comments on our
adoption of non-NQF-endorsed
measures. On February 5, 2014, we
submitted the Hospital-Level 30-Day
All-Cause Unplanned Readmission
Following Coronary Artery Bypass Graft
(CABG) Surgery measure to NQF for
endorsement.
Comment: Several commenters
oppose the CABG readmission measure
because it is not risk-adjusted for SES.
Another commenter also suggested
removing other readmission measures
from the Hospital IQR Program until
they are risk-adjusted for SES. Several
commenters suggest following NQFendorsed panel recommendations that
propose evidence be presented in either
support for or against the inclusion of
SES in the measure. A commenter
requested we risk-adjust the measure for
SES and stated that this materially
impacts the patient’s likelihood of being
readmitted, and the members on NQF’s
panel to examine adjusting for SES
recommended adjusting for SES when
appropriate. A commenter stated that
the lack of risk-adjustment of this
measure materially impacts the patient’s
likelihood of being readmitted.
Response: We appreciate the
commenters’ concerns and note that
these concerns were addressed in the
FY 2014 IPPS/LTCH PPS final rule (79
FR 50653 through 50654, 50673 through
50674). As described in prior
rulemaking, we do not currently risk
adjust for SES in the Hospital IQR
Program. However, we do risk adjust for
comorbidities (that is, correlated
illnesses) and other factors to ensure
that hospitals are not penalized for
serving populations that are sicker or
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have higher incidences of chronic
disease.
We are aware that there are differing
opinions regarding this approach. We
appreciate the commenters’ suggestions
on the importance of addressing SES in
the Hospital IQR Program. We have
continued to consider and evaluate
stakeholder concerns regarding the
influence of patient socioeconomic
status on clinical quality measures. We
have received many comments regards
risk-adjusting measures for SES in
several quality programs. We refer
readers to section IV.H.4. of the
preamble of this final rule for further
discussion of this issue.
Comment: Several commenters noted
that there could be unintended
consequences from adopting this
measure. One commenter believed it is
equally likely to result in hospitals
avoiding complex cases in order to
avoid potential penalty. Another
commenter requested that CMS
carefully monitor CABG utilization in
high-risk, older patients to ensure
hospitals are not avoiding performing
them for high risk patients in order to
appear as lower readmission. If
evidence is found that CABG surgeries
are not being offered to high-risk
patients, the commenters suggested that
CMS may need to reconsider its risk
adjustment methodology to mitigate this
unintended consequence.
Response: We note that the measures
are risk-adjusted to take into account
clinically complicated conditions. We
appreciate commenters’ concerns for
potential unintended consequences of
the measure. We believe the measure is
adequately risk-adjusted for high-risk
patients and so will not create a
disincentive to treat these patients, but
we will consider monitoring for any
shift in their care (for example, by
evaluating the risk profile of Medicare
patients undergoing surgery before and
after commencement of public
reporting). The proposed CABG
readmission measure adjusts for
differences across hospitals in the level
of risk their patients have for
readmission relative to patients cared
for by other hospitals. The measure uses
administrative claims data to identify
patient clinical conditions and
comorbidities to adjust patient risk for
readmission across hospitals, but does
not adjust for potential complications of
care.
Comment: One commenter opposed
the measure construction and riskadjustment methodology, citing
concerns that the low R-squared meant
that the measure does not truly
differentiate performance between
hospitals.
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Response: The commenter refers to
the R-squared statistic, but this is not a
statistic used to evaluate the CABG
measures. Therefore, we are assuming
the commenter’s primary concern is
with the c-statistic of the measure. The
c-statistic evaluates the measure’s
ability to discriminate or differentiate
among low- versus high-risk patients.
For measures used to profile hospital
performance the goal is not always to
achieve the highest c-statistic possible.
The role of risk-adjustment in hospital
profiling models is to level the playing
field for hospitals for measures that
assess relative performance—that is,
how well hospitals fare compared to
others with a similar patient case-mix.
The risk-adjustment variables should be
only those that are inherent to the
patient and present at the time of
admission. Some variables that might
increase predictive power, such as
complications of care, would not be
appropriate for inclusion in an outcome
quality measure, even if they would
lead to a higher c-statistic. The cstatistic of this CABG measure is similar
to other measures that are NQFendorsed and in use, such as the AMI/
HF/PN readmission measures.
In addition, this measure’s risk model
has been validated using registry data
from the Society of Thoracic Surgeons’
(STS) Adult Cardiac Surgery Database,
which produced nearly identical cstatistics in a matched set of patients
with correlation coefficients between
0.92 and 0.96, depending upon the
statistic used.68
Comment: One commenter does not
support the CABG readmission measure,
because it holds hospitals responsible
for pre-existing underlying conditions.
The commenter expected that risk
adjusting is unlikely to be sufficient.
Response: We believe that the
measure should appropriately account
for patient case mix, including preexisting conditions. This measure’s risk
model includes a range of medical and
surgical comorbidities predictive of
complications and readmissions
following CABG surgery. In addition, as
noted above, the risk model has been
validated against a clinical risk model
using registry data from the STS’ Adult
Cardiac Surgery Database.69
68 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
69 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
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Comment: One commenter noted that
the CABG readmission measure has
poor discrimination ability.
Response: As outlined above, we
believe the commenter’s primary
concern is with the c-statistic of the
measure. Discrimination refers to the
ability to distinguish high risk subjects
from low risk. The c-statistic is one of
the statistical tools used to assess
discrimination. We would like to clarify
the important difference between
predictive models intended for patientlevel risk-stratification versus models
used to profile hospital performance. In
a patient-level predictive model, the
objective is to best predict patient
outcomes; the risk-adjustment variables
are a means to better predict these
outcomes. As an example, a patient who
has a serious complication of care may
be at higher risk of mortality and
readmission; therefore, complications
might be useful to include in a model
used for patient-level prediction.
By contrast, the role of riskadjustment in a hospital profiling model
is to level the playing field for hospitals
for measures that assess relative
performance—that is, how well
hospitals are doing compared to others
with similar patients. The riskadjustment variables should be only
those that are inherent to the patient
and present at admission. Although risk
adjusting for complications of care
could increase the statistical power of a
profiling model, it would not make
sense to risk-adjust for complications
here since it could lead hospitals with
high rates of complications to appear to
be performing better than hospitals with
similar patients even though the quality
of care is worse.
In addition, as noted above, this
measure’s risk model has been validated
using registry data from the STS’ Adult
Cardiac Surgery Database and produced
nearly identical c-statistics in a matched
set of patients with correlation
coefficients between 0.92 and 0.96,
depending upon the statistic used.70
Comment: One commenter requested
that the measure differentiate between
readmissions within and outside the
control of the bypass surgeon.
Response: We interpret readmissions
‘‘within and outside the control of the
bypass surgeon’’ to mean those that are
only related to the CABG surgery. We
proposed this measure for hospitalspecific performance measurement, not
for measurement of surgeon-level
70 Suter L.G., Wang, C., Vellanky S., Potteiger J.,
Curtis J., Lin Z., Geary L.L., Krumholz H.M., Drye
E.D. Hospital-level 30-day All-Cause Unplanned
Readmission Following Coronary Artery Bypass
Graft Surgery: Report prepared for the Centers for
Medicare & Medicaid Services. 2012.
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50223
performance. The measure defines the
outcome as ‘‘all-cause’’ unplanned
readmissions rather than readmissions
only related to the CABG surgery for
several reasons. First, from the patient
perspective, readmission for any reason
is likely to be an undesirable outcome
of care.
Second, there is no reliable way to
determine whether a readmission is
related to the previous hospitalization
based on the documented cause of
readmission. For example, a CABG
patient with post-operative left
ventricular dysfunction inadequately
managed by the hospital performing the
surgery may ultimately be readmitted
for heart failure. It would be
inappropriate to treat this readmission
as unrelated to the care the patient
received for their CABG surgery.
Third, the range of potentially
avoidable readmissions also includes
those not directly related to the index
condition such as those resulting from
medication reconciliation errors, poor
communication at discharge, or
inadequate follow-up post-discharge.
Therefore, we believe that creating a
comprehensive list of potentially
avoidable readmissions related to the
previous hospitalization’s condition
category would be arbitrary and,
ultimately, challenging to implement.
Fourth, all existing CMS readmission
measures report all-cause readmission,
making this approach consistent with
existing measures.
Fifth, research shows that
readmission reduction interventions can
reduce all-cause readmission, not only
condition-specific readmission.
Finally, defining the outcome as allcause readmissions may encourage
hospitals to implement broader
initiatives aimed at improving the
overall care within the hospital and
transitions from the hospital setting
instead of limiting the focus to a narrow
set of condition-specific approaches.
Comment: One commenter cited a
study71 that concluded that readmission
rates for the majority of hospitals were
unreliable due to low case volume over
the measurement period.
Response: The study cited uses a
different approach to calculate hospitalspecific risk-adjusted readmission rates,
including a logistic regression model
and distinct risk variables, than that
used in our proposed measure. Our
proposed measure uses a hierarchical
logistic regression model to account for
the clustering of patients within
71 Shih and Dimick. Reliability of readmission
rates as a hospital quality measure in cardiac
surgery. Annals of Thoracic Surgery. April 2014;
97:1214–1219.
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hospitals while risk-adjusting for
differences in patient case-mix.
Therefore, we do not believe that
conclusions drawn from this study are
generalizable to this measure. Reliability
testing of this measure score using a
split-sample approach, in which each
hospitals’ patients are divided into two
completely distinct groups and the
measure score is calculated for each
group and compared, produces an
intraclass correlation coefficient of 0.33
on a three year data sample (which is
the equivalent of a year and a half of
data for each comparison group).
One limitation of this split-sample
approach is that the reliability is
estimated under the assumption of only
half the number of patients per hospital
that would normally be used. Using the
Spearman Brown prophecy formula 72 to
estimate the reliability of the measure if
the entire three year cohort was used
(that is, if the number of items in a test
increases by a factor of N, then the new
reliability r’ can be estimated from the
original reliability. Validity for this
measure has been documented by both:
(1) face validity assessment by a
Technical Expert Panel (TEP)—79
percent of TEP members agreed (71
percent moderately or strongly agreed)
that the measure will provide an
accurate reflection of quality, and (2) in
a formal validation study against
clinical registry data that documented
correlations in excess of 0.90 between
clinical data and claims-based risk
models.73
To assess face validity, we surveyed
the Technical Expert Panel and asked
each member to rate the following
statement using a six-point scale
(1=Strongly Disagree, 2=Moderately
Disagree, 3=Somewhat Disagree,
4=Somewhat Agree, 5=Moderately
Agree, and 6=Strongly Agree): ‘‘The
readmission rates obtained from the
readmission measure as specified will
provide an accurate reflection of
quality.’’ Fourteen TEP members
provided the following responses:
Moderately Disagreed (2), Somewhat
Disagreed (2), Somewhat Agreed (4),
Moderately Agreed (5), and Strongly
Agreed (1). Therefore, 71 percent of TEP
members agreed (43 percent moderately
or strongly agreed) that the measure will
provide an accurate reflection of quality.
72 Traub, R. (1994).MMSS Reliability for the
Social Sciences: Theory and Applications (Page
100). Sage Publications. Newbury Park CT.
73 Suter L.G., Wang C., Araas M., Joyce E.,
Vellanky S., Potteiger J., Lin Z., Curtis J., Geary L.L.,
Krumholz H.M., Drye E.D. Hospital-level 30-day
All-Cause Mortality Following Coronary Artery
Bypass Graft Surgery: Report prepared for the
Centers for Medicare & Medicaid Services. 2012.
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After consideration of the public
comments we received, we are
finalizing the Hospital 30-day, Allcause, Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure as proposed.
b. Hospital 30-day, All-cause, RiskStandardized Mortality Rate (RSMR)
Following Coronary Artery Bypass Graft
(CABG) Surgery.74
(1) Background
CABG is a priority area for outcomes
measure development because it is a
common procedure associated with
considerable morbidity, mortality, and
health care spending. In 2007, there
were 114,028 hospitalizations for CABG
surgery and 137,721 hospitalizations for
combined surgeries for CABG and valve
procedures (‘‘CABG plus valve’’
surgeries) among Medicare FFS patients
in the U.S.75
CABG surgeries are costly procedures
that account for the majority of major
cardiac surgeries performed nationally.
In FY 2009, isolated CABG surgeries
accounted for almost half (47.6 percent)
of all cardiac surgery hospital
admissions in Massachusetts.76 This
provides an example of the frequency in
which a CABG Is performed for a
patient admitted for cardiac surgery. In
2008, the average Medicare payment
was $30,546 for CABG without valve
and $47,669 for CABG plus valve
surgeries.77
Mortality rates following CABG
surgery are not insignificant and vary
across hospitals. For example, in 2009
Medicare FFS data indicated that the
median hospital-level, risk-standardized
mortality rate after CABG was 3.0
percent and ranged from 1.5 percent to
7.9 percent.78 Even within a single state,
the observed in-hospital, 30-day allcause, hospital-level mortality rate was
1.81 percent and ranged from 0.0
percent to 5.6 percent among patients
who were discharged after CABG
surgery (without any other major heart
74 Krumholz H. CABG Mortality Measure
Methodology Report Section 1, Subtask 3.1,
Deliverable #49a: Yale New Haven Systems
Corporation; Center for Outcomes Research and
Evaluation; 2012.
75 Drye E, Krumholz H, Vellanky S, Wang Y.
Probing New Conditions and Procedures for New
Measure Development: Yale New Haven Systems
Corporation; Center for Outcomes Research and
Evaluation; 2009:7.
76 Massachusetts Data Analysis Center. Adult
Coronary Artery Bypass Graft Surgery in the
Commonwealth of Massachusetts: Hospital and
Surgeons Risk-Standardized 30-Day Mortality Rates.
In: Health MDoP, ed. Boston; 2009:77.
77 Pennsylvania Health Care Cost Containment
Council. Cardiac Surgery in Pennsylvania 2008–
2009. Harrisburg; 2011:60.
78 Ibid.
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surgery earlier in the hospital stay) in
New York in 2008. The risk-adjusted
mortality rate ranged from 0.0 percent to
8.2 percent.79
Variation in these rates suggests that
there is room for improvement. An allcause mortality measure for patients
who undergo CABG surgery will
provide hospitals with an incentive to
reduce mortality through improved
coordination of perioperative care and
discharge planning. This is further
supported by the success of registrybased mortality measures in reducing
CABG mortality rates. For example,
California reports that CABG mortality
in that state has steadily declined from
2.9 percent in 2003, the first year of
mandatory reporting of their state
registry measure, to 2.2 percent in
2008.80
The specifics of the measure
methodology are included in the
measure methodology report we have
posted on our Web site at: http://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html. We refer readers to
the report for further details on the riskadjustment statistical model.
We proposed to include this nonNQF-endorsed measure in the Hospital
IQR Program under the exception
authority in section
1886(b)(3)(B)(IX)(bb) of the Act as
previously discussed in section IX.A.7.
of the preamble of this final rule.
Although the proposed measure is not
currently NQF-endorsed, we considered
available measures that have been
endorsed or adopted by the NQF, and
we were unable to identify any
measures that assess hospital 30-day,
all-cause, risk-standardized mortality
rate (RSMR) following coronary artery
bypass graft (CABG) surgery. We also
are not aware of any other 30-day, allcause, RSMR measures that have been
endorsed or adopted by a consensus
organization, and found no other
feasible and practical measures on this
topic. The measure has been reviewed
by the MAP and was conditionally
supported pending NQF endorsement as
detailed in its Pre-Rulemaking 2014
Map Recommendations Report available
at: https://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Report__2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
79 New York State Department of Health. Adult
Cardiac Surgery in New York State 2006–2008;
2010:54.
80 California CABG Outcomes Reporting Program.
The California Report on Coronary Artery Bypass
Graft Surgery: 2007–2008 Hospital and Surgeon
Data. 2011:119.
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This measure was submitted to NQF on
March 17, 2014 and is currently under
review.
(2) Overview of Measure
The CABG mortality measure assesses
hospitals’ 30-day, all-cause riskstandardized rate of mortality following
admission for a CABG procedure. In
general, the measure uses the same
approach to risk adjustment and
hierarchical logistic modeling (HLM)
methodology that is specified for CMS’
other mortality measures previously
adopted for this program. Information
on how the measure employs HLM can
be found in the 2012 CABG Mortality
Measure Methodology Report (available
at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
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(3) Data Sources
The proposed measure is claimsbased. It uses Medicare administrative
data from hospitalizations for Medicare
FFS beneficiaries hospitalized for a
CABG procedure.
(4) Outcome
The outcome for this measure is 30day, all-cause mortality, defined as
death for any cause within 30 days of
the date of the index procedure date. We
use a standard period of assessment so
that the outcome for each patient is
measured consistently. Without a
standard period, variation in length of
stay would have an undue influence on
mortality rates, and institutions would
have an incentive to adopt strategies to
shift deaths out of the hospital without
improving quality. The measure differs
from the timeframe used in the other 30day mortality measures in the Hospital
IQR Program by starting the outcome
window from the procedure date rather
than the admission date. Data from 2009
Medicare FFS patients demonstrates
that 25 percent of CABG procedures
occurred more than 3 days after the
admission date. Therefore, dating the
measurement period from admission
would potentially underestimate the
period of risk for a substantial number
of hospitals.
We chose 30-day mortality because it
is an outcome that can be strongly
influenced by hospital care and the
early transition to the outpatient setting.
Clinical experts concur that a 30-day
timeframe is clinically sensible for
measuring outcomes following CABG
surgery.
The measure assesses all-cause
mortality rather than CABG-specific
mortality for several reasons. First,
limiting the measure to CABG-related
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mortalities may limit the focus of efforts
to improve care to a narrow set of
approaches as opposed to encouraging
broader initiatives aimed at improving
the overall in-hospital care. Second,
cause of death may be unreliably
recorded and it is often not possible to
exclude quality issues and
accountability based on the documented
cause of mortality. Finally, from a
patient perspective, death due to any
cause is the outcome that matters.
(5) Cohort
The cohort includes patients aged 65
years and older who received a
qualifying CABG procedure at an acute
care facility. Patients are eligible for
inclusion if they had a qualifying CABG
procedure and continuous enrollment in
Medicare FFS one year prior to the first
day of the index hospital stay and
through 30 days post-procedure.
In order to include a clinicallycoherent set of patients in the measure,
we sought input from clinical experts
regarding the inclusion of other
concomitant cardiac and non-cardiac
procedures, such as valve replacement
and carotid endarterectomy. Adverse
clinical outcomes following such
procedures are higher than those
following ‘‘isolated’’ CABG procedures,
that is, CABG procedures performed
without concomitant high-risk cardiac
and non-cardiac procedures.81 Limiting
the measure cohort to ‘‘isolated’’ CABG
patients is consistent with published
reports of CABG outcomes; 82 therefore,
the measure cohort considers only
patients undergoing isolated CABG as
eligible for inclusion in the measure. We
defined isolated CABG patients as those
undergoing CABG procedures without
concomitant valve or other major
cardiac, vascular or thoracic procedures.
In addition, our clinical experts,
consultants, and Technical Expert Panel
(TEP) members agreed that an isolated
CABG cohort is a clinically coherent
cohort for quality measurement. For
detailed information on the cohort
definition, we refer readers to the 2012
CABG Mortality Measure Methodology
Report on the CMS Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
(6) Inclusion and Exclusion Criteria
The measure includes
hospitalizations for patients who are 65
years of age or older at the time of index
81 Hannan EL, Zhong Y, Lahey SJ, et al. 30-day
readmissions after coronary artery bypass graft
surgery in New York State. JACC Cardiovasc Interv.
2011;4(5):569–576.
82 Ibid.
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admission and for whom there was a
complete 12 months of Medicare FFS
enrollment to allow for adequate risk
adjustment. The measure excludes the
following admissions from the measure
cohort: (1) Admissions for patients who
leave hospital against medical advice
excluded because providers do not have
the opportunity to deliver full care and
prepare the patient for discharge); and
(2) admissions for patients with
subsequent qualifying CABG procedures
during the measurement period (a
repeat CABG procedure during the
measurement period very likely
represents a complication of the original
CABG procedure and is a clinically
more complex and higher risk surgery,
therefore we select the first CABG
admission for inclusion in the measure
and exclude subsequent CABG
admissions from the cohort).
(7) Risk-Adjustment
The measure adjusts for differences
across hospitals in how at risk their
patients are for death relative to patients
cared for by other hospitals. The
measure uses claims data to identify
patient clinical conditions and
comorbidities to adjust patient risk for
readmission across hospitals, but does
not adjust for potential complications of
care. We refer readers to section IV.H.4
of the preamble of this final rule for
further discussion of risk-adjustment for
socioeconomic factors.
(8) Calculating the Risk-Standardized
Mortality Ratio (RSMR)
The measure is calculated using
hierarchical logistic modeling (HLM).
This approach appropriately accounts
for the types of patients a hospital treats
(that is, hospital case mix), the number
of patients it treats, and the quality of
care it provides. The HLM is an
appropriate statistical approach to
measuring quality based on patient
outcomes when the patients are
clustered within hospitals (and
therefore the patients’ outcomes are not
statistically independent) and the
number of eligible patients for the
measure varies from hospital to
hospital. As noted above, the measure
methodology defines hospital case mix
based on the clinical diagnoses
provided in the hospital claims for their
patients’ inpatient and outpatient visits
for the 12 months prior to the CABG
hospitalization, as well as those present
in the claims for care at admission. The
methodology, however, specifically
does not account for diagnoses present
in the index admission that may
indicate complications rather than
patient comorbidities.
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The RSMR is calculated as the ratio of
the number of predicted deaths to the
number of expected deaths and then the
ratio is multiplied by the national
unadjusted mortality rate. The ratio is
greater than one for hospitals that have
more deaths than would be expected for
an average hospital with similar cases
and less than one if the hospital has
fewer deaths than would be expected for
an average hospital with similar cases.
This approach is analogous to a ratio of
‘‘observed’’ or ‘‘crude’’ rate to an
‘‘expected’’ or risk-adjusted rate used in
other similar types of statistical
analyses.
The RSMR is a point estimate—the
best estimate of a hospital’s mortality
rate based on the hospital’s case mix.
For displaying the measure for the
Hospital IQR Program, we computed an
interval estimate, which is similar to the
concept of a confidence interval, to
characterize the level of uncertainty
around the point estimate. We use the
point estimate and interval estimate to
determine hospital performance (for
example, higher than expected, as
expected, or lower than expected). For
more detailed information on the
calculation methodology, we refer
readers to our Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
We invited public comment on this
proposal.
Comment: Several commenters
supported the inclusion of CABG
mortality into the Hospital IQR Program.
Response: We thank the commenters
for their support.
Comment: Several commenters
opposed adoption of this measure
because it is not NQF-endorsed.
Response: We proposed to include
this non-NQF-endorsed measure under
the Hospital IQR Program exception
authority in section
1886(b)(3)(B)(IX)(bb) of the Act. This
provision provides that, in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
We refer readers to section IX.A.7. of the
preamble of this final rule where we
discuss other commenters concerns
regarding our use of non-NQF-endorsed
measures.
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Although the proposed measure is not
currently NQF-endorsed, it is pending
NQF endorsement. We considered
available measures that have been
endorsed or adopted by the NQF. We
also are not aware of any other similar
measures that have been endorsed or
adopted by a consensus organization,
and found no other feasible and
practical measures on this topic. We
refer readers to section IX.A.7. of the
preamble of this final rule for a general
discussion on adoption of non-NQFendorsed measures. This measure was
submitted to NQF for endorsement and
is currently under review.
Comment: One commenter
recommended that CMS focus on
developing an electronically-specified
measure based on ICD–10–CM/PCS for
future adoption instead of the current
proposed measure.
Response: We will take this
suggestion into consideration as we
move towards use of electronic clinical
quality measures for CABG measures.
Comment: One commenter did not
support the measure construction and
risk-adjustment methodology, citing
concerns that the low R-squared meant
that the measure does not truly
differentiate performance between
hospitals.
Response: We refer readers to our
discussion of this issue above in
response to the same concern regarding
our proposed Hospital 30-day, Allcause, Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure.
Comment: One commenter expressed
concerns about the reliability and
validity of CMS’ mortality measures.
Several commenters opposed this
measure because they believed that a
more robust methodology is needed to
appropriately hold hospitals
accountable.
Response: We refer readers to our
discussion of this issue above in
response to the same concern expressed
for reliability, validity, and robust
methodology regarding our proposed
Hospital 30-day, All-cause, Unplanned,
Risk-Standardized Readmission Rate
(RSRR) Following Coronary Artery
Bypass Graft (CABG) Surgery measure.
We understand ‘‘robust’’ as having
good reliability and validity and we
believe we demonstrated this in the
response below which is the similar to
the response for the CABG readmission
measure.
Comment: Several commenters
believed that the CABG mortality
measure has poor discrimination ability.
One commenter expressed concern
regarding the ability of claims data to
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adequately adjust for mortality risk. The
commenter suggested comparing results
for this measure with results for the STS
CABG mortality measure. A commenter
expressed concern regarding the ability
of claims data to adequately adjust for
mortality risk. The commenter
suggested comparing results for this
measure with results for the RiskAdjusted Operative Mortality for CABG
mortality measure.
Response: We thank the commenters
for their feedback. The STS CABG
measure provides a clinical model based
upon registry data and the CMS CABG
mortality measures uses administrative
claims data. These measures have
similar but not identical mortality
outcomes STS NQF #0119, includes
inpatient deaths beyond 30 days, and
NQF #2558, excludes inpatient deaths
beyond 30 days. For these reasons we
would not compare the results of these
measures. We refer readers to our
discussion of this issue in response to
the same concern above regarding our
proposed Hospital 30-day, All-cause,
Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure.
Comment: Several commenters did
not support the CABG mortality
measure as it does not risk adjust for
SES. Commenters requested CMS risk
adjust the measure for SES and stated
that this materially impacts the patient’s
likelihood of death and the members on
NQF’s panel to examine adjusting for
SES recommended adjusting for SES
when appropriate.
Response: We refer readers to our
earlier responses in sections IX.A.6. and
7. Of the preamble to this final rule
under our Hospital IQR Program
discussion. We also refer readers to our
responses in section IV.H.4. of the
preamble to this final rule for further
discussion of this issue.
Comment: One commenter requested
that CMS carefully monitor CABG
utilization in high-risk, older patients to
ensure hospitals are not avoiding
performing them for high risk patients
in order to appear as lower mortality.
The commenter noted that if evidence is
found that CABG surgeries are not being
offered to high-risk patients, CMS may
need to reconsider its risk adjustment
methodology to mitigate this
unintended consequence.
Response: We refer readers to our
discussion of this issue in response to
the same concern regarding our
proposed Hospital 30-day, All-cause,
Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following
Coronary Artery Bypass Graft (CABG)
Surgery measure.
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After consideration of the public
comments we received, we are
finalizing the Hospital 30-day, Allcause, Risk-standardized Mortality Rate
(RSMR) Following Coronary Artery
Bypass Graft (CABG) Surgery measure
as proposed.
c. Hospital-level, Risk-standardized 30day Episode-of-Care Payment Measure
for Pneumonia
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(1) Background
Providing high-value care is an
essential part of our mission to provide
better health care for individuals, better
health for populations, and lower costs
for health care. In order to incentivize
innovation that promotes high-quality
care at high value it is critical to
examine measures of payment and
patient outcomes concurrently. There is
evidence of variation in payments at
hospitals for pneumonia patients; mean
30-day risk-standardized payment
among Medicare FFS patients aged 65 or
older hospitalized for pneumonia in
2008–2009 was $13,237, and ranged
from $8,281 to $27,975 across 4,155
hospitals. However, high or low
payments to hospitals are difficult to
interpret in isolation. Some high
payment hospitals may have better
clinical outcomes when compared with
low payment hospitals while other high
payment hospitals may not have better
outcomes. For this reason, the value of
hospital care is more clearly assessed
when pairing hospital payments with
hospital quality. Therefore, we proposed
to include this non-NQF-endorsed
measure in the Hospital IQR Program
under the exception authority in section
1886(b)(3)(B)(IX)(bb) of the Act as
previously discussed in section IX.A.7.
of the preamble of this final rule.
Although the proposed measure is not
currently NQF-endorsed, we considered
available measures that have been
endorsed or adopted by the NQF, and
we were unable to identify any
measures that assess hospital riskstandardized payment associated with a
30-day episode-of-care for pneumonia.
We also are not aware of any other 30day episode-of- care pneumonia
measures that have been endorsed or
adopted by a consensus organization,
and found no other feasible and
practical measures on this topic. The
MAP supports this measure but
reiterated the need for this measure to
be submitted for NQF-endorsement:
https://www.qualityforum.org/Setting_
Priorities/Partnership/MAP_Final_
Reports.aspx. This measure was
submitted to the NQF for endorsement
on April 18, 2014.
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We believe it is important to adopt
this measure as pneumonia is one of the
leading causes of hospitalization for
Americans 65 and over, and pneumonia
patients incur roughly $10 billion in
aggregate health care costs.83
Furthermore, because 30-day all-cause
mortality and readmission measures for
pneumonia are already publicly
reported, pneumonia serves as a model
condition for assessing relative value for
an episode of care that begins with an
acute hospitalization because including
this measure in the Hospital IQR
Program and publicly reporting it on
Hospital Compare will allow
stakeholders to assess information about
a hospital’s quality and cost of care for
pneumonia. The measure reflects
differences in the management of care
for patients with pneumonia both
during hospitalization and immediately
post-discharge. By focusing on one
specific condition, value assessments
may provide actionable feedback to
hospitals and incentivize targeted
improvements in care.
(2) Overview of Measure and Rationale
for Examining Payments for a 30-Day
Episode-of-Care
The pneumonia payment measure
assesses hospital risk-standardized
payment associated with a 30-day
episode-of-care for pneumonia for any
hospital participating in the Hospital
IQR Program. The measure includes
Medicare FFS patients aged 65 or older
admitted for pneumonia and calculates
payments for these patients over a 30day episode-of-care beginning with the
index admission. In general, the
measure uses the same approach to riskadjustment as our 30-day outcome
measures previously adopted for the
Hospital IQR Program. We refer readers
to our Web site at: http://cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Hospital
QualityInits/MeasureMethodology.html.
When examining variation in
payments, consideration of the episodeof-care triggered by admission is
meaningful for several reasons. First,
hospitalizations represent a brief period
of illness that requires ongoing
management post-discharge and
decisions made at the admitting hospital
affect payments for care in the
immediate post-discharge period.
Second, attributing payments for a
continuous episode-of-care to admitting
83 Lindenauer PK, Lagu T, Shieh M, Pekow PS,
Rothberg MB. Association of diagnostic coding with
trends in hospitalizations and mortality of patients
with pneumonia, 2003–2009. JAMA: The Journal of
the American Medical Association.
2012;307(13):1405–1413.
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hospitals may reveal practice variations
in the full care of the illness that can
result in increased payments. Third, a
30-day preset window provides a
standard observation period by which to
compare all hospitals. Lastly, the
pneumonia payment measure is
intended to be paired with our 30-day
pneumonia mortality and readmission
measures and capture payments for
Medicare patients across care settings,
services, and supplies, except for
Medicare Part D (that is, inpatient,
outpatient, skilled nursing facility,
home health, hospice, physician/
clinical laboratory/ambulance services,
supplier Part B items, and durable
medical equipment, prosthetics/
orthotics, and supplies).
We have posted the measure
methodology report on our Web site at:
http://cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. We refer
readers to the report for further details
on the risk adjustment statistical model
as well as the model results.
(3) Data Sources
The proposed measure is claimsbased and uses Medicare administrative
data that contain hospitalizations and
payments for Medicare FFS
beneficiaries hospitalized with
pneumonia.
(4) Outcome
The primary outcome of the
pneumonia payment measure is the
hospital-level risk-standardized
payment for a pneumonia episode-ofcare. The measure captures payments
for Medicare patients across all care
settings, services, and supplies, except
Part D. By risk-standardizing the
payment measure, we are able to adjust
for case-mix at any given hospital and
compare a specific hospital’s
pneumonia payment to other hospitals
with the same case-mix. The analytic
time frame for the pneumonia payment
measure begins with the index
admission for pneumonia and ends 30
days post-admission.
In order to isolate payment variation
that reflects practice patterns rather than
CMS payment adjustments, the
pneumonia payment measure excludes
policy and geography payment
adjustments unrelated to clinical care
decisions. We achieve this by
‘‘stripping’’ or ‘‘standardizing’’
payments for each care setting.
Stripping refers to removing geographic
differences and policy adjustments in
payment rates for individual services
from the total payment for that service.
Standardizing refers to averaging
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payments across geographic areas for
those services where geographic
differences in payment cannot be
stripped. Stripping and standardizing
the payment amounts allows for a fair
comparison across hospitals based
solely on payments for decisions related
to clinical care of pneumonia.
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(5) Cohort
We created the pneumonia payment
measure cohort to be aligned with the
publicly reported pneumonia mortality
measure cohort. Consistent with these
measures, the pneumonia payment
measure includes hospitalizations with
a principal hospital discharge diagnosis
of pneumonia using the International
Classification of Diseases, 9th Edition,
Clinical Modification (ICD–9–CM).
These measures will use data from July
2010–June 2013, which does not yet
include the period for which ICD–10
codes are mandatory. We refer readers
to our discussion of data collection for
this measure during the transition
period from ICD–9–CM codes to ICD–
10–CM/PCS codes (79 FR 28232). A full
list of ICD–9–CM codes included in the
final cohort can be found in Appendix
B of the technical report on our Web site
at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. The
measure includes only those
hospitalizations from short-stay acute
care hospitals in the index cohort and
restricts the cohort to patients enrolled
in FFS Medicare Parts A and B (with no
Medicare Advantage coverage).
(6) Inclusion and Exclusion Criteria
The pneumonia payment measure
includes hospitalizations for patients 65
years or older at the time of index
admission and for whom there was a
complete 12 months of FFS enrollment
to allow for adequate risk adjustment.
An index admission/hospitalization is
the initial pneumonia admission that
triggers the 30-day episode-of-care for
this payment calculation. The measure
excludes the following admissions from
the measure cohort: (1) Admissions for
patients with fewer than 30 days of
post-admission enrollment in Medicare
because this is necessary in order to
identify the outcome (payments) in the
sample over the analytic period; (2)
admissions for patients having a
principal diagnosis of pneumonia
during the index hospitalization who
were transferred from another acute care
facility are excluded, because the
hospital where the patient was initially
admitted made the critical acute care
decisions (including the decision to
transfer and where to transfer); (3)
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admissions for pneumonia patients who
were discharged on the same or next
day as the index admission and did not
die or get transferred are excluded,
because it is unlikely these patients
suffered a clinically significant
pneumonia; (4) admissions for patients
enrolled in the Medicare Hospice
program any time in the 12 months
prior to the index hospitalization,
including the first date of the index
admission are excluded, because it is
likely that these patients are continuing
to seek comfort care and their goal may
not be survival; (5) admissions for
patients who are discharged alive and
against medical advice are excluded
because providers did not have the
opportunity to deliver full care and
prepare the patient for discharge; (6)
admissions for patients transferred to or
from federal or Veterans Administration
hospitals are excluded, because we do
not have claims data for these hospitals;
thus, including these patients would
systematically underestimate payments;
and (7) admissions without a DRG or
DRG weight for the index
hospitalization are excluded, because
we cannot calculate a payment for these
patients’ index admission using the
IPPS; this would underestimate
payments for the entire episode-of-care.
There are two portions of the DRG
system that determine how much a
provider is reimbursed. The first is the
DRG itself which indicates the reason a
patient was admitted. The second is the
DRG weight which determines the
severity of the admission. Without
either of these, we were unable to
calculate the payment for the index
admission.
(7) Risk Adjustment
The measure adjusts for differences
across hospitals in how payments are
affected by patient comorbidities
relative to patients cared for by other
hospitals. We refer readers to section
IV.H.4 of the preamble of this final rule
for further discussion of risk-adjustment
for socioeconomic factors.
(8) Calculating the Risk-Standardized
Payment (RSP)
The measure is calculated using a
hierarchical generalized linear model
with a log link and a Poisson error
distribution. This is a widely accepted
statistical method that enables fair
evaluation of relative hospital
performance by taking into account
patient risk factors as well as the
number of patients that a hospital treats.
This statistical model accounts for the
structure of the data (patients clustered
within hospitals) and calculates: (1)
how much variation in hospital
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payment overall is accounted for by
patients’ individual risk factors (such as
age and other medical conditions); and
(2) how much variation is accounted for
by hospital-specific performance. This
approach appropriately models a
positive, continuous, right-skewed
outcome like payment and also accounts
for the types of patients a hospital treats
(that is, hospital case mix), the number
of patients it treats, and the quality of
care it provides. The hierarchical
generalized linear model is an
appropriate statistical approach to
measuring quality based on patient
outcomes when the patients are
clustered within hospitals and sample
sizes vary across hospitals. Clustered
patients are within the same hospital,
and the quality of care of the hospital
effects all patients, so the outcomes for
each hospital’s patients are not fully
independent (that is, completely
unrelated) as is assumed by many
statistical models. As noted above, the
measure methodology defines hospital
case mix based on the clinical diagnoses
provided in the hospital claims for their
patients’ inpatient and outpatient visits
for the 12 months prior to the
pneumonia hospitalization, as well as
those present in the claims for care at
admission. This methodology
specifically does not, however, account
for diagnoses present in the index
admission that may indicate
complications rather than patient
comorbidities.
The RSP is calculated as the ratio of
predicted payments to expected
payments and then the ratio is
multiplied by the national unadjusted
average payment for an episode of care.
The ratio is greater than one for
hospitals that have higher payments
than would be expected for an average
hospital with similar cases and less than
one if the hospital has lower payments
than would be expected for an average
hospital with similar cases. This
approach is analogous to a ratio of
‘‘observed’’ or ‘‘crude’’ rate to an
‘‘expected’’ or ‘‘risk-adjusted’’ rate used
in other similar types of statistical
analyses.
The RSP is a point estimate—the best
estimate of a hospital’s payment based
on the hospital’s case mix. To calculate
the measure for the Hospital IQR
Program, we computed an interval
estimate, which is similar to the concept
of a confidence interval, to characterize
the level of uncertainty around the point
estimate, we use the point estimate and
interval estimate to determine hospital
performance (for example, higher than
expected, as expected, or lower than
expected). The interval estimate
indicates that the true value of the
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payment ratio lies between the lower
limit and the upper limit of the interval.
For more detailed information on the
calculation methodology, we refer
readers to our Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
This measure is meant to be paired
with our 30-day pneumonia mortality
and/or readmission measure in order for
us to gain a better understanding of the
value of care for a hospital’s patients
and the nation as a whole.
We invited public comment on this
proposal.
Comment: One commenter did not
support inclusion of the heart failure
and pneumonia payment measures in
the Hospital IQR Program because of
concern that much of the variation in
30-day episode measures is attributable
to factors outside of the hospitals
control, most notably post-acute care
(PAC) services. The commenter felt that
measures of accountability should hold
all entities accountable as opposed to
focusing only on hospitals.
Response: We appreciate the
commenter’s suggestion and note that
we addressed this question in the FY
2014 IPPS/LTCH PPS final rule. In that
final rule (78 FR 50804), we stated that
‘‘when considering payments to
hospitals, we attributed payments for a
30-day episode of care to the hospital
since the episode is triggered by
admission to an inpatient
hospitalization. Hospitalizations
represent a brief period of acute illness
that requires ongoing management postdischarge and hospitals are often
directly responsible for scheduling postdischarge follow-up. Therefore
decisions made at the admitting hospital
affect not only the hospitalization
payments, but payments for care in the
immediate post-discharge period.’’
Comment: Several commenters
generally supported and appreciated
CMS’ proposal to report 30-day riskstandardized episode of care payment
measures for pneumonia and heart
failure, as a way to optimally measure
care for these patients. A commenter
urged CMS to monitor measure results
with respect to volume of procedures. A
commenter supported conditionspecific or more granular, episode-based
payment measures over the Medicare
Spending Per Beneficiary (MSPB)
measure.
Response: We thank the commenters
for their support, We will take their
recommendations to monitor measure
results with respect to volume of
procedures and the request to add
condition-specific or more granular,
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episode-based payment measures into
consideration when planning future
measure development.
Comment: Several commenters
believed payment measures are
necessary, but do not support payment
measures that examine episodes of care
beyond the inpatient admission due to
variations in availability of PAC
services.
Response: Because acute care
providers make decisions that affect
PAC spending, including scheduling
follow-up care and others, we believe it
is appropriate to attribute payments
arising from the PAC setting to the acute
care provider.
Comment: A commenter stated that
CMS should adjust episode-based
payment measures for outcome
differences that accrue over clinically
relevant time horizons.
Response: We thank the commenter
for this suggestion, and will consider
these comments in the future. We
appreciate the commenter’s feedback.
However we believe that the proposed
measure does account for outcome
differences over clinically relevant time
horizons as the measure captures
payments for Medicare patients across
all care settings, services, and supplies,
except Part D.
Comment: Several commenters did
not support the use of the Hospitallevel, Risk-standardized 30-day
Episode-of-Care Payment Measure for
Pneumonia measure in the Hospital IQR
Program because they believed that the
proposed measure reflected actions of
many health care entities that are
beyond the hospital’s control, such as
cost variation in Medicare spending and
notably PAC services. The commenters
felt measures of accountability should
hold all entities accountable as opposed
to focusing only on hospitals.
Commenters noted that hospitals are
legally unable to direct patient toward
high-quality, cost-efficient providers.
Several commenters were concerned
that the payment measures assume
hospitals have more control over costs
that occur post hospitalization than
what is realistic and it reflects actions
of many health care entities that are
beyond the hospital’s control. Therefore,
the commenters stated that the
pneumonia and heart failure payment
measures were not appropriate for
evaluating care exclusively in the
inpatient setting.
Commenters suggested the measures
would be more appropriate for
physician, LTCH, home health, and PAC
reporting programs. Several commenters
believed measures should hold
accountable all entities so that
incentives are aligned across
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continuum. A commenter noted that
legal and regulatory challenges at the
State and federal level prevent hospitals
from coordinating care as fully as
possible and episode of care measures
holding only the hospital accountable
create misaligned incentives which
could lead to unintended consequences.
Response: We appreciate the
commenters’ suggestions and note that
we addressed many of these questions
in the FY 2014 IPPS/LTCH PPS final
rule. In that final rule (78 FR 50804), we
stated that, ‘‘when considering
payments to hospitals, we attributed
payments for a 30-day episode of care to
the hospital since the episode is
triggered by admission to an inpatient
hospitalization. Hospitalizations
represent a brief period of acute illness
that requires ongoing management postdischarge and hospitals are often
directly responsible for scheduling postdischarge follow-up. Therefore
decisions made at the admitting hospital
affect not only the hospitalization
payments, but payments for care in the
immediate post-discharge period.’’
Finally, the objective of these episode of
care payment measures is to encourage
efficiencies gained by well-coordinated
care across a patient’s experience of
illness.
We understand the commenters
concerns about differences among
hospitals in the availability of postacute services, such as LTCHs. We hope
that the differences in episode payments
revealed by these measures will catalyze
hospitals, other providers and
communities to engage in an
examination of local service availability
to encourage efficient and sufficient
services are available to all patients.
Without the reporting of standardized
episode payment measures, the
knowledge of differences among
hospitals payment patterns would not
be available to provide incentives for
such efforts. Although hospitals are not
responsible for all differences in episode
payments alone, they are wellpositioned to participate in such
collaborations.
Comment: A commenter was
disappointed that CMS continue to
develop and adopt measures that
examine episodes of care beyond the
inpatient admission. The commenter
stated that measures of accountability,
such as the proposed episode measures,
should hold accountable all entities so
that the incentives are aligned across the
continuum.
Another commenter opposed
measures that reflect the broad spectrum
of care inside and outside of the
hospital. The commenter did not believe
that measures that encompass a range of
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services from admission until 30 days
post-discharge should be used as an
indicator of hospital-specific care.
Response: We respectfully disagree
with the commenters. We refer readers
to our discussion of this issue in
response to the same concern in the
response above. In addition, we believe
that these measures should reflect the
broad spectrum of care inside a hospital
as well as care transitions, which are
important for hospitals’ and for the
health care system’s efforts to reduce
readmissions and prevent hospitals
from being financially penalized. We
believe measures that look beyond the
discharge will encourage hospitals to
communicate more effectively with
their patients and their peers thereby,
improving care, reducing costs, and
improving the health of the nation.
Comment: A commenter did not
support inclusion of the pneumonia or
heart failure payment measures in in the
Hospital IQR Program, because they do
not exclude certain high-cost patients
(patients with ESRD, cancer, or HIV/
AIDS).
Response: We appreciate the concern
about high-cost patients. The payment
measures are intended to assess
differences in payment associated with
different practice patterns for the broad
range of patients cared for by a hospital.
We note that the episode of care
measures account for the fact that some
hospitals care for more patients with
needs for high-cost care by risk
adjusting for patients’ conditions, such
as cancer, rather than excluding such
patients. In the course of selecting
variables for risk-adjustment, high-cost
chronic conditions such as cancer, endstage renal disease, HIV/AIDS, and
others are considered. Once the
variables are considered, we determined
if the variable should be included in the
measure. To be included in the measure,
each risk variable must be found to be
significantly and consistently related to
the payment outcome in the risk-model
selection process. We note that the
Agency for Healthcare Research and
Quality’s Condition Categories for HIV/
AIDS; Metastatic Cancer and Acute
Leukemia; Lung, Upper Digestive Tract,
and Other Severe Cancers; Lymphatic,
Head And Neck, Brain, and Other Major
Cancers; Dialysis Status; and Renal
Failure are included in the final risk
adjustment model for pneumonia
payment. The Condition Categories for
HIV/AIDS; Dialysis Status; and Renal
Failure were also included the final
risk-adjustment model for HF payment.
The HF measures’ risk-adjustment was
discussed at length by the NQF Cost and
Resource Steering Committee. In its
final vote, the NQF Cost and Resource
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Steering Committee recommended
endorsement of the episode-of-care
payment measure for heart failure.
Comment: A commenter was
concerned that the measures unfairly
disadvantage hospitals that treat sicker
patients. For example, patients with
heart failure who receive a defibrillator
are sicker, however they are not
excluded from the measures, so
hospitals that perform this service
appear less efficient.
Response: We appreciate the
commenter’s concern about complex
patient factors that may contribute to
the cost of care. The payment measures
are risk-adjusted in order to account for
differences in case-mix, or patient
complexity, between hospitals. For each
patient, the claims for the 12-months
prior to the measured hospitalization
are examined to identify additional
clinical conditions that patients may
have which could contribute to costs of
care. These conditions are included in
the risk-model for the measure to ensure
that all providers are assessed fairly and
avoid putting providers at risk of
appearing to have patient costs that are
higher than other hospitals due to the
clinical complexity of their patients.
Although we do not believe that the use
of defibrillators is likely to substantially
change hospitals’ results, we appreciate
this comment and plan to investigate
the prevalence of defibrillators in the
heart failure cohort and its effect on the
payment outcome.
Comment: A commenter did not
support the inclusion of the PN and HF
payment measures in the Hospital IQR
Program and recommended using a
single hospital-wide payment measure
instead of condition-specific payment
measures to pool information for all
patients to increase sample size and
improve reliability.
Response: We believe the conditionspecific payment measures are useful
for several reasons. By focusing on one
specific condition, payment measures
may provide actionable feedback to
hospitals and incentivize targeted
improvements in care. Heart failure and
pneumonia are both common conditions
in the elderly with a substantial range
in payments due to different practice
patterns. Furthermore, because 30-day
all-cause mortality and readmission
measures for heart failure and
pneumonia are already publicly
reported, heart failure and pneumonia
serve as model conditions for examining
both payments for an episode-of-care
and the quality of a hospital’s care for
the same patient population.
Comment: Commenters recommended
that CMS pilot the PN and HF payment
measures prior to implementation.
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Response: We thank the commenter
for their recommendation. We will
consider this as we plan dry runs in the
future. A dry run provides the
opportunity for hospitals to review their
measure results and ask questions about
the measure methodology. The measure
results used during a dry run are based
on data outside of the performance
period designated for a given fiscal year,
and the measure results are made
available to hospitals on a secure Web
site and are not publically reported.
From our perspective, a dry run is type
of pilot in which hospitals become
familiar with their measure results and
the measure methodology.
Comment: A commenter requested
that CMS transparently assess the
reliability of the PN and HF payment
measures prior to adoption into the
Hospital IQR Program.
Response: We appreciate this
feedback. We note that we have been
transparent in assessing the reliability of
the PN and HF payment measures, in
that the measure methodologies for
these measures contain the reliability
testing results and have been posted at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html in May 2015
We note that the Intraclass Correlation
Coefficient (ICC) is a statistical process
used to assess the reliability of
measures. The ICC score can be used to
determine the extent to which
assessments of a hospital using
different, but randomly selected subsets
of patients produces similar measures of
hospital performance. To the extent that
the calculated measures of these two
subsets agree, we have evidence that the
measure assesses an attribute of the
hospital, not of the patients. The
agreement between the two independent
assessments of each hospital was 0.825
for the PN measure and 0.752 for the HF
measure, which according to the
conventional interpretation, is ‘‘almost
perfect’’ for the PN measure and
‘‘substantial’’ for the HF measure.84
Comment: A commenter was
concerned about CMS measuring
overuse, as there are patient scenarios
that are not addressed by available
evidence. The commenter stated that
proper evaluation of validity and
reliability is lacking; however, current
registry-based measures are filling this
gap. The commenter recommends
halting the development and
implementation of these measures.
84 Landis JR, Koch GG. The measurement of
observer agreement for categorical data. Biometrics.
1977:159–174.
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Response: These measures are not
specifically designed to identify
overuse. We interpret overuse to mean
using more resources than expected
given how sick the patients are. Rather,
the measures are designed to evaluate
broad patterns of care, both within the
inpatient environment and in the
transition to the outpatient setting, that
might lead to higher overall payments.
As noted in another response above, the
reliability and validity of these
measures has been evaluated by both a
Technical Expert Panel and the NQF
Cost and Resource Use Standing
Committee. We also analyzed the ICC
score for these measures to help assess
reliability. Although registry data offers
some advantages, it is much more
burdensome for hospitals to collect and
is not uniformly available.
Comment: Several commenters
requested that CMS adjust the payment
measures for SES based on the NQFs
expert panel recommendations.
Response: We refer readers to section
IV.H.4. of the preamble to this final rule
for further discussion of this issue.
After consideration of the public
comments we received, we are
finalizing the Hospital-Level, RiskStandardized Payment Associated with
a 30-Day Episode of Care for Pneumonia
measure, as proposed.
d. Hospital-Level, Risk-Standardized 30Day Episode-of-Care Payment Measure
for Heart Failure
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(1) Background
There is evidence of variation in
payments at hospitals for heart failure
patients; mean 30-day risk-standardized
payment among Medicare FFS patients
aged 65 or older hospitalized for heart
failure in 2008–2009 was $13,922, and
ranged from $9,630 to $20,646 across
3,714 hospitals. However, high or low
payments to hospitals are difficult to
interpret in isolation. Some high
payment hospitals may have better
clinical outcomes when compared with
low payment hospitals while other high
payment hospitals may not have better
outcomes. For this reason, the value of
hospital care is more clearly assessed
when pairing hospital payments with
hospital quality. Therefore, we proposed
to include this non-NQF-endorsed
measure: hospital risk-standardized
payment associated with a 30-day
episode-of-care for heart failure in the
Hospital IQR Program under the
exception authority in section
1886(b)(3)(B)(IX)(bb) of the Act as
previously discussed in section IX.A.7.
of the preamble of this final rule.
Although the proposed measure is not
currently NQF-endorsed, we considered
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available measures that have been
endorsed or adopted by the NQF, and
we were unable to identify any
measures that assess hospital riskstandardized payment associated with a
30-day episode-of-care for heart failure.
We also are not aware of any other 30day episode-of-care heart failure
measures that have been endorsed or
adopted by a consensus organization,
and found no other feasible and
practical measures on this topic. The
MAP supports this measure but
reiterated the need for this measure to
be submitted for NQF endorsement:
https://www.qualityforum.org/Setting_
Priorities/Partnership/MAP_Final_
Reports.aspx. The HF measure was
submitted to the NQF and is currently
under review as part of the cost and
resource use project.
We believe it is important to adopt
this measure as heart failure is one of
the leading causes of hospitalization for
Americans 65 and over and costs
roughly $34 billion annually.85 86
Furthermore, because 30-day all-cause
mortality and readmission measures for
heart failure are already publicly
reported, heart failure serves as a model
condition for assessing relative value for
an episode of care that begins with an
acute hospitalization. Including this
measure in the Hospital IQR Program
and publicly reporting it on Hospital
Compare will allow stakeholders to
assess information about a hospital’s
quality and cost of care for heart failure.
The measure reflects differences in the
management of care for patients with
heart failure both during hospitalization
and immediately post-discharge. By
focusing on one specific condition,
value assessments may provide
actionable feedback to hospitals and
incentivize targeted improvements in
care.
(2) Overview of Measure and Rationale
for Examining Payments for a 30-Day
Episode-of-Care
The heart failure payment measure
assesses hospital risk-standardized
payment associated with a 30-day
episode-of-care for heart failure for any
hospital participating in the Hospital
IQR Program. The measure includes
Medicare FFS patients aged 65 or older
admitted for heart failure and calculates
payments for these patients over a 30day episode-of-care beginning with the
85 Russo
CA, Elixhauser, A. Hospitalizations in
the Elderly Population, 2003. Agency for Healthcare
Research and Quality. 2006.
86 Heidenriech PA, Trogdon JG, Khavjou OA,
Butler J, Dracup K, Ezekowitz MD, et al. Forecasting
the future of cardiovascular disease in the United
States: a policy statement from the American Heart
Association. Circulation. 2011;123(8):933–44.
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index admission. In general, the
measure uses the same approach to riskadjustment as our 30-day outcome
measures previously adopted for the
Hospital IQR Program. We refer readers
to the measure methodology report on
our Web site at: http://cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
HospitalQualityInits/MeasureMethodology.html.
When examining variation in
payments, consideration of the episodeof-care triggered by admission is
meaningful for several reasons. First,
hospitalizations represent brief periods
of illness that require ongoing
management post-discharge; and
decisions made at the admitting hospital
affect payments for care in the
immediate post-discharge period.
Second, attributing payments for a
continuous episode-of-care to admitting
hospitals may reveal practice variations
in the full care of the illness that can
result in increased payments. Third, a
30-day preset window provides a
standard observation period by which to
compare all hospitals. The term preset
window means that every admission
will be tracked 30 days post admission
in order to apply a standardized
measurement window. In order to
compare payments across providers it is
important that the comparison window
is identical for each admission at each
hospital. Lastly, the heart failure
payment measure is intended to be
paired with our 30-day heart failure
mortality and readmission measures and
capture payments for Medicare patients
across all care settings, services, and
supplies, except for Medicare Part D
(that is, inpatient, outpatient, skilled
nursing facility, home health, hospice,
physician/clinical laboratory/ambulance
services, supplier Part B items, and
durable medical equipment, prosthetics/
orthotics, and supplies).
We have posted the measure
methodology report on our Web site at:
http://cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html. We refer
readers to the report for further details
on the risk adjustment statistical model
as well as the model results.
(3) Data Sources
The proposed measure is claimsbased and uses Medicare administrative
data that contain hospitalizations and
payments for Medicare FFS
beneficiaries hospitalized with heart
failure.
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(4) Outcome
The primary outcome of the heart
failure payment measure is the hospitallevel risk-standardized payment for a
heart failure episode-of-care. The
measure captures payments for
Medicare patients across all care
settings, services, and supplies, except
Part D. By risk-standardizing the
payment measure, we are able to adjust
for case-mix at any given hospital and
compare a specific hospital’s heart
failure payment to other hospitals with
the same case-mix. The analytic time
frame for the heart failure payment
measure begins with the index
admission for heart failure and ends 30
days post-admission. The index
admission is any admission included in
the measure calculation that begins the
30-day heart failure episode of care.
In order to isolate payment variation
that reflects practice patterns rather than
CMS payment adjustments, the heart
failure payment measure excludes
policy and geography payment
adjustments unrelated to clinical care
decisions. We achieve this by
‘‘stripping’’ or ‘‘standardizing’’
payments for each care setting. These
concepts were also discussed previously
in the proposed hospital-level, riskstandardized 30-day episode-of-care
payment measure for pneumonia
measure in section IX.A.7.c.(4) of the
preamble of this final rule.
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(5) Cohort
We created the heart failure payment
measure cohort to be aligned with the
publicly reported heart failure mortality
measure cohort. Consistent with these
measures, the heart failure payment
measure includes hospitalizations with
a principal hospital discharge diagnosis
of heart failure using ICD–9–CM codes
included in the final cohort can be
found in Appendix B of the technical
report on our Web site at: http://
cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/
HospitalQualityInits/MeasureMethodology.html. The measure will be
using data from July 2010–June 2013,
which does not yet include the period
when ICD–10 codes are mandatory. We
refer readers to our discussion of data
collection for this measure during the
transition period from ICD–9–CM codes
to ICD–10–CM/PCS codes (79 FR
28234).
An index admission/hospitalization is
the initial heart failure admission that
triggers the 30-day episode-of-care for
this payment calculation. The measure
includes only those hospitalizations
from short-stay acute care hospitals in
the index cohort and restricts the cohort
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to patients enrolled in FFS Medicare
Parts A and B (with no Medicare
Advantage coverage). These
hospitalizations are the admissions
which were included in the measure
after applying all inclusion/exclusion
criteria.
(6) Inclusion and Exclusion Criteria
The heart failure payment measure
includes hospitalizations for patients 65
years or older at the time of index
admission and for whom there was a
complete 12 months of FFS enrollment
to allow for adequate risk adjustment.
The measure excludes the following
admissions from the measure cohort: (1)
admissions for patients with fewer than
30 days of post-admission enrollment in
Medicare because this is necessary in
order to identify the outcome
(payments) in the sample over the
analytic period; (2) admissions for
patients having a principal diagnosis of
heart failure during the index
hospitalization who were transferred
from another acute care facility are
excluded, because the hospital where
the patient was initially admitted made
the critical acute care decisions
(including the decision to transfer and
where to transfer); (3) admissions for
heart failure patients who were
discharged on the same or next day as
the index admission and did not die or
get transferred are excluded, because it
is unlikely these patients suffered a
clinically significant heart failure; (4)
admissions for patients enrolled in the
Medicare Hospice program any time in
the 12 months prior to the index
hospitalization, including the first date
of the index admission are excluded,
because it is likely that these patients
are continuing to seek comfort care and
their goal may not be survival; (5)
admissions for patients who are
discharged alive and against medical
advice are excluded because providers
did not have the opportunity to deliver
full care and prepare the patient for
discharge; (6) admissions for patients
transferred to or from federal or
Veterans Administration hospitals are
excluded, because we do not have
claims data for these hospitals; thus,
including these patients would
systematically underestimate payments;
(7) admissions without a DRG or DRG
weight for the index hospitalization are
excluded, because we cannot calculate a
payment for these patients’ index
admission using the IPPS; this would
underestimate payments for the entire
episode-of-care; and (8) admissions for
patients who receive a heart transplant
or LVAD during the index admissions or
episode of care because these patients
are clinically distinct, generally very
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high payment cases, and not
representative of the typical heart
failure patient that this measure aims to
capture.
(7) Risk Adjustment
The measure adjusts for differences
across hospitals in how payments are
affected by patient comorbidities
relative to patients cared for by other
hospitals. We refer readers to section
IV.H.4 of the preamble of this final rule
for further discussion of risk-adjustment
for socioeconomic factors.
(8) Calculating the Risk-Standardized
Payment (RSP)
The measure is calculated using
hierarchical generalized linear statistical
models with a log link and a Gamma
error distribution. This approach
appropriately models a positive,
continuous, right-skewed outcome like
payment and also accounts for the types
of patients a hospital treats (that is,
hospital case-mix), the number of
patients it treats, and the quality of care
it provides. The hierarchical generalized
linear model is an appropriate statistical
approach to measuring quality based on
patient outcomes when the patients are
clustered within hospitals (and
therefore the patients’ outcomes are not
statistically independent) and sample
sizes vary across hospitals. As noted
above, the measure methodology defines
hospital case mix based on the clinical
diagnoses provided in the hospital
claims for their patients’ inpatient and
outpatient visits for the 12 months prior
to the heart failure hospitalization, as
well as those present in the claims for
care at admission. This methodology
specifically does not, however, account
for diagnoses present in the index
admission that may indicate
complications rather than patient
comorbidities.
The RSP is calculated as the ratio of
predicted payments to expected
payments and then the ratio is
multiplied by the national unadjusted
average payment for an episode of care.
The ratio is greater than one for
hospitals that have higher payments
than would be expected for an average
hospital with similar cases and less than
one if the hospital has lower payments
than would be expected for an average
hospital with similar cases. This
approach is analogous to a ratio of
‘‘observed’’ or ‘‘crude’’ rate to an
‘‘expected’’ or ‘‘risk-adjusted’’ rate used
in other similar types of statistical
analyses.
The RSP is a point estimate—the best
estimate of a hospital’s payment based
on the hospital’s case mix. For
displaying the measure for the Hospital
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IQR Program, we computed an interval
estimate, which is similar to the concept
of a confidence interval, to characterize
the level of uncertainty around the point
estimate, we use the point estimate and
interval estimate to determine hospital
performance (for example, higher than
expected, as expected, or lower than
expected). For more detailed
information on the calculation
methodology, we refer readers to our
Web site at: http://cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html.
This measure is meant to be paired
with our 30-day heart failure mortality
and/or readmission measure in order for
us to gain a better understanding of the
value of care for a hospital’s patients
and the nation as a whole.
We invited public comment on this
proposal.
Comment: Several commenters
opposed the payment measures because
they did not believe it is fair to hold a
hospital responsible for payments that
occur outside of its walls. The
commenters recommended that these
mortality and readmissions measures
instead be adopted in the PQRS, as well
as long-term care, PAC, home health,
and other entities that participate in the
patient’s care.
One commenter cited a study that
stated that 80 percent of the variability
in the payment measures is driven by
PAC and noted that areas with more
LTCHs will likely have higher spending.
Several commenters believed measures
should hold accountable all entities so
that incentives are aligned across the
continuum of care. Another commenter
noted that legal and regulatory
challenges at the State and federal levels
prevent hospitals from coordinating care
as fully as possible and episode of care
measures holding only the hospital
accountable create misaligned
incentives, which could lead to
unintended consequences.
Response: We interpret the
commenter’s statement that, ‘‘these
types of measures should instead be
adopted in the PQRS, as well as longterm care, PAC, home health, and other
entities that participate in the patient’s
care,’’ to mean the Long-Term Care
Quality Reporting (LTCHQR) Program,
PAC (all care provided after a patient is
discharged from an index
hospitalization), Home Health Quality
Reporting Program and other CMS
quality reporting programs applicable to
entities that participate in the patient’s
care. As described above, because heart
failure is one of the leading causes of
hospitalization for Americans 65 and
over, and its associated care costs
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roughly $34 billion annually, we believe
it is appropriate to pair a measure of
Medicare payments for heart failure
with the existing quality measures on
this topic. We intend to closely monitor
the measure’s effects on hospitals’ and
PAC providers’ behavior.
We developed these measures in
accordance with national guidelines 87
and in consultation with clinical and
measurement experts, key stakeholders,
and the public. Furthermore, the AMI/
HF measures were recommended for
endorsement by the NQF Standing
Committee for Cost and Resource Use,
Phase 2. This information can be located
in the following report: http://
www.qualityforum.org/WorkArea/link
it.aspx?LinkIdentifier=
id&ItemID=76905.
Comment: Several commenters
expressed concern that the heart failure
payment measure did not receive NQF
endorsement, and specifically, that the
Cardiovascular Technical Advisory
Panel or the Cost and Resource Use
Standing Committee did not endorse the
measure. These commenters noted that
the Cost and Resource Use Standing
Committee felt the risk model did not
properly account for differences in
patient risk and it was not until CMS
pressed for a third vote that it received
endorsement (see http://www.quality
forum.org/WorkArea/
linkit.aspx?LinkIdentifier=
id&ItemID=76905). Consequently, the
commenters believed the measure is
premature and should not be
implemented.
Response: We appreciate this
comment. We note the following
sequence of events regarding the
recommendation for endorsement of
this measure confirms that this measure
is not premature in consideration for
implementation. Earlier this year the
measure was assessed by the Cost and
Resource Use Standing Committee.
During this part of the endorsement
process the Standing Committee did not
reach consensus on a recommendation
87 Krumholz HM, Brindis RG, Brush JE, et al.
Standards for statistical models used for public
reporting of health outcomes: an American Heart
Association Scientific Statement from the Quality of
Care and Outcomes Research Interdisciplinary
Writing Group: cosponsored by the Council on
Epidemiology and Prevention and the Stroke
Council. Endorsed by the American College of
Cardiology Foundation. Circulation. Jan 24
2006;113(3):456–462) and ‘‘Standards for Measures
Used for Public Reporting of Efficiency in Health
Care’’ (Krumholz HM, Keenan PS, Brush JE, Jr., et
al. Standards for measures used for public reporting
of efficiency in health care: a scientific statement
from the American Heart Association
Interdisciplinary Council on Quality of Care and
Outcomes Research and the American College of
Cardiology Foundation. Circulation. Oct 28
2008;118(18):1885–1893.
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for endorsement and the measure was
submitted for public comment. After
review of CMS’ responses to the public
comments the Consensus Standards
Approval Committee (CSAC) voted to
recommend the Hospital-Level, Riskstandardized 30-day Episode-of-Care
Payment Measure for Heart Failure for
endorsement. The NQF Board is
expected to review this measure in
August 2014. We are actively seeking
NQF endorsement for this measure. A
Voting Draft Report of the Cost and
Resource Use Standing Committee can
be found at http://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=76905.
Comment: A commenter suggested the
need for innovative solutions for
providers in addition to outcome
measures. This commenter believed that
hospitals should: consider innovative
ways to identify heart failure patients
early in admission; implement
evidence-based clinical pathways to
assure the patient moves efficiently
through their stay with optimal
outcomes; develop a tight network of
post-acute providers; and implement an
enhanced communication system to
identify where the patient is at any
point in timed during the 30-day
window.
Response: We agree with the
commenter’s points about the need for
continued innovation to drive highquality and efficient care. We believe
the measures that we have selected will
help drive hospitals to provide that care.
Comment: One commenter noted that
much of the care expended during the
first 30 days is aimed at increasing longterm survival and requested that CMS
consider a measure with a longer
outcome window to pair with the
measure.
Response: We agree that it is possible
that some of the variation in hospital
payments will be due to patterns of care
that are intended to improve longer term
outcomes. However at this time, we are
not aware of a publicly reported, or nonNQF endorsed NQF-endorsed quality
metric that considers a longer-term
outcome with which we can harmonize
the payment measure. As part of
ongoing measure reevaluation and
surveillance, we will evaluate the
relationship between payments and
longer term outcomes to assess if the
performance of hospitals differs when
looking at a longer time frame. Our plan
is to eventually compare 30-day
payments with longer outcomes like 1year mortality to determine if high
upfront payments have a longer term
benefit.
Comment: One commenter was
concerned that the proposed payment
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measure will be used in isolation and
not understood by practitioners and the
public. The commenter recommended
that CMS instead create a composite
measure with both cost and quality.
Response: We will take into
consideration the suggestion to create a
single composite measure of cost and
quality for future measure development.
In order to ensure practitioners and the
public appreciate out intent, which is to
evaluate payment in the context of
quality, we plan to report the payment
measure alongside the outcomes
measures on the Hospital Compare Web
site.
Comment: A commenter noted that it
will be difficult to determine value with
the existing heart failure measures since
mortality and readmission are inversely
related and the process measures are
almost ‘‘topped-out.’’
Response: We appreciate this
feedback. We intend this episode of care
measure to be used in conjunction with
the other outcome heart failure
measures of readmission and mortality.
We do not intend to use the outcome
heart failure measures with the heart
failure process measures as the outcome
and process measure results would not
provide useful and comparable
information. Regarding the concern of
not being able to determine the value of
the heart failure episode of care measure
since the heart failure mortality and
readmission are inversely related, we
believe that there is value in the episode
of care measure because a hospital’s
performance on mortality and
readmissions measures represents
different aspects of quality. We also note
that there does not appear to be a
meaningful correlation between hospital
risk-standardized mortality rates and
readmission rates. Finally, we believe
that this measure can determine value
as it was specifically developed to align
with the heart failure mortality and
readmissions measure. A recent
MedPAC report indicates that there may
be an inverse correlation between
readmission and mortality rates, but we
note that this inverse relationship has
been found to be modest (available at
http://www.medpac.gov/documents/
Jun13_EntireReport.pdf). We recognize
the commenter’s concern and will
monitor changes in the strength of these
inverse correlations over time.
Comment: Several commenters did
not support adopting the heart failure
payment measures for the Hospital IQR
Program due to concerns regarding the
measures’ utility and its attribution
specifications, all episode-of-care
payments to the admitting hospital.
Response: We view the proposed
measure of payments made for heart
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failure as an important component of
quality improvement when paired with
existing quality measures. We believe it
is important for hospitals to be held
accountable for care decisions made
during acute care episodes, particularly
when those decisions include, for
example, scheduling post-discharge
follow-up care. We believe the measure
appropriately attributes spending during
the heart failure episode to the
admitting hospital, and we will monitor
close hospitals’ performance on the
measure, as well as possible unintended
consequences for patient care. We do
not understand the commenter’s
concern regarding ‘‘all episode-of-care
payments to the admitting hospital,’’ but
welcome the opportunity to address it
upon clarification.
Comment: A commenter
recommended performing multi-level
testing to determine the appropriate
level for use of this measure.
Response: The episode-of-care
payment measures are hospital-level
measures. They account for risk at the
patient-level, but attribute payments to
the hospital. We interpret ‘‘multi-level
testing’’ to mean the influence of
community-level variables, like patient
income levels or rural or urban setting,
on the payment outcomes. Although
hospitals cannot fully control all
payments during the episode of care,
they are well positioned to influence the
outcome or the total episode-of-care
payment. We will take into
consideration the recommendation to
test multiple levels.
Comment: A commenter did not
support this measure due to concerns
that the measure’s risk adjustment
model does not properly account for
differences in patient case mix and
severity, which may lead to the
misinterpretation of differences in
episode cost performance.
Response: We believe that the
measure properly accounts for
differences in patient case mix and
severity. We developed the measure in
accordance with national guidelines and
in consultation with clinical and
measurement experts, key stakeholders,
and the public. The measure is
consistent with the technical approach
to outcomes measurement set forth in
the NQF guidance for outcomes
measures (http://www.qualityforum.org/
projects/Patient_Outcome_Measures_
Phases1-2.aspx), CMS’ Measure
Management System (http://
www.cms.gov/Medicare/QualityInitiatives-PatientAssessment
Instruments/MMS/index.html?redirect=/
MMS/19_MeasuresManagementSystem
Blueprint.asp), and the guidance
articulated in two American Heart
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Association scientific statements.88 89
Furthermore, this measure was vetted
by the NQF Standing Committee for
Cost and Resource Use, Phase 2.
Furthermore, this measure was
recommended for endorsement by the
NQF Standing Committee for Cost and
Resource Use, Phase 2 and the
Consensus Standards Approval
Committee in the third quarter of 2014.
It is anticipated to be reviewed by the
NQF Board in August 2014.
Comment: One commenter agreed
with comments made by the NQF
Cardiovascular TEP that accountability
for heart failure payment outcomes
should be attributed to primary care
providers. The commenter believed that
there is a wide range of heart failure
severity, which determines the level of
accountability and that patients with
heart failure are often cared for by a
range of providers who vary in level and
skill.
Response: Although many providers
contribute to the cost of care, we
attributed payments for a 30-day
episode of care to the hospital because
the episode is triggered by admission to
an inpatient hospitalization. Inpatient
hospitalizations represent a brief period
of acute illness that require ongoing
management post-discharge, and
hospitals are often directly responsible
for scheduling post-discharge follow-up.
Therefore, decisions made at the
admitting hospital affect not only the
hospitalization payments, but payments
for care in the immediate post-discharge
period. Finally, the objective of this
episode of care payment measure is to
encourage efficiencies gained by wellcoordinated care across a patient’s
experience of illness.
Comment: One commenter felt that
the measure is counter to CMS’
implementation of episode groupers
since it would capture all costs
associated with the patient instead of
only the costs of medical and
procedural services related to heart
failure. The commenter recommended
that CMS include episode groupers that
88 Krumholz HM, Brindis RG, Brush JE, et al.
Standards for statistical models used for public
reporting of health outcomes: an American Heart
Association Scientific Statement from the Quality of
Care and Outcomes Research Interdisciplinary
Writing Group: cosponsored by the Council on
Epidemiology and Prevention and the Stroke
Council. Endorsed by the American College of
Cardiology Foundation. Circulation. Jan 24
2006;113(3):456–462.
89 Krumholz HM, Keenan PS, Brush JE, Jr., et al.
Standards for measures used for public reporting of
efficiency in health care: a scientific statement from
the American Heart Association Interdisciplinary
Council on Quality of Care and Outcomes Research
and the American College of Cardiology
Foundation. Circulation. Oct 28 2008;118(18):1885–
1893.
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assign specific services to certain
episodes in the heart failure payment
measure.
Response: Episode Groupers are
designed to capture epsiodes of care in
the Medicare Population. However,
these groupers are used to evaluate
physicians’ resource use while our
measure is constructed to capture
hospitals’ resource use.
Comment: One commenter did not
agree with a 30-day outcome timeframe
because it does not align with heart
failure disease progression and
recommended more focus be placed on
the ambulatory care environment with a
longer time period focused on
outpatient care.
Response: Although heart failure is a
chronic condition, patients often suffer
acute decompensation requiring
hospital admission. Acute
decompensation is acute exacerbation
that compromises the patient’s
cardiorespiratory status and requires
admission. This measure focuses on this
acutely decompensated cohort of heart
failure patients, not on ambulatory
patients. Heart failure admissions are
associated with a substantial 30-day
mortality rate as well as variation in
costs.90 In addition, heart failure
admissions have high rates of
readmission prompting heart failure to
be targeted in current readmission
reduction programs. For these reasons,
we believe that heart failure is an
appropriate focus for a hospital-based
episode-of-care measure.
Comment: Several commenters did
not believe transfer patients should be
attributed to the admitting hospital
because the organization that initially
admits a patient may not have as much
control over the patient’s course of care.
Furthermore, the commenters were
concerned that hospitals would have a
stronger incentive to hold onto patients
longer to avoid being held accountable
for the costs of another facility.
Response: While we understand the
commenters’ concerns, attributing the
outcome to the first admitting hospital
makes the most sense given the focus of
this particular payment measure, which
is hospital risk-standardized payment
associated with a 30-day episode-of-care
for heart failure]. We define a transfer as
any admission that requires acute
inpatient care at two or more hospitals
for the same HF. We attribute total
episode payments that involve a transfer
for acute care of HF to the transferring
hospital because:
90 Xiao, X, Li S–X, Normand SL, Kim N, Ott LS,
Lagu T, Duan M, Kroch EA, Krumholz HM. ’’
‘Phenotyping’ Hospital Value of Care for Patients
with Heart Failure’’ Health Services Research Early
View, Article first published online: 28 Jun 2014.
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• The episode of care begins at the
time of the index admission, which
thereby, provides a standard measure
time frame for each hospital.
• The transferring hospital is
responsible for initial care decisions as
well as the decision to transfer the
patient, both of which can have a
cascading effect on subsequent care
decisions.
• This method avoids incentivizing
hospitals to transfer patients who are
critically ill and at high risk of being
very expensive to treat. As a result, we
disagree with the commenter that
hospitals would have a stronger
incentive to hold onto patients longer to
avoid being held accountable for the
costs of another facility.
• This method aligns with CMS’
publicly reported measure for HF riskstandardized mortality.
• The objective of this episode-of-care
payment measure is to encourage
efficiencies gained by well-coordinated
care across a patient’s experience of
illness.
Comment: Several commenters
believed the HF payment measure
should exclude transplant or LVAD
patients who underwent the procedure
in the previous 12 months.
Response: We interpret this comment
to mean that the measure should
exclude patients with any type of
transplant or a left ventricular assist
device (LVAD) within 12 months of the
index admission for heart failure. We
agree that these patients will likely cost
more than other HF patients.
Accordingly, we plan to evaluate the
data to see if either a heart transplant or
LVAD placement occurred within 12
months prior to HF admission and
exclude these patients from the measure
beginning in FY 2016. We will then
determine whether or not we should
exclude patients from the measure with
a history of LVAD or transplant.
Comment: One commenter was
concerned that the measure may not
adequately adjust for older and more
frail patients who are at a higher risk for
readmission.
Response: We note that the measure
specifically adjusts for age and multiple
indicators of patient frailty such as
malnutrition and dementia. The
measure is risk-adjusted in order to
account for differences in case-mix, or
patient complexity, between hospitals.
For each patient, the claims for the 12months prior to the measured
hospitalization are examined to identify
additional clinical conditions that
patients may have which could
contribute to costs of care. These
conditions are included in the risk
model for the measure to ensure
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50235
providers are: 1)compared on their
performance; 2) are not penalized for
caring for sicker patients; and 3) to
prevent putting providers at risk of
being profiled as high cost facilities due
to the clinical complexity of their
patients.
Comment: Several commenters
believed that the measure does not
adequately adjust for patient risk and
cited NQF concerns regarding R-square
values of 0.03–0.05 in the development
and validation samples.
Response: While we appreciate the
concern that the measure does not
adequately adjust for patient risk
factors, we disagree for several reasons.
First, the measure model was evaluated
with a number of statistical methods in
addition to the R-square. The results of
these other diagnostic tests (over-fitting
indices, distribution of Standardized
Pearson residuals, and predictive ratios)
all suggest that the model predicts
payments well, after adjustment for
patient risk factors. These results
consider the measure from a different
perspective than the R-square. Second,
we feel the focus on the R-square value
for this measure is not appropriate
because the statistical methods we used
do not produce a traditional R-square
value. To provide conceptually similar
number, we produced a quasi-R-square,
the details of which can be found in our
technical report (available at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/
Measure-Methodology.html). Third, this
quasi-R-square is consistent with other
patient-level risk-adjustment models for
health care payment. Lastly, the Rsquare results suggest that factors other
than clinical severity may be predictive
of resource utilization that can increase
payments as discussed at length during
the NQF proceedings.91 92 We note that
despite the concerns raised about the Rsquare value during endorsement
proceeding, in June 2014, the NQF
Standing Committee for Cost and
Resource Use Phase 2 recommended
endorsement of the HF episode of care
measure.
After consideration of the public
comments we received, we are
finalizing the Hospital-Level, RiskStandardized Payment Associated with
a 30-Day Episode of Care for Heart
Failure measure as proposed.
91 Chen SI, Dharmarajan K, Kim N, et al.
Procedure intensity and the cost of care. Circ
Cardiovasc Qual Outcomes 2012;5:308–13.
92 Safavi KC, Dharmarajan K, Kim N, et al.
Variation exists in rates of admission to intensive
care units for heart failure patients across hospitals
in the United States. Circulation 2013;127:923–9.
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e. Severe Sepsis and Septic Shock:
Management Bundle Measure (NQF
#0500)
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
(1) Background
Sepsis, severe sepsis, and septic shock
can arise from a simple infection, such
as pneumonia or urinary tract infection.
Although it can affect anyone at any age,
it is more common in infants, the
elderly, and patients with chronic
health conditions such as diabetes and
immunosuppressive disorders seen in
transplant patients. Information for this
measure comes from the NQF Measure
Information-Composite for the Severe
Sepsis and Septic Shock: Management
Bundle (NQF #0500).93 More
information on this issue is available
from the Surviving Sepsis Campaign:
International Guidelines for
Management of Severe Sepsis and
Septic Shock: 2012.94 Sepsis is
associated with mortality rates of over
16 to 49 percent, which is more than 8
times higher than the rate for inpatient
stays for other hospital admissions.
Findings from the National Hospital
Discharge Survey indicate that the
number of hospital stays for septicemia
more than doubled between the years of
2000 and 2008, and patients with this
condition were more severely ill than
patients hospitalized for other
conditions. Severe sepsis and septic
shock are frequent causes of rehospitalizations, especially during the
first year after the initial hospitalization.
Based on national discharge data
reported by the AHRQ, sepsis was the
sixth most common principal reason for
hospitalization in the United States in
2009, accounting for 836,000 hospital
stays. There were an additional 829,500
stays with a secondary diagnosis of
sepsis for a total of 1,665,400 inpatient
stays and 258,000 deaths. From 1993 to
2009, sepsis-related hospital stays
increased by 153 percent, with an
average annual increase of 6 percent.
Medicare was the predominant payer for
sepsis-related hospital stays, covering
58.1 percent of patients. Sepsis cases
and sepsis-related deaths are expected
to continue to increase with the aging of
the population.
In a landmark study by Rivers et al.,95
it has been shown that an absolute and
93 National Quality Forum (NQF). Measure
Information-Composite. #500 Severe Sepsis and
Septic Shock: Management Bundle. Updated 2014
Jan 2. NQF: Washington, DC http://
www.qualityforum.org/Home.aspx.
94 Dellinger RP, Levy MM, Rhodes A, Annane D,
et al. Surviving Sepsis Campaign: international
guidelines for management of severe sepsis and
septic shock: 2012. Crit Care Med. 2013 Feb;
41(2):580–637.
95 Rivers E, Nguyen B, Havstad S et al. Early goaldirected therapy in the treatment of severe sepsis
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relative reduction in mortality from
sepsis can be reduced 16 percent and 30
percent, respectively, when aggressive
care is provided within 6 hours of
hospital arrival. Furthermore, a recent
study of the 2008 Healthcare Cost and
Utilization Project (HCUP) Nationwide
Inpatient Sample 96 determined that
patients admitted through the
Emergency Department had a 17 percent
lower likelihood of dying from sepsis
than when directly admitted.
The Severe Sepsis and Septic Shock:
Management Bundle measure (NQF
#0500) was supported by the MAP for
the Hospital IQR Program, contingent on
NQF endorsement in its Pre-Rulemaking
Report: 2013 Recommendations on
Measures Under Consideration by HHS,
available at: https://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=72738. The MAP
noted the measure addresses an NQS
priority not adequately addressed in the
program measure set and that early
detection and treatment of sepsis in the
emergency department and inpatient
settings is important (page 125). This
measure was initially endorsed by the
NQF in 2008 for the hospital/acute care
facility setting, underwent maintenance
review and update in March 2013, June
2013, and May 2014.
The MAP conditionally supported
this measure as a Meaningful Use
measure in its Pre-Rulemaking Report:
2014 Recommendations on Measures
Under Consideration by HHS, available
at: http://www.qualityforum.org/
Publications/2014/01/MAP_Pre-Rule
making_Report_2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
The MAP stated, ‘‘Not ready for
implementation; measure concept is
promising but requires modification or
further development.’’ In its Additional
Findings the MAP stated that it, ‘‘noted
the need for continued development of
electronic specifications for NQF #0500
Severe Sepsis and Septic Shock:
Management Bundle. While some
workgroup members challenged the
feasibility and evidence behind this
measure, MAP deferred to the recent
endorsement review of this measure and
conditionally supported it for the
Meaningful Use Program. Public
comment from Edwards Lifesciences
supports MAP’s conclusion [page 168].’’
(In the proposed rule (79 FR 28236), we
and septic shock. N Engl J Med. 2001; 345: 1368–
77.
96 HCUP Nationwide Inpatient Sample (NIS).
Healthcare Cost and Utilization Project (HCUP).
2007–2009. Agency for Healthcare Research and
Quality, Rockville, MD. http://www.hcupus.ahrq.gov/nisoverview.jsp.
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attributed all of the MAP’s statements to
its 2013 Pre-Rulemaking Report.)
(2) Overview of Measure
The purpose of the proposed Severe
Sepsis and Septic Shock: Management
Bundle measure is to support the
efficient, effective, and timely delivery
of high quality sepsis care in support of
the Institute of Medicine’s (IOM) aims
for quality improvement. This is
consistent with the Department of
Health and Human Service National
Quality Strategy´s priorities directed at
one of the leading causes of mortality.
By providing timely, patient-centered
care, and making sepsis care more
affordable through early intervention,
reduced resource use and complication
rates can result. The severe sepsis and
septic shock early management bundle
provides a standard operating procedure
for the early risk stratification and
management of a patient with severe
infection. Through applying this
standard operating procedure, a
clinically and statistically significant
decrease in organ failure, mortality, and
the utilization of health care resources
has been demonstrated for over 10
years. Additional information about this
measure is available on the NQF’s Web
site at http://www.qualityforum.org/
QPS/0500.
(3) Data Sources
The proposed measure is chartabstracted data of patients presenting
with septic shock who received
treatment detailed in the Calculations
section below.
(4) Outcome
The outcome criteria for this measure
consists of: measure lactate; blood
cultures; timely antibiotics; fluid
resuscitation; lactate clearance;
vasopressors, central venous pressure
(CVP), central venous oxygen saturation
(ScvO2); and overall bundle
compliance. These are discussed in
more detail below
• Measure Lactate
Measurement of lactate levels is
specifically associated with improved
outcomes in sepsis, and an elevated
lactate value identifies patients at higher
risk for poor outcomes. Up to 10 percent
of in-hospital cardiac arrest in the
United States per year is secondary to
sepsis (pneumonia). These patients are
often misdiagnosed and sent to the
medical floors only to suffer acute
hemodynamic deterioration. These
outcomes could be potentially avoided
with lactate measurement upon
admission providing risk stratification
triggering alternative dispositions.
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Levy et al.97 conducted an
international, multisite ‘‘Surviving
Sepsis Campaign’’ (SSC) initiative to
determine the rate of change at which
the sites reached the SSC guideline
targets. In the first quarter of this
initiative, only 61.0 percent of patients
had lactate values measured consistent
with guidelines. In addition, prior
studies have shown that care prompted
by measurement of lactate levels in
sepsis patients reduced resource
utilization and cost. This leads to lower
likelihood of hospital-acquired
conditions. This performance measure
has been previously used as a core
component of multicenter and national
quality improvement initiatives.
Formalizing it as a national performance
measure will provide direct targets for
intervention that are closely linked with
improvements in mortality and cost.
• Blood Cultures
In the first quarter of the Levy et al.
SSC initiative, only 64.5 percent of
patients had blood cultures collected
prior to antibiotic administration.
Collecting blood cultures prior to
antibiotic administration is specifically
associated with improved outcomes in
sepsis, and pathogens identified by
blood cultures allow for customized
therapy. As a result, blood cultures
continue as a recommendation of the
current Surviving Sepsis Guidelines.
By obtaining blood cultures, antibiotic
regimens can be customized to treat the
specific infecting organism. This will
result in less unnecessary exposure to
antibiotics, reducing complications
associated with antibiotic use, including
drug reactions, allergies and adverse
events, the development of drugresistant organisms, and the occurrence
of Clostridium difficile colitis. The
performance measure for collecting
blood cultures for suspected sepsis has
been previously used and continues as
a core component of the SSC guidelines.
• Timely Antibiotics
Kumar et al.98 found the median time
to appropriate antibiotics was 6 hours
after shock. In the first quarter of the
Levy et al.99 SSC initiative, only 60.4
percent of patients received timely
97 Levy MM, Dellinger RP, et al.; Surviving Sepsis
Campaign. The Surviving Sepsis Campaign: results
of an international guideline based performance
improvement program targeting severe sepsis. Crit
Care Med. 2010 Feb;38(2):367–74.
98 Kumar A, Roberts D, Wood K, Light B, et al.
Duration of Hypotension before Initiation of
Effective Antimicrobial Therapy is the Critical
Determinant of Survival in Human Septic Shock.
Crit Care Med. 2006;34 (6):1589–96.
99 Levy MM, Dellinger RP, et al.; Surviving Sepsis
Campaign. The Surviving Sepsis Campaign: results
of an international guideline based performance
improvement program targeting severe sepsis. Crit
Care Med. 2010 Feb;38(2):367–74.
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antibiotics. Multiple studies, for
example, have demonstrated that delays
in administration of appropriate
antibiotics in patients with sepsis and
other severe infections are associated
with longer lengths of stay, higher costs,
and higher mortality. In septic shock,
the Kumar et al. study demonstrated
that every hour in delay of appropriate
antibiotics was associated with a 7.6
percent higher mortality. The timely
administration of broad-spectrum
antibiotics was associated with
significantly higher risk adjusted
survival. Based on a preponderance of
data, the current recommendations in
the international guidelines for the
management of severe sepsis and septic
shock includes the administration of
broad-spectrum antibiotic therapy
within 1 hour of diagnosis of septic
shock and severe sepsis.
• Fluid Resuscitation
A common finding in patients with
septic shock, manifested by low blood
pressure and/or other signs of organ
hypoperfusion, such as elevated serum
lactate levels, is intravascular volume
depletion. The degree of the
intravascular volume deficit in sepsis
varies, yet nearly all patients require
initial volume resuscitation and many
patients require continuing fluid
resuscitation over the first 24 hours.
Early fluid resuscitation is associated
with improved outcomes for patients
with acute lung injury due to septic
shock. International guidelines
recommend that patients with suspected
hypovolemia be initially treated with at
least 30 mL/kg of crystalloid (for
example, Ringer’s solution) to determine
clinical response. In the first quarter of
the Levy et al.100 SSC initiative, only
59.8 percent of patients received fluid
resuscitation consistent with guidelines.
Timely fluid resuscitation avoids an
error of omission in which indicated
therapy is delayed or omitted. By
improving outcomes, length of stay is
reduced. This leads to lower likelihood
of hospital-acquired conditions. This
performance measure has been
previously used as a core component
and continues as a core component of
the SSC guidelines. Formalizing it as a
national performance measure will
provide direct targets for intervention
that are closely linked with
improvements in mortality and cost.
• Lactate Clearance
Elevated lactate levels prompt the
consideration of specific care practices
toward hemodynamic optimization
guided by either central venous oxygen
saturation or lactate clearance.
International guidelines recommend
100 Ibid.
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50237
that patients with sepsis and continued
elevated lactate values have additional
therapies until lactate levels are
normalized. However, normal lactate
levels can be seen in septic shock,
especially in children.
• Vasopressors, Central Venous
Pressure (CVP), and Central Venous
Oxygen Saturation (ScvO2)
Performance gaps in individual
bundle elements can range from 79
percent (Confidence Interval (CI) (69–89
percent) for vasopressors, to 27 percent
(CI 18–36 percent) for Central Venous
Pressure (CVP) measurement, and as
low as 15 percent (CI 7–23 percent) for
Central Venous Oxygen Saturation
(ScvO2) in some community emergency
departments. These numbers increase
(50–75 percent) in larger hospital
settings. CVP has been shown to have a
significant association with mortality 101
and multiple studies and meta-analysis
have shown a significant association
with reaching an ScvO2 of 70 percent
and improved mortality.
• Overall Bundle Compliance
Multiple initiatives promoting
bundles of care for severe sepsis and
septic shock were associated with
improved guideline compliance and
lower hospital mortality. Even with
compliance rates of less than 30 percent,
absolute reductions in mortality of 4–6
percent have been noted. Coba et al.102
found that when all bundle elements
were completed within 18 hours and
compared with patients who did not
have bundle completion, the mortality
difference was 10.2 percent. Thus, there
is a direct association between bundle
compliance and improved mortality. In
addition, a continuous quality
improvement (CQI) initiative, can
improve compliance rates. CQI is a
quality management process that
encourages continually assessing
performance and whether
improvements can be made.103 Multiple
studies have shown that standardized
order sets, enhanced bedside monitor
display, telemedicine and
comprehensive CQI feedback is feasible,
modifies clinician behavior and is
associated with decreased hospital
mortality.
101 Varpula M, Tallgren M, Saukkonen K, VoipioPulkki LM, Pettila V. Hemodynamic variables
related to outcome in septic shock. Intensive Care
Med. Jun 23 2005;31:1066–1071.
102 Coba V, Whitmill M, Mooney R, et al.
Resuscitation Bundle Compliance in Severe Sepsis
and Septic Shock: Improves Survival, Is Better Late
than Never. J Intensive Care Med. Jan 10 2011.
103 Edwards PJ, et al. Maximizing your investment
in EHR: Utilizing EHRs to inform continuous
quality improvement. JHIM 2008;22(1):32–7.
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(5) Cohort
This measure will focus on patients
aged 18 years and older who present
with symptoms of severe sepsis or
septic shock. These patients will be
eligible for the 3 hour (severe sepsis)
and/or 6 hour (septic shock) early
management measures.
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(6) Inclusion and Exclusion Criteria
Numerator Statement: the numerator
is: Patients from the denominator who
received all the following: Step 1, Step
2, and Step 3 within 3 hours of time of
presentation, and if septic shock is
present (as either defined as
hypotension or lactate >=4 mmol/L),
who also received Step 4, Step 5, Step
6, and Step 7 within 6 hours of time of
presentation. The steps are described in
detail below.
Step 1: Measure lactate level
Step 2: Obtain blood cultures prior to
antibiotics
Step 3: Administer broad spectrum
antibiotics
Step 4: Administer 30 ml/kg crystalloid
for hypotension or lactate >= 4 mmol/
L
Step 5: Apply vasopressors (for
hypotension that does not respond to
initial fluid resuscitation to maintain
a mean arterial pressure >= 65)
Step 6: In the event of persistent arterial
hypotension despite volume
resuscitation (septic shock) or initial
lactate >= 4 mmol/L (36 mg/dl),
measure central venous pressure and
central venous oxygen saturation
Step 7: Re-measure lactate if initial
lactate is elevated
Denominator: The denominator is the
number of patients presenting with
severe sepsis or septic shock. The
following patients presenting with
severe sepsis or septic shock will be
excluded from the denominator:
• Patients with advanced directives
for comfort care;
• Patients with clinical conditions
that preclude total measure completion;
• Patients for whom a central line is
clinically contraindicated;
• Patients for whom a central line
was attempted but could not be
successfully inserted;
• A patient or a surrogate decision
maker declines or is unwilling to
consent to such therapies or central line
placement; and
• Patients who are transferred to an
acute care facility from another acute
care facility.
(7) Calculations
In calculating this measure, the
denominator is the number of patients
presenting with severe sepsis or septic
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shock. The numerator in this measure is
patients from the denominator who had
their lactate levels measured, had blood
cultures obtained prior to receiving
antibiotics, and who received broad
spectrum antibiotics within 3 hours of
presentation. If septic shock is present,
the patients also must receive 30 ml/kg
crystalloid for hypotension or lactate
>=4 mmol/L, apply vasopressors (for
hypotension that does not respond to
initial fluid resuscitation to maintain a
mean arterial pressure >=65), in the
event of persistent arterial hypotension
despite volume resuscitation (septic
shock) or initial lactate >=4 mmol/L (36
mg/dl) measure central venous pressure
and central venous oxygen saturation,
and the patient’s lactate level must be
re-measured if the initial lactate level is
elevated.
We invited public comment on this
proposal.
Comment: Several commenters
supported adopting this measure. Some
commenters supported adopting this
measure because it is NQF-endorsed.
One commenter supported the addition
of this measure and noted that it fills an
important measure gap, and should
positively impact patient care.
Another commenter strongly
supported incorporating the sepsis/
septic shock measure into the Hospital
IQR Program beginning in the FY 2017
payment determination because of the
association of sepsis with patient
deaths, hospital admissions, and length
of hospital stays. Further, the
commenter stated that Medicare is the
largest payer for sepsis-related hospital
stays, accounting for close to 60 percent
of all patients.
Response: We proposed adopting this
measure because we believe this
measure improves patient health
outcomes.
Comment: Several commenters noted
that there are two other trials that
examine the risks/benefits of
protocolized care of septic patients
which are yet to be published. As this
field is evolving, the commenter
believed that it is not appropriate to set
benchmarks which were not confirmed
in the most recent, largest randomized
controlled trial. Specifically, the
commenters suggested that specific
measure criteria should await the results
of the Australian Resuscitation In Sepsis
Evaluation Randomised Controlled Trial
(ARISE) and The Protocolised
Management in Sepsis Trial (ProMISe).
Response: We thank the commenter
for feedback. We acknowledge the
importance of the results pending from
the ARISE and the ProMISe trials and
will take those results and their
potential impact into consideration
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when available. However, we believe
that care of patients with severe sepsis
and septic shock is of paramount
importance and there is a significant
performance gap within the Hospital
IQR Program. The presence of this gap
warrants the adoption of this clinical
quality metric prior to the finalization of
the two pending trials referenced above.
The severe sepsis/septic shock bundle
measure is the only NQF-endorsed
sepsis measure currently available to
CMS.
Comment: Many commenters opposed
CMS adopting this measure citing the
recent Protocolized Care for Early Septic
Shock (ProCESS) trial published after
publication of the proposed rule. The
ProCESS trial found no additional
benefit in including measurement of
central venous pressure (CVP) and
central venous oxygen saturation.
Response: We thank the commenters
for this feedback. We note from the
measure steward that the Severe Sepsis
and Septic Shock: Management Bundle
(NQF #0500) measure ‘‘has undergone
the rigorous NQF evaluation process for
over 6–7 years based on over 13 years
of confirmatory studies. These studies
provided the framework which allowed
the measure to navigate the validity and
reliability metrics as a whole measure
including the central venous catheter to
measure central venous pressure and
oxygen saturation (SCVO2).’’ 104 We note
that these two clinical parameters guide
the administration of intravenous fluids,
vasopressors, inotropes, and blood
transfusions. Further, both parameters
provide critical information about
cardiac dysfunction, which when
treated appropriately improves
outcome. The steward further notes ‘‘As
a result CVC placement has been shown
to be one of the most important bundle
elements 34–37 and independently
associated with a 9 percent reduction in
mortality.’’ 38 39
Regarding the ProCESS trial, we note
that this randomized trial focused on a
different set of guidelines for septic
shock patients and did not require
patients to have a central venous
catheter placed, unless peripheral
access was insufficient.105 The protocolbased standard therapy was the result of
the ProCESS Investigators reviewing the
literature, surveying emergency
physicians and intensivists worldwide
with consensus feedback from
investigators.2 The ProCESS trial
104 NQF. Patient Safety Measure. Henry Ford
Comments. June 2014. Available at: http://
www.qualityforum.org/
ProjectMaterials.aspx?projectID=73701.
105 ProCESS Investigators. A Randomized trial of
Protocol-Based Care for early septic shock. NEJM.
2014; 370:1683–1693.
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protocol-based standard therapy also
included administration of fluids and
vasoactive agents to reach goals for
systolic blood pressure and shock index
(the ratio of heart rate to systolic blood
pressure).2 The results of this trial were
published in March 2014 and NQF
reviewed the Severe Sepsis and Septic
Shock: Management Bundle (NQF
#0500) measure and narrowly voted to
remove the central venous catheter
portion of the EGDT bundle in June
2014. We note that the ProCESS trial
was performed in 31 U.S. hospital
emergency departments known to have
a high volume of patients and that over
a 5-year period randomized 1351
patients with septic shock into the trial,
or on average 8 patients per site per
year. The measure steward noted that a
meta-analysis of 49 studies found the
ProCESS trial population to account for
3 percent of the 41,064 patients in the
these studies and that the 31 centers in
the trial are not reflective of community
settings where the majority of patients
are treated in the U.S.,2 nor are the 31
centers a majority of the 4500 hospitals
in the U.S.
Finally, during the NQF Patient Safety
Measure Standing Committee meeting,
the steward noted that the
recommendation to remove the CVC
portion of the Severe Sepsis and Septic
Shock: Management Bundle (NQF
#0500) measure had not been tested to
assess if the measure would still be
reliable and valid with this change to
the measure, and that the
recommendation was based on a single
study’s protocol-based standard therapy
which was noted not to be identical to
the EGDT treatment used in the Severe
Sepsis and Septic Shock: Management
Bundle (NQF #0500) measure.
In view of this background of
information we believe the most logical
next step is to gather more information
from two other studies that will be
completed in the near future, as well as
to await further recommendations from
the NQF Patient Safety Measures Project
as the ProCESS investigators collaborate
with the stewards of the Severe Sepsis
and Septic Shock: Management Bundle
(NQF #0500) measure to refine the
measure. We believe that sepsis and its
mortality rate are important medical
conditions which have also shown wide
variation in treatment and outcome. We
believe severe sepsis and septic shock
should be monitored for improvements
in mortality rates.
Comment: Commenters noted that the
CVP and central venous oxygen
saturation monitoring and other
processes were adopted in the Surviving
Sepsis Campaign (SSC) after the results
of a single center trial published in
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2001.106 Commenters also stated that
the Surviving Sepsis Campaign (SSC)
moderated some of its recommendations
based on the results of the ProCESS trial
citing the SSC’s response to the
ProCESS trial.107
Response: We thank the commenter
for feedback. We note that monitoring
CVP and central venous oxygen
saturation monitoring are important
components of the sepsis bundle. The
SSC recommendations note that
mortality outcomes increase if CVP or
oxygen saturation of 70 percent or 65
percent respectively, is not achieved
with fluid resuscitation to the central
venous pressure target. We acknowledge
that the CVP and central venous oxygen
saturation monitoring and other
processes were adopted by the
Surviving Sepsis Campaign (SSC) after
the results of a single center trial
published in 2001. However, we would
like to point out the SSC
recommendations have been updated
since their initial publication and these
updated recommendations are based on
many different international studies.
With regard to the comment that SSC
has moderated some of its
recommendations based on the ProCESS
trial. We note that in their response to
the ProCESS trial dated May 19, 2014,
SSC recognizes that there are alternative
ways to obtain these results and they
will address ways to include this data
in future versions of their quality
improvement database.
Comment: One commenter stated that
support for this measure was not
lessened by the ProCESS trial
questioning the level of support for
element ‘‘F’’ (measurement of central
venous pressure and central venous
oxygen saturation) of this measure. The
commenter noted that, while the NQF
Patient Safety Steering Committee voted
in favor of removing element ‘‘F,’’ final
ratification is pending by the NQF
Board of Directors.
The commenter noted that the NQF
Patient Safety Steering Committee did
not remove its endorsement of the full
measure, and cited the Draft Report for
Comment 108 on the ad hoc review that
stated that ‘‘usual care for severe sepsis
106 Rivers E, Nguyen B, Havstad S et al. Early
goal-directed therapy in the treatment of severe
sepsis and septic shock. N Engl J Med.2001; 345:
1368–77.
107 Surviving Sepsis Campaign. Surviving Sepsis
Campaign Responds to ProCESS Trial. May 19,
2014. Available at: http://www.survivingsepsis.org/
SiteCollectionDocuments/SSC-Responds-ProcessTrial.pdf.
108 National Quality Forum. NQF-Endorsed
Measures for Patient Safety. Draft Report for
Comment. May 28, 2014. Available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=76698.
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50239
and septic shock had changed
dramatically in the past decade with
dramatic improvements in sepsisrelated morbidity and mortality with
several elements of the NQF #0500
measure being key to this improvement
in outcomes’’ (p. 20).
Response: We agree that support for
this measure has not lessened as a result
of the ProCESS trial. As part of its
ongoing work, the NQF Patient Safety
Standing Committee conducted an ad
hoc review of the sepsis measure (NQF
#0500) based on results from the
ProCESS trial. While the NQF Patient
Safety Steering Committee voted in
favor of removing element ‘‘F,’’ it
recommended retaining endorsement of
the measure as a whole. At this time
final ratification is pending by the NQF
Board of Directors. We refer readers to
the NQF Web site for complete
information on this measure’s review at:
http://www.qualityforum.org/News_
And_Resources/Press_Releases/2014/
Statement_from_NQF_on_Review_of_
Sepsis_Measure.aspx. We intend to
closely monitor and incorporate new
information as the evidence base
improves.
Comment: A commenter asked CMS
to invest additional resources in
developing a stronger sepsis outcome
measure. Another commenter asked
CMS to consider adding non-NQFendorsed measures that address early
detection of sepsis.
Response: We thank the commenters
for these suggestions and will take them
into consideration in the future.
Comment: A commenter supported
the severe sepsis/septic shock:
management bundle measure provided
the chart-abstracted measures that are
proposed for removal in this rule are
removed. The commenter noted that, if
all existing chart-abstracted measures
are left intact and the proposed
mandatory electronic submission
requirements for CY 2016 are added, it
will be difficult for the commenter to
find the resources to add the new
measures.
Response: We are working to lessen
the burden by removing several chartabstracted measures.
Comment: One commenter was
concerned that the measure, as defined,
may have a high rate of false positives.
Response: We are unaware of any
studies indicating the severe sepsis/
septic shock measure, as defined, has a
high rate of false positives. We would be
interested in seeing any evidence of a
high rate of false positives.
Comment: One commenter stated that
the science of sepsis treatment is
evolving and measurements of the
incidence of sepsis and sepsis outcomes
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are likely inaccurate due to coding
variances and payment incentives.
Response: We acknowledge that the
science of sepsis treatment is evolving.
We note that this is common
phenomenon in medicine, and this is
why all measures undergo routine
measure maintenance. We believe that
the coding of sepsis is accurate because
these codes are used for payment
reimbursement. In addition, our
payment reimbursement processes
allow for review, correction, and
appeals. The payment incentive in the
Hospital IQR Program is for reporting,
therefore there is no financial incentive
associated with actual sepsis/septic
shock outcomes.
Comment: Many commenters
suggested that this measure poses a
possible risk to patients and would be
a burden on hospitals to collect the data.
Specifically, one commenter was
concerned about whether emergency
department staff would be required to
complete elements of the bundle while
they triage patients.
Response: We believe this measure
will benefit consumers seeking
information regarding the quality of
health care outcomes. Sepsis is
associated with patient deaths, hospital
readmissions, and increased length of
hospital stays. The measure fills an
important measure gap, and will
positively impact patient care. We
believe that these benefits will outweigh
data collection burdens. We also do not
believe this measure will be more
burdensome than other measures for
hospitals because the measure data may
be collected concurrently,
retrospectively, or a combination of
both.
Regarding the concern of the inability
to complete the bundle elements in the
emergency department during triage, we
note that the measure allows for
completion of elements A–C within 3
hours. Timeliness of accurate detection
and treatment of sepsis has been
associated with improved survival in
numerous studies, for example. 109 110
Comment: A commenter suggested
that CMS defer the sepsis reporting
requirements until 2016, when the next
version of the Surviving Sepsis
Guidelines (SSG) is published.
109 Castellanos-Ortega A, Suberviola B, GarciaAstudilllo LA, Holanda MS, et al. Impact of the
Surviving Sepsis Campaign protocols on hospital
length of stay and mortality in septic shock
patients: Results of a three-year follow-up quasiexperimental study. Crit Care Med. 2010, 8(4):1036–
1043.
110 Ferrer R, Artigas A, Suarez D, Palencia E, et
al. Effectiveness of Treatments for Severe Sepsis. A
Prospective, Multicenter, Observational Study. Am
J Respir Crit Care Med. 2009, 180:861–866.
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Response: We believe the measure is
important and addresses a critical gap in
measurement and therefore, should be
adopted at this time. However, we
intend to closely monitor and
incorporate new information as the
evidence base improves.
Comment: Several commenters
requested that CMS consider alternative
sepsis measures that are NQF-endorsed,
reliable, accurate, feasible, evidencebased, streamlined, and can be collected
consistently and reliably, with minimal
burden.
Response: At the time of this
publication, we note that here are no
other NQF-endorsed severe sepsis/
septic shock measures available.
Comment: A commenter asked for
clarification as to which patients would
be excluded from this measure. This
commenter also wanted clarification on
whether we are developing a sampling
methodology for the sepsis measure.
The commenter suggested that we
define a minimum case threshold for
publicly reporting this measure.
Response: The exclusions for this
measure were outlined above, in the
proposed rule (79 FR 28237), and at:
http://www.qualityforum.org/QPS/0500.
We intend to develop a sampling
strategy for the sepsis measure. In
addition, regarding a minimum case
threshold for public reporting, we will
follow our existing guidelines. We
display a footnote on Hospital Compare
when the number of cases/patients is
too few to report, that is fewer than 11
cases.111
Comment: Many commenters also
asked for changes to specific aspects of
the measure. Components of the sepsis
measure commenters would like to
change include:
• Allowing exclusions to the required
fluid resuscitation amount of 30 ml/kg
to take into account the elderly, frail,
and cardiac compromised that are not
able to handle this amount of fluid, and
may have fluid overload. For example,
one exclusion could be 25 ml/kg for
cardiac compromise, which the
commenter stated the literature also
supports in sepsis fluid resuscitation.
• Allowing administration of 30 ml/
kg crystalloid for hypotension or lactate
>/=4 mmol/L should be administered
within 3 hours of time of presentation
and not 6 hours, according to current
guidelines.
• Excluding patients from the blood
culture before antibiotic measure if
blood cultures are attempted without
success and patients that present to the
emergency department with an atypical
111 http://www.medicare.gov/hospitalcompare/
Data/Footnotes.html.
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sepsis presentation (cardiac arrest prior
to arrival).
Many commenters opposed the
inclusion of element F from the
measure, specifically ‘‘In the event of
persistent hypotension despite volume
resuscitation (septic shock) or initial
lactate >=4 mmol/L (36 mg/dl) measure
central venous pressure and central
venous oxygen saturation,’’ per the
recommendation of the Patient Safety
Measure Committee. A commenter
cautioned that central lines have many
complications and this trial showed
early goal directed therapy without a
central line was equivocal to placing a
central line for monitoring. Commenters
also noted that central venous catheters
should be used sparingly, as they can
lead to infections and other
complications.
A commenter stated that the measure
specifications of care steps within six
hours (required only for patients with
septic shock) should not include steps
five through seven because they are no
longer considered the standard of care
or high-quality sepsis resuscitation
metrics and are outdated.
Response: We thank the commenters
for their feedback. We are adopting this
measure as developed by the measure
steward, Henry Ford Hospital, and
endorsed by the NQF. We suggest the
commenters recommend any changes to
this measure to the measure developer/
steward so that those changes would go
through the consensus development
process.
Comment: Several commenters sought
clarification on aspects of the sepsis
measure, such as:
• Clarification of the denominator for
identification of septic shock patients.
The commenter asked that we clarify if
the measure has specific ICD–9–CM
diagnosis codes that would limit the
review. If those are present, the
commenter did not object to this
measure. However, if they are not
present, the commenter strongly
objected to this measure based upon the
significant burden of work that it
imposes.
• Clarification on whether the
measure will be collected as aggregate
data (Web-based) or if we will require
the submission of patient-level data.
• Clarification as to if the measure
specifications will be provided in the
standard manual format and when those
specifications will be released. At this
time, the commenter noted that there is
no algorithm, data elements, initial
patient population or sampling
guidelines available to be able to begin
programming this measure for
collection. As this is a very complicated
measure, the commenter noted that to
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collect this measure as a chartabstracted measure will be a burden to
the hospitals.
• Clarification and rationale as to
why we wanted to collect this as a
chart-abstracted measure and not as an
electronic clinical quality measure. A
commenter suggested that the Severe
Sepsis and Septic Shock measure be
introduced as an electronic clinical
quality measure rather than as a chartabstracted measure. The inclusion of
this measure should be timed to occur
when electronic measure specification
is available to support its inclusion.
Another commenter requested
clarification and rationale as to why we
want to collect this as a chart-abstracted
measure and not as an electronic
clinical quality measure.
Response: The denominator is the
number of patients presenting with
severe sepsis or septic shock. These
types of patients have specific ICD–9–
CM codes and the codes will be
provided with the measure
specifications. The measure is a
composite patient safety measure,
which will require submission of
patient-level data.
The electronic specifications of the
measure are not ready for
implementation. We will consider
adopting the electronic clinical quality
measure version when it becomes fully
electronically-specified.
Comment: A commenter requested
that, pending approval of the Sepsis and
Septic Shock: Management Bundle
Measure (NQF #0500), CMS provide the
measure specifications six months in
advance of the abstraction period to
provide hospitals with ample time to
review and evaluate any necessary
process changes before the data
collection period begins. Another
commenter requested clarification as to
if the measure specifications will be
provided in the standard manual format
and when those specifications will be
released. At this time, the commenter
notes that there is no algorithm, data
elements, initial patient population or
sampling guidelines available to be able
to begin programming this measure for
collection. As this is a very complicated
measure, the commenter notes that to
collect this measure as a chartabstracted measure will be a burden to
the hospitals.
Response: The measure specifications
will be released in the standard format,
in the Specifications Manual, which
will contain the data elements and
algorithm. Typically, our specifications
manuals are posted on QualityNet in
January for July–December discharges
and July for January–June discharges.
We also provide addendums each year
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after the finalization of the IPPS/LTCH
PPS final rule. The release date of this
addendum is to be determined.
Comment: One commenter stated that
the quality improvement opportunities
are when missed diagnosis occurs. The
commenter asked if CMS will include
possible diagnosis from an electronic
health record problem list as a data
source.
Further, the commenter stated that the
first three elements for severe sepsis
have best-practice times of three hours
from presentation. The commenter
asked if that is three hours from arrival
to the facility, upon transfer between
units, from presentation of symptoms,
or all of the above. The commenter
advised that three hours could also be
very difficult to meet depending on
emergency department volumes at any
given time.
Response: We note that this is a chartabstracted measure and hospitals can
collect data from all available sources of
medical records including EHRs.
Regarding the best-practice times for
the measure, we refer the commenter to
the Inclusion and Exclusion Criteria
described above for a description of the
steps to be completed within 3 hours of
the patient’s presentation. According to
the measure steward, Henry Ford
Hospital, the measure’s intent is to use
three hours following presentation/
onset from one endpoint to another, be
it facility transfer/arrival or unit
transfer/arrival.
After consideration of the public
comments we received, we are
finalizing the Severe Sepsis and Septic
Shock: Management Bundle Measure
(NQF #0500) as proposed. We will
closely monitor this measure as new
clinical evidence becomes available,
and will update the public via future
rulemaking and/or operational guidance
as necessary.
f. Electronic Health Record-Based
Voluntary Measures
(1) Overview of New Electronic Health
Record-Based Voluntary Measures
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28238 through
28239) we proposed four new voluntary
electronic health record-based measures
to be submitted as electronically
specified measures: (1) Hearing
Screening Prior to Hospital Discharge
(NQF #1354); (2) PC–05 Exclusive
Breast Milk Feeding and the subset
measure PC–05a Exclusive Breast Milk
Feeding Considering Mother’s Choice
(collectively referred to as NQF #0480);
(3) Home Management Plan of Care
(HMPC) Document Given to Patient/
Caregiver; (4) and Healthy Term
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Newborn (NQF #0716). The four
proposed electronic health record-based
measures were included on a publicly
available document entitled ‘‘List of
Measures Under Consideration for
December 1, 2012’’ in compliance with
section 1890A(a)(2) of the Act, and they
were reviewed by the MAP in its MAP
Pre-Rulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS. The final MAP
report is available at: https://
www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&Item
ID=72746. We considered the input and
recommendations provided by the MAP
in selecting measures to propose for the
Hospital IQR Program.
The specifications for the electronic
clinical quality measures for eligible
hospitals are found at: http://cms.gov/
Regulations-and-Guidance/Legislation/
EHRIncentivePrograms/eCQM_
Library.html.
Many commenters raised similar
concerns applicable across the proposed
electronic clinical quality measures; we
summarize and respond to these general
comments first below before discussing
the individual electronic clinical quality
measures.
Comment: Many commenters opposed
one or more of these voluntary
electronic clinical quality measures for
the following reasons:
• A significant portion of the
measures’ populations are not covered
by Medicare.
• The proposed measures would not
lead to improved hospital quality or
offer insight on how to improve
electronic clinical quality measures.
• CMS did not propose to allow
hospitals to submit chart-abstracted data
on these measures in addition to the
electronic clinical quality measures.
Response: We are concerned with
improving the quality of care provided
to all patients, not just Medicare
patients. All of our non-claims-based
measures include all-payer patients,
meaning they include non-Medicare
patients as well as Medicare
beneficiaries.
We disagree that these measures
would not lead to improved hospital
quality of care. The measures address
high-impact conditions not adequately
addressed in the program measure set.
We also disagree that these measures
will not improve electronic clinical
quality measures. Reporting clinical
quality measures in their electronic
form is a different mode of data
collection that, as with any measure,
will require refinement over time. We
believe that implementing and using
will drive quality improvement through
measuring quality through EHR’s, and
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provide nationally representative
information to inform future electronic
clinical quality measure refinements.
Finally, we believe these measures
will give hospitals useful information
that can be used to improve the quality
of care for those patients in the measure
population regardless of the mode of
collection and submission. We are in
the process of moving away from chartabstracted measures. Therefore, in part
to minimize hospitals data collection
burden and when electronic
specifications are available, we intend
to adopt those versions. We proposed to
adopt these measures as voluntary
electronic clinical quality measures to
align with the Medicare EHR Incentive
Program to provide hospitals’ flexibility
in reporting. We note that the proposed
measures are voluntary and a hospital
may choose to not report one or more
of the proposed measures.
Comment: One commenter was
concerned that the complexity of the
data currently in chart abstraction for
these measures will make it difficult to
ensure that this information will
accurately be translated when
submitting these measures
electronically.
Response: These measures are already
electronically-specified and as such, no
translation is required. As previously
stated in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50817 through 50818),
we do not believe that the electronic
clinical quality measures are
substantively different from their chartabstracted form.
Comment: Commenters recommended
aligning CMS and TJC requirements for
these measures in an effort to reduce the
amount of resources that are spent when
requirements are different or the timing
of changes in requirements creates
additional challenges.
Response: We intend to continue
working with TJC and other
stakeholders to reduce hospitals’ quality
reporting burden.
(2) Voluntary Electronically Specified
Measure: Hearing Screening Prior to
Hospital Discharge (NQF #1354)
The Hearing Screening Prior to
Hospital Discharge (NQF #1354)
measure assesses the proportion of all
live births born at a hospital that have
been screened for hearing loss before
hospital discharge. The Joint Committee
on Infant Hearing encourages early
screening and intervention in infants
with hearing loss to maximize linguistic
competence and literacy development
in children with hearing loss or who are
hard of hearing. Early intervention
improves developmental and social
outcomes for children. The States and
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CDC have collected this measure as a
population-based measure for more than
10 years.
This measure is NQF-endorsed and
was supported by the MAP in its PreRulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS, available at:
https://www.qualityforum.org/Work
Area/linkit.aspx?LinkIdentifier=id&
ItemID=72738. The MAP noted that the
measure addresses a high-impact
condition not adequately addressed in
the program measure set.
The numerator is all live births during
the measurement period born at a
facility and screened for hearing loss
prior to discharge, or screened but still
not discharged, or not screened due to
medical reasons or a medical exclusion.
The denominator includes all live
births during the measurement period
born at a facility and discharged without
being screened, or screened prior to
discharge, or screened but still not
discharged.
The measure excludes any patient
deceased prior to discharge and has not
received hearing screening.
Comment: One commenter supported
the hearing screening prior to hospital
discharge measure.
Response: We thank the commenter
for their support.
Comment: One commenter opposed
the Hearing Screening Prior to Hospital
Discharge measure, and expressed
concern that it will encourage
physicians to obtain other preventative
screenings during the hospitalization
that are unnecessary or unrelated to the
cause of the patient’s admission.
Response: This measure relates to
hearing screening for newborns prior to
discharge, not all patients. Newborns, as
defined by this measure, are not in the
same category as other admitted patients
as they are born to an admitted patient.
Early screening allows for early
intervention in infants with hearing
loss. We do not believe newborn
preventive hearing screenings will
encourage physicians to perform
unneeded preventive screenings.
After consideration of the public
comments we received, we are
finalizing the adoption of the Hearing
Screening Prior to Hospital Discharge
measure for voluntary electronic
reporting as proposed.
(3) Voluntary Measure: PC–05 Exclusive
Breast Milk Feeding and the subset
measure PC–05a Exclusive Breast Milk
Feeding Considering Mother’s Choice
(collectively referred to as NQF #0480)
Exclusive breast milk feeding for the
first 6 months of neonatal life has long
been the expressed goal of World Health
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Organization (WHO), HHS, American
Academy of Pediatrics (AAP) and
American College of Obstetricians and
Gynecologists (ACOG).
The PC–05 Exclusive Breast Milk
Feeding measure and the subset
measure PC–05a Exclusive Breast Milk
Feeding Considering Mother’s Choice
(NQF #0480) is endorsed by the NQF
and supported by the MAP in its PreRulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS, available at:
https://www.qualityforum.org/
WorkArea/linkit.aspx?Link
Identifier=id&ItemID=72738. The MAP
noted that the measure addresses a highimpact condition not adequately
addressed in the program measure set.
This measure assesses the number of
newborns exclusively fed breast milk
during the newborn’s entire
hospitalization; and the subset measure
only includes those newborns whose
mothers chose to exclusively feed breast
milk.
The numerator is the same for both
the measure and subset measure—
newborns that were fed breast milk only
since birth. However, the denominators
differ. For PC–05, the denominator is
defined as single term liveborn
newborns discharged alive from the
hospital with ICD–9–CM Principal
Diagnosis Code for single liveborn
newborn. The denominator for the
subset measure, PC–05a, is defined as
single term newborns discharged alive
from the hospital excluding those whose
mothers chose not to breast feed with
ICD–9–CM Principal Diagnosis Code for
single liveborn newborn. The ICD–9–
CM Principal Diagnosis Codes for single
liveborn newborns are found in
Appendix A, Table 11.20.1: Single Live
Newborn in the Specifications Manual
for Joint Commission National Quality
Measures available at: http://
manual.jointcommission.org/releases/
TJC2013A/AppendixATJC.html.
Excluded populations:
• Admitted to the Neonatal Intensive
Care Unit (NICU) at this hospital during
the hospitalization.
• ICD–9–CM Other Diagnosis Codes
for galactosemia as defined in Appendix
A, Table 11.21 in the Specifications
Manual for Joint Commission National
Quality Measures found at: http://
manual.jointcommission.org/releases/
TJC2013A/AppendixATJC.html.
• ICD–9–CM Principal Procedure
Code or ICD–9–CM Other Procedure
Codes for parenteral infusion as defined
in Appendix A, Table 11.22 in the
Specifications Manual for Joint
Commission National Quality Measures
found at: http://
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• Experienced death.
• Length of Stay >120 days.
• Enrolled in clinical trials.
• Patients transferred to another
hospital.
• ICD–9–CM Other Diagnosis Codes
for premature newborns as defined in
Appendix A, Table 11.23 in the
Specifications Manual for Joint
Commission National Quality Measures
found at: http://
manual.jointcommission.org/releases/
TJC2013A/AppendixATJC.html.
• Documented Reason for Not
Exclusively Feeding Breast Milk.
The maternal reasons for not
exclusively breastfeeding are limited to
the following situations:
• HIV infection;
• Human t-lymphotrophic virus type
I or II;
• Substance abuse and/or alcohol
abuse;
• Active, untreated tuberculosis;
• Taking certain medications, that is,
prescribed cancer chemotherapy,
radioactive isotopes, antimetabolites,
antiretroviral medications and other
medications where the risk of morbidity
outweighs the benefits of breast milk
feeding;
• Undergoing radiation therapy;
• Active, untreated varicella;
• Active herpes simplex virus with
breast lesions; and
• Admission to Intensive Care Unit
(ICU) post-partum.
We invited public comments on this
proposal.
Comment: One commenter strongly
supported the adoption of PC–05:
Exclusive Breast Milk Feeding and the
Subset Measure PC–05a Exclusive
Breast Milk Feeding Considering
Mother’s Choice (Collectively Referred
to as NQF #0480). Another commenter
urged CMS to make the exclusive breast
milk feeding measure a mandatory
measure no later than FY 2017. The
commenter believed that exclusive
electronic reporting of these measures
could ultimately reduce the burden of
collection and increase the potential for
timely feedback to all stakeholders on
the ever important area of maternity
care. The commenter indicated that the
health benefits of breastfeeding for
mothers and for babies are well
established and that the measure has the
virtue of being included in TJC’s core
Perinatal Care measure set (PC–05),
which hospitals with more than 1,100
births annually are now required to
collect and report. The commenter
indicated that the use of standardized
measures helps avoid confusion among
consumers and health professionals and
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reduces duplication of related measure
concepts and burden of collection.
Response: We thank the commenters
for their support. We will take into
consideration their recommendations as
we plan Hospital IQR Program policies
in the future.
Comment: One commenter stated that
it is unclear whether noncompliance
with the breast feeding measure would
be created if the mother changed her
mind at some point during the stay.
Response: For PC–05a only, if the
mother’s initial feeding plan was to
exclusively feed breast milk and she
diverges from that plan to feed formula
later in the hospitalization, then the
case will fail. A case is only excluded
from the denominator if formula feeding
is the initial stated feeding plan.
Comment: One commenter believed
there should be exclusions for
newborns’ medical conditions that
require supplemental feedings. This
commenter did not support the measure
because it is an electronic clinical
quality measure only. The commenter
would support the measure in its chartabstracted form because it is NQFendorsed and supported by the MAP.
Response: We suggest that any
recommendations for changes to the
measure be shared with the measure
developer/steward, TJC. As is, the
measure is NQF-endorsed and includes
the electronic specification. In 2012,
The MAP declined to support the
electronic clinical quality measure
because of an issue regarding patient
choice. However, the measure developer
has addressed this issue following the
2012 MAP recommendation. Patients
that choose not to exclusively breast
feed are excluded from the
denominator. In 2013, the MAP
supported the measure for adoption by
the Hospital IQR Program, noting the
measure addresses an NQS priority not
adequately addressed in the program
measure set.
Comment: Several commenters
recommended the integration of
technical assistance provided by TJC
and the United States Breastfeeding
Committee (USBC) to assist with
implementation of the measure. The
commenters pointed out that USBC has
published an online toolkit 112 to help
hospitals implement the measure and
suggested that we should inform
hospitals of the availability of the
toolkit.
Response: We thank the commenters
for their suggestions and will consider
them in the future.
112 http://www.usbreastfeeding.org/HealthCare/
HospitalMaternityCenterPractices/
ToolkitImplementingTJCCoreMeasure/tabid/184/
Default.aspx).
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After consideration of the public
comments we received, we are
finalizing are finalizing the PC–05
Exclusive Breast Milk Feeding and the
subset measure PC–05a Exclusive Breast
Milk Feeding Considering Mother’s
Choice (collectively referred to as NQF
#0480) measure as a voluntary
electronic clinical quality measure as
proposed.
(4) Voluntary Measure CAC–3: Home
Management Plan of Care (HMPC)
Document Given to Patient/Caregiver
Asthma is the most common chronic
disease in children and a major cause of
morbidity and health care costs
nationally. For children, asthma is one
of the most frequent reasons for
admission to hospitals. There were
approximately 157,000 admissions for
childhood asthma in the United States
in 2009. Under-treatment and/or
inappropriate treatment of asthma are
recognized as major contributors to
asthma morbidity and mortality.
Guidelines developed by the National
Asthma Education and Prevention
Program (NAEPP) of the National Heart,
Lung and Blood Institute (NHLBI), as
well as by the American Academy of
Pediatrics (AAP) for the diagnosis and
management of asthma in children,
recommend establishing a plan for
maintaining control of asthma and for
establishing plans for managing
exacerbations.
The CAC–3: Home Management Plan
of Care (HMPC) Document Given to
Patient/Caregiver measure is no longer
endorsed by the NQF and was not
supported by the MAP in its PreRulemaking Report: 2013
Recommendations on Measures Under
Consideration by HHS available at:
https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier
=id&ItemID=72738, because the
measure no longer meets the NQF
endorsement criteria. However, based
on the prevalence of asthma among
children, as well as the risks associated
with under-treatment or over-treatment
described above, we believe the measure
is appropriate for voluntary collection.
Because asthma is a serious, and
potentially life-threatening disease, we
believe that it is important to allow
hospitals to voluntarily report this data,
which may help inform our policy.
This measure assesses the proportion
of pediatric asthma patients (aged 2–17
years) discharged from an inpatient
hospital stay with a HMPC document in
place. The numerator is the number of
pediatric asthma inpatients with
documentation that they or their
caregivers were given a written HMPC
document that addresses: (1)
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Arrangements for follow-up care, (2)
environmental control and control of
other triggers, (3) method and timing of
rescue actions, (4) use of controllers,
and (5) use of relievers.
The denominator is the number of
pediatric asthma inpatients (age 2 years
through 17 years) discharged with a
principal diagnosis of asthma.
The measure excludes: (1) Patients
with an age less than 2 years or 18 years
or greater; (2) patients who have a
length of stay greater than 120 days; and
(3) patients enrolled in clinical trials.
We invited public comments on this
proposal.
Comment: A commenter supported
the CAC–3 HPMC measure and noted
that this plan of care supports patients’
successful transition from the hospital
to home.
Response: We thank the commenter
for their support.
Comment: Some commenters opposed
the measure’s adoption as a voluntary
electronic clinical quality measure
because the NQF has removed its
endorsement and the MAP has not
recommended this measure. Another
commenter requested that CMS provide
additional information beyond what
was stated in the proposed rule
regarding our rationale for inclusion of
the CAC–3 Home Management Plan of
Care Document Given to Patient/
Caregiver. The commenter noted that
this measure’s loss of NQF endorsement
is cause for concern, but more
importantly, the commenter did not feel
this documentation measure
appropriately contributes to evaluating
the state of perinatal care in the U.S.
Response: This is a pediatric measure
addressing children aged 2–17, not a
perinatal care measure. Since it is a
pediatric measure, CAC–3 fills a gap in
the Hospital IQR Program measure set.
We are moving away from chartabstracted measures and when
electronic specifications are available,
we intend to adopt the electronic
clinical quality measure version of a
new measure. We acknowledge that the
MAP did not support the adoption of
this measure because the NQF withdrew
their endorsement. According to the
NQF report, the reason for this was
because the measure did not pass the
criteria for the category ‘‘Importance to
Measure and Report.’’ 113 NQF stated
that the evidence is not as strong for
care plan as for use of ICS. The
Committee noted the recent publication
in JAMA by Morse in October 5, 2011
that found ‘‘Among children admitted to
pediatric hospitals for asthma, there was
113 https://www.qualityforum.org/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=73041.
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high hospital-level compliance with
CAC–1 and CAC–2 quality measures
and moderate compliance with the
CAC–3 measure but no association
between CAC–3 compliance and
subsequent ED visits and asthma-related
readmissions’’ (http://jama.amaassn.org/content/306/13/1454.abstract).
The NQF also cited concerns over the
lack of standardization of a quality care
plan, how language is constructed, and
health literacy issues. Despite these
findings, however, the NQF still agreed
that ‘‘patient education is clearly an
essential component in successful
asthma management.’’ Our purpose for
adopting this voluntary electronic
clinical quality measure is to align with
the Medicare EHR Incentive Program
and to provide hospitals with flexibility
in their quality reporting. We reiterate
that the proposed measure is voluntary
and a hospital may choose to not report
this measure.
Furthermore, we proposed to include
this non-NQF endorsed measure under
the Hospital IQR Program exception
authority as discussed in section IX.A.7.
of the preamble of this final rule.
After consideration of the public
comments we received, we are
finalizing the Home Management Plan
of Care (HMPC) Document Given to
Patient/Caregiver measure as a
voluntary electronic clinical quality
measure as proposed.
(5) Voluntary Measure: Healthy Term
Newborn (NQF #0716)
This measure assesses the optimal
outcome of pregnancy and childbirth,
specifically a healthy term newborn. It
evaluates the impact of any changes in
the management or intervention on the
positive outcome for the newborn.
The measure is NQF-endorsed. The
MAP recommended removal of this
measure in its Pre-Rulemaking Report:
2013 Recommendations on Measures
under Consideration by HHS available
at: https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier
=id&ItemID=72738, because the
measure required modification or
further development. However, the
MAP strongly supported the measure
concept for inclusion once technical
issues were resolved. Given its
endorsement by NQF, as well as the
MAP’s strong support for the measure
concept, we believe the measure is
appropriate for voluntary reporting.
The result of the measure calculation
is the percentage of term singleton live
births (excluding those with diagnoses
originating in the fetal period) that do
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not have significant complications
during birth or the nursery care.114
The numerator of this measure is the
absence of conditions or procedures
reflecting morbidity that happened
during birth and nursery care to an
otherwise normal infant.
The denominator is composed of
singleton, term (>=37 weeks), inborn,
live births in their birth admission. The
denominator further has eliminated fetal
conditions likely to be present before
labor. Maternal and obstetrical
conditions (for example, hypertension,
prior cesarean, malpresentation) are not
excluded unless there is evidence of
fetal effect prior to labor (for example,
Intrauterine Growth Restriction (IUGR)/
Small for Gestational Age (SGA)).
This measure excludes: (1) multiple
gestations; (2) preterm, congenital
anomalies; and, (3) fetuses affected by
selected maternal conditions.
We invited public comments on this
proposal.
Comment: Some commenters
supported the adoption of this measure.
One commenter noted the measure has
recently been refined and renamed as
‘‘Unexpected Newborn Complications’’
and expressed the hope that CMS will
adopt the updated version.
Further, one commenter
recommended that CMS make the
measure mandatory no later than FY
2017. The commenter believed that the
exclusive electronic reporting of this
measure could ultimately reduce the
burden of collection and increase the
potential for timely feedback to all
stakeholders on the ever important area
of maternity care.
Response: We will monitor the
progress of the refined measure and
consider adopting it after the measure
completes the NQF-endorsement
process. We will take into consideration
the commenters’ recommendations as
we plan Hospital IQR Program policies
in the future.
After consideration of the public
comments we received, we are
finalizing the Healthy Term Newborn
(NQF #0716) measure as a voluntary
electronic clinical quality measure as
proposed.
g. Readoption of Measures As
Voluntarily Reported Electronic Clinical
Quality Measures
In order to align with the Medicare
EHR Incentive Program for eligible
hospitals (EHs) and critical access
hospitals (CAHs), in the FY 2015 IPPS/
114 National Quality Forum. National Voluntary
Consensus Standards for Patient Outcomes 2009.
Available at: http://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=id&Item
ID=67546.
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LTCH PPS proposed rule (79 FR 28239
through 28242) we proposed to re-adopt
two measures previously removed from
the Hospital IQR Program; (a) AMI–2
Aspirin Prescribed at Discharge for AMI
(acute myocardial infarction) (NQF
#0142) (electronic clinical quality
measure); and (b) AMI–10 Statin
Prescribed at Discharge (NQF #0639)
(electronic clinical quality measure). In
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28239) we proposed to add
these measures to the list of voluntarily
reported electronic clinical quality
measures as described in section
IX.A.7.f. of the preamble of this final
rule. We believe we should continue
aligning the Hospital IQR Program and
the Medicare EHR Incentive Program in
order to minimize reporting burden and
continue the transition to reporting of
electronic clinical quality measures, and
we believe voluntary adoption of these
measures will further that aim. Further,
we believe that allowing hospitals the
option to electronically report toppedout measures will provide hospitals
with an opportunity to test the accuracy
of their electronic health record
reporting systems.
(1) Readoption of AMI–2 Aspirin
Prescribed at Discharge (NQF #0142)
The AMI–2 Aspirin Prescribed at
Discharge (NQF #0142) assesses the
percentage of acute myocardial
infarction (AMI) patients who are
prescribed aspirin at hospital discharge.
The measure is NQF endorsed, but
has been placed in reserve status, as the
performance on this measure is
‘‘topped-out.’’ The MAP recommended
the measure should be suspended and
phased out in its Pre-Rulemaking
Report: 2013 Recommendations on
Measures under Consideration by HHS
available at: https://www.quality
forum.org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=72738. However,
as stated above, we intend to continue
aligning the Hospital IQR Program and
Medicare EHR Incentive Program, and
we believe collecting this measure on a
voluntary basis enables us to continue
collecting quality data on this topic
while working to minimize reporting
burden on participating hospitals.
Further, allowing hospitals the option to
electronically report topped-out
measures will provide hospitals with an
opportunity to test the accuracy of their
electronic health record reporting
systems.
The numerator includes AMI patients
in the denominator who are prescribed
aspirin at hospital discharge. The
denominator includes patients with the
following ICD–9–CM principal
diagnosis codes of AMI: 410.00, 410.01,
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410.10, 410.11, 410.20, 410.21, 410.30,
410.31, 410.40, 410.41, 410.50, 410.51,
410.60, 410.61, 410.70, 410.71, 410.80,
410.81, 410.90, and 410.91.
The following patients are excluded
from this measure:
• Patients less than18 years of age;
• Patients who have a length of stay
greater than 120 days;
• Patients enrolled in clinical trials;
• Patients who were discharged to
another hospital;
• Patients who expired;
• Patients who left the hospital
against medical advice;
• Patients who were discharged to
home for hospice care;
• Patients who were discharged to a
health care facility for hospice care;
• Patients with comfort measures
only documented; and
• Patients with a documented reason
for no aspirin at discharge.
(2) Readoption of AMI–10 AMI-Statin
Prescribed at Discharge (NQF #0639)
AMI–10 AMI-Statin Prescribed at
Discharge (NQF #0639) assesses the
percent of acute myocardial infarction
(AMI) patients who are prescribed a
statin at hospital discharge.
The measure is NQF endorsed. The
MAP recommended phased removal in
its Pre-Rulemaking Report: 2013
Recommendations on Measures under
Consideration by HHS available at:
https://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier
=id&ItemID=72738 because the
performance on this measure is likely
‘‘topped-out.’’ However, as stated above,
we intend to continue aligning the
Hospital IQR Program and Medicare
EHR Incentive Program, and we believe
collecting this measure on a voluntary
basis enables us to continue collecting
quality data on this topic while working
to minimize reporting burden on
participating hospitals. Further,
allowing hospitals to electronically
report topped-out measures on a
voluntary basis will provide hospitals
with an opportunity to test the accuracy
of their electronic health record
reporting systems.
The numerator includes AMI patients
in the denominator who are prescribed
a statin medication at hospital
discharge. The denominator includes
patients with the following ICD–9–CM
principal diagnosis codes of AMI:
410.00, 410.01, 410.10, 410.11, 410.20,
410.21, 410.30, 410.31, 410.40, 410.41,
410.50, 410.51, 410.60, 410.61, 410.70,
410.71, 410.80, 410.81, 410.90, and
410.91.
The following patients are excluded
from this measure:
• Patients less than 18 years of age;
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• Patients who have a length of stay
greater than 120 days;
• Patients with comfort measures
only documented;
• Patients enrolled in clinical trials;
• Patients who were discharged to
another hospital;
• Patients who left the hospital
against medical advice;
• Patients who expired;
• Patients who were discharged to
their home for hospice care;
• Patients who were discharged to a
health care facility for hospice care;
• Patients with low-density
lipoprotein less than 100 mg/dL within
the first 24 hours after hospital arrival
or 30 days prior to hospital arrival and
not discharged on a statin; and
• Patients with a reason for not
prescribing statin medication at
discharge.
We invited public comments on our
proposal to readopt these two measures
as electronic clinical quality measures.
Comment: Some commenters
supported the inclusion of voluntary
reporting for certain electronic clinical
quality measures for the Hospital IQR
Program, and noted that voluntary
reporting allows hospitals to be better
prepared for submitting new quality
measures from EHRs and to correct any
operational issues that arise. Several
commenters supported adopting AMI–2
and AMI–10 as electronic clinical
quality measures, because aligning the
Hospital IQR Program with the
Medicare EHR Incentive Program could
reduce reporting burdens. The
commenter hoped that CMS will
continue to expand efforts to allow for
electronic reporting to include
registries, which are commonly used for
data collection and reporting, in
addition to EHRs.
Response: We thank these
commenters for their support. We
would like to clarify that at this time we
do not allow registry reporting for these
measures.
Comment: One commenter did not
support CMS’ proposal to readopt two
topped-out measures for purposes of
electronic reporting, arguing that
topped-out measures, by definition, are
removed because they are no longer an
accurate measure of hospital
performance. The commenter was
concerned that these measures would
not advance hospital quality or improve
electronic reporting.
Other commenters opposed AMI–2
and AMI–10 as electronic clinical
quality measures because they were
topped-out and retired as chartabstracted measures and they believed
retaining them would not advance
hospitals’ understanding of how to
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submit electronic clinical quality
measures or improve the quality of
hospital care.
Response: As we explained in section
IX.A.2.g.(2) of the preamble of this final
rule in response to a similar comment,
even though these measures are toppedout, we would still like to retain the
electronically specified versions for the
following reasons: (1) to align the
Hospital IQR Program and the Medicare
EHR Incentive Program, (2) to allow us
to monitor the effectiveness of measure
reporting by EHR’s, and (3) to
familiarize hospitals with reporting
electronically specified measures.
Topped-out status is also only one of
many factors which we consider before
determining whether a measure should
be removed.
While these measures may be toppedout, they are still an accurate measure
of performance. Continuing to report on
these measures is a way to monitor for
continued high performance. Electronic
measure data will help us evaluate
variations in data capture modes (chartabstracted versus electronic clinical
quality measures) in order to determine
whether and what adjustments are
necessary for the two different modes of
collection. In addition, we believe that
by allowing hospitals to voluntarily
report these measures via electronic
submission, we will provide hospitals
needed flexibility in electronic clinical
quality measure reporting, as requested
by hospitals in their comments to the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50813 through 50814). As stated in
the proposed rule (79 FR 208243), we
intend to propose to require electronic
clinical quality measure reporting in
future rulemaking. We are providing
this voluntary option to provide
hospitals time to prepare for required
electronic clinical quality measure
reporting.
After consideration of the public
comments we received, we are
finalizing the readoption of both AMI–
2: Aspirin Prescribed at Discharge (NQF
#0142) and AMI–10: Statin Prescribed at
Discharge (NQF #0639) as voluntary
electronic clinical quality measures as
proposed.
In summary, for FY 2017 payment
determination and subsequent years, we
are finalizing: (1) the adoption of 11
total measures—9 new measures (4 of
which are voluntary electronic clinical
quality measures) and 2 previously
removed measures re-adopted as
voluntary electronic clinical quality
measures, and (2) the removal of 19
measures (4 of which were previously
suspended), ten of which are being
retained as voluntary electronic clinical
quality measures. We are not finalizing
the removal of one of the required chartabstracted measures (SCIP–Inf–4). This
gives a total of 63 measures (47 required
and 16 voluntary electronic clinical
quality measures) in the Hospital IQR
Program measure set.
Set out below is a table showing both
the previously adopted and the newly
finalized quality measures for the FY
2017 payment determination and
subsequent years. Please note that this
table does not include suspended
measures.
PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES AND MEASURES NEWLY FINALIZED IN THIS FINAL RULE FOR
THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
Measure name
NQF No.
Submission methods for FY 2017
payment determination
AMI–7a ..................
NQF #0164 ...........
NQF #0300 ...........
Electronic clinical quality measure or
chart-abstracted REQUIRED.
Chart-abstracted only REQUIRED ......
NQF #0500 ...........
Chart-abstracted only REQUIRED ......
NQF #1659 ...........
NQF #0434 ...........
Chart-abstracted only REQUIRED ......
Chart-abstracted only REQUIRED ......
NQF #0495 ...........
Stroke-4 .................
Fibrinolytic Therapy Received Within
30 Minutes of Hospital Arrival.
Cardiac Surgery Patients With Controlled 6 A.M. Postoperative Blood
Glucose.
Severe sepsis and septic shock: management bundle.
Influenza Immunization .......................
Venous thromboembolism (VTE) prophylaxis.
Median time from ED arrival to ED departure for admitted ED patients.
Admit Decision Time to ED Departure
Time for Admitted Patients.
Thrombolytic therapy ...........................
NQF #0437 ...........
Stroke-6 .................
Discharged on statin medication .........
NQF #0439 ...........
Stroke-8 .................
Stroke education .................................
N/A ........................
VTE–1 ....................
Venous thromboembolism prophylaxis
NQF #0371 ...........
VTE–2 ....................
Intensive care unit venous thromboembolism prophylaxis.
VTE discharge instructions .................
NQF #0372 ...........
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
Electronic clinical quality measure
chart-abstracted REQUIRED.
SCIP–Inf–4 ............
Sepsis ....................
Imm-2 .....................
Stroke-1 .................
ED–1 ......................
ED–2 ......................
VTE–5 ....................
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Short name
VTE–6 ....................
PC–01 ....................
CLABSI ..................
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Incidence of potentially preventable
VTE.
Elective delivery (Collected in aggregate, submitted via Web-based tool
or electronic clinical quality measure).
National Healthcare Safety Network
(NHSN) Central line-associated
Bloodstream Infection (CLABSI)
Outcome Measure.
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NQF #0497 ...........
N/A ........................
N/A ........................
NQF #0469 ...........
NQF #0139 ...........
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or
or
or
or
or
or
or
or
or
NHSN REQUIRED ..............................
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50247
PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES AND MEASURES NEWLY FINALIZED IN THIS FINAL RULE FOR
THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued
Short name
Measure name
NQF No.
Submission methods for FY 2017
payment determination
SSI .........................
American College of Surgeons—Centers for Disease Control and Prevention (ACS–CDC) Harmonized
Procedure Specific Surgical Site Infection (SSI) Outcome Measure.
Colon procedures
Hysterectomy procedures
National Healthcare Safety Network
(NHSN) Catheter-associated Urinary Tract Infection (CAUTI) Outcome Measure.
National Healthcare Safety Network
(NHSN) Facility-wide Inpatient Hospital-onset
Methicillin-resistant
Staphylococcus aureus (MRSA)
Bacteremia Outcome Measure.
National Healthcare Safety Network
(NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure.
Influenza vaccination coverage among
healthcare personnel (HCP).
Hospital 30-day, all-cause, risk-standardized mortality rate (RSMR) following acute myocardial infarction
(AMI) hospitalization for patients 18
and older.
Hospital 30-day, all-cause, risk-standardized mortality rate (RSMR) following heart failure (HF) hospitalization for patients 18 and older.
Hospital 30-day, all-cause, risk-standardized mortality rate (RSMR) following pneumonia hospitalization.
Hospital 30-Day, All-Cause, RiskStandardized
Mortality
Rate
(RSMR) following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization.
Stroke 30-day mortality rate ................
Hospital 30-day, all-cause, risk-standardized mortality rate (RSMR) following coronary artery bypass graft
(CABG) surgery.
Hospital 30-day all-cause risk-standardized readmission rate (RSRR)
following acute myocardial infarction
(AMI) hospitalization.
Hospital 30-day, all-cause, risk-standardized readmission rate (RSRR)
following heart failure hospitalization.
Hospital 30-day, all-cause, risk-standardized readmission rate (RSRR)
following pneumonia hospitalization.
Hospital-level 30-day, all-cause riskstandardized
readmission
rate
(RSRR) following elective primary
total hip arthroplasty (THA) and/or
total knee arthroplasty (TKA).
Hospital-Wide All-Cause Unplanned
Readmission (HWR).
Hospital 30-Day, All-Cause, RiskStandardized Readmission Rate
(RSRR) following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization.
NQF #0753 ...........
NHSN REQUIRED ..............................
NQF #0138 ...........
NHSN REQUIRED ..............................
NQF #1716 ...........
NHSN REQUIRED ..............................
NQF #1717 ...........
NHSN REQUIRED ..............................
NQF #0431 ...........
NHSN REQUIRED ..............................
NQF #0230 ...........
Claims REQUIRED .............................
NQF #0229 ...........
Claims REQUIRED .............................
NQF #0468 ...........
Claims REQUIRED .............................
NQF #1893 ...........
Claims REQUIRED .............................
N/A ........................
N/A ........................
Claims REQUIRED .............................
Claims REQUIRED .............................
NQF #0505 ...........
Claims REQUIRED .............................
NQF #0330 ...........
Claims REQUIRED .............................
NQF #0506 ...........
Claims REQUIRED .............................
NQF #1551 ...........
Claims REQUIRED .............................
NQF #1789 ...........
Claims REQUIRED .............................
NQF #1891 ...........
Claims REQUIRED .............................
CAUTI ....................
MRSA .....................
CDI .........................
HCP .......................
MORT–30–AMI ......
MORT–30–HF ........
MORT–30–PN .......
COPD Mortality ......
STK Mortality .........
CABG mortality ......
READM–30–AMI ....
READM–30–HF .....
READM–30–PN .....
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READM–30–TH/
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READM–30–HWR
COPD READMIT ...
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PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES AND MEASURES NEWLY FINALIZED IN THIS FINAL RULE FOR
THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued
Measure name
NQF No.
Submission methods for FY 2017
payment determination
STK READMIT .......
30-day risk standardized readmission
rate (RSMR) following Stroke hospitalization.
Hospital 30-day, all-cause, unplanned,
risk-standardized readmission rate
(RSRR) following coronary artery
bypass graft (CABG) surgery.
Death among surgical inpatients with
serious, treatable complications.
Patient safety for selected indicators
(composite).
Payment-Standardized
Medicare
Spending Per Beneficiary (MSPB).
AMI Payment per Episode of Care .....
Hospital-level, risk-standardized 30day episode-of-care payment measure for heart failure.
Hospital-level, risk-standardized 30day episode-of-care payment measure for pneumonia.
Hospital-level risk-standardized complication rate (RSCR) following elective primary total hip arthroplasty
(THA) and/or total knee arthroplasty
(TKA).
Participation in a Systematic Clinical
Database Registry for Nursing Sensitive Care.
Participation in a Systematic Clinical
Database Registry for General Surgery.
Safe Surgery Checklist Use ................
N/A ........................
Claims REQUIRED .............................
N/A ........................
Claims REQUIRED .............................
NQF #0351 ...........
Claims REQUIRED .............................
NQF #0531 ...........
Claims REQUIRED .............................
NQF #2158 ...........
Claims REQUIRED .............................
N/A ........................
N/A ........................
Claims REQUIRED .............................
Claims REQUIRED .............................
New for FY 2017.
N/A ........................
Claims REQUIRED .............................
New for FY 2017.
NQF #1550 ...........
Claims REQUIRED .............................
N/A ........................
Web-based REQUIRED ......................
N/A ........................
Web-based REQUIRED ......................
N/A ........................
Web-based REQUIRED ......................
NQF #0166 ...........
NQF #0228 ...........
NQF #0142 ...........
Patient Survey REQUIRED .................
Electronic clinical quality measure ......
CABG READMIT ...
PSI 4 (PSI/NSI) ......
PSI 90 ....................
MSPB .....................
AMI payment ..........
HF Payment ...........
PN payment ...........
Hip/knee complications.
Registry Nursing
Sensitive Care.
Registry for General
Surgery.
Safe Surgery
Checklist.
HCAHPS ................
HCAHPS + CTM–3 .............................
AMI–2 ....................
Aspirin Prescribed at Discharge for
AMI.
AMI–8a ..................
Primary PCI Received Within 90 Minutes of Hospital Arrival.
NQF #0163 ...........
Electronic clinical quality measure ......
AMI–10 ..................
Statin Prescribed at Discharge ...........
NQF #0639 ...........
Electronic clinical quality measure ......
SCIP–Inf–1a ..........
Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision.
Prophylactic Antibiotic Selection for
Surgical Patients.
NQF #0527 ...........
Electronic clinical quality measure ......
NQF #0528 ...........
Electronic clinical quality measure ......
Urinary catheter removed on Postoperative Day 1 (POD 1) or Postoperative Day 2 (POD 2) with day
of surgery being day zero.
Discharged on antithrombotic therapy
NQF #0453 ...........
Electronic clinical quality measure ......
NQF #0435 ...........
Electronic clinical quality measure ......
Stroke–3 ................
Anticoagulation therapy for atrial fibrillation/flutter.
NQF #0436 ...........
Electronic clinical quality measure ......
Stroke–5 ................
Antithrombotic therapy by the end of
hospital day two.
NQF #0438 ...........
Electronic clinical quality measure ......
Stroke–10 ..............
Assessed for rehabilitation ..................
NQF #0441 ...........
Electronic clinical quality measure ......
VTE–3 ....................
Venous thromboembolism patients NQF #0373 ...........
with anticoagulation overlap therapy.
Electronic clinical quality measure ......
SCIP–Inf–2a ..........
SCIP–Inf–9 ............
Stroke-2 .................
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Short name
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Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
50249
PREVIOUSLY ADOPTED HOSPITAL IQR PROGRAM MEASURES AND MEASURES NEWLY FINALIZED IN THIS FINAL RULE FOR
THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS—Continued
Short name
Measure name
NQF No.
Submission methods for FY 2017
payment determination
New for FY 2017
payment
determination
VTE–4 ....................
Patients
receiving
un-fractionated
Heparin with doses/labs monitored
by protocol.
Exclusive Breast Milk Feeding and the
subset measure PC–05a Exclusive
Breast Milk Feeding Considering
Mother´s Choice.
Hearing Screening Prior to Hospital
Discharge.
N/A ........................
Electronic clinical quality measure ......
NQF #0480 ...........
Electronic clinical quality measure ......
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
NQF #1354 ...........
Electronic clinical quality measure ......
Home Management Plan of Care
(HMPC).
Document Given to Patient/Caregiver
Healthy Term Newborn .......................
N/A ........................
Electronic clinical quality measure ......
NQF #0716 ...........
Electronic clinical quality measure ......
PC–05 ....................
EHDI–1a ................
CAC–3 ...................
HTN .......................
h. Electronic Clinical Quality Measures
(1) Data Submission Requirements for
Quality Measures That May Be
Voluntarily Electronically Reported for
the FY 2017 Payment Determination
We believe that collection and
reporting of data through health
information technology will greatly
simplify and streamline reporting for
many CMS quality reporting programs.
Through electronic reporting, hospitals
will be able to leverage EHRs to capture,
calculate, and electronically submit
quality data that is currently manually
chart-abstracted and submitted to CMS
for the Hospital IQR Program. As we
noted in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51614), we recognize
the need to align and harmonize
measures across CMS quality reporting
programs to minimize the reporting
burden imposed on hospitals. In the
Medicare EHR Incentive Program Stage
2 final rule (77 FR 54083 through
54087), we finalized a total of 29
clinical quality measures from which
hospitals must select at least 16
measures covering three National
Quality Strategy (NQS) domains to
report beginning in FY 2014. We
anticipate that, as health information
technology evolves and infrastructure is
expanded, we will have the capacity to
accept electronic reporting of many of
the chart-abstracted measures that are
currently part of the Hospital IQR
Program.
In the FY 2014 IPPS/LTCH PPS final
rule, for the STK (with the exception of
STK–1), VTE, ED, and PC measure sets,
we allowed hospitals to either: (1)
electronically report at least one quarter
of CY 2014 (Q1, Q2, or Q3) quality
measure data for each measure in one or
more of those four measure sets; or (2)
continue reporting all measures in those
four measure sets using chart-abstracted
data for all four quarters of CY 2014 (78
FR 50818).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28242 through
28243) for the FY 2017 payment
determination, we proposed to expand
this policy, such that providers may
select to voluntarily report any 16 of the
28 Hospital IQR Program electronic
clinical quality measures that align with
the Medicare EHR Incentive Program as
long as those 16 measures span three
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
Voluntary electronic clinical
quality measure.
different NQS domains. The 28
measures are listed in the table below.
Only 28 of the 29 measures adopted in
the Medicare EHR Incentive Program are
applicable for the Hospital IQR Program,
because the measure ED–3 Median time
from ED arrival to ED departure for
discharged ED patients (NQF #0496) is
an outpatient quality measure. We
expect eligible hospitals to select
measures that best apply to their patient
mix.
For the FY 2017 payment
determination, we also proposed to
expand the reporting requirement of
electronic clinical quality measures to
require a full year’s data collection and
submission instead of a minimum of
one quarter. In addition, for the FY 2017
payment determination, we proposed to
require data submission within
approximately 60 days after the end of
a calendar year quarter. We have listed
the proposed submission deadlines in
the table below. We also refer readers to
section IX.D.2. of the preamble of this
final rule for a description of the
electronic clinical quality measures data
reporting periods and proposed
submission deadlines.
CY 2015/FY 2017 ELECTRONIC CLINICAL QUALITY MEASURES DATA REPORTING PERIODS AND PROPOSED SUBMISSION
DEADLINES
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CY 2015 quarter
1
2
3
4
Reporting period (2015)
......................................................
......................................................
......................................................
......................................................
January 1–March 31 ..............................................................................
April 1–June 30 ......................................................................................
July 1–September 30 .............................................................................
October 1–December 31 .......................................................................
As an incentive for hospitals to
voluntarily submit electronicallyspecified clinical quality measures, we
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proposed that for the FY 2017 payment
determination, hospitals successfully
submitting electronic clinical quality
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May 30, 2015.
Aug 30, 2015.
Nov 30, 2015.
Feb 28, 2016.
measures according to our procedures
will not have to validate those
electronic clinical quality measures by
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
submitting chart-abstracted data to
validate the accuracy of the measure
data submitted electronically.
By proposing these changes, we
believe we would further align the
Hospital IQR Program and the Medicare
EHR Incentive Program and promote
greater electronic clinical quality
measure data reporting for hospitals. In
addition, we believe that these changes
would ease hospitals’ administrative
burden, as they will be able to report the
same clinical quality measures once to
partially satisfy both the Hospital IQR
and Medicare EHR Incentive Programs’
requirements.
We welcomed public comments on
these proposals.
Commenters’ opinions on these
proposals focused on timing,
substantive and nonsubstantive quality
measure updates, our collaboration with
hospitals and EHR vendors, certification
requirements, and general concerns
about electronic clinical quality
measure reporting.
Comment: Some commenters were
concerned that we were not allowing
hospitals and EHR vendors enough time
to transition to the new data submission
deadlines. Some commenters supported
the long-term goal of transitioning to
EHR-enabled measurement and the
general progression toward electronic
clinical quality measures, noting that it
will improve communication and
documentation while reducing hospital
resources now used for chart-abstracted
measures. A commenter strongly
supported CMS using electronic clinical
quality measures and strongly objected
to the implementation of chartabstracted measures. The commenter
stated that the current methodology of
manual chart abstraction is resource
intensive and inefficient for hospitals.
By focusing on electronic clinical
quality measures, hospitals can focus on
performance improvement and target
resources to implementing EHRs and
processes to improve patient care.
Response: We thank commenters for
their support. We plan to move away
from chart-abstracted measures and
move towards electronic clinical quality
measures, as appropriate.
This voluntary option also simplifies
alignment with the Medicare EHR
Incentive Program and allows hospitals
to partially satisfy requirements in both
programs using a common set of
measures. Since hospitals have a choice
whether to submit voluntary electronic
clinical quality measure data or chartabstracted data, we recommend
hospitals that are not yet prepared to
submit electronically instead submit via
chart-abstraction. We encourage
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hospitals to submit test data when they
are ready.
We are actively working to reduce
hospitals’ reporting burden by offering
the option to submit electronic clinical
quality measures.
We received a number of comments
regarding the timing of this proposal in
relation to hospitals’ readiness to submit
electronic clinical quality measures.
Comment: Some commenters stated
that healthcare providers and electronic
health records systems are not yet ready
to adopt electronic clinical quality
measures, expressing concern about
vendor problems related to meaningful
use, including problems associated with
submitting data to CMS, and about the
accuracy and feasibility of electronically
specified measures.
Other commenters suggested that
CMS not specify a date for mandatory
electronic reporting until significant
levels of CEHRT adoption are achieved,
and a validation process for electronic
clinical quality measures is operational
and yields evidence of measure
reliability.
Response: We recently published a
proposed rule (79 FR 29732 through
29738) proposing changes to the
meaningful use stage timeline and
changes to the requirements for the
reporting of clinical quality measures
for 2014. The comment period closed
July 21, 2014. We hope the commenter
was able to share their concerns
regarding vendor problems related to
meaningful use by responding to the
proposed rule. We would like to clarify
that this rule provides flexibility to
hospitals and CAHs needing to update
their EHR systems only for the most
recent version of the CQMs, which is
not a criteria for 2014 CEHRT. No
changes to 2014 CEHRT criteria or
timelines are being finalized in this rule.
As we have previously mentioned, we
are finalizing voluntary electronic
clinical quality measure submission in
order to give hospitals flexibility.
Hospitals that are not yet ready to
submit electronically can satisfy
requirements for applicable measures as
previously finalized and finalized in
this rule at section IX.A.2.g.(2) of the
preamble of this final rule, that is
submit via chart-abstraction. We
encourage hospitals to work with
vendors and encourage vendors to work
with the various EHR-related and
electronic clinical quality measure HHS
working groups to become more
informed about policies and standards.
As participants in these groups, the
hospitals and vendors can share their
concerns with CMS, ONC, and other
measure stakeholders and help to
improve processes. In addition, we
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suggest hospitals participate in our pilot
electronic validation test to get free
feedback on the accuracy of their data
and have an opportunity to provide
direct input regarding concerns. We
refer readers to section IX.A.11.e. of the
preamble of this final rule where this
policy is discussed.
Comment: A commenter opposed the
creation of voluntary electronic reported
clinical quality measures.
Response: We respectfully disagree
with the commenter that did not
support voluntary electronic clinical
quality measure reporting. This
voluntary reporting provides hospitals
the opportunity to test their submissions
to prepare before electronic clinical
quality measure reporting is required for
this program.
Comment: Commenters urged CMS to
begin a more robust dialogue with
hospitals, EHR vendors, and other
stakeholders regarding submitting
electronic clinical quality measures so
that there is a shared understanding of
the opportunities and challenges that
lay ahead—both from the hospital
operational perspective as well as from
our perspective.
Response: We have begun our
education and outreach efforts with
hospitals and vendors by holding
educational webinars/sessions,
uploading a number of resources to
QualityNet,115 and creating a listserv for
updates and announcements. Further,
we have past recorded sessions
discussing electronic clinical quality
measures issues on our Web site at:
https://www.qualitynet.org/dcs/
ContentServer?c=Page&page
name=QnetPublic%2FPage%2FQnet
Tier3&cid=1228773852046. We also
note that hospitals may submit test files
or practice submissions at any time and
encourage hospitals and vendors to
begin submitting test files as soon as
feasible.
Comment: One commenter
recommended that CMS consider that
certain measures currently improve
quality of care for patients, but may not
immediately lend themselves to especification.
Response: We will take the comment
into consideration for future measures,
and note that we have expanded our
measures under consideration process
in order to find measures from a greater
number of sources.
Comment: Some commenters
requested that CMS allow more time for
implementing certification requirements
and adopting measure specification
115 https://www.qualitynet.org/dcs/Content
Server?c=Page&pagename=QnetPublic%2FPage
%2FQnetTier2&cid=1228773849716.
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updates. A commenter specifically
suggested that CMS allow 18 months
between the time of an updated
specification adoption and the federal
fiscal year to which the specification
updates should apply. Another
commenter recommended that CMS
refrain from requiring certification of
the revised measures and provide
flexibility on the date by which the
revisions must be fully implemented on
provider sites. The commenter
expressed concern that the current time
frame of just prior to the October 1, 2014
start of the measure reporting year is
inadequate to accommodate the
development, testing, certification of the
software by health IT vendors and
subsequent delivery and
implementation of software for every
customer site. This time constraint
could lead providers to continue to
attest to their electronic clinical quality
measures in FY 2015, rather than submit
their electronic clinical quality
measures as CMS would prefer.
One commenter noted that there is
insufficient time for vendors and
certification test labs to obtain
certification and subsequently deliver
the certified product in time for
hospitals to submit electronic clinical
quality measures electronically in CY
2015. The commenter therefore
anticipated that hospitals will continue
to attest their clinical quality measure
data in FY 2015. The commenter
suggested that CMS allow hospitals who
elect to attest their clinical quality
measure for the Medicare EHR Incentive
Program in CY 2015 to submit data
electronically for the Hospital IQR
Program during CY 2015.
Response: We believe when
discussing the ‘‘revised measures,’’ the
commenter is referring to the annual
April updates to the electronic clinical
quality measures. For submission of CY
2015 data, we will only accept data
consistent with the April 2014 measure
specifications. Electronic clinical
quality measure specifications are
available in the CMS eCQM Library at:
http://cms.gov/Regulations-andGuidance/Legislation/
EHRIncentivePrograms/eCQM_
Library.html. The October 1, 2014 date
is the beginning of the reporting period
for the Medicare EHR Incentive Program
only. However, we proposed, that in
order to align the two programs’
electronic clinical quality measure
reporting and submission periods, both
programs’ reporting periods and
submission deadlines would begin with
Q1 CY 2015 discharges (79 FR 28245
through 28246).
However, after consideration of these
comments regarding timing and
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hospitals’ readiness, we are modifying
our proposal so that hospitals that wish
to participate in the voluntary reporting
need only submit one CY 2015 quarter
(Q1, Q2, or Q3) of electronic clinical
quality measure data with a submission
deadline of November 30, 2015. We
hope that this modification will
encourage more hospitals to submit
electronic clinical quality measures
rather than attest. The commenter is
reminded that attesting is a Medicare
EHR Incentive Program option only and
would not apply to Hospital IQR
Program requirements. In addition, if a
hospital chooses not to voluntarily
submit one quarter of electronic clinical
quality measure data for the Hospital
IQR Program, it must submit all four
quarters of chart-abstracted data in CY
2015.
We believe that by modifying our
proposal and reducing the data
requirement to one quarter’s worth of
data and by adopting the November
30th submission deadline, hospitals will
have adequate time to update their
EHR’s ability to capture and report data.
In addition, measure certification falls
under the ONC. ONC published a
proposed rule February 26, 2014
describing voluntary 2015 Edition
Electronic Health Record (EHR)
Certification Criteria; Interoperability
Updates and Regulatory Improvements
(79 FR 10880 through 10946). The
proposed rule offered a potential ‘‘gap
certification’’ solution which may help
the commenter with their concerns
about the current timelines for
development, testing, certification of the
software by health IT vendors. The final
rule is expected to be published in the
summer of 2014. With respect to CEHRT
requirements, though 2014 CEHRT is
required, eligible hospitals are not
required to ensure that their CEHRT
products are recertified to the most
recent version of the electronic
specifications for the clinical quality
measures.
A hospital may submit electronic
clinical quality measures for the
Hospital IQR Program during CY 2015
even if they attest their aggregate
measure numerators and denominators
through the Medicare EHR Incentive
Program. The hospital could submit as
test data or production data. Test data
submissions are submissions that do not
count as submissions; they are practice
submissions. Production data
submissions are considered final
submissions meant to fulfill Program
submission requirements. With respect
to CEHRT requirements, although 2014
CEHRT is required, eligible hospitals are
not required to ensure that their CEHRT
products are recertified to the most
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50251
recent version of the electronic
specifications for the clinical quality
measures.
Comment: One commenter noted that
the proposed subregulatory process for
annual updates is to incorporate
‘‘nonsubstantive’’ changes to measure
specifications. However, the commenter
believed that the annual updates
include substantive changes. The
commenter looks forward to working
with CMS to further refine the
definition of nonsubstantive changes
and recommended that the annual
updates be limited to changes that do
not have a significant impact on
clinicians, software, or recertification.
Response: We interpret the
commenter’s use of the term ‘‘annual
updates’’ to be in reference to our
publication of the measure
specifications in the electronic clinical
quality measure Library at: http://
cms.gov/Regulations-and-Guidance/
Legislation/EHRIncentivePrograms/
eCQM_Library.html. We will work with
stakeholders to help define substantive
and nonsubstantive changes related
specifically to electronic measure
specifications, and will take suggestions
regarding any recommended changes
into consideration for future
rulemaking.
Comment: A commenter explained
that there is confusion as to whether
vendors need to certify to the updated
measures and whether hospitals must
start their measure reporting year with
the annual updates and request clear
and consistent guidance. The
commenter also noted that the Cypress
tool is not yet available for testing of the
new measures, and no information has
been provided as to when Cypress may
be available.
Response: Although 2014 CEHRT is
required, eligible hospitals are not
required to ensure that their CEHRT
products are recertified to the most
recent version of the electronic
specifications for the clinical quality
measures. Hospitals that choose to
voluntarily submit electronic clinical
quality measures in Q1, Q2, or Q3 of CY
2015 for FY 2017 payment
determination must use the 2014
version of the measure specifications.
Cypress version 2.5 is expected to be
available with the eligible hospital and
eligible provider measure packages in
September 2014. Cypress version 2.51 is
expected to align with the CMS
Implementation Guide released for
publication in July 2014.
Comment: A commenter expressed
concerns about electronic clinical
quality measure specifications in
regards to the ‘‘Medication, Order not
done: Medical Reason’’ related to the
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
STK, VTE, and future AMI, PN, and
SCIP measures. The commenter pointed
out that the Hospital IQR Program
requires providers to document a
medical reason for not prescribing a
medication/device and the MU/
electronic clinical quality measure
requires providers to document ‘‘what
medication of choice would you have
prescribed if not for a medical reason.’’
The commenter disagreed with the
requirement to answer these questions
and suggested that providers may view
the questions as inefficient
‘‘administrative only questions’’ and
may avoid them entirely. The
commenter also suggested that the
questions may force the institution to
intentionally fail a measure due to lack
of a contraindication and that it is
improper to use data related to
medication orders for public reporting
of quality of care and financial
incentives because not all medication
orders that count for the Hospital IQR
Program also count for electronic
clinical quality measures since they are
not all included in the qualifying
RxNorm document.
Response: We acknowledge that this
is a known issue that is being addressed
through HL7 and expected to be
implemented in FY 2015. ONC has
consolidated several JIRA comments
into one issue. The commenter can
follow the progress of the issue at
http://jira.oncprojectracking.org/
browse/CQM–970. We note that to date
there are no consequences for measure
failure and encourage the commenter to
review our zero denominator
clarification in section IX.D.5. of the
preamble of this final rule.
Comment: A commenter expressed
concern with the increasing number of
measures for electronic clinical quality
measure submission. The commenter
advised that since electronic health
records allow documentation to be
placed in multiple places, chart review
is required. The commenter stated that
current medical record technology has
not matured to restrict documentation
input into only the field or fields
designated for electronic data retrieval.
Potential technological solutions
contribute to alert fatigue. Further, the
commenter believed that because there
is not a common electronic medical
record system for all staff to use
regardless of the care setting, multiple
inefficient documentation systems are
created and customized to suit the
needs of the individual hospital and
facility. The commenter stated that
resolving these problems will require a
significant financial investment while
reimbursement for services declines.
Response: We recognize that many
hospitals struggle with proper data
capture in the EHR. We encourage these
hospitals to work with their vendors to
reduce burden and human intervention
through chart abstraction. The
electronically-specified clinical quality
measures remain voluntary at this time
to provide an opportunity for hospitals
to improve upon accurate data capture.
Comment: A commenter specifically
disagrees with CMS’ statement that
electronic clinical quality measures are
more easily reported than chartabstracted measures.
Response: We disagree that electronic
clinical quality measures are not more
easily reported than chart-abstracted
measures; once capture is possible
within EHR, the time and resources
compared to manual abstraction should
be significantly less. As data becomes
more standardized, it is expected that
reporting burden will decrease over
time. For example, electronic clinical
quality measure collection does not
require hospital staff time to find and
pull paper medical records, and
manually review medical records to
abstract data elements used in measure
calculation. We acknowledge there are
costs, but also benefits to moving to
electronic data capture. EHR user
training is a cost that will ultimately
result in consistency coming from a
common understanding and capture of
common data definitions.
Comment: A commenter
recommended that CMS develop and
share a five-year roadmap for the future
regarding the transition of all clinical
quality measurement programs to
electronic reporting so hospitals can
strategically plan for workflows that
support electronic reporting. The
commenter further recommended that
this guidance, as well as all electronic
quality reporting sub regulatory
guidance and eMeasure specifications
should be located on a central Web site.
Response: We are working on a
roadmap for both the Hospital IQR and
Hospital VBP Programs, as well as a
consolidated location for electronic
clinical quality measure resources.
After consideration of the public
comments we received, we are
modifying our proposal to finalize that
hospitals that choose to voluntarily
report electronic measures should
submit one quarter of electronic clinical
quality measure data from Q1, Q2, or Q3
of CY 2015 for FY 2017 payment
determination. Hospitals that choose to
voluntarily submit electronic clinical
quality measures must use the 2014
version of the measure specifications
and submit 16 measures covering three
NQS domains from the 28 available
electronically specified measures.
However, hospitals may voluntarily
submit more than one quarter of data.
We will not accept Q4 2015 data for CY
2015 as this would likely delay EHR
Incentive Program payments. Policies
for CY 2016/FY 2018 payment
determination electronic clinical quality
measure reporting and submission will
be made in future rulemaking.
Because we are modifying our
proposal to now only require 1 quarter’s
worth of data from hospitals that wish
to voluntarily submit electronically
specified measures. We are
subsequently also modifying the
submission deadline to November 30,
2015 regardless of which quarter of data
is submitted. We also refer readers to
section X.2.h.1 for further discussion of
submission of electronically specified
measures.
The chart below provides a summary
of the finalized reporting periods and
electronic submission deadlines for the
FY 2017 Hospital IQR Program:
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FY 2017 HOSPITAL IQR PROGRAM ELECTRONIC REPORTING PERIODS AND SUBMISSION DEADLINES FOR ELIGIBLE
HOSPITALS
CY 2015 Quarter
Q1
Q2
Q3
Q4
Discharge reporting periods
....................................................
....................................................
....................................................
....................................................
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Submission deadlines
January 1, 2015–March 31, 2015 .........................................................
April 1, 2015–June 30, 2015 .................................................................
July 1, 2015–September 30, 2015 ........................................................
October 1, 2015–December 31, 2015 ...................................................
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November 30, 2015.
November 30, 2015.
November 30, 2015.
Not Applicable.
22AUR2
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
(2) Public Reporting of Electronic
Clinical Quality Measures
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50813 through 50818), we
adopted a policy under which we would
only publicly report electronic clinical
quality measure data under the Hospital
IQR Program if we determined that the
data are accurate enough to be reported.
However, we noted that the majority of
public commenters had opposed our
proposal to withhold the electronically
reported data from publication on
Hospital Compare, and instead urged us
to publicly display it (78 FR 50815).
Therefore, for electronic clinical quality
measure data submitted for the FY 2016
payment determination, we will
publically report the data as previously
finalized. However, for the FY 2017
payment determination, in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28243) we proposed to provide
hospitals that voluntarily report one
year of electronic clinical quality
measure data (as proposed above) an
option to have their data reported on
Hospital Compare with a preview
period prior to public reporting. We also
proposed to add a footnote next to that
publically reported data indicating that
it is a result of electronically-specified
measures.
We welcomed public comments on
these proposals.
Comment: Commenters suggested that
when reporting electronic clinical
quality measure data, hospitals should
be provided a preview period for the FY
2016 payment determination. One
commenter believed that public display
of electronic measures for the FY 2016
payment determination should not
occur because accuracy of data has not
been validated, there would be
inconsistencies in reporting time
periods and that display of the data may
not provide accurate or valuable data to
the public for decision making.
Commenters noted that display of the
data may not provide accurate or
valuable data to the public for decision
making, and specifically stated that
there are no validity and reliability
studies demonstrating the capture of
equivalent data between chartabstracted measures and electronically
captured measures and urging us to
develop a data validation strategy before
publicly posting this information.
Commenters stated that measures
submitted as electronic clinical quality
measures should not be publicly
reported until validation of electronic
clinical quality measures demonstrates
that they are comparable to values
reached through chart-abstraction. A
commenter expressed concern that
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opportunity for a preview period before
posting electronic clinical quality data
on Hospital Compare will not offset the
risks associated with reporting clinical
quality measures electronically. One
commenter asked that CMS wait until
more research is conducted and there is
an understanding of the limitations and
opportunities of the electronic clinical
quality measures. The commenter also
asked that CMS wait until the
preponderance of hospitals can do so
and a data validation system for
electronic measures is established.
However, other commenters stated
that not reporting electronic clinical
quality measures on Hospital Compare
fails to provide the public with reliable
data and requested that CMS
communicate the criteria it will use to
determine if the electronic clinical
quality measure data are accurate
enough to be publicly displayed.
Response: Regarding public reporting
for electronically reported data
submitted for the FY 2016 payment
determination, we note that this policy
is not subject to change in this
rulemaking as it was previously
finalized. However, consistent with our
finalized policy, we will not post data
that we determine are not deemed to be
accurate. We intend to use the results of
our validation pilot to assist in
determining criteria for identifying
electronic clinical quality measure data
accuracy. These criteria will be
proposed in future rulemaking.
With respect to inconsistencies in
reporting periods, historically we
publicly reports data on Hospital
Compare as it becomes available.
Therefore, it is not unusual for there to
be inconsistencies in reporting periods.
The current data collection periods for
each measure are posted on Hospital
Compare.
We appreciate the commenter’s
concerns about validation. As finalized
in section IX.A.11.e. of the preamble of
this final rule, we intend to conduct a
validation strategy pilot test in FY 2015.
We also intend to develop mandatory
requirements for validation in the FY
2016 IPPS/LTCH PPS proposed rule,
which will make assessment of validity
possible prior to posting of data
collected for the FY 2018 payment
determination.
However, based on public comments
received opposing public reporting for
FY 2017, we are modifying our proposal
to finalize that we will only publish the
names of hospitals who successfully
submit CY Q1, Q2, or Q3 electronic
clinical quality measure data by
November 30, 2015. We will not: (1)
report actual data or performance rates
for measures submitted as electronic
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50253
clinical quality measures on Hospital
Compare, (2) include a preview period,
or (3) provide hospitals an option to
suppress their participation.
Comment: One commenter
encouraged CMS to use a strategy
similar to the Star Ratings program with
‘‘topped-out’’ measures. The commenter
suggested we allow voluntary
submission of ‘‘topped-out’’ measures
through all reporting mechanisms and
publically report on Hospital Compare
as ‘‘display measures.’’ This would
allow for continued monitoring of
performance and increase alignment
with the Medicare Advantage and Part
D plans. This concept of display
measures could be used for introducing
and testing new measures by first
introducing the new measures on the
display page.
Response: We thank the commenter
for the suggestion and will consider the
idea in the future.
After consideration of the public
comments we received and as a logical
outgrowth of our existing public
reporting policy, we are finalizing our
policy that we will only publicly report
the names of those hospitals who
successfully submit CY 1, CY 2, or CY
3 electronic clinical quality measure
data by the November 30, 2015
submission deadline. Hospitals will not
have a preview period nor will we allow
hospitals to opt out of this public
reporting. We will indicate these
hospitals with a symbol on Hospital
Compare to recognize their advanced
ability to submit data electronically. We
will not publicly report actual data or
performance rates of electronic clinical
quality measures at this time.
8. Possible New Quality Measures and
Measure Topics for Future Years
a. Mandatory Electronic Clinical Quality
Measure Reporting for FY 2018 Payment
Determination
We anticipate that, as EHR technology
changes and improves, hospitals will
electronically report all clinical processof-care and HAI measures that are
currently part of the Hospital IQR
Program or that have been proposed for
adoption into the Program. As stated
above, we intend for the future direction
of electronic quality measure reporting
to reduce significantly administrative
burden on hospitals under the Hospital
IQR Program. We will continue to work
with measure stewards and developers
to develop new measure concepts, and
conduct pilot, reliability, and validity
testing. We believe that this voluntary
reporting option will provide hospitals
and us with the ability to test systems
in CY 2015 for future quality program
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
proposals that, if finalized, will make
electronic reporting a requirement
instead of voluntary. We believe this
will simplify measure collection and
submission for the Hospital IQR
Program, and will reduce the burden on
hospitals to report chart-abstracted
measures.
We intend to propose to require
reporting of electronic clinical quality
measures for the Hospital IQR Program
beginning for the CY 2016 reporting
period or FY 2018 payment
determination. We considered
proposing to require hospitals to
electronically report some Hospital IQR
Program quality measures in the FY
2014 IPPS/LTCH PPS proposed rule (78
FR 27695). After considering public
comments, we made electronic
reporting voluntary in CY 2014 in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50813 through 50814). However,
after two years, we believe that hospitals
are more prepared and should be
required to report Hospital IQR Program
measures as electronic clinical quality
measures beginning in CY 2016. We
intend to propose this policy in future
rulemaking, but requested comments on
this intention here.
Comment: A commenter asked for
clarification on the proposal to
electronically report all clinical process
of care and HAI measures beginning in
CY 2016, which are currently part of the
Hospital IQR Program or which have
been proposed for adoption for the FY
2018 payment determination and
subsequent years. The commenter
believed that CMS is moving away from
the critical work of the Infection
Preventionist and into a realm that is
without professional judgment for
identifying an HAI.
Response: We clarify that we did not
propose electronic reporting of all
clinical process of care and HAI
measures in CY 2016. We do not intend
to take away the professional judgment
of the Infection Preventionist
professionals.
Comment: One commenter was very
concerned about the amount of
resources that would be needed to
analyze, validate, and ensure
compliance with the electronically
specified clinical quality measure
specifications as well as the actual
submission process. The commenter
asked that CMS require the use of
electronic submissions gradually
instead of for all Hospital IQR Program
measures in CY 2016. The commenter
recommended a proposal that
encourages voluntary submission of one
or two measures that are not ‘‘toppedout’’ for CY 2016 with future gradual
expansion of required electronic
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measures over a period of several years.
The commenter stated that this would
allow hospitals to become proficient in
reporting measures electronically while
curtailing the administrative burden
that hospitals experience when
implementing new electronic measures.
The commenter also urged CMS to
allow hospitals to have flexibility in
how measures are transmitted until all
measure developers confirm that the
measures can be e-specified within the
timeframe. A commenter noted that any
decisions to add electronic clinical
quality measures should be dependent
on the final decisions for Stage 2 and
Stage 3 of meaningful use, given the
current difficulties providers and
vendors are experiencing with Stage 2
EHR implementation. In addition, the
commenter recommended that CMS
consider that certain measures currently
improve quality of care for patients, but
may not immediately lend themselves to
e-specification.
Response: We believe we are
providing a gradual approach to
electronic clinical quality measure
adoption and submission. This will be
the second year that the Hospital IQR
Program has provided a voluntary
electronic reporting option. With
respect to the commenter’s request that
we allow flexibility in how measures are
submitted, we will strive to include a
variety of measures in the Hospital IQR
Program, such as claims-based, chartabstracted, electronically specified, and
structural aggregate measures. We
recognize that many hospitals struggle
with proper data capture in the EHR and
we encourage these hospitals to work
with their vendors to reduce burden
associated with human intervention
through chart abstraction. The
electronic clinical quality measures
remain voluntary at this time to provide
an opportunity to improve upon
accurate data capture. We continue to
work with the Medicare EHR Incentive
Program team to ensure measure
alignment moving forward.
We agree that not all measures are
appropriate for electronic specification.
Comment: A commenter stated that
while ONC and others are working to
ensure common data standards, it is
unwise to dismiss inclusion of a
measure that is currently not
electronically specified, but which may
improve the quality of care for patients.
Response: We will not remove a
measure merely because it lacks an
electronic specification. In the FY 2011
IPPS/LTCH PPS final rule (75 FR
50185), we outlined seven criteria for
removing measures from the Hospital
IQR Program. In section IX.A.2.a. of the
preamble of this final rule, we are also
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finalizing updated criteria for
determining ‘‘topped-out’’ status.
Conversely, we will consider adopting a
measure that does not have electronic
specifications if the measure meets a
critical need and measurement gap.
Comment: A commenter urged CMS
to reconsider the proposal to begin
requiring electronic clinical quality
measures in CY 2016. The commenter
stated that there is a lack of clear especifications and certification
requirements, and that mandatory
reporting should only begin when EHR
systems are able to reliably generate this
data.
Response: We will consider these
suggestions as we develop policies on
electronic reporting. Please note that we
did not propose to require electronic
clinical quality measures in CY 2016,
but rather, we signaled an intent. We
thank the commenters for providing this
feedback, and will take it into account
in the future.
b. Possible Future Electronic Clinical
Quality Measures
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28244) we stated
that we intend to continue to support
the following measure domains in the
Hospital IQR Program measure set:
effective clinical care (for example, the
AMI, PN, STK, and VTE measures),
communication and care coordination
(for example, the readmission
measures), patient safety (for example,
the HAI measures), person and
caregiver-centered experience (for
example, the HCAHPS measure),
community/population health (for
example, the global immunization
measure), and efficiency and cost
reduction (for example, the Medicare
Spending per Beneficiary measure).
This approach will enhance better
patient care while aligning the Hospital
IQR Program with our other established
quality reporting and pay-forperformance programs, such as the
Hospital VBP Program.
Based on the above approach, we
stated our intent to propose to adopt the
following electronic clinical quality
measures with data collection beginning
with October 1, 2016 discharges (or, as
described further above, January 1,
2017, if the proposal to align reporting
under the Hospital IQR Program and
Medicare EHR Incentive Program is
finalized) to coincide with Medicare
EHR Incentive Program Stage 3
collection:
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
• Hepatitis B Vaccine Coverage Among
All Live Newborn Infants Prior to
Hospital or Birthing Facility Discharge
(NQF #0475)
The Hepatitis B Vaccine Coverage
Among All Live Newborn Infants Prior
to Hospital or Birthing Facility
Discharge (NQF #0475) measure is NQFendorsed, supported by the MAP, and
conditionally supported by the MAP as
an electronic clinical quality measure
for the EHR Incentive Program by the
MAP in its 2014 Recommendations on
Measures for More Than 20 Federal
Programs final report available at:
http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Reportl2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
However, the MAP recommends a
review of the electronic specifications of
this measure through the NQF
endorsement process.
This measure requires each hospital/
birthing facility to measure its
administration of a dose of hepatitis B
vaccine to all infants born in their
hospital/birthing facility prior to
discharge for a specific time period (for
example, one calendar year). Hospitals
are required to assess infants whose
parents refused vaccination for
exclusion from the coverage estimate.
• PC–02 Cesarean Section (NQF #0471)
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The PC–02 Cesarean Section (NQF
#0471) is NQF-endorsed and supported
by the MAP in its 2014
Recommendations on Measures for
More Than 20 Federal Programs final
report available at: http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_
Reportl2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx. The MAP noted that
there is an important public education
piece to the reporting of PC–02 and
recommended that we work with others
to ensure consumers understand what
the results mean and why the measure
is important.
This measure assesses the number of
nulliparous women with a term,
singleton baby in a vertex position
delivered by cesarean section.
• Adverse Drug Events—Hyperglycemia
Adverse Drug Events—Hyperglycemia
is conditionally supported by the MAP
in its 2014 Recommendations on
Measures for More Than 20 Federal
Programs final report available at:
http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Reportl2014_
Recommendations_on_Measures_for_
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Jkt 232001
More_than_20_Federal_Programs.aspx.
Use of this measure would address a
very common condition. The MAP
expressed concerns over the feasibility
of using this measure in the Hospital
IQR Program as it has been tested using
electronic data and stated that the NQF
endorsement process should resolve this
issue.
This measure assesses the average
percentage of hyperglycemic hospital
days for individuals with a diagnosis of
diabetes mellitus, anti-diabetic drugs
(except metformin) administered, or at
least one elevated glucose level during
the hospital stay. The measure’s
numerator is the sum of the percentage
of hospital days in hyperglycemia for all
admissions in the denominator. The
measure’s denominator is the total
number of admissions with a diagnosis
of diabetes mellitus, at least one
administration of insulin or any oral
anti-diabetic medication except
metformin, or at least one elevated
blood glucose value (≤200 mg/dL [11.1
mmol/L]) at any time during the entire
hospital stay.
Exclusions include: (1) Admissions
with a diagnosis of diabetic ketoacidosis
(DKA) or hyperglycemic hyperosmolar
syndrome (HHS); (2) admissions
without any hospital days included in
the analysis; (3) admissions with lengths
of stay greater than 120 days.
• Adverse Drug Events—Hypoglycemia
Adverse Drug Events—Hypoglycemia
is conditionally supported by the MAP
in its 2014 Recommendations on
Measures for More Than 20 Federal
Programs final report, which is available
at: http://www.qualityforum.org/
Publications/2014/01/MAP_PreRulemaking_Reportl2014_
Recommendations_on_Measures_for_
More_than_20_Federal_Programs.aspx.
Use of this measure would address a
common condition that is very
dangerous to patients. The MAP
expressed concerns over the feasibility
of using this measure in the Hospital
IQR Program as it has been tested using
electronic data and that the NQF
endorsement process should resolve this
issue.
This measure assesses the rate of
hypoglycemic events following the
administration of an anti-diabetic agent.
The measure’s numerator is the total
number of hypoglycemic events (<40
mg/dL) that were preceded by
administration of a short/rapid-acting
insulin within 12 hours or an antidiabetic agent other than a short/rapidacting insulin within 24 hours, were not
followed by another glucose value
greater than 80 mg/dL within 5 minutes,
and were at least 20 hours apart. The
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measure’s denominator is total number
of hospital days with at least one antidiabetic agent administered. Exclusions
include admissions with length of stay
greater than 120 days.
We requested comments on these
possible future measures.
Comment: One commenter strongly
supported the proposed measure
Adverse Drug Events—Hypoglycemia.
Response: We thank the commenter
for their support.
Comment: One commenter strongly
supported adding Adverse Drug
Events—Hyperglycemia. Another
commenter advised that measurement of
Adverse Drug Events—Hyperglycemia
via chart abstraction requires searching
for discrete, out-of-range blood glucose
lab values, which is resource intensive.
The commenter stated that collection of
this measure as an electronic clinical
quality measure is the most efficient
data collection mechanism and supports
Meaningful Use of an electronic health
record. The commenter believed that
glucose testing results can be captured
at the point-of-care or from the
laboratory system and stored in the EHR
as discrete data fields.
Response: We thank the commenters
for their support and will address this
measure in future policy making.
Comment: A commenter noted that
that electronically submitted data on
Adverse Drug Events-Hyperglycemia
would be highly unreliable. Further,
that commenter stated that
recommendations regarding levels of
glucose control are variable among
patient populations and there is limited
information within CMS’ proposal
regarding what patient populations
would be included in the sample.
Response: Adverse Drug Events—
Hyperglycemia is conditionally
supported by the MAP. The MAP
expressed concerns over the feasibility
of using this measure in the Hospital
IQR Program as it has been tested using
data from the EHR. Some hospitals and
health systems are able to use the results
of these electronic measures to address
adverse events at the point of care and
to track improvement over time. The
data elements are still under
development.
Comment: Several commenters
supported the adoption of the Hepatitis
B Vaccine measure. A commenter
recommended that further attention is
given to high volume conditions and/or
procedures, the goals of the three-part
aim, and alignment between the
Hospital IQR Program and other HHS
programs.
Response: We thank the commenters
for their support.
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Comment: Several commenters
supported the adoption of the Cesarean
Section measure. One commenter
believed that exclusive electronic
reporting of this measure could
ultimately reduce the burden of
collection and increase the potential for
timely feedback to all stakeholders on
the ever important area of maternity
care. Commenters also noted that the
two leading obstetric professional
societies, American College of
Obstetricians and Gynecologists and
Society for Maternal-Fetal Medicine,
recently released a detailed set of
consensus recommendations for safely
reducing the rate of initial or primary
cesarean sections, stating that this
procedure is overused and that there are
many safe ways to reduce the rate.
Response: We thank the commenters
for their support.
We note that we received many public
comments regarding other suggested
future measures and policies addressing
different operational aspects of the
Hospital IQR Program such as public
reporting and working with other
stakeholders. We thank the commenters
for their comments. Because we believe
these comments are not within the
scope of this current rulemaking, we are
not addressing them in this final rule.
However, we intend to consider all of
these views for future rulemaking and
Hospital IQR Program development.
meet specific data collection,
submission, and validation
requirements. For each Hospital IQR
Program year, we require that hospitals
submit data on each measure in
accordance with the measure’s
specifications for a particular period of
time. The data submission
requirements, Specifications Manual,
and submission deadlines are posted on
the QualityNet Web site at: http://
www.QualityNet.org/. Hospitals submit
quality data through the secure portion
of the QualityNet Web site. There are
safeguards in place in accordance with
the HIPAA Security Rule to protect
patient information submitted through
this Web site.
In order to participate in the Hospital
IQR Program, hospitals must meet
specific procedural requirements.
Hospitals choosing to participate in the
Hospital IQR Program must also meet
specific data collection, submission, and
validation requirements.
9. Form, Manner, and Timing of Quality
Data Submission
c. Data Submission Requirements for
Chart-Abstracted Measures
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51640
through 51641), the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53536 through
53537), and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50811) for details
on the Hospital IQR Program data
submission requirements for chartabstracted measures.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28245) we did not
propose any changes to data submission
requirements for chart-abstracted
measures.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
a. Background
Sections 1886(b)(3)(B)(viii)(I) and (II)
of the Act state that the applicable
percentage increase for FY 2007 and
each subsequent fiscal year shall be
reduced by 2.0 percentage points (or
beginning with FY 2015, by one-quarter
of such applicable percentage increase
(determined without regard to sections
1886(b)(3)(B)(ix), (xi), or (xii) of the
Act)) for any subsection (d) hospital that
does not submit, to the Secretary in
accordance with this clause and in a
form and manner, and at a time,
specified by the Secretary, data required
to be submitted on measures selected
under this clause with respect to such
a fiscal year. We note that, in
accordance with this section, the FY
2015 payment determination begins the
first year that the Hospital IQR Program
will reduce the applicable percentage
increase by one-quarter of such
applicable percentage increase. In order
to participate in the Hospital IQR
Program, hospitals must meet specific
procedural requirements.
Hospitals choosing to participate in
the Hospital IQR Program must also
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b. Procedural Requirements for the FY
2017 Payment Determination and
Subsequent Years
The Hospital IQR Program procedural
requirements are codified in regulation
at 42 CFR 412.140. We refer readers to
the codified regulations for participation
requirements, as further explained by
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50810 through 50811).
d. Alignment of the Medicare EHR
Incentive Program Reporting and
Submission Timelines for Clinical
Quality Measures with Hospital IQR
Program Reporting and Submission
Timelines
The Hospital IQR Program and the
Medicare EHR Incentive Program have
different reporting and submission
periods for electronic clinical quality
measures, with hospitals reporting data
to the Hospital IQR Program based on
calendar year deadlines while the
Medicare EHR Incentive Program is
based on fiscal year deadlines. In
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addition, the Hospital IQR Program
generally requires quarterly reporting
and submission of data for chartabstracted measures while the Medicare
EHR Incentive Program requires annual
submission of clinical process of care
measure data.
As a result of the different and
incongruent Hospital IQR and Medicare
EHR Incentive Programs’ schedules,
hospitals reporting and submitting
measure data to both programs would
have to do so multiple times in a
calendar year. This discrepancy may
create confusion and additional burden
for hospitals attempting to report data to
both programs. To alleviate this possible
confusion and reduce provider burden,
beginning with the CY 2015 reporting
period/FY 2017 payment determination,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28245 through
28246) we proposed to align
incrementally the data reporting and
submission periods for clinical quality
measures for the Medicare EHR
Incentive Program and the Hospital IQR
Program on a calendar year basis.
This proposed change also would also
move us closer to meeting our
commitment to align quality
measurement and reporting among our
programs, as we described in the
Electronic Health Record Incentive
Program—Stage 2 final rule (77 FR
54049 through 54051), the FY 2013
IPPS/LTCH PPS final rule (77 FR 53502
and 53534), and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50811
through 50819 and 78 FR 50903 through
50904).
In order to ease the transition and
prevent the delay of Medicare EHR
Incentive Program payments, we
proposed to shift incrementally the
Medicare EHR Incentive Program
reporting and submission periods for
clinical quality measures to align with
that of the Hospital IQR Program. We
refer readers to section IX.D.2. of the
preamble of this final rule for a detailed
discussion of this proposal in the
Medicare EHR Incentive Program.
Specifically, for the CYs 2015 and 2016,
we proposed in the Medicare EHR
Incentive Program to require CY
reporting, but only for the first three
calendar quarters (that is, January
through September). This proposal will
allow us to align data reporting and
submission periods without shifting the
Medicare EHR incentive payments.
We note that for the Hospital IQR
Program, for the FY 2017 payment
determination, we proposed to change
the November 30th submission deadline
to require data submission within
approximately 60 days of the close of a
quarter. We refer readers to section
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IX.A.7.h.(1) of the preamble of this final
rule where this proposal is discussed.
We also proposed this change in the
Medicare EHR Incentive Program in
order to align the two programs. We
refer readers to section IX.D.2. of the
preamble of this final rule where this
proposal is discussed. In summary, we
proposed to align the reporting and
submission periods of the Medicare
50257
EHR Incentive Program clinical quality
measures with that of the Hospital IQR
Program for CYs 2015 and 2016.
PROPOSED REPORTING TIMELINE TO ALIGN THE MEDICARE EHR INCENTIVE PROGRAM WITH PROPOSED HOSPITAL IQR
PROGRAM SUBMISSION PERIODS
2015 Reporting Period .........................................
CY
Medicare EHR incentive
program reporting
requirements*
Hospital IQR program reporting requirements
Submission period**
Q1 ...
January 1–March 31, 2015
January 1–March 31, 2015
Q2 ...
April 1–June 30, 2015 .......
April 1–June 30, 2015 .......
Q3 ...
July 1–September 30,
2015.
N/A for Medicare EHR Incentive Program.
July 1–September 30,
2015.
October 1–December 31,
2015.
Q1 ...
January 1–March 31, 2016
January 1–March 31, 2016
Q2 ...
April 1–June 30, 2016 .......
April 1–June 30, 2016 .......
Q3 ...
July 1–September 30,
2016.
N/A for Medicare EHR Incentive Program.
July 1–September 30,
2016.
October 1–December 31,
2016.
Data must be submitted by
May 30, 2015.
Data must be submitted by
August 30, 2015.
Data must be submitted by
November 30, 2015.
For Hospital IQR Program,
Data must be submitted
by February 28, 2016.
Data must be submitted by
May 30, 2016.
Data must be submitted by
August 30, 2016.
Data must be submitted by
November 30, 2016.
For Hospital IQR Program,
Data must be submitted
by February 28, 2017.
Q4 ...
2016 Reporting Period .........................................
Q4 ...
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
* Calendar year alignment and quarterly reporting for 2015 and 2016 would apply for electronically reported CQM data only.
** Proposed Medicare EHR Incentive Program and Hospital IQR submission period would allow data submission on an ongoing basis starting
January 2 of the reporting year, and ending approximately 60 days after the end of the quarter.
We invited public comments on these
proposals.
Comment: Many commenters
supported CMS’ proposal to align the
Hospital IQR Program and the Medicare
EHR Incentive Program. One commenter
supported efforts aligning the Hospital
IQR Program and the EHR Incentive
Program and supported using the
Hospital IQR Program as the foundation
of the alignment.
Response: We thank these
commenters for their support.
Comment: One commenter
recommended that additional steps be
taken to fully align the Hospital IQR and
Medicare EHR Incentive Programs, and
stated that it is currently not possible for
a hospital to satisfy the meaningful use
requirements with mandatory Hospital
IQR Program measures only. This
commenter observed that the Stage 2 list
of electronic clinical measures includes
some that have not been adopted for the
Hospital IQR Program, and also some
Hospital IQR Program measures that
have been found to be ‘‘topped-out.’’
Two measures that previously were
removed from the Hospital IQR Program
remain as electronic clinical quality
measures for demonstrating meaningful
use of EHRs. The commenter
recommended that CMS work to ensure
hospitals could meet the meaningful use
requirements by electronically reporting
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some mandatory Hospital IQR Program
measures, without having to report
additional measures that have not been
determined to have value for public
reporting or quality improvement
purposes under the Hospital IQR
Program.
Response: We are actively taking steps
to align the list of available measures
between the Hospital IQR and Medicare
EHR Incentive Programs by proposing to
adopt six new and retain 10 topped-out
measures as electronic clinical quality
measures (79 FR 28220 through 28242)
so that 28 of the 29 Stage 2 measures are
adopted by the Hospital IQR Program.
As previously noted, ED–3—Median
time from ED arrival to ED departure for
discharged ED patients, is an outpatient
quality measure. While 12 of the Stage
2 measures are required Hospital IQR
Program measures, we believe that
allowing hospitals the flexibility to
select other measures that best fit their
patient population is a benefit to the
hospitals. This flexibility was requested
by commenters in response to our
restriction to 16 specific measures in CY
2014 (78 FR 50814–50815). As proposed
and as finalized in this rule, hospitals
can meet some meaningful use
requirements by electronically reporting
some mandatory Hospital IQR Program
measures. We intend to continue
working with hospitals to ensure that
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they are able to meet meaningful use
requirements by reporting Hospital IQR
Program measures electronically. We
respectfully disagree with the
commenter’s implication that only the
mandatory Hospital IQR Program
measures have value. We believe that
allowing hospitals the flexibility to
choose which additional measures to
report is a benefit to the hospital and
their patient population. We refer
readers to our response in section
IX.A.2.a. of the preamble of this final
rule regarding why we are retaining
‘‘topped-out’’ measures.
Comment: Some commenters opposed
or expressed concerns with CMS’
alignment proposal. One commenter
stated that it is premature to require
quarterly reporting of electronic clinical
quality measures because of the
implementation delays with 2014
CEHRT for meaningful use and the
anticipated changes in the attestation
requirements for meaningful use in
2014.
Response: We understand the
commenters’ concerns. We are not
finalizing quarterly reporting of
electronic clinical quality measures at
this time. We refer readers to section
IX.A.2.h.(1) of the preamble of this final
rule where this is discussed in more
detail.
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Comment: One commenter
appreciated CMS’ goal to align the
Hospital IQR Program and the Medicare
EHR Incentive Program, but noted
several concerns. Specifically, the
commenter is concerned about the
validity of the electronic clinical quality
measures, noting that hospitals that are
performing well under the chartabstracted versions of measures are not
the same hospitals that achieve high
performance levels under the electronic
clinical quality measure versions.
Because of this concern, the commenter
urged CMS to develop a methodology
for validation and argues that chartabstracted versions of measures should
never be compared to electronic clinical
quality measure versions.
Response: We are unaware of data
showing that hospitals that are
performing well under the chartabstracted versions of measures are not
the same hospitals that achieve high
performance levels under the electronic
clinical quality measure versions. To
date, we have only heard anecdotal
comments about actual performance
level differences between the two modes
of collection. We do not have sufficient
data to be able to confirm these
comments. We are conducting a small
validation pilot and have proposed to
conduct a larger pilot in CY 2015. More
discussion of the electronic clinical
quality measure validation pilot can be
found in section IX.A.11.e. of the
preamble of this final rule.
Comment: One commenter is
concerned that CMS’ data systems may
not be prepared to routinely accept
EHR-based measures.
Response: We would like to reassure
the commenter that our data systems are
prepared to accept EHR-based measures.
The CMS database has been open to
accept electronic clinical quality
measure submissions since January 2,
2014.
Comment: One commenter was
concerned that different deadlines (that
is, for chart-abstracted measures versus
electronic clinical quality measures)
may lead to confusion and requested
that CMS undertake a strong
educational initiative using current
educational resources for both programs
and ensure that technical assistance is
available for hospitals opting to submit
data for both programs electronically.
Response: We routinely provide
educational sessions and resources on
the QualityNet Web site. After
publication of the final rule, we will
update the resources and offer
additional educational sessions to assist
reporting hospitals. We urge the
commenter to sign up for our electronic
mail distribution list available for
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pertinent updates and announcements
of upcoming educational sessions.
Further, we have recorded sessions
available on electronic clinical quality
measures on our Web site at: https://
www.qualitynet.org/dcs/Content
Server?c=Page&pagename=QnetPublic
%2FPage%2FQnetTier3&cid=1228773
852046. We also refer readers to our
response in section IX.A.2.h.(1) of the
preamble of this final rule regarding
education and outreach to hospitals and
vendors.
Comment: Another commenter
expressed concern that the methods to
encourage participation in the voluntary
electronic reporting option and to align
critical quality measure reporting in the
Hospital IQR Program and the Medicare
EHR Incentive Program undermine the
goals of the Hospital IQR Program—
namely, continuous hospital quality
improvement. Rather than consider
exceptions to Hospital IQR Program
requirements, the commenters suggested
that CMS leverage the data from the
Medicare EHR Incentive Program for
insight and development of a report on
lessons learned to date from hospitals’
experience with certified electronic
health record technology (CEHRT), and
their use for electronic clinical quality
measures.
Response: We respectfully disagree
with the commenter that our efforts to
align reporting of electronic clinical
quality measures between the Hospital
IQR and Medicare EHR Incentive
Programs undermine the goals of the
Hospital IQR Program. We believe that
clinical quality measure reporting,
regardless of the mode of submission,
will lead to continuous quality
improvement.
We interpret the commenter’s
statement ‘‘consider exceptions to
Hospital IQR Program requirements’’
and ‘‘CMS leverage the data from the
Medicare EHR Incentive Program’’ to
request that we not introduce an
electronic voluntary reporting option for
Hospital IQR. By allowing one
submission to partially fulfill
requirements for two programs, we
believe we are alleviating the burden of
reporting data to two programs. We
disagree that leveraging data from the
Medicare EHR Incentive Program would
promote continuous quality
improvement, since many hospitals
have elected to attest results of their
electronic clinical quality measures.
Comment: One commenter cautioned
that its EHR vendor prioritizes
complying with federal government
requirements over fixing critical errors
in its system that could affect patient
safety.
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Response: Patient safety is the top
priority and we urge hospitals to work
closely with their vendors to ensure
patient safety as the highest priority.
Comment: One commenter
encouraged CMS to more clearly state
that references to submission timelines
in its proposal to align the Hospital IQR
Program and the Medicare EHR
Incentive Program do not impact chartabstracted measures. Another
commenter asked CMS to clarify
whether the submission deadline for the
first quarter of CY 2015 is May 30 or
May 31.
Response: Our proposal to align the
Hospital IQR Program and the Medicare
EHR Incentive Program does not affect
chart-abstracted measures’ submission
deadlines. The alignment applies to
electronic clinical quality measures
only.
In addition, as stated in section
IX.A.2.h.(1) of the preamble of this final
rule above, we are finalizing a modified
version of our proposal. We will not
require quarterly reporting at this time
for the electronic clinical quality
measures. As a result, we also modified
the submission deadline for electronic
clinical quality measures, which instead
will be November 30, 2015. Policies for
electronic clinical quality measure
reporting in CY 2016/FY 2018 payment
determination and subsequent years
will be made in future rulemaking.
Comment: One commenter
recommended that CMS finalize the
zero denominator and case threshold
changes as proposed.
Response: We refer readers to sections
IX.D.5. and IX.D.6. of the preamble of
this final rule for the discussion of zero
dominators and the case threshold
exemption in the EHR Incentive
Program. We note that while this policy
was clarified in the EHR Incentive
Program, it also applies to electronic
reporting for the Hospital IQR Program.
After consideration of the public
comments we received, we are
finalizing our proposal to align the EHR
Incentive Program with the Hospital
IQR Program, with modifications. We
proposed to align the reporting period
and submission deadlines of the
Medicare EHR Incentive Program
clinical quality measures with that of
the Hospital IQR Program for CY 2015.
While we are finalizing our proposal to
align the reporting period and
submission deadline of the Medicare
EHR Incentive Program with those of
the Hospital IQR Program on the
calendar year for clinical quality
measures that are reported
electronically, we are not finalizing our
proposal to require quarterly submission
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of clinical quality measure data in CY
2015.
Since we are also modifying our
proposal in the Hospital IQR Program to
finalize that hospitals can voluntarily
submit one calendar year (CY) quarter’s
data for CY Q1 (January 1–March 31,
2015), CY 2 (April 1–June 30, 2015), or
CY 3 (July 1–September 30) by
November 30, 2015, we are also
applying these modifications to the
alignment with the Medicare EHR
Incentive Program. As a result, we are
not incrementally shifting the Medicare
EHR Incentive Program reporting period
and submission deadlines for clinical
quality measures as proposed. We plan
to continue to align reporting periods
and submission deadlines in CY 2016
and subsequent years in future policy
years. We refer readers to section IX.E.2.
of the preamble of this final rule for a
detailed discussion of the final policy in
the Medicare EHR Incentive Program.
ED–1, ED–2, Stroke-4, Stroke-6,
Stroke-8, VTE–1, VTE–2, VTE–3, VTE–
5, VTE–6, AMI–7a, and PC–01 are
measures required under the Hospital
IQR Program and may be submitted as
chart-abstracted or as electronic clinical
quality measures. If a hospital chooses
to submit one calendar quarter (CY 2015
Q1, Q2, or Q3) as an electronic clinical
quality measure by November 30, 2015,
a hospital does not need to also submit
chart-abstracted data for that measure.
The chart below provides a summary
of the finalized reporting periods and
electronic submission deadlines for the
FY 2017 Hospital IQR Program:
FY 2017 HOSPITAL IQR PROGRAM
ELECTRONIC REPORTING PERIODS
AND SUBMISSION DEADLINES FOR
ELIGIBLE HOSPITALS
Discharge reporting
periods
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January 1, 2015–
March 31, 2015.
April 1, 2015–June
30, 2015.
July 1, 2015–September 30, 2015.
October 1, 2015–December 31, 2015.
Submission deadline
November 30, 2015.
November 30, 2015.
November 30, 2015.
Not Applicable.
e. Sampling and Case Thresholds for the
FY 2017 Payment Determination and
Subsequent Years
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (75 FR 50230), the
FY 2012 IPPS/LTCH PPS final rule (76
FR 51641), the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53537), and the FY
2014 IPPS/LTCH PPS final rule (78 FR
50819) for details on our sampling and
case thresholds for the FY 2016
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payment determination and subsequent
years.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28246) we did not
propose any changes to sampling or case
thresholds.
f. HCAHPS Requirements for the FY
2017 Payment Determination and
Subsequent Years
We refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50220), the
FY 2012 IPPS/LTCH PPS final rule (76
FR 51641 through 51643), the FY 2013
IPPS/LTCH PPS final rule (77 FR 53537
through 53538), the FY 2014 IPPS/LTCH
PPS final rule and (78 FR 50819 through
50820) for details on HCAHPS
requirements.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28246) we did not
propose any changes to HCAHPS
requirements.
Hospitals and HCAHPS survey
vendors should, however, regularly
check the official HCAHPS Web site at
http://www.hcahpsonline.org for new
information and program updates
regarding the HCAHPS Survey, its
administration, oversight and data
adjustments.
g. Data Submission Requirements for
Structural Measures for the FY 2017
Payment Determination and Subsequent
Years
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51643
through 51644), and the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53538
through 53539) for details on the data
submission requirements for structural
measures.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28246) we did not
propose any changes to data submission
requirements for structural measures.
h. Data Submission and Reporting
Requirements for Healthcare-Associated
Infection (HAI) Measures Reported via
NHSN
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51631
through 51633; 51644 through 51645),
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53539), and the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50820
through 50822) for details on the data
submission and reporting requirements
for healthcare-associated infection (HAI)
measures reported via the CDC’s
National Healthcare Support Network
(NHSN) Web site. The data submission
deadlines are posted on the QualityNet
Web site at: http://www.QualityNet.
org/.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28246) we did not
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50259
propose any changes to data submission
and reporting requirements for
healthcare-associated infection
measures reported via the NHSN.
10. Submission and Access of HAI
Measures Data Through the CDC’s
NHSN Web Site
As finalized in the FY 2014 Hospital
IPPS/LTCH PPS final rule (78 FR 50805
through 50807), the Hospital IQR
Program requires hospitals to report
data via the CDC’s NHSN Web site for
the following HAI measures: (1) CLABSI
(NQF #0139); (2) CAUTI (NQF #0138);
(3) SSI following colon surgery; (4) SSI
following abdominal hysterectomy; (5)
laboratory-identified MRSA bacteremia
infection (NQF #1716); (6) laboratoryidentified Clostridium difficile infection
(NQF #1717); and, (7) healthcare
personnel vaccination (NQF #0413). In
the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51644 through 51645), we
adopted the data submission and
reporting standard procedures that have
been set forth by CDC for NHSN
participation in general and for
submission of specific HAI measures to
NHSN.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28246 through
28247) for the FY 2016 payment
determination and subsequent years, for
the Hospital IQR Program, we clarified
our data reporting and submission
requirements for the above stated HAI
measures. By adopting the data
reporting and submission procedures set
forth by the CDC, we intended that
hospitals report, through the existing
NHSN process, any and all data
elements at the patient-level that are
designated as ‘‘required’’ on NHSN
forms (such as, the ‘‘primary
bloodstream infection’’ or ‘‘annual
facility survey’’ forms). Some examples
of these ‘‘required’’ patient-level data
elements include: patient identifier,
date of birth, and gender; detailed event
data, such as specific symptoms
identified to meet case definitions and
laboratory results; and risk factor data
used to calculate the hospital-level
measures. Hospitals may find a
comprehensive list of required forms
and data elements on the NHSN Web
site (http://www.cdc.gov/nhsn/acutecare-hospital/index.html).
We further clarified that the NHSN
required data collected by the CDC will
be shared with CMS for Hospital IQR
Program and Hospital VBP Program
administration, monitoring and
evaluation activities, including
validation, appeals review, program
impact evaluation, and development of
quality measure specifications. We
routinely use submitted quality measure
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data for these types of program
administration, monitoring and
evaluation activities.
In addition, we proposed that we will
also receive access from the CDC to
voluntarily submitted name and race
identifying information with respect to
Hospital IQR Program required
measures. These data will also be used
for Hospital IQR Program and Hospital
VBP Program administration,
monitoring and evaluation activities,
including validation, appeals review,
program impact evaluation, and
development of quality measure
specifications. More specifically, for
Hospital IQR Program validation, we
proposed to use these data to ensure
accurate matching between patient
charts submitted for HAI validation that
cannot be matched to NHSN using
Medicare beneficiary identification
numbers. We also proposed to use these
data as appropriate for program
evaluation.
We invited public comment on this
proposal.
Comment: Several commenters
strongly supported the proposal for
CMS to access NHSN patient-,
system-, and aggregate-level data.
Commenters stated that this access is
necessary to evaluate the impact of the
Hospital VBP and Hospital IQR
Programs as required by the Affordable
Care Act, as well as the HAC Reduction
Program. Commenters stated that this
information is also critical to inform
quality improvement efforts and to
ensure accurate data collection and will
also increase the sampling power of the
Hospital IQR Program validation
process. A commenter also noted its
trust that CMS will ensure data privacy
and abide by all security and privacy
requirements, as CMS has historically
been an excellent steward to ensure data
privacy and security in its quality
programs.
Response: We thank the commenters
for the support.
Comment: Many commenters opposed
the proposed NHSN data access policy
for validation purposes. Many of these
commenters expressed the opinion that
access to patient-level data was not
needed for validation because CMS
already has a validation process.
Response: We would like to clarify
why we need access to these NHSN data
for validation. Although commenters
correctly point out that we already have
an HAI validation process, the current
validation process is inefficient, does
not provide timely information for the
validation-related appeals process, and
does not give hospitals all the
information that would be useful to
them.
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One example of how validation could
improve in efficiency is by providing
the CMS’ clinical data abstraction center
(CDAC) contractor with access to data
regarding which symptoms a patient
experienced in order to meet the
requirements for reporting a particular
type of HAI event. In validating a single
quarter of 2013 HAI data, CDAC
encountered more than 30 episodes-ofcare in which the hospital reported an
event to NHSN and for which CDAC did
not find a reportable infection during its
medical record review. In these
situations, CDAC employs quality
controls to ensure that its staff have not
overlooked or misinterpreted important
documentation. However, HAI records
selected for validation are on average
more than 1,000 pages in length, with
maximum page length above 60,000
pages. Having information about which
symptoms CDAC should be looking for
and on what dates catheters were
inserted would greatly assist the CDAC
in ensuring that a properly documented
and reported HAI was not overlooked,
and that the hospital was credited
appropriately. Without this data access,
we rely on hospitals to request an
educational review or appeal cases to
identify any potential CDAC errors,
thereby increasing inefficiencies and
burden for hospitals.
Another reason we need direct access
to patient-level NHSN data for Hospital
IQR Program administration is to
support the processing of validationrelated appeals. A hospital may request
from CMS at any time an educational
review to better understand whether or
not CDAC reached a correct conclusion
during validation. However, a hospital
which fails to meet Hospital IQR
Program validation requirements has 30
days to appeal after this determination.
Hospitals that fail to meet any Hospital
IQR Program requirement, including
validation, are ineligible for the Hospital
VBP Program, and therefore, would not
contribute to Hospital VBP Program
performance standards. Because of the
tight timeframe between the Hospital
IQR Program payment determination
and when Hospital VBP Program
benchmarks must be posted, we must
process Hospital IQR Program appeals
very quickly, sometimes in 48 hours or
less. Taking time at precisely this
juncture to verify with CDC what was
submitted to NHSN as the basis for the
appeal is inefficient, and threatens
timely payment determinations.
Lastly, under our current validation
process, we are unable to provide
patient-level data element information
of hospital reported HAI data for
mismatched validation cases. We
believe that our proposal is in part
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responsive to the commenters in
previous rules; those comments
indicated that we needed to provide
hospitals with more detailed HAI
validation educational feedback (78 FR
50826 through 50827). We believe that
this patient-level information is
necessary to provide specific and
actionable feedback to hospitals to
report more accurate HAI data for CMS
programs. For example, if CDAC can
explain to a hospital that a patient did
have the infection symptoms that the
hospital reported to NHSN, but that the
symptoms (and therefore, the infection)
first occurred too long after a catheter
was removed, the hospital would have
a clearer explanation of why an
infection was reported incorrectly.
Moreover, by accessing NHSN data at
the patient-level for every required
reporting element, CDAC can review the
accuracy of data reporting to NHSN at
the data-element level and provide all of
this feedback to hospitals. When CDAC
validates clinical process-of-care
measures, CDAC reviews and provides
feedback to hospitals for every data
element submitted to the Hospital IQR
Program. CDAC is unable to provide a
comparable level of feedback to
hospitals for HAI measures, because it
does not have access to patient-level
data at the element-level.
Comment: Many commenters stated
that the proposal to access patient name
and race submitted on a voluntary basis
as particularly objectionable. Some
commenters questioned why patient
name and race were needed for
validation. A few commenters noted
that this patient identifiable information
would not be particularly useful
because it is not available for every
patient. A few commenters wanted to
know why CMS needed data on nonMedicare beneficiaries. A few
commenters stated that CMS should
observe whether the new requirement to
link data using Medicare Beneficiary ID
for validation is helpful before
instituting new policies. One
commenter asked how frequently CMS
failed to match validation cases on
Medicare Beneficiary ID number.
Response: Our past validation
experience indicates that accessing
patient race and name data for
validation will allow CDAC to match
validation cases that lack Medicare
beneficiary numbers with a higher level
of confidence. If we cannot access these
data, a hospital might have to request an
educational review or appeal to
determine that we made an
inappropriate mismatch. We believe
that this approach is much less efficient
and more burdensome to hospitals than
using the patient name and race data
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from NHSN where available to confirm
the match. The policy requiring
hospitals to report Medicare beneficiary
identification numbers to NHSN is first
effective for HAIs occurring in patients
discharged in quarter 3, 2014 (78 FR
50822). We do not agree with
commenters who indicated that we
should wait until we implement this
policy because of the number of patients
with HAIs who are not receiving
Medicare who will be impacted. We
anticipate that there will be many cases
that lack Medicare beneficiary
identification numbers, because a large
percentage of the 5 HAIs reportable to
NHSN as part of the Hospital IQR
Program occur among patients under 65
years of age. For infections reported in
2013, the percentage of events reported
for patients under 65 years of age ranged
from a low of 44 percent for laboratoryidentified Clostridium difficile (CDI)
events to a high of 64 percent for
surgical site infections (SSI). In these
instances without Medicare beneficiary
numbers, it would be helpful to have
other data, such as name and race where
available, in order to more effectively
match validation cases.
We agree that patient race and name
data is not available for every patient.
We believe that this information would
be more useful if it were required and
not voluntary. We will discuss this with
CDC and take the suggestion under
consideration for future rulemaking,
considering both the burden of added
requirements as well as the potential
benefits. For the present, we believe that
the available patient race and name data
will greatly assist in identification of
medical records required for CMS
validation submission, and CMS’
matching of validation medical records
to NHSN reported infection events.
Regarding data for non-Medicare
beneficiaries, we remind commenters
that the Hospital IQR Program requires
quality data that encompasses all-payer
patients (both Medicare beneficiaries
and those not participating in
Medicare). Therefore, data from all
patients must be validated.
Comment: Some commenters asked
CMS to clarify: (1) how it intends to use
patient-level data for program
evaluation, and (2) why aggregate-level
data cannot be used for this purpose.
Some commenters stated that CMS
should only use aggregate-level data for
program evaluation. Several
commenters observed that patient name
and race would have limited usefulness
because these data are submitted
voluntarily and are not available for all
submitted cases. One commenter
wanted to know what CMS meant by the
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phrase ‘‘as appropriate for program
evaluation.’’
Response: We are collecting data from
NHSN using our authority to collect
these data for validation purposes. For
purposes of Hospital IQR Program data
program administration, including
validation and appeals, like all data we
collect for that purpose, we intend to
use that data more broadly to meet goals
of the Hospital IQR and VBP Programs
including measure and program
evaluation. Measure and program
evaluation are two key components of
administering a public reporting
program. We intend to use patient-level
data for program evaluation to assess the
impact of quality measures used in the
Hospital IQR and Hospital VBP
Programs and determine whether either
program may have unintended
consequences as we already do with
other non-NHSN measures data.
Aggregate-level data have limited
effectiveness for program evaluation,
because they do not have a strong
predictive power nor allow for
multivariate statistical modeling. On the
other hand, patient-level data provides
us with much greater predictive power
and the capability to perform
multivariate statistical modeling
through matching this data across all
quality measures, including HAI
measures. Such analyses provide
additional information about the
validity and impact of individual
measures included in the Hospital IQR
Program. For example, information from
the same group of patients must be
matched at the individual patient-level
for the SCIP process-of-care antibiotic
administration, PSI–90 component
claims, and HAI measures to assess
correlation among measure results. Such
analyses provide additional information
about the validity of individual
measures included in the Hospital IQR
Program, and also assist with assessing
the relative impact of different types of
measures on the distribution of Hospital
VBP Program performance scores. These
types of analyses provide actionable
data to determine whether either
program may have unintended
consequences, including
disproportionately penalizing hospitals
serving the poor and vulnerable.
Patient level data on race and
Hispanic ethnicity are particularly
important for evaluating any potential
unintended consequences related to
poor and vulnerable populations.
Aggregate level analyses have limited
predictive power and lack the level of
detail needed to evaluate whether
program initiatives have had
unintended consequences in
contributing to disparities both within
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50261
and across hospitals as well as
disparities associated with specific
populations. We intend to use patientlevel information, as well as race and
Hispanic origin information where
available, to improve the accuracy of
categorizing safety net hospitals in our
impact analysis. However, we agree
with the concerns of some of the
commenters that the patient race and
ethnicity data may be of limited
usefulness because it may be reported
by too few hospitals. This is why we
described the use of these voluntarily
reported data ‘‘as appropriate’’. In the
routine course of analysis, we intend to
evaluate the level of completeness of the
voluntarily submitted patient race and
Hispanic ethnicity data, and its
appropriateness for the specific analyses
designed to evaluate the impact of the
HVBP Program on safety net hospitals.
Comment: Several commenters
expressed concern about specific uses
for patient-level access to NHSN data. A
few indicated that CMS should not
access patient-level NHSN data to
produce standardized infection ratios
(SIRs) to post on Hospital Compare.
CDC currently performs this role and
these commenters believe that CDC
should continue to do so. One
commenter expressed concern that CMS
would misuse or misinterpret data to
reduce hospital payment rates.
Response: We agree with commenters
that CDC effectively produces SIRs and
should continue to provide these data to
us to post on the Hospital Compare Web
site, and that it would be duplicative for
us to perform this work. We do not
intend to perform these analyses and
will not use the data in ways that reduce
an individual hospital’s payment rates.
Comment: Several commenters
viewed CDC as housing the only
‘‘credible’’ experts on NHSN data
collection and analysis, such that if
CMS used these data to produce trends,
evaluate and update NHSN measure
specifications, or conduct data mining
activities, the results might be incorrect,
misleading, or not scientifically valid.
Response: We recognize that CDC is
the measure steward for NHSN data,
and uniquely understands the
intricacies of NHSN data collection. We
do not intend to independently update
NHSN measure specifications and
would only make changes in response to
CDC updates. Such changes would be
subject to our substantive and
nonsubstantive changes policy (see 77
FR 53504). We also would not conduct
data mining activities. The measure
steward, CDC, is responsible for
updating measure specifications. We
would invite CDC to provide feedback
on any NHSN quality trend data we
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produce for Hospital IQR or Hospital
VBP Program evaluation purposes.
Comment: Several commenters
viewed any analyses that CMS might
conduct as potentially duplicative with
CDC efforts and therefore, wasteful of
resources. One commenter asserted that
CDC should conduct validation instead
of CMS.
Response: Our intention to access and
use NHSN data does not constitute
redundant or duplicative efforts with
the CDC. CDC produces national and
hospital level HAI SIRs for NHSN, and
also provides CMS with hospitalspecific data for reporting on Hospital
Compare. We intend to continue using
CDC reported HAI SIRs.
Further, the CDC does not validate
these measures for purposes of the
Hospital IQR Program. CMS has both
the authority and the responsibility to
conduct validation activities under
section 1886(b)(3)(B)(viii)(XI) of the Act.
We are statutorily responsible with
auditing a number of hospitals to ensure
the validity of the reporting program.
Our validation process provides
hospitals with a single standardized
national process and provides hospitals
in the validation sample with actionable
and specific patient-level, confidential
feedback on mismatched patient-level
validation results in order to improve
accuracy.
We might consider contracting with
CDC to conduct such validation in
future years if we determine that CDC is
interested in conducting validation for
the Hospital IQR Program and could do
so more efficiently than CMS. However,
any validation process that CMS would
undertake would have to be
standardized nationally and employ
quality assurance standards such as
assessing inter-abstractor reliability.
CDC’s current validation strategy, which
involves providing technical assistance
to states conducting validation, is not
nationally standardized.116 It therefore
does not meet CMS’ needs to ensure
accuracy of HAI measure data using a
standardized and nationwide process.
Comment: Many commenters
questioned whether CMS had rights to
the data, and stated that CMS access
would violate the confidentiality
agreement between hospitals and
NHSN, or indicated that the data being
required and accessed exceeded those
needed to measure performance as
posted on Hospital Compare. Several
commenters indicated that CMS should
justify its need for specific data
116 National Healthcare Safety Network (NHSN)
Validation Guidance and Toolkit 2012. Validation
for Central Line-Associated Bloodstream Infection
(CLABSI) in ICUS. http://www.cdc.gov/nhsn/
toolkit/validation-clabsi/, last accessed 7/29/2014.
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elements, arguing that CMS should
require and access the minimum data
needed to meet its goals.
Response: We believe that our
responsibility encompasses more than
merely measuring quality performance.
As described above in this section, we
have both the authority and the
responsibility to conduct validation of
the data for the Hospital IQR Program.
Furthermore, we wish to clarify that this
policy does not constitute an expansion
of reporting requirements, because we
would access data that hospitals are
already required to submit to meet
Hospital IQR Program requirements.
In addition, our policy to access data
required by the Hospital IQR Program
also does not violate the confidentiality
agreement between facilities and the
CDC. The confidentiality agreement
signed by facilities specifically indicates
that one purpose for the data submitted
to NHSN is to ‘‘enable healthcare
facilities to report HAI and prevention
practice adherence data via NHSN to the
U.S. Centers for Medicare and Medicaid
Services (CMS) in fulfillment of CMS’s
quality measurement reporting
requirements for those data.’’ We would
only be accessing data reported to fulfill
Hospital IQR Program requirements, and
therefore, would not violate the
confidentiality agreement.
We agree with commenters that data
collection requirements should be kept
to the minimum necessary to meet
quality measurement goals, and that
each data element collected should be
justified.
Using our authority and responsibility
to access data needed to administer the
Hospital IQR Program including by
performing validation and appeals, we
intend to access and store only the
minimum data for any of the particular
analysis of the types described above.
However, given the varied analytical
requirements for validation and appeals,
and the frequency with which CDC
makes small changes are made to NHSN
specifications, we believe it would be
impractical to provide a data element by
data element rationale in a regulation.
Comment: Many commenters
expressed concerns about security for
this highly sensitive and confidential
data. Many commenters wanted to know
whether CMS or its contractors would
access the data, and how CMS would
prevent inadvertent disclosures or
privacy breaches. One commenter
specifically wanted to know how the
data would be transferred and how long
it would be stored.
Response: It is our intention that our
staff as well as contractors would
request access to data submitted via the
NHSN for the purposes of administering
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the Hospital IQR Program. In accessing
data submitted via the NHSN, we would
uphold the same privacy and security
standards we use for other quality
measures data submitted directly to us.
For example, we would comply with all
applicable requirements of the Health
Insurance Portability and
Accountability Act of 1996 (HIPAA)
Privacy and Security Rules to safeguard
and limit the use and disclosure of the
information we access and obtain
through the NHSN, as well as require
through HIPAA business associate
agreements that our contractors do the
same.
We have several options for securely
transferring data. For example, the
Secure Transfer Protocol on QualityNet
has secure transfer capabilities that
ensure encryption of both the data and
the transmission process. We will
collaborate closely with CDC to ensure
that we minimize the number of
requests made for data. We will store
data according to the CMS Center for
Clinical Standards and Quality standard
operating procedure for retention of
records, which calls for retention of data
for 10 years.
Comment: A few of the commenters
opposing CMS’ proposed data access
policy urged CMS to work with CDC to
support activities that increase accuracy
through education, validation, and
widespread adoption of electronic
health records with ‘‘infection decision
and support software.’’
Response: As described above and
further below, we conduct data
validation and would like to do more to
educate hospitals about data accuracy.
This would require better access to
NHSN data as proposed in this policy.
We will consider the recommendation
regarding infection decision and
support software for future policy
development in concert with our other
efforts and incentives to promote EHR
adoption.
After considering public comments
we received, we are finalizing the policy
to access NHSN data as proposed.
11. Modifications to the Existing
Processes for Validation of Chartabstracted Hospital IQR Program Data
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53539 through 53553), we
finalized the processes and procedures
for validation of chart-abstracted
measures in the Hospital IQR Program
for the FY 2015 payment determination
and subsequent years; this rule also
contained a comprehensive summary of
all procedures finalized in previous
years and still in effect. Several
modifications to these processes were
finalized for the FY 2016 and FY 2017
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payment determinations in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50822
through 50835). In the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28219)
for the FY 2017 payment determination
and subsequent years, we proposed
additional modifications to these
processes. Proposed changes fall into
the following categories: (a) Eligibility
criteria for hospitals selected for
validation; (b) number of charts to be
submitted per hospital for validation; (c)
combining scores for HAI and clinical
process-of-care measures; (d) processes
to submit medical records for chartabstracted measures; and (e) plans to
validate electronic clinical quality
measure data.
a. Eligibility Criteria for Hospitals
Selected for Validation
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50833 through 50834), for
the FY 2016 payment determination and
subsequent years, we finalized our
process to draw a random sample of 400
hospitals and an additional sample of
up to 200 hospitals meeting specific
targeting criteria for purposes of
validation. For the FY 2017 payment
determination and subsequent years, we
proposed one minor change to this
process. In the FY 2011 IPPS/LTCH PPS
final rule (75 FR 50227), we defined
hospitals eligible for validation as the
subset of subsection (d) hospitals that
successfully submitted ‘‘at least one
case for the third calendar quarter of the
year two years prior to the year to which
validation applies.’’
For the FY 2017 payment
determination and subsequent years, we
proposed to change the definition of
validation-eligible hospitals to be the
subset of subsection (d) hospitals that
successfully submitted at least one case
to the Hospital IQR 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, for the FY 2017
payment determination, we intend to
draw this sample in November or
December of 2014. The second quarter
(Q2) of 2014 ends in June 2014, but
hospitals participating in the Hospital
IQR Program may submit quality data
from this quarter until November 15,
2014 (see www.qualitynet.org for
submission deadlines). If CMS draws its
sample early in November 2014, before
all the second quarter hospital data are
submitted and processed by the Clinical
Data Warehouse, the ‘‘quarter
containing the most recently available
data’’ will be first quarter (Q1) of 2014.
On the other hand, if CMS draws its
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sample late November or early
December 2014 after the second quarter
2014 hospital data are processed, the
second quarter of 2014 will contain the
most recently available data.
We proposed this change because, in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50822 through 50825), for the FY
2017 annual payment determination
and subsequent years, we changed the
timing of quarters for validation of HAI
measures, as illustrated in the three
graphs (78 FR 50824). To align with this
change for HAI measures and to give
hospitals more time to complete HAI
validation template requirements once
selected, we intend to draw the
validation sample several months
sooner than we have historically drawn
it. Historically, we drew the sample
early in each calendar year. This
proposal provides us with greater
flexibility for when we can sample
hospital data and allows CMS to use the
most recent data available to select
hospitals.
We invited public comment on this
proposal.
Comment: Several commenters
supported CMS’ proposal to change the
definition of validation-eligible
hospitals because it allows more
flexibility in the timing to draw the
sample, allows alignment of the HAI
and chart-abstracted validation
timeframes, and provides hospitals with
more time to submit HAI validation
templates.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing this policy as proposed.
b. Number of Charts To Be Submitted
per Hospital for Validation
(1) Background
In the sections that follow, we discuss
our proposals to: (1) Change the number
of charts hospitals must submit for
validation; (2) change the measurespecific sample sizes for HAI validation;
and (3) change the topic areas and
sample design for clinical process of
care measures. We proposed these
changes because section 1886(o) of the
Act requires the Hospital VBP Program
to use a subset of Hospital IQR Program
measures and there is a declining
number of measures and chartabstracted measure topic areas available
to the Hospital VBP Program. Our
proposals also will direct more
resources to measures and topic areas
that also overlap with the Hospital VBP
Program. Finally, our proposals will
ensure that all chart-abstracted measure
topic areas containing required
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measures within the Hospital IQR
Program are included in validation. A
more detailed rationale accompanies
each proposal.
As described in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53539
through 53553), the Hospital IQR
Program validates chart-abstracted data
submitted to two different systems:
clinical process-of-care data submitted
to the Hospital IQR Program Clinical
Data Warehouse and HAI data
submitted to the NHSN. Different
validation approaches are used for the
data submitted to each of the systems.
The process for selecting and validating
HAI data was first introduced in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51646 through 51648) and has evolved
annually in each successive IPPS/LTCH
PPS rule. In contrast, validation of the
clinical process of care measures, which
involves separate samples for each topic
area, has not substantively changed
since it was first finalized for the FY
2012 payment determination in the FY
2010 IPPS/LTCH PPS final rule (74 FR
43884 through 43889).
(2) Number of Charts To Be Submitted
for Validation
(A) Total Number of Charts Required for
Validation
Our current policy requires hospitals
to submit 96 charts for validation (60
charts for clinical process-of-care
measures and 36 charts for HAIs) (78 FR
50825 through 50834). In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28248) for the FY 2017 payment
determination and subsequent years, we
proposed to require hospitals selected
for Hospital IQR Program validation to
submit 18 patient charts per quarter for
a total of 72 charts per year. A sample
size of 72 charts is statistically
estimated to be the number of charts
needed to determine whether an
individual hospital clearly passed
validation and to assess hospital
performance across both types of
measures (HAIs and clinical process-ofcare) combined. As finalized in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53551), hospitals may fall into three
validation categories: (1) Hospitals pass
validation with a lower bound of the
confidence interval greater than or equal
to 75 percent; (2) hospitals fail
validation with an upper bound for a
hospital’s confidence interval lower
than 75 percent; and (3) hospitals
neither pass nor fail validation with a 90
percent confidence interval that
includes values above and below 75
percent. Hospitals in the third category
that neither pass nor fail validation
receive their annual payment update,
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but may be randomly sampled for
inclusion in the targeted validation in
the following year.
We estimate that a sample of 72 charts
will be sufficient to estimate a reliability
of 75 percent +/¥ 10 percent with 90
percent confidence, assuming a design
effect no greater than 1.4. Historical data
suggests that most hospitals in the
Hospital IQR Program pass validation
and validated data have a high level of
accuracy. For example, for the FY 2013
payment determination, approximately
95 percent of hospitals validated had
data reliability of 85 percent or higher.
With a sample of 72 charts and an
expected mean data reliability well
above 85 percent, we should be able to
identify most hospitals that pass
validation. Of the remaining hospitals,
we will use the same conservative
approach to identify hospitals failing
validation that we have used since the
inception of the Hospital IQR Program.
Comment: Many commenters
supported the decrease in the number of
charts required for validation.
Response: We thank the commenters
for their support.
Comment: Several commenters
opposed CMS’ proposed changes to the
chart-abstracted data validation process.
The commenters were concerned that
hospitals were more likely to fail as a
consequence of the policy. One
commenter suggested a two-stage
process, under which the initial sample
size for clinical process of care charts
would be small, but a hospital failing
validation would be invited to submit
additional charts. The validation score
for the combined larger pool of charts
then would be used for determining
whether the hospital has failed
validation. Since only a small number of
hospitals fail validation, this would be
an efficient strategy. Some commenters
also said that hospitals needed more
feedback on these chart-abstracted
measures.
Response: We disagree that the
proposed policy to decrease sample size
will increase the likelihood that one or
more individual hospitals will fail
validation. As explained in the proposal
above, a hospital fails validation when
the upper bound for its two-tailed 90
percent confidence interval is less than
75 percent. For any hospital that
submits data at a given level of
reliability, the only two factors that
would affect how likely the upper
bound of the confidence interval is to be
less than that reliability standard are (1)
the level of reliability selected for the
standard, and (2) the confidence level.
We did not propose to change either the
standard level of reliability (currently 75
percent) or the confidence level of the
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upper bound (currently 90 percent) (77
FR 53551). Therefore, the likelihood
that hospitals fail validation will not
increase by decreasing sample size.
Currently, a high percentage of
hospitals pass, and we anticipate that
the same percentages of hospitals would
continue to pass, but acknowledge that
the width of the confidence interval
would increase due to decreased sample
size. As stated in our proposal, we
anticipate that additional hospitals
would be eligible for targeted selection
for validation in the following year. This
targeting process is quite similar to the
recommendation made by the
commenter. We will take into
consideration for future rulemaking the
remainder of the commenter’s
recommendations to combine scores
across the first and second samples to
produce a final passing or failing score.
We also appreciate that the
commenters would like more data on
these chart-abstracted, clinical processof-care cases. However, our proposal
reflects our best efforts to balance the
cost and burden against the desire for
more detailed feedback. Moreover, some
of the measures that have been in the
program for a long time are reported
very accurately. For these measures,
only minimal feedback is needed. We
intend to summarize national validation
results and provide educational training
for hospitals to incorporate the lessons
learned to address the most frequently
occurring validation mismatches. We
believe it would be wasteful to increase
resources simply to verify the accuracy
of the measures that are already being
reported well.
After consideration of the public
comments we received, we are
finalizing our proposal to require
hospitals selected for Hospital IQR
Program validation to submit 18 patient
charts per quarter for a total of 72 charts
per year as proposed.
would be submitted to validate clinical
process-of-care measures. This would
equal 72 charts per year with a mix of
40 HAI and 32 clinical process-of-care
measure charts. We proposed to require
more HAI charts than clinical processof-care measure charts because HAI
measures now, as proposed, have a
greater impact on the Hospital VBP and
the HAC Reduction Programs.
Considering only the relative
importance of HAIs and clinical
process-of-care charts to the Hospital
VBP Program, which is about 4 times as
great, CMS might choose a ratio larger
than 10 HAI charts for every 8 clinical
process-of-care charts. However, we
estimate that we spend about 4 times as
much money per chart to validate HAIs
as clinical process-of-care measures.
Moreover, the clinical process-of-care
measures are still a critical part of the
Hospital IQR Program.
Therefore, we proposed this mix of 40
HAI and 32 clinical process of care
charts per year because we believe it to
be optimal after considering both the
relative importance of the two types of
charts to the Hospital IQR Program and
related payment incentive programs and
the relative cost of validation for the two
types of charts.
We invited public comment on these
proposals.
Comment: Many commenters
supported this proposal. Most
commenters supported the proposed
mix of HAI and clinical process of care
cases.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing our proposal that of the 18
charts proposed to be submitted per
quarter, 10 charts would be submitted to
validate HAI measures and 8 charts
would be submitted to validate clinical
process-of-care measures as proposed.
(B) Number of Charts Required for HAI
and Clinical Process-of-Care Measures
As finalized in the FY 2014 IPPS/
LTCH PPS final rule for the FY 2017
payment determination and future
years, we require hospitals to submit 9
charts for HAI measures per quarter (78
FR 50831) and for the FY 2016 payment
determination and future years, we
require hospitals to submit 15 charts for
clinical process-of-care measures per
quarter for validation (78 FR 50830). In
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28248) for the FY 2017
payment determination and subsequent
years, we proposed that of the 18 charts
proposed to be submitted per quarter
(above), 10 charts would be submitted to
validate HAI measures and 8 charts
(3) HAI Validation: Measures and
Measure-Specific Sample Sizes
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50828 through 50832) for
the FY 2016 payment determination and
subsequent years, we finalized the HAI
measures to be included in validation,
the processes for completing validation,
and the specific sample sizes for each.
To validate HAI data, hospitals must use
Validation Templates to provide
supplemental data to CMS. These
supplemental data provide CMS with a
set of candidate infections for each HAI.
As finalized previously, hospitals
sampled for validation will be randomly
assigned to provide two Validation
Templates, either: (1) CLABSI and
CAUTI, or (2) MRSA and CDI.
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Consequently, up to 300 hospitals will
provide data on each of these 4
measures. We also previously finalized
a decision to validate a smaller number
of patient charts for SSI from twice as
many hospitals because of the smaller
number of candidate SSIs expected per
hospital per quarter. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28248) we did not propose to change the
process for validating individual
measures.
However, as described above in this
section, we proposed to increase the
total HAI sample size by 1 chart per
quarter for a total of 4 more charts per
year. As explained below in this section,
HAI measures have greater relative
scoring weights in the Hospital VBP and
HAC Reduction Programs than clinical
process-of-care measures. Therefore, in
order to align the Hospital IQR Program
with the Hospital VBP and HAC
Reduction Programs, we proposed to
increase measure-specific sample size
targets to support this 1 chart per
quarter increase in the Hospital IQR
Program for the FY 2017 payment
determination and subsequent years.
Specifically, the total number of charts
for CLABSI, CAUTI, MRSA, and CDI
would increase by 1 from 15 to 16; and
the total number of charts for SSI would
increase by 2 from 6 to 8. The
previously finalized and proposed
specific sample-size charts are detailed
in the tables below.
PREVIOUSLY FINALIZED NUMBER OF CHARTS REQUIRED FOR HAI VALIDATION FOR THE FY 2017 PAYMENT
DETERMINATION AND SUBSEQUENT YEARS
HAI
Number of hospitals
Previously Finalized:
Central line associated bloodstream infections (CLABSI) ...........
Catheter-associated urinary tract infections (CAUTI) ..................
MRSA ...........................................................................................
CDI ...............................................................................................
SSI ................................................................................................
Up
Up
Up
Up
Up
to
to
to
to
to
300
300
300
300
600
Charts/
quarter/
hospital
Number of
quarters
...................
...................
...................
...................
...................
4
4
4
4
4
Number of
charts per
hospital
3.75*
3.75*
3.75*
3.75*
1.5*
15
15
15
15
6
*As previously finalized, within each hospital, quarterly targets are 3, 3, and 1 respectively for CLABSI, CAUTI, and SSI, and 3, 3, and 1 respectively for MRSA, CDI, and SSI. As finalized, 2 additional charts per quarter per hospital were to be randomized to meet the fractional case
targets on average.
PROPOSED NUMBER OF CHARTS TO BE SUBMITTED FOR HAI VALIDATION FOR THE FY 2017 PAYMENT DETERMINATION
AND SUBSEQUENT YEARS
HAI
Number of hospitals
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Proposed:
Central line associated bloodstream infections (CLABSI) ...........
Catheter-associated urinary tract infections (CAUTI) ..................
MRSA ...........................................................................................
CDI ...............................................................................................
SSI ................................................................................................
We invited public comment on this
proposal.
Comment: Many commenters
expressed general support for validation
provisions.
Response: We thank commenters for
their support.
Comment: One commenter asked
CMS to provide a rationale as to why
CDAC assesses over-reporting of
CLABSI and CAUTI events to NHSN.
The commenter further wanted to know
whether the purpose of validation is ‘‘to
determine if the hospital knows how to
read and understand the measure
specifications and report accordingly or
to assist the hospitals in identifying
processes and procedures needed to
reduce the rates and improve quality of
care.’’
Response: We have both the authority
and the responsibility to conduct
validation activities under section
1886(b)(3)(B)(viii)(XI) of the Act. We are
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Up
Up
Up
Up
Up
to
to
to
to
to
300
300
300
300
600
...................
...................
...................
...................
...................
statutorily responsible with auditing a
number of hospitals to ensure the
accuracy of the reported data. This
includes verifying the accuracy of data
reported to NHSN. We look to confirm
that all events that should have been
reported were reported and all events
that should not have been reported were
not.
An important factor for increasing
accuracy is ensuring that hospitals
know how to read and understand
measure specifications and report them
accordingly. Because hospitals have a
financial disincentive to erroneously
report more infections than actually
occurred in their hospitals, education
and feedback about these types of errors
can benefit hospitals.
After consideration of the public
comments we received, we are
finalizing our proposal to increase
measure-specific sample size targets by
1 chart per quarter for the FY 2017
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Charts/
quarter/
hospital
Number of
quarters
4
4
4
4
4
Number of
charts per
hospital
4
4
4
4
2
16
16
16
16
8
payment determination and subsequent
years as proposed.
(4) Clinical Process of Care Measures:
Topic Areas and Sample Design
As discussed above in this section, we
proposed to sample 8 total patient
charts for clinical process-of-care
measures per quarter per hospital
included in validation for the Hospital
IQR Program for the FY 2017 payment
determination and subsequent years.
Those 8 charts are discussed in greater
detail below.
As shown in the table below, two
other (than immunization) Hospital IQR
Program clinical process-of-care topic
areas overlap with measures proposed
for inclusion in the FY 2017 Hospital
VBP Program. Regardless, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28249 through 28250) we did not
propose to target those topic areas for
the following reasons. One of these
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measures, PC–01, Elective delivery prior
to 39 completed weeks of gestation, is
reported in aggregate. We cannot use the
same mechanism to validate PC–01 as
we use for measures reported at the
patient level, but we hope to include it
in our validation program in the future
should reporting PC–01 as an electronic
clinical quality measure becomes a
requirement. The second measure is
AMI–7a. AMI–7a describes a process of
care only performed in small rural
hospitals. Of the approximately 3,300
hospitals participating in the Hospital
IQR Program for the FY 2015 payment
determination, only 113 submitted cases
for this measure in the first two quarters
of CY 2013. Therefore, targeting
hospitals that report the AMI–7a
measure would unduly single out small
rural hospitals that disproportionately
report relatively high AMI–7a measure
denominator counts for validation, and
would be inequitable.
NUMBER OF CHART-ABSTRACTED CLINICAL PROCESS-OF-CARE MEASURES PER TOPIC AREA PROPOSED TO BE
REPORTED IN THE HOSPITAL IQR PROGRAM IN THE CY 2014 AND CY 2015 DISCHARGE PERIODS*
Topic area
Number of required measures
reported in CY
2014 for FY
2016 hospital
IQR program
Number of required measures
proposed for CY
2015 for FY
2017 hospital
IQR program
2
1
1
7
6
8
2
1
0
1
1
0
0
0
5
4
2
1
1
1
Acute Myocardial Infarction (AMI) .........................................................................................
Heart Failure (HF) .................................................................................................................
Pneumonia (PN) ....................................................................................................................
Surgical Care Improvement Project (SCIP) ..........................................................................
Venous thromboembolism (VTE) ..........................................................................................
Stroke (STK) ..........................................................................................................................
Emergency department throughput (ED) ..............................................................................
Prevention—global immunization (IMM) ...............................................................................
Sepsis ....................................................................................................................................
Perinatal Care (PC) ** ...........................................................................................................
Proposed to
include in the
hospital VBP
program for
FY 2017
Yes
No
No
No
No
No
No
Yes
No
Yes
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* Data validated for the FY 2017 payment determination are Quarter 3, CY 2014, Quarter 4, CY 2014 Quarter 1, CY 2015 and Quarter 2, CY
2015 (78 FR 50824).
** Not reported at the patient level and not proposed for inclusion in validation.
For the FY 2017 payment
determination and subsequent years, we
proposed that the remaining 5 of the 8
clinical process-of-care charts be drawn
from a systematic random sample of
charts across all topic areas containing
required measures other aside from
those in the immunization and perinatal
care topic areas. Across all hospitals
included in validation, we believe this
approach will ensure adequate numbers
of patient charts are sampled for each
topic area. Under this proposal, the pool
of clinical process-of-care topic areas
sampled for validation will include:
STK, VTE, ED, and sepsis, as well as all
other Hospital IQR Program-required
topic areas such as AMI. We received
many comments in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50807
through 50810; 78 FR 50825) regarding
the importance of validating VTE, STK,
and ED measures not included in
validation for the FY 2016 payment
determination. With this proposal, STK,
VTE, ED, and sepsis measures would be
included in the pool of clinical processof-care measures for validation. The
systematic random sample of topic areas
from this pool would ensure that charts
are sampled proportionate to the
number of charts submitted for each
topic. Thus, a sample of 20 charts per
year would not be limited to only one
topic area by random occurrence. In
addition, across all hospitals included
in validation, we believe this approach
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will ensure adequate numbers of patient
charts are sampled for each topic
area.117
This proposal simultaneously
simplifies the sampling plan for clinical
process-of-care measures and gives us
the flexibility of introducing or
removing new topic areas into
validation each year without having to
redesign and propose a new sampling
strategy. Using a random sample
ensures that new topic areas are not
excluded from the validation sample
and we can more easily adjust as the
topic areas change over the years. If this
proposal is finalized, every time a new
required topic area is added to the
Hospital IQR Program, it will
automatically be added to validation,
and every time a topic is removed from
the Hospital IQR Program, it will
automatically be excluded from
validation.
We invited public comment on these
proposals.
Because of the close relationship
between this proposal and the one
immediately below, we provide one
consolidated set of comments and final
policy for the two sections together at
the end of the next proposal.
117 We used data submitted to the Clinical Data
Warehouse for the Hospital IQR Program from
quarters 1 and 2 of 2013 to estimate that at least
400 cases per topic area would be validated per year
(across all hospitals).
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(5) Immunization Measure Validation
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28250) we
proposed for the Hospital IQR Program
for the FY 2017 payment determination
and subsequent years, that 3 of the 8
total patient charts each quarter be
targeted from the Immunization topic
area. Currently, this topic area only
includes the Immunization for Influenza
(NQF #1659) measure, which overlaps
with the Hospital VBP Program. We
want to ensure that every hospital
included in validation is validated for
this topic area because of the overlap.
Comment: Many commenters
supported the proposed policies to drop
the measures that are topped-out from
the validation process, and to divide the
quarterly clinical process-of-care sample
of 8 charts per hospital into a systematic
random sample of 5 charts of all
required topic areas other than
immunization and perinatal care and a
second sample of 3 immunization charts
because of the importance of
immunization to the Hospital VBP
Program.
Response: We thank these
commenters for their support.
Comment: A few commenters
opposed the proposed policy to have 3
charts dedicated to immunization each
quarter. These commenters observed
that the IMM–2 measure only has
meaning in the months of October
through March, when hospitals are
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expected to immunize patients.
Therefore, in 2 of the 4 quarters, the
only data element available to validate
would be the patient’s discharge date.
Because discharge date is not a measure
of care quality, validating this element
alone would not yield meaningful
results. These commenters requested
further clarification on the proposed
methodology. For example, the
commenters asked if ED Throughput
(EDT) would be validated on those
charts instead. A commenter asked if
CMS will validate EDT on every IMM
chart, since hospitals use the same
population to sample cases for both
measures.
Response: We had not considered the
seasonal nature of this measure when
we proposed this policy, and that very
limited data would be available for 2 of
the 4 quarters included in validation for
this measure. We agree that it would be
wasteful to validate 6 cases per year (or
3 cases per quarter for 2 quarters) per
hospital during a time period which we
know will not contain any meaningful
data.
We will address this concern by
finalizing a modified version of our
proposal as follows. We will not sample
any records for the IMM topic area in
the quarters when the IMM–2 measure
does not yield meaningful data and
increase the number of IMM records
sampled in the quarters during which
this measure does yield meaningful
data. In other words, for quarters 4 and
1 for each hospital included in
validation, we will draw a quarterly
random sample of 5 charts for validation
for the IMM topic area and a quarterly
systematic random sample of 3 charts in
the ‘‘other’’ category. In quarters 2 and
3, when the IMM–2 measure does not
apply, we will draw a systematic
random sample of 8 charts from the
‘‘other’’ category. As established in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50822 through 50825), the quarters
to be included in validation for the FY
2017 payment determination are
quarters 3 and 4, 2014 and quarters 1
and 2, 2015. In quarters 3 and 4, 2014,
the topic areas that will be in the
‘‘other’’ stratum are: AMI, ED, HF, PN,
SCIP, STK, and VTE. In quarters 1 and
2, 2015, the topic areas that will be in
the ‘‘other’’ category are: AMI, ED, SCIP,
STK, VTE, and sepsis.
We did not propose to validate the
same cases for EDT and IMM, because
EDT measures are not also finalized for
the Hospital VBP Program. We disagree
that making a one-for-one substitution
of EDT for IMM cases would be an
appropriate substitution, because unlike
the IMM measure set, which contains a
measure finalized in the Hospital VBP
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Program, the EDT topic area is not
inherently more important than any
other required topic area in the Hospital
IQR Program.
Comment: A few commenters
expressed concern that CMS intended to
drop some required measure sets from
validation in its ‘‘other’’ systematic
random sample, and/or suggested that
CMS continue validating chartabstracted data for all measures sets that
are part of the Hospital IQR and
Hospital VBP Programs. In addition,
several commenters noted that the
‘‘other’’ sample would include the ED,
STK, VTE, and sepsis measures in
validation.
Response: We agree that all required
measure sets should be included in
validation to the extent that this is
operationally feasible. In our weighting
proposal below in this section, we
identified the topic areas containing
required measures other than
Immunization and Perinatal Care only
for quarters 1 and 2, in CY 2015 and
inadvertently omitted HF, PN, and SCIP.
However, we explicitly proposed to
include a generic category so that we
would not be required to revise our
validation strategy every time a new
topic area was added or deleted from
the Hospital IQR Program measure set.
Further, we included all CY 2014
Hospital IQR Program measures,
including HF, PN, and SCIP, in our table
above in this section, ‘‘Number of ChartAbstracted Clinical Process-of-Care
Measures per Topic Area Proposed to Be
Reported in the Hospital IQR Program in
the CY 2014 and CY 2015 discharge
periods.’’ We thank the commenter for
the opportunity to clarify this ambiguity
that we had no intention of dropping
these measures from validation, and that
in fact, as reflected in the Table above
in quarters 3 and 4, 2014, these topic
areas would meet the definition of the
‘‘other’’ category because they contain
Hospital IQR Program required
measures other than immunization and
perinatal care.
We appreciate the commenter’s
concern and wish to reiterate that we
proposed to draw a systematic random
sample of records from ‘‘topic areas
containing required measures aside
from those in the immunization and
perinatal care topic areas.’’ For example,
the HF, PN, and SCIP topic areas
include measures that are required for
the Hospital IQR Program in quarters 3
and 4, 2014, which are part of validation
for the FY 2017 payment determination.
Therefore, the HF, PN, and SCIP
measure sets would fall into the ‘‘other’’
category in these quarters. However,
these topics are not included in the
Hospital IQR Program in 2015 because
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50267
they met ‘‘topped-out’’ criteria and
therefore, they would not fall into the
‘‘other’’ category in quarters 1 and 2,
2015.
Comment: A few other commenters
opposed validation of the VTE, STK, or
sepsis measures. These commenters
opposed validation of the VTE or STK
measures because they believed that the
measure specifications were of poor
quality. These commenters wanted to
know how CMS would ensure the
clarity of TJC-developed specifications.
Those commenters opposing validation
of the sepsis measure observed that
because it was new, hospitals were
inexperienced with reporting it.
Response: Although we appreciate
that the measure specifications could be
clearer for the VTE and STK measures
and that the sepsis measure is new, all
of these measures are NQF-endorsed
and are finalized in the Hospital IQR
Program. Any lack of clarity regarding
the meaning of VTE and STK measure
specifications and the inexperience of
hospitals with the sepsis measures
appear to be good reasons to provide
hospitals with education and feedback
on the data quality of these measures.
We believe that the potential adverse
impact to any individual hospital of
validating measures in the VTE, STK,
and Sepsis topic areas to be very small.
In contrast, we believe that combining
the validation data in these topic areas
across all hospitals will provide the
Hospital IQR Program and hospitals
with rich information about the quality
of data and needs for education and
improved specifications.
After consideration of public
comments we received, we are
modifying both our proposals that the
remaining 5 of the 8 clinical process-ofcare charts be drawn from a systematic
random sample of charts across all topic
areas containing required measures
aside from those in the immunization
and perinatal care topic areas, and our
proposal that 3 of the 8 total patient
charts each quarter are to be targeted
from the Immunization topic area. The
modification takes into consideration
the seasonal nature of the IMM measure
set and is otherwise consistent with our
proposals to sample 8 clinical process of
care charts per quarter and to validate
the IMM topic area separately from
other topic areas because of its
importance to the Hospital VBP
Program.
We are finalizing a modified policy as
follows. In quarters 4 and 1, for each
hospital included in validation, we will
draw a quarterly random sample of 5
charts for validation of the IMM topic
area and a quarterly systematic random
sample of 3 charts in the ‘‘other’’
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category. In quarters 2 and 3, for each
hospital included in validation, we will
draw a quarterly systematic random
sample of 8 charts from all topic areas
containing required measures other than
immunization and perinatal care.
c. Combining Scores for HAI and
Clinical Process of Care Topic Areas
We refer readers to the FY 2010 IPPS/
LTCH PPS final rule (74 FR 43885) for
the process of scoring clinical processof-care measures, the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50832
through 50833) for the process of
scoring HAI measures, and FY 2014
IPPS/LTCH PPS final rule (78 FR 50833)
for the process to be used to compute
the confidence interval. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28250) we did not propose any changes
to those established policies.
However, for the FY 2017 payment
determination and subsequent years, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28250 through 28251) we
proposed to modify our approach to
weighting the scores for each of the HAI,
IMM and ‘‘other topic areas’’ with two
proposals.
In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50226) and the FY 2013
IPPS/LTCH PPS final rule (77 FR 53548
through 53553), we established a
process to combine the HAI and clinical
process-of-care measure scores by
weighting them proportionate to the
number of measures included in
validation. For example, in section
IX.A.11.b.(4) of the preamble of this
final rule, our proposal to validate all
clinical process-of-care measures
required by the Hospital IQR Program
for the FY 2017 payment determination
would yield 14 clinical process-of-care
measures in validation in CY 2015 and
only 5 HAI measures in validation.
Using the previously finalized weights,
the clinical process of care measures
score would contribute 14/19 and the
HAI score would contribute only 5/19 to
the combined score. This weighting
does not reflect either the relative
importance of HAIs to clinical process
of care measures in the Hospital VBP
Program nor the resources proposed to
devote to their validation.
In sections IV.I. and IV.J. of the
preamble of this final rule (the Hospital
VBP Program and the HAC Reduction
Program, respectively), we discuss our
proposals to weight the patient safety
domain (of which the HAI measures are
part) more heavily in the Hospital VBP
Program (20 percent for the patient
safety domain versus 5 percent for the
clinical process of care measures) and to
use the HAI measures for the HAC
Reduction Program.
In this section, we discuss our
proposal to weight the HAI measures
more heavily than the clinical process of
care scores to align with these proposals
in sections IV.I and IV.J. In the FY 2015
IPPS/LTCH PPS proposed rule (79 FR
28250 through 28251) for the FY 2017
payment determination and subsequent
years, we proposed to weight the HAI
score 66.7 percent (or 2/3) of the total
score and the clinical process-of-care
measures to weight 33.3 percent (or 1/
3) of the total score. Further justification
is provided after the second proposal.
In addition, we proposed to weight
the IMM measures more heavily than
other chart-abstracted clinical processof-care measures validated in the
Hospital IQR Program to align with the
Hospital VBP Program. We are changing
the process currently established to
calculate the clinical process-of-care
score, which is based on application of
the formulas for the variance of a
stratified single-stage cluster sample
with unequal cluster sizes and the
variance of a proportion in a stratified
random sample (see reference to
Cochran’s ‘‘Sampling Techniques’’ at 75
FR 50226 and 78 FR 53550). We have
previously applied this formula without
consideration for the relative
importance of different measures. When
so applied, each topic area is weighted
proportionate to the amount of data
submitted to the warehouse for that
topic area.
However, we proposed to modify the
formulas as previously applied to
weight the IMM topic area more heavily
because of the overlap with the Hospital
VBP Program. For the FY 2017 payment
determination and subsequent years, we
proposed to weight the ‘‘IMM’’ clinical
topic area as 66.7 percent (2/3) and all
other topic areas combined 33.3 percent
(1/3) of the clinical process-of-care
score. The weights reflect our policy
preference to place greater relative
weight on Hospital VBP Program
included measures to better ensure
accurate scores and payment.
Emphasizing chart-abstracted clinical
process of care measures validated in
the Hospital IQR Program to align with
the Hospital VBP Program will address
the need to validate Hospital IQR
Program data not currently included in
Hospital VBP Program for public
reporting and validation feedback to
hospitals.
The table below shows the effect of
the two proposals combined (the first to
weight the HAI score more heavily than
the clinical process-of-care score and
the second to weight IMM data more
heavily than other clinical process-ofcare topic areas). The HAI topic area
will count 3 times as much as the IMM
topic area and 6 times as much as all
other topic areas combined.
PROPOSED WEIGHTING TO COMBINE SCORES ACROSS CHART-ABSTRACTED TOPIC AREAS INCLUDED IN VALIDATION FOR
THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS
Weight
percent
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Topic Area
Healthcare-associated infection (HAI) .............................................................................................................................................
Immunization (IMM) .........................................................................................................................................................................
Other (all clinical process of care topic areas containing required measures other than IMM and Perinatal Care) .....................
66.7
22.2
11.1
Total ..........................................................................................................................................................................................
100
Previously, the clinical process-ofcare measures accounted for 20 percent
of the Hospital VBP Program score,
whereas the HAI measures, a subset of
the outcome measures, weighted 30
percent (FR 53605 through 53606). The
proposed relative weights for the HAI
(66 percent) and IMM (22 percent) topic
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areas better reflect the strong emphasis
we have proposed for the HAI measures.
These proposals will require
adjustments to the formulas applied to
compute the confidence intervals. As
we have done in the past, we intend to
post the specific formulas used to
compute the confidence interval on the
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QualityNet Web site at least one year
prior to final computation (https://
www.qualitynet.org/dcs/
ContentServer?c=Page
&pagename=QnetPublic%2FPage%2F
QnetTier2&cid=1138115987129). These
formulas will continue to account
appropriately for the manner in which
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patient charts were sampled and data
were abstracted.
We invited public comment on these
proposals.
Comment: Many commenters
supported the proposals to increase the
weight of HAI measures, to decrease the
weight of process of care measures, and
to weight the immunization measure
more heavily than other clinical process
of care measures when computing a
hospital’s validation score.
Response: We thank the commenters
for their support.
Comment: A few commenters
opposed the proposal to weight the IMM
measure more heavily than other
clinical process-of-care measures
because of the seasonal nature of the
measure. These commenters suggested
that weighting the EDT measure more
heavily might be appropriate.
Response: We have addressed the
commenters’ concern by finalizing a
policy to validate IMM data only inseason (we refer readers to section
IX.A.11.b.(5) of the preamble of this
final rule, above). Having made this
policy adjustment above in this section,
we believe that weighting IMM more
heavily than other clinical process of
care measures because of its importance
to the Hospital VBP Program is still
appropriate. The EDT measure is not
included in the Hospital VBP Program;
so it should not count more than any
other process-of-care measures.
After consideration of the public
comments we received, we are
finalizing our policy to weight the
‘‘IMM’’ clinical topic area twice as
heavily and all other topic areas
combined of the clinical process-of-care
score as proposed with final weights of
66.7% for HAI, 22.2% for IMM, and
11.1% for all topic areas containing
required clinical process of care
measures other than IMM and perinatal
care.
d. Processes To Submit Patient Medical
Records for Chart-Abstracted Measures
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50834 through 50835), we
finalized a process for the FY 2016
payment determination and subsequent
years that allows hospitals to submit
patient charts for validation via: (1)
paper patient medical records; or (2)
secure transmission of electronic
versions of patient information. The
process previously finalized restricts
electronic submission of patient
information to digital images of patient
medical records submitted using
encrypted CD–ROMs, DVDs, or flash
drives.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28251) we
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proposed for the FY 2017 payment
determination and subsequent years to
expand the options for secure
transmission of electronic versions of
patient medical records. Specifically,
we proposed to allow hospitals to
submit digital images (PDFs) of patient
charts using a Secure File Transfer
Portal on the QualityNet Web site. This
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.quality
net.org/dcs/ContentServer?c=Page&page
name=QnetPublic%2FPage%2FQnet
Basic&cid=1228773343598. After July
2014, hospitals can submit all Hospital
IQR Program validation data using this
portal. This proposal responds to many
commenters from the FY 2014 IPPS/
LTCH PPS rulemaking that were
concerned that encrypted CD–ROMs
were cumbersome and requested viable
alternatives. We believe that the burden
associated with using this portal will be
similar to or less than that involved
with submitting patient medical records
via portable electronic media (that is,
encrypted CD–ROMS, DVDs, or flash
drives). Therefore, we intend to
reimburse hospitals according to the
rate established for submitting patient
medical records via portable electronic
media (78 FR 50956).
We invited public comment on this
proposal.
Comment: A few commenters strongly
supported the proposal to expand the
transmission options for patient medical
records, specifically the option to
submit pdfs via the QualityNet Web site.
The commenters believed this action
will streamline the validation process
and reduce the burden on hospitals.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing our policy to allow hospitals
to submit digital images (PDFs) of
patient charts using a Secure File
Transfer Portal on the QualityNet Web
site as proposed.
e. Plans To Validate Electronic Clinical
Quality Measure Data
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50807 through 50810), we
finalized a voluntary process allowing
hospitals to partially meet Hospital IQR
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50269
Program requirements for the FY 2014
payment determination by submitting
electronic clinical quality measure data
via certified electronic health record
technology. Many commenters
expressed concern that we did not have
an adequate methodology to validate
these data.
To respond to these concerns as well
as to ensure that Hospital IQR Program
data are accurate and reliable, we
conducted an environmental scan,
including review of prior public
comments to CMS proposed rules and
requests for information, review of the
technical and academic literatures,
numerous listening sessions, and
interviews with nine hospitals. From
these activities, we identified three key
categories of threats to data accuracy: (1)
the design of the EHR product,
including both the manufacturerprovided EHR product and the
hospital’s customizations of that EHR
product to support the hospital’s
specific workflows and processes, (2)
hospital and provider documentation
practice, and (3) EHR and electronic
clinical quality measure standards and
specifications. We understand the
potential threats to validity in each of
these categories. To respond to these
concerns, we are currently conducting a
small scale test of a remote real-time
validation strategy for electronic clinical
quality measures in approximately 9
hospitals.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28251 through
28253) we did not propose any
requirements for validation of electronic
clinical quality measures for the FY
2017 payment determination. However,
we stated that we intend to conduct a
larger scale pilot test of validation
activities in FY 2015. The pilot test will
engage up to 100 volunteer hospitals in
a highly interactive test abstraction of
their EHR systems using a secure remote
access, real-time abstraction technology.
Hospitals that volunteer to participate
must meet the Medicare EHR Incentive
Program Stage 2 criteria (77 FR 53968
through 54162) and be able to produce
QRDA Category 1 Revision 2 extracted
data (individual patient data) for at least
6 of the 16 measures in the STK, VTE,
ED, and PC topic areas. The Office of the
National Coordinator for Health
Information Technology (ONC) adopted
QRDA as the standard to support both
QRDA Category I (individual patient)
and QRDA Category III (aggregate) data
submission approaches for meaningful
use Stage 2 in the Health Information
Technology: Standards, Implementation
Specifications, and Certification Criteria
for Electronic Health Record
Technology, 2014 Edition; Revisions to
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the Permanent Certification Program for
Health Information Technology rule (77
FR 54163 through 54292). Interested
hospitals will be invited to attend a 30minute pre-briefing session where they
will be provided with detailed
instructions about the process and a
demonstration explaining how to install
needed software and have any concerns
about security or systems requirements
addressed. The software to be installed,
Bomgar, is approved by CMS and meets
our security requirements allowing
CDAC to remotely view isolated records
in real-time under hospital supervision,
comparing all abstracted data with
QRDA Category 1 file data and
summarizing the results after the realtime session.
We implemented Bomgar software, a
commercial product, in a CMS data
center to allow for the review of medical
records securely over the Internet. The
product will allow the CDAC staff and
Hospital medical record staff to easily
set up remote support sessions for
reviewing Hospital IQR Program-related
EHR records under hospital supervision.
The software was tested and passed our
strict security standards. The electronic
sessions do not require changes to a
hospital’s firewall or network because
both the CDAC computer and the
hospital computer connect to the
product through secure outbound
connections. The product will log and
record every session and all session data
will be safe-guarded by federal
government approved encryption.
While CDAC has limited, remote
viewing access, hospitals will be asked
to:
• Generate separate lists of patients
eligible for measures in each of the four
topic areas (STK, VTE, ED, and PC);
• Generate QRDA Category 1 files
extracted automatically from an EHR for
all applicable measures for up to 3
records within each of the 4 topic areas
(for a total of 12 records) as selected by
CDAC; and
• Show selected records, such as
laboratory records, and patient medical
history, navigating through the EHR
system as directed by CDAC.
During this remote real-time session,
CDAC will:
• Follow the specifications for the
electronic measure to abstract relevant
information related to each data element
from up to 10 different sources, for
example, medication administration
records, laboratory reports, and patient
history, (including structured and
unstructured fields) within each patient
medical record.
After concluding the real-time session
with a hospital, CDAC will:
• Compare all abstracted data with
QRDA Category 1 file data; and
• Summarize results identifying
patterns of concern.
Based on these results, we will, with
our contractors:
• Work with measure stewards to
refine measure specifications based on
conflicting findings;
• Share conflicting findings with
individual hospitals to support
improvement;
• Publicize de-identified patterns of
conflicting findings that allow vendors
to develop automated checks;
• Determine reliability (agreement)
between QRDA Category 1 extracted and
abstracted data; and
• Produce descriptive statistics to
estimate sample size requirements for
future validation.
To address the burden associated with
this test, we intend to reimburse
hospitals for the burden associated with
their participation. Details about
reimbursement are included in section
XIII.B.6. of the preamble of this final
rule. We posted on QualityNet a
detailed draft of the operational
procedures that volunteer hospitals will
be expected to follow during the public
comment period at https://
www.qualitynet.org under ‘‘Data
Validation Resources.’’ We developed
this process to attempt to meet all of our
goals for validity, as further explained
in the table below.
ELECTRONIC CLINICAL QUALITY MEASURE VALIDATION STRATEGY SUMMARY FOR THE HOSPITAL IQR PROGRAM
Desired Attributes of Validation Strategy
• Assesses accuracy including reliability and population representativeness.
• Employs a standardized process conducted by an objective third party.
• Minimizes burden to hospitals.
• Minimizes costs to CMS by being performed at a central location.
• Leverages the dynamic qualities of an EHR, including query functions.
• May ultimately integrate with validation of other IQR measures.
Goals of Test
•
•
•
•
Assess the accuracy and completeness of electronic clinical quality measure data.
Assess Hospital IQR Program readiness for electronic clinical quality measure reporting requirements.
Identify the needs for and implement updates to measure specifications and standards.
Plan future validation requirements, including detailed operational instructions and sample size.
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Planned Process Overview
Hospitals will:
• Allow CMS’ Clinical Data Abstraction Contractor (CDAC) to remotely view records in real-time.
• Generate separate lists of patients eligible for measures to be validated.
• Generate QRDA Category 1 extract files for all applicable measures for up to 12 records selected by CDAC.
• Show selected records, navigating through the EHR system as directed by CDAC.
CDAC will:
• Abstract data following the specifications for the electronic measure and relevant information related to each data element from up to 10 different sources (including structured and unstructured fields) within each medical record.
• Compare all abstracted data with QRDA Category 1 file data.
• Assess and refine operational processes.
CMS and its contractors will:
• Determine reliability (agreement) between extracted and abstracted measures.
• Work with measure stewards to refine measure specifications based on conflicting findings.
• Share conflicting findings with individual hospitals to support improvement.
• Publicize de-identified common patterns of conflicting findings that allow vendors to develop automated checks.
• Produce descriptive statistics to estimate sample size requirements for future validation.
• Reimburse hospitals for burden associated with participation in test.
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We invited public comment on this
voluntary pilot test for validation.
Because of the close relationship of
comments for this policy and the
request for information that follows, we
respond to comments for both after the
next paragraph.
We also considered other validation
approaches including one that
supplements the current procedures and
compares quality data manually
abstracted by the hospitals with QRDA
Category 1 extracts from their EHRs.
Although we are making no specific
proposals related to these alternatives at
this time, we invited comments on
whether we should develop or identify
existing computerized applications to
assist hospitals in self-validation and on
the specific functionalities that may be
useful for self-validation. For example,
as part of the validation process, should
we develop or identify an existing
application that would use natural
language processing, to identify
potential threats to validity that human
abstractors might then review more
closely. An example of such an
application might be one that searches
the unstructured fields for
contraindications to VTE prophylaxis,
even if such contraindications were not
noted in a structured field within an
EHR. We also invited comments any
other types of applications that would
be useful for self-validation.
Comment: Many commenters
expressed concern that there is no
proposed validation process for the
electronic clinical quality measures, or
that the validation strategy that CMS
proposed is still in its initial stages.
These commenters opposed CMS’ use of
electronic clinical quality measure data
that has not been validated and proven
to be reliable for public reporting or
pay-for-performance. Some commenters
are pleased that CMS has taken steps to
validate electronic clinical quality
measures data, but believed that all
measures used in public reporting and
pay-for-performance programs should
be subject to data validation, and noted
that failure to do so will eliminate any
benefit of electronic clinical quality
measures.
Response: We understand
commenters’ concerns regarding use of
electronic clinical quality measure data
that is not validated and proven reliable
for public reporting or pay-forperformance. We note that although we
have signaled target dates for requiring
hospitals to report electronic clinical
quality measure validation requirements
in the Hospital IQR Program, we have
not proposed, nor are we finalizing any
formal requirements to report
electronically specified measures at this
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time. We recognize that validation is a
major concern for many stakeholders
interested in electronic clinical quality
measure reporting and will take these
comments into consideration for future
rulemaking.
Comment: Many commenters
expressed general support for CMS’
efforts towards a voluntary pilot test for
EHR validation. Some commenters
encouraged CMS to complete this
process quickly. Several of these
commenters encouraged CMS to
publicly report the results of the pilot to
allow hospitals and vendors to
implement processes to support
electronic clinical quality measure
validation.
Response: We intend to complete
pilot activities in CY 2015. We also
intend to publicly report aggregated
results from the pilot, while protecting
the confidentiality of individual
providers and patients.
Comment: Many commenters
advocated for greater collaboration in
the electronic clinical quality measure
validation process. Several commenters
suggested that CMS work with other
federal agencies and private sector
experts to develop the protocols and
testing environments needed to begin
validation of electronic clinical quality
measures. Other commenters
emphasized the important role of the
vendor in the validation pilot. A few
commenters specifically observed that
the validation plan does not ‘‘reflect the
significant role of EHR vendors in this
effort,’’ and/or that vendors need to be
engaged so that hospitals are prepared
to participate in the pilot, including
being prepared to produce QRDA–1 files
on demand in real-time. One commenter
specifically recommended that the pilot
should only include functional
requirements that are required in Stage
2, 2014 Edition certification.
Response: We recognize the
importance of engaging vendors, federal
partners, and other private sector
experts in the validation process, and
we intend to do so going forward. We
intend to reach out to vendors prior to
implementation of the pilot to compare
current product capabilities relative to
pilot requirements. As described in our
proposed policy, the only requirements
for participation are that hospitals must
meet the Medicare EHR Incentive
Program Stage 2 criteria (77 FR 53968
through 54162) and be able to produce
QRDA Category 1 Release 2 extracted
data (individual patient data) for at least
6 of the 16 measures in the STK, VTE,
ED, and PC topic areas. We realize that
this may limit participation of hospitals
who qualify for meaningful use based
on reporting of other measures. Our
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50271
proposed policy does not require that
hospitals are able to produce QRDA–1
files in real time, only that hospitals are
able to produce these files.
We have instructed the CDAC
contractor to be very flexible so that if
a hospital cannot produce QRDA–1 files
or the measures of interest in real-time,
but can provide them later, our
contractor will accept them later during
the pilot project data collection period.
Similarly, we have directed CDAC to
work out a flexible process if some
hospitals are not able to generate patient
lists for the ED, STK, VTE, or PC
measure sets in real time. We intend to
revise our pilot data collection materials
to reflect that flexibility. We are not
aware of any other specific functional
requirements in the pilot materials
proposed that are not part of stage 2,
2014 edition certification. We believe
that we can complete outreach and
collaborative activities before and after
the validation pilot within the
framework of the policy we have
proposed.
During the pilot itself, we will allow
CDAC to engage with the vendor with
the hospital’s permission, and can do so
within the confines of the policy as
proposed. However, we will not
reimburse vendors. As we describe in
the burden section XIII.B.6. of the
preamble of this final rule, we will limit
reimbursement to hospitals for the costs
associated with one staff person
participating for up to 16 hours and
costs associated with providing medical
records. We believe this is reasonable as
it is in the business interests of vendors
to support hospitals that need QRDA
Category-1 files.
Comment: Most commenters believe
that the validation pilot should
accommodate a comparison of chartabstracted and electronic clinical
quality measure outcomes for the same
measures, and/or that CMS should
clarify whether it will evaluate whether
the intent of the chart-abstracted and
electronic clinical quality measures are
the same.
In contrast, several commenters
specifically noted that one should not
expect the same result from a manual
process (which allows for differences in
documentation practices, judgment, and
error and accommodates data from
multiple sources) as from an electronic
process which extracts data from a
‘‘defined specific data element
location,’’ or that the processes for
electronic clinical quality measure
validation should be ‘‘independent’’
from validation of chart-abstracted
measures. One of these commenters also
advised that CMS acknowledge the role
of customization in creating variability
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in records and that data can be
unstructured in the EHR and that
provider documentation can vary and
still support the intent of the measure.
Response: We understand that
although the purpose of validation for
chart-abstracted and electronic clinical
quality measures are the same, the
outcomes of validation may be different
for many reasons, including what was
described by the commenter above. We
agree with commenters that our
validation process should also include a
comparison of chart-abstracted and
electronic clinical quality measure
outcomes for the same measures and
will add this to our electronic clinical
quality measures validation pilot as
finalized below.
We also are aware that hospitals may
customize software in ways that create
reporting errors and that individual
providers may create errors by using the
software in a manner other than that
intended by the manufacturer. We
understand, from a scoring perspective,
that we can only hold vendors and
hospitals accountable for achieving an
outcome that should be generated based
on existing standards and specifications.
In addition to problems that may arise
because of misalignment or errors in
standards or specifications, we also are
aware that hospitals may customize
software in ways that create errors and
that individual providers may create
errors by using the software in a manner
other than intended. We did not include
a proposal for scoring individual
hospitals, because we are aware that
vendors have no choice but to code to
existing specifications and standards.
We intend to partner with stakeholders
to assist in interpreting results and help
develop a validation strategy that
addresses these issues.
We also understand that provider
documentation may vary, be located in
unstructured fields, and still support the
measure. We intend that our validation
pilot will be able to distinguish among
these many different threats to accuracy
as well as identify times when
variability in documentation does not
threaten accuracy. We further believe
that the pilot will be a rich source of
information about all of these scenarios.
Comment: A few commenters raised
issues related to the questions included
in the detailed participation pilot
materials posted on QualityNet
describing the EHR walkthrough
process. One commenter recommended
that CMS include vendors as a source of
information for many of the questions in
the interview document that CMS
posted on the QualityNet Web site to
document the methodology we
proposed to use for the validation pilot
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as noted in CMS’ proposal. This
commenter also requested additional
guidance on the purpose of these
questions and their relation to the
outcome of the pilot and encouraged us
to develop a final process that
minimized burden to providers and the
health system. One commenter
recommended that the electronic
clinical quality measure data validation
pilot exclude assessment of EHR
features, focusing instead on the health
data of the EHR.
Response: We assume that when the
first commenter was requesting
guidance on the Electronically Specified
Clinical Quality Measures Program
Walk-through and Interview Document,
the commenter was referring to
questions related to ‘‘acceptability of
remote technology for validation’’ as the
other questions have a very clear
relationship to the range of technical
issues that this commenter raised in
relation to electronic clinical quality
measure validation generally. This
section on ‘‘acceptability of remote
technology for validation’’ includes the
questions assessing EHR features that
one commenter suggested we remove.
We agree that vendors may be a better
source of information for these
questions, and therefore, intend to
remove questions 9–12 based on the
comments received. The purpose of the
remaining questions in this section is to
gauge the general level of acceptability
of the approach that we are piloting, and
to judge how many hours of staff time
hospitals would be willing and capable
of dedicating to validation activities to
support to ensure reliable electronic
clinical quality measure data. We intend
to retain questions 6–8 and 13–15,
because we would value hospitals’
opinions about these ideas.
Comment: Several commenters urged
CMS to implement the
recommendations of a March 2014 GAO
report to ‘‘develop a comprehensive
strategy for ensuring that data collected
and reported using certified EHR
technology are reliable, including
testing for and mitigation of reliability
issues arising from variance in certified
EHR systems tested to different CQM
specifications.’’ 118
Response: We agree that reliability of
data collected and reported using
certified EHR technology is critical. As
proposed, our validation pilot is
intended to develop a methodology that
118 Electronic Health Record Programs:
Participation Has Increased, but Action Needed to
Achieve Goals, Including Improved Quality of Care:
Report to Congressional Committees. (GAO
Publication No. GAO–14–207). Retrieved from U.S.
Government Accountability Office: http://
www.gao.gov/assets/670/661399.pdf.
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achieves that goal. We intend to address
problems arising from the fact that
certified EHR systems may have been
tested to specifications issued in
different years, by only including in the
pilot only those data certified to 2014
specifications. We will take the
recommendations of the GAO report as
a whole into consideration in future
policy-making.
Comment: One commenter
specifically wanted to know how the
validation pilot would align with
Meaningful Use specifications when the
QRDA does not take into account any
information from scanned documents,
text, and documentation added at a later
time.
Response: We understand that
Meaningful Use specifications require
that QRDA files extract data only from
structured fields and therefore, the
QRDA does not take into account data
from scanned documents, text, and
documentation added at a later time.
Our proposed validation strategy was
developed to acknowledge that because
the QRDA does not take into account
data from scanned documents, text, and
documentation added at a later time,
even the perfect EHR system could
produce clinically meaningless
validation results in contrast to chartabstracted validation. In addition, as
described above in this section, many
commenters have observed errors in
standards and specifications. By
employing CDAC to look at the entire
content of the record during our
validation process, as we have described
in our proposal, we hope to be able to
identify those situations in which the
calculated measure does not produce
results consistent with the intent of the
measure. We recognize that our
validation pilot test may uncover
problems that are not the fault of the
provider, hospital, or developer, which
is one of the goals of this pilot. We note
that we have not proposed a process for
scoring hospitals based on validation
findings.
Comment: One commenter requested
further details regarding what controls
will be put into place to allow CDAC to
remotely view records in real-time.
Response: The process that we intend
to use to access medical records
remotely contains several important
controls to prevent unauthorized access
to hospital systems. We clarify that
access would be pursuant to a request
by CDAC for the minimum necessary
access to such records that includes an
assertion of CDAC’s legal authority
(including the applicable basis(-es)
under HIPAA) for such access. The
Bomgar software that we intend to use
is installed on a secure CMS-owned
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system that has safeguards in place in
accordance with the HIPAA Security
Rule to protect sensitive patient data.
The Bomgar software is configured to
transmit all information exchanged
during the medical record review
through CMS-owned hardware at a
secure facility. All information needed
to access hospital systems remotely is
guarded by strong HTTPS secure socket
layer (SSL) encryption, which protects
the information as it is transmitted from
the hospital to the CDAC. This hardware
and software, which CDAC will use to
access medical records remotely, will
not store any information about the
medical records themselves. Only a
limited number of CDAC personnel,
authorized by CMS, will have access to
the Bomgar device. For more
information, see: video http://
www.bomgar.com/products/security.
In addition, CDAC contractors employ
security controls to protect medical
record information as follows: (1) all
screen captures saved and QRDA files
received by CDAC contractors are
controlled and monitored according to
security standards established by the
National Institute of Standards and
Technology (NIST); 119 (2) all Protected
Health Information (PHI) is encrypted
on all CDAC servers; and (3) firewalls
and servers are monitored by CMS
security contractors. Only a limited
number of CDAC personnel have been
granted access to view any PHI. These
CDAC personnel undergo background
checks and undergo privacy and
security training prior to being issued
passwords to view records containing
PHI. All of these security controls are
audited in compliance with CMS
Security Standards.120
Comment: One commenter who
supported CMS’ validation plan for
electronic clinical quality measures also
agreed ‘‘that the development or
identification of existing computerized
applications that can assist hospitals in
self-validation and functionalities will
be useful in self-validation of eCQMs.’’
The commenter believed this process
could take the place of the current
internal inter-rater reliability (IRR)
efforts (on abstracted data) and ensure
accurate data capture practices.
Response: We will consider this
suggestion to develop tools to replace
more labor-intensive quality control
efforts such as inter-rater reliability
efforts (that is, comparing chartabstracted results from two different
abstractors) in development of future
policies.
We thank the commenters for their
comments. We will consider them as we
develop plans to validate electronic
clinical quality measure data.
After consideration of public
comments on our proposal to conduct a
validation pilot test for electronically
specified measures in FY 2015, we are
finalizing the policy as proposed with a
few minor modifications.
We will compare results generated
from QRDA–1 files with data from up to
10 sources identified through chartabstraction as proposed. In addition, we
will compare measure outcomes
abstracted from electronic clinical
quality measure specifications to those
abstracted according to chart-abstracted
specifications. Also, we plan to remove
the questions related to ‘‘acceptability of
remote technology for validation’’ and
to EHR functionality from the
‘‘Electronically Specified Clinical
Quality Measures Program Walkthrough and Interview’’ document and
reflect our intended flexible approach to
accommodate hospitals that cannot
produce patient lists or QRDA–1 files in
real time as long as submissions can
occur during the data collection period
for the pilot project. We also intend to
reach out to stakeholders to collaborate
in preparing for the pilot and
interpreting results after the pilot.
f. Data Submission Requirements for
Quality Measures That May Be
Voluntarily Electronically Reported for
the FY 2017 Payment Determination
We believe that collection and
reporting of data through health
information technology will greatly
simplify and streamline reporting for
many CMS quality reporting programs.
Through electronic reporting, hospitals
will be able to leverage EHRs to capture,
calculate, and electronically submit
quality data that is currently manually
chart-abstracted and submitted to CMS
Short name
Measure name
ED–1 .............
Median time from ED arrival to ED departure for admitted ED patients.
Admit Decision Time to ED Departure
Time for Admitted Patients.
ED–2 .............
119 http://csrc.nist.gov/,
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NQF number
NQF #0495
NQF #0497
120 https://www.cms.gov/Research-Statistics-Dataand-Systems/CMS-Information-Technology/
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for the Hospital IQR Program. As we
noted in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51614), we recognize
the need to align and harmonize
measures across CMS quality reporting
programs to minimize the reporting
burden imposed on hospitals. In the
Medicare EHR Incentive Program Stage
2 final rule (77 FR 54083 through
54087), we finalized a total of 29
clinical quality measures from which
hospitals must select at least 16
measures covering three National
Quality Strategy (NQS) domains to
report beginning in FY 2014. We
anticipate that, as health information
technology evolves and infrastructure is
expanded, we will have the capacity to
accept electronic reporting of many of
the chart-abstracted measures that are
currently part of the Hospital IQR
Program.
In the FY 2014 IPPS/LTCH PPS final
rule, for the STK (with the exception of
STK–1), VTE, ED, and PC measure sets,
we allowed hospitals to either: (1)
electronically report at least one quarter
of CY 2014 (Q1, Q2, or Q3) quality
measure data for each measure in one or
more of those four measure sets; or (2)
continue reporting all measures in those
four measure sets using chart-abstracted
data for all four quarters of CY 2014 (78
FR 50818).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28242 through
28243) for the FY 2017 payment
determination, we proposed to expand
this policy, such that providers may
select to voluntarily report any 16 of the
28 Hospital IQR Program electronic
clinical quality measures that align with
the Medicare EHR Incentive Program as
long as those 16 measures span three
different NQS domains. The 28
measures are listed in the table below.
Only 28 of the 29 measures adopted in
the Medicare EHR Incentive Program are
applicable for the Hospital IQR Program,
because the measure ED–3 Median time
from ED arrival to ED departure for
discharged ED patients (NQF #0496) is
an outpatient setting measure. We
expect eligible hospitals to select
measures that best apply to their patient
mix.
NQS domain 121
Patient and Family
Engagement.
Patient and Family
Engagement.
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Available data submission modes
Electronic clinical quality measure or
chart-abstracted.
Electronic clinical quality measure or
chart-abstracted.
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informationsecurity, last accessed 7/17/2014.
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Short name
Measure name
PC–01 ...........
Elective delivery (Collected in aggregate,
submitted via Web-based tool or electronic clinical quality measure).
Discharged on antithrombotic therapy ......
Stroke-2 ........
NQF number
NQS domain 121
NQF #0469
Clinical Process/Effectiveness.
NQF #0435
Available data submission modes
Stroke-6 ........
Antithrombotic therapy by the end of hospital day two.
Discharged on statin medication ...............
NQF #0439
Stroke-8 ........
Stroke education .......................................
N/A
Stroke-10 ......
Assessed for rehabilitation ........................
NQF #0441
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Patient and Family
Engagement.
Care Coordination .....
VTE–1 ...........
Venous thromboembolism prophylaxis .....
NQF #0371
Patient Safety ............
VTE–2 ...........
NQF #0372
Patient Safety ............
NQF #0373
VTE–5 ...........
Intensive care unit venous thromboembolism prophylaxis.
Venous thromboembolism patients with
anticoagulation overlap therapy.
Patients receiving un-fractionated Heparin
with doses/labs monitored by protocol.
VTE discharge instructions .......................
VTE–6 ...........
Incidence of potentially preventable VTE
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Patient and Family
Engagement.
Patient Safety ............
AMI–2 ...........
Aspirin Prescribed at Discharge for AMI ..
NQF #0142
AMI–7a .........
Fibrinolytic Therapy Received Within 30
minutes of Hospital Arrival.
Primary PCI Received Within 90 Minutes
of Hospital Arrival.
Statin Prescribed at Discharge .................
NQF #0164
Stroke-3 ........
Stroke-4 ........
Stroke-5 ........
VTE–3 ...........
VTE–4 ...........
AMI–8a .........
AMI–10 .........
PN–6 .............
SCIP–Inf–1a
SCIP–Inf–2a
SCIP-Inf-9 .....
PC–05 ...........
EHDI–1a .......
CAC–3 ..........
HTN ..............
121 Medicare
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Anticoagulation therapy for atrial fibrillation/flutter.
Thrombolytic therapy .................................
NQF #0437
NQF #0438
N/A
N/A
N/A
NQF #0163
NQF #0639
Initial Antibiotic Selection for communityacquired
pneumonia
(CAP)
in
Immunocompetent Patients.
Prophylactic Antibiotic Received Within
One Hour Prior to Surgical Incision.
Prophylactic Antibiotic Selection for Surgical Patients.
NQF #0147
Urinary catheter removed on Postoperative Day 1 (POD 1) or Postoperative Day 2 (POD 2) with day of
surgery being day zero.
Exclusive Breast Milk Feeding and the
subset measure PC–05a Exclusive
Breast Milk Feeding Considering Mother´s Choice.
Hearing Screening Prior to Hospital Discharge.
Home Management Plan of Care (HMPC)
Document Given to Patient/Caregiver.
Healthy Term Newborn .............................
NQF #0453
NQF #0527
NQF #0528
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Clinical Process/Effectiveness.
Efficient Use of
Healthcare Resources.
Patient Safety ............
Efficient Use of
Healthcare Resources.
Patient Safety ............
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
NQF #0480
Clinical Process/Effectiveness.
Voluntary electronic clinical quality measure.
NQF #1354
Clinical Process/Effectiveness.
Patient and Family
Engagement.
Patient Safety ............
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
N/A
NQF #0716
EHR Incentive Program Stage 2 final rule (77 FR 54083 through 54087).
Comment: A commenter requested
clarification regarding whether hospitals
are required to report on the ED–1 and
ED–2 measures for FY 2015. If hospitals
are required to report on these
measures, the commenter would like
clarification regarding whether the data
must be submitted electronically as
opposed to chart-abstracted.
VerDate Mar<15>2010
NQF #0436
Electronic clinical quality measure or
chart-abstracted aggregated with Webbased submission.
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
Electronic clinical quality measure or
chart-abstracted.
Voluntary electronic clinical quality measure.
Electronic clinical quality measure or
chart-abstracted.
Electronic clinical quality measure or
chart-abstracted.
Voluntary electronic clinical quality measure.
Electronic clinical quality measure or
chart-abstracted.
Electronic clinical quality measure or
chart-abstracted.
Electronic clinical quality measure or
chart-abstracted.
Voluntary electronic clinical quality measure.
Electronic clinical quality measure or
chart-abstracted.
Electronic clinical quality measure or
chart-abstracted.
Voluntary electronic clinical quality measure.
Electronic clinical quality measure or
chart-abstracted.
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
Voluntary electronic clinical quality measure.
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Response: ED–1 and ED–2 are shown
as voluntary electronic clinical quality
measures in the table on 79 FR 28242,
but are not identified as voluntary
measures in the table on 79 FR 28241.
We would like to clarify that both ED–
1 and ED–2 are required measures that
can be submitted either as chartabstracted measures or as electronic
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clinical quality measures under the
voluntary reporting option.
For the FY 2017 payment
determination, we also proposed to
expand the reporting requirement of
electronic clinical quality measures to
require a full year’s data collection and
submission instead of a minimum of
one quarter. In addition, for the FY 2017
payment determination, we proposed to
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require data submission within
approximately 60 days after the end of
a calendar year quarter. We have listed
the proposed submission deadlines in
the table below. We also refer readers to
section IX.D.2. of the preamble of this
final rule for a description of the
electronic clinical quality measures data
50275
reporting periods and proposed
submission deadlines.
CY 2015/FY 2017 ELECTRONIC CLINICAL QUALITY MEASURES DATA REPORTING PERIODS AND PROPOSED SUBMISSION
DEADLINES
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1
2
3
4
.........................................
.........................................
.........................................
.........................................
Reporting period (2015)
January 1–March 31 ...........................................................................................
April 1–June 30 ...................................................................................................
July 1–September 30 ..........................................................................................
October 1–December 31 .....................................................................................
As an incentive for hospitals to
voluntarily submit electronic clinical
quality measures, we proposed that for
the FY 2017 payment determination,
hospitals successfully submitting
electronic clinical quality measures
according to our procedures will not
have to validate those measures by
submitting chart-abstracted data.
By proposing these changes, we
would further align the Hospital IQR
Program and the Medicare EHR
Incentive Program and promote greater
electronic clinical quality measure data
reporting for hospitals. In addition, we
believe that these changes would ease
hospitals’ administrative burden, as
they will be able to report the same
clinical quality measures once to
partially satisfy both the Hospital IQR
and Medicare EHR Incentive Programs’
requirements.
We invited public comment on this
proposal.
Comment: One commenter requested
that CMS allow hospitals to
electronically report data for one
calendar quarter instead of an entire CY.
Response: We refer readers to section
IX.A.2.h.(1) of the preamble of this final
rule where we are finalizing a
modification of our proposal, which
will only require one CY quarter of
electronic clinical quality measure data
for those hospitals that elect to
participate in the voluntary electronic
clinical quality measures reporting
option.
Comment: A commenter supported
the inclusion of voluntary reporting for
certain electronic clinical quality
measures for the Hospital IQR Program,
and noted that voluntary reporting
allows hospitals to be better prepared
for submitting new quality measures
from EHRs and to correct any
operational issues that arise. Another
commenter supported the long-term
goal of using EHRs to streamline and
reduce the burden of quality reporting
while increasing access to real-time
information to improve care and patient
outcomes. One commenter supported
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Proposed submission deadline
18:25 Aug 21, 2014
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the proposal that hospitals
electronically report a full year of data
on the 12 Hospital IQR Program
measures that overlap with the 2014
Medicare EHR Incentive Program
measures.
Response: We thank the commenters
for their support and, as noted in the
response above, we have modified in
our finalized policy the number of
quarters of data to be reported by those
hospitals that elect to participate in the
voluntary electronic clinical quality
measures reporting option.
Comment: One commenter requested
clarification on whether the deadlines
for submitting chart-abstracted measures
remain the same given the proposal for
requiring data submission within 60
days after the calendar year quarter ends
for electronic clinical quality measures.
Commenters also stated that the
shortened time frame for reporting
measure data poses a burden on
facilities and increases the possibility of
errors, which could affect measure
scores and, therefore, payment.
Response: We would like to clarify
that we did not propose any changes to
the submission requirements for chartabstracted measures (79 FR 28245). We
retained the 41⁄2 months quarterly
submission deadline (78 FR 50811). In
addition, we are not finalizing the 60
day quarterly submission deadline for
electronic clinical quality measures. We
refer readers to section IX.A.2.h.(1) of
the preamble of this final rule where
this is discussed in more detail.
Comment: Some commenters
supported the alignment of measures
and reporting requirements and
timelines across quality reporting and
incentive programs, specifically noting
that this alignment would reduce
hospital’s administrative burden and
confusion, uses the later Hospital IQR
Program deadlines, reduce the number
of quarters required until the transition
is complete, and does not delay
incentive payments. Some commenters
argued that CMS’ timeline for alignment
is aggressive and requested CMS give
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May 30, 2015.
Aug 30, 2015.
Nov 30, 2015.
Feb 28, 2016.
hospitals time to comply with this
requirement. Commenters noted that
EHRs are not ready for year two of Stage
1 meaningful use criteria or Stage 2
meaningful use criteria.
Other commenters opposed CMS’
proposal to require Q4 2014 and Q1
2015 data submission by May 15, 2015,
stating that it does not provide enough
time for data submission, particularly
for hospitals that conduct manual chart
abstraction.
Response: We thank the commenters
for supporting our proposal to align
reporting between the Hospital IQR
Program and the Medicare EHR
Incentive Program. We proposed to
begin aligning the reporting periods
between the two programs beginning
with the CY 2015 reporting period. We
believe some commenters may have
confused the proposed electronic
clinical quality measure requirements of
the Medicare EHR Incentive Program
with the proposed electronic clinical
quality measure submission
requirements for the Hospital IQR
Program.
We proposed for the Hospital IQR
Program, that hospitals choosing to
submit electronic clinical quality
measures would need to submit all four
quarters of CY 2015, whereas the
Medicare EHR Incentive Program
proposed to require only the first three
quarters of CY 2015 (79 FR 28245
through 28246). However, we are not
finalizing our proposal for hospitals to
submit electronic clinical quality
measures for all four quarters for the
Hospital IQR Program and are instead
finalizing a modified policy. We refer
readers to section IX.A.2.h.(1) of the
preamble of this final rule where this is
discussed in more detail. We recognize
that many hospitals have faced
challenges moving to the latest CQM
versions, which is why electronic
clinical quality measure reporting
remains voluntary at this time.
Comment: One commenter noted that
they appreciated the opportunity to gain
experience with voluntary electronic
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reporting for the Hospital IQR Program
before such reporting is made
mandatory. The commenter also asked
that CMS provide further explanation
on the set of voluntary electronic
clinical quality measures within the
Hospital IQR Program.
Response: We refer the commenter to
the table above listing the 28 possible
electronic clinical quality measures. If a
hospital chooses to submit electronic
clinical quality measures, the hospital
must submit 16 of the 28 possible
measures covering three NQS domains.
Please note that 12 of the 28 measures
are measures required in the Hospital
IQR Program. These 12 measures do
cover three NQS domains. We would
like to clarify that if a hospital chooses
to submit electronic clinical quality
measures, chart-abstraction of those
submitted measures is not necessary.
Comment: One commenter urged
CMS to be mindful of safety net
hospitals’ limited resources when
proposing new requirements for
reporting measure data electronically.
The commenter advised that electronic
reporting of quality data requires
significant work to obtain, validate, and
report and that it also requires
information technology and quality
management resources. The commenter
stated that many hospitals are struggling
to meet the current electronic data
reporting requirements and that
additional requirements will increase
hospital expenses for labor, data
analysis, and validation.
Response: We note that reporting
electronic clinical quality measure data
remains voluntary for CY 2015
reporting/FY 2017 payment
determination. We believe that our
electronic clinical quality measure
reporting voluntary reporting option is
not unduly burdensome to hospitals,
and will allow hospital an opportunity
to prepare for electronic reporting of
quality measure data. As data becomes
more standardized, it is expected that
provider burden will decrease over
time. In addition, we have modified our
proposal for CY 2015 so that for those
hospitals choosing to submit electronic
clinical quality measures, only one
quarter of data submission is necessary
to meet the Hospital IQR Program
requirement. We want to clarify that we
have not made proposals for CY 2016
electronic clinical quality measure
reporting/FY 2018 payment
determination. These will be addressed
in future rulemaking.
Comment: One commenter raised
concern that participation in the
voluntary electronic clinical quality
measure program under the Hospital
IQR Program would be low and would
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18:25 Aug 21, 2014
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therefore, not provide the data to inform
future policy direction. In order to make
the voluntary electronic clinical quality
measure program more attractive to
hospitals, the commenter recommended
that CMS work with payers and quality
assurance organizations to further align
measure sets, provide electronic clinical
quality measure specifications at least
nine months before each relevant
reporting period, allow providers to post
or omit electronically-generated
electronic clinical quality measure data
to Hospital Compare, and either require
only one-quarter of electronic clinical
quality measure data in order to fulfill
EHR MU and Hospital IQR Program
requirements, or incorporate a robust
logic model to monitor and evaluate the
burdens and benefits associated with
more frequent reporting.
Response: We are actively working
with measure developers/stewards to
align measure sets and revise measure
specifications, as needed. Issues
identified by measure stakeholders
should be reported to ONC’s JIRA tool
at: http://jira.oncprojectracking.org/
browse/CQM where all stakeholders can
comment and follow the progress of the
issue. Electronic clinical quality
measure specifications are published/
updated annually at: http://cms.gov/
Regulations-and-Guidance/Legislation/
EHRIncentivePrograms/eCQM_
Library.html. Also, we are modifying
our proposal so that for those hospitals
choosing to submit electronic clinical
quality measures, only one quarter of
data submission is necessary to meet the
Hospital IQR Program requirements. We
refer readers to section IX.A.2.h.(1) of
the preamble of this final rule where
this is discussed in more detail.
After consideration of the public
comments we received, we are
finalizing our proposals with some
modifications. We are finalizing our
policy for hospitals that chose to
participate in the voluntary electronic
reporting option in CY 2015 must report
any 16 of the 28 measures across 3 NQS
domains as proposed. We are also
finalizing that we will only accept the
April 2014 version of the measure
specifications for CY 2015 reporting/FY
2017 payment determination. Policies
for electronic clinical quality measure
reporting in CY 2016 and subsequent
years will be made in future rulemaking.
We are finalizing a modified version of
our proposal to expand the reporting
requirement of electronic clinical
quality measures to require a full year’s
data collection to only requiring one
quarter’s worth of data. In addition, we
are finalizing a modified version of our
proposal to require data submission
within approximately 60 days after the
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end of a calendar year quarter to require
submission of CY Q1, Q2, or Q3 data by
November 30, 2015. We refer readers to
section IX.A.2.h.(1) of the preamble of
this final rule for a more detailed
discussion.
We note that hospitals choosing to
report at least one quarter of quality
measure data electronically are not
required, but are encouraged, to also
submit the same data via chartabstraction. We understand that many
hospitals may be submitting chartabstracted quality measure data to TJC
so the reporting burden would not be
increased. Hospitals will gain
experience in understanding the
differences in the submission methods.
Hospitals voluntarily submitting
electronically specified clinical quality
measures will utilize their existing
QualityNet account to submit electronic
quality measure data.
12. Data Accuracy and Completeness
Acknowledgement Requirements for the
FY 2017 Payment Determination and
Subsequent Years
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53554) for
information for details on DACA
requirements for the FY 2017 payment
determination and subsequent years.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28253) we did not
propose any changes to DACA form
requirements.
We did not invite public comment
regarding DACA requirements, but
received one comment that we are
addressing below.
Comment: One commenter expressed
concerns that the Data Accuracy and
Completeness Acknowledgement
statement for hospitals does not provide
a means for hospitals to indicate to CMS
any errors they have discovered in their
quality reporting throughout the year.
The commenter observed that a hospital
may discover in the fourth quarter an
error in the data that was submitted in
the first quarter of the year, but the
DACA only permits a ‘Yes’ or ‘No’
response regarding whether all of the
data was complete and accurate to the
best of their knowledge at the time of
submission, which does not provide a
means for fixing any errors. The
commenter observed that there also
should be a process for fixing such
errors from prior years.
Response: We currently provide a
review and correction process for
Hospital IQR Program process of care,
HAI, and HCAHPS data during the
submission period. Hospitals can review
their measure rate before the submission
deadline, and can review patient-level
data to correct any identified errors on
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previously submitted data. We strongly
encourage hospitals to closely review
their Hospital IQR Program measure and
patient feedback reports to detect these
errors before the submission deadline.
We do not allow patient-level data
correction after the submission deadline
or for previous years. We must set a
deadline to ensure timely computation
of measure rates, Hospital VBP
performance scores and payment
adjustment factors.
13. Public Display Requirements for the
FY 2017 Payment Determination and
Subsequent Years
We refer readers to the FY 2008 IPPS
final rule (72 FR 47360), the FY 2011
IPPS/LTCH PPS final rule (75 FR
50230), the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51650), the FY 2013
IPPS/LTCH PPS final rule (77 FR
53554), and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50836) for details
on public display requirements for the
FY 2017 payment determination and
subsequent years.
The Hospital IQR Program quality
measures are typically reported on the
Hospital Compare Web site at: http://
www.medicare.gov/hospitalcompare,
but on occasion are reported on other
CMS Web sites such as http://
www.cms.gov and/or https://
data.medicare.gov.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28253) we did not
propose any changes to public display
requirements.
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14. Reconsideration and Appeal
Procedures for the FY 2017 Payment
Determination and Subsequent Years
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51650
through 51651), the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50836), and at 42
CFR 412.140(e) for details on
reconsideration and appeal procedures
for the FY 2017 payment determination
and subsequent years.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28253) we did not
propose any changes to the
reconsideration and appeals procedures.
15. Hospital IQR Program Extraordinary
Circumstances Extensions or
Exemptions
We refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51651
through 51652), the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50836 through
50837), and 42 CFR 412.140(c)(2) for
details on the Hospital IQR Program
extraordinary circumstances extensions
or waivers. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28253) we did
not propose any substantive changes to
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these policies or the processes.
However, in the future, we will refer to
the process as the Extraordinary
Circumstances Extensions or
Exemptions process. We are currently in
the process of revising the Extraordinary
Circumstances/Disaster Extension or
Waiver Request form, previously
approved under OMB control number
0938–1171.
In addition, we proposed to make a
conforming change from the phrase
‘‘extension or waiver’’ to the phrase
‘‘extension or exemption’’ in 42 CFR
412.140(c)(2). Section 412.140(c)(2)
currently states that upon request by a
hospital, CMS may grant an extension or
waiver of one or more data submission
deadlines in the event of extraordinary
circumstances beyond the control of the
hospital. Specific requirements for
submission of a request for an extension
or waiver are available on
QualityNet.org. We proposed to revise
this language to state that upon request
by a hospital, CMS may grant an
extension or exemption of one or more
data submission deadlines in the event
of extraordinary circumstances beyond
the control of the hospital. Specific
requirements for submission of a request
for an extension or exemption are
available on QualityNet.org.
We did not receive any public
comments on this proposal and we are
finalizing this policy as proposed.
B. PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program
1. Statutory Authority
Section 3005 of the Affordable Care
Act added new sections 1866(a)(1)(W)
and (k) to the Act. Section 1866(k) of the
Act establishes a quality reporting
program for hospitals described in
section 1886(d)(1)(B)(v) of the Act
(referred to as ‘‘PPS-Exempt Cancer
Hospitals’’ or ‘‘PCHs’’). Section
1866(k)(1) of the Act states that, for FY
2014 and each subsequent fiscal year, a
PCH must submit data to the Secretary
in accordance with section 1866(k)(2) of
the Act with respect to such a fiscal
year. Section 1866(k)(2) of the Act
provides that, for FY 2014 and each
subsequent fiscal year, each hospital
described in section 1886(d)(1)(B)(v) of
the Act must submit data to the
Secretary on quality measures specified
under section 1866(k)(3) of the Act in a
form and manner, and at a time,
specified by the Secretary.
Section 1866(k)(3)(A) of the Act
requires that any measure specified by
the Secretary must have been endorsed
by the entity with a contract under
section 1890(a) of the Act, unless an
exception under section 1866(k)(3)(B) of
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the Act applies. The National Quality
Forum (NQF) currently holds this
contract. The NQF is a voluntary,
consensus-based, standard-setting
organization with a diverse
representation of consumer, purchaser,
provider, academic, clinical, and other
health care stakeholder organizations.
The NQF was established to standardize
health care quality measurement and
reporting through its consensus
development processes. We have
generally adopted NQF-endorsed
measures in our reporting programs.
However, section 1866(k)(3)(B) of the
Act provides an exception. Specifically,
it provides that, in the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Under section 1866(k)(3)(C) of the
Act, the Secretary was required to
publish the measures select for PCHs no
later than October 1, 2012, with respect
to FY 2014.
Section 1866(k)(4) of the Act requires
the Secretary to establish procedures for
making public the data submitted by
PCHs under the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR)
Program. Such procedures must ensure
that a PCH has had the opportunity to
review the data that are to be made
public with respect to the PCH prior to
such data being made public. The
Secretary must report measures of
processes, structural measures,
measures of outcomes, patients’
perspective on care, efficiency, and
costs of care that relate to services
furnished by PCHs on the CMS Web
site.
2. Covered Entities
Section 1886(d)(1)(B)(v) of the Act
excludes particular cancer hospitals
from payment under the IPPS. This final
rule covers only those PPS-excluded
cancer hospitals meeting eligibility
criteria specified in 42 CFR 412.23(f).
3. Previously Finalized PCHQR Program
Quality Measures
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556 through 53561), we
finalized five quality measures for the
FY 2014 program and subsequent years.
Specifically, we finalized two of the
CDC NHSN-based HAI quality measures
(outcome measures): (1) CLABSI; and (2)
CAUTI. We also finalized three cancer-
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specific process of care measures: (1)
Adjuvant chemotherapy is considered
or administered within 4 months (120
days) of diagnosis to patients under the
age of 80 with the American Joint
Committee on Cancer (AJCC) III (lymph
node positive) colon cancer; (2)
Combination chemotherapy is
considered or administered within 4
months (120 days) of diagnosis for
women under 70 with AJCC T1c, or
Stage II or III hormone receptor negative
breast cancer; and (3) Adjuvant
hormonal therapy. We also discussed
the collection requirements and
submission timeframes for these
measures in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53563 through
53566).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50838 through 50840), we
finalized one new quality measure for
the FY 2015 program and subsequent
years. Specifically, we finalized the
CDC’s NHSN HAI measure of Surgical
Site Infection (SSI). We did not remove
or replace any of the previously
finalized measures from the PCHQR
Program for the FY 2015 program and
subsequent years.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50840 through 50846), we
finalized 12 new quality measures for
the FY 2016 program and subsequent
years. Specifically, we finalized six new
SCIP measures, five new clinical
process/oncology care measures, and
the HCAHPS Survey for reporting
beginning with the FY 2016 program
and subsequent years. We did not
remove or replace any of the previously
finalized measures from the PCHQR
Program for the FY 2016 program and
subsequent years. We also discussed the
collection requirements and submission
timeframes for these measures in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50850 through 50853).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28254), we did not
propose to remove or replace any of the
previously finalized measures from the
PCHQR Program for the FY 2017
program and subsequent years.
4. Update to the Clinical Process/
Oncology Care Measures Beginning
With the FY 2016 Program
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28254), beginning
with the FY 2016 program, we proposed
to update the specifications for each of
the five clinical process/oncology care
measures so that, for each measure,
PCHs must report all-patient data. We
believe that the delivery of high quality
care in the PCH setting is critically
important and that collecting data on all
patients will enable us to ensure that
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high quality care is delivered to
Medicare beneficiaries in this setting. In
addition, all-patient data increase
transparency in the health care system
and align with State and Federal
initiatives.122 Our proposal to require
PCHs to collect all-patient data provides
us with the data necessary to inform the
public accurately about the quality of
care and patient outcomes in the PCH
setting. In addition, this proposal will
align the specifications of the clinical
process/oncology care measures with
those of the SCIP PCHQR measures, for
which all-patient data are required for
submission.
We welcomed public comments on
this proposal for the clinical process/
oncology care measures for the FY 2016
program and subsequent years.
Comment: One commenter supported
the proposal to require PCHs to report
all-patient data for the five clinical
process/oncology care measures, noting
that it is consistent with reporting
requirements in other CMS quality
reporting programs.
Response: We thank the commenter
for its support.
After consideration of the public
comments we received, we are
finalizing our proposal requiring PCHs
to submit all-patient data for the five
clinical process/oncology care measures
beginning with the FY 2016 program.
5. New Quality Measure Beginning With
the FY 2017 Program
a. Considerations in the Selection of
Quality Measures
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53556) and in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50837
through 50838), we indicated that we
have taken a number of principles into
consideration when developing and
selecting measures for the PCHQR
Program, and that many of these
principles are modeled on those we use
for measure development and selection
under the Hospital IQR Program:
• Public reporting should rely on a
mix of standards, outcomes, process of
care measures, and patient experience of
care measures, including measures of
care transitions and changes in patient
functional status.
• The measure set should evolve so
that it includes a focused core set of
measures appropriate to cancer
hospitals that reflects the level of care
and the most important areas of service
furnished by those hospitals. The
measures should address gaps in the
quality of cancer care.
122 All-Payer Claims Database (APCD) Fact Sheet;
available at: http://www.apcdcouncil.org/issuebriefs-and-fact-sheets.
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• We also consider input solicited
from the public through rulemaking and
public listening sessions.
• We consider suggestions and input
from a PCH Technical Expert Panel
(TEP), convened by a CMS measure
development contractor, which rated
potential PCH quality measures for
importance, scientific soundness,
usability, and feasibility. The TEP
membership includes health care
providers specializing in the treatment
of cancer, cancer researchers, consumer
and patient advocates, disparities
experts, and representatives from payer
organizations.
Like the Hospital IQR Program, the
PCHQR Program supports the National
Quality Strategy (NQS), national
priorities, HHS Strategic Plans and
Initiatives, the CMS Quality Strategy,
and strives to reduce the burden on
participating PCHs whenever possible.
The PCHQR Program also takes into
consideration the recommendations of
the Measure Applications Partnership
(MAP). The MAP is a multi-stakeholder
body convened by the NQF for the
purpose of providing input to HHS on
the selection of measures.
b. New Quality Measure Beginning With
the FY 2017 Program
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28254 through
28456), we proposed to adopt one new
clinical effectiveness measure for the FY
2017 program and subsequent years:
External Beam Radiotherapy for Bone
Metastases (NQF #1822). The proposed
clinical effectiveness measure was
included on a publicly available
document entitled ‘‘List of Measures
under Consideration for December 1,
2013,’’ a list of quality and efficiency
measures being considered for use in
various Medicare programs. The
proposed measure was submitted to the
MAP Hospital Workgroup for review.
The MAP supported the inclusion of
this measure in the PCHQR Program.
The MAP’s conclusions may be found in
the ‘‘MAP Pre-Rulemaking Report: 2014
Recommendations on Measures Under
Consideration by HHS,’’ which is
available at: https://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_Report_
_2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx. We considered the
MAP’s input and recommendations for
this proposed measure for the PCHQR
Program, and specifically, we note that
the proposed measure addresses the
MAP priority of palliative care for
cancer patients. In addition, the
proposed measure addresses the NQS
domain of effective clinical care.
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We believe that this NQF-endorsed
measure, developed by the American
Society for Radiation Oncology
(ASTRO), meets the requirement under
section 1866(k)(3)(A) of the Act that
measures specified for the PCHQR
generally be endorsed by the entity with
a contract under section 1890(a) of the
Act (currently the NQF). This measure
assesses the percentage of patients (both
Medicare and non-Medicare) with
painful bone metastases and no history
of previous radiation who receive EBRT
with an acceptable dosing schedule. The
measure numerator includes all patients
with painful bone metastases and no
previous radiation to the same site who
receive EBRT with any of the following
recommended fractionation schemes:
30Gy/10fxns; 24Gy/6fxns; 20Gy/5fxns;
or 8Gy/1fxn. The measure denominator
includes all patients with painful bone
metastases and no previous radiation to
the same site who receive EBRT. The
following patients are excluded from the
denominator: patients who have had
previous radiation to the same site;
patients with femoral axis cortical
involvement greater than 3 cm in length;
patients who have undergone a surgical
stabilization procedure; and patients
with spinal cord compression, cauda
equina compression, or radicular pain.
For the reasons explained more fully
below, we believe that this measure will
reduce the rate of EBRT services
overuse, support our commitment to
promoting patient safety, and support
the NQS domains.
Bone metastases are a common
manifestation of malignancy. Some
cancer types have a bone metastasis
prevalence as high as 70 to 95
percent.123 EBRT can provide
significant pain relief in 50 to 80
percent of patients with painful bone
metastases.124
In October 2009, ASTRO organized a
Task Force to perform an assessment of
existing recommendations in order to
address a lack of palliative radiotherapy
guidelines. Based on a review of the
literature, the Task Force recommended
the following EBRT dosing schedules
for patients with previously
unirradiated painful bone metastases: 30
Gy over the course of 10 fractions; 24 Gy
over the course of 6 fractions; 20 Gy
123 Coleman
RE. Metastatic bone disease: clinical
features, pathophysiology and treatment strategies.
Cancer Treat Rev. 2001;27:165–176.
124 Lutz S, Berk L, Chang E, et al. Palliative
radiotherapy for bone metastases: An ASTRO
evidence-based guideline. Int J Radiat Oncol Biol
Phys. 2011;79(4):965–976.
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over the course of 5 fractions; and a
single 8 Gy fraction.125 Despite the
recommendations, the actual doses
applied for EBRT continue to include
dosing schedules as high as 25
fractions.126 Other studies support the
conclusion that shorter EBRT schedules
produce similar pain relief outcomes
when compared to longer EBRT
schedules, and that patients prefer
shorter EBRT schedules because of their
convenience, increased tolerability, and
reduced side effects.127
In addition, the ASTRO Task Force
found that the frequency and severity of
side effects associated with a single
fraction were the same or less than those
associated with multiple fraction
regimens, indicating that shorter
treatment schedules may be
preferable.128 The proposed External
Beam Radiotherapy for Bone Metastases
measure seeks to address the
performance gap in treatment variation,
ensure appropriate use of EBRT, and
prevent the overuse of radiation
therapy. We believe that this measure is
necessary to support patient preferences
for shorter EBRT schedules as well as to
ensure patient safety, given that shorter
treatment courses show similar or fewer
side effects while producing similar
clinical outcomes.
We believe the proposed measure is
applicable to the PCH setting because it
addresses cancer care associated with
radiation therapy. The adoption of
measures that apply to multiple health
care settings is one of our objectives in
promoting quality care consistently
across all health care settings. Detailed
specifications for this proposed measure
may be found at: http://
www.Fqualityforum.Forg/WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=
70374.
In summary, in addition to the 18
measures that we have previously
finalized for the PCHQR Program, we
proposed one new measure for reporting
beginning with the FY 2017 program.
The proposed policies regarding the
form, manner, and timing of data
collection for this measure are discussed
in later sections. We welcomed public
comment on this proposal.
125 Ibid.
126 Available at: http://www.qualityforum.org/
WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=
70374.
127 Ibid.
128 Lutz S, Berk L, Chang E, et al. Palliative
radiotherapy for bone metastases: An ASTRO
evidence-based guideline. Int J Radiat Oncol Biol
Phys. 2011;79(4):965–976.
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Comment: Several commenters
supported the proposed EBRT for bone
metastases measure, noting that it aims
to address the variation in practice
patterns for using radiation therapy for
palliative care and promotes improved
quality of inpatient care provided to
Medicare beneficiaries. However, the
commenters encouraged CMS to
conduct a performance gap analysis of
radiation therapy practice that is
specific to the PCH setting.
Response: We thank the commenters
for their support. Radiation therapy is a
common treatment modality for some
cancers, and the ASTRO Task Force
(2009) found that the literature
demonstrates widespread variation in
palliative radiation dose fractionation
schedules. Because of this variation, we
believe it is important to protect patient
safety in the PCH setting by addressing
potentially unnecessary and harmful
radiation doses. We understand that
PCHs, specifically, provide EBRT
services, and we believe that the ASTRO
Task Force findings demonstrate that
the EBRT for bone metastases measure
is relevant and appropriate for the PCH
setting.
We agree with the commenters’
suggestions that we conduct a
‘‘performance gap analysis’’ to assess
the appropriateness of the EBRT
measure in the PCH setting. We intend
to conduct that analysis when we have
collected data beginning with the FY
2017 PCHQR Program.
Comment: One commenter supported
the adoption of the EBRT for bone
metastases measure but recommended
that CMS revise the measure to include
a broader population of patients
receiving radiation therapy.
Response: We appreciate the
commenter’s feedback. The measure is
NQF-endorsed for the population
described in the specifications. We will
continue to work closely with ASTRO to
assess the current clinical evidence base
for the broader PCH population. We will
consider incorporating any future
measure updates supported by clinical
evidence.
After consideration of the public
comments we received, we are
finalizing the EBRT for bone metastases
measure for the FY 2017 program and
subsequent years.
The table below lists all previously
adopted measures as well as the
finalized measure for the PCHQR
Program for the FY 2017 program and
subsequent years.
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PCHQR PROGRAM MEASURES FOR THE FY 2017 PROGRAM AND SUBSEQUENT YEARS
[Including measure finalized in this final rule]
Topic
Safety and Healthcare-Associated Infection—HAI:
• (NQF #0139) NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure *
• (NQF #0138) NHSN Catheter-Associated Urinary Tract Infections (CAUTI) Outcome Measure *
• (NQF #0753) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure * (currently includes SSIs following Colon
Surgery and Abdominal Hysterectomy Surgery)
Clinical Process/Cancer-Specific Treatments:
• (NQF #0223) Adjuvant Chemotherapy is Considered or Administered Within 4 Months (120 days) of Diagnosis to Patients Under the Age
of 80 with AJCC III (lymph node positive) Colon Cancer *
• (NQF #0559) Combination Chemotherapy is Considered or Administered Within 4 Months (120 days) of Diagnosis for Women Under 70
with AJCC T1c, or Stage II or III Hormone Receptor Negative Breast Cancer *
• (NQF #0220) Adjuvant Hormonal Therapy *
SCIP:
• (NQF #0218) Surgery Patients who Received Appropriate VTE Prophylaxis within 24 Hrs Prior to Surgery to 24 Hrs After Surgery End
Time *
• (NQF #0453) Urinary Catheter Removed on Post-Operative Day 1 or Post-Operative Day 2 with Day of Surgery Being Day Zero *
• (NQF #0527) Prophylactic Antibiotic Received Within 1 Hr Prior to Surgical Incision *
• (NQF #0528) Prophylactic Antibiotic Selection for Surgical Patients *
• (NQF #0529) Prophylactic Antibiotic Discontinued Within 24 Hrs After Surgery End Time *
• (NQF #0284) Surgery Patients on Beta Blocker Therapy Prior to Admission who Received a Beta Blocker During the Perioperative Period *
Clinical Process/Oncology Care Measures:
• (NQF #0382) Oncology-Radiation Dose Limits to Normal Tissues *
• (NQF #0383) Oncology: Plan of Care for Pain *
• (NQF #0384) Oncology: Pain Intensity Quantified *
• (NQF #0390) Prostate Cancer-Adjuvant Hormonal Therapy for High-Risk Patients *
• (NQF #0389) Prostate Cancer-Avoidance of Overuse Measure-Bone Scan for Staging Low-Risk Patients *
Patient Engagement/Experience of Care:
• (NQF #0166) HCAHPS *
Clinical Effectiveness Measure:
• (NQF #1822) External Beam Radiotherapy for Bone Metastases **
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* Previously finalized measures.
** Finalized for the FY 2017 program and subsequent years in this final rule.
6. Possible New Quality Measure Topics
for Future Years
We seek to develop a comprehensive
set of quality measures for widespread
use for informed decision-making and
quality improvement in the PCH setting.
Therefore, in future rulemaking, we
intend to propose to adopt new or
updated measures, such as measures
that assess the safety and efficiency of
the diagnosis and treatment of cancer,
measures that take into account novel
diagnostic and treatment modalities,
measures that assess symptoms and
functional status, and measures of
appropriate disease management.
Additional measure topics we intend to
consider include patient-centered care
planning and care coordination, shared
decision-making, measures of quality of
life outcomes, and measures of
admissions for complications of cancer
and treatment for cancer. We believe
that such measures will help us further
our goal of achieving better health care
and improved health for Medicare
beneficiaries who obtain cancer services
through the widespread dissemination
and use of quality of care information.
We welcomed public comments and
specific suggestions for measure topics
for the following measure domains:
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outcomes; quality of life; clinical quality
of care; care coordination; patient safety;
patient and caregiver experience of care;
population/community health; and
efficiency. These domains align with
those of the NQS, and we believe that
selecting measures to address these
domains will promote better cancer care
while aligning the PCHQR Program with
other established quality reporting and
pay-for-performance programs such as
the Hospital IQR Program, the Hospital
OQR Program, and the Hospital VBP
Program.
Comment: Several commenters
supported the types of measures that
CMS stated its intent to adopt for the
PCHQR Program, specifically measures
that take into account the use of novel
treatments and diagnostic tests, noting
that CMS’ approach will ensure that
cancer patients have appropriate access
to new treatments.
Response: We thank the commenters
for their support and will consider this
feedback for future rulemaking.
Comment: Several commenters
suggested measure topics that CMS
should consider for future years. They
recommended that CMS: (1) develop
and adopt measures on topics including
benign and malignant hematology; (2)
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consider measures that address nonsmall cell lung cancer (NSCLC)
treatment; (3) develop measures of riskadjusted, stage-specific survival rates for
various types of cancer; (4) adopt
validated outcomes measures over
process-based measures; (5) emphasize
the importance of the HCAHPS survey;
and (6) consider palliative care
measures.
Response: We appreciate the
commenters’ suggestions and will
consider this feedback for future
rulemaking. We note that, in the FY
2014 IPPS/LTCH PPS final rule, we
adopted the HCAHPS survey for use in
the PCHQR Program measure set
beginning with the FY 2016 program (78
FR 50844 through 50845).
Comment: One commenter supported
the measure topics proposed for
consideration for the PCHQR Program in
future years. Several commenters also
described the importance of ensuring
that measures adopted for the PCHQR
Program be supported by the MAP,
tested for their applicability, and
assessed for potential unintended
consequences that may result from their
use in specific patient populations.
Another commenter recommended that
CMS continue to align measures
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adopted for the PCHQR Program with
those in other IPPS quality reporting
programs.
Response: We thank the commenters
for their support and comments. We
will consider this feedback in future
rulemaking.
Comment: One commenter
commended CMS for focusing attention
on addressing high priority measure
gaps such as outcomes, quality of life
measures, safety, and overuse of care to
be considered for future use in the
PCHQR Program. The commenter
encouraged CMS to coordinate with
partners in addressing the following
challenges: measures that require
multiple data sources; research that
demonstrates gaps in care; and the need
to develop a ‘‘core’’ set of measures for
a population with varied diagnoses.
Response: We thank the commenter
for its support and will strive
continually to collaborate with external
stakeholders.
Generally, we retain measures from
the previous years’ PCHQR Program
measure sets for subsequent years.
However, in future years, we will
consider developing criteria to
determine whether or not to remove or
replace measures from the PCHQR
Program measure set. In developing
removal criteria, we will consider those
criteria used by other CMS quality
reporting programs in order to align the
PCHQR Program with those programs.
We also welcomed public comments
on the criteria for removal or
replacement of measures from the
PCHQR Program.
Comment: Several commenters noted
that, in the FY 2015 IPPS/LTCH PPS
proposed rule, CMS proposed to remove
nearly all of the SCIP measures from the
Hospital IQR Program and
recommended that CMS consider
removing the six SCIP measures from
the PCHQR Program. Commenters also
recommended that CMS adopt criteria
for determining ‘‘topped out’’ measures
and measure removal in future years.
Response: At this time, we do not
have sufficient data to determine
whether these SCIP measures are
‘‘topped-out’’ in the PCH setting. We
recognize that the PCHQR patient
population is exclusively comprised of
cancer patients, unlike the patient
population at acute care hospitals that
are included in the Hospital IQR
Program.
As a result, we will retain the PCH
SCIP measures until we have adopted
‘‘topped out’’ policy and until we have
sufficient data to conduct ‘‘topped-out’’
analyses in future years and we will
continue to monitor and evaluate the
PCHQR SCIP measures. As noted above,
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we will consider adopting ‘‘topped out’’
and other measure removal criteria
similar to those adopted by other quality
reporting programs, including the
Hospital IQR Program, in future
rulemaking.
In an effort to reduce the reporting
burden for PCHs, in future years, we
will consider proposing to require PCHs
to report electronically-specified
clinical quality measures for the PCHQR
Program. We believe that the collection
and reporting of data through health
information technology would greatly
simplify and streamline reporting for
many CMS quality reporting programs,
including the PCHQR Program. Through
electronic reporting, PCHs would be
able to leverage EHRs to capture,
calculate, and electronically submit
quality data that are currently manually
chart-abstracted and submitted to CMS
for the PCHQR Program. In developing
future proposals for electronic clinical
quality measures adoption, we will
consider the need to align and
harmonize measures across various
quality reporting programs to minimize
the reporting burden imposed on PCHs.
We welcomed public comments on
the development of electronic clinical
quality measure reporting criteria for
future years.
Comment: Several commenters
supported CMS’ proposal to develop
electronic clinical quality measure
reporting criteria for future years and
recommended that CMS consider the
content validity and clinical
appropriateness of any measures
adopted for the PCHQR Program.
Response: We thank the commenters
for their support and will consider this
feedback in future rulemaking.
changes to measures might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,
and exclusions for a measure. We
believe that nonsubstantive changes
may include updates to measures based
upon changes to guidelines on which
the measures are based.
We will continue to use rulemaking to
adopt substantive updates to the
measures we have adopted for the
PCHQR Program. Examples of changes
that we might consider to be substantive
would be those in which the changes
are so significant that the measure is no
longer the same measure, or when a
standard of performance assessed by a
measure becomes more stringent (for
example, changes in acceptable timing
of medication, procedure/process, or
test administration). Another example of
a substantive change would be where
the NQF has extended its endorsement
of a previously endorsed measure to a
new setting, such as extending a
measure from the inpatient setting to
hospice. We also note that, to the extent
a PCHQR measure is endorsed by the
NQF, the NQF measure maintenance
process incorporates an opportunity for
public comment and engagement.
We believe the endorsement
processes, as well as our treatment of
substantive versus nonsubstantive
measure changes, adequately balances
our need to incorporate updates to
PCHQR Program measures in the most
expeditious manner possible while
preserving the public’s ability to
comment on updates that so
fundamentally change an endorsed
measure that it is no longer the same
measure that we originally adopted.
7. Maintenance of Technical
Specifications for Quality Measures
We maintain technical specifications
for the PCHQR Program measures, and
we periodically update those
specifications. The specifications may
be found on the QualityNet Web site at:
https://qualitynet.org/dcs/Content
Server?cid=1228772356060&
pagename=QnetPublic%2FPage%
2FQnetTier2&c=Page.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53504 through 53505), we
finalized a policy under which we use
a subregulatory process to make
nonsubstantive updates to measures
used for the Hospital IQR Program. We
also adopted this process for all
measures adopted for the PCHQR
Program. With respect to what
constitutes substantive versus
nonsubstantive changes, we expect to
make this determination on a case-bycase basis. Examples of nonsubstantive
8. Public Display Requirements
Beginning with the FY 2014 Program
Section 1866(k)(4) of the Act requires
the Secretary to establish procedures for
making the data submitted under the
PCHQR Program available to the public.
Such procedures must ensure that a
PCH has the opportunity to review the
data that are to be made public with
respect to the PCH prior to such data
being made public. Section 1866(k)(4) of
the Act also provides that the Secretary
must report quality measures of process,
structure, outcome, patients’ perspective
on care, efficiency, and costs of care that
relate to services furnished in such
hospital on the CMS Web site.
In order to meet these requirements,
in the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53562 through 53563), we
finalized our policy to display publicly
PCHQR Program data on the Hospital
Compare Web site (http://www.
hospitalcompare.hhs.gov/) and
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established a preview period of 30 days
prior to making such data public.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50847 through 50848), we
finalized our proposal to display
publicly in 2014 and subsequent years
the data for the measures listed below:
• Adjuvant Chemotherapy is
considered or administered within 4
months (120 days) of diagnosis to
patients under the age of 80 with AJCC
III (lymph node positive) colon cancer
(NQF #0223); and
• Combination Chemotherapy is
considered or administered within 4
months (120 days) of diagnosis for
women under 70 with AJCC T1c, or
Stage II or III hormone receptor negative
breast cancer (NQF #0559).
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28257), we
proposed to display publicly in 2015
and subsequent years the data for the
Adjuvant Hormonal Therapy measure
(NQF #0220).
We also proposed to display publicly
no later than 2017 and for subsequent
years the data for the measures listed
below:
• NHSN Catheter-Associated Urinary
Tract Infections (CAUTI) Outcome
Measure (NQF #0138); and
• NHSN Central Line-Associated
Bloodstream Infection (CLABSI)
Outcome Measure (NQF #0139).
At present, all PCHs are reporting
CLABSI and CAUTI data to the NHSN
under the PCHQR Program. However,
due to the low volume of data produced
and reported by the small number of
facilities (in fewer than 2 years), the
CDC is unable to calculate reasonable
and reliable baseline estimates, or
expected rates, which are needed for the
purpose of calculating these measure
rates. Therefore, we estimate that the
first public posting of the CLABSI and
CAUTI PCHQR Program data reported to
the NHSN from the PCHs will occur no
later than 2017.
We invited public comment on these
proposals.
Comment: Commenters recommended
that CMS revise the CLABSI, CAUTI,
and SSI measures to account for cancerspecific risks and consider the variation
in the cancer patient population casemix, especially regarding the percentage
of patients discharged to palliative or
hospice care, when assessing
performance on these measures for
public display, and recommended that
CMS display publicly ICU versus nonICU rates for the CLABSI and CAUTI
data.
Response: We appreciate the
commenters’ feedback and will consider
it for future years. We note that the CDC
is the measure steward and is
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responsible for maintaining the measure
specifications for the CLABSI, CAUTI,
and SSI measures. CDC works closely
with external partners and subjectmatter experts to develop and maintain
NHSN definitions and criteria that are
both standardized and clinically
relevant. A concerted effort is made to
take into account the heterogeneous
patient populations that are monitored
and tracked using NHSN, cancer
patients being one of many such
populations. However, CDC recognizes
that the HAI definitions may not
account for all heterogeneity and
variation among the patient populations
and will continue to work with subjectmatter experts to gain input and insight
on additional criteria that are needed to
better represent specific populations
where possible. In addition, now that
we have received data specifically from
PCHs, those data can be reviewed, along
with all other NHSN data, when the
SIRs are to be recalculated to determine
baselines based on the FY 2014 program
year. If strong variations are found, we
will consider revising the calculation for
PCHs.
Comment: One commenter supported
CMS’ proposal to delay the display of
both NHSN CAUTI and CLABSI until no
later than 2017 in order to ensure that
reliable expected rates can be
calculated, and recommended that CMS
evaluate the NHSN SSI data under the
same standard.
Response: We thank the commenter
for its support. The main purposes of
the PCHQR Program are to report
publicly quality of care information that
consumers can use to make decisions
about their health care and to encourage
PCHs to improve their quality of care.
Accordingly, we will delay public
reporting of CLABSI and CAUTI data
until no later than 2017 so that reliable
baseline estimates and expected rates
can be determined. We believe this
delay is necessary in order to provide
meaningful and reliable data available
for consumers to make informed health
care decisions. After considering the
comment, we agree that this same
standard should apply to the SSI
measure.
After consideration of the public
comments we received, we are
finalizing the proposal to display
publicly beginning in 2015 the data for
the Adjuvant Hormonal Therapy
measure (NQF #0220), and to display
publicly the CLABSI and CAUTI data no
later than 2017.
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9. Form, Manner, and Timing of Data
Submission Beginning With the FY
2017 Program
a. Background
Section 1866(k)(2) of the Act requires
that, beginning with the FY 2014
PCHQR Program, each PCH must submit
to the Secretary data on quality
measures specified under section
1866(k)(3) of the Act in a form and
manner, and at a time, as specified by
the Secretary.
Data submission requirements and
deadlines for the PCHQR Program are
generally posted on the QualityNet Web
site at: http://www.qualitynet.org/dcs/
ContentServer?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier3&
cid=1228772864228.
b. Reporting Requirements for the New
Measure: External Beam Radiotherapy
for Bone Metastases (NQF #1822)
Beginning With the FY 2017 Program
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28257 through
28258), we proposed that PCHs report
the External Beam Radiotherapy for
Bone Metastases (NQF #1822) measure
beginning with January 1, 2015
discharges and for subsequent years. We
proposed that PCHs would report this
measure to us via a CMS Web-based
Measures Tool on an annual basis (July
1 through August 15 of each respective
year). This approach is consistent with
the data submission deadlines finalized
for the clinical process/oncology care
measures (78 FR 50850 through 50851)
and PCHs are already preparing to begin
submitting PCHQR data using this
timeline. We also believe that annual
data submission of once per year (as
opposed to quarterly data submission of
four times per year) will reduce PCHs’
costs and burden. We believe that these
proposed dates will provide enough
advance notice for PCHs to prepare to
report the measure.
We proposed to collect the EBRT for
Bone Metastases measure rates for the
FY 2017 program and subsequent years
using all-patient (both Medicare and
non-Medicare) data from the four
quarters (Q1, Q2, Q3, and Q4) of CY
2015, and that PCHs must submit
aggregate data for the measure for each
of these quarters during a data
submission window that would be open
from July 1 through August 15, 2016.
For the FY 2017 program and
subsequent years, we refer readers to the
reporting periods and data submission
window outlined in the table below in
this section.
For data collection, we proposed that
PCHs submit aggregate-level data
through the CMS Web-based Measures
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Tool or submit an aggregate data file
through a vendor (via QualityNet
infrastructure). We refer readers to the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50850 through 50851) for more
information on the CMS Web-based
Measures tool.
We welcomed public comment on the
proposed reporting periods, data
submission timeframes, and data
collection methods/modes for the
proposed measure for the FY 2017
program and subsequent years.
Comment: One commenter requested
that CMS provide clarification on
whether a sampling methodology
(including population and sampling
guidelines) will be permitted for the
EBRT for bone metastases measure
because this approach will lessen the
burden on PCHs.
Response: We agree that an all-patient
EBRT sampling methodology would
provide the public with quality measure
data that represents the entire patient
population of PCHs. We believe that this
approach would facilitate PCH
education through a consistent sampling
methodology across PCHQR measures.
Accordingly, we are finalizing a
sampling methodology for the EBRT
measure in this final rule that is
consistent with the sampling
methodology standards finalized for the
clinical process/oncology care and SCIP
measures. We will incorporate this
EBRT sampling methodology in the next
feasible regularly scheduled PCHQR
specifications manual semiannual
update.
Comment: One commenter
recommended that CMS adopt the same
reporting requirements proposed for the
clinical process/oncology care, clinical
process/cancer specific treatment, and
SCIP measures for the new EBRT for
bone metastases measure.
Response: The EBRT for bone
metastases reporting proposals (79 FR
28257) are consistent with the clinical
process/oncology care proposals (79 FR
28258). These proposals allow two data
50283
submission options to submit aggregate
data: via a CMS Web-based Measures
Tool or an aggregate data file.
After consideration of the public
comments we received, we are
finalizing the sampling methodology by
allowing PCHs to use the same sampling
approach that we are finalizing for the
clinical process/oncology care measures
(we refer readers to the sampling table
found in section IX.B.9.d. of the
preamble of this final rule (New
Sampling Methodology for the Clinical
Process/Oncology Care Measures
Beginning with the FY 2016 Program))
for the EBRT measure sampling
purposes. In addition, we are finalizing
our proposed reporting requirements for
the EBRT measure, beginning with the
FY 2017 PCHQR Program. The table
below outlines the finalized reporting
periods and submission timeframes for
FY 2017, FY 2018, and subsequent years
for the EBRT for bone metastases
measure.
FINALIZED EXTERNAL BEAM RADIOTHERAPY FOR BONE METASTASES (NQF #1822) MEASURE-REPORTING PERIODS AND
SUBMISSION TIMEFRAMES FOR THE FY 2017 PROGRAM AND SUBSEQUENT YEARS
Program year
(FY)
Reporting periods
(CY)
2017 ...................................
Q1 2015 discharges ............................................................................................
(January 1, 2015–March 31, 2015) ....................................................................
Q2 2015 discharges ............................................................................................
(April 1, 2015–June 30, 2015).
Q3 2015 discharges ............................................................................................
(July 1, 2015–September 30, 2015).
Q4 2015 discharges ............................................................................................
(October 1, 2015–December 31, 2015).
Q1 2016 discharges ............................................................................................
(January 1, 2016–March 31, 2016) ....................................................................
Q2 2016 discharges ............................................................................................
(April 1, 2016–June 30, 2016).
Q3 2016 discharges ............................................................................................
(July 1, 2016–September 30, 2016).
Q4 2016 discharges ............................................................................................
(October 1, 2016–December 31, 2016).
Q1 discharges .....................................................................................................
(January 1–March 31 of each year 2 years before the program year) ..............
Q2 discharges .....................................................................................................
(April 1–June 30 of each year 2 years before the program year).
Q3 discharges .....................................................................................................
(July 1–September 30 of each year 2 years before the program year).
Q4 discharges .....................................................................................................
(October 1–December 31 of each year 2 years before the program year).
2018 ...................................
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Subsequent Years .............
c. Reporting Options for the Clinical
Process/Cancer Specific Treatment
Measures Beginning With the FY 2015
Program and the SCIP and Clinical
Process/Oncology Care Measures
Beginning With the FY 2016 Program
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28258 through
28259), we proposed to modify the data
submission requirements for the three
clinical process/cancer specific
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Data submission deadlines
treatment measures that we adopted in
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53564), and the six SCIP
measures and five clinical process/
oncology care measures that we adopted
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50846). Under those
requirements, PCHs submit aggregatelevel clinical process/cancer specific
treatment measure data to a CMS
contractor, aggregate-level clinical
process/oncology care measure data
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July 1, 2016–August 15, 2016.
July 1, 2017–August 15, 2017.
July 1–August 15 of each year before the program year.
through the CMS Web-based Measures
Tool, and patient-level SCIP measure
data through the QualityNet
infrastructure. We proposed to allow
PCHs to report the clinical process/
cancer specific treatment, SCIP, and
clinical process/oncology care data to
CMS using one of two mechanisms.
Under the first option, which was newly
proposed for the SCIP and clinical
process/oncology care measure sets,
PCHs or their authorized vendors may
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
enter aggregate numerator and
denominator data into a CMS Web page
located on the secure part of the CMS
QualityNet infrastructure. Under the
second option, which was newly
proposed for the clinical process/cancer
specific treatment, SCIP, and clinical
process/oncology care measures, PCHs
or their authorized vendors may submit
an aggregate data file through a CMS
secure QualityNet file exchange process.
We proposed these options in order to
decrease the reporting burden for PCHs.
We believe that the newly proposed
submission option, which is described
further below for the SCIP measures,
will result in a considerable burden
reduction for PCHs, as it includes once
annually, rather than once quarterly,
submission deadlines and submission of
aggregate data as opposed to patientlevel data for the SCIP measures.
In addition, we proposed a second
option, allowing PCHs to submit an
annual aggregate data file stratified by
four quarters for each of the SCIP
measures. We stated that we believed
this additional option would provide
the public with sufficiently reliable
quality measure information while
reducing PCH burden through providing
two data collection options. We also
stated that we would provide detailed
technical file format specifications on
the public QualityNet Web site
(www.qualitynet.org) following
publication of this final rule. We
outlined the new submission deadlines
for the SCIP measures in the table
below.
We stated that these requirements
would replace, for the purposes of the
PCHQR Program, the update to the SCIP
timeline and IT infrastructure that we
finalized for the PCHQR Program in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50851 through 50852).
We invited public comment on the
proposed new reporting mechanism that
would apply to the three clinical
process/cancer specific treatment
measures, five clinical process/oncology
care treatment measures, and six SCIP
measures.
Comment: One commenter supported
the proposal to allow two reporting
options for the clinical process/cancer
specific treatment, clinical process/
oncology care, and SCIP measures. One
commenter supported the proposal to
update the reporting periods and
submission timelines for the six SCIP
measures, noting that the proposal
simplifies the PCHQR Program’s data
reporting process.
Response: We appreciate the
commenters’ support of this proposal.
Our intent is to reduce burden and effort
and align CMS infrastructure where
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appropriate by offering alternative
options for PCHs to submit measure
data. We are finalizing the two reporting
options for the clinical process/cancer
specific treatment and clinical process/
oncology care measures as proposed.
However, the six PCHQR SCIP
measures, we are only finalizing the
second proposed option, under which
PCHs or their vendors may submit an
annual aggregate data file stratified by
four quarters data via the CMS
QualityNet portal.
We are not finalizing the first
proposed option that would have
allowed PCHs to submit aggregate
numerator and denominator data into a
CMS Web-Based Measures Tool for the
SCIP measures because we were
recently informed by our IT developers
that the proposed CMS Web page would
not be modified to collect aggregate
SCIP data by the previously finalized
January 2015 initial discharge date. As
a result, we are retaining as a second
option for these measures the data
submission that is currently in place,
under which PCHs may submit patientlevel data to CMS through the
QualityNet infrastructure.
Comment: One commenter expressed
concern that the proposed submission
options for the clinical process/cancer
specific treatment measures, which
allow for a data submission other than
through the CMS contractor (77 FR
53564) which uses the Commission on
Cancer Rapid Quality Reporting System
(RQRS), could result in declining
patient outcomes and less PCH
accountability.
Response: We appreciate the
commenter’s feedback. We strongly
believe that the vendor submission
approach, allowing for vendors to
submit aggregate data files is consistent
across all PCHQR measures and other
CMS quality reporting programs to
submit data on behalf of the respective
hospital facilities. In addition, we
believe this approach will greatly
reduce reporting burden, minimize
duplication of effort, and increase
efficiency because vendors commonly
submit more than one measure set at the
same time (for example, annually or
quarterly) on behalf of the facilities.
Comment: One commenter
recommended that CMS update NQF
#0383 (Oncology: Plan of Care for Pain)
to include a minimum threshold for
pain in the denominator and to provide
a more specific definition for ‘‘visit’’
that includes oncology visits (for
example, for palliative care). The
commenter also recommended all
changes to the measure specifications of
the clinical process/oncology care
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measures be communicated to NQF and
PCHs.
Response: We appreciate the
commenter’s feedback and will consider
it in future rulemaking.
Comment: Several commenters asked
CMS to consider whether the SCIP
measures have been adequately tested in
the PCH patient population, noting that
the measures may inadvertently
encourage care that is not applicable to
the PCH setting. For example, one
commenter noted that SCIP-Inf-3
requires that prophylactic antibiotics be
discontinued within 24 hours after
surgery end time, but that this approach
may not be well-suited for oncologic
patient populations.
Response: We note that we have
considered the appropriateness of these
measures for the PCH settings, as the
inclusion and exclusion criteria for the
SCIP measures adopted for the PCHQR
Program exclude patients from the
measure denominator when the care
does not apply. For example, the SCIPInf-3 measure specifications include an
exclusion criterion for patients with a
Reason to Extend Antibiotics. We
believe it is important to note that the
SCIP measures include all cancer
surgeries (and not limited to orthopedic
surgeries) performed by both PCHs and
many acute care hospitals. We will
continue to collaborate with PCHs that
have questions about the SCIP
measures, and to incorporate
nonsubstantive updates into the PCHQR
specifications manual.
After consideration of the public
comments we received, we are
finalizing the proposed reporting
requirements for the clinical process/
cancer specific treatment and clinical
process/oncology care measures
beginning with the FY 2015 and FY
2016 program years respectively with
one modification. We are not finalizing
the CMS Web-Based Measures Tool
(aggregate-level data) for the SCIP
measures because we are able to
leverage the existing patient-level CMS
SCIP IT collection infrastructure. PCHs
may submit the SCIP measures using
two options: (1) Authorized vendor
submission of an aggregate data file into
the secure CMS QualityNet portal to
CMS; or (2) submission of data via the
secure CMS QualityNet portal. This
finalized policy aligns our existing
reporting infrastructure across the
PCHQR Program and other CMS quality
improvement programs and provides an
additional vendor option to report SCIP
data to CMS.
The reporting periods and submission
timeframes for the clinical process/
cancer specific treatment and clinical
process/oncology care measures are
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outlined in the FY 2013 and FY 2014
IPPS/LTCH PPS final rules (77 FR 53564
and 78 FR 50851, respectively). The
table below outlines the finalized
aggregate data file reporting periods and
submission timeframes for FY 2016, FY
2017, and subsequent years for the SCIP
measures. Patient-level SCIP reporting
period and data submission timeframes
are available on the QualityNet Web site
50285
(https://www.qualitynet.org/dcs/Content
Server?c=Page&pagename=
QnetPublic%2FPage%2FQnetTier3&
cid=1228773716091).
FINALIZED SIX SCIP MEASURES-AGGREGATE DATA FILE REPORTING PERIODS AND SUBMISSION TIMEFRAMES FOR THE FY
2016 PROGRAM AND SUBSEQUENT YEARS
Program year
(FY)
Reporting periods
(CY)
2016 ...................................
Q1 2015 discharges ............................................................................................
(January 1, 2015–March 31, 2015) ....................................................................
Q2 2015 discharges ............................................................................................
(April 1, 2015–June 30, 2015) ............................................................................
Q3 2015 discharges ............................................................................................
(July 1, 2015–September 30, 2015).
Q4 2015 discharges ............................................................................................
(October 1, 2015–December 31, 2015).
Q1 discharges .....................................................................................................
(January 1–March 31 of each year 2 years before the program year) ..............
Q2 discharges .....................................................................................................
(April 1–June 30 of each year 2 years before the program year).
Q3 discharges .....................................................................................................
(July 1–September 30 of each year 2 years before the program year).
Q4 discharges .....................................................................................................
(October 1–December 31 of each year 2 years before the program year).
2017 ...................................
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Subsequent Years .............
Data submission deadlines
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28259), we did not
propose any changes to the previously
finalized procedural requirements,
Notice of Participation (NOP)
requirements, or Data Accuracy and
Completeness Acknowledgement
(DACA) requirements. We refer readers
to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53563 through 53567) for
more information on these
requirements.
The proposed methodology will allow
for different numbers of cases to be
reported based on each PCH’s cancer
patient population size. This is
necessary for the PCHQR Program
because bed size varies among PCHs
from 20 to >250 beds.129 The sampling
methodology for the clinical process/
oncology care measures is shown below,
and we believe it will decrease the
reporting burden on PCHs while
producing reliable measure rates.
d. New Sampling Methodology for the
Clinical Process/Oncology Care
Measures Beginning With the FY 2016
Program
Average
quarterly
initial population size
‘‘N’’
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50842), we adopted a policy
under which PCHs could report the five
clinical process/oncology care measures
finalized for the FY 2016 program and
subsequent years using the same
sampling methodology that we allow for
the reporting of those measures under
the PQRS. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28259), we
proposed to replace the previously
adopted sampling methodology with a
sampling methodology similar to the
one we have allowed hospitals to use to
report the SCIP measures under the
Hospital IQR Program. The sampling
methodology specified in the PQRS
Specifications Manual is specific to the
physician office setting. We believe that
the methodology we proposed is more
applicable to PCHs because it was
developed for hospital-level reporting.
>125 .........
51–125 .....
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10–50 .......
<10 ...........
Minimum required sample size
‘‘N’’
25.
20 percent of the initial patient
population.
10.
No sampling; 100 percent of the
initial patient population.
We also proposed that PCHs report
population and sample size counts (by
measure) for Medicare and nonMedicare discharges by quarter for the
five clinical process/oncology care
measures for the FY 2016 program and
subsequent years.
We proposed these requirements in
order to support our effort to align with
existing reporting requirements used in
other CMS quality reporting programs,
such as the Hospital IQR Program,
which requires participating hospitals to
129 American Hospital Directory: http://
www.ahd.com/freesearch.php.
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July 1, 2015–August 15, 2015.
July 1, 2016–August 15, 2016.
July 1–August 15 of each year before the program year.
submit population and sample size
counts for certain measures in addition
to the all-payer data needed to calculate
measure rates. We view it as vital for
PCHs to determine accurately their
aggregate population and appropriate
sample size data in order for us to assess
PCHs’ data reporting accuracy and
completeness for their total population
of cases, including both Medicare and
non-Medicare patients.
We welcomed public comments on
the proposed sampling guidelines and
proposed population and sample size
reporting requirements for the clinical
process/oncology care measures for the
FY 2016 program and subsequent years.
Comment: Several commenters
supported the proposal to replace the
PQRS physician-level sampling
methodology with the proposed new
sampling methodology. However, one
commenter requested clarification on
whether the proposal to collect allpatient data for the clinical process/
oncology care measures conflicts with
the proposed sampling methodology
and also on whether the sampling
methodology is based on the number of
patients applicable for each measure, or
on bed size (that is, hospital-level
sample size determination).
Response: We thank the commenters
for their support. The term ‘‘all-patient
data’’ refers to data regarding both
Medicare and non-Medicare patients.
Consistent with the sampling
methodology standards that we adopted
for these measures under the Hospital
IQR Program, when PCHs identify the
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initial patient population, they will use
‘‘all-patient data’’ to determine the
population of patients meeting the
measure criteria prior to individual
measure denominator exclusions. Thus,
the sample will include both patients
included and excluded from the
measure denominator. We believe that
this sampling methodology reduces
potential bias in measure rates from
sampling all patients included in the
measure’s initial patient population.
This initial patient population is usually
defined by groups of ICD–9–CM
principal procedure or diagnosis codes,
which may be readily identified by
PCHs by using computer billing records
common to Medicare and non-Medicare
health insurance payers. The PCHs will
subsequently identify the sample size
based on the patient population (‘‘allpatient data’’). This sampling process is
applicable for each clinical process/
oncology care measure.
Comment: One commenter requested
that CMS provide the specifications for
the clinical process/oncology care
measures and their new sampling
method.
Response: We appreciate the
commenter’s feedback. We have
partnered closely with all 11 PCHs and
will provide training and education
materials on all measures, including the
clinical process/oncology care measures
and the applicable proposed sampling
methodology. These materials will be
available on our QualityNet Web site
(http://www.qualitynet.org).
Comment: One commenter
recommended that CMS revise the
proposed reporting requirements for the
clinical process/oncology care measures
in order to require that reporting of
population and sample size counts be
based on electronically available data
only.
Response: We appreciate the
commenter’s feedback. We interpret the
comment to recommend that data be
submitted via the CMS Web-based
Measures Tool only. However, we
believe it is most appropriate and
feasible at this time to provide PCHs
with data submission options. We also
understand from past discussions with
PCHs that the 11 PCHs vary in their
implementation of EHRs. We will
consider future available data collection
options for PCHs, including electronic
Clinical Quality Measures (eCQMs). We
also believe that requiring population
and sample size count reporting based
on electronic data might adversely
burden PCHs that do not yet have the
means to collect electronic data.
Comment: One commenter
recommended that benchmarks for the
clinical process/oncology care measures
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be based on statistically significant
aggregate calculations only.
Response: We thank the commenter
for its feedback. Currently, we do not
have a policy to develop benchmarks. In
our effort to monitor and evaluate
program growth and sustainability, we
will be observing the clinical process/
oncology care measures baselines and
expected rates.
10. Exceptions From Program
Requirements
In our experience with other quality
reporting and performance programs,
we have noted occasions when
providers have been unable to submit
required quality data due to
extraordinary circumstances that are not
within their control (for example,
natural disasters). We do not wish to
unduly increase their burden during
these times. Therefore, in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50848), we finalized our policy that, for
the FY 2014 program and subsequent
years, PCHs may request and we may
grant exceptions (formerly referred to as
waivers) with respect to the reporting of
required quality data when
extraordinary circumstances beyond the
control of the PCH warrant. When
exceptions are granted, we will notify
the respective PCH. 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.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28259), we did not
propose any substantive changes to this
PCHQR exception process.
C. Long-Term Care Hospital Quality
Reporting (LTCHQR) Program
1. Background
In accordance with section 1886(m)(5)
of the Act, as added by section 3004(a)
of the Affordable Care Act, the Secretary
established the Long-Term Care
Hospital Quality Reporting (LTCHQR)
Program. Under section 1886(m)(5)(A)(i)
of the Act, for the rate year 2014 and
each subsequent rate year, in the case of
an LTCH that does not submit data to
the Secretary in accordance with section
1886(m)(5)(C) of the Act with respect to
such a rate year, any annual update
(which we also refer to as a ‘‘payment
determination’’) to a standard Federal
rate for discharges for the hospital
during the rate year, and after
application of section 1886(m)(3) of the
Act, shall be reduced by two percentage
points. As we discussed in the FY 2012
IPPS/LTCH PPS final rule (76 FR 51743
through 51744), for the purposes of the
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LTCH PPS, the term ‘‘rate year’’ and the
term ‘‘fiscal year’’ both refer to the time
period beginning October 1 and ending
September 30. In order to avoid any
possible confusion, we will use the term
‘‘fiscal year’’ rather than ‘‘rate year’’ in
our discussion of the LTCHQR Program.
Under section 1886(m)(5)(D)(i) of the
Act, the quality measures for the
LTCHQR Program are measures selected
by the Secretary that have been
endorsed by an entity that holds a
contract with the Secretary under
section 1890(a) of the Act, unless
section 1886(m)(5)(D)(ii) of the Act
applies. This contract is currently held
by the National Quality Forum (NQF).
Additional information regarding the
NQF and its measure review processes
is available at: http://
www.qualityforum.org/Measuring_
Performance/Measuring_
Performance.aspx.
While as a general matter the
Secretary must select endorsed
measures for the LTCHQR Program,
section 1886(m)(5)(D)(ii) of the Act
provides that an exception may be made
in the case of a specified area or medical
topic determined appropriate by the
Secretary for which a feasible and
practical measure has not been endorsed
by the entity that holds a contract with
the Secretary under section 1890(a) of
the Act. In such a case, section
1886(m)(5)(D)(ii) of the Act authorizes
the Secretary to specify a measure that
is not so endorsed, as long as due
consideration is given to measures that
have been endorsed or adopted by a
consensus organization identified by the
Secretary.
The LTCHQR Program was
implemented in the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51743
through 51756).
2. General Considerations Used for
Selection of Quality Measures for the
LTCHQR Program
We seek to promote higher quality
and more efficient health care for the
beneficiaries we serve. Quality reporting
programs, including public reporting of
quality information, advance such
quality improvement efforts. Quality
measurement remains the key tool to the
success of these programs. Therefore,
the selection of only the highest caliber
of measures is a priority for CMS.
We seek to adopt measures for the
LTCHQR Program that promote better,
safer, and more efficient care. Our
measure development and selection
activities for the LTCHQR Program take
into account national priorities, such as
those established by the National
Priorities Partnership (http://
www.qualityforum.org/Setting_
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Priorities/NPP/National_Priorities_
Partnership.aspx), the HHS Strategic
Plan (http://www.hhs.gov/secretary/
about/priorities/priorities.html), the
National Quality Strategy (NQS)
http://www.ahrq.gov/workingforquality/
nqs/nqs2011annlrpt.htm), and the CMS
Quality Strategy (http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
QualityInitiativesGenInfo/CMS-QualityStrategy.html).
We also must consider input from the
NQF Measures Application Partnership
(MAP) when selecting measures under
the LTCHQR Program. The MAP is
composed of multi-stakeholder groups
convened by the NQF, our current
contractor under section 1890 of the
Act. The NQF must convene these
stakeholders and provide us with the
stakeholders’ input on the selection of
certain categories of quality and
efficiency measures as part of a prerulemaking process described in section
1890A of the Act. We, in turn, must take
this input into consideration in
selecting those categories of measures.
The NQF MAP met in December 2013
and January 2014 and provided input to
CMS as required under section
1890A(a)(3) of the Act. This input
appears in the MAP’s January 2014 PreRulemaking Report available for
download at: http://
www.qualityforum.org/Publications/
2014/01/MAP_Pre-Rulemaking_Report_
_2014_Recommendations_on_
Measures_for_More_than_20_Federal_
Programs.aspx. Measures proposed for
the LTCHQR Program in this final rule
are measures CMS included under the
List of Measures under Consideration
(MUC List) for December 1, 2013,130 a
list that the Secretary must make
available to the public by December 1 of
each year, as part of the pre-rulemaking
process, as described in section
1890A(a)(2) of the Act. The measures we
proposed in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28263
through 28268) for the LTCHQR
Program are discussed in the MAP PreRulemaking Report (pp. 192–193). The
MAP reviewed each measure proposed
in this rule. We refer readers to the
following sections of the preamble of
this final rule for more information on
the MAP’s recommendations:
IX.C.7.a.(1), Functional Status Quality
Measure: Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function; IX.C.7.a.(2), Functional Status
130 Available at: http://www.qualityforum.org/
WorkArea/
linkit.aspx?LinkIdentifier=id&ItemID=74245.
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Quality Measure: Functional Outcome
Measure: Change in Mobility among
Long-Term Care Hospital Patients
Requiring Ventilator Support; and
IX.C.7.b., Quality Measure: National
Healthcare Safety Network (NHSN)
Ventilator-Associated Event (VAE)
Outcome Measure.
After due consideration to any
measures that may have been endorsed
or adopted by a consensus organization,
including the NQF, for the LTCH
setting, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28259 through
28278) we proposed measures that are
either supported by the MAP for the
LTCHQR Program, or that we believe
most closely align with the national
priorities discussed in this section of the
proposed rule. In the absence of the
MAP’s support, in some cases we
proposed measures for which the MAP
expressed conditional support and that
meet the exception criteria in section
1886(m)(5)(D)(ii) of the Act. Further
discussion of why each measure is a
high priority in the LTCH setting is
included below.
3. Policy for Retention of LTCHQR
Program Measures Adopted for Previous
Payment Determinations
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53614 through 53615), for
the LTCHQR Program, we adopted a
policy that once a quality measure is
adopted, it will be retained for use in
subsequent years, unless otherwise
stated. For the purpose of streamlining
the rulemaking process, when we
initially adopt a measure for the
LTCHQR Program for a payment
determination, this measure will be
automatically adopted for all
subsequent years or until we propose to
remove, suspend, or replace the
measure. For further information on
how measures are considered for
removal, suspension, or replacement,
we refer readers to the FY 2013 IPPS/
LTCH PPS final rule.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28260), we did not
propose any changes to this policy for
retaining LTCHQR Program measures
adopted for previous payment
determinations.
4. Policy for Adopting Changes to
LTCHQR Program Measures
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53615 through 53616), we
adopted our policy that if the NQF
updates an endorsed measure that we
have adopted for the LTCHQR Program
in a manner that we consider to not
substantively change the nature of the
measure, we will use a subregulatory
process to incorporate those updates to
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50287
the measure specifications that apply to
the LTCHQR Program. With respect to
what constitutes a substantive versus a
nonsubstantive change, we expect to
make this determination on a measureby-measure basis. Examples of such
nonsubstantive changes might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,
and changes to exclusions for a
measure. The subregulatory process for
nonsubstantive changes will include
revision of the LTCHQR Program
Manual and posting of updates on our
Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/index.html. Examples of
changes that we might consider to be
substantive would be those in which the
changes are so significant that the
measure is no longer the same measure,
or when a standard of performance
assessed by a measure becomes more
stringent, such as changes in acceptable
timing of medication, procedure/
process, test administration, or
expansion of the measure to a new
setting.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28260 through
28261), we did not propose any changes
to this policy for adopting changes to
LTCHQR Program measures.
5. Previously Adopted Quality Measures
a. Previously Adopted Quality Measures
for the FY 2015 and FY 2016 Payment
Determinations and Subsequent Years
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53624 through 53636), we
retained the application of Percent of
Residents with Pressure Ulcers That Are
New or Worsened (Short-Stay) (NQF
#0678) to the LTCH setting (initially
adopted in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51745 through 51750))
for the FY 2015 payment determination
and subsequent years, and adopted
updated versions of National Health
Safety Network (NHSN) CatheterAssociated Urinary Tract Infection
(CAUTI) Outcome Measure (NQF #0138)
and NHSN Central Line-Associated
Blood Stream Infection (CLABSI)
Outcome Measure (NQF #0139), for the
FY 2014 payment determination and
subsequent years. We also adopted two
new quality measures for the LTCHQR
Program for the FY 2016 payment
determination and subsequent years, in
addition to the three previously adopted
measures (the CAUTI measure, CLABSI
measure, and Pressure Ulcer measure):
(1) Percent of Residents or Patients Who
Were Assessed and Appropriately Given
the Seasonal Influenza Vaccine (Short-
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Stay) (NQF #0680); and (2) Influenza
Vaccination Coverage among Healthcare
Personnel (NQF #0431) (77 FR 53624
through 53636).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50861 through 50863), we
adopted the NQF-endorsed version of
the Pressure Ulcer measure, Percent of
Residents or Patients with Pressure
Ulcers That Are New or Worsened
(Short-Stay) (NQF #0678), for the
LTCHQR Program for the FY 2015
payment determination and subsequent
years.
Set out below are the quality
measures, both previously adopted
measures retained in the LTCHQR
Program and measures adopted in FY
2013 and FY 2014 IPPS/LTCH PPS final
rules, for the FY 2015 and FY 2016
payment determinations and subsequent
years.
LTCHQR PROGRAM QUALITY MEASURES ADOPTED FOR THE FY 2015 AND FY 2016 PAYMENT DETERMINATIONS AND
SUBSEQUENT YEARS
NQF Measure ID
Measure title
NQF #0138 ................
National Health Safety Network (NHSN) Catheter-Associated Urinary Tract Infection
(CAUTI) Outcome Measure.
National Health Safety Network (NHSN) Central Line-Associated Blood Stream Infection (CLABSI) Outcome Measure.
Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened
(Short-Stay).
Percent of Residents or Patients Who Were Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short-Stay).
Influenza Vaccination Coverage among Healthcare Personnel ......................................
NQF #0139 ................
NQF #0678 ................
NQF #0680 ................
NQF #0431 ................
While we did not propose any
changes in the FY 2015 IPPS/LTCH PPS
proposed rule to measure specifications
for NQF #0678, Percent of Residents or
Patients with Pressure Ulcers That Are
New or Worsened (Short-Stay), we
received input from several commenters
on this measure.
Comment: A few commenters
suggested CMS consider adding a
‘‘present on admission’’ (POA) indicator
in the LTCH Continuity Assessment
Record and Evaluation (CARE) Data Set.
These commenters noted that a POA
indicator is critical to aid in the
determination of whether a pressure
ulcer was developed as a result of care
provided by an LTCH.
Response: We recognize the
importance of determining pressure
ulcers that are ‘‘present on admission’’
and taking this into account when
assessing new or worsened pressure
ulcers in the LTCH setting. The quality
measure Percent of Residents or Patients
with Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678), is
designed to identify pressure ulcers that
are present on admission. Items
M0800A, M0800B, and M0800C on the
LTCH CARE Data Set discharge
assessment capture patient-specific data
Payment determination
to identify Stage 2, Stage 3, and Stage 4
pressure ulcers that are ‘‘new’’ or
‘‘worsened’’ since the time of admission
assessment, thus identifying only those
Stage 2, Stage 3 and Stage 4 pressure
ulcers that were not present on the
admission assessment and/or only those
Stage 2, Stage 3 and Stage 4 pressure
ulcers that were present at a lower stage
on the admission assessment. We refer
readers to the measure specifications for
the Pressure Ulcer measure, which are
available for download at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
and at www.qualityforum.org/QPS/0678.
Comment: A commenter
recommended that ‘‘behavioral
patients’’ be excluded from the Pressure
Ulcer measure. The commenter noted
that the inclusion of all inpatients
regardless of age and any other criteria
has a significant impact on the reporting
burden for LTCHs and that the
exclusion of behavioral patients would
lessen burden on LTCHs because these
patients do not significantly
contributing to the Pressure Ulcer
measure.
Response: We appreciate the
commenter’s input on this previously
FY 2015 and Subsequent FYs.
FY 2015 and Subsequent FYs.
FY 2015 and Subsequent FYs.
FY 2016 and Subsequent FYs.
FY 2016 and Subsequent FYs.
finalized measure. Pressure ulcers are
serious medical conditions that can lead
to serious life threatening infections,
can substantially increase the cost of
care, and are an important measure of
quality. As a result, we believe that all
patients, regardless of their cognitive or
behavioral health status, should be
assessed for pressure ulcer risk, and
appropriate pressure ulcer monitoring,
prevention, and management should be
implemented for all patients in an
LTCH. We refer the commenter to the
current measure specifications for NQF
#0678, including patient exclusions and
inclusions, available at
www.qualityforum.org/QPS/0678.
b. Previously Adopted Quality
Measures for the FY 2017 and FY 2018
Payment Determinations and
Subsequent Years
In the FY 2014 IPPS/LTCH PPS final
rule, we adopted three additional
measures for the FY 2017 payment
determination and subsequent years (78
FR 50863 through 50874) and one
additional measure for the FY 2018
payment determination and subsequent
years (78 FR 50874 through 50877).
These measures are set out in the table
below.
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LTCHQR PROGRAM QUALITY MEASURES PREVIOUSLY ADOPTED FOR THE FY 2017 AND FY 2018 PAYMENT
DETERMINATIONS AND SUBSEQUENT YEARS
NQF Measure ID
Measure title
NQF #1716 ........................................................
National Healthcare Safety Network (NHSN)
Facility-Wide
Inpatient
Hospital-Onset
Methicillin-Resistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure.
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Payment determination
FY 2017 and Subsequent Years
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50289
LTCHQR PROGRAM QUALITY MEASURES PREVIOUSLY ADOPTED FOR THE FY 2017 AND FY 2018 PAYMENT
DETERMINATIONS AND SUBSEQUENT YEARS—Continued
NQF Measure ID
Measure title
NQF #1717 ........................................................
National Healthcare Safety Network (NHSN)
Facility-Wide Inpatient Hospital-Onset Clostridium difficile Infection (CDI) Outcome
Measure.
All-Cause Unplanned Readmission Measure
for 30 Days Post-Discharge from Long-Term
Care Hospitals.
Percent of Residents Experiencing One or
More Falls with Major Injury (Long-Stay).
NQF #2512 (Under Review at NQF*) ...............
Application of NQF #0674 .................................
Payment determination
FY 2017 and Subsequent Years
FY 2017 and Subsequent Years
FY 2018 and Subsequent Years
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* Not NQF endorsed, currently under review at NQF, please see: http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_
Measures.aspx
While we did not propose any
changes in the FY 2015 IPPS/LTCH PPS
proposed rule to measures previously
adopted for the FY 2017 payment
determination and subsequent years, we
received input from a few commenters
regarding three previously finalized
measures: NHSN Facility-Wide
Inpatient Hospital-Onset MethicillinResistant Staphylococcus aureus
(MRSA) Bacteremia Outcome Measure
(NQF #1716), NHSN Facility-Wide
Inpatient Hospital-Onset Clostridium
difficile Infection (CDI) Outcome
Measure (NQF #1717), and All-Cause
Unplanned Readmission Measure for 30
Days Post-Discharge from Long-Term
Care Hospitals (NQF #2512, under
review at NQF). While we greatly
appreciate the commenters’ views on
these previously finalized measures, we
did not make any proposals relating to
them in the FY 2015 IPPS/LTCH PPS
proposed rule. Therefore, we will not
summarize and address all of these
comments in detail in this final rule.
However, we will consider all of these
comments in future rulemaking and
program development.
Comment: A commenter supported
the inclusion of the MRSA and CDI
measures in the LTCHQR Program
noting that the LTCH patients arrive
after receiving several weeks of therapy
for infections that are difficult to treat
and therefore have high levels of
exposure to antibiotics. Another
commenter also supported these two
measures and indicated support for the
readmission measure. This commenter
urged CMS to adopt outcome measures
more quickly and suggested that the
three aforementioned measures
finalized for FY 2017 be implemented
for FY 2016.
Response: We appreciate the
commenter’s recommendation to adopt
the measures more quickly than the
previously finalized timeline. However,
in order to ensure adequate time to
support successful measure
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implementation across the LTCHs, we
believe the previously finalized data
collection period and submission
deadlines are appropriate. We refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50880 through 50882)
for more information.
Comment: A commenter urged CMS
to share, on a monthly basis, claims data
with LTCHs for any patients readmitted
within 30 days of the LTCH discharge.
The commenter noted that providing
these data would (1) notify LTCHs of
readmissions that will affect their
quality reporting data, and (2) enable
LTCHs to identify potential systemic
problems and implement corrective
action plans focused on improving
quality of care and reducing preventable
readmissions.
Response: We appreciate the
commenter’s support for this previously
finalized quality measure. This
commenter recommended a quality
improvement process that is separate
from the purpose of the readmissions
measure. The readmissions measure is
intended to report statistically robust
estimates of standardized readmission
rates over a particular time, while the
commenter recommends an intensive
quality control process with real time
data on specific patients. We will
consider these quality improvement
process recommendations as we move
forward with the LTCHQR Program and
future measure development and
reporting efforts. To facilitate reduction
in readmissions, we encourage all
LTCHs to conduct appropriate discharge
planning and follow up with their
patients to monitor and ensure highquality care and improved outcomes.
6. Revisions to Data Collection Period
and Submission Deadlines for
Previously Adopted Quality Measures
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28262 through
28263) we proposed, for the FY 2016
payment determination and subsequent
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years, to revise data collection period
and submission deadlines for a measure
that we previously adopted for the
LTCHQR Program: Percent of Residents
or Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680). We also proposed, for the FY
2018 payment determination only,
revised data collection period and
submission deadlines for the
application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long-Stay) (application of
NQF #0674) measure. For the FY 2019
payment determination and subsequent
years, data collection for this measure
would begin on January 1 and continue
through December 31.
a. Revisions to Data Collection Period
and Submission Deadlines for Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680)
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50858 through 50861), we
revised the Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) measure for the FY 2016
payment determination and subsequent
years. Specifically, we finalized that for
the FY 2016 payment determination,
LTCHs must collect data for any patient
admitted or discharged during the
influenza vaccination season, from
October 1, 2014, through April 30, 2015,
and submit data for these patients by
May 15, 2015.
We sought to better align the data
collection period and submission
deadlines of the Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) measure with the data collection
period and submission deadlines of the
Percent of Residents or Patients with
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Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678)
measure because both measures are
reported using the same data collection
instrument, the LTCH CARE Data Set.
Therefore, for the FY 2016 payment
determination and subsequent years, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28262), we proposed to
revise the data collection period and
submission deadlines for the Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short Stay)
(NQF #0680) measure. Specifically, we
proposed that the first data collection
period would take place during the
fourth quarter of the CY preceding the
applicable FY (for example, October
2014 through December 2014 for the FY
2016 payment determination), with data
submission by February 15, 2015, and
the second data collection period would
take place during the first quarter of the
subsequent CY (for example, January
2015 through March 2015 for the FY
2016 payment determination), with data
submission by May 15, 2015.
The changes are illustrated below for
the FY 2016 and FY 2017 payment
determinations only, but similar
collection period and submission
deadlines would also apply to
subsequent years. By taking into
account the influenza vaccination
season, these changes would align data
collection and submission for this
measure (NQF #0680) with the rest of
the LTCH CARE Data Set.
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES FOR LTCHQR PROGRAM QUALITY DATA FOR THE FY 2016 AND
FY 2017 PAYMENT DETERMINATIONS: PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) (NQF #0680)
Data collection period
October
January
October
January
1,
1,
1,
1,
Submission deadlines
2014—December 31, 2014 ................................................................
2015—March 31, 2015 ......................................................................
2015—December 31, 2015 ................................................................
2016—March 31, 2016 ......................................................................
We noted that these changes would
only apply to the Percent of Residents
or Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) for the LTCHQR Program, and
would not be applicable to any other
LTCHQR Program measures, proposed
or adopted, unless explicitly stated.
We invited public comments on our
proposal to revise the data collection
period and submission deadlines for
this patient influenza vaccination
measure (NQF #0680) for the FY 2016
payment determination and subsequent
years. We refer readers to section IX.9.c.
of the preamble of this final rule for our
responses to comments on this proposal,
as well as our final policy on this
proposal.
February 15, 2015 ................................
May 15, 2015.
February 15, 2016 ................................
May 15, 2016.
b. Revisions to Data Collection Period
and Submission Deadlines for the
Application of Percent of Residents
Experiencing One or More Falls With
Major Injury (Long-Stay) (NQF #0674)
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50874 through 50877), we
adopted the Application of Percent of
Residents Experiencing One or More
Falls with Major Injury (Long-Stay)
(NQF #0674) for the FY 2018 payment
determination. We further finalized that
LTCHs should begin to collect and
submit data on this measure using the
LTCH CARE Data Set starting January 1,
2016.
To ensure the successful
implementation of new and updated
versions of LTCH CARE Data Set, in the
FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28262 through 28263), we noted
that we will be following an
implementation cycle beginning April 1,
2016, which will allow for a predictable
future release schedule. We believe that
adherence to a predictable future release
schedule that takes into account both
Payment
determination
FY 2016.
FY 2017.
the changes that must be made to the
LTCH CARE Data Set, as well as
requirements that are managed by
LTCHs for such changes, will help
ensure successful implementation.
Therefore, we will be adhering to a date
of April 1 of any given year when
releasing future iterations of the LTCH
CARE Data Set. This change will
effectively delay the implementation of
the January 1, 2016, release by three
months, allowing LTCHs additional
time to become familiar with and to
participate in trainings related to the
revised LTCH CARE Data Set, as well as
time to incorporate given changes into
their existing IT infrastructure.
Therefore, we proposed that for the
FY 2018 payment determination, data
collection for this measure would begin
on April 1, 2016. For all subsequent
years, data collection for this measure
would begin on January 1 and continue
through December 31. The changes are
illustrated below for the FY 2018 and
FY 2019 payment determinations.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES FOR LTCHQR PROGRAM QUALITY DATA FOR THE FY 2018 AND
FY 2019 PAYMENT DETERMINATIONS: APPLICATION OF PERCENT OF RESIDENTS EXPERIENCING ONE OR MORE FALLS
WITH MAJOR INJURY (LONG-STAY) (NQF #0674)
Data collection period
Submission deadlines
April 1, 2016—June 30, 2016 ..............................................................................
July 1, 2016—September 30, 2016 .....................................................................
October 1, 2016—December 31, 2016 ................................................................
January 1, 2017—March 31, 2017 ......................................................................
April 1, 2017—June 30, 2017 ..............................................................................
July 1, 2017—September 30, 2017 .....................................................................
October 1, 2017—December 31, 2017 ................................................................
August 15, 2016 ...................................
November 15, 2016.
February 15, 2017.
May 15, 2017 ........................................
August 15, 2017.
November 15, 2017.
February 15, 2018.
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Payment
determination
FY 2018.
FY 2019.
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
We noted that these proposed changes
would be applicable only to the
application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long-Stay) (NQF #0674)
measure, and not applicable to any
other LTCHQR Program measures,
proposed or adopted, unless specifically
proposed for such measures.
We invited public comments on these
proposals. We refer readers to section
IX.9.f. of the preamble of this final rule
for our responses to comments on these
proposals, as well as our final policy on
this proposal.
7. New LTCHQR Program Quality
Measures for the FY 2018 Payment
Determination and Subsequent Years
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28263 through
28268), we proposed three new quality
measures for the FY 2018 payment
determination and subsequent years.
Two of these are related to functional
status, and one measure is related to
ventilator-associated events (VAE). One
of the proposed functional status quality
measures is Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function. The second proposed
functional status quality measure is
Functional Outcome Measure: Change
in Mobility among Long-Term Care
Hospital Patients Requiring Ventilator
Support. The quality measures are
described in more detail below.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
a. New LTCHQR Program Functional
Status Quality Measures for the FY 2018
Payment Determination and Subsequent
Years
Patients in LTCHs present with
clinically complex conditions. In
addition to having complex medical
care needs for an extended period of
time, LTCH patients often have
functional limitations due to the nature
of their conditions, as well as
deconditioning due to prolonged bed
rest and treatment requirements (for
example, ventilator use). These patients
are therefore at high risk for functional
decline during the LTCH stay that is
both condition-related and iatrogenic.
The National Committee on Vital and
Health Statistics, Subcommittee on
Health,131 noted: ‘‘[i]nformation on
functional status is becoming
increasingly essential for fostering
healthy people and a healthy
population. Achieving optimal health
and well-being for Americans requires
131 Subcommittee on Health National Committee
on Vital and Health Statistics, ‘‘Classifying and
Reporting Functional Status’’ (2001).
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an understanding across the life span of
the effects of people’s health conditions
on their ability to do basic activities and
participate in life situations, in other
words, their functional status.’’
The functional assessment items
included in the two functional status
quality measures were originally
developed and tested as part of the PostAcute Care Payment Reform
Demonstration version of the CARE
Tool,132 which was designed to
standardize assessment of patients’
status across acute and post-acute
settings, including LTCHs, inpatient
rehabilitation facilities (IRFs), skilled
nursing facilities (SNFs), and home
health agencies (HHAs). The functional
status items on the CARE Tool are daily
activities that clinicians typically assess
at the time of admission and/or
discharge in order to determine patients’
needs, evaluate patient progress and
prepare patients and families for a
transition to home or to another setting.
The development of the CARE Tool
and a description and rationale for each
item is described in a report entitled
‘‘The Development and Testing of the
Continuity Assessment Record and
Evaluation (CARE) Item Set: Final
Report on the Development of the CARE
Item Set: Volume 1 of 3.’’ 133 Reliability
and validity testing were conducted as
part of CMS’ Post-Acute Care Payment
Reform Demonstration, and we
concluded that the functional status
items have acceptable reliability and
validity. A description of the testing
methodology and results are available in
several reports, including the report
entitled ‘‘The Development and Testing
of the Continuity Assessment Record
And Evaluation (CARE) Item Set: Final
Report On Reliability Testing: Volume 2
of 3’’ 134 and the report entitled ‘‘The
Development and Testing of The
Continuity Assessment Record And
Evaluation (CARE) Item Set: Final
Report on Care Item Set and Current
Assessment Comparisons: Volume 3 of
3.’’ 135 These reports are available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-Quality132 In the FY 2015 IPPS/LTCH PPS proposed rule,
we used the terms ‘‘CARE Item Set’’ and ‘‘CARE
Tool’’ interchangeably. For the purpose of
consistency and standardization of terminology, we
have revised the language to ‘‘CARE Tool’’
throughout this FY 2015 IPPS/LTCH PPS final rule.
However, we have retained the term ‘‘CARE Item
Set’’ when citing existing reports.
133 Barbara Gage et al., ‘‘The Development and
Testing of the Continuity Assessment Record and
Evaluation (CARE) Item Set: Final Report on the
Development of the CARE Item Set ’’ (RTI
International, 2012).
134 Ibid.
135 Ibid.
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50291
Initiatives/CARE-Item-Set-and-B–
CARE.html.
(1) Functional Status Quality
Measure: Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function
The first functional status quality
measure we proposed for the FY 2018
payment determination and subsequent
years is a process quality measure
entitled Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function. This quality measure reports
the percent of LTCH patients with both
an admission and a discharge functional
assessment and a care plan that
addresses function.
This process measure requires the
collection of admission and discharge
functional status data by trained
clinicians using standardized clinical
assessment items, or data elements, that
assess specific functional activities (that
is, self-care, mobility, cognition,
communication, and bladder
continence). The self-care and mobility
function items are coded using a 6-level
rating scale that indicates the patient’s
level of independence with the activity;
higher scores indicate more
independence. The number of available
response options for coding the
cognition, communication, and bladder
items ranges from 2 to 7. For this quality
measure, inclusion of function in the
patient’s care plan is determined based
on whether a functional goal is recorded
at admission for at least one of the
standardized self-care or mobility
function items using the 6-level rating
scale.
An increasing body of reported
evidence has supported the safety and
feasibility of early mobilization and
rehabilitation of critically ill but stable
patients, with minimal adverse events
and risk to the patient.136 137 138 139 140 141
136 J. Adler and D. Malone, ‘‘Early mobilization in
the intensive care unit: A systematic review,’’
Cardiopulm Phys Ther J 23, no. 1 (2012).
137 J. P. Kress, ‘‘Clinical trials of early
mobilization of critically ill patients,’’ Crit Care
Med 37, no. 10 Suppl (2009).
138 W. D. Schweickert and J. P. Kress,
‘‘Implementing early mobilization interventions in
mechanically ventilated patients in the ICU,’’ Chest
140, no. 6 (2011).
139 W. D. Schweickert et al., ‘‘Early physical and
occupational therapy in mechanically ventilated,
critically ill patients: a randomised controlled
trial,’’ Lancet 373, no. 9678 (2009).
140 J. M. Zanni et al., ‘‘Rehabilitation therapy and
outcomes in acute respiratory failure: an
observational pilot project,’’ J Crit Care 25, no. 2
(2010).
141 A. Drolet et al., ‘‘Move to improve: the
feasibility of using an early mobility protocol to
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Early mobility and rehabilitation in
these settings have been associated with
improved patient outcomes. Therefore,
this quality measure addresses the
importance of: (1) Conducting a
functional assessment at the time of
admission addressing self-care,
mobility, cognition, communication,
and bladder continence; (2)
incorporating the functional assessment
findings made at the time of admission
into the patients’ care plan and setting
at least one discharge self-care or
mobility functional status goal; and (3)
conducting a functional assessment at
the time of discharge addressing selfcare, mobility, cognition,
communication, and bladder
continence.
Functional limitations following
critical illness are becoming
increasingly prevalent as a result of
improving critical care medicine and
survival rates.142 Short-term and longterm adverse consequences among
critically ill and chronically, critically
ill patients in LTCH and Intensive Care
Unit (ICU) settings include severe
weakness,143 144 145 146 muscle
atrophy,147 connective-tissue
shortening,148 loss of bone mass,149
increased risk for blood clots,150
increased risk for pressure ulcers,151
deconditioning,152 153 deficits in selfcare and ambulation,154 and functional
impairment,155 fatigue,156 as well as
cognitive impairment, including
increase ambulation in the intensive and
intermediate care settings,’’ Phys Ther 93, no. 2
(2013).
142 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: a systematic review.’’
143 Ibid.
144 S. L. Dang, ‘‘ABCDEs of ICU: Early mobility,’’
Crit Care Nurs Q 36, no. 2 (2013).
145 E. H. Skinner et al., ‘‘Development of a
physical function outcome measure (PFIT) and a
pilot exercise training protocol for use in intensive
care,’’ Crit Care Resusc 11, no. 2 (2009).
146 Centre for Clinical Practice at NICE (UK),
‘‘Rehabilitation after critical illness [Internet].’’
National Institute for Health and Clinical
Excellence (NICE), http://www.nice.org.uk/
nicemedia/live/12137/43564/43564.pdf.
147 Zanni et al., ‘‘Rehabilitation therapy and
outcomes in acute respiratory failure: an
observational pilot project.’’
148 Ibid.
149 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
150 Ibid.
151 Ibid.
152 Schweickert and Kress, ‘‘Implementing early
mobilization interventions in mechanically
ventilated patients in the ICU.’’
153 Zanni et al., ‘‘Rehabilitation therapy and
outcomes in acute respiratory failure: an
observational pilot project.’’
154 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: a systematic review.’’
155 Skinner et al., ‘‘Development of a physical
function outcome measure (PFIT) and a pilot
exercise training protocol for use in intensive care.’’
156 Centre for Clinical Practice at NICE (UK),
‘‘Rehabilitation after critical illness [Internet].’’
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profound and persistent deficits in
memory, attention/concentration, and
executive function,157 158 159 and the
inability to return to work one year after
hospital discharge.160 161 Cognitive
impairment in survivors of critical
illness has been associated with anxiety
and depression, inability to return to
work, and inability of older persons to
return home.162 To mitigate these
adverse consequences, traditional
practices of bed rest and immobility
have been challenged in recent years,
and early mobility and rehabilitation
have been increasingly recognized as
important to improve patients’ longterm functional outcomes,163 164 165 with
recovery of function being described as
both desirable and possible.166 The lack
of early mobility initiation in ICU
settings has also been described as a
strong predictor of patient outcomes.167
The clinical practice guideline
Rehabilitation after Critical Illness 168
from the National Institute for Health
and Clinical Excellence (NICE)
recommends performing clinical
assessment to determine the patient’s
risk of developing physical and
nonphysical morbidity during the
critical care stay as early as clinically
possible, identifying current
rehabilitation needs for patients at risk
of morbidity, establishing short-term
and medium-term rehabilitation goals
based on the clinical assessment,
starting an individualized structured
rehabilitation program as early as
possible, and performing clinical
reassessment before discharge.
157 Ibid.
158 M. E. Wilcox et al., ‘‘Cognitive dysfunction in
ICU patients: risk factors, predictors, and
rehabilitation interventions,’’ Crit Care Med 41, no.
9 Suppl 1 (2013).
159 N. E. Brummel et al., ‘‘A combined early
cognitive and physical rehabilitation program for
people who are critically ill: the activity and
cognitive therapy in the intensive care unit (ACT–
ICU) trial,’’ Phys Ther 92, no. 12 (2012).
160 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
161 H. J. Engel et al., ‘‘ICU early mobilization: from
recommendation to implementation at three
medical centers,’’ Crit Care Med 41, no. 9 Suppl 1
(2013).
162 Wilcox et al., ‘‘Cognitive dysfunction in ICU
patients: Risk factors, predictors, and rehabilitation
interventions.’’
163 Drolet et al., ‘‘Move to improve: The feasibility
of using an early mobility protocol to increase
ambulation in the intensive and intermediate care
settings.’’
164 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
165 Z. Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review,’’ Arch Phys Med Rehabil 94, no. 3 (2013).
166 C. L. Rochester, ‘‘Rehabilitation in the
intensive care unit,’’ Semin Respir Crit Care Med
30, no. 6 (2009).
167 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
168 Centre for Clinical Practice at NICE (UK),
‘‘Rehabilitation after critical illness [Internet].’’
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The importance of standardized
functional assessment in LTCH settings
is also supported by the high prevalence
of therapy services provided in this
setting, as well as the need for care
coordination for patients returning
home and receiving follow-up care in
the community and patients receiving
additional institutional healthcare
services after discharge from an LTCH.
A study 169 of 1,419 ventilatordependent patients from 23 LTCHs
reported that physical, occupational,
and speech therapy were the most
commonly provided services among a
comprehensive list of 34 procedures,
services, and treatments provided
during the LTCH stay. The high
frequency of physical (84.8 percent),
occupational (81.5 percent), and speech
(79.7 percent) therapy reflects use of the
rehabilitative model of care adopted by
many post-ICU ventilator weaning
programs, which is important in
restoration of function. 170 This high
utilization of therapy services supports
the need for standardized functional
assessment at admission to document
functional status, identify the need for
therapy, set functional status goals and
assist with discharge planning and care
coordination.
Whether an LTCH patient is
discharged home or to another care
setting for continuing health care,
functional status is an important aspect
of a person’s health status to document
at the time of transition. The study 171
also reported that 28.8 percent of
patients were discharged directly home
or to assisted living, further supporting
the importance of functional assessment
and early rehabilitation to facilitate
discharge planning and home discharge,
when possible.
Reported benefits of early mobility
and rehabilitation include: (1) Improved
strength 172 173 174 and functional
status; 175 176 177 (2) earlier achievement
169 D. J. Scheinhorn et al., ‘‘Post-ICU mechanical
ventilation at 23 long-term care hospitals: a
multicenter outcomes study,’’ Chest 131, no. 1
(2007).
170 Ibid.
171 Ibid.
172 Schweickert and Kress, ‘‘Implementing early
mobilization interventions in mechanically
ventilated patients in the ICU.’’
173 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
174 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
175 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
176 Schweickert et al., ‘‘Early physical and
occupational therapy in mechanically ventilated,
critically ill patients: A randomised controlled
trial.’’
177 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: a systematic
review.’’
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
of mobilization milestones, such as outof-bed mobilization; 178 179 (3)
improvement in mobility and self-care
function scores from admission to
discharge; 180 181 (4) greater incidence of
return to functional baseline in mobility
and self-care, greater unassisted walking
and walking distances, and improved
self-reported physical function scores at
hospital discharge compared with
persons not participating in early
mobility and rehabilitation; 182 (5)
enhanced recovery of functional
exercise capacity; 183 (6) improved selfperceived functional status; 184 and (7)
reduced physiological and cognitive
complications 185 and improved
cognitive function.186 Early mobility
and rehabilitation have also been
associated with reduced ICU and
hospital length of stay; 187 188 189 190 191 192
reduced incidence of delirium and
improved patient awareness; 193 194
increased ventilator-free days and
improved weaning outcomes; 195 196 197
greater incidence of discharge home
directly after hospitalization compared
with patients not receiving early
178 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
179 P. E. Morris, ‘‘Moving our critically ill
patients: Mobility barriers and benefits,’’ Crit Care
Clin 23, no. 1 (2007).
180 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
181 Scheinhorn et al., ‘‘Post-ICU mechanical
ventilation at 23 long-term care hospitals: A
multicenter outcomes study.’’
182 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
183 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
184 Ibid.
185 Ibid.
186 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
187 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
188 Kress, ‘‘Clinical trials of early mobilization of
critically ill patients.’’
189 Schweickert et al., ‘‘Early physical and
occupational therapy in mechanically ventilated,
critically ill patients: A randomised controlled
trial.’’
190 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
191 Engel et al., ‘‘ICU early mobilization: From
recommendation to implementation at three
medical centers.’’
192 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
193 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
194 Schweickert et al., ‘‘Early physical and
occupational therapy in mechanically ventilated,
critically ill patients: A randomised controlled
trial.’’
195 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
196 Dang, ‘‘ABCDEs of ICU: Early mobility.’’
197 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
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mobilization; 198 199 and reduced
hospital readmission or death in the
year following hospitalization.200 201
Short-term and long-term cognitive
impairment are very frequent
complications of critical illness, and
negatively influence survivors’ abilities
to function independently.202 203 204
Delirium during hospitalization is
highly prevalent in critically ill patients
and has been associated with longer
lengths of stay, increased duration of
mechanical ventilation, and higher risk
of death.205 A longer duration of
delirium has been associated with worse
short- and long-term cognition and
executive function.206 207 Given these
adverse consequences, the importance
of early assessment of cognitive
function, including possible delirium,
and early initiation of cognitive
rehabilitation in critical care settings, is
being increasingly recognized.208 209
Also, given the positive effects of
physical exercise on cognitive function
in other populations, the potential
positive influence of exercise on
cognitive function in the critically ill
population is being examined by
researchers.210
A technical expert panel (TEP)
convened by our measure development
contractor provided input on the
technical specifications of this quality
measure, including the items included
198 Schweickert et al., ‘‘Early physical and
occupational therapy in mechanically ventilated,
critically ill patients: A randomised controlled
trial.’’
199 Engel et al., ‘‘ICU early mobilization: From
recommendation to implementation at three
medical centers.’’
200 Adler and Malone, ‘‘Early mobilization in the
intensive care unit: A systematic review.’’
201 Li et al., ‘‘Active mobilization for
mechanically ventilated patients: A systematic
review.’’
202 Wilcox et al., ‘‘Cognitive dysfunction in ICU
patients: Risk factors, predictors, and rehabilitation
interventions.’’
203 Brummel et al., ‘‘A combined early cognitive
and physical rehabilitation program for people who
are critically ill: The activity and cognitive therapy
in the intensive care unit (ACT–ICU) trial.’’
204 P. P. Pandharipande, T. D. Girard, and E. W.
Ely, ‘‘Long-term cognitive impairment after critical
illness,’’ N Engl J Med 370, no. 2 (2014).
205 Wilcox et al., ‘‘Cognitive dysfunction in ICU
patients: Risk factors, predictors, and rehabilitation
interventions.’’
206 Ibid.
207 Pandharipande, Girard, and Ely, ‘‘Long-term
cognitive impairment after critical illness.’’
208 Brummel et al., ‘‘A combined early cognitive
and physical rehabilitation program for people who
are critically ill: The activity and cognitive therapy
in the intensive care unit (ACT–ICU) trial.’’
209 R. S. Miller et al., ‘‘Outcomes of trauma
patients who survive prolonged lengths of stay in
the intensive care unit,’’ J Trauma 48, no. 2 (2000).
210 Brummel et al., ‘‘A combined early cognitive
and physical rehabilitation program for people who
are critically ill: The activity and cognitive therapy
in the intensive care unit (ACT–ICU) trial.’’
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in the quality measure, inclusion and
exclusion criteria. We also solicited
public comment on the draft
specifications of this quality measure on
the CMS Quality Measures Public
Comment Page (http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/
CallforPublicComment.html) between
February 21, 2014, and March 14, 2014,
and received 22 responses from
stakeholders with comments and
suggestions. Additional information
regarding these comments may be found
on our Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/.
Based on the evidence discussed
above, we proposed to adopt for the
LTCHQR Program for the FY 2018
payment determination and subsequent
years the quality measure entitled
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function.
This quality measure was developed by
CMS, and we plan to submit the quality
measure to the NQF for review. The
MAP met in December 2013 and January
2014, and provided input to CMS as
required under section 1890A(a)(3) of
the Act. In its January 2014 PreRulemaking Report, the MAP
conditionally supported this measure
and stated that the measure concept is
promising, but requires modification or
further development, and that
functional status is a critical area of
measurement.
Since the time of the MAP meeting,
we have continued further development
of the measure with input from
technical experts, including empirical
data analysis. Subsequently, we released
draft specifications for the functional
status quality measures, and requested
public comment between February 21,
2014 and March 14, 2014. We received
22 responses from stakeholders with
comments and suggestions during the
public comment period, and have
updated the quality measures
specifications based on these comments
and suggestions. The updated
specifications are available for review at
the LTCHQR Program Web site at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
index.html?redirect=/LTCH-QualityReporting/. We refer readers to section
IX.C.2. of the preamble of this final rule
for more information on the MAP.
In section 1886(m)(5)(D)(ii) of the Act,
the exception authority provides that
‘‘[i]n the case of a specified area or
medical topic determined appropriate
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by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the
Secretary.’’ We reviewed the NQF’s
consensus endorsed measures and were
unable to identify any NQF-endorsed
quality measures focused on assessment
of function for patients in the LTCH
setting. We are unaware of any other
quality measures for functional
assessment that have been endorsed or
adopted by another consensus
organization for the LTCH setting.
Therefore, we proposed to adopt this
functional assessment measure for use
in the LTCHQR Program for the FY 2018
payment determination and subsequent
years under the Secretary’s authority to
select non-NQF-endorsed measures.
Additional information regarding the
quality measure may be found on our
Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/.
We proposed that data for the quality
measure be collected through the LTCH
CARE Data Set, with the submission
through the Quality Improvement and
Evaluation System (QIES) Assessment
Submission and Processing (ASAP)
system. For more information on
LTCHQR Program reporting using the
QIES ASAP system, we refer readers to
our Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/
LTCHTechnicalInformation.html. We
noted our intention to revise the LTCH
CARE Data Set to include new items
that assess functional status, should this
measure be adopted. These items, which
assess specific functional activities (that
is, self-care, mobility, cognition,
communication, and bladder
continence), would be based on
functional items included in the PostAcute Care Payment Reform
Demonstration version of the CARE
Tool. The items have been carefully
developed and tested for reliability and
validity.
We invited public comments on our
proposal to adopt the quality measure
entitled Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function for the LTCHQR Program, with
data collection starting on April 1, 2016,
for the FY 2018 payment determination
and subsequent years. We refer readers
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to section IX.C.9.c. of the preamble of
this final rule for more information on
the data collection period and
submission deadline for this quality
measure. Our responses to public
comments on these quality measures are
discussed below in this section of the
final rule.
Comment: Several commenters
expressed support for the quality
measure entitled Percent of Long-Term
Care Hospital Patients with an
Admission and Discharge Functional
Assessment and a Care Plan That
Addresses Function because functional
improvement is an important patientcentered outcome. A few commenters
noted that such improvements reduce
the likelihood of infection, morbidity,
mortality, and cost and significantly
improve quality of life in this vulnerable
population. A commenter emphasized
the importance of improved functional
status and improved, earlier mobility for
patients who are ventilated.
Commenters agreed that functional
status is an important measurement gap
for LTCHs and support CMS for
proposing measures that address this
measurement gap area. A commenter
noted support for the use of the CARE
Tool to streamline reporting across
acute and post-acute care settings.
Response: We appreciate the support
for functional status quality measures in
the LTCH setting and the support for the
use of cross-setting standardized
assessment items.
Comment: A commenter supported a
measure of function in patient care, but
suggested that an outcome measure
examining progress toward a functional
goal would be preferable to a process
measure. The commenter also suggested
that CMS consider having a process
measure that would address having a
plan in place that addresses functional
deficits at discharge.
Response: We thank the commenter
for their support. We interpret the
commenter’s comment to suggest that
we should include an outcome measure
pertaining to the attainment of
functional goals. We believe that patient
attainment of functional goals is
important and appreciate the
commenter’s suggested inclusion of
such an outcome measure. We will
consider this measurement concept as
we further develop the LTCHQR
Program. We further interpret the
commenter’s comment to suggest that
we consider adopting a process measure
related to functional deficits at
discharge so as to ensure care
coordination. We agree that such a
measure concept is important in that the
domain of ‘‘care coordination’’ is a
priority to CMS. Therefore, we will
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consider this concept in future measure
development for the LTCHQR Program.
Comment: Many commenters
expressed concern that the measure is
not NQF-endorsed. Commenters
underscored the importance of the NQF
review process, emphasizing that NQF
endorsement provides assurance that
the measure has been tested, can
reliably and accurately collect data, is
feasible to implement and is usable. For
these reasons, commenters encouraged
CMS to refrain from adopting measures
into the LTCHQR Program until they
have been endorsed by NQF for use in
the LTCH setting.
Response: We agree that the NQFendorsement process is an important
part of measure development, and we
have generally adopted NQF-endorsed
measures whenever feasible. However,
as discussed above, where such
measures do not exist for the LTCH
setting, we may adopt measures that are
not NQF-endorsed under the Secretary’s
exception authority set out in section
1886(m)(5)(D)(ii) of the Act.
Comment: A commenter indicated
that the quality measure uses the FIM®
rating scale.
Response: We interpret this
commenter to assert that we are using
the FIM® rating scale. We would like to
clarify that we are not using the FIM®
rating scale, rather we are using a 6level rating scale developed and tested
as part of the Post-Acute Care Payment
Reform Demonstration (PAC-PRD).
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed quality
measures that focused on assessment of
function for patients in the LTCH
setting. We are unaware of any other
quality measures for functional
assessment that have been endorsed or
adopted by another consensus
organization for the LTCH setting.
Therefore, we proposed to adopt this
functional assessment measure for use
in the LTCHQR Program under the
Secretary’s authority to select non-NQFendorsed measures. Further, CMS and
its measure development contractor are
planning to submit this measure for
NQF review in the fall of 2014.
Comment: Several commenters agreed
with the MAP’s recommendation to
adopt functional status measures as part
of the LTCHQR Program. While most
commenters agreed this was an
important measure area for the LTCH
population and some commenters noted
that it addresses a measure area gap
identified by the MAP, many
commenters expressed concern that the
measure is not yet fully developed and
received only conditional support from
the MAP. The commenters noted the
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MAP’s conclusions that while the
measure concept is promising, the
measure is not ready for implementation
and requires further modification and
development. Commenters encouraged
CMS to refrain from adopting any
measures not fully supported by the
MAP.
Response: We note that this quality
measure has been under development
for more than 3 years. The steps we
undertook as part of the measure
development process have included an
environmental scan, technical expert
panel review, and posting of
specifications to solicit public input. As
part of the environmental scan, we
reviewed the NQF’s consensus-endorsed
measures and were unable to identify
any NQF-endorsed quality measures
that focused on assessment of function
for patients in the LTCH setting. A TEP
focused on functional status quality
measures was convened by our measure
development contractor and met in
person and by phone in the fall of 2013.
A report summarizing these TEP
meetings titled ‘‘Summary of Feedback
from TEP on the Development of CrossSetting Functional Status Quality
Measures’’ is available at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/.
Since the MAP meeting, we have
continued further development of this
measure, including posting of the TEP
report. As discussed above, we also
released draft specifications for the
functional status quality measures and
solicited public comment between
February 21, 2014, and March 14, 2014.
We received 22 responses from
stakeholders with comments and
suggestions during this public comment
period and, based on these comments
and suggestions, updated the quality
measure specifications, which are
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/index.html?redirect=/LTCHQuality-Reporting/.
Comment: A commenter was
concerned that CMS did not convene a
TEP for any of the new proposed quality
measures and noted that TEPs, ‘‘which
evaluate . . . quality measures for
importance, scientific soundness,
usability, and feasibility,’’ are integral to
developing health care settingappropriate quality measures.
Response: Our measure contractor
convened a cross-setting functional
status quality measures TEP after a
public call for TEP nominations. The
TEP met in person on September 9,
2013, and then met via Webinar on
October 21, 2013, October 28, 2013, and
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November 6. 2013. TEP members
included experts from LTCHs, as well as
IRFs and SNFs. A report summarizing
recent TEP meetings focused on
functional status quality measures titled
‘‘Summary of Feedback from TEP on the
Development of Cross-Setting
Functional Status Quality Measures’’ is
available at: https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/. The functional status quality
measure development built on work
conducted as part of a project funded by
the Assistant Secretary for Planning and
Evaluation, and that project also
included a cross-setting function quality
measure TEP, which was held on
August 15, 2012. A report summarizing
that meeting is available at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/Downloads/ASPE-ReportAnalysis-of-Crosscutting-MedicareFunctional-Status-Quality-MetricsUsing-the-Continuity-and-AssessmentRecord-and-Evaluation-CARE-Item-SetFinal-Report.pdf.
Comment: Some commenters
indicated that the measure was
inappropriate for the LTCH patient
population. These commenters noted
that many or most LTCH patients are
not mobile or functional on admission,
a significant percent are not mobile for
the duration of their stay, and the
majority of the functional status
assessment items such as walking,
picking up items and car transfers,
would not be applicable to these
patients. The commenters also noted
that for many LTCH patients, a transfer
from the bed to a chair is not possible.
Response: The development of this
quality measure included a review of
published literature, a review of the
findings from the PAC-PRD, discussions
with an LTCH expert panel and an
opportunity for a public comment
period. As evidenced in the literature
review, the PAC-PRD findings, and
through the technical expert panel input
we obtained during the measure
development process, we concluded
that this measure is important and
appropriate for the LTCH setting, and
items selected during the measure’s
development were considered
applicable.
With respect to comments about the
items selected, during their use in the
PAC–PRD, the LTCH staff stated that
these items and their associated
response scale are able to capture small
changes in patient improvement, such
as the progression from total
dependence for task completion to
completing a task with much assistance
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50295
(that is, more than half the task was
completed by the helper). The ability to
capture this level of change was found
to be significant, particularly as it
pertains to the most impaired
populations. Further, we made
refinements to the items selected based
on input from the expert panels
convened by our measure development
contractor and the public comment
process, including those activities, for
example, walking, picking up items and
car transfers, which the commenter
suggested were not applicable to this
setting.
Comment: Several commenters
conveyed their concern regarding the
use of the CARE Tool as the data source
for the functional status quality
measures due to limited testing in
LTCHs and reliability testing results.
These commenters noted that several
self-care and mobility items have Kappa
statistics categorizing inter-rater
reliability as ‘‘fair’’ or ‘‘moderate,’’ and
were based on a small sample of 46
LTCH patients. These commenters
stated that ‘‘fair’’ or ‘‘moderate’’
reliability, while acceptable for
exploratory studies or internal quality
improvement efforts, is insufficient for
national use in the LTCHQR Program.
Commenters recommended CMS
explain the low Kappa statistics and/or
re-test these items in significantly more
LTCHs to address reliability issues.
These commenters noted that measure
testing should be oriented towards the
intended setting of use of the measure
and suggested additional testing in the
LTCH setting be conducted.
Response: The reliability results
mentioned by these commenters were
only one of several reliability analyses
conducted to support the development
of this measure as part of the PAC–PRD.
In addition to the inter-rater reliability
study mentioned by these commenters,
we also examined: (1) Inter-rater
reliability of the CARE items using
videotaped case studies, which
included 114 LTCH assessments from 3
LTCHs; (2) internal consistency of the
function data, which included more
than 7,700 assessments from 28 LTCHs;
and (3) Rasch analyses of the function
data, which included more than 7,700
assessments from 28 LTCHs. The report
describing these additional analyses and
an interpretation of the Kappa statistics
results is available at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Post-Acute-Care-QualityInitiatives/Downloads/TheDevelopment-and-Testing-of-theContinuity-Assessment-Record-andEvaluation-CARE-Item-Set-Final-Reporton-Reliability-Testing-Volume-2-of-
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3.pdf. Therefore, given the totality of the
reliability analysis involved, we believe
that the development of this measure
included a sufficient level of analysis,
and at a scientifically acceptable level,
such that a quality measure could be
derived from these items.
We note that as part of the LTCHQR
Program we intend to evaluate the
national-level data for this quality
measure submitted by LTCHs to CMS.
These data will inform ongoing measure
development and maintenance efforts,
including further analysis of reliability
and validity of the data elements and
the quality measure.
Comment: Several commenters
expressed concern related to undue
burden associated with data
documentation for the functional status
quality measure. Some commenters
suggested that several of the functional
status assessment items had low or nonresponse rates when used as part of
PAC–PRD. These commenters requested
that CMS provide additional
information on how the measure has
been updated to address these low
response rates. Further, in the event no
updates have been made, the
commenters encouraged CMS to further
investigate its use of items having low
or high non-response rates and
reconsider if all of these items remain
necessary and appropriate for LTCHs.
Response: We appreciate the concerns
related to any undue burden, including
documentation, and take such concerns
under consideration when selecting
measures for the LTCHQR Program. In
the specifications for the measure, we
have included several gateway
questions that allow the clinician to
skip questions that are not pertinent,
which we believe helps to reduce undue
burden. For example, one item asks if
the patient is or is not walking. If the
patient is not walking, then the items
‘‘Walk 10 feet,’’ ‘‘Walk 50 feet with two
turns’’ and ‘‘Walk 150 feet’’ do not
require responses and are therefore
skipped.
With respect to the comments that
some items had low response rates, we
interpreted these comments to refer to
the coding responses for when a patient
does not or cannot attempt a daily
activity, hence the activity did not
occur, and the assessor reports a code
indicating the reason that the activity
was not attempted (for example,
‘‘Medical Condition’’ or ‘‘Patient
Refusal’’). We interpret the comments
pertaining to non-response as referring
to missing data.
In the development of this measure,
despite the low or high non-response
rates, inclusion of these items was the
result of public input and expert
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opinion. However, we agree with the
commenters that some of the self-care
and mobility items may not be activities
that many LTCH patients perform,
particularly at the time of admission. An
analysis of the PAC–PRD data showed
that LTCHs had the highest percentage
of codes for these items indicating the
‘‘Activity Did Not Occur’’ as compared
to IRFs, SNFs and HHAs. We also agree
that car transfers and picking up an
object are challenging activities for
LTCH patients. Due to prior public
input we received via public posting
and technical expert panels, we had
included these particular items because
these items were intended to aid in the
further development of this measure
utilizing national data. However, if
these items are removed, the use of the
measure can be retained without
impacting the measure outcome in any
significant manner.
Because commenters expressed
concern regarding burden and because
commenters expressed concerns about
‘‘Activity Did Not Occur’’ for data
elements that pertain to specific
physical activities or functions that
would be assessed and addressed by a
care plan, we believe that we should
consider removing assessment items
where possible from this measure’s
specifications, particularly when the
items are duplicative to items already
included, or would often be coded as
‘‘Activity Did Not Occur’’ (that is, when
due to medical condition) and would
not specifically be meaningful in a care
plan. We have therefore reviewed our
measure and the assessment items
needed for addressing all the key
domains of function we proposed (for
example, self-care, mobility, cognition,
communication and bladder function).
We believe there are items that could be
removed from the self-care and mobility
domains because they potentially
overlap with items that we would retain
and also because these items had high
‘‘Activity Did Not Occur’’ rates. Further,
these items can be removed from the
quality measure without affecting the
measure substantively.
We followed specific rationale in our
consideration for the removal of these
items: (1) That these particular items
had high ‘‘Activity Did Not Occur’’ or
high non-response rates; and/or (2) that
the data elements to be removed were
duplicative of the remaining data
elements in the quality measure for the
LTCH population. We determined this,
for each item, based on data analysis
and public comment, our review of the
item definitions, as well our review of
the distribution of scores of LTCH
patients from the PAC–PRD. Lastly, we
evaluated our ability to finalize a
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modified measure, and we reviewed the
modifications to the measure, through
the removal of these items, to ensure
that the modification was not
substantive in nature.
The data elements specifically
analyzed for removal were: ‘‘Dressing
upper body,’’ ‘‘Dressing lower body,’’
‘‘Putting on/taking off footwear,’’
‘‘Shower/bathe self,’’ ‘‘Car transfer,’’ ‘‘1
step,’’ ‘‘4 steps,’’ ‘‘12 steps,’’ ‘‘Walk 10
feet on uneven surfaces’’ and ‘‘Pick up
object,’’ all of which we would remove
from the measure specifications for
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function.
Following our analysis, the following
items have been finalized for removal,
with the associated rationale:
• The item ‘‘Dressing Upper Body’’
had high ‘‘Activity Did Not Occur’’
response rates and overlaps with the
item ‘‘Wash Upper Body,’’ which we are
retaining, in that both items pertain to
upper body movement and the data
captured for ‘‘Wash Upper Body’’ would
represent the activity. The item
‘‘Dressing Lower Body’’ had high
‘‘Activity Did Not Occur’’ response rates
and overlaps with ‘‘Toileting Hygiene,’’
which we are retaining, in that both
items include managing lower body
clothing.
• The item ‘‘Putting on/taking off
footwear’’ had high ‘‘Activity Did Not
Occur’’ response rates and also overlaps
with ‘‘Toileting Hygiene,’’ an item
which we are retaining, although we are
aware that it had moderately high
‘‘Activity Did Not Occur’’ response
rates. We note that, although we are
aware that the item ‘‘Toileting Hygiene’’
is associated with moderate ‘‘Activity
Did Not Occur’’ response rates, we have
decided to retain the item ‘‘Toileting
Hygiene’’ based on feedback from
technical expert panels convened by the
measure contractor, the public
comments from stakeholders, and the
relevance of the item for every patient.
• The item ‘‘Shower/bathe self’’ had
high ‘‘Activity Did Not Occur’’ response
rates and overlaps with the tasks
involved with the item ‘‘Wash Upper
Body,’’ which we are retaining.
• The mobility items we are
removing, ‘‘Walking 10 Feet on Uneven
Surfaces,’’ ‘‘Car transfer,’’ ‘‘1 step,’’ ‘‘4
steps,’’ ‘‘12 steps’’ and ‘‘Pick up object,’’
had high non-response rates and overlap
with items ‘‘Walk 150 Feet’’ and ‘‘Walk
50 feet with 2 turns,’’ which we are
retaining.
As stated in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28263) and
the December 1, 2013, MUC List (pp.
39–40, 194–95), this measure provides
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the percentage of all LTCH patients that
receive a functional assessment on
admission and discharge and a care plan
that addresses function. We believe that
this measure, as modified in response to
public comment, is consistent with the
description of the measure reviewed by
the MAP, which did not specify the
various functions assessed or addressed
by a care plan. Moreover, we believe
that modification of the quality measure
through the removal of duplicative
assessment items with low or high nonresponse rates does not substantively
alter this measure’s application or its
calculation. We have previously
explained that substantive measure
changes would include ‘‘those in which
the changes are so significant that the
measure is no longer the same measure,
or when a standard of performance
assessed by a measure becomes more
stringent (for example: Changes in
acceptable timing of medication,
procedure/process, or test
administration)’’ or ‘‘where the NQF has
extended its endorsement of a
previously endorsed measure to a new
setting, such as extending a measure
from the inpatient setting to the LTCH
setting.’’ (77 FR 53258, 53615 through
53616).
We believe that in this case, the
standard of performance assessed by
this measure would become less, not
more, stringent due to the
modifications, and the measure is not
being extended to a new patient setting.
Moreover, we believe that the
modifications to the measure are not ‘‘so
significant that the measure [would no
longer be] the same measure,’’ as the
measure numerator, denominator, and
exclusions are unchanged. Therefore,
we believe that the modified version of
Percent of Long-Term Care Hospital
Patients with an Admission and
Discharge Functional Assessment and a
Care Plan That Addresses Function
would not be inconsistent with the
descriptions of the measure reviewed by
the MAP and that the modifications to
the measure are not substantive in
nature.
Thus, in response to public
comments, we are modifying the
proposed quality measure, Percent of
Long-Term Care Hospital Patients with
an Admission and Discharge Functional
Assessment and a Care Plan That
Addresses Function, through removal of
the data items noted above. Specifically,
the data elements we are removing for
the reasons discussed above are the
following: ‘‘Dressing upper body,’’
‘‘Dressing lower body,’’ ‘‘Putting on/
taking off footwear,’’ ‘‘Shower/bathe
self,’’ ‘‘Car transfer,’’ ‘‘1 step,’’ ‘‘4 steps,’’
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‘‘12 steps,’’ ‘‘Walk 10 feet on uneven
surfaces,’’ and ‘‘Pick up object.’’
Comment: Several commenters
expressed concerns about the need for
standardized training to ensure interrater reliability for the CARE Tool
function items, and noted that this
training would add additional burden to
facilities. Several commenters also
suggested CMS identify the types of
LTCH personnel who would collect and
report measure data.
Response: We have addressed similar
concerns in the past with public
outreach including training sessions,
training manuals, Webinars, open door
forums, help desk support and a Web
site that hosts training information
http://www.youtube.com/user/
CMSHHSgov), and we conduct such
activities for the new items. All training
materials are available on the Web site
free of charge. Procedures for data
collection, including who may complete
functional assessments, are to follow
facility policies, and patient
assessments are to be completed in
compliance with facility and applicable
State and Federal requirements. We do
not provide guidance on which
disciplines may complete patient
assessments.
Comment: Several commenters
suggested that patients with program
interruptions (that is, periods of time
during which the patient is transferred
from the LTCH to another care setting
and subsequently returned to the same
LTCH; see the LTCHQR Program
Manual 2.0 for current definition—
Chapter 3–A https://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/) be excluded from the
quality measure, because it would be
burdensome to collect data when the
patient was transferred and then
returned to the LTCH. A commenter
explained that an interrupted stay
patient is ‘‘discharged’’ from the LTCH
and then ‘‘readmitted’’ to the LTCH
within a certain fixed period under the
3-day or less interrupted stay policy and
the greater than 3-day interrupted stay
policy. Thus, the commenter felt it
would be unnecessary to assess the
patient’s functional status at both points
of admission and discharge since doing
so may result in an inaccurate
assessment of the patient’s condition.
The commenter also suggested that if
interrupted stay patients are not
excluded, then only the initial
admission and the last discharge should
be assessed for measure data collection
purposes.
Response: For LTCH patients who
experience one or more program
interruptions (3 calendar days or less),
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completion of the function items would
not be required during the program
interruption, that is, at the time of the
transfer to the acute care setting and the
return. Patients with program
interruptions are included in the quality
measure, but, as the commenter
suggested, assessments would be only
be required for the initial admission
assessment and at the time of the
discharge from the LTCH stay.
Comment: A commenter expressed
general concern about the difficulty of
assessing cognitive function in the
LTCH patient population, including
circumstances such as when any mindaltering medication was given to the
patient. The commenter stated that
cognitive assessment items have no
provisions for accounting for such
circumstances, nor could they, since
any such mandate would interfere with
clinical practice. Due to such
considerations, the commenter
questioned whether it was possible to
accurately capture cognitive status via
observational assessment, within two
days of admission. The commenter
noted that timely completion of the
cognitive assessment items necessitates
a clinician who is familiar with the
patient, which in turn affects whether
these items get completed on the
admission assessment.
Another commenter stated that the
cognitive function assessment tool does
not adequately measure baseline
cognition because of the variation in
LTCH patients’ clinical conditions and
mental status. LTCH patients are
extremely fragile, and their cognition is
affected by small changes, such as the
time of day and the clinical condition of
the patient. The commenter also
expressed the opinion that the cognitive
function assessment tool provides a
snapshot of a patient at a given time on
a given day, and is not a true reflection
of the patient’s cognitive functioning.
The commenter added that the expertise
of a clinical psychologist would be
required to complete this tool.
Thus, these two commenters felt
assessing the patient to collect data to
complete each of the data elements for
the measure would require LTCHs to
expend significant time and resources
reporting data whose value in
measuring quality of care in the LTCH
setting is questionable.
Response: We acknowledge the
complexity of the LTCH patient
population, and potential challenges
that can limit certain assessments, for
example, the inability to perform a
cognitive assessment with a ventilatordependent patient on sedation. We
interpret the commenter to indicate that
under such circumstances, it will not be
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feasible to accurately assess a patient’s
cognition at the beginning of the LTCH
stay and that it would be an interruption
in clinical care to perform such an
assessment. We also interpret the
commenter to indicate that in the
assessment there would be no capacity
to reflect recent administration of
medications that impact cognitive
status, although assessment of cognition
is required for this measure. We agree
that at the time of assessment there is
information that cannot be obtained
from certain patients, such as patients
who are ventilator-dependent and on
sedation, or in the event the patient is
comatose. We agree that there are
circumstances that an assessment
cannot be performed, and it would be
inappropriate to do so, and hence, the
assessment should allow for LTCHs to
indicate these circumstances when the
data could not be collected.
We will address these circumstances
by providing instructions on when
select items can be skipped due to
patient conditions and gateway
questions in the LTCH CARE Data Set
Version 3.00. In the specifications for
the measure, we have included several
gateway questions that allow the
clinician to skip questions that are not
pertinent. For example, one item asks if
the patient is or is not walking. If the
patient is not walking, then the items
‘‘Walk 10 feet,’’ ‘‘Walk 50 feet with two
turns’’ and ‘‘Walk 150 feet’’ do not
require responses and are therefore
skipped. We agree with the commenter
that a clinician familiar with the patient
would provide the most accurate
assessment of the patients’ status.
Consistent with the clinical standard
of practice, timely admission
assessments are conducted on all
patient admissions by a clinician,
typically by a registered nurse who
obtains assessment information to
inform care planning so that the care
team can become familiar with the
patient and develop and implement
sound clinical care and interventions.
Thus, from the time of admission to an
LTCH, we believe that clinical staff
should collect health assessment
information about the patient to inform
their care. Further, we believe that such
assessment data would be captured by
a clinician familiar with the LTCH
patient.
We interpret the second commenter to
indicate that the variability in the LTCH
patient cognitive status would make it
difficult to obtain a baseline for use in
this measure. We also interpret the
commenter’s concern to be related to the
importance of capturing causation in
mental status change. Causative factors
in cognitive change do not impact the
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calculation of the quality measure. The
measure requires the collection of the
Confusion Assessment Method (CAM®)
in order to capture fluctuations of
cognitive function. We selected the
CAM® Instrument after TEP review, and
following receipt of several comments
from our initial public comment
opportunity in March 2014.
We disagree with the commenter’s
statement that the expertise of a clinical
psychologist would be needed to collect
the cognitive status assessment, because
the CAM® was collected during the
PAC–PRD by varying levels of staff,
with strong inter-rater reliability
without it being performed by a clinical
psychologist, and there was no evidence
found during this demonstration to
support this concern. Furthermore, the
CAM® was tested for use by bedside
staff for use in the Minimum Data Set
Version 3.0 and was implemented on
October 1, 2010.
Both commenters suggest that
capturing the assessment data would
necessitate LTCHs to expend significant
time and resources to collect this
measure, which they further suggest
may not be valuable for this setting. We
disagree with these commenters in that
the data collected for use in these
measures is consistent with general
clinical care and the CAM® itself is a
specific assessment that is already
utilized in the healthcare setting.
Comment: Commenters suggested that
CMS take into consideration the
addition of a POA indicator in selected
portions of the LTCH CARE Data Set.
These commenters noted that a POA
indicator would be important for
performing any risk adjustment of
functional status measures to allow for
the distinction between complications
associated with care at the LTCH and a
patient’s preexisting conditions.
Response: The admission functional
assessment data collected for this
quality measure would be based on the
patient’s functional status at the time of
admission, and we would consider the
initial assessment to be ‘‘present on
admission.’’
In addition to soliciting comments
about our proposal to adopt the
functional status measure for the
LTCHQR Program, we also invited
public comment on our proposal to use
the LTCH CARE Data Set and QIES
ASAP systems for data collection and
submission of the functional status
measure. We received no public
comments on this proposal.
After consideration of the public
comments we received, we are
finalizing the adoption of the measure
entitled Percent of Long-Term Care
Hospital Patients with an Admission
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and Discharge Functional Assessment
and a Care Plan That Addresses
Function for use in the LTCHQR
Program, with the modifications noted
in our responses to public comments
above.
(2) Functional Status Quality Measure:
Functional Outcome Measure: Change
in Mobility Among Long-Term Care
Hospital Patients Requiring Ventilator
Support
Section 1206(c) of Division B of
Public Law 113–67, the Pathway to SGR
Reform Act of 2013, amended section
1886(m)(5)(D) of the Act to add a new
clause (iv) requiring the Secretary to
establish by no later than October 1,
2015, ‘‘a functional status quality
measure for change in mobility among
inpatients requiring ventilator support.’’
Accordingly, the second functional
status quality measure that we proposed
was an outcome quality measure
entitled the Functional Outcome
Measure: Change in Mobility among
Long-Term Care Hospital Patients
Requiring Ventilator Support. This
measure estimates the risk-adjusted
change in mobility score between the
time of admission and the time of
discharge among LTCH patients
requiring ventilator support at the time
of admission. As noted above, LTCH
patients often have functional
limitations and receive rehabilitation
therapy services so that they can
become more independent when
performing functional activities.
Functional improvement is particularly
relevant for patients who require
ventilator support because these
patients have traditionally had limited
mobility due to cardiovascular and
pulmonary instability, delirium,
sedation, lack of rehabilitation therapy
staff, and lack of physician referral.211
Several studies have examined
functional improvement among patients
in the long-term care hospitals. In a
sample of 101 patients in LTCHs (threequarters were ventilator-dependent),
median functional status scores using
the Functional Status Score (FSS)–ICU
(rolling, supine-to-sit transfers,
unsupported sitting, sit-to-stand
transfers, and ambulation) improved
significantly from admission to
discharge, with significant change in all
five functional items.212 A separate
study of 103 patients with respiratory
211 Zanni et al., ‘‘Rehabilitation therapy and
outcomes in acute respiratory failure: An
observational pilot project.’’
212 A. Thrush, M. Rozek, and J.L. Dekerlegand,
‘‘The clinical utility of the functional status score
for the intensive care unit (FSS–ICU) at a long-term
acute care hospital: A prospective cohort study,’’
Phys Ther 92, no. 12 (2012).
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failure examined functional
improvement and found that by the end
of the respiratory ICU stay, 69.4 percent
of survivors ambulated more than 100
feet, 8.2 percent ambulated less than
100 feet, 15.3 percent could sit in a
chair, 4.7 percent could sit on the edge
of the bed, and 2.4 percent did not
accomplish any of these activities.213
The importance of monitoring
improvement in mobility skills among
LTCH patients who require ventilator
support at the time of admission is also
supported by the high prevalence of
therapy service provision as part of the
treatment plan and the percent of
patients discharged home after an LTCH
stay. In a study of 1,419 ventilatordependent patients from 23 LTCHs with
weaning programs,214 physical therapy,
occupational therapy, and speech
therapy were the three most commonly
provided services among 34 procedures,
services, and treatments provided
during the LTCH admission. The very
high frequency of physical (84.8
percent), occupational (81.5 percent),
and speech (79.7 percent) therapy
reflects use of the rehabilitative model
of care adopted by many post-ICU
weaning programs, which is important
in the restoration of function.215
Improvement in functional status,
including mobility and self-care was
noted from admission to discharge.
Nearly 30 percent of all patients
discharged alive returned directly home
or to assisted living.216
A TEP convened by our measure
development contractor provided input
on the technical specifications of this
quality measure. We also solicited
public comment on the draft
specifications of this quality measure,
on the CMS Quality Measures Public
Comment Page (http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/
CallforPublicComment.html) between
February 21 and March 14, 2014, and
received 22 responses from stakeholder
with comments and suggestions.
Additional information regard the
quality measure may be found on our
Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/.
We proposed that data for the
proposed quality measure be collected
through the LTCH CARE Data Set, with
213 P. Bailey et al., ‘‘Early activity is feasible and
safe in respiratory failure patients,’’ Crit Care Med
35, no. 1 (2007).
214 Scheinhorn et al., ‘‘Post-ICU mechanical
ventilation at 23 long-term care hospitals: A
multicenter outcomes study.’’
215 Ibid.
216 Ibid.
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the submission through the QIES ASAP
system. For more information on
LTCHQR Program reporting using the
QIES ASAP system, we refer readers to
our Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/
LTCHTechnicalInformation.html. We
intend to revise the LTCH CARE Data
Set to include new items that assess the
functional status and the risk adjustors,
should this proposed measure be
adopted. These items, which assess
specific functional activities (that is,
self-care, mobility, cognition,
communication, and bladder
continence), would be based on
functional status items included in the
Post-Acute Care Payment Reform
demonstration version of the CARE
Tool. The items have been carefully
developed and tested for reliability and
validity.
Based on the evidence discussed
above, we proposed to adopt for the
LTCHQR Program for the FY 2018
payment determination and subsequent
years the quality measure entitled
Functional Outcome Measure: Change
in Mobility among Long-Term Care
Hospital Patients Requiring Ventilator
Support. This quality measure is
developed by CMS, and we plan to
submit the quality measure to the NQF
for review. The MAP met in December
2013 and January 2014, and the NQF
provided the MAP’s input to CMS as
required under section 1890A(a)(3) of
the Act. In its January 2014 PreRulemaking Report, the MAP
conditionally supported this proposed
measure and stated that the measure
concept is promising, but requires
modification or further development,
and that functional status is a critical
area of measurement. Since the time of
the MAP meeting, we have continued
further development of the measure
with input from technical experts,
including empirical data analysis.
Subsequently, we have released draft
specifications for the function quality
measures, and requested public
comment between February 21 and
March 14, 2014. We received 22
responses from stakeholders with
comments and suggestions during the
public comment period, and have
updated the quality measures
specifications based on these comments
and suggestions. The updated
specifications are available for review at
the LTCHQR Program Web site at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
index.html?redirect=/LTCH-Quality-
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Reporting/. We refer readers to section
IX.C.2. of the preamble of this final rule
for more information on the MAP.
In section 1886(m)(5)(D)(ii) of the Act,
the exception authority provides that
‘‘[i]n the case of a specified area or
medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the
Secretary.’’ We reviewed the NQF’s
consensus endorsed measures and were
unable to identify any NQF-endorsed
quality measures focused on
improvement of function among
patients in the LTCH setting. We are
unaware of any other quality measures
for functional improvement that have
been endorsed or adopted by another
consensus organization for the LTCH
setting. Moreover, as discussed above,
the Secretary is now required to
establish such a measure by October 1,
2015. Therefore, we proposed to adopt
this functional improvement measure
for use in the LTCHQR Program for the
FY 2018 payment determination and
subsequent years under the Secretary’s
authority to select non-NQF-endorsed
measures.
We invited public comments on our
proposal to adopt the quality measure
entitled Functional Outcome Measure:
Change in Mobility among Patients
Requiring Ventilator Support for the
LTCHQR Program, with data collection
starting on April 1, 2016, for the FY
2018 payment determination and
subsequent years. We refer readers to
section IX.C.9.c. of the preamble of this
final rule for more information on the
proposed data collection and
submission timeline for this proposed
quality measure.
Comment: Several commenters
expressed support for the quality
measure ‘‘Functional Outcome Measure:
Change in Mobility Among Long-Term
Care Hospital Patients Requiring
Ventilator Support,’’ because functional
improvement is an important patientcentered outcome. A few commenters
noted that such improvements reduce
the likelihood of infection, morbidity,
mortality, and cost and significantly
improve quality of life in this vulnerable
population. A commenter emphasized
the importance of improved functional
status and improved, earlier mobility by
those patients who are ventilated.
Several commenters agreed with the
MAP’s recommendation to adopt
functional status measures as part of the
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LTCHQR Program. Commenters agreed
that functional status is an important
measurement gap for LTCHs and
supported CMS for proposing measures
that address this measurement gap area.
A commenter noted support for the use
of common functional status items
across acute and post-acute care
settings. A commenter noted that this
quality measure is required by public
law.
Response: We appreciate the support
for the quality measure entitled
Functional Outcome Measure: Change
in Mobility among Long-Term Care
Hospital Patients Requiring Ventilator
Support in the LTCH setting, and for the
support of use of standardized
functional status items across acute and
post-acute care settings.
Comment: Many commenters
expressed concern that the measure is
not yet fully developed and is not NQFendorsed. Several commenters noted a
number of issues that CMS should
consider in the development of these
functional status quality measures.
Response: We agree that the NQF
endorsement process is an important
part of measure development and we
have generally adopted NQF-endorsed
measures whenever feasible. However,
where such measures do not exist for
the LTCH setting, as stated in our
proposal and noted above, we may
adopt measures that are not NQFendorsed for the LTCHQR Program
under the Secretary’s exception
authority set out in section
1886(m)(5)(D)(ii) of the Act.
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed quality
measures that focused on assessment of
function for patients in the LTCH
setting. We are unaware of any other
quality measures for functional
assessment that have been endorsed or
adopted by another consensus
organization for the LTCH setting.
Therefore, we proposed to adopt this
functional assessment measure for use
in the LTCHQR Program for the FY 2018
payment determination and subsequent
years under the Secretary’s authority to
select non-NQF-endorsed measures. We
plan to submit an application for NQF
endorsement in the fall of 2014.
Comment: While most commenters
agreed that functional improvement was
an important measure area for the LTCH
population and some commenters noted
that it addresses a measure area gap
identified by the MAP, many
commenters expressed concern that the
measure is not yet fully developed and
had only conditional support from
MAP. They noted the MAP’s
conclusions that while the measure
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concept is promising, the measure is not
ready for implementation and requires
further modification and development.
Commenters encouraged CMS to refrain
from adopting any measures not fully
supported by the MAP.
Response: We note that this function
quality measure has been under
development for more than 3 years. The
steps we undertook as part of the
measure development process have
included an environmental scan,
technical expert panel review, and
public posting of specifications with
public input. A report summarizing the
TEP meetings titled ‘‘Summary of
Feedback from TEP on the Development
of Cross-Setting Functional Status
Quality Measures’’ is available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/.
Since the time of the MAP meeting,
we have continued further development
of the measure, and we posted draft
specifications for the functional status
quality measures for public comment
between February 21, 2014, and March
14, 2014. As discussed above, we
received 22 responses from stakeholders
with comments and suggestions during
the public comment period and, based
on these comments and suggestions,
have updated the quality measures
specifications, which are available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
index.html?redirect=/LTCH-QualityReporting/.
Comment: A commenter expressed
concern that CMS did not convene a
TEP for any of the new proposed quality
measures, and noted that TEPs, ‘‘which
evaluate . . . quality measures for
importance, scientific soundness,
usability, and feasibility,’’ are integral to
developing healthcare setting
appropriate quality measures.
Response: Our measure contractor
convened a cross-setting function
quality measures TEP after a public call
for TEP nominations. The TEP met in
person on September 9, 2013, and then
by Webinar on October 21, 2013,
October 28, 2013, and November 6.
2013. TEP members included experts
from LTCHs as well as IRFs and SNFs.
A report summarizing recent TEP
meetings focused on functional status
quality measures titled ‘‘Summary of
Feedback from TEP on the Development
of Cross-Setting Functional Status
Quality Measures’’ is available at:
https://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/.
The functional status quality measure
development builds upon work
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conducted as part of a project funded by
the Assistant Secretary for Planning and
Evaluation, and that project also
included a cross-setting function TEP,
which was held on August 15, 2012. A
report summarizing that meeting is
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/Post-AcuteCare-Quality-Initiatives/Downloads/
ASPE-Report-Analysis-of-CrosscuttingMedicare-Functional-Status-QualityMetrics-Using-the-Continuity-andAssessment-Record-and-EvaluationCARE-Item-Set-Final-Report.pdf.
Comment: Several commenters
conveyed concerns related to undue
burden associated with data
documentation for the functional status
quality measure.
Response: In the measure
specifications, we included several
gateway questions that allow the
clinician to skip questions that are not
pertinent, which we believe helps to
reduce undue burden. For example, one
item asks if the patient is or is not
walking. If the patient is not walking,
then the items ‘‘Walk 10 feet,’’ ‘‘Walk 50
feet with two turns’’ and ‘‘Walk 150
feet’’ do not require responses and are
therefore skipped.
Comment: A commenter questioned
the value of this measure in the LTCH
setting, given that many ventilator
patients have no mobility at the time of
admission. Another commenter noted
that for some patients, the proposed
measure may not be meaningful. The
commenter added that in such cases, it
may be appropriate to apply certain
exclusions. Another commenter
suggested the use of a process measure
due to limited improvement in mobility
for ventilator patients.
Response: Our analyses of the PAC–
PRD data found that many patients
admitted to LTCHs on a ventilator have
very limited mobility skills on
admission, but that many did show
some improvement in mobility skills
during the LTCH stay, including bed
mobility skills. LTCH clinicians in the
PAC–PRD appreciated that the items
used in this measure could capture even
small improvement. We also list
exclusion criteria in the draft measure
specifications document, including
patients with tetraplegia complete and
locked-in state as well as patients with
incomplete LTCH stays. We appreciate
the commenter’s suggestion on the use
of a process measure, and we note that
we are finalizing such as process
measure that includes this population.
Comment: A commenter stated that in
the testing of the CARE Tool, no
analysis was reported of differences in
functional scores at admission and
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discharge, thus calling into question
whether there is adequate variability in
change in function scores to result in a
meaningful measure. This commenter
stated that the Rasch analysis for
assessing validity was not applied to the
sensitivity of the measure for
chronically and critically ill patients.
The commenter concluded that if little
difference in functional scores at
admission and discharge is expected,
then the meaningfulness of the measure
is called into question.
Response: The change in self-care and
mobility function for LTCH patients was
reported in the Post-Acute Care
Payment Reform Demonstration Final
Report—Volume 4 available at: http://
www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/Reports/Downloads/PAC-PRD_
FinalRpt_Vol4of4.pdf. Specifically, on
page 57 of this Report, it is noted that
the mean self-care change for all
patients in the post-acute care setting
was an improvement of 12.4 units of
self-care function. Among patients with
nervous system conditions, LTCH
patients and SNF patients achieved very
similar unadjusted change in self-care
scores (10.4 and 10.1 units of self-care
functional improvement, respectively).
The mean mobility change for all postacute care patients was 14.6 units of
functional improvement. LTCH patients
improved 11.2 units from admission to
discharge, which is slightly more than
the change in mobility observed among
home health patients, which was 10.4
units of change. These results
demonstrate that functional
improvement was observed among
LTCH patients using the function items
from the CARE Tool. Our measure
development analyses also showed
improvement in mobility skills for
patients requiring ventilator support.
Comment: In order to more fully
evaluate the proposed functional
outcome measure, a few commenters
requested that CMS provide further
details regarding the proposed
methodology and expected utilization
approach for the measure. Specifically,
a commenter was interested in learning
more about the risk adjustment
procedures. A commenter expressed
concern about the lack of a validated
model to assess change in mobility
among LTCH inpatients requiring
ventilator support. Commenters
suggested that any such tool would also
need to include components for
stratification based on comorbidities
impacting a patient’s ability to
demonstrate functional improvement.
Response: The risk adjustment
methodology is described in the draft
quality measures specification
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document titled ‘‘Draft Specifications
for the Proposed Functional Status
Quality Measures for Long-Term Care
Hospitals’’ available at the LTCHQR
Program Web site at: https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting.
The risk adjustment analyses are being
conducted by the measure contractor
and the regression coefficients (that is,
weights) will be available as part of the
NQF application. Risk adjustment for
this measure includes variables that
adjust for several comorbidities,
including chronic kidney disease or
dialysis; septicemia or other severe
infections; metastatic lung, colorectal,
bladder or other severe cancers;
diabetes; paraplegia; and hemiplegia.
We received several suggestions for risk
adjustors as part of the March 2014
public comment process and have tested
all suggested variables.
After consideration of the public
comments we received, we are
finalizing the adoption of the quality
measure entitled Functional Outcome
Measure: Change in Mobility among
Long-Term Care Hospital Patients
Requiring Ventilator Support for use in
the LTCHQR Program, as proposed.
b. Quality Measure: National Healthcare
Safety Network (NHSN) VentilatorAssociated Event (VAE) Outcome
Measure
The third quality measure that we
proposed was the CDC-developed
National Healthcare Safety Network
(NHSN) Ventilator-Associated Event
(VAE) Outcome measure. The term
‘‘Ventilator-Associated Events’’
incorporates a range of ventilatorassociated events, including ventilatorassociated pneumonia (VAP),
pulmonary edema, acute respiratory
distress syndrome, sepsis, and
atelectasis.217 The NHSN VAE Outcome
measure provides increased measure
sensitivity, more objective definitions
for ventilator-associated conditions, and
the potential for automated outcome
detection.218 The NHSN VAE Outcome
measure is designed for use across
multiple inpatient care settings,
including LTCHs. The measure
specifications were created and tested in
the acute care setting. During CY 2013,
217 Klompas, M., Y. Khan, et al. (2011).
‘‘Multicenter Evaluation of a Novel Surveillance
Paradigm for Complications of Mechanical
Ventilation.’’ PLoS ONE 6(3): e18062.
218 Magill, S. S., M. Klompas, et al. (2013).
‘‘Developing a new, national approach to
surveillance for ventilator-associated events*.’’ Crit
Care Med 41(11): 2467–2475.
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105 LTCHs submitted VAE data to
CDC’s NHSN.219
According to the CDC, ‘‘more than
300,000 patients receive mechanical
ventilation in the United States each
year.’’ 220 These patients are at increased
risk for infections, such as pneumonia
and sepsis, as well as other serious
complications including pulmonary
edema, pulmonary embolism, and
death.221 222 223 These complications can
lead to longer stays in the ICU and
hospital, increased health care costs and
increased risk of disability (or death).224
The estimated mortality rate in patients
aged 85 years and older with acute lung
injury on mechanical ventilation is 60
percent.225
Ventilator-Associated Events
represent a high-priority complication
in the LTCH setting, given the older,
medically complex population in
LTCHs and the high prevalence of
mechanical ventilation in this setting. A
MedPAC analysis of MedPAR data
found that 16 percent of LTCH patients
used at least one ventilator-related
service in 2012.226 In FY 2012, MS–
LTC–DRG 207, a diagnosis-related group
that refers to respiratory diagnosis with
ventilator support for 96 or more hours,
represented the most frequently
occurring diagnosis among LTCH
patients, at 11.3 percent of all LTCH
discharges,227 and MS–LTC–DRG–4, a
diagnosis-related group that refers to
tracheostomy with ventilator support for
96 or more hours or primary diagnosis
except face, mouth, and neck without
major OR procedure, represented an
additional 1.3 percent of all LTCH
discharges. Together, the two diagnosisrelated groups account for a total of
nearly 18,000 discharges. Furthermore,
219 Data from CMS–CDC correspondence on
February 10, 2014.
220 Centers for Disease Control and Prevention
(CDC). Ventilator-Associated Event (VAE). January
2014. http://www.cdc.gov/nhsn/PDFs/pscManual/
10-VAE_FINAL.pdf.
221 Esteban, A., A. Anzueto, et al. (2002).
‘‘Characteristics and outcomes in adult patients
receiving mechanical ventilation: a 28-day
international study.’’ JAMA 287(3): 345–355.
222 Klompas, M., Y. Khan, et al. (2011).
‘‘Multicenter Evaluation of a Novel Surveillance
Paradigm for Complications of Mechanical
Ventilation.’’ PLoS ONE 6(3): e18062.
223 Rubenfeld, G. D., E. Caldwell, et al. (2005).
‘‘Incidence and outcomes of acute lung injury.’’ N
Engl J Med 353(16): 1685–1693.
224 Centers for Disease Control and Prevention
(CDC). Ventilator-Associated Event (VAE). January
2014. http://www.cdc.gov/nhsn/PDFs/pscManual/
10-VAE_FINAL.pdf,.
225 Rubenfeld GD, Caldwell E, Peabody E, et al.
Incidence and outcomes of acute lung injury. N
Engl J Med 2005: 353:1685–93.
226 MedPAC ‘‘Report to Congress: Medicare
Payment Policy’’ Chapter 11 ‘‘Long-term care
hospital services.’’ March 2014. http://
www.medpac.gov/chapters/Mar14_Ch11.pdf.
227 Ibid.
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the number of ventilated patients in
LTCHs is increasing—the number of
discharged patients with respiratory
diagnosis with ventilator support for 96
or more hours increased 7.4 percent
between 2008 and 2011.228
Although there are no nationwide or
LTCH-specific estimates of the
prevalence of ventilator-associated
conditions (VACs) and infection-related
ventilator-associated complications
(IVACs), a recent study of mechanically
ventilated patients in ICUs found that
approximately 10 percent developed a
VAC and 5 percent developed an
IVAC.229 Adherence to clinical practice
guidelines for the prevention of VAP
has been associated with decreased VAC
rates in ICUs.230 Because VAP, one type
of VAC, is considered preventable,
surveillance and measurement of
infection rates is important to improving
quality of care and patient safety.
The importance of the NHSN VAE
Outcome measure in LTCHs was
underscored by the MAP, which stated
in its January 2014 Pre-Rulemaking
Report that the measure addresses a
National Quality Strategy aim or priority
that is currently not adequately
addressed. The MAP supported the
addition of this measure addressing
VAEs in the LTCH setting and stated
that ‘‘although this measure is not NQFendorsed, it provides useful information
for healthcare facilities to help them
monitor ventilator use and identify
improvements for preventing
complications.’’ 231
We reviewed the NQF’s consensus
endorsed measures and were unable to
identify any NQF-endorsed measures for
VAEs in the LTCH setting (or a related
setting). We are unaware of any other
measures for VAEs that have been
endorsed or adopted by another
consensus organization for the LTCH
setting (or a related setting). Therefore,
we proposed to adopt the NHSN VAE
Outcome measure for use in the
LTCHQR Program for the FY 2018
payment determination and subsequent
years under the Secretary’s authority to
select non-NQF-endorsed measures
under section 1886(m)(5)(D)(ii) of the
Act.
We proposed to use the CDC’s NHSN
reporting and submission infrastructure
228 Ibid.
229 Muscedere, J., T. Sinuff, et al. (2013). ‘‘The
clinical impact and preventability of ventilatorassociated conditions in critically ill patients who
are mechanically ventilated.’’ Chest 144(5): 1453–
1460.
230 Ibid.
231 National Quality Forum. Measure
Applications Partnership Pre-Rulemaking Report:
Public Comment Draft: January 2014. Available:
http://www.qualityforum.org/map/.
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for reporting of the NHSN VAE
Outcome measure. Details related to the
procedures for using CDC’s NHSN for
data submission and information on
definitions, numerator data,
denominator data, data analyses, and
measure specifications for the NHSN
VAE Outcome measure can be found at:
http://www.cdc.gov/nhsn/PDFs/
pscManual/10-VAE_FINAL.pdf.
CDC’s NHSN is the data collection
and submission framework currently
used for reporting the CAUTI (NQF
#0138) and CLABSI (NQF #0139)
measures for the LTCHQR Program.
Further, CDC’s NHSN is the data
collection and submission framework
adopted for data collection and
reporting for the Influenza Vaccination
Coverage among Healthcare Personnel
measure (NQF #0431) starting on
October 1, 2014, and for the NHSN
Facility-Wide Inpatient Hospital-Onset
Methicillin-Resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716) and NHSN
Facility-Wide Inpatient Hospital-Onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717) starting
on January 1, 2015. By building on the
CDC’s NHSN reporting and submission
infrastructure, we intend to reduce the
administrative burden related to data
collection and submission for this
measure under the LTCHQR Program.
We refer readers to section IX.C.9.d. of
the preamble of this final rule for more
information on the data collection and
submission timeline for this quality
measure.
We invited public comments on our
proposal to adopt the NHSN VAE
Outcome measure for the LTCHQR
Program, with data collection beginning
on January 1, 2016, for the FY 2018
payment determination and subsequent
years. We also invited public comments
on our proposal to use the CDC’s NHSN
for data collection and submission for
this measure.
Comment: Many commenters agreed
that the NHSN VAE Outcome measure
is an appropriate quality measurement
area for the general LTCH patient
population. Several commenters agreed
with the NQF MAP’s recommendation
to adopt HAI measures as part of the
LTCHQR Program. Commenters agreed
that HAI measures represent an
important measurement gap for LTCHs
and supported CMS’ proposal of a
measure that addresses this
measurement gap area. A commenter
noted that the NHSN VAE Outcome
measure is well aligned with the newly
identified chronically critically ill (CCI)
category of patients.
Response: We thank these
commenters’ for their support of our
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effort to implement HAI measures that
address important measurement gap
areas identified by the NQF MAP and
other stakeholder groups.
Comment: Some commenters fully
supported CMS’ proposal to implement
the NHSN VAE Outcome measure for
the FY 2018 payment year. These
commenters agreed with CMS’ rationale
that VAEs represent a high-priority
complication in the LTCH setting and
appreciated CMS’ consideration for the
utility of this measure given that it can
be used across multiple settings.
Some commenters specifically noted
that the measure offers a mechanism for
LTCHs of long-term mechanical
ventilation to objectively measure the
impact of care improvement initiatives.
Furthermore, these commenters stated
that reporting the NHSN VAE Outcome
measure would raise awareness to the
medical detriment of extended time on
mechanical ventilation and would
encourage facilities to implement
strategies to reduce time on mechanical
ventilation. Further, these commenters
noted that the foundational elements for
VAE definition (positive-end expiratory
pressure (PEEP), fraction of inspired
oxygen (FiO2), temperature, and white
blood cell count (WBC)) are readily
available, objective, rational, and
reportable. The commenters stated that
measuring and reporting VAE along
with tracking care improvement
initiatives could help to quantify the
extent to which VAEs are preventable.
Response: We appreciate these
commenters’ support of our proposal
and rationale to implement the NHSN
VAE Outcome measure.
Comment: Many commenters
expressed concern that the measure is
not NQF-endorsed, though several
commenters noted that the measure is
supported by the MAP. Commenters
underscored the importance of the NQF
review processes, emphasizing that
NQF-endorsement provides assurance
that the measure has been tested, can
reliably and accurately collect data, is
feasible to implement, and is usable. For
these reasons, commenters encouraged
CMS to refrain from adopting measures
into the LTCHQR Program until they
have been endorsed by the NQF for use
in the LTCH setting. Commenters also
emphasized the importance of review by
the NQF via the full consensus
development process, stating that timelimited endorsement from the NQF is
insufficient to consider a measure for
adoption in the LTCHQR Program. In
addition to securing NQF-endorsement,
commenters encouraged CMS to refrain
from adopting any measures not
supported by the NQF MAP and a TEP.
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Response: We agree that the NQFendorsement process is an important
part of measure development and we
have generally adopted NQF-endorsed
measures whenever feasible. However,
where such measures do not exist for
the LTCH setting, as stated in our
proposal, we may adopt measures that
are not NQF-endorsed under the
Secretary’s exception authority set out
in section 1886(m)(5)(D)(ii) of the Act.
As also stated in our proposal, we
reviewed the NQF’s consensus endorsed
measures for VAEs and were unable to
identify an NQF-endorsed measure for
the LTCH setting. We note that the CDC
has conveyed to us that they received
preliminary positive feedback from the
NQF on the NHSN VAE Outcome
measure and plans to submit the
measure for NQF endorsement in 2015.
In addition, the NQF MAP supported
the use of this measure in the LTCHQR
Program and concluded that ‘‘although
this measure is not NQF-endorsed, it
provides useful information for
healthcare facilities to help them
monitor ventilator use and identify
improvements for preventing
complications.’’ 232 Because the NHSN
VAE Outcome measure was developed
for use in multiple inpatient settings,
including LTCHs, and because several
stakeholder groups have agreed that the
measure provides useful information
that can prevent ventilator-associated
events and impact patient outcomes, we
believe the measure is appropriate for
implementation in the LTCHQR
Program.
Comment: A commenter questioned
the appropriateness of the NHSN VAE
Outcome measure for the LTCH patient
population since the primary focus of
care for the LTCH patient may include
aggressive ventilator weaning. This
commenter expressed concern that the
definitions for VAE surveillance used in
the NHSN VAE Outcome measure are
different from the patient outcomes and
clinical indicators of VAEs, such as the
VAP, used in LTCHs. Further, this
commenter noted that the surveillance
monitoring approach used by the NHSN
VAE Outcome measure does not align
with LTCH patient goals (which often
include aggressive ventilator weaning).
Since LTCHs typically use identification
of a symptomatic patient and laboratory
culture results to identify VAEs, the
commenter stated that implementing
surveillance monitoring (in particular,
ongoing monitoring of positive-end
expiratory pressure and fraction of
232 National Quality Forum. Measure
Applications Partnership Pre-Rulemaking Report:
Final Report January 2014. Available: http://
www.qualityforum.org/map/ (page 31).
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inspired oxygen) to adhere to the NHSN
algorithm would be difficult and taxing
in the LTCH setting and would divert
resources away from other, more
valuable monitoring and prevention
efforts in the LTCH setting.
Response: Although we recognize that
the implementation of this measure
adds burden for LTCHs, the NHSN VAE
measure was developed to be more
sensitive to VAEs than other VAE
identification measures and is also more
objective than other measures.233 The
VAE algorithm avoids the use of chest
radiograph and the reliance on specific
clinical signs and symptoms to identify
VAP due to their subjectivity and the
fact that they may be poorly or
inconsistently documented in the
medical record.234 The VAE
surveillance definition algorithm used
in the NHSN VAE Outcome measure
was developed by a workgroup based on
objective, streamlined, and potentially
automatable criteria that will
intentionally identify a broad range of
conditions and complications occurring
in mechanically-ventilated adult
patients.235 The measure was designed
for use across several different
healthcare settings, including LTCHs,
and in 2013, 105 LTCHs successfully
submitted VAE data to CDC’s NHSN,236
indicating that LTCHs were able to
implement and operationalize this
measure in their facilities. The NHSN
VAE Outcome measure was also
developed to facilitate potential
automated outcome detection, which
will contribute to increased objectivity
and decreased burden on LTCHs.
Comment: A commenter expressed
concern about the validity of certain
aspects of NHSN VAE Outcome
measure. The commenter noted the
NHSN VAE Outcome measure is used as
a way to capture ventilator-associated
pneumonia; however, the VAP portion
of this measure is no longer valid or
effective.
Response: The NHSN VAE algorithm
was developed and carefully tested to be
more sensitive to VAEs (including
VAPs) than other VAE measures and to
be more objective than other
233 Magill, S. S., M. Klompas, et al. (2013).
‘‘Developing a new, national approach to
surveillance for ventilator-associated events*.’’ Crit
Care Med 41(11): 2467–2475.
234 Centers for Disease Control and Prevention
(CDC). Ventilator-Associated Event (VAE). January
2014. http://www.cdc.gov/nhsn/pdfs/pscManual/
10-VAE_FINAL.pdf.
235 Centers for Disease Control and Prevention
(CDC). Ventilator-Associated Event (VAE). January
2014. http://www.cdc.gov/nhsn/pdfs/pscManual/
10-VAE_FINAL.pdf.
236 Data from CMS–CDC correspondence on
February 10, 2014.
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50303
measures.237 The algorithm was
developed based on objective,
streamlined, and potentially
automatable criteria 238 and was
developed and tested for a range of
healthcare settings, including LTCHs.
Research indicates the VAE algorithm
detects clinical conditions such as
pneumonia, ARDS, atelectasis and
pulmonary edema, clinical conditions
that may be preventable. In terms of
what is most appropriate for making
comparisons, benchmarking, etc., the
overall VAE rate, which represents all
events that met at least the VAC
definition, and the ‘‘IVAC-plus’’ rate,
which represents all events that met at
least the IVAC definition, would be
suitable for these purposes, and all
facilities should be able to detect VACs
and IVACs. Rates of individual events
(for example, ‘‘VAC only,’’ ‘‘IVAC
only,’’ and ‘‘especially possible and
probable VAP’’) could be used by
LTCHs as ‘‘internal quality
improvement’’ measures. ‘‘Possible and
probable VAP’’ definitions were
developed for internal quality
improvement purposes rather than
inter-facility comparisons because
practices within and among facilities
with regard to diagnostic testing of
respiratory tract samples vary widely
and so are not ideal for inclusion in
surveillance definitions that could
potentially be used to make such
comparisons in the future. Using the
third tier of VAE (‘‘possible or probable
VAP’’) for public reporting and/or for
benchmarking or comparison purposes
would therefore not be recommended.
Comment: Several commenters
expressed concerns regarding recent
changes in the NHSN VAE Outcome
measure algorithm and definitions,
which were updated in January 2013
and July 2013, with additional
modifications made in January 2014. A
commenter noted that the updated
algorithm has been in place for a
relatively short period of time
(implemented in the NHSN in 2013);
thus, the commenter questioned
whether data submitted under the new
algorithm has been analyzed and
validated, particularly in the LTCH
setting. The commenter encouraged
CMS to exercise caution in adopting the
NHSN VAE Outcome measure as part of
the LTCHQR Program since the measure
was created and tested in the acute care
237 Magill, S. S., M. Klompas, et al. (2013).
‘‘Developing a new, national approach to
surveillance for ventilator-associated events*.’’
Critical Care Medicine 41(11): 2467–2475.
238 Centers for Disease Control and Prevention
(CDC). Ventilator-Associated Event (VAE). January
2014. http://www.cdc.gov/nhsn/pdfs/pscManual/
10-VAE_FINAL.pdf.
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hospital setting and the updated
algorithm is still fairly new.
Another commenter expressed similar
concerns, noting that the NHSN
continues to modify the data collection
algorithm based on assessment and user
feedback. This commenter mentioned
that the NHSN has not yet provided
comparative data to enable facilities to
set adequate benchmarks for targets.
Another commenter noted that further
experience is necessary with VAE
surveillance in the LTCH setting before
moving forward with the adoption of
this as a quality measure. This
commenter provided an example
requiring clarification is whether the
epidemiology of VAE differs in a LTCH
setting where tracheostomies are largely
predominant.
Another commenter stated the recent
change in the NHSN algorithm no
longer uses the Ventilator–Associated
Pneumonia bundle. The commenter also
stated that the previously used VAP
bundle, referenced in the proposed rule,
was applicable to Intensive Care Units,
is outdated, and is not an appropriate
measure for LTCHs.
Response: We agree that
comprehensive measure testing is an
important part of measure development.
The CDC algorithm was developed for
several healthcare settings and initial
testing was conducted in acute care
facilities prior to implementation. As
one commenter pointed out, the CDC
continues to test the algorithm and to
modify it based on assessment and enduser feedback. CDC has implemented an
ongoing process to continually improve
this measure and ensure it is up to date
and reflects the most recently available
testing and user feedback results.
Although more testing and validation is
helpful to inform the use of a measure,
based on evidence cited, measure
testing conducted to date, and the fact
that 105 LTCHs collected and reported
data to the CDC’s NHSN in CY 2013,239
we believe the impact this measure
could have on the quality of care and
patient outcomes supports our proposal
to implement this measure starting
January 1, 2016.
We will continue to work closely with
CDC to review measure testing results
and feedback on an ongoing basis and
continue to assess the validity of this
measure and its impact on the quality of
care in LTCHs. Further, CMS and CDC
will develop and provide guidance to
LTCHs to support the implementation of
this measure, including clarification on
measure specifications. This guidance
will be informed by the current and
239 Data from CMS–CDC correspondence on
February 10, 2014.
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ongoing CDC NHSN experience with
VAE surveillance in the LTCH setting.
Finally, we agree with the commenter
who states that the former VAP bundle
is out of date; hence, we have not
adopted this bundle for implementation
in the LTCHQR Program.
Comment: Commenters requested
clarification regarding how CMS intends
to define VAEs in the LTCH setting.
These commenters encouraged CMS to
report only the two standardized
infection ratios (SIRs) listed in the
NHSN specifications for the measure:
VACs and IVACs. The commenters
referred to the proposed rule, which
states that VAE ‘‘incorporates a range of
ventilator-associated events, including
ventilator-associated pneumonia (VAP),
pulmonary edema, acute respiratory
distress syndrome, sepsis, and
atelectasis’’ (79 FR 28267). The
commenters clarified that according to
the current specifications, VAE is
defined not by the five aforementioned
clinical conditions, but instead by
quantitative changes in specific
pathophysiologic parameters, including
a decline in a patient’s oxygenation
level after a period of stability or
improvement on the ventilator,
evidence of infection or inflammation
(for example, elevated body
temperature), and laboratory evidence of
respiratory infection. Commenters noted
that the pathophysiologic changes
which define VACs and IVACs could be
due to a variety of clinical conditions
including, but not limited to, those
mentioned in the proposed rule. These
commenters underscored that, as
suggested by the current specifications,
the use of quantitative parameters is
appropriate at this time because
available definitions of specific
conditions leading to VAEs are fairly
subjective, which could lead to
unreliable or invalid data collection and
reporting. Commenters noted that, as
specified by the NHSN, the NHSN VAE
Outcome measure reports two SIRs,
VAC and IVAC, which are not intended
to be a ‘‘roll-up’’ of the five clinical
conditions listed in the proposed rule.
The commenters encouraged CMS to
report the measure in a manner
consistent with those specifications.
Response: Our intent for the NHSN
VAE Outcome measure as part of the
LTCHQR Program is to collect and
report data in alignment with NHSN
measure specifications. Specifically, we
will collect and report data on the two
SIRs (VAC and IVAC) in alignment with
the NHSN specifications. The measure
would not be reported via a ‘‘roll-up,’’
or combined prevalence or incidence
count of the five clinical conditions
mentioned in the comment (ventilator-
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associated pneumonia (VAP),
pulmonary edema, acute respiratory
distress syndrome (ARDS), sepsis, and
atelectasis). In the event that the
measure specifications are revised
through ongoing measure development
by the CDC, the measure steward, we
will align the data collection and
reporting for the measure with revised
measure specifications.
Comment: A commenter expressed
concerns about the NHSN VAE
Outcome measure based on recent
publications (Klouwenberg et al.,
2014 240 and Lilly et al., 2014 241) and
noted that these studies demonstrate
that the new definition of VAE has poor
sensitivity for detecting clinically
verified VAP. The commenter expressed
concern about the appropriateness of
developing a quality measure based
upon a clinical definition that research
has shown to have poor sensitivity. The
commenter encouraged CMS to work
with stakeholders to improve the VAE
definition before implementing the
NHSN VAE Outcome measure.
Response: We appreciate the
commenter’s concern regarding the
sensitivity of the measure for detecting
clinically verified VAP. Ultimately, it is
a clinical diagnosis that is made by
taking into account several pieces of
information at the bedside. There is not
a universally accepted standard
approach that all LTCHs can agree on.
With this in mind, the intent of VAE
surveillance is not to provide a new
surveillance VAP definition but instead
to provide an objective measure—based
on information that should be available
for any patient on mechanical
ventilation in any facility—that captures
a broad range of conditions and
complications in patients on mechanical
ventilation understanding that
infections are not the only potentially
preventable complications of
mechanical ventilation. Research
indicates the VAE algorithm detects
clinical conditions that may be
preventable, including, but not limited
to, pneumonia, ARDS, atelectasis, and
pulmonary edema.
Comment: Several commenters
recommended that CMS delay the
January 1, 2016, implementation start
240 Klein Klouwenberg PM, van Mourik MS, Ong
DS, Horn J, Schultz MJ, Cremer OL, Bonten MJ;
MARS Consortium. Electronic Implementation of a
Novel Surveillance Paradigm for Ventilatorassociated Events. Feasibility and Validation. Am J
Respir Crit Care Med. 2014 Apr 15;189(8):947–55
241 Lilly CM, Landry KE, Sood RN, Dunnington
CH, Ellison RT 3rd, Bagley PH, Baker SP, Cody S,
Irwin RS; for the UMass Memorial Critical Care
Operations Group. Prevalence and Test
Characteristics of National Health Safety Network
Ventilator-Associated Events. Crit Care Med. 2014
May 7. [Epub ahead of print].
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date for this measure. A commenter
recommended CMS delay
implementation until data submitted
under the new VAE algorithm is
reviewed for reliability and in order to
allow time to support adequate training
and resources for VAE data collection.
Several commenters expressed a need
for the NHSN VAE Outcome measure to
be further tested and refined for the
LTCH setting before it is adopted for use
in the LTCHQR Program.
A few commenters expressed a
concern that the NHSN VAE Outcome
measure was developed and tested in
the acute care setting and recommended
that CMS exercise caution in
implementing the measure in the LTCH
setting. A commenter stated there is
need for better data on VAEs and
responsiveness to quality improvement
programs before the measure is
considered suitable for inter-facility
comparisons or pay-for-performance
programs. This commenter asked that
the implementation of NHSN VAE
Outcome measure be delayed until the
measure can be validated in the LTCH
setting, more is known about what
portion of VAE is preventable, and until
risk adjustment strategies for the
measure have been developed. Another
commenter expressed similar concerns
about lack of LTCH-specific data
currently available under the new VAE
algorithm and stated that
implementation of the measure in the
LTCHQR Program would be premature
until further data is available and
standards of care are developed for
preventing VAEs.
Response: The CDC algorithm was
developed for several health care
settings, including LTCHs. While initial
testing was conducted in acute care
setting, the CDC continues to test the
algorithm and to modify it based on
assessment and end-user feedback.
Further, LTCHs are acute care facilities
and hence, while setting-specific testing
is important, based on extensive
evidence cited in our proposal, we
believe that the impact this measure
could have on the quality of care and
patient outcomes in the LTCH setting
justifies the need to implement this
measure beginning January 1, 2016.
CMS will continue to work closely with
the CDC to review measure testing
results and feedback on an ongoing
basis and continue to assess the validity
and reliability of this measure and its
impact on the quality of care in LTCHs.
Comment: A few commenters
expressed concern about the resourceintensive nature for data collection for
this measure. A commenter expressed
concern about the limitations of existing
resources in LTCHs and noted that
implementation of the measure will
divert resources to NHSN VAE Outcome
measure data collection and reporting
activities and away from other valuable
prevention activities. A commenter
noted that some LTCHs do not have
EHRs to facilitate data collection for this
measure. Another commenter noted the
complexity of the measure algorithm
and the variety of patient scenarios that
could be implicated and stated that
these represent additional burden in
collecting data for the NHSN VAE
Outcome measure.
Response: Based on evidence cited in
our proposal, we believe the impact this
measure could have on quality of care
and patient outcomes justifies
additional resources needed for measure
data collection. We recognize that the
implementation of this measure adds
data collection and reporting burdens
for facilities; however, we believe the
initial burden to implement the measure
and train staff is necessary to improve
the quality of care for patients in the
LTCHs. In addition, in 2013,
approximately 25 percent (n=105) of all
currently Medicare-certified LTCHs
reported data on this measure to CDC’s
NHSN; this is evidence in support the
feasibility of implementation of this
measure in the LTCH setting.242 In
addition, this measure was developed to
facilitate potential automated outcome
detection, which could eventually lead
to decreased burden for LTCH.
50305
Further, CMS and CDC will undertake
training and stakeholder
communication and outreach efforts in
CY 2015 and CY 2016 to support the
implementation of this measure in the
LTCHQR Program, similar to our
ongoing efforts since 2012 to support
the implementation of previously
adopted measures, including the
CLABSI, CAUTI, and Healthcare
Professional Influenza Vaccination
measures.
In addition to soliciting comments on
our proposal to adopt the NHSN VAE
Outcome measure for the LTCHQR
Program, we also invited comments on
our proposal to use the CDC’s NHSN
system for data collection and
submission for this measure.
We received no comments on the use
of the NHSN system for data collection
and submission of the VAE Outcome
measure. Therefore we are finalizing the
National Healthcare Safety Network
(NHSN) Ventilator-Associated Event
(VAE) Outcome Measure, as proposed,
for FY 2018 payment update
determination and subsequent years.
8. LTCHQR Program Quality Measures
and Concepts Under Consideration for
Future Years
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28268 through
28269), we stated that we are
considering whether to propose one or
more of the quality measures and
quality measure topics listed in the table
below for future years in the LTCHQR
Program. We invited public comments
on these measures and measure topics.
We specifically invited public
comments regarding the clinical
importance of these measures and
measure topics in the LTCH setting,
feasibility of data collection and
implementation, current use of these
measures and measure topics in the
LTCH setting, and the usability of data
for these measures and measure topics
to inform future quality improvements
in the LTCH setting.
FUTURE MEASURES AND MEASURE TOPICS UNDER CONSIDERATION FOR PROPOSAL FOR THE LTCH QUALITY REPORTING
PROGRAM
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National Quality Strategy Priority: Patient Safety.
• Measures addressing Ventilator Bundle.
• Measures addressing avoidable injuries secondary to polypharmacy.
• Application of Hospital-Based Inpatient Psychiatric Services (HBIPS)2 Hours of Physical Restraint Use (NQF #0640).
• Application of Percent of Residents Who Were Physically Restrained
(Long Stay) (NQF #0687).
National Quality Strategy Priority: Effective Clinical Processes.
• Severe Sepsis and Septic Shock: Management Bundle.
242 Data from CMS–CDC correspondence on
February 10, 2014.
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FUTURE MEASURES AND MEASURE TOPICS UNDER CONSIDERATION FOR PROPOSAL FOR THE LTCH QUALITY REPORTING
PROGRAM—Continued
• Venous Thromboembolism Prophylaxis (NQF #0371).
• Ventilator Weaning Rate.
• Pain Management.
National Quality Strategy Priority: Patient- and Caregiver-Centered
Care.
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National Quality Strategy Priority: Communication and Coordination of
Care.
Comment: Commenters supported the
addition of patient experience of care
measures for use in the LTCHQR
Program. Specifically, a commenter
supported an application of the
HCAHPS survey for use in the LTCHQR
Program. The commenter supported the
collection of patient and caregiver
experience through surveys that provide
feedback that only a patient or their
caregiver can provide. The commenter
urged CMS to undertake the necessary
testing to modify the HCAHPS survey to
be appropriate for use within the
LTCHQR Program. The commenter
suggested some modifications to the
HCAHPS that would be necessary prior
to implementation. These include
testing the HCAHPS questions in LTCHs
and the addition of new questions about
key topics relevant to the LTCH patient
population. The commenter added that
for many patients proxy respondents
would be necessary to achieve a reliable
response rate.
Response: We appreciate the
commenters’ support of the HCAHPS
survey in the LTCHQR Program, and we
will take their recommendations into
consideration in our measure
development and testing efforts, as well
as in our ongoing efforts to identify and
propose appropriate measures for the
LTCHQR Program in the future.
Comment: Commenters noted the
‘‘Severe Sepsis and Septic Shock:
Management Bundle’’ was not ready for
use in the LTCHQR Program. A
commenter noted that the bundle was
endorsed for the acute care hospital
setting and would need refinement and
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• Depression Assessment and Management.
• Application of Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) (NQF #0166).
• Measures addressing patients’ experience of care.
• Measures addressing pain control—patients’ preference.
• Application of Medication Reconciliation (NQF #0097).
• Application of Medication Reconciliation Post-Discharge (NQF
#0554).
• Reconciled Medication List Received by Discharged Patients (Discharges from an Inpatient Facility to Home/Self Care or Any Other
Site of Care) (NQF #0646).
• Transition Record with Specified Elements Received by Discharged
Patients (Discharges from an Inpatient Facility to Home/Self Care or
Any Other Site of Care) (NQF #0647).
• Timely Transmission of Transition Record (Discharges from an Inpatient Facility to Home/Self Care or Any Other Site of Care) (NQF
#0648).
• Measures addressing care transitions.
testing for use in the LTCH setting.
Another commenter recommended
additional review of ‘‘Severe Sepsis and
Septic Shock: Management Bundle’’
before proposing the bundle as a formal
measure. The commenter noted that
although sepsis is one of the leading
causes of hospitalization and
readmissions and results in significant
morbidity, mortality, and increased cost
in health care, the current bundle
definition, including central line
placement and central hemodynamic
monitoring, may have other unintended
consequences. The commenter
underscored the NQF Patient Safety
Standing Committee’s recent
recommendation that the item requiring
measurement of central venous pressure
be removed from this bundle. The
commenter added that this
recommendation is based on recent
literature published on sepsis protocols,
which found no significant benefit of
the mandated use of central venous
catheterization and central
hemodynamic monitoring in all
patients.
Response: We appreciate the
commenters’ acknowledgement of the
significant burden sepsis can cause on
health care outcomes and costs. We will
take their comments regarding this
measure into consideration in our
measure development efforts, as well as
in our ongoing efforts to identify and
propose appropriate measures for the
LTCHQR Program in the future.
Comment: A commenter did not
support the inclusion of the ‘‘Institute
for Healthcare Improvement Ventilator
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Bundle,’’ as several components of the
bundle (daily sedation reduction and
daily weaning of ventilator settings)
may not be applicable to patients who
are on a long-term ventilator and may
never be weaned. Another commenter
supported the development of palliative
care measures for the LTCHQR Program.
Another commenter recommended CMS
consider development and pilot testing
of measure(s) related to antimicrobial
stewardship, citing this measurement
area as an important one given the fact
that LTCHs are often at the epicenter of
clusters and outbreaks of multidrugresistant organisms. Another commenter
recommended CMS consider including
The Joint Commission tobacco
performance measure set in the
LTCHQR Program since identifying and
treating tobacco use is a cost-effective
and medically effective clinical
intervention demonstrated to improve
health and reduce costs. Another
commenter supported the addition of
care coordination measures in the
LTCHQR Program and noted that since
patients in the LTCH setting often
receive services from multiple
providers, a care coordination measure
would represent an important
opportunity to ensure holistic, highquality care for the LTCH population.
Finally, a commenter indicated support
and a recommendation to include new
quality measures, after the measures
have been fully developed, tested, and
endorsed by a multi-stakeholder
consensus organization. The commenter
supported quality of life, functional
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status, and other patient-reported
outcomes performance measures.
Response: We appreciate the
commenters’ recommendations, and we
will take the commenters’ suggestions
into consideration in our measure
development efforts, as well as in our
ongoing efforts to identify and propose
appropriate measures for the LTCHQR
Program in the future.
9. Form, Manner, and Timing of Quality
Data Submission for the FY 2016
Payment Determination and Subsequent
Years
a. Background
Section 1886(m)(5)(C) of the Act
requires that, for the FY 2014 payment
determination and subsequent years,
each LTCH submit to the Secretary data
on quality measures specified by the
Secretary and that such data shall be
submitted in a form and manner, and at
a time, specified by the Secretary. As
required by section 1886(m)(5)(A)(i) of
the Act, for any LTCH that does not
submit data in accordance with section
1886(m)(5)(C) of the Act with respect to
a given rate year, any annual update to
the standard Federal rate for discharges
for the hospital during the rate year
must be reduced by two percentage
points.
b. Finalized Timeline for Data
Submission Under the LTCHQR
Program for the FY 2016 and FY 2017
Payment Determinations (Except NQF
#0680 and NQF #0431)
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50857 through 50861 and
50878 through 50881), we finalized the
data submission timelines and
submission deadlines for measures for
the FY 2016 and FY 2017 payment
determinations. We refer readers to the
FY 2014 IPPS/LTCH PPS final rule for
a more detailed discussion of these
timelines and deadlines. Specifically,
we refer readers to the table at 78 FR
50878 of the FY 2014 IPPS/LTCH PPS
final rule for the data collection period
and submission deadlines for the FY
2016 payment determination and the
tables at 78 FR 50881 of that final rule
for the data collection timelines and
submission deadlines for the FY 2017
payment determination.
c. Revision to the Previously Adopted
Data Collection Period and Submission
Deadlines for Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680) for the FY 2016 Payment
Determination and Subsequent Years
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50858 through 50861), we
revised the Percent of Residents or
50307
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short Stay) (NQF
#0680) measure for the FY 2016
payment determination and subsequent
years. In that rule (78 FR 50861, 50880
through 50882), we also revised the data
collection period and submission
deadlines for the FY 2016 through FY
2018 payment determinations for this
measure.
For the reasons discussed in section
IX.C.6.a. of the preamble of the
proposed rule (79 FR 28262), we
proposed to change to the data
collection timeframes and submission
deadlines for the FY 2016 payment
determination and subsequent years.
Specifically, as discussed in section
IX.C.6.a. of the preamble of the
proposed rule, for the FY 2016 payment
determination, we proposed submission
deadlines of February 15, 2015, and
May 15, 2015, for this measure for data
collection periods October 1-December
31, 2014, and January 1-March 31, 2015,
respectively, instead of the previously
finalized submission deadline of May
15, 2015, for the data collection period
of October 1, 2014-April 30, 2015. The
changes applicable to this measure
(NQF #0680) are illustrated below for
the FY 2016 payment determination.
Please refer to section IX.C.6 of the
preamble of this final rule for further
information regarding this revision.
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2016 PAYMENT DETERMINATION FOR PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED AND APPROPRIATELY
GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) (NQF #0680)
Final submission deadlines for the LTCHQR program FY 2016
payment determination
Data collection period (CY):
Q4 (October 1—December 31, 2014) ......................................................
Q1 (January 1—March 31, 2015) ............................................................
Further, as discussed in section
IX.C.6.a. of the preamble of the
proposed rule (79 FR 28262), we
February 15, 2015.
May 15, 2015.
proposed similar deadlines for the FY
2017 payment determination and
subsequent years for the LTCHQR
Program. The changes applicable to this
measure (NQF #0680) are illustrated
below.
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DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2017 PAYMENT DETERMINATION AND SUBSEQUENT YEARS FOR PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED
AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) (NQF #0680)
Data collection period (CY):
Final submission deadlines for the LTCHQR program payment
determination (FY)
Q4 of the CY two years before the payment determination year (for example, October 1—December 31, 2015 for the FY 2017 payment determination).
Q1 of the CY one year before the payment determination year (for example, January 1—March 31, 2016 for the FY 2017 payment determination).
February 15 of the FY preceding the payment determination year (for
example, February 15, 2016 for the FY 2017 payment determination).
May 15 of the FY preceding the payment determination year (for example, May 15, 2016 for the FY 2017 payment determination).
We invited public comment on our
proposal to revise the data collection
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Patients Who Were Assessed and
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Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
#0680) for the FY 2016 payment
determination and subsequent years.
Comment: A few commenters
supported CMS’ proposal to revise the
data collection period and submission
deadlines for Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680) for the FY 2016 payment
determination and subsequent years. A
commenter also noted this alignment
reflects the influenza season and will
reduce data entry time for LTCH staff.
Response: We greatly appreciate
commenters’ support of our proposal to
revise the data collection period and
submission deadlines for NQF #0680 to
better align with the influenza
vaccination season.
Comment: A commenter
recommended that the NQF #0680
measure not apply to patients
transferred from acute care hospitals
since this would represent a duplicative
compliance requirement between the
two care settings.
Response: We did not propose any
changes to measure specifications for
NQF #0680. As we stated in the FY 2014
IPPS/LTCH PPS final rule (78 FR
50860), the specifications for NQF
#0680 are written to ensure that ‘‘LTCHs
follow current clinical guidelines to
assess whether a patient should receive
an influenza vaccine and to ensure that,
when clinically indicated, each patient
only receives one influenza vaccine.’’
For patients who did not receive the
influenza vaccine in the LTCH, item
O0250 on the LTCH CARE Data Set
allows the LTCH to indicate why the
vaccine was not received in the facility,
including selecting an option indicating
that the patient received the vaccine
outside of the facility.
In addition, because this measure
reports on patients who received the
influenza vaccine either inside or
outside the facility/hospital, for a
patient who received the vaccine at
another facility prior to arriving at the
LTCH, there is no incentive for the
LTCH to over-vaccinate or provide
duplicative vaccination. Facilities will
need to adhere to the principles of
proper care coordination and
documentation to avoid overimmunization as well as underimmunization. However, the measure
specifications are designed to encourage
facilities to vaccinate only when the
patient has not already received the
vaccination in another setting and only
when clinically indicated. We refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50860) for more
information on this topic.
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After consideration of the public
comments we received, we are
finalizing the revision to the data
collection period and submission
timeline for Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680) for the FY 2016 payment
determination and subsequent years.
d. Data Submission Mechanisms for the
FY 2018 Payment Determination and
Subsequent Years for New LTCHQR
Program Quality Measures and for
Revisions to Previously Adopted
Quality Measures
For the two functional status
measures and the application of the
Percent of Residents Experiencing One
or More Falls with Major Injury (Long
Stay) (NQF #0674) measure, in the FY
2015 IPPS/LTCH PPS proposed rule (79
FR 28270), we proposed that all LTCHs
would be required to collect data using
the LTCH CARE Data Set.243 We will
release the technical data submission
specifications and update LTCHQR
Program Manual for the LTCH CARE
Data Set (Version 3.00) to include items
related to the functional status measures
and the application of the Percent of
Residents Experiencing One or More
Falls with Major Injury (Long-Stay)
(NQF #0674) measure in CY 2015. The
QIES ASAP system would remain the
data submission mechanism for the
LTCH CARE Data Set. Further
information on data submission of the
LTCH CARE Data Set for the LTCHQR
Program Reporting using the QIES
ASAP system is available at: https://
www.qtso.com/
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCHTechnicalInformation.html.
For the NHSN VAE Outcome
measure, we proposed that LTCHs
would be required to use the CDC’s
NHSN reporting and submission
infrastructure. Details related to the
procedures for using CDC’s NHSN for
data submission and information on
definitions, numerator data,
denominator data, data analyses, and
measure specifications for the NHSN
243 The LTCH CARE Data Set (Version 2.01) was
approved on June 10, 2013, by OMB in accordance
with the PRA. The OMB Control Number is 0938–
1163. Expiration Date June 30, 2016. Available on
the CMS Web site at: http://www.cms.gov/
Regulations-and-Guidance/Legislation/
PaperworkReductionActof1995/PRA-Listing-Items/
CMS1252160.html. CMS will revise the LTCH
CARE Data Set and submit for OMB review for PRA
approval to support data collection for the two
functional status measures and the application of
the Percent of Residents Experiencing One or More
Falls with Major Injury (Long Stay) (NQF #0674).
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VAE Outcome Measure can be found at:
http://www.cdc.gov/nhsn/PDFs/
pscManual/10–VAE_FINAL.pdf.
We invited public comments on these
proposals.
Comment: A commenter supported
the use of the LTCH CARE Data Set for
the two functional status measures. The
commenter appreciated CMS’ use of the
LTCH CARE Data Set to streamline
reporting across acute and post-acute
settings.
Response: We appreciate the
commenter’s feedback and support of
the use of the LTCH CARE Data Set for
collection of the functional status
measures.
We received no comments on our
proposed data submission mechanisms
for the NHSN VAE Outcome measure.
After consideration of the public
comments we received, we are
finalizing that all LTCHs would use the
LTCH CARE Data Set (Version 3.00) to
collect data for the application of
Percent of Residents Experiencing One
or More Falls with Major Injury (LongStay) (NQF #0674) and the two
functional status measures. We are also
finalizing that the QIES ASAP system
will remain the data submission
mechanism for the LTCH CARE Data
Set. Further, we are finalizing that for
the NHSN VAE Outcome measure,
LTCHs would use the CDC’s NHSN
reporting and submission infrastructure
for the LTCHQR Program.
e. Data Collection Period and
Submission Deadlines Under the
LTCHQR Program for the FY 2018
Payment Determination
In sections IX.C.9.c. and f. of the
preamble of this final rule, we discuss
our proposal, for the FY 2016 payment
determination and subsequent years, to
revise the data collection period and
submission deadlines for the Percent of
Residents or Patients Who Were
Assessed and Appropriately Given the
Seasonal Influenza Vaccine (Short-Stay)
(NQF #0680) measure and, for the FY
2018 payment determination and
subsequent years, to revise the data
collection period and submission
deadlines for the application of the
Percent of Residents Experiencing One
or More Falls with Major Injury (LongStay) (NQF #0674) measure. In the FY
2014 IPPS/LTCH PPS final rule (78 FR
50882), we adopted the data collection
period and submission deadlines for the
remaining quality measures applicable
to the FY 2018 payment determination
as listed in the following tables.
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TIMEFRAMES FOR DATA COLLECTION
OF LTCHQR PROGRAM QUALITY
DATA FOR THE FY 2018 PAYMENT
DETERMINATION
NQF measure
ID
Data collection period
NQF #0138 ....
NQF #0139 ....
NQF #0678 ....
NQF #0431 ....
NQF #1716 ....
NQF #1717 ....
January 1, 2016–December
31, 2016.
January 1, 2016–December
31, 2016.
January 1, 2016–December
31, 2016.
October 1, 2016 (or when
vaccine becomes available)–March 31, 2017.
January 1, 2016–December
31, 2016.
January 1, 2016–December
31, 2016.
50309
TIMELINE FOR SUBMISSION OF
LTCHQR PROGRAM QUALITY DATA
FOR THE FY 2018 PAYMENT DETERMINATION FOR ALL MEASURES EXCEPT INFLUENZA VACCINATION COVERAGE AMONG HEALTHCARE PERSONNEL (NQF #0431) AND PERCENT OF RESIDENTS OR PATIENTS
WHO WERE ASSESSED AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY)
(NQF #0680)
TIMELINE FOR SUBMISSION OF
LTCHQR PROGRAM QUALITY DATA
FOR THE FY 2018 PAYMENT DETERMINATION FOR ALL MEASURES EXCEPT INFLUENZA VACCINATION COVERAGE AMONG HEALTHCARE PERSONNEL (NQF #0431) AND PERCENT OF RESIDENTS OR PATIENTS
WHO WERE ASSESSED AND APPROPRIATELY GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY)
(NQF #0680)—Continued
Final submission deadlines
for the
LTCHQR program FY 2018
payment determination
Final submission deadlines
for the
LTCHQR program FY 2018
payment determination
Data collection period: CY
2016
Q1 (January–March 2016) ....
Q2 (April–June 2016) ............
May 15, 2016.
August 15,
2016.
Data collection period: CY
2016
Q3 (July–September 2016) ...
Q4 (October–December
2016).
November 15,
2016.
February 15,
2017.
TIMELINE FOR SUBMISSION OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2018 PAYMENT DETERMINATION:
INFLUENZA VACCINATION COVERAGE AMONG HEALTHCARE PERSONNEL (NQF #0431)
Final submission deadlines for the LTCHQR Program FY 2018 payment determination
Data collection period
October 1, 2016 (or when vaccine becomes available)–March 31, 2017
For the new measures that we
proposed to adopt for the FY 2018
May 15, 2017.
payment determination and subsequent
years, we proposed the following data
collection period and submission
deadlines.
DATA COLLECTION PERIOD FOR NEW LTCHQR PROGRAM MEASURES FOR THE FY 2018 PAYMENT DETERMINATION
NQF measure ID or measure name (when NQF measure ID not available)
National Healthcare Safety Network (NHSN) Ventilator-Associated
Event (VAE) Outcome Measure.
Functional Outcome Measure: Change in Mobility among Long-Term
Care Hospital Patients Requiring Ventilator Support.
Percent of Long-Term Care Hospital Patients with an Admission and
Discharge Functional Assessment and a Care Plan That Addresses
Function.
Data collection period
January 1, 2016–December 31, 2016.
April 1, 2016–December 31, 2016.
April 1, 2016–December 31, 2016.
SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2018 PAYMENT DETERMINATION: NATIONAL
HEALTHCARE SAFETY NETWORK (NHSN) VENTILATOR-ASSOCIATED EVENT (VAE) OUTCOME MEASURE
Final submission deadlines for the LTCHQR program FY 2018 payment determination
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Data collection period
Q1
Q2
Q3
Q4
(January–March 2016) .......................................................................
(April–June 2016) ...............................................................................
(July–September 2016) ......................................................................
(October–December 2016) .................................................................
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May 15, 2016.
August 15, 2016.
November 15, 2016.
February 15, 2017.
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SUBMISSION DEADLINES OF LTCHQR
PROGRAM QUALITY DATA FOR THE
FY 2018 PAYMENT DETERMINATION:
FUNCTIONAL OUTCOME MEASURE:
CHANGE IN MOBILITY AMONG LONGTERM CARE HOSPITAL PATIENTS
REQUIRING VENTILATOR SUPPORT
AND PERCENT OF LONG-TERM CARE
HOSPITAL PATIENTS WITH AN ADMISSION AND DISCHARGE FUNCTIONAL
ASSESSMENT AND A CARE PLAN
THAT ADDRESSES FUNCTION
Data collection period
Q2 (April–June 2016) * ..........
Q3 (July–September 2016) ...
Q4 (October–December
2016).
Final submission deadlines
for the
LTCHQR program FY 2018
payment determination
August 15,
2016.
November 15,
2016.
February 15,
2017.
* Note that data collection implementation
begins Q2.
We invited public comments on these
data collection timelines and
submission deadlines for the three new
quality measures for FY 2018 payment
determination.
We received no comments on these
proposals. Therefore, we are finalizing
the data collection period and
submission deadlines for the three
measures (the two functional measures
and the NHSN VAE Outcome measure),
as proposed.
f. Data Collection Timelines and
Submission Deadlines for the
Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF #0674)
for the FY 2018 Payment Determination
and Subsequent Years
In the FY 2014 IPPS/LTCH PPS final
rule, we revised the application of the
Percent of Residents Experiencing One
or More Falls with Major Injury (Long
Stay) (NQF #0674) measure for the FY
2018 payment determination and
subsequent years (78 FR 50874 through
50877). In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28272), we
proposed, for the FY 2018 payment
determination only, to move the start
date for data collection of this measure
to April 1, 2016, instead of the
previously finalized start date of January
1, 2016. Data collection and submission
of this measure will continue through
December 31, 2016, as previously
finalized for the FY 2018 payment
determination. This change in the data
collection start date will only affect CY
2016 data collection and submission for
the LTCHQR Program for the FY 2018
payment determination. For all
subsequent years, data collection for
this measure will begin on January 1
and continue through December 31. We
note that these proposed changes will be
applicable only to the application of
Percent of Residents Experiencing One
or More Falls with Major Injury (Long
Stay) (NQF #0674) measure, and not
applicable to any other LTCHQR
Program measures, proposed or
adopted, unless explicitly stated. We
refer readers to section IX.C.6. of the
preamble of this final rule for further
information and rationale.
We invited public comment on the
proposed data collection timeline and
quarterly submission deadlines for the
application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF #0674)
for the FY 2018 payment determination.
Comment: Commenters supported
CMS’ proposal to delay the start of data
collection for the NQF #0674 measure
until April 1, 2016, for the FY 2018
payment determination.
Response: We appreciate commenters’
support of our proposal to revise the
data collection period and quarterly
submission deadlines for the
application of NQF #0674 and are
finalizing the proposed revision to the
data collection period and quarterly
submission deadlines for this measure
for the FY 2018 payment determination.
We reiterate that this change in data
collection of this measure would only
apply to the FY 2018 payment
determination year only; for all
subsequent years, data collection for
this measure would begin on January 1
and continue through December 31.
After consideration of the public
DATA COLLECTION TIMELINES AND
comments we received, we are
SUBMISSION
DEADLINES
OF
finalizing the data collection period and
LTCHQR PROGRAM QUALITY DATA quarterly submission deadlines for the
FOR THE FY 2018 PAYMENT DETER- application of Percent of Residents
MINATION FOR THE APPLICATION OF Experiencing One or More Falls with
PERCENT OF RESIDENTS EXPERI- Major Injury (Long Stay) (NQF #0674)
ENCING ONE OR MORE FALLS WITH for the FY 2018 payment determination,
MAJOR INJURY (LONG STAY) (NQF as proposed. For all subsequent years,
data collection for this measure would
#0674)
begin on January 1 and continue
Final submis- through December 31.
Data collection period: CY
2016
Q2 (April–June 2016) * ..........
Q3 (July–September 2016) ...
Q4 (October–December
2016).
sion deadlines
for the
LTCHQR program FY 2018
payment determination
August 15,
2016.
November 15,
2016.
February 15,
2017.
* Note that data collection implementation
begins Q2.
g. Data Collection Timelines and
Submission Deadlines Under the
LTCHQR Program for the FY 2019
Payment Determination and Subsequent
Years
For the quality measures applicable to
the FY 2019 payment determination and
subsequent years, including those that
we proposed in section IX.C.7. of the
preamble of the proposed rule, we
proposed the following data collection
timelines and submission deadlines.
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DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2019
PAYMENT DETERMINATION
NQF neasure ID or measure name
(when NQF measure ID not available)
Data collection period
National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138).
National Healthcare Safety Network (NHSN) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139).
Percent of Residents or Patients with Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678).
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January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
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50311
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2019
PAYMENT DETERMINATION—Continued
NQF neasure ID or measure name
(when NQF measure ID not available)
Data collection period
Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF
#0680).
Influenza Vaccination Coverage among Healthcare Personnel (NQF
#0431).
National Healthcare Safety Network (NHSN) Facility-Wide Inpatient
Hospital-Onset Methicillin-resistant Staphylococcus areus (MRSA)
Bacteremia Outcome Measure (NQF #1716).
National Healthcare Safety Network (NHSN) Facility-Wide Inpatient
Hospital-Onset Clostridium difficile Infection (CDI) Outcome Measure
(NQF #1717).
Application of Percent of Residents Experiencing One or More Falls
with Major Injury (Long-Stay) (NQF #0674).
National Healthcare Safety Network (NHSN) Ventilator-Associated
Event (VAE) Outcome Measure.
Functional Outcome Measure: Change in Mobility among Patients Requiring Ventilator Support.
Percent of LTCH Patients with an Admission and Discharge Functional
Assessment and a Care Plan That Addresses Function.
October 1, 2017–March 31, 2018.
October 1, 2017–March 31, 2018.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
January 1, 2017–December 31, 2017.
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2019 PAYMENT DETERMINATION FOR ALL MEASURES EXCEPT INFLUENZA VACCINATION COVERAGE AMONG HEALTHCARE PERSONNEL (NQF #0431) AND PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED AND APPROPRIATELY
GIVEN THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) (NQF #0680)
Final submission deadlines for the LTCHQR program FY 2019
payment determination
Data collection period: CY 2017
Q1
Q2
Q3
Q4
(January–March 2017) .......................................................................
(April–June 2017) ...............................................................................
(July–September 2017) ......................................................................
(October–December 2017) .................................................................
May 15, 2017.
August 15, 2017.
November 15, 2017.
February 15, 2018.
DATA COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2019 PAYMENT DETERMINATION: PERCENT OF RESIDENTS OR PATIENTS WHO WERE ASSESSED AND APPROPRIATELY GIVEN
THE SEASONAL INFLUENZA VACCINE (SHORT-STAY) (NQF #0680)
Final submission deadlines for the LTCHQR Program FY 2019
payment determination
Data collection period
October 1, 2017–December 31, 2017 ......................................................
January 1, 2018–March 31, 2018 ............................................................
February 15, 2018.
May 15, 2018.
COLLECTION PERIOD AND SUBMISSION DEADLINES OF LTCHQR PROGRAM QUALITY DATA FOR THE FY 2019 PAYMENT
DETERMINATION: INFLUENZA VACCINATION COVERAGE AMONG HEALTHCARE PERSONNEL (NQF #0431)
Final submission deadlines for the LTCHQR Program FY 2019
payment determination
Data collection period
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October 1, 2017–March 31, 2018 ............................................................
We invited public comment on these
proposals. We received no comments on
these proposals. Therefore, we are
finalizing the data collection period and
submission deadlines for the FY 2019
payment determination and subsequent
years, as proposed.
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May 15, 2018.
10. LTCHQR Program Data Completion
Thresholds for the FY 2016 Payment
Determination and Subsequent Years
a. Overview
Section 1886(m)(5)(C) of the Act
requires that, for the FY 2014 payment
determination and subsequent years,
each LTCH submit to the Secretary data
on quality measures specified by the
Secretary in a form and manner, and at
a time, specified by the Secretary. As
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required by section 1886(m)(5)(A)(i) of
the Act, for any LTCH that does not
submit data in accordance with section
1886(m)(5)(C) of the Act with respect to
a given fiscal year, any annual update to
the standard Federal rate for discharges
for the hospital during the rate fiscal
year must be reduced by two percentage
points. To date, we have not established
a standard for compliance other than
that LTCHs submit all applicable
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required data for all finalized measures,
by the previously finalized quarterly
deadlines. In response to input from our
stakeholders seeking additional
specificity related to the LTCHQR
Program compliance affecting FY
payment update determinations and,
due to the importance of ensuring the
integrity of quality data submitted to
CMS, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28273 through
28275), we proposed to set specific
LTCHQR Program thresholds for
completeness of LTCH quality data
beginning with data affecting the FY
2016 payment determination and
subsequent years.
The LTCHQR Program, through the
FY 2012, FY 2013, and FY 2014 IPPS/
LTCH PPS final rules, requires LTCHs to
submit quality data using two separate
data collection/submission mechanisms:
Measures collected using the LTCH
CARE Data Set (LCDS) are submitted
through the CMS Quality Improvement
Evaluation System (QIES); and measures
stewarded by the CDC (such as
Healthcare-Acquired Infection (HAI)
and vaccination measures), are
submitted using the CDC’s National
Healthcare Safety Network (NHSN). We
have also previously finalized a claimsbased measure (All-Cause Unplanned
Readmission Measure for 30 Days Post
Discharge from Long Term Care
Hospitals); however, claims-based
measures do not require LTCHs to
actually submit quality data to CMS, as
they are calculated using claims data
submitted to CMS for payment
purposes. Thus, for claims-based
measures, there is no submitted quality
data to which we could apply data
completion thresholds.
To ensure that LTCHs are meeting an
acceptable standard for completeness of
submitted data, we proposed that for the
FY 2016 payment determination and
subsequent years, LTCHs meet or
exceed two separate program
thresholds: One threshold for
completion of quality measures data
collected using the LCDS and submitted
through QIES; and a second threshold
for quality measures data collected and
submitted using the CDC’s NHSN. We
proposed that LTCHs must meet or
exceed both thresholds discussed
below, in order to avoid receiving a 2
percentage point reduction to their
annual payment update for a given FY,
beginning with FY 2016.
We proposed to hold LTCHs
accountable for different data
completion thresholds for each of the
two data submission mechanisms; an 80
percent data completion threshold for
data collected using the LCDS and
submitted through the QIES mechanism;
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and a 100 percent data completion
threshold for data submitted through the
CDC’s NHSN. We proposed to hold
LTCHs to the higher data completion
threshold for the CDC’s NHSN initially,
because many LTCHs have been
mandated by States to report infection
data using the CDC’s NHSN system for
surveillance purposes, prior to the start
of the LTCHQR Program on October 1,
2012, and, therefore, we believe LTCHs
are more familiar with the NHSN
collection and submission process.
In contrast, LTCHs had never
submitted quality data using a
standardized data collection instrument
before October 1, 2012, such as the
LCDS submitted through the QIES
mechanism. In addition, we require the
submission of LCDS admission and
discharge data through QIES, in order
for LTCHs to meet the proposed data
accuracy compliance standard, which
with regard to discharge data, may be
more difficult to collect on patients that
are discharged emergently or against
medical advice, in effect making it more
difficult to meet a higher level of
compliance initially. Lastly, through the
FY 2014 IPPS/LTCH PPS final rule, we
finalized accelerated quarterly deadlines
for submission of quality data,
beginning January 2014, of 45 days
beyond the end of each CY quarter, as
opposed to the 135 day post-quarterly
deadline LTCHs were previously
required to meet. We feel that this is an
additional challenge that LTCHs may
face. We invited comment on other
obstacles LTCHs may face in meeting a
higher level of compliance with regard
to submission of quality data using the
LCDS.
Comment: A few commenters noted
that individual LTCHs may have a
higher than average percentage of
incomplete data due to emergent
discharges, as well as patients with fecal
management systems. Commenters
stated that emergent discharges do not
allow for the collection of complete
data, and that CMS guides LTCHs to
enter a dash (-) for item H0400 (Bowel
Continence) for those patients that have
fecal management systems in place,
rendering any associated admission
assessment incomplete. These
commenters suggested that 10 percent to
15 percent of any LTCH’s patients may
fall under one of the two above
categories, making it difficult to comply
with proposed data completion
thresholds. Finally, the commenters
suggested that completeness in the
LTCH CARE Data Set Planned Discharge
assessments may be a better metric of a
facility’s compliance with quality
reporting completion thresholds.
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Response: The proposed data
completion threshold for data submitted
using the LTCH CARE Data set is 80
percent. We have considered emergent
discharges as one reason that LTCHs
may not meet data completion
thresholds approaching 100 percent.
While we understand that LTCHs may
not have the opportunity to complete
data item H0400 (Bowel Continence) for
those patients with fecal management
systems in place, we believe that LTCHs
should be able to meet our currently
proposed threshold of 80 percent and
can confirm that the majority of LTCHs
are meeting this threshold presently.
With respect to the future expansion of
our data completion threshold policy,
we will monitor LTCH performance on
each required item and take steps to
account for any such low response rate.
If we find that the majority of LTCHs are
failing to consistently respond to any
one of our required items, we will either
take action to modify that item on the
LTCH CARE Data Set, or we will
address the problem as it relates to data
completion threshold compliance in
future rulemaking.
With regard to the commenters’
suggestion that we base completion
thresholds on only planned discharge
assessment, we respectfully disagree.
We believe that the LTCH CARE Data
Set admission assessment is an
important factor in collecting data with
regard to risk adjustment items.
However, we will consider the effect of
the inclusion of unplanned discharge
data elements in our compliance
determinations based on data
completion thresholds, as we monitor
this program.
b. LTCHQR Program Data Completion
Threshold for the Required LTCH CARE
Data Set (LCDS) Data Items
The LCDS is composed of data
collection items designed to inform
quality measure calculations, including
risk-adjustment calculations, as well as
internal consistency checks for logical
inaccuracies. In the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28274), we
proposed that beginning with quality
data affecting the FY 2016 payment
determination and subsequent years,
LTCHs must meet or exceed a proposed
LCDS data completion threshold of 80
percent. We proposed to assess the
completeness of submitted data by
verifying that for all LCDS assessments
submitted by any given LTCH, at least
80 percent of those LCDS Assessments
must have 100 percent of the required
quality data items completed, where, for
the purposes of this rule, ‘‘completed’’
is defined as having provided actual
patient data, as opposed to a non-
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informative response, such as a dash
(-), that indicates the LTCH was unable
to provide patient data. The proposed
threshold of 80 percent is based on the
need for substantially complete records,
which allows appropriate analysis of
quality measure data for the purposes of
updating quality measure specifications
as they undergo yearly and triennial
measure maintenance reviews with the
NQF. In addition, complete data is
needed to understand the validity and
reliability of quality data items,
including risk-adjustment models.
Finally, we want to ensure complete
quality data from LTCHs, which will
ultimately be reported to the public,
allowing our beneficiaries to gain an
understanding of LTCH performance
related to these quality metrics, and
helping them to make informed health
care choices.
Our data suggest that the majority of
current LTCHs are in compliance with,
or exceeding, this proposed threshold
already. Our decision to set this
proposed data completion threshold at a
lower level initially, with the intent to
raise the proposed 80 percent threshold
in subsequent program years, is based
on our understanding that LTCHs are
still new to quality reporting, and that
their experience and understanding,
with respect to reporting quality data
using a standardized data collection
instrument, and thus their compliance,
will increase over time. However, we
invited public comment on
circumstances that might prevent
LTCHs from meeting this level of
compliance. All items that we proposed
to require under the LTCHQR Program
are identified in Appendix D of the
LTCHQR Program Manual version 2.01,
which is available for download on the
CMS Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/
LTCHTechnicalInformation.html.
We also proposed that any LTCH that
does not meet the proposed requirement
that 80 percent of all LCDS assessments
submitted contain 100 percent of all
required quality data items, will be
subject to a reduction of 2 percentage
points to the applicable FY annual
payment update beginning with FY
2016. In order to establish this program
threshold, we analyzed all LCDS
submissions from January 2013 through
September 2013, and we believe that the
majority of LTCHs will be able to meet
the proposed 80 percent data
completion threshold. It is our intent to
raise this threshold over the next 2
years, through the formal notice-andcomment rulemaking process. As stated
above, we feel that as LTCHs continue
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to submit data using a standardized data
collection instrument, such as the
LCDS, and as they continue to take
advantage of the resources we provide
to guide LTCHs in their submission of
this data (national trainings, CMS
Special Open Door Forums, LTCHQR
Program Manual, and technical
trainings available on our Web site), we
feel LTCH performance with respect to
data completion will improve over time.
We proposed that this threshold will
have to be met by LTCHs, in addition
to the CDC NHSN threshold discussed
below, in order to avoid receiving a 2
percentage point reduction to the
applicable FY annual payment update.
c. LTCHQR Program Data Completion
Threshold For Measures Submitted
Using the Centers for Disease Control
and Prevention (CDC) National
Healthcare Safety Network (NHSN)
The LTCHQR Program through the FY
2012, FY 2013, and FY 2014 IPPS/LTCH
PPS final rules, requires that LTCHs
submit CDC-stewarded quality measure
data using the CDC’s NHSN, including
data for the previously finalized CAUTI,
CLABSI, and Influenza Vaccination
Coverage among Healthcare Personnel
(HCP) quality measures. More
specifically, we require LTCHs follow
CDC quality measure protocols, which
require the LTCHs to complete all data
fields required for both numerator and
denominator data within NHSN,
including the ‘‘no events’’ field for any
month during which no infection events
were identified. LTCHs are required to
submit this data on a monthly basis
(except for the HCP measure, which is
only required to be reported once per
year). However, LTCHs have until the
associated quarterly deadline (45
calendar days beyond the end of each
CY quarter) by which to report infection
data to the CDC for each of the three
months within any given quarter. For
more information on the LTCHQR
Program quarterly deadlines, we refer
readers to section IX.C.9.b. of the
preamble of this final rule.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28275), we
proposed that beginning with FY 2016
payment determination and subsequent
years, this previously finalized
requirement for monthly reporting must
be met in addition to the proposed
LCDS data completion threshold
discussed above in order to avoid a 2
percentage point reduction to the
applicable FY annual payment update.
That is, we proposed that LTCHs must
meet a threshold of 100 percent for
measures submitted via the NHSN,
achieved by submitting relevant
infection, vaccination, or other required
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50313
quality measure data for each month of
any given CY, in addition to meeting the
above-proposed data item completion
threshold for required quality data items
on the LCDS. As the LTCHQR Program
expands, and LTCHs begin reporting
measures that were previously finalized,
but not yet implemented, or newly
proposed and finalized measures, we
proposed to apply this same threshold.
d. Application of the 2 Percentage Point
Reduction for LTCHs That Fail To Meet
the Data Completion Thresholds
As we discussed above, we have
proposed that LTCHs must meet two
separate data completion thresholds in
order to avoid a 2 percentage point
reduction to their applicable FY annual
payment update; a data completion
threshold of 80 percent for those
required data elements collected using
the LCDS and submitted through QIES;
and a second data completion threshold
of 100 percent for quality measure data
submitted through the CDC’s NHSN. In
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28275), we proposed that
these data completion thresholds must
be met in addition to the data validation
threshold of 75 percent we discuss
below, in order to avoid a 2 percentage
point reduction to their applicable FY
annual payment update. While we
proposed that LTCHs must meet both
the proposed data completion and data
validation thresholds, LTCHs cannot
have their applicable annual payment
update reduced twice. That is, should
an LTCH fail to meet either one or both
of the proposed thresholds, it will only
receive one reduction of 2 percentage
points to its applicable fiscal year
annual payment update.
We invited public comment on these
proposals.
Comment: A few commenters
supported CMS’ proposal to establish
data completion thresholds, noting that
it is a fundamental step to ensure the
accuracy of the LTCH quality reporting
data. A few commenters stated that
CMS’ proposed policy will facilitate
more accurate public reporting in the
future and agreed with our proposed
numeric standards.
Response: We thank the commenters
for their support.
Comment: Commenters recommended
that CMS apply the data completion
standards no earlier than the FY 2017
payment determination, instead of FY
2016. These commenters further stated
that a significant amount of data for FY
2016 has already been collected and
submitted and that it would be
inappropriate and unfair to apply the
data completion standards to data
submitted before the standards were
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even proposed and therefore known to
LTCHs.
Response: Currently, the compliance
standard applicable to each LTCH is to
timely submit all required quality data,
and LTCHs should already be ensuring
that the data that they submit is
complete and accurate. Thus, applying
the data completion standards to CY
2014 data merely ensures that LTCHs
are complying with applicable
standards and that payments made to
LTCHs are based on complete and
accurate quality data.
Comment: A commenter suggests that
LTCHs should not be penalized by a 2
percentage point reduction to the
annual payment update based on
completion thresholds, citing that
emergency discharges make it difficult
to complete assessments.
Response: We believe that the number
of unplanned discharges in LTCHs is
not so substantial that it will prevent
LTCHs from meeting or exceeding the
proposed data completion threshold of
80 percent for data submitting using the
LTCH CARE Data Set. We will continue
to monitor submission patterns and
completion thresholds for all data items
and appropriately investigate and
address any submission patterns that
lead us to believe that a systematic issue
is preventing LTCHs from complying
with our data completion thresholds.
After consideration of the public
comments we received, we are
finalizing the LTCHQR Program data
completion threshold for the FY 2016
payment determination and subsequent
years, as proposed.
11. Data Validation Process for the FY
2016 Payment Determination and
Subsequent Years
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a. Data Validation Process
Historically, we have built
consistency and internal validation
checks into our data submission
specifications to ensure that the basic
elements of the LCDS assessments
conform to requirements such as proper
format and facility information. These
internal consistency checks are
automated and occur during the LTCH
submission process, and help ensure the
integrity of the data submitted by
LTCHs by rejecting submissions or
issuing warnings when LTCH data
contain logical inconsistencies. These
internal consistency checks are referred
to as ‘‘system edits’’ and are further
outlined in the LTCH Data Submission
Specifications version 1.01, which are
available for download on the LTCH
Quality Reporting Technical
Information Web page at: http://
www.cms.gov/Medicare/Quality-
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Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCHTechnicalInformation.html.
Validation is intended to provide
added assurance of the accuracy of the
data that will be reported to the public
as required by section 1886(m)(5)(E) of
the Act. In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28275 through
28276) we proposed, for the FY 2016
payment determination and subsequent
years, to validate the data elements
submitted to CMS for quality purposes.
Initially, for the FY 2016 payment
determination, this data accuracy
validation will apply only to the LCDS
items that inform the measures Percent
of Patients or Residents with Pressure
Ulcers That are New or Worsened
(Short-Stay) (NQF #0678). We intend to
expand this validation process for
quality measures affecting the FY 2017
payment determination and subsequent
years through future notice-andcomment rulemaking.
We proposed to validate the data
elements submitted to CMS for Percent
of Residents or Patients with Pressure
Ulcers That are New or Have Worsened
(Short-Stay) (NQF #0678) under the
LTCHQR Program by requesting the
minimum chart data necessary to
confirm a statistically valid random
sample of 260 LTCHs. From the random
sample of 260 LTCHs, 5 LCDS
assessments submitted through the
National Assessment Collection
Database would be randomly selected
by the CMS validation contractor. In
accordance with § 164.512 (d)(1)(iii) of
the HIPAA Privacy Rule, we would
request from these LTCHs the specified
portions of the 5 Medicare patient charts
that correspond to the randomly
selected assessments, which would
need to be copied and submitted via
traceable mail to a CMS contractor for
validation. We proposed that the
specific portions of the 5 beneficiary
charts would be identified in the written
request, but may include: Admission
and discharge assessments, relevant
nursing notes following the admission,
relevant nursing notes preceding the
discharge, physician admission
summary and discharge summary, and
any Assessment of Pressure Ulcer Form
the facility may utilize. We proposed
that the CMS contractor would utilize
the portions of the patient charts to
compare that information with the
quality data submitted to CMS.
Differences that would affect measure
outcomes or measure rates would be
identified and reported to CMS. These
differences could include but are not
limited to unreported worsened
pressure ulcers.
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We proposed that all data that has
been submitted to the National
Assessment Collection Database under
the LTCHQR Program would be subject
to the data validation process.
Specifically, we proposed that the
contractor would request copies of the
randomly selected medical charts from
each LTCH via certified mail (or other
traceable methods that require an LTCH
representative to sign for CMS
correspondence), and the LTCH would
have 45 days from the date of the
request (as documented on the request
letter) to submit the requested records to
the contractor. If the LTCH does not
comply within 30 days, the contractor
would send a second certified letter to
them, reminding the LTCH that it must
return copies of the requested medical
records within 45 calendar days
following the date of the initial
contractor medical record request. If the
LTCH still does not comply, then the
contractor would assign a ‘‘zero’’ score
to each measure in each missing record.
If, however, the LTCH does comply, the
contractor would review the data
submitted by the LTCH on the LCDS
assessments for the required data
elements associated with the Pressure
Ulcer measure, until such time that
LTCHs begin to submit additional
quality measures that are collected
using the LCDS. Initially, this review
would consist solely of those required
data elements that inform the Pressure
Ulcer measure calculation and checks
for logical inconsistencies. As LTCHs
begin to report additional finalized
measures, we intend to expand this
validation process to quality measures
affecting the FY 2017 payment
determination and subsequent years,
through future notice-and-comment
rulemaking. The contractor would then
calculate the percentage of matching
data elements, which would constitute
a validation score. Because we would
not be validating all records, we would
need to calculate a confidence interval
that incorporates a potential sampling
error.
To receive the full FY 2016 annual
payment update, we proposed that
LTCHs in the random sample must
attain at least a 75 percent validation
score, based upon our validation
process, which would use charts
requested from patient assessments
submitted for CY 2013. We would
calculate a 95 percent confidence
interval associated with the observed
validation score. If the upper bound of
this confidence interval is below the 75
percent cutoff point, we would not
consider a hospital’s data to be
‘‘validated’’ for payment purposes. We
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proposed that LTCHs failing the
validation requirements would be
subject to the 2 percent annual payment
update reduction, beginning with their
fiscal year annual payment update. In
addition, all LTCHs validated would
receive educational feedback, including
specific case details.
Comment: Several commenters
believed that the proposed validation is
a fundamental step to ensure the
accuracy of the LTCH quality reporting
data.
Response: We thank the commenters
for their support for this proposal.
Comment: Several commenters
suggested that CMS begin the validation
standards no earlier than FY 2017.
Although the commenters believed that
validation is an important step to
ensuring that hospitals are collecting
measure data appropriately, they
believed it would be inappropriate to
validate data submitted for FY 2016
payment determination, as much of
those data will be submitted prior to the
effective date of CMS’ finalized data
accuracy validation policy on October 1,
2014.
Response: We agree that validation is
important not only to ensure hospitals
are collecting data appropriately, but
also in providing feedback to LTCHs
regarding possible differences in the
findings of our validation effort. We
believe the feedback a facility will
receive, even if they are well above the
validation minimum, could be valuable
to both the LTCHs and to CMS. We are
confident that most LTCHs have been
submitting data accurately. Although
much of the data for FY 2016 has been
submitted, the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53620) states that
LTCHs are required to submit the subset
of data elements necessary to enable
CMS to validate that the pressure ulcer
measure data elements were accurately
reported. We believe that we are
operating within our authority to
validate quality data. Currently, the
compliance standard applicable to each
LTCH is to timely submit all required
quality data, and LTCHs should already
be ensuring that the data that they
submit is complete and accurate. Thus,
validating CY 2014 data ensures that
LTCHs are complying with applicable
standards and that payments made to
LTCHs are based on complete and
accurate quality data.
Comment: Several commenters
recommended that the CMS make the
validation process as transparent as
possible, particularly since it is new to
the LTCHQR Program.
Response: We will use the requested
charts to validate the following data
elements: Functional mobility: ‘‘Lying
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to Sitting on Side of Bed;’’ ‘‘Bowel
continence;’’ ‘‘Active Diagnosis;’’
‘‘PVD;’’ ‘‘Active Diagnosis;’’ ‘‘Diabetes
Mellitus;’’ ‘‘Height;’’ ‘‘Weight;’’
‘‘Worsening stage 2 Pressure Ulcer;’’
‘‘Worsening stage 3 Pressure Ulcer;’’
and, ‘‘Worsening stage 4 Pressure
Ulcer.’’ We intend to share our data
accuracy validation findings with the
randomly selected LTCHs, so that they
may gain an understanding of any
discrepancies between the medical
record and the LTCH CARE Data
Assessment to which the medical record
is being compared. We will also
incorporate examples of our findings
into LTCH training, special open door
forums, and LTCH manuals, ensuring
that the greater LTCH community
benefits from this validation effort as
well.
b. Application of the 2 Percentage Point
Reduction for LTCHs That Fail To Meet
the Data Accuracy Threshold
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28276) we
proposed that LTCHs must meet a data
accuracy threshold of 75 percent in
order to avoid receiving a 2 percentage
point reduction to their applicable fiscal
year annual payment update. We
proposed that this proposed data
accuracy threshold of 75 percent must
be met in addition to the proposed data
completion thresholds (80 percent for
data collected using the LTCH CARE
Data Set and submitted using QIES, and
100 percent for data submitted using the
CDC’s NHSN), in order to avoid
receiving a 2 percentage point reduction
to their applicable FY annual payment
update. While we proposed that LTCHs
must meet both the proposed data
accuracy and data completion
thresholds, LTCHs cannot have their
applicable annual payment update
reduced twice. That is, should an LTCH
fail to meet either one or both of the
proposed thresholds (data completion
and/or data accuracy), it will only
receive one reduction of 2 percentage
points to its applicable FY annual
payment update.
We invited public comment on these
proposals and suggestions to improve
the utility of the approach or to reduce
the burden on LTCHs.
Comment: A commenter noted that
260 LTCHs would represent
approximately 60 percent of the entire
industry, which they believed was
excessive.
Response: We thank the commenter
for voicing this concern and will take
the proportion into consideration in
future rulemaking.
Comment: A commenter asked
whether ‘‘IPPS comparable’’ cases will
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50315
be required to meet LTCHQR Program
requirements or those that fall under
ACH reporting requirements.
Response: We presume that the
commenter is referring to current short
stay outlier policy, but they could be
referencing future regulation under the
SGR Reform Act, where the IPPS
comparable amount is one of the
payment options for a ‘‘site neutral’’
case. Regardless, the facility/unit would
be subject to the LTCHQR Program, as
it is still an LTCH when it is paid an
IPPS comparable amount, and the
payment is a form of LTCH PPS
payment.
Comment: A commenter
recommended that CMS annually
announce which LTCHs will be subject
to validation and disseminate
information about when these LTCHs
should expect to begin receiving
requests for medical records.
Response: We recognize the need to
communicate with LTCHs whether or
not they will be selected for validation.
We will use the LTCHQR Program Web
site, as well as direct communication
with LTCHs selected for validation, to
communicate time frames and deadlines
regarding the data accuracy validation
effort. In addition, we will use the
LTCHQR Program Web site to
announce, and offer access to, a new
listserv specifically for the LTCHQR
Program, which we will use to
communicate with the provider
community in the near future.
Comment: Commenters expressed
concern that the threshold compliance
of 75 percent agreement was too high for
this first attempt to validate the Pressure
Ulcer data. Commenters suggested that
there would be a great deal of variability
in the reporting of the Pressure Ulcer
measure and that this should be an
opportunity for CMS to educate LTCHs
on appropriate documentation and
reporting to improve the process.
Commenters suggested that a 60 percent
compliance threshold would be more
appropriate validation.
Response: We note that the 75 percent
agreement is the single point estimate of
the proportion in agreement; we
proposed that the upper bound of a 95
percent confidence interval be the value
that must exceed the 75 percent
compliance threshold. We believe this
takes into account the inherent
variability to be found in the pressure
ulcer data. In addition, the 75 percent
proportion agreement is consistent with
the other data quality programs
currently underway, for example, the
Hospital IQR Program, 42 CFR
412.140(d)(2), and the Hospital OQR
Program, 42 CFR 419.46(e)(2). We feel it
is important to promulgate consistent
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standards when we deal with the
various quality data we are collecting.
Comment: A commenter requested
CMS promulgate regulations for the
validation process and provide the
credentials, inter-rater reliability and
detail the training provided to the
contractor performing the validation.
Response: We will make any future
data accuracy validation regulations
known to the LTCH community through
future notice-and-comment rulemaking.
All chart reviews will be performed by
a licensed registered nurse trained in
medical record review and comparison,
utilizing the quality measure data
specifications in the LTCH Quality
Reporting Program Manual. Specified
training will be provided before the
actual reviews, which will include
ensuring that there is inter-rater
reliability among the reviewers prior to
implementation of the data validation
process.
Comment: A few commenters
suggested that CMS adopt a two-level
data validation process similar to the
process used by the MACs for the IRF
Compliance Percentage Threshold. An
initial small sample of charts would be
requested from the facilities randomly
selected for validation. If the facility did
not meet the initial threshold for
compliance, a larger, second sample of
charts would be requested. The
commenters believed that 5 charts is too
small of a sample size and that if two
of the five charts selected for review are
perceived to contain errors the facility
would not meet the 75 percent
validation score. Lastly, the commenters
suggested that CMS select the LTCHs for
validation from all LTCHs participating
in the Medicare program.
Response: We will consider this
approach for future years. We
understand the concern regarding a
relatively low sample of charts, but wish
to explain that the overall validation
score will be determined based on the
aggregate percentage of reported
elements (out of all reportable elements)
in all of the sampled charts, not on the
percentage of reported elements in each
individual chart. Each chart will be
evaluated on the 9 required data
elements. Finally, we would like to
confirm that the sample of randomly
selected LTCHs will be drawn from the
universe of all Medicare-certified
LTCHs, as suggested by the commenter.
After consideration of the public
comments we received, we have
decided to further explore suggestions
from commenters before finalizing the
LTCH data validation process that we
proposed. Therefore, we are not
finalizing our LTCH data validation
proposal at this time.
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12. Public Display of Quality Measure
Data for the LTCHQR Program
Under section 1886(m)(5)(E) of the
Act, the Secretary is required to
establish procedures for making data
submitted under section 1886(m)(5)(C)
of the Act available to the public.
Section 1886(m)(5)(E) of the Act
requires that such procedures shall
ensure that an LTCH has the
opportunity to review the data that is to
be made public with respect to the
LTCH prior to such data being made
public. The statute also requires that the
Secretary report quality measures that
relate to services furnished in inpatient
settings in LTCHs on our Web site. In
the FY 2013 IPPS/LTCH PPS final rule
(77 FR 53637), we received and
responded to public comments
regarding the public reporting of quality
data under the LTCHQR Program.
Currently, we are developing plans
regarding the implementation of these
provisions. We appreciate the need for
transparency into the processes and
procedures that will be implemented to
allow for public reporting of the
LTCHQR Program data and to afford
LTCHs the opportunity to review that
data before it is made public. At this
time, we have not established
procedures or timelines for public
reporting of data, but we intend to
include related proposals in future
rulemaking.
We welcomed public comment on
what we should consider when
developing future proposals related to
public reporting of quality measures for
the LTCHQR Program.
Comment: Several commenters
encouraged CMS to work with LTCHs to
ensure an opportunity to review
potential displays of quality data and to
provide feedback prior to public
reporting.
Response: We thank the commenters
for taking the time to express these
views and suggestions regarding public
reporting and will take it into
consideration for future public reporting
development.
Comment: A commenter noted CMS
should develop reports in the CASPER
Reporting Application to indicate
patients included in the Pressure Ulcer
measure.
Response: We plan to begin designing
and making CASPER reports accessible
for LTCHs in the near future.
We thank the commenters for the
responses, and we will consider them as
we develop future proposals related to
public reporting of quality measures for
the LTCHQR Program.
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13. LTCHQR Program Submission
Exception and Extension Requirements
for the FY 2017 Payment Determination
and Subsequent Years
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50883 through 50885), we
referred to these requirements as
submission ‘‘waiver’’ requirements. We
proposed to instead use the phrase
‘‘exception and extension’’ requirements
for purposes of clarity. For the FY 2017
payment determination and subsequent
years, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28276 through
28277), we proposed to continue using
the LTCHQR Program’s requirements
that we adopted in the FY 2014 IPPS/
LTCH PPS final rule for the FY 2015
payment determination and subsequent
years, although the term ‘‘waiver’’ is
replaced by ‘‘exception and extension.’’
In the FY 2014 IPPS/LTCH PPS final
rule, we finalized a process for LTCHs
to request and for us to grant waivers
with respect to the quality data
reporting requirements of the LTCHQR
Program for one or more quarters,
beginning with the FY 2015 payment
determination, when there are certain
extraordinary circumstances beyond the
control of the LTCH. We proposed to
continue to use this previously finalized
process.
In the event that an LTCH seeks to
request a submission exception or
extension for quality reporting
purposes, the LTCH must request an
exception or extension within 30 days
of the date that the extraordinary
circumstances occurred by submitting a
written request to CMS via email to the
LTCH mailbox at
LTCHQRPReconsiderations@
cms.hhs.gov. Exception or extension
requests sent to CMS through any other
channel will not be considered as a
valid request for an exception or
extension from the LTCHQR Program’s
reporting requirements for any payment
determination. The written request must
contain all of the finalized requirements
in the FY 2014 IPPS/LTCH PPS final
rule, and on our Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-ReportingReconsideration-and-Disaster-WaiverRequests.html.
When an exception or extension is
granted, an LTCH will not incur
payment reduction penalties for failure
to comply with the requirements of the
LTCHQR Program, for the timeframe
specified by CMS. If an LTCH is granted
an exception, we will not require that
the LTCH submit any quality data for a
given period of time. If we grant an
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extension to an LTCH, the LTCH will
still remain responsible for submitting
quality data collected during the time
frame in question, although we will
specify a revised deadline by which the
LTCH must submit this quality data.
In addition, in the FY 2014 IPPS/
LTCH PPS final rule, we finalized a
policy that allowed CMS to grant
exceptions or extensions to LTCHs that
have not requested them if it is
determined that extraordinary
circumstances affects an entire region or
locale. We stated that if this
determination was made, we will
communicate this decision through
routine communication channels to
LTCHs and vendors, including, but not
limited to, issuing memos, emails, and
notices at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/index.html. More information
on the LTCHQR Program exception and
extension requirements and processes,
and all related announcements may be
found at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
index.html.
For the FY 2017 payment
determination and subsequent years, we
proposed that we may grant an
exception or extension to LTCHs if we
determine that a systemic problem with
one of our data collection systems
directly affected the ability of the LTCH
to submit data. Because we do not
anticipate that these types of systemic
problems will happen often, we do not
anticipate granting a waiver or
extension on this proposed basis
frequently. We proposed that if we make
the determination to grant an exception
or extension, we would communicate
this decision through routine
communication channels to LTCHs and
vendors, including, but not limited to,
issuing memos, emails, and notices on
our Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/index.html.
We invited public comment on these
proposals.
Comment: A few commenters
supported the proposed Exception/
Exemption proposal.
Response: We thank the commenters
for their support.
After consideration of the public
comments we received, we are
finalizing the LTCHQR Program
submission exception and extension
requirements for the FY 2017 payment
determination and subsequent years, as
proposed.
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14. LTCHQR Program Reconsideration
and Appeals Procedures for the FY 2016
Payment Determination and Subsequent
Years
a. Previously Finalized LTCHQR
Program Reconsideration and Appeals
Procedures for the FY 2014 and FY 2015
Payment Determinations
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50885 through 50887), we
finalized a voluntary process that
allowed LTCHs the opportunity to seek
reconsideration of our initial
noncompliance decision for the FY 2014
and FY 2015 payment determinations.
We refer readers to that rule for a
discussion of this process.
b. LTCHQR Program Reconsideration
and Appeals Procedures for the FY 2016
Payment Determination and Subsequent
Years
For the FY 2016 payment
determination and subsequent years, in
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28277 through 28278), we
proposed to adopt an updated process,
as described below, that will enable an
LTCH to request a reconsideration of
our initial noncompliance decision in
the event that an LTCH believes that it
was incorrectly identified as being
subject to the 2-percentage point
reduction to its annual payment due to
noncompliance with the LTCHQR
Program reporting requirements for a
given reporting period.
For the FY 2016 payment
determination, and subsequent years,
we proposed that an LTCH would
receive a notification of noncompliance
if we determine that the LTCH did not
submit data in accordance with section
1886(m)(5)(C) of the Act with respect to
the applicable fiscal year and that the
LTCH is therefore subject to a 2percentage point reduction in the
applicable payment determination as
required by section 1886(m)(5)(A)(i) of
the Act. We would only consider
requests for reconsideration after an
LTCH has been found to be
noncompliant and not before.
An LTCH would have 30 days from
the date of the initial notification of
noncompliance to review its payment
determination and submit to us a
request for reconsideration. This
proposed time frame would allow us to
balance our desire to ensure that LTCHs
have the opportunity to request
reconsideration with our need to
complete the process and provide
LTCHs with our reconsideration
decision in a timely manner.
Notifications of noncompliance and any
subsequent notifications from CMS
would be sent via a traceable delivery
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50317
method, such as certified U.S. mail or
registered U.S. mail. We proposed that
an LTCH may withdraw its request at
any time and may file an updated
request within the proposed 30-day
deadline. We also proposed that, in very
limited circumstances, we may grant a
request by an LTCH to extend the
proposed deadline for reconsideration
requests. It would be the responsibility
of an LTCH to request an extension and
demonstrate that extenuating
circumstances existed that prevented
the filing of the reconsideration request
by the proposed deadline.
We also proposed that as part of the
LTCH’s request for reconsideration, the
LTCH would be required to submit all
supporting documentation and evidence
demonstrating: (1) Full compliance with
all LTCHQR Program reporting
requirements during the reporting
period; or (2) extenuating circumstances
that affected noncompliance if the
LTCH was not able to comply with the
requirements during the reporting
period. We would not review any
reconsideration request that fails to
provide the necessary documentation
and evidence along with the request.
The documentation and evidence may
include copies of any communications
that demonstrate its compliance with
the program’s requirements, as well as
any other records that support the
LTCH’s rationale for seeking
reconsideration. A sample list of
acceptable supporting documentation
and evidence, as well as instructions for
LTCHs to retrieve copies of the data
submitted to CMS for the appropriate
program year can be found on our Web
site at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-ReportingReconsideration-and-Disaster-WaiverRequests.html.
We proposed that an LTCH wishing to
request a reconsideration of our initial
noncompliance determination would be
required to do so by submitting an email
to the following email address:
LTCHQRPReconsiderations@
cms.hhs.gov. Any request for
reconsideration submitted to us by an
LTCH would be required to follow the
guidelines outlined on our Web site at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/LTCH-Quality-Reporting/
LTCH-Quality-ReportingReconsideration-and-Disaster-WaiverRequests.html.
Following receipt of a request for
reconsideration, we will provide—
• An email acknowledgment, using
the contact information provided in the
reconsideration request, to the CEO or
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CEO-designated representative that the
request has been received; and
• Once we have reached a decision
regarding the reconsideration request,
an email to the LTCH CEO or CEOdesignated representative, using the
contact information provided in the
reconsideration request, regarding our
decision.
We proposed to require an LTCH that
believes it was incorrectly identified as
being subject to the 2-percentage point
reduction to its annual payment update
to submit a timely request for
reconsideration and receive a decision
on that request before the LTCH can file
an appeal with the Provider
Reimbursement Review Board (PRRB). If
the LTCH is dissatisfied with the
decision rendered at the reconsideration
level, the LTCH could appeal the
decision with the PRRB under 42 CFR
405.1835. We believe this proposed
process is more efficient and less costly
for CMS and for LTCHs because it
decreases the number of PRRB appeals
by resolving issues earlier in the
process. Additional information about
the reconsideration process including
requirements for submitting a
reconsideration request is posted on our
Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/LTCH-QualityReporting/LTCH-Quality-ReportingReconsideration-and-Disaster-WaiverRequests.html.
We invited public comment on the
proposed procedures for reconsideration
and appeals.
Comment: Several commenters
supported the proposal to continue the
reconsideration process for FY 2016.
Response: We thank the commenters
for their support.
Comment: A commenter supported
the reconsideration process, but
believed that it should be expanded to
include data validation.
Response: We believe the current
reconsideration process could be
utilized for reconsideration of the
validation findings, as long as all of the
documentation used for the request for
reconsideration was submitted at the
time of validation. As noted above, we
are finalizing our data completeness
proposal, but we are not finalizing our
data validation proposal at this time.
Comment: A commenter stated that
CMS should set the reconsideration
process in regulation as has been done
in other administrative appeals
processes. In addition, the commenter
did not believe that CMS has
demonstrated the ability to manage this
level of additional administrative
complexity in a prompt manner. The
commenter believed that CMS should
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allow LTCHs to appeal to the PRRB
without having to go through CMS first.
Response: We plan to propose
regulations for reconsideration in future
rulemaking. We note that while some
CMS programs have codified their
reconsideration processes in
regulations, not all CMS reconsideration
processes have been codified. We
disagree that we have not demonstrated
the ability to manage this level of
additional administrative complexity.
The LTCHQR Program completed all
reconsiderations and notified all LTCHs
of those reviews within 60 days in FY
2013. We believe that requiring LTCHs
to first submit to the CMS
reconsideration process prior to
requesting a hearing at the PRRB will
allow us the opportunity to overturn an
erroneous decision when we have a
systematic process and resources in
place to do so, and ultimately decrease
any unnecessary burden on the PRRB
process.
After consideration of the public
comments we received, we are
finalizing the LTCHQR Program
reconsideration and appeals procedures
for the FY 2016 payment determination
and subsequent years, as proposed.
15. Electronic Health Records (EHR) and
Health Information Exchange (HIE)
We are also interested in
understanding the current state of
electronic health record (EHR) adoption
and use of Health Information Exchange
(HIE) in the LTCH community.
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28278) we
solicited feedback and input from
LTCHs and the public on EHR adoption
and HIE usage. We noted that are
especially interested in LTCH feedback
and input on the following questions:
• Have you adopted an EHR in your
LTCH setting?
• If your LTCH setting uses EHRs,
what functional aspects of EHRs do you
find most important (for example, the
ability to send or receive transfer of care
information; the ability to support
medication orders/medication
reconciliation)?
• Does the EHR system used in your
LTCH setting support interoperable
document exchange with other
healthcare providers (for example, acute
care hospitals, physician practices,
skilled nursing facilities, etc.)?
In addition to seeking public feedback
and input on the feasibility and
desirability of EHR adoption and use of
HIE in LTCHs, we stated that we are
also interested in public comment on
the need to develop electronic clinical
quality measures, and the benefits and
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limitations of implementing these
measures for LTCHs.
Comment: Commenters expressed
support of the adoption and use of
EHRs, HIEs and electronic prescribing
in the LTCH setting. The commenters
suggested that it is a critical step to
achieving efficiencies and improving
the quality of care provided by LTCHs,
and that it is important to allow LTCHs
to exchange information with other
types of providers to improve care
coordination and to participate in
Accountable Care Organizations and
other reform efforts.
Response: We thank the commenters
for their support.
Comment: Some commenters urged
CMS to consider a funding incentive
program for the adoption of EHR
technology by LTCHs that includes the
same opportunities afforded to eligible
physicians, CAHs, and acute care
hospitals under the HITECH provisions
of Public Law 111–5, the American
Recovery and Reinvestment Act of 2009.
The commenters noted that the lack of
funding is a significant challenge to
EHR adoption in the LTCH setting and
calls into question the feasibility of
requiring EHR use. Another commenter
suggested that it is premature to
consider the further development of
electronic clinical quality measures for
the LTCH setting until compensation is
offered for implementing EHRs.
Response: We believe that these
recommendations and concerns are
important considerations related to EHR
adoption and HIE usage in the LTCH
setting and help to inform our
understanding of these issues.
Comment: Several commenters
indicated that their LTCHs have
adopted EHR technology and indicated
challenges they have been facing. First,
the amount of information generated by
the EHRs can be overwhelming, and
there is a significant challenge
associated with utilizing the
information in a timely and meaningful
way. Second, the lack of interoperability
between acute care hospitals’ and LTCH
EHRs make information exchange
difficult. Third, the information
currently being collected by HIEs are
rudimentary and does not necessarily
meet the information needs to LTCHs.
A commenter indicated that not all
proposed and new LTCH quality
measures utilize EHR information and,
therefore, suggested that LTCHs face the
burden of manually reviewing each
patient’s entire medical record
regardless of whether EHR technology
has been adopted.
Response: We thank the commenters
for their observations. We believe that
these concerns are important
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considerations related to EHR adoption
and HIE usage in the LTCH setting and
help to inform our understanding of
these issues.
D. Electronic Health Record (EHR)
Incentive Program and Meaningful Use
(MU)
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1. Background
The HITECH Act (Title IV of Division
B of the ARRA, together with Title XIII
of Division A of the ARRA) authorizes
incentive payments under Medicare and
Medicaid for the adoption and
meaningful use of certified electronic
health record (EHR) technology
(CEHRT). We refer to this program as
the EHR Incentive Program. Eligible
hospitals (EHs) and critical access
hospitals (CAHs) may qualify for these
incentive payments under Medicare (as
authorized under sections 1886(n) and
1814(l) of the Act, respectively) if they
successfully demonstrate meaningful
use of CEHRT, which includes reporting
on clinical quality measures (CQMs)
using CEHRT. Sections 1886(b)(3)(B)
and 1814(l) of the Act also establish
downward payment adjustments under
Medicare, beginning with fiscal year
2015, for eligible hospitals and CAHs
that are not meaningful users of CEHRT
for certain associated reporting periods.
We refer to this part of the EHR
Incentive Program as the Medicare EHR
Incentive Program. Sections
1903(a)(3)(F) and 1903(t) of the Act
provide the statutory basis for Medicaid
incentive payments.
The set of CQMs from which eligible
hospitals and CAHs will report under
the EHR Incentive Program beginning in
FY 2014 is listed in Table 10 of the EHR
Incentive Program Stage 2 final rule (77
FR 54083 through 54087). We continue
to believe there are important synergies
with respect to the Medicare EHR
Incentive Program and the Hospital IQR
Program. We believe the financial
incentives under the Medicare EHR
Incentive Program for the adoption and
meaningful use of CEHRT by EHs and
CAHs will encourage the adoption and
use of CEHRT for the electronic
reporting of CQMs under the Hospital
IQR Program. We expect that the
electronic submission of quality data
from EHRs under the Medicare EHR
Incentive Program will provide a
foundation for establishing the capacity
of hospitals to send, and for CMS to
receive, CQMs via CEHRT for certain
Hospital IQR Program measures.
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2. Alignment of the Medicare EHR
Incentive Program Reporting and
Submission Timelines for Clinical
Quality Measures With Hospital IQR
Program Reporting and Submission
Timelines
We believe it is important to continue
our goal of aligning the Medicare EHR
Incentive Program with the Hospital
IQR Program because alignment of these
programs will serve to reduce hospital
reporting burden and encourage the
adoption and meaningful use of CEHRT
by eligible hospitals and CAHs. Section
1886(n)(3)(B)(iii) of the Act requires
that, in selecting measures and
establishing the form and manner for
reporting measures under the Medicare
EHR Incentive Program, the Secretary
shall seek to avoid redundant or
duplicative reporting with reporting
otherwise required, including reporting
under section 1886(b)(3)(B)(viii) of the
Act (the Hospital IQR Program). The
reporting and submission timelines for
the Medicare EHR Incentive Program for
eligible hospitals and CAHs currently
operate on a Federal fiscal year basis,
while the reporting and submission
timelines for the Hospital IQR Program
currently operate on a calendar year
basis. This difference may create
confusion and additional burden for
hospitals attempting to report data to
both programs. To alleviate this possible
confusion, reduce provider burden, and
strengthen our commitment to aligning
programs, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28278
through 28279) we proposed to align the
reporting and submission periods for
clinical quality measures for the
Medicare EHR Incentive Program with
that of the Hospital IQR Program on a
calendar year basis in 2015 and 2016.
We realize that aligning the Medicare
EHR Incentive Program to the calendar
year would mean shifting the timeline
for reporting and submission of CQMs
such that the submission period would
continue through February of the
subsequent calendar year rather than
ending in November as it is currently
done, and therefore would delay the
incentive eligibility assessment, and
subsequently delay the Medicare EHR
incentive payments under Medicare
made to eligible hospitals and CAHs. In
order to ease the transition of the
reporting period to the calendar year,
and to prevent the delay of Medicare
EHR incentive payments, we proposed
to incrementally shift the Medicare EHR
Incentive Program reporting periods for
CQMs. Specifically, for 2015 and 2016,
we proposed for the Medicare EHR
Incentive Program to require calendar
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50319
year reporting for CQM data that are
submitted electronically, but require
that the data be reported only for the
first three calendar quarters (that is,
January through March, April through
June and July through September)
allowing the reporting period, incentive
eligibility assessment, and incentive
payments to remain on their current
schedule.
We noted that this proposal would
only apply for eligible hospitals and
CAHs submitting CQMs electronically
for 2015 and 2016, and that hospitals
demonstrating meaningful use for the
first time in 2015 or 2016 would still be
required to report CQMs by attestation
for a continuous 90-day period in FY
2015 or 2016, or report CQMs
electronically, by July 1 of the given
year to avoid the Medicare penalty in
the subsequent year as finalized in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50903 through 50905). Medicaidonly providers would continue to report
according to State requirements. The
proposal would not change the
reporting periods or requirements for
the meaningful use objectives and
associated measures under 42 CFR 495.6
or for CQMs that are reported by
attestation via the Registration and
Attestation System. This proposal
would allow us to align the CQM
reporting periods for the Medicare EHR
Incentive Program with that of the
Hospital IQR Program without delaying
payment of the Medicare EHR incentive
payments for 2015 and 2016.
To further align CQM reporting for the
two programs, we proposed to require
quarterly reporting of electronically
reported CQMs for the Medicare EHR
Incentive Program to align with the
currently established quarterly
electronic CQM reporting periods for
the Hospital IQR Program. Additionally,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28242 through
28243) the Hospital IQR Program
proposed to change its submission
period for electronic CQMs from annual
to quarterly submission. We refer
readers to the Hospital IQR Program
discussion in section IX.A.7.h. of the
preamble of that proposed rule for more
information about this proposal.
Therefore, for the CY 2015 and 2016
reporting periods, we also proposed to
align the Medicare EHR Incentive
Program submission period with that
being proposed for the Hospital IQR
Program. The table below illustrates the
current reporting periods, and the
following table further illustrates our
proposals.
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CURRENT (2014) TIMELINES FOR EHR INCENTIVE PROGRAM AND HOSPITAL IQR PROGRAM REPORTING AND SUBMISSION
EHR incentive program CQM reporting requirements
2014 Reporting Period ......
FY 2014 October 1, 2013–
September 30, 2014.
Hospital IQR program reporting requirements for FY
2016 payment determination
Report one full year OR ....
Q4 CY 2013 ......................
October 1, 2013–December 31, 2013. N/A for
2014 Hospital IQR Program reporting.
Report one three-month
quarter OR.
Report any continuous 90day period.
Q1 CY 2014 ......................
January 1–March 31,
2014.
April 1–June 30, 2014.
Q2 CY 2014 ......................
Q3 CY 2014 ......................
Submission Period ............
Jan 2, 2014–Nov 30, 2014
July 1–September 30,
2014.
October 1, 2013–November 30, 2014.
PROPOSED TIMELINES TO ALIGN THE MEDICARE EHR INCENTIVE PROGRAM WITH PROPOSED HOSPITAL IQR PROGRAM
REPORTING AND SUBMISSION
EHR incentive program reporting requirements *
Hospital IQR program reporting
requirements
Submission period **
Q1
January 1–March 31, 2015 .......
January 1–March 31, 2015 .......
Q2
April 1–June 30, 2015 ...............
April 1–June 30, 2015 ...............
Q3
July 1–September 30, 2015 ......
July 1–September 30, 2015 ......
Q4
N/A for EHR Incentive Program
October 1–December 31, 2015
Q1
January 1–March 31, 2016 .......
January 1–March 31, 2016 .......
Q2
April 1–June 30, 2016 ...............
April 1–June 30, 2016 ...............
Q3
July 1–September 30, 2016 ......
July 1–September 30, 2016 ......
Q4
N/A for EHR Incentive Program
October 1–December 31, 2016
Data must be submitted by May 30,
2015.
Data must be submitted by August 30,
2015.
Data must be submitted by November
30, 2015.
For Hospital IQR Program, data must
be submitted by February 28, 2016.
Data must be submitted by May 30,
2016.
Data must be submitted by August 30,
2016.
Data must be submitted by November
30, 2016.
For Hospital IQR Program, data must
be submitted by February 28, 2017.
CY
2015 Reporting Period ..
2016 ...............................
Reporting Period ...........
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* Calendar year alignment and quarterly reporting for 2015 and 2016 would apply for electronically reported CQM data only.
** Proposed EHR Incentive Program and Hospital IQR Program submission period would allow data submission on an ongoing basis starting
January 2 of the reporting year, and ending approximately 60 days after the end of the quarter.
We invited public comment on these
proposals.
Comment: Many commenters
supported CMS’ proposed alignment
between the Medicare EHR Incentive
Program and Hospital IQR Program.
Commenters appreciated CMS’ efforts to
align these programs and felt alignment
would reduce overall quality reporting
burden. Several commenters specifically
expressed their support of the proposal
to align the reporting and submission
timelines of CQMs for the Medicare
EHR Incentive Program with reporting
and submission timelines for the
Hospital IQR Program stating that this
alignment would reduce confusion
among the programs and reduce
reporting burden. A few commenters
noted that the proposal did not address
the reporting and submission timeline
for reporting CQMs via attestation, or
the reporting and submission timelines
of the meaningful use objectives. Some
of these commenters requested that
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CMS clarify whether those timelines
would also be affected by this proposal.
Response: We appreciate the
comments in support of our alignment
efforts with the Hospital IQR Program,
and agree that our proposal to align
timelines for the programs would
reduce confusion and reporting burden.
For this reason, we are finalizing our
proposal, with the modifications
discussed below, to align the reporting
and submission timelines for CQMs that
are reported electronically for the
Medicare EHR Incentive Program with
the reporting and submission timelines
of the Hospital IQR Program on the
calendar year for 2015. Although it is
still our general goal to continue this
alignment on a calendar year basis for
2016, we are not finalizing the proposals
for 2016 at this time and will address
the policy for 2016 in future
rulemaking. We will continue to
evaluate our policies for 2016, and
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maintain our goal of alignment with the
Hospital IQR Program.
We note that we did not propose to
change the reporting periods or
requirements for the meaningful use
objectives and associated measures
under 42 CFR 495.6 or for CQMs that
are reported by attestation via the
Registration and Attestation System,
and thus, the policy will remain the
same. We also note that we will
consider these comments and possible
alignment of CQMs reported by
attestation in future rule making.
Comment: Many commenters
expressed their views regarding CMS’
proposal to require quarterly submission
of CQMs reported electronically for the
Medicare EHR Incentive Program. In
general, commenters felt it was
premature to require quarterly
submission of CQMs in 2015 for the
Medicare EHR Incentive Program given
the delays with certification of EHR
technology in 2014 and anticipated
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changes in attestation requirements.
Commenters also expressed concerns
over whether EHRs would be ready for
quarterly reporting by the first quarter of
2015, and suggested that CMS consider
a pilot program for quarterly reporting
instead of requiring it for 2015.
Response: We refer readers to the
Hospital IQR Program discussion in
section IX.A.9.d. of the preamble of this
final rule for further discussion of the
comments related to quarterly reporting.
We appreciate and understand the
commenters’ concerns regarding
quarterly reporting, and understand the
feedback we have received from
stakeholders concerning delays in
certification of EHR technology. We
additionally acknowledge that our
requirement to report the most recent
version of the CQMs as finalized below
poses a challenge to eligible hospitals
and CAHs in implementing quarterly
reporting as EHR vendors can be
certified to 2014 CEHRT without
updating to the most recent version of
CQMs. We note that at this time, we do
not plan to offer quarterly reporting on
a pilot basis in 2015.
Based on commenters’ concerns, and
the additional challenges posed by
requiring the most recent version of the
CQMs for 2015 reporting, we have
decided not to finalize our proposal to
require quarterly submission of
electronically reported CQMs for the
Medicare EHR Incentive Program in
2015, and instead maintain in 2015 our
policy of one annual submission period
to align with the submission period for
CQMs reported electronically under the
Hospital IQR Program. This annual
submission period begins on January 2
and ends on November 30 (for example,
for the reporting periods in 2015, the
submission period is January 2, 2015
through November 30, 2015).
In addition, and to align with the
Hospital IQR Program in 2015, we are
not finalizing our proposal to require
three quarters of CQM data for calendar
year 2015. Instead, for CQM data
submitted electronically, we will
require one calendar quarter of data for
2015 from either Q1 (January 1, 2015–
March 31, 2015), Q2 (April 1, 2015–June
30, 2015), or Q3 (July 1, 2015–
September 30, 2015). As noted above, at
this time, we are not finalizing any
proposals related to our reporting and
submission requirements for 2016. We
refer readers to the Hospital IQR
Program discussion in section IX.A.9.d.
of the preamble of this final rule for
further discussion of the comments
related to quarterly reporting.
We also note that this policy only
applies for eligible hospitals and CAHs
submitting CQMs electronically for
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2015. Therefore, as finalized in the FY
2014 IPPS/LTCH PPS final rule (78 FR
50903 through 50905), hospitals
demonstrating meaningful use for the
first time in 2015 are still required to
report CQMs by attestation for a
continuous 90-day period in FY 2015, or
to report CQMs electronically, by July 1
of the given year to avoid the Medicare
penalty in the subsequent year.
Medicaid-only providers will continue
to report according to State
requirements. In addition, as stated
above, this policy does not change the
reporting periods or requirements for
the meaningful use objectives and
associated measures under 42 CFR 495.6
or for CQMs that are reported by
attestation via the Registration and
Attestation System.
In summary, after consideration of the
public comments we received, we are
finalizing our proposal, with the
modifications described above, to align
the reporting and submission timelines
of the Medicare EHR Incentive Program
with those of the Hospital IQR Program
on the calendar year for CQMs that are
reported electronically in 2015.
We are not finalizing our proposal to
require quarterly submission of CQM
data for 2015; instead, we will maintain
one annual submission period. We are
also not finalizing our proposal to
require three calendar quarters of CQM
data for 2015, but instead, for data
submitted electronically, we will
require one calendar quarter of data
from Q1, Q2, or Q3 of 2015. We are not
finalizing our proposals for 2016 in this
final rule, and will address the policy
for 2016 in future rule making.
3. Quality Reporting Data Architecture
Category III (QRDA–III) Option in 2015
In the EHR Incentive Program Stage 2
final rule (77 FR 54088), we finalized
two options for eligible hospitals and
CAHs to electronically submit CQMs
beginning in FY 2014 under the
Medicare EHR Incentive Program.
Option 1 was to electronically submit
aggregate-level CQM data using QRDA–
III. Option 2 was to electronically
submit data using a method similar to
the 2012 and 2013 EHR Incentive
Program electronic reporting pilot for
EHs and CAHs, which used QRDA–I
(patient-level data). We also stated in
that final rule that, consistent with
section 1886(n)(3)(B)(ii) of the Act, in
the event the Secretary does not have
the capacity to receive CQM data
electronically, eligible hospitals and
CAHs that are beyond their first year of
meaningful use may continue to report
aggregate CQM results through
attestation.
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50321
We noted in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50904 through
50905) that we had determined that the
electronic submission of aggregate-level
data using QRDA–III would not be
feasible in 2014 for eligible hospitals
and CAHs under the Medicare EHR
Incentive Program. Therefore, for the
2014 reporting period under the
Medicare EHR Incentive Program,
eligible hospitals and CAHs would have
the option to continue to report
aggregate CQM results through
attestation. We stated that we would
reassess this policy for the 2015 and
future reporting periods.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28279 through
28280), we stated that we have
determined that the electronic
submission of aggregate-level data using
QRDA–III will not be feasible in 2015
for eligible hospitals and CAHs under
the Medicare EHR Incentive Program.
Therefore, for the 2015 reporting period
under the Medicare EHR Incentive
Program, eligible hospitals and CAHs
would have the option to continue to
report aggregate CQM results through
attestation. We noted that submissions
of aggregate CQM data via attestation
would not satisfy the reporting
requirements for the Hospital IQR
Program, and consistent with our
proposal above regarding alignment of
these programs, attested CQM data
would need to be submitted for one full
fiscal year in 2015 via the Registration
and Attestation System, and would not
require quarterly submissions. Hospitals
in their first year of demonstrating
meaningful use in 2015 would still be
required to report CQMs by attestation
for a continuous 90-day period in FY
2015, or report CQMs electronically, by
July 1, 2015 to avoid the Medicare
penalty in FY 2016 as finalized in the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50903 through 50905). We also noted
that this policy does not apply to the
Medicaid EHR Incentive Program.
Therefore, States may still require the
submission of QRDA–III files to fulfill
the CQM reporting requirements for
hospitals that participate in the
Medicaid EHR Incentive Program.
In order to remain aligned with the
Hospital IQR Program, and because over
66 percent of hospitals that participate
in the Hospital IQR Program are already
meaningful users, we strongly
recommended that hospitals that are
eligible to participate in both programs
electronically submit up to 16 electronic
clinical quality measures of the 28
inpatient measures identified by the
Hospital IQR Program. We believe that
keeping the two programs aligned will
ultimately reduce reporting burden for
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hospitals. We note again that reporting
via attestation would not count towards
the reporting requirements for the
Hospital IQR Program.
Comment: Several commenters
expressed views related to CMS’
proposal not to accept aggregate-level
data using QRDA–III for reporting in
2015. Most commenters were
disappointed to learn that it was not
feasible for CMS’ systems to accept
QRDA–III files in 2015 and urged CMS
to continue to improve systems such
that we would be able to accept QRDA–
III data in the future. Some commenters
requested further discussion of CMS’
plan to accept QRDA–III data in the
future.
Response: We understand the
concerns raised by commenters, and we
expect to continue to review and
improve our systems for future years to
be able to accept aggregate level QRDA–
III files. We note that our plans
regarding the acceptance of QRDA–III
files will be addressed in future rule
making.
Comment: A few commenters
suggested that CMS and ONC remove
the requirement for EHR technology
designed for the inpatient setting to be
certified to produce QRDA–III formatted
files if CMS would not be able to receive
QRDA–III data in the future in order to
prevent unnecessary work related to the
development of these files.
Response: We appreciate the
commenters’ concerns and suggestion.
As we continue to review and improve
our systems, we will continue to
evaluate whether QRDA–III is a feasible
option for future years and whether
changes to existing policies would be
appropriate.
Comment: A few commenters
requested additional information about
the storage and maintenance of QRDA–
I files.
Response: We note that the storage
and maintenance of QRDA–I files is
outside the scope of this final rule.
After consideration of the public
comments we received, and for the
reasons set forth above, we are finalizing
the policy as proposed. For the
Medicare EHR Incentive Program,
eligible hospitals and CAHs may report
their CQMs electronically using QRDA–
I (patient-level data) or via attestation
(aggregate-level data). We note again
that reporting via attestation would not
count towards the reporting
requirements for the Hospital IQR
Program.
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4. Electronically Specified Clinical
Quality Measures (CQMs) Reporting for
2015
In the EHR Incentive Program Stage 2
final rule, we finalized the CQMs that
eligible hospitals and CAHs would be
required to report for purposes of
meeting the CQM component of
meaningful use under the EHR Incentive
Program starting in 2014 (77 FR 54083
through 54087 Table 10). These CQMs
are updated routinely to account for
changes, including but not limited to
changes in billing and diagnosis codes
and changes in medical practices. The
requirements specified in the EHR
Incentive Program Stage 2 final rule
allow for the reporting of different
versions of the CQMs. For 2015, it is not
technically feasible for CMS to accept
data that is electronically reported
according to the specifications of the
older versions of the CQMs, including
versions that may be allowed for
reporting under the EHR Incentive
Program. We stated in the EHR
Incentive Program Stage 2 final rule
that, consistent with section
1886(n)(3)(B)(ii) of the Act, in the event
that the Secretary does not have the
capacity to receive CQM data
electronically, eligible hospitals and
CAHs may continue to report aggregate
CQM results through attestation (77 FR
54088). In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28280) we
proposed that eligible hospitals and
CAHs that seek to report CQMs
electronically under the Medicare EHR
Incentive Program must use the most
recent version of the electronic
specifications for the CQMs and have
CEHRT that is tested and certified to the
most recent version of the electronic
specifications for the CQMs.
Eligible hospitals and CAHs that do
not wish to report CQMs electronically
using the most recent version of the
electronic specifications (for example, if
their CEHRT has not been certified for
that particular version) would be
allowed to report CQM data by
attestation for the Medicare EHR
Incentive Program.
We invited public comment on these
proposals. We have addressed several of
the public comments received in this
section of this final rule, and we also
refer readers to the Hospital IQR
Program discussion in section IX.A.9.d.
of the preamble of this final rule for
further discussion of the comments
related to CQM versions.
Comment: Commenters expressed
concern and requested clarification
regarding the timeframe between
publication of the revised specifications
and the quarter in which hospitals must
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being using the new version.
Commenters stated that the timeline
was too short for adequate development
and implementation of the new
specifications.
Response: CQMs are updated
routinely to account for changes
including, but not limited to, changes in
billing and diagnosis codes and changes
in medical practices. In order for CQMs
to remain current and clinically valid,
the specifications must be updated on a
regular basis. We note that
specifications are posted at least 6
months prior to the reporting period,
and as we align the reporting and
submission timelines of the Medicare
EHR Incentive Program with those of
the Hospital IQR Program, we provide
an even greater window of time between
the posting of the specifications and the
start of the reporting period.
Comment: Commenters specifically
requested clarification regarding the
timing and reporting of the updated
specifications with respect to CMS’
proposal to require quarterly reporting
of electronically reported CQMs.
Commenters stated that the two
proposals would require hospitals to use
an EHR that is certified to one set of
specifications and then re-certified to a
different set of specifications within a
given reporting year in order to satisfy
the quarterly reporting requirement.
Response: As we discussed above,
and in section IX.D.2. of the preamble
of this final rule, we are not finalizing
our proposal to require quarterly
submission of electronically reported
CQMs for 2015. For electronic reporting
of CQM data for 2015, we will require
one calendar quarter of data from Q1,
Q2 or Q3 of 2015 submitted during the
period January 2, 2015–November 30,
2015. We believe this revised policy
will allow additional time for eligible
hospitals and CAHs to implement the
updates required to submit the most
recent version of the CQMs in 2015.
Comment: One commenter suggested
that CMS accept multiple versions of
CQMs during the reporting year to
account for the period of transition
between CQM versions.
Response: We appreciate the
commenter’s suggestion, but
unfortunately, as noted above, for 2015,
it is not technically feasible for us to
accept data that is electronically
reported according to the specifications
of the older versions of the CQMs,
including versions that may be allowed
for reporting under the EHR Incentive
Program. We note that eligible hospitals
and CAHs that do not wish to report
CQMs electronically using the most
recent version of the electronic
specifications would be allowed to
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report CQM data by attestation for the
Medicare EHR Incentive Program.
Comment: One commenter supported
the proposal to require that eligible
hospitals and CAHs ensure that their
CEHRT products are tested and certified
to the most recent version of the
electronic specifications for the CQMs,
and many others opposed the
recertification requirement siting the
additional burden and cost
recertification would impose.
Response: We have received feedback
from stakeholders regarding the
difficulty and expense of having to test
and recertify CEHRT products to the
most recent version of the electronic
specifications for the CQMs. While we
still believe eligible hospitals and CAHs
should test and certify their products to
the most recent version of the electronic
specifications for the CQMs when
feasible, we understand the burdens
associated with this requirement.
Therefore, to avoid this added burden,
we are not finalizing our proposal to
require eligible hospitals and CAHs to
ensure that their CEHRT products are
recertified to the most recent version of
the electronic specifications for the
CQMs. Please note that, although we are
not requiring recertification, eligible
hospitals and CAHs must still report the
most recent version of the electronic
specifications for the CQMs.
After consideration of the public
comments we received, and for the
reasons set forth above, we are finalizing
the policy that eligible hospitals and
CAHs that seek to report CQMs
electronically under the Medicare EHR
Incentive Program must use the most
recent version of the electronic
specifications for the CQMs, however,
we will not require eligible hospitals
and CAHs to ensure that their CEHRT
products are recertified to the most
recent version of the electronic
specifications for the CQMs.
5. Clarification Regarding Reporting
Zero Denominators
As we stated in the EHR Incentive
Program Stage 2 final rule (77 FR 54079)
we expect eligible hospitals and CAHs
to adopt EHR technology that includes
CQMs relevant to each eligible
hospital’s or CAH’s patient mix. We
understand, however, that there are
situations in which an eligible hospital
or CAH does not have data to report on
a particular CQM, and its EHR is not
certified to additional CQMs that can be
used to replace that CQM with another
for which it has data. For example, a
health system with multiple eligible
hospitals or CAHs may have an EHR
certified for 16 CQMs, which is the
minimum number of required CQMs for
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reporting, but not all of the eligible
hospitals or CAHs in the health system
may have cases to report on those
particular 16 CQMs. We have received
questions on how eligible hospitals and
CAHs should meet their reporting
requirements in this situation; therefore,
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28280) we
clarified our policy as set forth below
regarding the reporting of a zero
denominator for the purposes of the
Medicare EHR Incentive Program and
the Hospital IQR Program.
If the eligible hospital’s or CAH’s EHR
is certified to a CQM, but the eligible
hospital or CAH does not have patients
that meet the denominator criteria of
that CQM, the eligible hospital or CAH
can submit a zero in the denominator
for that CQM. Submission of a zero in
the denominator for a CQM counts as a
successful submission for that CQM for
both the Medicare EHR Incentive
Program and the Hospital IQR Program.
For example, if the eligible hospital or
CAH within the previously mentioned
health system does not provide
maternity services, but one of the 16
CQMs the health system’s EHR is
certified to is a maternity measure, that
eligible hospital’s or CAH’s EHR may
render a zero in the denominator for
that CQM. The eligible hospital or CAH
would therefore report a zero
denominator for that maternity care
CQM, and this would count toward the
16 required CQMs for the Medicare EHR
Incentive Program and the Hospital IQR
Program. Eligible hospitals or CAHs
within that health system for which that
maternity CQM does apply would
provide data on that measure.
Comment: Commenters supported
and appreciated the clarification
regarding zero denominators. Some
commenters requested clarification as to
whether the above stated zero
denominator policy would be effective
in CY 2015 or upon publication of this
final rule.
Response: The clarification set forth
in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28280) and stated
above represents our current policy. The
additional information and examples
provided in the proposed rule were
intended for clarification only and do
not represent a change to our existing
policy.
Comment: One commenter requested
clarification as to whether this policy
extends to issues resulting from the
maintenance of value sets specifically
related to medications codified in
RxNorm required by the CQM
specifications. The commenter stated
that these issues often result in a zero
denominator being produced by the
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Medicare EHR, and went on to suggest
that these issues may be resolved by
modifying CQM specifications to be
more in line with how medications are
evaluated in the Hospital IQR Program
chart-abstracted measures.
Response: While we cannot explore
all the possible explanations and
reasons why an EHR would produce a
zero denominator in this final rule, we
hope that the above clarification
regarding zero denominators will
provide guidance in these instances.
6. Case Threshold Exemption Policy;
Clarification for 2014 and Change for
2015
In the EHR Incentive Program—Stage
2 final rule (77 FR 54080), we finalized
the policy that eligible hospitals and
CAHs that have 5 or fewer discharges
per quarter in the same quarter as their
reporting period in FY 2014, or 20 or
fewer discharges per full FY reporting
period beginning in FY 2015, for which
data are being electronically submitted
(Medicare and non-Medicare combined)
as defined by the clinical quality
measure’s denominator population are
exempted from reporting the CQM. To
be eligible for the exemption, eligible
hospitals and CAHs must submit their
aggregate population and sample size
counts for Medicare and non-Medicare
discharges for the CQM for the reporting
period.
In the Health Information Technology:
Revisions to the 2014 Edition Electronic
Health Record Certification Criteria; and
Medicare and Medicaid Programs;
Revisions to the Electronic Health
Record Incentive Program interim final
rule, we revised the case threshold
exemption policy to make it applicable
for eligible hospitals and CAHs in all
stages of meaningful use beginning with
FY 2013, including those that are
demonstrating meaningful use for the
first time and submitting CQMs by
attestation (77 FR 72988 through 72989).
Eligible hospitals and CAHs with 5 or
fewer discharges during the relevant
EHR reporting period (if attesting to a
90-day EHR reporting period), or 20 or
fewer discharges during the year (if
attesting to a full year EHR reporting
period) as defined by the CQM’s
denominator population would be
exempted from reporting on that CQM.
We stated in the interim final rule (77
FR 72989) that beginning in FY 2014,
the reporting requirement is to report 16
CQMs covering at least 3 domains from
a list of 29 CQMs. We stated further that
in order to be exempted from reporting
fewer than 16 CQMs, the eligible
hospital or CAH would need to qualify
for the case threshold exemption for
more than 13 of the 29 CQMs. If the
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eligible hospital or CAH does not meet
the criteria for a case threshold
exemption for 13 or more CQMs, the
eligible hospital or CAH would be able
to report at least 16 CQMs. Likewise, we
stated that if the CQMs for which the
eligible hospital or CAH can meet the
case threshold of discharges do not
cover at least 3 domains, the eligible
hospital or CAH would be exempt from
the requirement to cover the remaining
domains. For example, if the eligible
hospital or CAH does not meet the case
threshold of discharges for 13 clinical
quality measures, and thus could report
16 clinical quality measures, but the 16
clinical quality measures cover only 2 of
the 3 domains, the eligible hospital or
CAH would be exempt from covering
the third domain.
For the reporting periods in 2014, our
policy requires that an eligible hospital
or CAH that claims a case threshold
exemption for one CQM must choose
another CQM on which to submit data,
or continue to invoke the case threshold
exemption until it exceeds 13 case
threshold exemptions and may therefore
report fewer than the 16 required CQMs.
This policy assumes that the eligible
hospital or CAH has an EHR that is
certified to more than the minimum of
16 CQMs, and the eligible hospital or
CAH has other CQMs in its EHR to
choose from for reporting. We realize,
however, that there could be many
EHRs that are certified to only the
minimum of 16 CQMs required by
ONC’s regulations at 45 CFR 170.102
(the definition of ‘‘Base EHR’’), and for
eligible hospitals and CAHs using those
EHRs, this policy may result in the
eligible hospital or CAH needing to
submit data on a CQM for which the
EHR is not certified. It was not our
intent to have eligible hospitals or CAHs
report on measures for which their
EHRs are not certified.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28280 through
28281), beginning with the reporting
periods in 2015, we proposed to change
the case threshold exemption policy so
that if an eligible hospital or CAH
qualifies for an exemption from
reporting on a particular CQM, the
exemption would count toward the 16
required CQMs. For example, if the
eligible hospital’s or CAH’s EHR is
certified to report 16 CQMs, and for one
of those CQMs the eligible hospital or
CAH has 5 or fewer discharges during
the relevant EHR reporting period (if
attesting to a 90-day EHR reporting
period), or 20 or fewer discharges
during the year (if attesting to a full year
EHR reporting period) as defined by the
CQM’s denominator population, the
eligible hospital or CAH would report
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data for the 15 CQMs for which the case
threshold exemption does not apply,
and invoke a case threshold exemption
for the one CQM for which the
exemption does apply for a total of 16
CQMs.
We expect eligible hospitals and
CAHs to adopt EHR technology that
includes CQMs relevant to the eligible
hospital’s or CAH’s case mix, though we
understand that in some cases, the
eligible hospital or CAH may not meet
the case threshold of discharges for a
particular CQM. We believe this
proposed policy better reflects our
intent for eligible hospitals and CAHs to
report on only those measures for which
their EHRs are certified while meeting
the reporting requirements for the
Medicare EHR Incentive Program and
Hospital IQR Program.
We invited public comment on this
proposal.
Comment: Several comments
supported the proposed change to CMS’
case threshold exemption policy.
Commenters felt that this change in
policy acknowledged that an eligible
hospital or CAH should receive credit
for meeting the CQM even though the
eligible hospital or CAH may not meet
the case threshold of discharges for that
particular CQM.
Response: We appreciate the
comments in support of our proposal.
After consideration of the public
comments we received, we are
finalizing the policy as proposed. We
note that for CQM data reported by
attestation, this policy applies to eligible
hospitals or CAHs that have 5 or fewer
discharges during the relevant EHR
reporting period (if attesting to a 90-day
EHR reporting period), or 20 or fewer
discharges during the year (if attesting
to a full year EHR reporting period), as
defined by the CQM’s denominator
population. For CQM data submitted
electronically in 2015, this policy
applies to eligible hospitals or CAHs
that have 5 or fewer discharges during
their chosen reporting period of one
calendar quarter, as defined by the
CQM’s denominator population. We
note that because there is no option for
a full year reporting period for data
submitted electronically in 2015, the
exemption based on 20 or fewer
discharges for a full year EHR reporting
period would not apply.
X. Revision of Regulations Governing
Use and Release of Medicare
Advantage Risk Adjustment Data
A. Background
Section 1853 of the Act requires the
Secretary to make payments to Medicare
Advantage (MA) organizations offering
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local and regional MA plans with
respect to coverage of individuals
enrolled under Medicare Part C. Section
1853(a)(1)(C) of the Act requires the
Secretary to adjust such payments for
such risk factors as age, disability status,
gender, institutional status, and such
other factors as the Secretary determines
appropriate, including health status. To
support these risk adjustments, section
1853(a)(3)(B) of the Act requires
submission of data by MA organizations
regarding the services provided to
enrollees and other information the
Secretary deems necessary but does not
limit the Secretary’s use of such data or
information. Section 1106 of the Act
authorizes the Secretary to adopt
regulations governing release of
information gathered in the course of
administering programs under the Act.
Implementing regulations at 42 CFR
422.310 set forth the requirements for
the submission of risk adjustment data
that CMS uses to risk-adjust payments.
MA organizations must submit data, in
accordance with CMS instructions, to
characterize the context and purposes of
items and services provided to their
enrollees by a provider, supplier,
physician, or other practitioner. Section
422.310(d)(1) provides that MA
organizations submit risk adjustment
data to CMS as specified by CMS. Risk
adjustment data refers to data submitted
in two formats: comprehensive data
equivalent to Medicare fee-for-service
claims data (often referred to as
encounter data); and data in abbreviated
formats (often referred to as RAPS data).
Section 422.310(f) currently specifies
CMS’ uses of the risk adjustment data.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978), we
proposed to revise the existing
regulation at § 422.310(f) to broaden the
specified uses and disclosures of risk
adjustment data in order to strengthen
program management and increase
transparency in the MA program, and to
specify the conditions for release of risk
adjustment data to entities outside of
CMS.
We received approximately 28 pieces
of correspondence from MA
organizations and trade associations,
beneficiary advocacy organizations,
hospital systems and trade associations,
a government agency, a research firm,
and individuals. Summaries of and our
responses to the public comments on
the uses and bases for disclosure of risk
adjustment data (§ 422.310(f)(1)) are
presented in section X.B.1 of the
preamble of this final rule. Summaries
of and responses to the public
comments on the conditions for release
of risk adjustment data outside of CMS
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(§ 422.310(f)(2)) are presented in section
X.B.2. of the preamble of this final rule.
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B. Proposed and Finalized Regulatory
Changes
1. Expansion of Uses and Reasons for
Disclosure of Risk Adjustment Data
In the FY 2015 IPPS/LTCHG PPS
proposed rule, we first proposed to
revise a reference in existing
§ 422.310(f) from ‘‘data obtained under
this section’’ to ‘‘data described in
paragraphs (a) through (d) of this
section’’ in both paragraphs (f)(1) and
(f)(2); this new text would indicate that
the data used or released under
proposed paragraph (f) would not
include the medical records and other
data collected separately under
paragraph (e) for the purpose of risk
adjustment data validation (RADV)
audits. We stated that we did not intend
for the proposed § 422.310(f) to
authorize any additional use or release
of the data described in paragraph (e).
We proposed that the data described in
paragraphs (a) through (d) would
include those elements that constitute
an encounter data record, including
contract, plan, and provider identifiers,
with the exception of disaggregated
payment data as discussed below. In
addition, we noted that paragraph (d)(1)
also authorizes the collection of
abbreviated data and that the proposed
regulation would apply to both the
abbreviated data as well as more
detailed (encounter-level) data collected
from MA organizations pursuant to
§ 422.310(a) through (d).
Comment: A few commenters stated
that, without a specific exclusion, the
data that CMS proposed to release
would seem to include audit data and
additional data collected as part of these
audits, which could include price and
charge information. These commenters
urged CMS to restrict the inclusion of
additional data collected as part of
audits from the data eligible for release.
Response: We did propose a specific
exclusion: That medical records and
other data that MA organizations submit
to CMS as part of a Risk Adjustment
Data Validation (RADV) audit at
§ 422.311 are excluded from the data
release provisions of this rulemaking,
through the references at § 422.310(f) to
the data described in § 422.310(a)
through (d) as the data that would be
available under this rule. This text
excludes data collected pursuant to
§ 422.310(e) for RADV.
We did not receive any public
comments challenging our proposed
exclusion of audit data under paragraph
(e) of § 422.310, nor did we receive any
public comments on the application of
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this rule to abbreviated data under
paragraph (d)(1) of § 422.310. Comments
about additional or fewer protections for
encounter data under the final rule are
addressed below. Therefore, we are
finalizing the use of this language
limiting the scope of paragraph (f) to
data described in paragraphs (a) through
(d) as proposed.
The existing regulation at § 422.310(f)
specifies five purposes for which CMS
may use risk adjustment data obtained
from MA organizations. In the proposed
rule, we clarified that CMS’ uses of
these data may include disclosure to
CMS contractors or other agents that
perform activities or analyses on CMS’
behalf in connection with authorized
use of the data. The existing specified
purposes are: (1) To determine the risk
adjustment factors used to adjust
payments, as required under
§§ 422.304(a) and (c); (2) to update risk
adjustment models; (3) to calculate
Medicare DSH percentages; (4) to
conduct quality review and
improvement activities; and (5) for
Medicare coverage purposes. We
proposed to restructure paragraph (f) to
identify the purposes for which CMS
may use and release risk adjustment
data and to impose certain conditions
on any release of that data.
We proposed to revise paragraph (f) to
add four purposes, as paragraphs
(f)(1)(vi) through (ix), for which CMS
may use risk adjustment data submitted
by MA organizations: (1) To conduct
evaluations and other analysis to
support the Medicare program
(including demonstrations) and to
support public health initiatives and
other health care-related research; (2) for
activities to support the administration
of the Medicare program; (3) for
activities conducted to support program
integrity; and (4) for purposes permitted
by other laws. We stated our expectation
that, in general, comprehensive risk
adjustment data submitted by MA
organizations, which MA organizations
began submitting to CMS effective CY
2012, will enable CMS to generate
improved data analyses that could
support Medicare program evaluations,
demonstration designs, and CMS’
effective and efficient operational
management of the Medicare program.
Risk adjustment data also could be
useful to support public health
initiatives by governmental entities and
to advance health care-related research
by universities and other research
organizations. We stated that we also
believe that risk adjustment data can
support CMS’ program integrity
activities in the Medicare program and
other Federal health care and related
programs. This general term
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encompasses audits, investigations,
efforts to combat waste, fraud, and
abuse, and any other actions designed to
ensure that the program operates within
its authority including audits,
evaluations, and investigations by the
Office of the Inspector General (OIG) as
well as CMS’ own efforts. In addition,
we stated that risk adjustment data may
be useful in supporting Medicare
administrative activities, such as the
review of the validity of bid and
medical loss ratio data submitted by MA
organizations. Finally, we proposed to
acknowledge that other laws may permit
other uses of risk adjustment data and
that this regulation is not intended to
supersede such other laws.
Regarding the use of risk adjustment
data outside of CMS, we proposed at
§ 422.310(f)(2) that other HHS agencies,
other Federal executive branch agencies,
States, and external entities would only
be able to obtain from CMS and use risk
adjustment data for one or more of the
purposes listed in proposed paragraph
(f)(1). An external entity may be an
individual, group, or organization. In
the proposed rule, we acknowledged
our expectation that other HHS agencies
and other Federal executive branch
agencies may request these data for the
same purposes CMS proposed to use the
data and that we believe such use is
appropriate. Under our proposal, other
agencies that evaluate and analyze the
Medicare program, perform health carerelated research, support public health
initiatives, perform activities in the
administration of the Medicare program,
or conduct activities to support program
integrity in the Medicare program and
other Federal health care and related
programs would be able to access and
use risk adjustment data for these
purposes. States, while conducting
program integrity activities for Medicaid
programs or in the administration of
Medicare-Medicaid demonstrations (for
example, refer to the Web site at:
http://www.cms.gov/MedicareMedicaid-Coordination/Medicare-andMedicaid-Coordination/MedicareMedicaid-Coordination-Office/Financial
AlignmentInitiative/FinancialModelsto
SupportStatesEffortsinCare
Coordination.html), may access and use
risk adjustment data under the proposal.
We stated that we anticipate that
nongovernmental external entities
would generally only gain access to risk
adjustment data under this proposal in
connection with public health
initiatives and health care-related
research, as such external entities
appear to have limited, if any, roles in
the other purposes identified in our
proposal.
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Regarding the use of risk adjustment
data for purposes permitted by other
laws, we noted that, to the extent that
a requestor has separate statutory
authority for requiring CMS disclosure
of data, our proposed provisions would
not limit or supersede such authority.
For example, some Congressional
support agencies may compel release of
data under separate statutory authority,
such as 31 U.S.C. 716, 2 U.S.C. 166(d)(1)
and 601(d), and section 1805 of the Act
(42 U.S.C. 1395b–6), for the purposes of
conducting Congressional oversight,
monitoring, making recommendations
and analysis of the Medicare program.
In addition, the OIG has separate
statutory authority under section 1128J
of the Act (42 U.S.C. 1320a–7k), coupled
with section 6(a) of the Inspector
General Act of 1978 (5 U.S.C. App. 3)
authorizing the OIG to access data as
necessary to perform its responsibilities.
This regulation will not limit that
authority.
Finally, in the proposed rule, we
stated that we are seeking to balance
protection of confidential beneficiary
information and the proprietary
interests of MA organizations with the
need to effectively administer Federal
health care programs and to encourage
research into better ways to provide
health care. We also noted a goal of the
proposal to increase transparency in the
administration of the Medicare program.
We sought public comments on the
proposed uses and release of data and
how else to achieve the necessary
balance. In particular, we solicited
public comment on the extent to which
a commercial purpose underlying a
request for risk adjustment data should
be a factor in evaluating whether the
request is for one of the purposes that
permit a disclosure under this
regulation or if one of the purposes in
paragraph (f)(1) of § 422.310, for which
CMS would disclose data under this
section, should address commercial
uses of the data. The topic of
commercial purposes is discussed later
in section X.B.2. of the preamble of this
final rule as a condition of data release.
Comment: Several commenters
supported CMS’ proposal for expanding
the use and distribution of MA risk
adjustment data to support and
strengthen the Medicare program, as
well as supporting public health
initiatives and health care-related
research. Commenters stated that risk
adjustment data are valuable to
researchers for analyzing health care
trends, public health research
initiatives, and improving management
of the Medicare program. These
commenters expressed support of CMS’
efforts to move toward greater
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transparency through the release of risk
adjustment data. One commenter
believed that greater data transparency
would not only further public health
research but also might serve to further
educate consumer organizations, patient
advocates, and ultimately beneficiaries
about the Medicare program. Generally,
commenters supporting the proposals in
the proposed rule simultaneously
recognized the importance of balancing
these goals with the importance of
protecting the confidentiality of
beneficiary information, and one
commenter agreed with CMS’ proposal
to aggregate data on negotiated rates
paid to providers.
Response: We appreciate the
commenters’ support.
Comment: A number of commenters
generally addressed the proposed uses
of risk adjustment data, characterizing
the listed purposes as too broad and
asking CMS to more specifically and
narrowly define them. One commenter
stated that the purposes, as stated in the
proposed rule, are so broad as to justify
release of these sensitive data for almost
any research activity. Several
commenters were concerned that having
permitted uses of risk adjustment data
for such broad-based purposes leaves a
large gap in the protection of potentially
proprietary information, especially
given the concern about usage of these
data by agencies with limited
knowledge or understanding of the data
and how to make accurate
interpretations.
Response: Section 1853 of the Act
does not limit the uses of risk
adjustment data, and section 1106 of the
Act authorizes the adoption of
regulations governing how CMS will
disclose data obtained in the course of
CMS’ duties. We have reviewed the
proposed uses of risk adjustment data
(which are for analytical purposes), and
we do not believe that they are too
broad. We reiterate that the list of
permissible bases under this regulation
for use and disclosure is exhaustive and
that uses of the risk adjustment data that
are outside of the scope of these nine
categories will not be authorized.
Accordingly, we see no compelling
reason to further limit uses of this data
by eliminating or narrowing any of the
proposed purposes.
Comment: Several commenters
expressed concern about CMS’ use of
risk adjustment data, under the purpose
stated under § 422.310(f)(1)(vii), ‘‘for
activities to support the administration
of the Medicare program.’’ In particular,
commenters requested clarification and
specificity regarding how these data
would be used in the example provided
in the preamble, which was to validate
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the MA organizations’ bid and Medical
Loss Ratio (MLR) data. They argued that
the risk adjustment data could not be
used to inform bid review or MLR
analyses: The data MA organizations
submit to CMS cannot provide a
complete picture of MA organizations’
costs because many organizations have
payment arrangements with providers
that are not fee-for-service based, for
example, capitation arrangements,
bundled pricing, incentive payments,
and multi-year contracting.
Response: In the preamble of the
proposed rule, we identified two
examples of using risk adjustment data
in support of Medicare administrative
activities: Review of the validity of bid
and MLR data submitted by MA
organizations. We anticipate that there
will be other uses in support of
Medicare administrative activities, such
as the development of quality measures.
Regarding the two examples we
provided in the proposed rule, while we
recognize that many MA organizations
have alternative arrangements other
than fee-for-service payments, we
believe that encounter data will be
useful for understanding patterns of
beneficiary utilization and aspects of
MA organizations’ expenditures, as
reported in bid and MLR submissions.
Comment: One commenter asked how
CMS could use risk adjustment data,
under § 422.310(f)(1)(viii), ‘‘for activities
conducted to support program
integrity,’’ particularly when the data
are incomplete due to payment
arrangements with providers that are
not fee-for-service based.
Response: We believe that risk
adjustment data are valuable for
program integrity purposes. For
example, encounter data could be used
to compare MA and FFS billing to
identify aberrant patterns, which may
inform efforts to combat fraud, waste,
and abuse.
Comment: Several commenters
expressed concern about CMS’ use of
risk adjustment data, under
§ 422.310(f)(1)(ix), ‘‘for purposes
permitted by other laws.’’ Commenters
requested CMS to further clarify this
purpose in regulation, for example, to
distinguish Federal laws from State laws
and to specify that this provision only
applies to health care laws. Another
commenter asked how CMS intends to
evaluate the other laws that permit use
or release of these data; for example,
would CMS allow risk adjustment data
to be used to evaluate risk adjustments
for insurance exchanges created under
the Affordable Care Act, and, if so, the
commenter expressed concern that the
data would not provide a valid or
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accurate comparison, given the unique
patient population.
Response: As we noted in the
preamble of the proposed rule, we
believe it is important to acknowledge
that this regulation is not intended to
supersede other laws that permit other
uses of risk adjustment data. For
example, this regulation cannot override
separate statutory authorities that
require CMS disclosure of data to other
Federal agencies. We refer readers, for
example, to 31 U.S.C. 716; 2 U.S.C.
166(d)(1) and 601(d); and section 1805
of the Act (42 U.S.C. 1395b–6).
Regarding the commenters’ request
that we further specify in regulation text
the types of laws to which paragraph
(f)(1)(ix) applies (such as Federal laws
versus State laws), we do not believe
that detailed specification of laws is
necessary because we believe it is clear
that only laws that apply to CMS or to
data held by CMS are within the scope
of the provision. However, in response
to these comments, we are finalizing the
regulation text at § 422.310(f)(1)(ix) to
state ‘‘for purposes authorized by other
applicable laws’’ to emphasize that the
provisions in other laws must be
applicable to CMS and to MA risk
adjustment data.
Finally, we are not sure what the
commenter means by evaluating other
laws other than as a request for
clarification that this provision
encompasses laws that are applicable to
CMS or to data held by CMS. If the
question is about how we would
determine the appropriateness of a
research topic and study design that
involves both Medicare and another
program enacted under other laws, we
do not believe we can comment on the
appropriateness of specific designs in
this preamble. The approval of any
research study requesting use of MA
risk adjustment data would be handled
through the existing process CMS uses
for data sharing, as described elsewhere
in this preamble in the discussion of
paragraph (f)(2)(ii) of § 422.310.
Comment: One commenter stated that
it is not appropriate for external entities
to receive the data for uses that are
exclusively within CMS’ authority—
specifically, that CMS should not
release data to entities outside of CMS
for the determination of risk adjustment
factors, updating risk adjustment
models, the calculation of Medicare
DHS percentages, or Medicare coverage
purposes (§ 422.310(f)(1)(i) and (f)(1)(ii)
or (f)(1)(v)). Another commenter asked
CMS to expressly limit, in regulatory
text, the bases upon which
nongovernmental external entities
receive the data to one purpose: Support
of public health initiatives and other
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health care-related research.
Furthermore, one commenter stated that
neither States nor external entities
should receive the data to conduct
quality review and improvement
activities, for activities to support the
administration of the Medicare program,
or for activities conducted to support
program integrity (§ 422.310(f)(1)(iv),
(f)(1)(vii), or (f)(1)(viii)) because these
are purposes exclusive to the Federal
Medicare program. Another commenter
stated that is it is unclear what uses
States would have for these data, given
the Federal administration of the MA
program and the difference in
populations enrolled in MA plans and
commercial health insurance coverage,
for which States may be administering
risk adjustment or other programs, or
Medicaid coverage, for which a State
Medicaid agency would administer
benefits, concluding that States should
not receive the MA risk adjustment data.
Response: We have reviewed our
proposed purposes and believe that
there may be cases in which researchers,
whether external entities or other
governmental agencies, might have
well-designed research projects that
meet CMS’ stringent requirements,
under our longstanding data sharing
procedures, thus warranting use of the
data for an approved project. For
example, other Federal governmental
agencies may want to use the data to
conduct research on new developments
in risk adjustment models or an external
entity may want to propose research on
the design of quality measures that
could apply to beneficiaries in both the
MA and FFS programs. Both of these
examples illustrate the point that greater
data transparency could improve
administration of the Medicare program
and improve public health. As noted in
the preamble of the proposed rule, we
also believe that risk adjustment data
can support program integrity activities
in the Medicare program and in other
Federal health care and related
programs funded in whole or in part by
Federal funds.
Furthermore, we believe that our
approach to determining whether to
disclose risk adjustment data, which
incorporates the Medicare Part A/B and
Part D minimum necessary data policy,
with additional restrictions to protect
beneficiary privacy and commercially
sensitive information of MA
organizations, strikes an appropriate
balance between the significant benefits
of furthering knowledge through health
care research and concerns regarding
the release of risk adjustment data.
Finally, we believe this process has
sufficient protections to ensure
compliance with the applicable laws
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and guard against the potential misuse
of data. External entities requesting
access to risk adjustment data will have
to enter into a Data Use Agreement with
us that includes provisions protecting
the data from improper release.
Comment: One commenter asked
CMS to further define what CMS means
by external entities in paragraphs (f)(1)
and (f)(2) of § 422.310.
Response: An external entity may be
an individual, group, or organization
that is not a Federal executive -branch
agency or a State.
After consideration of the public
comments we received, we are
finalizing, as proposed, the four
additional permitted uses of risk
adjustment data at § 422.310(f)(1)(vi)
through (f)(1)(ix), with the exception
that we are changing the language for
the purpose under paragraph (f)(1)(ix) to
read: ‘‘For purposes authorized by other
applicable laws.’’
2. Conditions for CMS Release of Data
The existing regulations at § 422.310
do not specify conditions for release by
CMS of risk adjustment data that are
submitted by MA organizations to CMS.
In the FY 2015 IPPS/LTCH PPS
proposed rule, we proposed to add a
paragraph (2) to § 422.310(f) to address
CMS’ release of such data to non-CMS
entities. First, as discussed above in
connection with proposed paragraph
(f)(1), our proposal was limited to the
risk adjustment data described in
§ 422.310(a) through (d) and did not
include the medical records and other
data collected separately under
paragraph (e) for the purpose of risk
adjustment data validation (RADV)
audits. We stated that we did not intend
for the proposed revision to § 422.310(f)
to authorize any additional use or
release of the data described in
paragraph (e).
Second, we proposed that CMS would
release only the minimum data that
CMS determines is necessary to fulfill
the analytical or operational goal for a
particular project. In other words, our
proposal provided that CMS could
determine that the appropriate data
release for an approved research project
is a subset of encounter data records
requested to conduct the proposed
inquiry (instead of all encounter data in
CMS’ systems for all years and provider
types) or is a subset of the abbreviated
data requested.
Third, we proposed that CMS may
release data under this authority to
other HHS agencies, other Federal
executive branch agencies, States, and
external entities, only for purposes
identified in paragraph (f)(1) (discussed
above) and subject to a number of
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additional limitations: (i) Applicable
Federal laws; (ii) CMS data sharing
procedures; (iii) protection of
beneficiary identifier elements and
beneficiary confidentiality, including:
(A) a prohibition against public
disclosure of beneficiary identifying
information; (B) release of beneficiary
identifying information to other HHS
agencies, other Federal executive branch
agencies, Congressional support
agencies, and States only when such
information is needed to accomplish the
purpose(s) of the disclosure; and (C)
release of beneficiary identifying
information to external entities only to
the extent needed to link datasets; and
(iv) the aggregation of payment data to
protect commercially sensitive data.
These limitations were included at
proposed paragraphs (f)(2)(i) through
(f)(2)(iv), respectively, of § 422.310. We
solicited public comment on other
conditions or limitations on the release
of this data that will help maintain a
balance between protecting confidential
and proprietary information with the
need to effectively administer Federal
health care programs and to encourage
research into better ways to provide
health care. We also solicited public
comments on the extent to which a
commercial purpose underlying a
request for risk adjustment data should
be a factor in evaluating whether the
request is for one of the purposes that
permit a disclosure under this
regulation or if one of the purposes in
paragraph (f)(1) of § 422.310, for which
CMS would disclose data under this
section, should address commercial
uses of the data.
Under the provisions at proposed
§ 422.310(f)(2)(iv), we would aggregate
payment data to protect commercially
sensitive information. We stated our
belief that release of payment data at the
level of the encounter record might
reveal proprietary negotiated payment
rates between MA plans and providers.
Given the commercially sensitive nature
of this information, we did not propose
to release payment data at the level of
the encounter record without taking
steps to protect the commercially
sensitive information. In the interest of
providing as much transparency as
possible, while at the same time
protecting proprietary information
related to the payments made by MA
organizations to health care providers,
we proposed to authorize release of
aggregate payment information. For
example, we could aggregate the
payment data by service category, by
plan, by contract, or across contracts.
We sought public comments on these or
other approaches to aggregating
payment data for release and whether
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the specified options are sufficiently
aggregated to protect commercially
sensitive information. In addition, we
sought public comment on our
conclusion that releasing payment rates
at the level of the encounter data record
would reveal proprietary negotiated
payment rates. Specifically, we
requested public comment on what
strategies might be used under which
payment data could be released while
protecting commercially sensitive
information.
Comment: A number of commenters
argued that no risk adjustment data
should be released to protect the
proprietary nature of encounter data,
including data on payments, diagnoses,
National Provider Identifiers (NPIs),
among other data fields. A few
commenters used ‘‘payment data’’ when
referring to terms such as ‘‘service
categories’’ and ‘‘diagnoses.’’
Response: In reviewing the comments,
we observed that several commenters
distinguished payment data from other
elements of encounter data, while other
commenters did not make this
distinction and instead used the term
‘‘risk adjustment data’’ or ‘‘encounter
data’’ when arguing that all data should
be aggregated. Therefore, our response
here is intended make clearer the
distinction between payment data and
other data elements.
In the proposed rule, we stated at
§ 422.310(f)(2)(iii) that beneficiary
identifier elements would not be
disclosed to protect beneficiary
confidentiality, and we stated at
§ 422.310(f)(2)(iv) that payment data
would be aggregated as necessary to
protect commercially sensitive data. Our
proposed rule thus implied that data
outside of these two protected categories
would be released without redaction or
aggregation. In light of some comments
we received, we are concerned that the
regulation text should be more detailed
in describing the risk adjustment data
that does not fall into the two protected
categories at § 422.310 (f)(2)(iii) and
(f)(2)(iv). Therefore, we are finalizing
this rule with two changes to the
regulation text. First, to clarify that the
term ‘‘payment data’’ means the dollar
amounts reported on an associated
encounter data record, we are finalizing
§ 422.310(f)(2)(iv) to use the more
specific phrase ‘‘dollar amounts
reported for the associated encounter’’
instead of ‘‘payment data.’’ Therefore, in
this final rule, we have revised
§ 422.310(f)(2)(iv) to specify risk
adjustment data subject to the
aggregation of dollar amounts reported
for the associated encounter to protect
commercially sensitive data. (We note
that dollar amounts are only reported in
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encounter data records and not in the
other type of risk adjustment data
referred to as abbreviated (RAPS) data.)
This rule does not address the release
of data that relates to how much CMS
pays MA organizations. In the final rule,
CMS–4144–F, published in the Federal
Register on April 15, 2011 (76 FR
21432), we adopted regulations on that
topic.
Second, we are clarifying that risk
adjustment data elements that do not
fall into either of the two protected
categories (beneficiary identifiers and
dollar amounts) are subject to release
without redaction or aggregation,
respectively. Specifically, we are adding
paragraph (f)(2)(v) to clarify that risk
adjustment data other than data
described in paragraphs (f)(2)(iii) and
(f)(2)(iv) of the section will be released
without the redaction or aggregation
described in paragraphs (f)(2)(iii) and
(f)(2)(iv), respectively. (We note that we
use the term ‘‘redaction’’ to include
deletion, encryption, and obscuring or
changing the form of something for legal
or security purposes.) We discuss in
more detail below our analysis of this
new language.
Comment: A number of commenters
responded to the request for public
comments on the release of payment
data and possible ways they could be
aggregated in order to protect
commercially sensitive information.
Many commenters thanked CMS for the
opportunity to comment on this issue
and expressed gratitude for CMS’
concern to protect proprietary
information on prices negotiated
between MA organizations and health
care providers.
Response: We appreciate the
commenters’ support.
Comment: A number of commenters
addressed the aggregation of risk
adjustment payment data for release
under this rule. Several commenters
asked that CMS only release payment
data that have been aggregated to the
national or regional level. Some
commenters were concerned that the
release of such data, even in an
aggregated form, has the potential to
provide detailed insight about aspects of
MA plan experience under the MA
program (for example, utilization and
cost experience) that are fundamental to
bidding and benefit design decisions
and, as a result, release of these data
would undermine the integrity of the
bidding process and the competitive
structure of the MA marketplace, both
in terms of plan competition for
enrollees and competitive negotiations
with providers regarding payments
rates. One commenter stated that public
transparency of negotiated rates could
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actually inflate prices by discouraging
private negotiations that can result in
lower prices for some buyers. One
commenter who requested regional
aggregation expressed concern that if
CMS discloses payment data at a lower
level of aggregation, it may be easy for
competitors to identify sensitive
business information on smaller plans
and on plans serving targeted
populations or providing specific
services, such as SNP plans, which
would undermine their market position.
Another commenter requested that CMS
not release payment data at all (at the
encounter level or aggregated). Several
other commenters asked that aggregated
payment data only be released to
government agencies and not to external
entities. One commenter made the
general request that CMS aggregate the
data in a manner and at a level that
protect the confidentiality of
information and that take into account
that an organization in some instances
may be the principal MA plan in a
particular geographic region. Some
commenters argued that using
encounter data fields such as contract,
plan, and provider identifiers as
categories by which to aggregate
payment data could still lead to
exposure of sensitive business strategies
(including details about exclusive
contracts, pricing, incentive programs,
and other information that would
disadvantage identifiable plans).
A number of commenters provided
suggestions for approaches to
aggregation of payment data. One
commenter suggested releasing national
per member per month averages, which
would protect negotiated rates while
still allowing comparison with other
areas of Medicare spending. Another
commenter suggested aggregating risk
adjustment payment data at a county
level in areas where there are three or
more MA plans, but in areas with two
or less MA plans aggregation should be
done across counties. In addition, this
commenter suggested that CMS identify
when area-specific aggregation
approaches are needed, such as where a
single MA plan dominates a market and
could be identifiable even where there
are multiple plans within one or across
several counties. Several commenters
suggested releasing only aggregated data
at either service level categories in the
MA bid or at the level of HCCs in the
Part C risk adjustment model. Finally,
one commenter suggested that CMS
make available average pricing per
relative value unit (RVU) for given
geographies or patient demographic
categories, which could provide helpful
information regarding payment levels
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without exposing commercially
sensitive negotiated rates.
Response: We appreciate all the
responses to our request for comment on
ways to aggregate risk adjustment
payment data, and we will take these
ideas and concerns into consideration
when determining the appropriate level
of aggregation of the dollar amounts
associated with each encounter. We
understand the commenters’ concerns
about the proprietary nature of the
payment data and believe that this rule,
as finalized, provides the flexibility to
protect commercially sensitive data as
necessary. It is important to note that, in
some instances, the payment data may
not require aggregation to protect
commercial sensitivity; for example, a
request could be made for data that are
over 15 years old that is not relevant to
current payment amounts. In this case,
we would need to assess the unique
circumstance of the request and
determine if the data were or were not
commercially sensitive, and we may
decide after consideration to release the
data at the encounter level because the
need to protect commercially sensitive
data is not implicated.
We note that we do not agree that
only payment data aggregated at the
national level should ever be disclosed
for any approved research project
because such a narrow approach would
eliminate too many research questions
appropriate to the permitted uses of the
data under § 422.310(f)(1) and would
not account for situations where less
than a national level of aggregation is
sufficient to protect the commercial
interests of the applicable MA
organization(s). In addition, we are not
convinced that the release of aggregated
payment data would have the negative
impact on competition and the integrity
of the MA bidding process that is
described by a number of commenters.
CMS expects to aggregate the dollar
amounts on encounter data records as
necessary to prevent researchers from
determining payment amounts to
individual providers, and in this way
we would protect competition. As we
noted in the April 15, 2011 final rule,
CMS–4144–F (76 FR 21516), the MA
program is not competitive in the way
that term is normally understood.
Although MA organizations do compete
for members, primarily through the plan
benefits offered and the cost (member
cost sharing and premium) of those
benefits, they do not directly compete
for the payments that CMS makes.
Rather, we approve all sustainable bids
that are otherwise qualified without
preference for the lowest bidder. The
fact that MA-eligible Medicare
beneficiaries can, generally, select from
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a number of plans offered in their
county of residence is evidence that
competition is robust.
Comment: Several commenters were
concerned with the release and use of
the payment data included in risk
adjustment data, especially to external
entities, even if the data are aggregated
for release. These commenters argued
that the MA encounter data are
incomplete due to the nature of MA
organizations’ financial arrangements
with providers and it is inappropriate to
use this data to draw conclusions that
may inform policy or program
management. Specifically, these
commenters noted that encounter data
cannot provide a complete picture of
MA organizations’ costs because many
MA organizations have payment
arrangements with providers that are
not fee-for-service based and are instead
based on capitation arrangements (for
which $0 is reported on an encounter
record), bundled pricing, incentive
payments, and multi-year contracting.
One commenter noted that, for some
MA plans, most outpatient services are
capitated, except for some referrals and
emergency services, and nonbenefit
costs are not reflected in encounter data,
rendering financial analysis and
comparisons for these plans
inappropriate and impractical. Another
commenter also recommended that
information about the limitations of the
data should accompany any release of
risk adjustment data, to reduce
misinterpretations of the data by the end
users and to prevent policy
development based on inaccurate
analyses of risk adjustment data.
Response: We understand the
commenters’ concerns that risk
adjustment data may not provide a
complete picture of the costs associated
with care of MA plan enrollees due to
the alternative payment arrangements.
However, we believe that broader
release of risk adjustment data to
external entities can increase the
positive contributions researchers make
to the evaluation and function of the
MA program and improve the efficiency
of the program and the clinical care of
its beneficiaries, which is in the interest
of public health. Specifically, it is in the
interest of the public health to share this
information with entities outside of
CMS, as the work of these entities will
assist CMS in evaluating the MA
program and assessing related policies
to improve the clinical care of
beneficiaries. In addition, broader
release of the data also has the potential
to assist in addressing public health
issues of the population in general
beyond just Medicare beneficiaries.
Regarding the suggestion to provide
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approved requestors with information
on the limitations of encounter data, we
believe this is a good suggestion and
will consider what disclaimers are
appropriate to accomplish this.
Comment: A number of commenters
also expressed concern about the
proprietary nature of other data
elements in the encounter record in
addition to payment data, stating that
releasing plan-specific and providerspecific data such as diagnoses, service
categories, Current Procedural
Terminology codes (CPTs), and NPIs has
the potential to provide detailed insight
about aspects of MA plan experience
under the MA program that are
fundamental to bidding and benefit
design decisions and could undermine
the competitive structure of the health
care market in many areas. In contrast,
one commenter agreed that proprietary
payment data should be aggregated to
protect proprietary information on
negotiated prices, but further
emphasized that all other encounter
claims data should be widely available
to commercial entities—including
providers, medical societies, ERISA
plans and insurers—for the purposes of
improving the value of health care to the
consumer (subject to privacy protections
under HIPAA and other statutes).
Response: In the proposed rule, we
only raised the issue of commercial
sensitivity with regard to payment data.
As noted in an earlier response, we are
clarifying that the term ‘‘payment data’’
means the dollar amounts reported on
an associated encounter data record,
and that risk adjustment data elements
that do not fall into either of the two
protected categories of beneficiary
identifiers and dollar amounts are
subject to release without redaction or
aggregation, respectively. We are not
persuaded by the argument that data
elements aside from beneficiary
identifiers and dollar amounts require
protection because they are relevant to
competition that MA organizations face.
We are mirroring the effort within CMS
to increase transparency through
broadened release of Parts A and B data.
We routinely make Medicare FFS claim
data available to interested parties for
research, and these data include
information on procedure codes and
diagnosis codes. Furthermore, on April
9, 2014, CMS released detailed service
use data on nearly 1 million physicians
and health care providers. Thus, as
clarified in § 422.310(f)(2)(v), CMS will
release risk adjustment data—other than
beneficiary identifier data described in
§ 422.310(f)(2)(iii) and dollar amounts
reported for associated encounter
described in § 422.310(f)(2)(iv)—without
the redaction or aggregation described
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in paragraphs (f)(2)(iii) and (f)(2)(iv),
respectively.
Comment: One commenter was
concerned that encounter data from
Medicare-Medicaid Plan (MMP)
demonstrations would be used for
analyses, such as OIG studies and
validation of bids and medical loss
ratios, and believed this would be a
mistake because these are new plans
and there remain many operational
questions about submission of this
encounter data, including coordinating
with States and processing and
submitting claims in a manner seamless
to both the member and provider.
Response: Our policy on the use and
release of risk adjustment data in this
final rule will apply the same way to the
Medicare risk adjustment data of MMP
demonstrations as it does to the risk
adjustment data of MA organizations.
We appreciate the comment on the
important distinctions in the encounter
data collection process for MMP data
compared to MA data, and we will
consider the unique aspects of MMP
data in their ultimate application.
Comment: Several commenters asked
CMS to provide a definition of
commercially sensitive.
Response: There is extensive case law
under the Trade Secrets Act (18 U.S.C.
1905) and FOIA Exemption 4 (5 U.S.C.
552(b)(4)) that addresses the concept of
commercially sensitive, and we do not
believe this is an appropriate venue for
summarizing the case law. We also
discuss the relationship of this
regulation to the Trade Secrets Act and
FOIA below.
We add that two commenters
appeared to blur the concepts of
commercially sensitive and commercial
purpose; therefore, we are clarifying
here that these are unrelated concepts
for the purpose of this rulemaking.
Issues around releasing data for a
commercial purpose pertain to CMS’
data sharing procedures and are
discussed in a separate comment and
response below.
Comment: Several commenters
asserted that even risk adjustment data
aggregated up to the level of contract or
parent organization (for example,
service category and diagnosis data)
could be considered to meet the
elements required for application of the
exemption under FOIA Exemption 4 (5
U.S.C. 552(b)(4)). The commenters
stated that risk adjustment data
submitted by an MA organization are
protected by 45 CFR 5.65(b)(1) because:
(1) It is supplied by someone outside the
government having a financial interest
in the information, namely the MA
organization providing the data; (2) it is
‘‘confidential commercial or financial
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information’’ and proprietary and
confidential; and (3) disclosure of each
MA organization’s service category and/
or diagnosis data could result in
competitive harm for the MA
organization.
Response: In response to comments
arguing that the Trade Secrets Act (18
U.S.C. 1905) or FOIA exemptions
prohibit release of this information on
the basis that the information is the
confidential commercial information of
the MA organization, we do not believe
that the release of the risk adjustment
data under our final rule will violate
either the Trade Secrets Act or FOIA.
With respect to the risk adjustment data
described in paragraph
§ 422.310(f)(2)(iv), the regulation
explicitly provides for aggregation at the
level necessary to protect commercially
sensitive data. Under this regulation,
when CMS aggregates, as necessary, the
dollar amounts associated with the risk
adjustment data—whether at a regional,
contract or other level—any detailed
(encounter-level) data protected by the
Trade Secret Act or FOIA Exemption 4
will be withheld from disclosure. With
respect to the risk adjustment data
described at § 422.310(f)(2)(v), we are
not persuaded that data elements aside
from beneficiary identifiers and dollar
amounts require protection and,
therefore, are adopting a regulation that
directs disclosure of such information
(assuming all other conditions in this
rule are met to obtain such a release)
without redaction or aggregation.
Section 1106(a) of the Act (42 U.S.C.
1306(a)) provides authority to enact
regulations that would enable the
agency to release information filed with
this agency. (See Parkridge Hospital,
Inc. v. Califano, 625 F.2d 719, 724–25
(6th Cir. 1980).) We have engaged in
notice-and-comment rulemaking to
promulgate regulations to enable the
disclosure of the data described at
§ 422.310(f)(2)(v). The Trade Secrets Act
permits government officials to release
otherwise confidential information
when authorized by law. A substantive
regulation issued following notice-andcomment rulemaking, such as this one,
provides the authorization of law
required by the Trade Secrets Act.
Because the Trade Secrets Act would
allow disclosure, Exemption 4 (5 U.S.C.
552(b)(4)), which is as coextensive with
the Trade Secrets Act, would also not
preclude disclosure with respect to the
information that would be released
under this final rule. We recognize that
this conclusion would not apply to the
dollar amounts data described in
paragraph § 422.310(f)(2)(iv).
Comment: Several commenters stated
that releasing payment data may trigger
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antitrust concerns within both the
health plan and provider communities,
and cited the August 1996 ‘‘Statements
of Antitrust Enforcement Policy’’
(http://www.ftc.gov/sites/default/files/
documents/reports/revised-federaltrade-commission-justice-departmentpolicy-statements-health-care-antritrust/
hlth3s.pdf), where the Federal Trade
Commission and the Department of
Justice laid out several conditions for an
antitrust safety zone (pages 44 and 45)
related to the collective release of
negotiated provider payment rates,
noting that there would be instances
where negotiated rates possibly could be
discerned, such as areas with a
dominant private payer.
Response: We are not clear what the
‘‘collective release of negotiated
provider payment rates’’ has to do with
this rulemaking. We understand the
term ‘‘collective’’ in this context to
mean more than one actor releasing its
own specific rates. When CMS approves
a release of aggregated payment data
under this rule, that release is
performed by one actor and not a
collective of some sort. Further, our
proposed policy of aggregating payment
data as necessary will protect the
proprietary nature of the payment data.
In cases where there is a dominant
private payer in a certain geographic
area, we will take this into account
when determining the appropriate level
of aggregation. We understand the
Federal Trade Commission and the
Department of Justice guidance to
address when health care providers act
in concert to share or release their
payment terms and what circumstances
those enforcement agencies believe
would ameliorate any collusive intent in
such actions. However, this rulemaking
pertains to a single actor (CMS), not to
a collective action; specifically, CMS
may release risk adjustment data for
approved research projects, and these
are data that were submitted to CMS by
MA organizations on the basis of
requirements in statute and regulation
regarding risk adjustment data
collection in the MA program. The
underlying negotiation of the payment
terms, such as whether the health care
providers collectively negotiated them
and the respective negotiating position
of the MA organizations and the parties,
are not part of the information
submitted to CMS or disclosed by CMS
under § 422.310.
Comment: A few commenters stated
that payment data should not be
collected by CMS as part of encounter
data and should not be used by CMS or
released outside of CMS because such
data are not relevant to risk adjustment.
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Response: We believe that payment
data are useful for all of the purposes set
forth in this regulation, including, but
not limited to, the purpose of riskadjusting payments to MA
organizations. Therefore, we are
finalizing in this rule the release of
aggregated payment data as necessary to
protect commercially sensitive data,
subject to all the conditions established
in this rule.
Comment: A number of commenters
raised issues about the timing for release
of risk adjustment data under the rule.
Some commenters supported release of
risk adjustment data to improve
transparency; one commenter stated that
there is an urgent need for more reliable
consumer comparison shopping tools
due to extreme provider price variations
in local healthcare markets, and
Medicare data could be valuable for this
purpose. A few commenters requested
that CMS delay release of encounter
data to any governmental agency
outside of CMS and/or delay release to
external entities.
A number of other commenters
presented requests for two different
types of delay in release of encounter
data: (1) A routine delay for all data
releases; and (2) a delay applicable only
to the first few years of encounter data
collected by CMS. First, commenters
requested that CMS implement a routine
lag in release of encounter data. Some
commenters argued that, before release
of the data for any given year, CMS
should ensure that the data are complete
and accurate, for example by validating
and identifying any limitations in the
data. Other commenters suggested
timeframes of between 4 and 6 years for
such routine lags, arguing that CMS
should allow an established number of
years pass before release because
utilization, pricing, and similar data
elements remain sensitive for a number
of years (and could be used for trending
competitor’s patterns), and many MA
organizations have multi-year contracts
with their providers (5 or more years),
making data even a few years old still
commercially sensitive in a
marketplace.
Second, a few commenters requested
that CMS never release encounter data
that was submitted in the initial years
of required submission (in particular,
that data for 2012 dates of service—the
first year of submission—never be
released). Alternatively, other
commenters suggested that CMS lag
release of data from the initial years of
submission because: (1) Implementation
of encounter data collection via CMS’
encounter Data System (EDS) has
required frequent and ongoing systems
development and modifications on the
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part of the agency and MA organizations
since the initiative began in January
2012, which has resulted in challenges
in submission and acceptance of
encounter data; and (2) the ICD–10 code
set transition likely will result in some
instances in which encounter data are
incomplete or inaccurate for the 2015
data year, as providers adjust to the
coding differences.
Response: Regarding commenters’
requests that CMS implement both
routine multi-year lags in release of
encounter data and targeted delays in
the release of encounter data from the
initial years of submission, we believe
that such delays in release to any
agencies and entities described in this
rule would defeat the goals of improving
transparency in the Medicare program
and allowing researchers to use data in
a timely manner to improve the
administration of and advance policy
research on the Medicare program. Also,
we refer readers to our response
elsewhere in this preamble regarding
the impact of such releases on MA
bidding.
However, CMS recognizes that there
are circumstances unique to the process
for collecting risk adjustment data that
should be addressed in the timing of
releases of such data. CMS allows 13
months after the end of a risk
adjustment 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,
and ensures that the risk adjustment
data is complete and accurate. We do
not plan to regularly release risk
adjustment data for a data collection
year prior to the completion of this
period because of the possibility that the
data may contain errors or be
incomplete for the applicable year.
Therefore, to clarify our processes for
the purposes of this rule, we have added
paragraph (f)(3) to § 422.310, which
states that risk adjustment data will not
be available for release under paragraph
(f) unless:
• The risk adjustment reconciliation
for the applicable payment year has
been completed;
• CMS determines that the data
release is necessary under paragraph
(f)(1)(vi) for emergency preparedness
purposes before reconciliation; or
• CMS determines that extraordinary
circumstances exist to release the data
before reconciliation.
An example of an extraordinary
circumstance would be a request by the
Department of Justice for data for a qui
tam case under the False Claims Act.
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We believe these restrictions on the
timing of data releases will address
some of the commenters’ concerns.
Comment: A few commenters
suggested that CMS not release
encounter data until CMS uses it for
risk-adjusted payment purposes in place
of RAPS data. One commenter stated
that no data should be released until
MA organizations are provided with the
MAO–004 encounter data reports
because these reports will allow the MA
organizations to validate that encounter
data are complete for risk adjustment
purposes.
Response: First, we do not agree with
the commenters that CMS’ transition
from the use of RAPS data to encounter
data for risk-adjusted payment should
be a prerequisite for releasing encounter
data for the purposes under this final
rule. The data are valuable for other
purposes besides calibration of the risk
adjustment model, as listed in
paragraph (f)(1) of § 422.310, and the
release of the data is important for
transparency. Second, the MAO–004
report, also known as a filtering report,
will contain detailed information on
which diagnoses are eligible for risk
adjustment purposes and will be part of
the process that CMS will undertake for
risk score calculation. The intent of this
report is to assist MA organizations and
other encounter data submitters to
understand risk score calculation; it is
not intended to support validation by
MA organizations of the encounters that
they have submitted to CMS. Therefore,
we do not believe that these filtering
reports should be a prerequisite to
releasing encounter data associated with
any payment year.
Comment: A number of commenters
responded to our request for public
comment on releasing risk adjustment
data for commercial purposes. Many
commenters asked CMS not to release
data to external entities for commercial
purposes. Commenters also noted that
CMS does not currently release Part A,
Part B, or Part D data for commercial
purposes, and argued that CMS should
have a consistent policy for release of
data for commercial purposes across all
Medicare programs, including the Part C
Medicare Advantage program; these
commenters cited CMS’ discussion
about such a consistent policy in a final
rule, CMS–4159–F, published on May
23, 2014 (79 FR 29844).
In contrast, one commenter supported
the use of risk adjustment data by
commercial entities to conduct research
when the research is focused on
legislative, regulatory, or policy
development aimed at improving the
Medicare program, including projects
focused on patterns of care of MA
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enrollees. This commenter suggested
that if CMS moves to define commercial
purpose, it should do so narrowly so
that, for example, firms requesting data
releases under the rule for research on
regulatory or policy issues for their
clients would not have this type of work
construed as commercial. Another
commenter stated that encounter data
should be widely available to
commercial entities, including
providers, medical societies, ERISA
plans, and insurers, for purposes of
improving the value of health care to the
consumer. This commenter encouraged
CMS to put providers and insurers on
an equal footing with each other, with
respect to sharing of public data on
safety, quality, volume, and intensity of
care. Finally, a number of commenters
requested that CMS define the term
‘‘commercial purposes.’’
Response: We appreciate all of the
responses to our request for public
comments on releasing risk adjustment
data for commercial purposes. We
recognize that some commenters would
like risk adjustment data to be available
for commercial purposes, while others
are concerned about external entities
having risk adjustment data releases
approved for projects that have
commercial purposes and/or for
researchers employed by commercial
entities. We consider the issue of
whether or not a request for data has a
commercial purpose to be an issue that
would be addressed under CMS’ data
sharing policies, which are referenced
in § 422.310(f)(2)(ii) of this rule.
Regarding commercial purpose, we refer
commenters to page 30674 of the
preamble of the final rule, CMS–4119–
F, published on May 28, 2008 (73 FR
30664), where, for example, there is
discussion of research whose primary
purpose is to contribute to general
knowledge in the public domain.
We agree with commenters that it is
appropriate to have consistent policies
for the release of data across the original
Medicare (Parts A and B) program, the
Part D prescription drug program, and
the Part C Medicare Advantage program.
Although we are not changing CMS’
existing policy against releasing data for
commercial purposes at this time, we
note that, in the event the policy
regarding the release of Parts A, B, and
D data for commercial purposes were to
change, we also would revise our Part
C risk adjustment data sharing policies
to be consistent with that change.
Therefore, if a request for the data under
the current policy is for one of the
purposes outlined in paragraph (f)(1)(i)
through (ix) and also for a commercial
purpose, we would consider the
commercial purpose as a barrier to the
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release in the same way here as in the
other Medicare programs.
Comment: A few commenters
expressed concern about how CMS will
evaluate requests for risk adjustment
data release. One commenter asked CMS
to keep in mind that broad disclosures
of data could lead to creation of nonFederal databases, which could
negatively affect the privacy and
security of beneficiary-specific data.
Another commenter cautioned that, in
determining what is a minimum dataset
necessary for a particular data request,
CMS must not approve release of a
subset of data or variables that omits
critical data, resulting in an analysis
with false assumptions about MA
encounters. In addition, other
commenters were particularly
concerned about requests by external
entities. One commenter stated that, in
evaluating requests from commercial
entities, CMS should consider
relationships between the corporate and
research arms of the commercial entity,
and CMS should not assume that data
released for research purposes will not
be made available to related commercial
entities unless specific prohibitions are
put in place, or that published research
findings will not be used for commercial
purposes. Another commenter also
expressed concern that external entities
may use data released to them for a
CMS-approved research project for
purposes that go beyond the initial
intent of the request.
Response: We will release only the
minimum data necessary for a particular
study design that CMS has determined
meets a use (analytical purpose)
finalized in this final rule and if the
research project also complies with all
other conditions established in this final
rule. We believe that CMS’ longstanding
data sharing procedures (a condition for
data release referenced at
§ 422.310(f)(2)(ii)) will allow CMS to
determine the appropriateness of a
requested data set and will limit
inappropriate use of encounter data.
CMS considers all data requests to
ensure that the use of the data will not
exploit or negatively impact Medicare
beneficiaries.
In order for a researcher to gain access
to CMS data, the researcher must
complete an application process,
including submission of a research
protocol. The researcher must receive
approval of the protocol from CMS. In
addition, all requestors are required to
sign a Data Use Agreement with the
agency that limits the use of the data to
only the approved purposes. The Data
Use Agreements that CMS uses have
and will continue to have enforcement
mechanisms. For example, one of CMS’
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Data Use Agreement forms states: ‘‘The
User acknowledges that penalties under
§ 1106(a) of the Social Security Act [42
U.S.C. 1306(a)], including possible
imprisonment, may apply with respect
to any disclosure of information in the
files(s) that is inconsistent with the
terms of the Agreement. The User
further acknowledges that criminal
penalties under the Privacy Act [5
U.S.C. 552a(i)(3)] apply if it is
determined that the User, or any
individual employed or affiliated
therewith, knowingly and willfully
obtained the file(s) under false
pretenses. The User also acknowledges
that criminal penalties may be imposed
under 18 U.S.C. 641.’’
We believe these restrictions are
necessary in order to ensure that data
are only requested in compliance with
the requirements of the regulations and
CMS data sharing procedures, and that
data shared by CMS are appropriately
protected and are not reused or
redisclosed without the necessary
approval. Under our data sharing
policies, we generally require the
requester not to disclose the data to
third parties without specific written
authorization from us. CMS expects that
researchers who receive a CMSapproved release of risk adjustment data
will abide by the law, policies, and
procedures surrounding use of that data,
particularly where the regulation
conditions release of the data on CMS
data procedures being followed.
Comment: A few commenters
requested that, when CMS is making a
determination about whether to release
risk adjustment data to a requestor, CMS
reach out to MA organizations to
consult on whether to approve the
request. One commenter stated that
plans would appreciate the opportunity
to advise the agency of any specific
concerns they have with respect to
release of data for certain purposes and
to certain entities, while another
commenter asked CMS to allow plans to
deny certain requests for data. Finally,
a few commenters stated that whenever
a stakeholder’s data is part of an
approved release, that stakeholder
should have access to the entire data
release for purposes of verification,
equity, and accuracy.
Response: Under this rulemaking, we
will use CMS existing data sharing
procedures (in accordance with
§ 422.310(f)(2)(ii)) for responding to
requests for risk adjustment data. It is
not part of CMS’ data sharing
procedures to contact a submitter of
data (for example, a FFS provider,
supplier, a Part D sponsor, or an MA
organization) whenever a researcher
requests or receives approval for access
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to a data set for a study that includes
some of that particular submitter’s data
(unless the request is made under
FOIA). Nor, is it part of the CMS’ data
sharing procedures to allow an MA
organization or another entity to have
approval rights in regards to the release
of data. In addition, this rule itself sets
the standards under which data will be
released. Therefore, CMS will not be
notifying MA organizations or their
contracted providers when data requests
that may include their risk adjustment
data are received or approved.
Finally, CMS could not simply release
a risk adjustment data set to a
stakeholder that had not received
approval through CMS data sharing
procedures simply on the grounds that
the stakeholder’s risk adjustment data
submissions to CMS comprise one part
of a data file released to a researcher for
an approved study.
One of the best ways MA
organizations can address their concerns
about the accuracy of risk adjustment
data available for release is to continue
working with CMS to improve the
quality of risk adjustment data they
submit to CMS.
Comment: One commenter opposed
the release of beneficiary identifying
information to external entities,
including other HHS agencies, other
Federal Executive Branch agencies,
Congressional support agencies, and
States. Another commenter encouraged
CMS to establish and impose
appropriate penalties for any breach of
privacy related to beneficiary
identifiable information by external
entities.
Response: We understand the need to
protect beneficiary identifying
information. As finalized in
§ 422.310(f)(2)(iii) of the regulation,
CMS release of risk adjustment data is
subject to the protection of beneficiary
identifier elements and beneficiary
confidentiality, including—
• A prohibition against public
disclosure of beneficiary identifying
information;
• Release of beneficiary identifying
information to other HHS agencies,
other Federal executive branch agencies,
and States only when such information
is needed; and
• Release of beneficiary identifying
information to external entities only to
the extent needed to link datasets.
Any release of beneficiary-identifiable
data must follow the policies in CMS’
data sharing procedures. We intend to
protect the beneficiary data through, for
example, encryption, or removal of the
confidential fields when risk adjustment
data is released. As we discussed above
and in the final rule, CMS–4159–F,
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published on May 23, 2014 (79 FR
29844), all users accessing beneficiary
identifiable data are required to sign
CMS’ Data Use Agreement, which
addresses privacy and security for the
data CMS discloses. The Data Use
Agreement also contains provisions
regarding access to and storage of CMS
data to ensure that beneficiary
identifiable information is stored in a
secure system and handled according to
CMS’ security policies. CMS has an
established process to evaluate requests
for data to ensure that there are
appropriate safeguards in place to
protect beneficiary privacy. We believe
this process contains the necessary
checks to ensure that the risks of the
disclosure are minimal.
Comment: One commenter requested
CMS to release risk adjustment data by
creating an MA encounter data Standard
Analytic File (SAF) in limited data set
form (LDS) to extend research that can
currently be done by users of LDS SAFs
across sites using fee-for-service
Medicare claims data. A few other
commenters argued that these data
should be routinely available through
public use files, not just through the
project-specific process set forth in this
rule.
Response: We appreciate the
suggestions and will take them into
consideration for future additional
guidance. With regard to the issue of
Public Use Files, we believe that the
nature of data—see the discussion
above—make it appropriate to include
the protections imposed by this rule,
including the limits on the purpose of
the disclosure, release of only the
minimum necessary data, the
incorporation of CMS data sharing
policies and procedures, and additional
protections for certain data elements.
After consideration of the public
comments we received, we are
finalizing, as proposed, the policies
regarding CMS release of data in
§ 422.310(f)(2), with the exception of
five changes to the regulation text. First,
we clarify that the paragraph (f)(1)(ix)
purpose permitted by other laws is for
‘‘purposes authorized by other
applicable laws.’’ Second, we have
deleted the term ‘‘congressional support
agencies’’ from paragraph (f)(2)(B) in
order to be consistent with the
introductory language at paragraph (f)(2)
of this regulation. Third, to clarify that
data aggregation will be of the dollar
amounts reported on an associated
encounter data record, we are finalizing
paragraph (f)(2)(iv) to state that subject
to the aggregation of dollar amounts
reported for the associated encounter to
protect commercially sensitive data.
Fourth, in order to explicitly address the
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risk adjustment data elements that do
not fall into either of the two protected
categories (beneficiary identifiers and
dollar amounts) and to clarify that such
data are subject to release without
redaction or aggregation, we are
finalizing an additional paragraph
(f)(2)(v) to state that risk adjustment data
other than data described in paragraphs
(f)(2)(iii) and (f)(2)(iv) of the section will
be released without the redaction or
aggregation described in paragraphs
(f)(2)(iii) and (f)(2)(iv) of the section,
respectively. Finally, we are adding
paragraph (f)(3) to § 422.310 to clarify
when risk adjustment data will be
available for release, to state that risk
adjustment data will not be available for
release under paragraph (f) unless—
• The risk adjustment reconciliation
for the applicable payment year has
been completed;
• CMS determines that the data
release is necessary under paragraph
(f)(1)(vi) of the section for emergency
preparedness purposes before
reconciliation; or
• CMS determines that extraordinary
circumstances exist to release the data
before reconciliation.
3. Technical Change
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978), we
proposed to amend § 422.300, which
identifies the basis and scope of the
regulations for payments to MA
organizations, to add a reference to
section 1106 of the Social Security Act,
which governs the release of
information gathered in the course of
administering our programs under the
Act.
We did not receive any public
comments on this technical change, and
we are finalizing without modification
our proposed amendment to § 422.300,
to add a reference to section 1106 of the
Social Security Act, which governs the
release of information gathered in the
course of administering our programs
under the Act.
XI. Changes to Enforcement Provisions
for Organ Transplant Centers
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A. Background
In February 2004, the Office of the
Inspector General (OIG) published a
report entitled ‘‘Medicare-Approved
Heart Transplant Centers’’ (OEI–01–02–
00520), in which the OIG outlined three
recommendations for CMS’ oversight of
heart transplant centers: (1) that CMS
expedite the development of continuing
criteria for volume and survival-rate
performance and for periodic
recertification; (2) that CMS develop
guidelines and procedures for taking
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actions against centers that do not meet
Medicare criteria for volume and
survival-rate performance requirements;
and (3) that CMS take immediate steps
to improve its ability to maintain
accurate and timely data regarding the
performance of transplant centers.
As part of CMS’ efforts to strengthen
oversight of organ transplant centers, we
published the final rule ‘‘Medicare
Program: Hospital Conditions of
Participation, Requirements for
Approval and Re-approval of Transplant
Centers to Perform Organ Transplants’’
on March 30, 2007 in the Federal
Register (72 FR 15198) that established
conditions of participation (CoPs) for
organ transplant centers and applied the
survey and certification enforcement
process (that is used for all other
providers and suppliers of Medicare
services) to Medicare-approved
transplant centers. In the preamble of
that final rule, we discussed our efforts
to improve organ donation and
transplantation services and our goals
to: (1) Protect patients who are awaiting
organs for transplantation; (2) establish
key quality and procedural standards;
and (3) improve outcomes for patients
(such as patient survival) and reduce
Medicare expenses by decreasing the
likelihood that a transplant would fail.
In the March 30, 2007 final rule, we
codified the CoPs for transplant centers
at 42 CFR Part 482, Subpart E (§§ 482.68
through 482.104) and the special
procedures for approval and re-approval
of organ transplant centers at 42 CFR
488.61. The CoPs set forth explicit
expectations for outcomes, patient
safety, informed choice, and quality of
transplantation services. In particular,
§§ 482.80 and 482.82 specify that a
transplant center’s outcomes are not
acceptable if, among other factors, the
number of observed patient deaths or
graft failures 1 year after receipt of a
transplant exceeds the risk-adjusted
expected number by 1.5 times, based on
the most recent program-specific report
from the Scientific Registry of
Transplant Recipients (SRTR).
Failure to meet the transplant center
requirements will lead CMS to deny
approval or re-approval of a center’s
Medicare participation under § 488.61.
However, §§ 488.61(a)(4) and (c)(4)
authorize CMS to consider mitigating
factors when determining approval and
re-approval, respectively, for a
transplant center that has not met the
data submission, clinical experience, or
outcome requirements, or other CoPs, if
the center submits a formal, written
request for such a review. The existing
regulations do not limit the factors that
CMS may consider, but enumerate, at a
minimum, the following factors to be
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considered: (1) The extent to which
outcome measures are met or exceeded;
(2) the availability of Medicareapproved transplant centers in the area;
and (3) extenuating circumstances that
may have a temporary effect on a
transplant center meeting the
requirements under the CoPs, such as a
natural disaster. CMS approval or reapproval based on mitigating factors
permits a transplant center to operate as
a Medicare-approved transplant center
under certain circumstances despite a
finding of noncompliance. Under
existing regulations at
§§ 488.61(b)(4)(iv) and (c)(4)(iv), CMS
will not approve a center with
condition-level deficiencies but may reapprove a center with standard-level
deficiencies.
B. Basis for Proposed and Final Policies
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27977), we
proposed to strengthen, clarify, and
provide additional transparency for the
survey, certification, and enforcement
procedures under § 488.61 for transplant
centers that are requesting initial
approval or re-approval for participation
in the Medicare program when the
centers have not met one or more of the
CoPs but wish to have certain mitigating
factors taken into consideration.
1. Expansion of Mitigating Factors
Based on CMS’ Experience
The existing organ transplant
enforcement regulation at § 488.61 does
not provide detailed information on the
factors generally needed for approval or
re-approval of a request based on
mitigating factors that a transplant
center may make in order to participate,
or continue to participate, in Medicare.
However, since the adoption of the
organ transplant CoPs and
corresponding enforcement regulations,
we have expanded our knowledge
regarding: (a) The factors and processes
that promote improvement in transplant
center outcomes; and (b) other
mitigating factors that merit explicit
recognition under CMS regulations.
Most of the requests that we have
approved based on mitigating factors
have been for transplant centers that
were out of compliance with CMS
outcomes requirements, but were then
able to (a) effect substantial program
improvements and (b) based on
meaningful post-transplant survival
data, demonstrate recent and much
improved patient and graft survival
subsequent to those program reforms.
These performance improvements
occurred after the program was cited for
substandard performance by CMS and
was at risk of losing Medicare
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participation, usually while the program
was operating during the mitigating
factors review process or under a
binding Systems Improvement
Agreement (SIA) with CMS. Under an
SIA, CMS agrees to extend the effective
date of a prospectively scheduled
termination from Medicare participation
(that is, denial of re-approval) and holds
in temporary abeyance a final review of
the transplant center’s mitigating factors
request, if the transplant center agrees to
engage in a structured regimen of
quality improvement to improve
performance during a specified period
of time. At the end of the SIA period
(typically 12 months), we review the
transplant center’s performance and
make a final decision as to whether: (a)
The transplant center’s patient and graft
survival is within the acceptable limits
set forth in the regulations; or (b) the
transplant center qualifies for approval
or re-approval based on mitigating
factors.
As of August 2013, CMS had rendered
a final determination for 129 requests
for approval to operate as a Medicareapproved transplant center based on
mitigating factors. Of those
determinations, 48 of the requests (37.8
percent) were approved based on
information provided by the transplant
center on its mitigating factors alone
(that is, without entering into an SIA)
because the transplant program had
implemented substantial program
improvements during the extended CMS
review period, and CMS concluded that
the most recent patient and graft
survival data (taking into consideration
the lag time in data inherent in the
SRTR reports) demonstrated current
compliance with outcome requirements.
Another 33 requests (25.6 percent) were
eventually approved on the basis of
each transplant program’s successful
SIA completion and much improved
outcome data for the affected program.
A total of 24 requests (18.6 percent)
involved transplant programs that were
approved (and the transplant centers
were permitted to continue Medicare
participation) because CMS determined
that the transplant centers met the
outcome requirements during the time
period it took for CMS to review the
mitigating factors request, based on a
new SRTR report that because available
during the 210-day mitigating factors
review period. Requests from another 2
programs (1.6 percent) were approved in
which the programs had not enter into
an SIA but had made extensive use of
innovative practices involving key
factors that were not included in the
SRTR risk-adjustment methodology. An
additional 2 requests (1.6 percent) were
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approved because natural disasters
temporarily impacted the transplant
centers. Finally, 20 requests (15.5
percent) were denied approval based on
mitigating factors because the programs
failed to meet the outcome or clinical
experience requirements and were not
able to demonstrate improvements and
recent outcomes or experience that
would warrant approval based on
mitigating factors. These 20 programs
voluntarily withdrew their participation
from the Medicare program.
Comment: Commenters supported
CMS’ efforts to add clarity and increase
transparency, and most commenters
conveyed specific suggestions for
further clarity or revision.
Response: We appreciate the
thoughtful nature of all comments we
received and the specificity of the
suggestions that were made. We address
those specific suggestions below in the
context of each relevant section of our
proposed language.
2. Coordination With Efforts of the
Organ Procurement and Transplantation
Network (OPTN) and Health Resources
and Services Administration
When we adopted the outcome
standards for transplant programs in
2007, we sought to harmonize CMS’
outcome standards with standards of the
Organ Procurement and Transplantation
Network (OPTN) so that transplant
centers would have a single, consistent
set of outcome expectations on which to
focus. We also sought to organize CMS
activities in a manner that would
reinforce and continue the OPTN as the
first line of external review and quality
improvement for transplant centers. The
OPTN is the unified transplant network
established under the National Organ
Transplant Act (NOTA) of 1984. The
NOTA called for the network to be
operated by a private, nonprofit
organization under Federal contract.
The OPTN is a public-private
partnership that links all of the
professionals involved in the donation
and transplantation system. The
primary goals of the OPTN are to: (a)
Increase the effectiveness and efficiency
of organ-sharing and equity in the
national system of organ allocation; and
(b) increase the supply of donated
organs available for transplantation. For
more details about the OPTN, we refer
readers to the Web site at: http://
optn.transplant.hrsa.gov/optn/
profile.asp.
The OPTN and the Health Resources
and Services Administration (HRSA)
have been considering adoption of an
alternative methodology for calculating
expected transplant outcomes, known as
the ‘‘Bayesian’’ methodology, and for
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setting a threshold that would ‘‘flag’’ a
transplant center for OPTN review of
performance. At its June 2014 meeting,
the OPTN determined to adopt the new
methodology and begin using the new
methodology in CY 2015. HRSA and the
SRTR will continue to provide the
information needed by CMS, and we
will work together to track how
transplant programs are rated under the
‘‘Bayesian’’ methodology and the CMS
outcomes standards. At the present
time, CMS has insufficient experience
with the new ‘‘Bayesian’’ methodology,
and insufficient data, to determine an
appropriate threshold for a Medicare
outcomes deficiency under a
‘‘Bayesian’’ methodology. Therefore, in
the FY 2015 IPPS/LTCH PPS proposed
rule, we did not propose any changes in
our CoPs regarding this new
methodology. However, we wish to
continue to coordinate with the OPTN’s
efforts. Therefore, we proposed that if a
program has been cited for an outcomes
deficiency by CMS, but has not been
flagged for review by the OPTN, CMS
would take these facts into
consideration if the transplant program
has requested approval based on
mitigating factors. For a perspective on
the ‘‘Bayesian’’ methodology, we refer
readers to the Web site at: http://
www.srtr.org/faqs/16.aspx.
Comment: One commenter stated that
an important lesson learned over the
past several years is the need to further
coordinate and reconcile differences
between the requirements and processes
used by CMS and the OPTN in
regulating the quality of services
provided by transplant centers
throughout the country.
Response: We concur with the value
of coordinating requirements and
processes to the extent permitted by the
different roles played by the OPTN and
CMS. Our desire to coordinate with
HRSA and OPTN gave rise to many of
the proposals discussed here. Further,
staff from the United Network for Organ
Sharing (UNOS, that is under contract
with HRSA) and CMS developed a
cross-walk of the OPTN and CMS
requirements, updated the cross-walk in
July 2014, and published it online at:
http://www.optn.transplant.hrsa.gov/
content/policiesAndBylaws/evaluation_
plan.asp. While CMS and OPTN have
many mutually-reinforcing
requirements, the two organizations
largely cover different aspects of the
transplant universe. The OPTN, for
example, excels at the data reporting
and management that CMS does not
address, but CMS reinforces OPTN
through a CMS requirement that
transplant centers timely and
adequately report data in accordance
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with OPTN requirements. Similarly,
there are other areas not covered by
OPTN that CMS addresses (such as the
CMS requirement that every transplant
program have an effectively functioning,
internal quality assessment and
performance improvement (QAPI)
system). CMS, HRSA, and the OPTN
observed both CMS’ and OPTN’s onsite
surveys in the past year, with the intent
to identify areas to reduce the burden on
transplant programs, as well as improve
the efficiency of the survey process.
Although the surveys are conducted
very differently based on the distinct
roles of the two agencies, the OPTN has
now combined the living donor survey
with its regular survey to eliminate the
need for an additional survey. HRSA
and CMS also maintain monthly
meetings and, as the need arises, more
frequent meetings of workgroups.
Another recent development was the
CMS final rule (‘‘Medicare and
Medicaid Programs; Regulatory
Provisions to Promote Program
Efficiency, Transparency, and Burden
Reduction; Part II; Final Rule’’)
published in the Federal Register on
May 12, 2014 (79 FR 27106) designed to
reduce regulatory burden and increase
efficiency. Among other features, the
rule permits CMS to vary the frequency
of onsite transplant center surveys
compared to the earlier and standard
CMS 3-year cycle that applied to all
transplant programs. CMS maintains
continuous review of transplant
outcomes, responds to complaints at
any time, and is notified by transplant
centers when there is a major change in
a center. With these continuous
activities, and the added flexibility of
the May 12, 2014 final rule, we expect
to extend the average onsite survey
frequency to a range of approximately 3
to 5 years. We expect some centers will
be surveyed more frequently than the
average and other centers less
frequently, depending on CMS’
assessment of the need for a survey of
a particular program. We expect that
this change will help reduce the extent
to which any particular transplant
program will have two different surveys
(OPTN and CMS) that occur within a
proximate time of each other. We look
forward to continuing to work with
HRSA, UNOS, OPTN, and the transplant
community on these and other
coordination issues.
C. Provisions of the Proposed and Final
Regulations
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27978), we
proposed to revise the regulations at
§ 488.61 to include specific additional
provisions describing and expanding
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the mitigating factors that CMS may
consider when evaluating requests and
explain the conditions under which
each factor would apply.
Comment: One commenter
recommended that CMS modify
§ 482.82 of the regulations to state that
a transplant center that does not meet
the data submission, clinical
experience, or outcomes requirements
would be considered to be out of
compliance at the Condition level only
if CMS determines that a mitigating
factors request would not be approved.
In other words, a mitigating factors
request would be processed before
citing a center for a deficiency at a
Condition level.
Response: We are not adopting this
recommendation for a number of
important reasons. First, the mitigating
factors provision is intended to enable
CMS to recognize special situations so
that we may calibrate enforcement
actions appropriately. The provision is
not intended to remove the possibility
of enforcement or the likelihood of
enforcement if appropriate corrections
are not made.
Second, we believe the mitigating
factors and SIA processes have been
quite successful in promoting improved
patient outcomes as a direct result of the
full hospital alignment in support of
each involved transplant center. Based
on the past 7 years of experience with
programs that have had substandard
outcomes, we believe that strong wholeinstitution support has been generated
directly in response to the deficiency
citation and accompanied by clear
potential for enforcement action against
a program that has had substandard
performance.
We note that most transplant
programs maintain excellent outcomes
continuously and are not cited for
noncompliance with CMS outcome
expectations. Another group of
transplant programs temporarily exceed
the outcomes thresholds based on a
single SRTR report, but soon manifest
outcomes within the acceptable
tolerance limits in the next report. Such
programs may be cited by CMS at a
Standard level, rather than the
Condition level, because the results are
evident in only a single SRTR report. A
Standard level citation requires
corrective action but does not require
mitigating factors approval because a
Standard level citation by itself does not
put the program on a schedule for
termination of Medicare participation. A
smaller third group of transplant
programs experience long-term
problems and may be cited by CMS at
the Condition level, but engage with the
OPTN and soon recover. These
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programs may apply for approval based
on mitigating factors, but are more likely
than other applicants to be approved
without greater involvement with CMS.
An even smaller group of programs are
cited by CMS at the Condition level and
are eventually approved based on
mitigating factors, but only after an
extended period of time and a more
involved regimen of quality
improvement through an SIA. CMS’
policy has been to cite at the Condition
level only if the tolerance limits are
exceeded in the most recent SRTR
report and in at least one other SRTR
report within the past five SRTR reports.
Although the number and percentages
vary depending on the particular SRTR
reports involved, we generally find that
approximately 9 to 11 percent of the
programs do not meet the CMS outcome
thresholds in any one particular SRTR
report. However, only approximately 3
to 4 percent of the programs tend to fail
to meet the outcomes requirement in the
most recent SRTR report and in at least
one other report of the most recent 5
reports. This number is further reduced
during the 210-day period that we
permit for consideration of a mitigating
factors request by CMS. The 210-day
period allows sufficient time for a sixth
SRTR report to appear and perhaps
show evidence of outcomes that would
remove the deficiency and remove the
need for mitigating factors approval.
As a result of the way we
implemented the citation and mitigating
factors processes, those programs cited
by CMS at the Condition level tend to
be programs that generally have more
extensive issues for which full hospital
alignment and support are most needed,
or programs that, for a variety of
reasons, have been immune to prior
efforts to improve outcomes. We believe
we have structured CMS enforcement
actions in a manner that permits
considerable time for a transplant
program to take action on its own, and
allows many programs to engage
successfully with the OPTN for timely
resolution. However, for the residual,
smaller number of programs that have
not been so successful, our experience
indicates that it is questionable whether
the hospital alignment and other actions
needed to achieve substantial and
sustainable improvement would have
occurred without the clear prospect that
Medicare participation might soon end.
The fact that many of the transplant
programs cited at the Condition level
had already been engaged with the
OPTN in a peer review process without
timely improvement in outcomes, lends
credence to the belief that the clear, and
potentially imminent, ending of
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Medicare participation has been the
stimulant that eventually brought the
various departments of the hospital
together to finally achieve the results
that had eluded the many dedicated
individuals who had previously labored
to achieve better outcomes.
Third, only two situations involved
mitigating factors where approval was
based on natural disasters, two
situations involved extensive use of
innovative practices, and a small
number of situations involved clinical
experience. The remainder, constituting
the vast preponderance of mitigating
factors requests we have received,
involved transplant programs whose
patient or graft survival outcomes
exceeded the tolerance limits in the
CMS regulation for programmatic
reasons. When such cases have been
approved, the approval has been based
on recovery and improvement in
outcomes during the extended time
period (210 days) that CMS permits for
mitigating factors consideration or the
even longer time period that CMS
permits under an SIA. We believe that
eventual approval of a mitigating factors
request should not be construed to
imply that the substandard outcomes
never occurred, or to obscure the history
or facts that led to the recovery efforts.
We regard such history as important
matters of public record.
Transplant programs that may be
approved based on mitigating factors
due to confirmed innovative practice
may be an area for which the
commenter’s suggestion has merit, and
we will give further consideration to
this area for potential future action.
Unlike mitigating factors approval that
is made pursuant to recovery from a
period of substandard outcomes or even
natural disaster, approval of mitigating
factors due to innovative practice may
indicate the absence of a deficiency in
the first place.
We will be pleased to continue a
dialogue with the transplant community
regarding these issues and to consider
other approaches to ensure that a
strenuous improvement effort, such as
that which is required in an SIA, is not
misinterpreted.
1. Expansion of Mitigating Factors List,
Content, and Timeframe
In the FY 2015 IPPS/LTCH PPS
proposed rule, we noted that the
regulations at §§ 488.61(a)(4) and (c)(4)
provide three specific mitigating factors
for review by CMS when determining
whether a transplant center can be
approved or re-approved, respectively,
based on mitigating factors. These
mitigating factors are: (1) The extent to
which outcome measures are met or
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exceeded; (2) the availability of
Medicare-approved transplant centers in
the area; and (3) extenuating
circumstances that may have a
temporary effect on meeting the CoPs. In
the FY 2015 IPPS/LTCH PPS proposed
rule, we proposed to move the listing of
mitigating factors from paragraphs
(a)(4)(i) through (a)(4)(iii) and (c)(4)(i)
through (c)(4)(iii) to new proposed
paragraphs (f), (g), and (h) under
§ 488.61, and to include additional
factors under these three new proposed
paragraphs that may be reviewed in
addition to the existing three factors. We
proposed to move existing paragraphs
(a)(4)(iv) and (c)(4)(iv) to the proposed
new paragraph (g)(2). We also proposed
to provide clarification of the existing
three mitigating factors and the
conditions under which they would
apply. Finally, we proposed to revise
the preexisting paragraphs (a)(4) and
(c)(4) of § 488.61 to include crossreferences to the new proposed
paragraphs (f), (g), and (h).
We note that an administrative rule
we published as a final rule in the
Federal Register on May 12, 2014 (79
FR 27106) within days of publication of
the FY 2015 IPPS/LTCH PPS proposed
rule renumbered the elements of
§ 488.61(c) and added § 488.61(c)(3)(v)
and made other amendments to this
section. Specifically, the May 12, 2014
administrative rule removed
§ 488.61(a)(7), revised the introductory
text of paragraphs (c) and (c)(1), and
revised paragraph (c)(1)(ii). In addition,
the final administrative rule removed
paragraph (c)(2) and redesignated
paragraphs (c)(3), (c)(4), and (c)(5) as
paragraphs (c)(2), (c)(3), and (c)(4),
respectively. Finally, the final
administrative rule revised the text of
newly designated paragraphs (c)(2),
(c)(3)(i), and (c)(3)(ii), added a new
paragraph (c)(3)(v), and revised
paragraph (e). As a result of these
changes, in this final rule, we are
replacing the renumbered paragraphs of
§ 488.61(c)(3)(i) through (c)(3)(iii) of the
administrative final rule as
§ 488.61(f)(1)(i), (f)(1)(ii), and (f)(1)(iii),
respectively. The renumbered paragraph
§ 488.61(c)(3)(iv) is moved to the new
§ 488.61(g)(2). We also are incorporating
the new paragraph that was added in
the final administrative rule
(§ 488.61(c)(3)(v)) as the new paragraph
§ 488.61(f)(1)(iv).
We note that in all subsequent
references involving § 488.61(c), we use
the regulatory citations as revised by the
May 12, 2014 final rule (79 FR 217060)
and described above. Under proposed
new paragraph § 488.61(f)(1), we
proposed to move and relist the three
mitigating factors currently under both
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50337
paragraphs (a)(4)(i) through (a)(4)(iii)
and paragraphs (c)(3)(i) through
(c)(3)(iii). We further proposed to
expand the mitigating factors that CMS
may consider by adding more
description to those factors, as well as
by adding new factors that may be
reviewed. We also proposed to specify
the procedures and timeframes for
transplant centers to request
consideration for approval based on
mitigating factors.
Specifically, in proposed new
paragraph (f)(1), we proposed to specify
the mitigating factors, except for
situations of immediate jeopardy, as
described below.
• The extent to which outcome
measures are not met or exceeded
(existing paragraphs (a)(4)(i) and
(c)(3)(i); proposed paragraph (f)(1)(i)).
• Availability of Medicare-approved
transplant centers in the area (existing
paragraphs (a)(4)(ii) and (c)(3)(ii);
proposed paragraph (f)(1)(ii)).
• Extenuating circumstances (for
example, natural disaster) that may have
a temporary effect on meeting the CoPs
(existing paragraphs (a)(4)(iii) and
(c)(3)(iii); proposed paragraph (f)(1)(iii)).
• Program improvements that
substantially address root causes of graft
failures or patient deaths and that have
been implemented and institutionalized
on a sustainable basis (proposed new
paragraph (f)(1)(iv)).
• Recent patient and graft survival
data to determine if there is sufficient
clinical experience and survival for
CMS to conclude that the program is in
compliance with CMS requirements,
except for the data lag inherent in the
reports from the SRTR (proposed new
paragraph (f)(1)(v)).
• Extensive use of innovative
transplantation practices relative to
other transplant programs, such as a
high rate of transplantation of
individuals who are highly sensitized or
children who have undergone the
Fontan procedure, where CMS finds
that the innovative practices are
supported by evidence-based, published
research or nationally recognized
standards or Institutional Review Board
(IRB) approvals, and the SRTR riskadjustment methodology does not take
the relevant key factors into
consideration (proposed new paragraph
(f)(1)(vi)).
• The program’s performance, based
on the OPTN method of calculating
patient and graft survival, is within the
OPTN’s thresholds for acceptable
performance and does not flag OPTN
performance review under the
applicable OPTN policy (proposed new
paragraph (f)(1)(vii)).
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Under proposed new paragraph (f)(2),
we proposed to include details for the
content of the request for consideration
of mitigating factors, based on examples
that have proven to be most useful in
considering successful mitigating factors
requests. Specifically, we proposed that
a request for consideration of mitigating
factors include sufficient information to
permit an adequate review and
understanding of the transplant
program, the factors that have
contributed to outcomes, program
improvements or innovations that have
been implemented or planned, and, in
the case of natural disasters, the
recovery actions planned. Examples of
information to be submitted with each
request could include, but are not
limited to, the following:
(i) The name and contact information
for the transplant hospital and the
names and roles of key personnel of the
transplant program;
(ii) The type of organ transplant
program(s) for which approval is
requested;
(iii) The CoPs that the program failed
to meet, and with respect to which the
transplant center is requesting CMS’
review of mitigating factors;
(iv) The rationale and relevant
supporting evidence for CMS’ review
must include, but not be limited to—
Æ Root Cause Analysis of patient
deaths and graft failures, including
factors the program has identified as
likely causal or contributing factors for
patient deaths and graft failures;
Æ Program improvements or
innovations (where applicable) that
have been implemented and
improvements that are planned;
Æ Patient and donor/organ selection
criteria and evaluation protocols,
including methods for pre-transplant
patient evaluation by cardiologists,
hematologists, nephrologists, and
psychiatrists or psychologists, to the
extent applicable;
Æ Organizational chart with full-time
equivalent levels, roles, and structure
for reporting to hospital leadership;
Æ Waitlist management protocols and
practices relevant to outcomes;
Æ Pre-operative management
protocols and practices;
Æ Immunosuppression/infection
prophylaxis protocols;
Æ Post-transplant monitoring and
management protocols and practices;
Æ Quality Assessment and
Performance Improvement (QAPI)
Program meeting minutes from the most
recent four meetings and attendance
rosters from the most recent 12 months;
Æ Quality dashboard and other
performance indicators;
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Æ Recent outcomes data for both
patient survival and graft survival; and
Æ Documentation of whether the
program has engaged with the OPTN to
review program outcomes, the status of
any such review, and any steps taken to
address program outcomes in
accordance with the OPTN review.
Under proposed new paragraph (f)(3),
we proposed to specify a timeline for
the transplant program to submit a
request for mitigating factors and to
make clear that, for requests related to
clinical experience or outcomes, the
program has additional time within
which to submit supporting
information. Specifically, we proposed
that within 10 days after CMS has
issued formal written notice of a
Condition-level deficiency to the
program, CMS must receive notice of
the program’s request to seek
consideration of mitigating factors. CMS
would require that all information
necessary for consideration be received
within 30 days of CMS’ initial
notification for any deficiency, except a
deficiency based on insufficient clinical
experience or outcomes; and within 120
days of CMS’ written notification for a
deficiency based on insufficient clinical
experience or outcomes. Failure of a
transplant program to meet these
timeframes may be the basis for denial
of requests for consideration based on
mitigating factors.
Comment: One commenter stated that
mitigating factors consideration should
not be available for either initial
applications or for deficiencies that
involve process requirements (as
opposed to clinical experience or
outcomes). Examples of process
requirements include the requirement to
match donor and recipient blood types,
ensure informed consent, or engage in
multi-disciplinary planning. The
commenter suggested that if the
mitigating factors provision applied to
process CoPs, CMS should clarify the
circumstances under which a program
ought to apply for mitigating factors
rather than submit a plan of correction.
The commenter suggested that process
CoPs be handled through plans of
correction rather than through
mitigating factors.
Response: We agree that all process
CoPs should be handled through the
plan of correction process and that only
a deficiency involving data submission,
clinical experience, or outcomes should
involve both the required plan of
correction and an optional mitigating
factors request. A transplant program
cited for a process CoP deficiency (or
any deficiency) would not risk
termination of its Medicare
participation without a prior
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opportunity to submit a plan of
correction and demonstrate that the
deficiency has been removed in a timely
manner. Since the time the CMS
transplant regulation became effective
in 2007, every instance in which a
program was cited for a process CoP has
been successfully remedied by timely
action on the part of the transplant
program. As a result, no transplant
program has had its Medicare
participation terminated as a result of
failure to comply with a process CoP.
We agree that the use of mitigating
factors in the case of process
deficiencies is not only unnecessary, but
is also confusing to transplant centers
and may interfere with the prompt
remediation of those process
deficiencies. In the final regulation, at
§ 488.(61)(f)(1) and elsewhere, we
therefore limit the mitigating factors
provision to deficiencies cited for
noncompliance with the data
submission, clinical experience, or
outcomes requirements specified at
§ 488.80 and § 488.82.
We also agree with the commenter
that, in the case of an initial application
for Medicare certification, every
transplant program should be in full
compliance with all process CoPs
without needing to rely on mitigating
factors consideration. However, we are
retaining the ability of an initial
applicant to request mitigating factors
consideration with respect to the data
submission, clinical experience, or
outcomes requirements. We retain such
ability because there may be situations
where a transplant program has gone
inactive beyond the time period allowed
by CMS and is seeking Medicare
reinstatement, or has withdrawn or lost
Medicare participation due to
substandard outcomes or lack of
sufficient clinical experience, and is
seeking reinstatement. In such
situations, the latest available SRTR
report may still show the program to
have substandard outcomes or
insufficient clinical experience for the
2.5 year retrospective period covered in
the report, despite the fact that
subsequent program improvements may
have enabled greater clinical
experience, or much better patient and
graft survival with more recent data that
meets the criteria for CMS approval
based on mitigating factors. With the
refinements discussed previously
(wherein the mitigating factors
provision will not apply to process
CoPs), we believe that the retention of
the mitigating factors provision for
initial applicants is warranted.
Comment: With regard to the
expanded list of factors at § 488.61(f)(1)
that CMS may consider, one commenter
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suggested that not every request should
necessarily be required to cover all of
the factors listed. Instead, the factors
covered should be tailored to the
particular circumstances in question.
Response: We agree with the
commenter. The intent of § 488.61(f)(1)
was not to require every application to
address every possible factor, but to
recognize CMS’ obligation to consider
all of the listed factors, as applicable.
We acknowledge the potential for
confusion on this matter, and therefore,
at § 488.61(f)(1) in this final rule, we
have clarified that CMS will consider
such mitigating factors as may be
appropriate in light of the nature of the
deficiency and circumstances involved.
We would not necessarily expect a
program that requests consideration on
the basis of innovative practice, for
example, to detail all the improvements
that have been implemented. We would
instead expect such a program to
explain its innovative practice, the
extent of such practice, the evidentiary
basis that established it as an innovative
practice, the particular cases in the
applicable SRTR report that involved
innovative practices, and similar factors
applicable to the use and outcomes of
innovative approaches.
Comment: One commenter noted that
a final rule published in the Federal
Register on May 12, 2014 (79 FR 21706)
made changes to § 488.61(c)(4),
renumbering it as § 488.61(c)(3) and
adding a factor at § 488.61(c)(3)(v), and
specifying that CMS would consider
program improvements that address root
causes of patient deaths or graft failures
if the improvements are supported by
recent outcomes data that permit CMS
to conclude that the program is in
compliance with CMS outcomes
expectations. In other words, in the May
12, 2014 final rule, CMS sought to
clarify that both program improvements
and recent data showing acceptable
outcomes, together, comprise a single
critical factor in our determination as to
whether mitigating factors approval
should be granted. CMS also sought to
make clear that CMS will examine data
that are more recent than the data in the
latest available SRTR report that covers
a retrospective 2.5 year period. The
commenter observed that the
subsequent regulation proposed in the
FY 2015 IPPS/LTCH PPS proposed rule
would move this provision to the new
§ 488.61(f)(1)(iv) and (f)(1)(v) as two
separate considerations, making it
unclear whether both improved data
and substantial improvements are
needed. The commenter asked that CMS
clarify whether a program must
demonstrate both substantial
improvements and recent improved
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outcomes data, or whether program
improvements without better outcomes
data would suffice. The commenter
expressed the opinion that it should be
sufficient for a program to demonstrate
that it had implemented substantial
program improvements on a sustainable
basis, without having to provide recent
outcomes data that allow CMS to
conclude that the improvements have
resulted in recent observed deaths or
graft failures that are less than 150
percent of the risk-adjusted expected
number 1 year after transplant. Several
other commenters simply stated that
these parts of the proposed regulation
were not entirely clear and should be
clarified.
Response: We believe that program
improvements and data showing
improved outcomes subsequent to the
program improvements are both needed
and should be considered as a single
two-sided but integrated consideration.
We do not agree that mitigating factors
should be approved without recent data
that demonstrate actual improvements
in outcomes in the manner described
above. In our considerable experience
with more than 129 mitigating factor
applications, we have encountered
many situations where program
improvements were implemented on a
sustainable basis, but outcomes either
did not improve or did not improve
sufficiently to bring the program into
compliance within a reasonable period
of time. Often the problem was that the
improvements were well-warranted, but
insufficient. Often the improvements
did not address root causes, and the root
causes did not become apparent until a
multidisciplinary peer review team
(organized under an SIA) conducted an
onsite review and, together with the
transplant program staff, gained new
insights into systemic factors that
contributed to substandard outcomes. In
other cases, the program implemented
improvements that were within the
transplant program’s purview, but the
hospital did not alter other aspects of
hospital operations that were
instrumental in affecting patient or graft
survival. The transplant programs often
were aware of other hospital-wide
factors that were important, but were
unable to effect change in those
hospital-wide factors until the hospital
agreed to enter into an SIA with CMS.
Examples of hospital-wide factors
include, but are not limited to, the
working relationships between the
transplant center and the intensive care
unit (ICU), availability of transplanttrained specialty physicians (such as in
cardiology, hepatology, anesthesiology,
or nephrology), adequacy of staffing
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50339
levels, and information technology
support, among others.
With regard to the requested
clarification for the new section
§ 488.61(f)(1)(iv) of the regulations, we
note that the SRTR data, upon which
the CMS outcomes expectations rely,
cover a retrospective 2.5 year period.
The data are further dependent on a 1year post-transplant period during
which patient and graft survival are
tracked. We appreciate that a transplant
program may implement improvements
and it will take time for the results of
the improvements to become manifest
in the SRTR data. This new section is
intended to make clear that CMS will
examine data that are more recent than
the data in the latest available SRTR
report. We will make a judgment as to
the usability of those data depending on
the number of transplants and the
amount of post-transplant survival time
available to be analyzed after major
program improvements have been
implemented. For example, a kidney
transplant center may conduct 80
transplants per year, but have only 35
transplants that both occurred after the
major program improvements were
implemented and also have a sufficient
post-transplant survival period (1-year
post-transplant survival period) to
constitute data that are reasonable to use
in evaluating outcomes. It is not likely
that the 35 transplant cases would be
included in the latest available SRTR
report. Nonetheless, this number of
cases with such a post-transplant
tracking period may be sufficient and
would be considered by CMS. We
acknowledge that, by looking at a time
period shorter than the 2.5 year period
of the SRTR reports and looking only at
the observed/expected ratio, we may
approve programs that seem to have
improved outcomes d by chance.
However, if there is a combined
demonstration of implemented program
changes and an improved survival ratio
based on adequate numbers, we believe
the risk is warranted. We also do not
mean to imply that 35 cases is a magic
number, but is illustrative for purposes
of clarifying CMS’ intention.
Therefore, we are finalizing these
provisions at § 488.61(f)(1)(iv) as a
combined factor (program
improvements plus improved outcomes
data). The final paragraph is consistent
with the final regulation published as
§ 488.61(c)(3)(v) on May 12, 2014 (79 FR
27106), but now is moved to the new
§ 488.61(f)(1)(iv). Paragraph (f)(1)(iv) of
§ 488.61 in this new final rule now
combines the two factors that were
proposed in the FY 2015 IPPS/LTCH
PPS proposed rule as § 488.61(f)(1)(iv)
and (f)(1)(v).
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Comment: With regard to the content
of mitigating factors requests described
in proposed § 488.61(f)(2), one
commenter suggested that instructions
related to specific information that must
be included as part of a mitigating
factors request should not be included
in regulations but, instead, in CMS
instructions that can be more easily
modified as transplant centers and CMS
gain additional experience with the
types of information that may be useful.
The commenter also expressed concern
that it appeared that all the information
was required of every request even if
certain items were not relevant.
Response: We appreciate the
commenter’s concern. On the basis of 7
years of experience and review of 129
mitigating factors requests, we are
confident that there are certain items of
information that are almost always
important in a mitigating factors
request. We agree that not every item is
needed in every request. Therefore, in
this final rule, we reorganized into
various categories the informational
items for a mitigating factors request
that were originally proposed in the
new § 488.61(f)(2). In this final rule, the
first category is comprised of items
required for all requests (new
paragraphs (f)(2)(i) through (f)(2)(iv)).
Additional information required for
requests pertaining to data submission,
clinical experience, or outcomes is then
described in new paragraph (f)(2)(v),
versus additional material required of
requests pertaining to innovative
practice (new paragraph (f)(2)(vi)),
versus requests based on natural
disasters or emergencies (new paragraph
(f)(2)(vii)). We believe that this
reorganization makes it clear that
information not pertinent to the request
is not needed, while continuing to
provide additional transparency and
continuing to communicate (in advance
of a request) the type of information that
a transplant center should be prepared
to provide if it wishes to request
consideration of mitigating factors.
Comment: With regard to the
proposed content at § 488.61(f)(2), one
commenter stated that it did not believe
CMS has the authority to require a root
cause analysis of patient deaths or graft
failures that is specified by the program
as a patient safety work product (PWSP)
and submitted to (or received from) a
Patient Safety Organization (PSO).
Further, the commenter stated that to
require such disclosure may place a
transplant center in a situation in which
it must choose between foregoing a
mitigating factors review, which could
keep the center open, or face fines under
the Patient Safety and Quality
Improvement Act of 2005 (PSQIA).
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Response: By way of background, the
PSQIA amended Title IX of the Public
Health Service Act (PHSA) (42 U.S.C
299 et seq.). Section 921(7)(A) of the
PSQIA defines ‘‘patient safety work
product’’ (PSWP) as including ‘‘any
data, reports, records, memoranda,
analyses (such as root cause analyses)
. . . which are assembled or developed
by a provider for reporting to a patient
safety organization and are reported to
a patient safety organization.’’ Section
921(7)(B) of the PSQIA clarifies that
PSWP does not include certain
information, such as a patient’s medical
record (section 921(7)(B)(i) of the
PSQIA) or ‘‘information that is
collected, maintained, or developed
separately, or exists separately, from a
patient safety evaluation system . . .’’
(section 921(7)(B)(ii) of the PSQIA).
Section 921(7)(B)(iii) of the PSQIA
further specifies that ‘‘nothing in this
part shall be construed to limit . . . the
reporting of information to a Federal,
State, or local governmental agency for
public health surveillance,
investigation, or other public health
purposes or health oversight purposes.’’
In addition, section 922(c)(1)(C) of the
PSQIA provides for an exception to the
privilege and confidentiality restrictions
for ‘‘disclosure of identifiable patient
safety work product if authorized by
each provider identified in such work
product.’’
We appreciate the commenter’s
concerns. However, after 7 years and
129 mitigating factors reviews, we have
not experienced this problem in relation
to organ transplant centers. This may be
because adequate root cause analyses of
peri- and post-transplant deaths or graft
failures require such specialized
expertise that the more generalized
patient safety expertise of PSOs is less
likely than in other areas to be the
resource to which transplant centers
turn.
We also note that, in certain other
types of providers where the PSQIA has
arisen as an issue, the providers have
often taken advantage of the exceptions
in the PSQIA noted previously (such as
the exceptions at section 921(7)(B)(ii) or
section 921(7)(B)(iii)) of the PSQIA).
CMS does not require submission of
a PSWP, and hospitals have choices
with regard to what to place in a patient
safety evaluation system as a PSWP, to
what extent the hospital will use any of
the exceptions provided in the PSQIA as
noted above, and to what extent the
hospital will seek to demonstrate
compliance with the CoPs through the
provision of other information. With
regard to root cause analyses, rather
than being a cause of Medicare
termination, we have found root cause
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analyses to have been among the most
important considerations in CMS
decisions to grant mitigating factors
approval that allowed continued
Medicare participation for most of the
requests we have received. In many
cases, the analyses demonstrated the
program’s definite capability to identify
root causes. In other cases, the analyses
demonstrated the program’s clear
inability to conduct adequate root cause
analyses, but CMS review of the
analyses (by clinical and quality
improvement personnel, both in-house
and contracted) allowed us to gain
sufficient insights, particularly with
respect to areas that might be further
investigated, that we determined an SIA
and more time would be warranted for
the transplant program to make
improvements. Rather than constituting
an expectation that leads to closure of
a transplant program, our experience of
the root cause analyses has been that
they prevented many programs from
termination of Medicare participation
and from experiencing risk that such
termination might have led to closure.
Finally, the regulations at § 482.21
and § 482.96 oblige each hospital and
transplant program to maintain an
effectively functioning quality
assessment and performance
improvement system. A key expectation
is that every adverse event be identified
and investigated and the results of the
investigation used to prevent
recurrence. In the case of patient deaths
and graft survival, this means root cause
analyses to identify systemic factors that
may have caused or contributed to the
adverse events. The ability of a
transplant program to demonstrate that
it has adequately conducted such
analyses, used the results to prevent
recurrence, and has the capability to
continue to do so is fundamental to the
program’s demonstration of compliance
required by CMS regulations.
Therefore, we are retaining in this
final regulation the language we
originally proposed.
Comment: One commenter objected to
the provision at proposed
§ 488.61(f)(2)(iv)(L) that each program
must describe whether it has engaged
with the OPTN to review program
outcomes, the status of any such review,
and any steps taken to address program
outcomes pursuant to the OPTN review.
The commenter believed that this
provision would unnecessarily mandate
disclosure of the institution’s
involvement with the peer review
function of the OPTN under 42 CFR
121.10(b). The commenter stated that
assurances of confidentiality and
protection from disclosure are the
foundations of effective medical peer
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review processes. The commenter
suggested that the proposed paragraph
be modified to specify only submission
of the steps taken by the program to
address program outcomes. Another
commenter suggested that the proposed
language at § 488.61(f)(1) be expanded
to include consideration of whether the
Membership and Professional Standards
Committee (MPSC) of the OPTN has
reviewed the program’s performance
and found it acceptable.
Response: We appreciate the
tremendous value of the OPTN peer
review process and its statutory
responsibilities under the National
Organ Transplant Act (Pub. L. 98–507).
We believe that the MPSC process of the
OPTN may often result in improved
outcomes, thereby rendering a CMS
Condition-level deficiency citation
unnecessary, or at least setting the stage
for approval of a mitigating factors
request during the extended period of
time CMS allows for consideration of
such requests. While we had proposed
the regulatory language in order to
further strengthen CMS coordination
with the OPTN, we also appreciate the
nature of the peer review process itself,
as described by the commenter.
Therefore, in this final rule, we have
removed reference to the OPTN peer
review process that was originally
proposed at § 488.61(f)(2)(iv)(L). We
note that programs may still voluntarily
disclose any engagement with the MPSC
of the OPTN. If the program is entering
into an SIA with CMS, the program may
also wish to disclose whether the OPTN
has already conducted a recent onsite
peer review of the program so that CMS
may consider if an adjustment to the
SIA peer review is warranted, or it may
choose to describe any recent onsite
peer review without reference to
whether the onsite review was
conducted under OPTN auspices or not.
Comment: With regard to the
timelines for submitting information
that we proposed at § 488.61(f)(3),
several commenters suggested that more
than the proposed 10 days be permitted
for a program to notify CMS of an intent
to apply for mitigating factors
consideration, and 30 days to submit
written documentation when the
pertinent deficiencies do not involve
citation for clinical experience or
outcomes. These commenters suggested
that 20 days and 45 days, respectively,
should be permitted.
Response: With respect to mitigating
factors, the 10-day timeline only obliges
programs to notify CMS of the program’s
intent to request such consideration,
and no information is required beyond
a simple statement of intent. We regard
the 10-day timeframe for submission of
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a simple notice of intent to be a
reasonable expectation. With the
modification in this final discussed
above (in which the mitigating factors
provision is limited to deficiencies of
data submission, clinical experience, or
outcomes), the 30-day time period is no
longer necessary. We already proposed
to permit a longer period of time (120
days) for submission of the application
when the deficiency is for data
submission, clinical experience, and
outcomes. Therefore, we are finalizing
the rule with the proposed 10-day and
120-day timelines. We have removed
the reference to the 30-day time period.
In response to comments that suggested
more time might be needed in some
cases, we also added a provision in this
final rule that permits CMS to extend
the timelines for good cause. An
example of a good cause would be a
natural disaster, such as the 2013
Hurricane Sandy event, that may
intervene in the middle of the
applicable period.
After consideration of the public
comments we received, we are retaining
the 10-day timeframe to notify CMS of
an intent to apply for mitigating factors,
reorganizing § 488.61(f)(1) and making it
clear that not all factors pertain to every
application, retaining the proposed
§ 488.61(f)(1)(iv) as a combined factor
(program improvements plus improved
outcomes data, consistent with the May
12, 2014 final regulation (79 FR 27106))
but with the paragraph moved to the
new and clarified § 488.61(f)(1)(iv), and
retaining the reorganized content of
§ 488.61(f)(2) except for the removal of
references to a transplant program’s
engagement with the OPTN.
2. Results of Mitigating Factors Review
Under proposed new § 488.61(g), we
proposed to clarify and expand on the
description of the mitigating factors
review process and results. Under
existing regulations, a transplant center
seeking initial approval or re-approval
of Medicare participation based on the
presence of mitigating factors is
required to submit a formal written
request to the CMS Central Office, as
described earlier. If there are no
deficiencies that constitute immediate
jeopardy to a patient’s health and safety,
in limited circumstances, CMS may
approve continued Medicare
participation based on mitigating
factors. However, where a transplant
program demonstrates that it is making
significant progress toward correction
and program improvement, but does not
yet qualify for approval based on
mitigating factors, we believe there may
be merit, in many cases, in temporarily
extending the effective date of the
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50341
program’s Medicare participation
termination in exchange for a hospital’s
agreement to engage in a significant and
directed regimen of further quality
improvement under a Systems
Improvement Agreement (SIA). As we
noted above, programs that have entered
into SIAs have demonstrated significant
improvements. Therefore, we proposed
to provide an explicit procedure in the
regulations at proposed new
§ 488.61(g)(1)(iii) for CMS to offer an
SIA and hold in abeyance a final
decision on the mitigating factors
request until the SIA period has ended.
Proposed new paragraphs (g)(1)(i),
(g)(1)(ii), and (g)(1)(iii) outline the three
outcomes of CMS mitigating factors
decisions: (i) Initial approval or reapproval of a program’s Medicare
participation based upon consideration
of mitigating factors; (ii) denial of the
program’s request; or (iii) offer of a timelimited SIA when a transplant program
has waived its appeal rights, has
committed to substantial program
improvements that address root causes
and are institutionally supported by the
hospital’s governing body on a
sustainable basis, and has requested
more time to design or implement
additional improvements or
demonstrate compliance with CMS
outcome requirements. Under the
proposed new paragraph (g)(1)(iii), we
would clarify that, during the SIA, CMS
holds the mitigating factors request in
abeyance and makes a final decision to
approve or deny Medicare participation
when the SIA is ended, based on the
results of the program’s performance of
the SIA.
Existing regulations state that CMS
will not approve any program with a
Condition-level deficiency. However,
CMS could approve a program with a
Standard-level deficiency upon receipt
of an acceptable plan of correction. A
Condition-level deficiency represents a
serious classification and, unless the
deficiency is remedied, precludes a
provider from participating in Medicare.
A Standard-level deficiency represents a
less serious deficiency, such as one in
which just a small part of a CoP is found
to be out of compliance. We proposed
to move this to the proposed new
paragraph § 488.61(g)(2).
We did not receive any public
comments on this proposal and,
therefore, are finalizing it as proposed.
3. System Improvement Agreements
(SIAs)
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 27977), we
proposed to add proposed new
paragraph (h) to § 488.61 to set forth the
purpose, intent, and contents of an SIA
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and the timeframes for an approved SIA
with CMS.
a. Purpose and Intent of an SIA
Based on information and
documentation provided by the
transplant program at the time of its
request, CMS may determine that,
despite a deficiency or deficiencies, the
transplant center has made substantial
progress, has full support of the hospital
governing body, and is on a quality
improvement path that promises to
improve prospects for patient survival.
In such cases, we exercise our limited
discretion to offer the transplant
program the opportunity to enter into an
SIA. In the absence of a written request
for consideration on the basis of
mitigating factors, CMS would
otherwise proceed with the proposed
date of termination based on
noncompliance with one or more of the
CoPs. In the proposed regulation, we
clarified and specified the terms for
such SIAs.
CMS may offer an SIA to a transplant
program if the transplant center can
show that it has identified, or is actively
improving its identification of, the root
causes of its noncompliance and if the
transplant center has initiated actions to
correct those root causes. However, if
we conclude that a transplant center
does not qualify for initial approval or
re-approval based on mitigating factors,
the proposed rule would explicitly
provide CMS with the option of offering
a time-limited SIA to those transplant
centers that have demonstrated progress
in making substantive program
improvements to address root causes of
deficient outcomes, agree to undertake a
structured regimen of further quality
improvement, and agree to waive their
appeal rights. In some instances, a
voluntary period of inactivity of the
transplant center is warranted, or a
period of inactivity may be required by
CMS as a condition of an SIA approval,
as a requirement of initiating an SIA for
a specified period, or until certain
milestones are achieved.
During the SIA period, CMS’
oversight and enforcement authority
continue and CMS may conduct routine
unannounced surveys, complaint
investigations, and/or terminate the
transplant center’s participation in the
Medicare program if there is not
substantial compliance with Federal
requirements under 42 CFR Part 482 or
if the program fails to follow the terms
of the SIA. In consideration for the
opportunity to continue to participate in
the Medicare program under an SIA
during the time that structured
improvements and corrections are
made, despite having been found to be
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in noncompliance with the
requirements, a transplant center would
be required to waive any appeal rights
that it may have, either administratively
or judicially, if CMS ultimately
terminates Medicare participation or
denies initial approval of the transplant
center. We proposed that such a waiver
applies, regardless of whether
revocation or termination of approval/
re-approval occurs due to a finding that
the hospital failed to fulfill the terms of
the SIA or due to the deficiency findings
that the SIA was designed to address,
pursuant to CMS’ enforcement authority
under the regulations.
A transplant center’s approval to
operate as a Medicare-approved
transplant center does not guarantee any
subsequent re-approvals and may be
time-limited. The transplant center must
submit a separate request for
consideration of mitigating factors,
including updated supporting
documentation each time a CMS review
(generally on a 3 to 5 year cycle) or
complaint investigation determines that
the transplant center does not meet one
or more of the data submission, clinical
experience, and outcomes requirements,
or other CoPs. At such time, we would
review any prior mitigating factors
approval to determine if the
circumstances that originally warranted
approval would still apply. However, in
the case of past mitigating factors
approval based on innovative practice,
CMS may seek information in advance
of a recertification survey to determine
if the reasons for past approval still
prevail and, in such a case, CMS may
consider mitigating factors
concomitantly with the recertification
survey.
We did not receive any public
comments in this policy and, therefore,
finalizing it as proposed.
b. Description and Contents of an SIA
The SIA is a binding agreement
between CMS and the hospital within
which a transplant center operates. A
transplant center, in turn, may have one
or more organ-specific programs, such
as a heart, kidney, pancreas, liver, or
lung transplant program. Each SIA is
focused on a particular organ transplant
program. The SIA is a plan for a series
of actions, activities, and goals that
provide opportunities for the hospital
and transplant center to conduct
internal improvement analysis and
action, and engage external experts to
ensure that the transplant center is in
compliance with evidence-based
standards and advances in the field that
would optimize the care provided to
patients.
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Through an SIA, CMS is able to offer
transplant centers additional time to
achieve compliance with the CoPs
through a structured and monitored
process. In particular, the use of the
formal SIA process reflects CMS’
recognition that it may sometimes
require more than the usual time to
correct the 1-year post-transplant
patient or graft survival and have the
results of such improvement become
manifest in the tracking data, or to
develop and implement a plan to correct
low-volume performance rates. We
generally do not expect to use an SIA in
cases of noncompliance with other
CoPs, although we do not preclude such
a possibility if highly unusual
circumstances are present.
The SIA process (discussed in more
detail below) has demonstrated
effectiveness in improving patient and
graft survival. An important measure of
outcome is the extent to which observed
patient deaths 1 year after transplant
compare with the risk-adjusted expected
number of deaths or graft failure for a
particular transplant program. The
SRTR risk adjustment methodology
(used to calculate the expected
numbers) takes into consideration the
organs transplanted and the
characteristics of the donors and
recipients (for example, factors that
have a bearing on the risk to patient or
graft survival, such as diabetes,
hypertension, advanced age, or cold
ischemic time of the organ to be
transplanted, among others). For
example, the national number of
expected deaths 1 year after transplant
for all transplant centers in the United
States is 1.0. A transplant center that
had twice the expected number of
deaths would have a standardized
mortality ratio (SMR) of 2.0. As of
August 2013, adult kidney transplant
programs cited by CMS for substandard
outcomes and placed on a Medicare
enforcement track, for which there was
a 2-year post-CMS survey tracking
period (N=15), improved their average
SMR for 1-year post-transplant patient
survival performance rate from 2.05 to
1.17 (close to the 1.0 national average).
The transplant centers under an
approved SIA improved their outcomes
from an average SMR ranging from 2.41
before the SIA to 0.76 after the SIA
(much better than the national average).
Transplant centers not cited for
substandard kidney transplant outcomes
improved outcomes slightly from 0.89 to
0.84.244
244 Hamilton, Thomas E., Regulatory Oversight in
Transplantation: Are Patients Really Better Off,
Curr Opin Organ Transplant 2013, 18:203–209.
Available at: at http://www.co-transplantation.com.
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In proposed new § 488.61(h), we
proposed to explicitly incorporate and
specify elements that have been
important to the successful use of the
SIA structure. We proposed to define an
SIA as a binding agreement, entered into
voluntarily by the hospital and CMS,
through which CMS extends the
effective date of a prospectively
scheduled termination of the center’s
Medicare participation (thereby
permitting the program additional time
to achieve compliance with the CoPs),
contingent on the hospital’s agreement
to participate in a structured regimen of
quality improvement activities and
subsequent demonstration of improved
outcomes. In some cases, transplant
programs have entered a period of
inactivity—voluntarily, or imposed as a
condition of the SIA.
Under proposed new § 488.61(h)(1)(i)
through (h)(1)(x), we proposed that in
the SIA, in exchange for additional time
to initiate or continue activities to
achieve compliance with the CoPs, the
transplant center must agree to a
regimen of specified activities,
including (but not limited to) all of the
following:
• Patient notification about the degree
and type of noncompliance by the
program, an explanation of what the
program improvement efforts mean for
patients, and financial assistance to
defray the out-of-pocket costs of
copayments and testing expenses for
any wait-listed individual who wishes
to be listed with another program
(proposed paragraph (h)(1)(i)).
• An external independent peer
review team that conducts an onsite
assessment of program policies, staffing,
operations, relationship to hospital
services, and factors that contribute to
program outcomes; that suggests quality
improvements the hospital should
consider; that provides both verbal and
written feedback to the hospital; and
that provides a verbal debriefing to
CMS. Neither the hospital nor the peer
review team is required to provide a
written report to CMS. The peer review
team would include a transplant
surgeon with expertise in the relevant
organ type(s), a transplant
administrator, an individual with
expertise in transplant QAPI systems, a
social worker or psychologist or
psychiatrist, and a specialty physician
with expertise in conditions particularly
relevant to the applicable organ types(s)
such as a cardiologist, nephrologist, or
hepatologist. Except for the transplant
surgeon, CMS may permit substitution
of an individual with one type of
expertise for another individual who
has expertise particularly needed for the
type of challenges experienced by the
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program, such as substitution of an
infection control specialist in lieu of, or
in addition to, a social worker (proposed
paragraph (h)(1)(ii)).
• An action plan that addresses
systemic quality improvements and is
updated after the onsite peer review
(proposed paragraph (h)(1)(iii)).
• An onsite consultant whose
qualifications are approved by CMS,
and who provides services for 8 days
per month on average for the duration
of the agreement, except that CMS may
permit a portion of the time to be spent
offsite and may agree to fewer
consultant days each month after the
first 3 months of the SIA (proposed
paragraph (h)(1)(iv)).
• A comparative effectiveness
analysis that compares policies,
procedures, and protocols of the
transplant program with those of other
programs in areas of endeavor that are
relevant to the transplant center’s
current quality improvement needs
(proposed paragraph (h)(1)(v)).
• Development of increased
proficiency, or demonstration of current
proficiency, with patient-level data from
the SRTR and the use of registry data to
analyze outcomes and inform quality
improvement efforts (proposed
paragraph (h)(1)(vi)).
• A staffing analysis that examines
the level, type, training, and skill of staff
in order to inform transplant center
efforts to ensure the engagement and
appropriate training and credentialing
of staff (proposed paragraph (h)(1)(vii)).
• Activities to strengthen
performance of the Quality Assessment
and Performance Improvement (QAPI)
Program to ensure full compliance with
the requirements at § 482.96 (proposed
paragraph (h)(1)(viii)).
• Monthly (unless otherwise
specified) reporting and conference calls
with CMS regarding the status of
programmatic improvements, the results
of the actions, data, reports, or other
deliverables specified in the SIA, and
regarding the number of transplants,
and the death and graft failures that
occur within 1 year post-transplant
(proposed paragraph (h)(1)(ix)).
• Additional or alternative
requirements specified by CMS, tailored
to the transplant program type and
circumstances (proposed paragraph
(h)(1)(x)).
Comment: One commenter suggested
that less detail be provided with regard
to the content of an SIA in favor of more
flexibility for CMS and transplant
centers. Another commenter observed
that the SIA content was robust and
could conceivably constitute a best
practice for transplant centers. The
commenter also noted that, despite the
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high specificity of the required
activities, proposed language at
§ 488.61(h)(1)(x) allowing CMS to
specify alternate requirements, provides
the flexibility needed if there are
elements a transplant program cannot
meet due to circumstances beyond its
control.
Response: We agree that the
requirements are reasonably robust and
specific. The SIA content was
developed after early experiences in
2007–2010 with lesser requirements that
failed to generate the results needed for
a number of programs to generate and
sustain improvement outcomes. We
then entered into a number of SIAs that
had additional requirements which we
did not include here, either because
they proved unnecessary in many cases
or caused excessive risk avoidance on
the part of some transplant centers. The
remaining requirements we proposed
have now been well-tested in 35 SIAs so
far, with exceptional success. We agree
with the commenter who observed that
the language proposed at § 488.61
(h)(1)(x) allows CMS with advisable
flexibility to tailor alternate
requirements when necessary. In
response to the concern of the first
commenter, however, in this final rule,
we expanded § 488.61(h)(1)(x) to allow
CMS the ability to waive certain
enumerated elements of the SIA (rather
than requiring alternates) if the agency
finds that the program has already
adequately fulfilled the task.
Comment: Several commenters stated
that transplant programs should not be
obliged to waive their appeal rights in
order to engage in an SIA with CMS.
Response: We do not agree. Prior to
any SIA, each transplant program will
already have had full opportunity to
appeal a prospectively scheduled
termination of Medicare participation.
Further, while a prospective termination
deriving from all other CoP deficiencies
must be resolved within 90 days, in the
case of clinical experience or outcomes,
CMS sets the prospective Medicare
termination at 210 days and allows for
consideration of mitigating factors. We
provide for an SIA for certain programs
when a program is making substantial
progress but is not able to demonstrate
compliance or qualify for outright
approval of its mitigating factors request
within the 210-day period. Under an
SIA, CMS agrees to extend the
prospectively scheduled Medicare
termination date for up to another 12
months. Given these considerations, we
do not agree that a program should be
able to reach the end of an SIA, fail to
demonstrate the improved outcomes
necessary, and then appeal. We believe
such an arrangement would only serve
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to prolong the termination date and
reduce incentives to correct deficiencies
and achieve compliance promptly.
Further, in our experience to date, only
one transplant program has chosen to
appeal a Medicare termination for any
reason. The affected hospital involved
expended considerable legal effort, over
the course of a year, and did not prevail.
In the succeeding year, the program
applied for reinstatement and was
eventually recertified for Medicare
participation after making further
improvements and demonstrating
compliance with the CMS clinical
experience and outcomes requirements.
In short, in the case of an SIA, we
provide for an exceptional extension of
time and believe it is preferable for the
available resources of all parties to be
invested in the process of improving
patient care rather than in a legal
contest. If a program wishes to appeal,
we suggest the appeal be made within
the 60-day post-notification period
permitted by regulation rather than
pursue an SIA (because the SIA would
require waiver of appeal rights).
After consideration of the public
comments we received, we are making
a minor change at § 488.61(h)(1)(x) to
allow some added flexibility to the SIA
content, and are otherwise finalizing
§ 488.61(h)(1)(i) through (h)(1)(ix) as
proposed.
MedPAC recommendations for the IPPS
for FY 2015 are addressed in Appendix
B to this final rule.
For further information relating
specifically to the MedPAC reports or to
obtain a copy of the reports, contact
MedPAC at (202) 653–7226, or visit
MedPAC’s Web site at: http://
www.medpac.gov.
c. Effective Period for an SIA
Under proposed new § 488.61(h)(2),
we proposed to specify that an SIA will
be established for a 12-month period,
subject to CMS’ discretion to determine
if a shorter time period would suffice.
At the hospital’s request and at CMS’
discretion, CMS may extend an SIA for
up to one additional 6-month period.
Comment: A number of commenters
supported these time periods.
Response: We appreciate the
commenters’ support.
After consideration of the public
comments we received, we are
finalizing § 488.61(h)(2) as proposed.
1. Statutory Requirement for Solicitation
of Comments
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
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.
• 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 FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28289 through
28294), we solicited public comment on
each of these issues for the following
sections of this document that contain
information collection requirements
(ICRs). We discuss and respond to any
XII. MedPAC Recommendations
Under section 1886(e)(4)(B) of the
Act, the Secretary must consider
MedPAC’s recommendations regarding
hospital inpatient payments. Under
section 1886(e)(5) of the Act, the
Secretary must publish in the annual
proposed and final IPPS rules the
Secretary’s recommendations regarding
MedPAC’s recommendations. We have
reviewed MedPAC’s March 2014
‘‘Report to the Congress: Medicare
Payment Policy’’ and have given the
recommendations in the report
consideration in conjunction with the
policies set forth in this final rule.
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XIII. Other Required Information
A. Requests for Data From the Public
In order to respond promptly to
public requests for data related to the
prospective payment system, we have
established a process under which
commenters can gain access to raw data
on an expedited basis. Generally, the
data are now available on compact disc
(CD) format. However, many of the files
are available on the Internet at: http://
www.cms.hhs.gov/Medicare/MedicareFee-for-Service-Payment/
AcuteInpatientPPS/index.html. We
listed the data files and the cost for each
file, if applicable, in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28288
through 28289).
Commenters interested in discussing
any data used in constructing the
proposed rule and this final rule should
contact Nisha Bhat at (410) 786–5320.
B. Collection of Information
Requirements
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public comments we received in the
relevant sections.
2. ICRs for Add-On Payments for New
Services and Technologies
Section II.I.1. of the preamble of the
proposed rule and of this final rule
discuss add-on payments for new
services and technologies. Specifically,
this section states that applicants for
add-on payments for new medical
services or technologies for FY 2016
must submit a formal request. A formal
request includes a full description of the
clinical applications of the medical
service or technology and the results of
any clinical evaluations demonstrating
that the new medical service or
technology represents a substantial
clinical improvement. In addition, the
request must contain a significant
sample of the data to demonstrate that
the medical service or technology meets
the high-cost threshold.
We believe the burden associated
with this requirement is exempt from
the PRA under 5 CFR 1320.3(c), which
defines the agency collection of
information subject to the requirements
of the PRA as information collection
imposed on 10 or more persons within
any 12-month period. This information
collection does not impact 10 or more
entities in a 12-month period. In FYs
2008, 2009, 2010, 2011, 2012, 2013, FY
2014, and FY 2015, we received 1, 4, 5,
3, 3, 5, 5, and 7 applications,
respectively.
We did not receive any public
comments regarding this information
collection.
3. ICRs for the Occupational Mix
Adjustment to the FY 2015 Index
(Hospital Wage Index Occupational Mix
Survey)
Section III.F. of the preamble of the
proposed rule (79 FR 28066 through
28067) and this final rule discusses the
occupational mix adjustment to the
proposed and final FY 2015 wage index,
respectively. While the preamble of
these rules does not contain any new
ICRs, we note that there is an OMB
approved information collection request
associated with the hospital wage index.
Section 304(c) of Public Law 106–554
amended section 1886(d)(3)(E) of the
Act to require CMS to collect data at
least once every 3 years on the
occupational mix of employees for each
short-term, acute care hospital
participating in the Medicare program
in order to construct an occupational
mix adjustment to the wage index. We
collect the data via the occupational mix
survey.
The burden associated with this
information collection requirement is
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the time and effort required to collect
and submit the data in the Hospital
Wage Index Occupational Mix Survey to
CMS. The aforementioned burden is
subject to the PRA; it is currently
approved under OCN 0938–0907.
We did not receive any public
comments regarding this information
collection.
4. Hospital Applications for Geographic
Reclassifications by the MGCRB
Section III.H.2. of the preambles of the
proposed rule (79 FR 28070 through
28075) and of this final rule discuss
proposed and final changes to the wage
index based on hospital
reclassifications. As stated in that
section, under section 1886(d)(10) of the
Act, the MGCRB has the authority to
accept short-term IPPS hospital
applications requesting geographic
reclassification for wage index and to
issue decisions on these requests by
hospitals for geographic reclassification
for purposes of payment under the IPPS.
The burden associated with this
application process is the time and
effort necessary for an IPPS hospital to
complete and submit an application for
reclassification to the MGCRB. The
burden associated with this requirement
is subject to the PRA. It is currently
approved under OCN 0938–0573.
We did not receive any public
comments regarding this information
collection.
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5. ICRs for Application for GME
Resident Slots
The information collection
requirements associated with the
preservation of resident cap positions
from closed hospitals, addressed under
section IV.J.3. of the preamble of this
final rule, are not subject to the
Paperwork Reduction Act, as stated in
section 5506 of the Affordable Care Act.
6. ICRs for the Hospital Inpatient
Quality Reporting (IQR) Program
The Hospital IQR Program (formerly
referred to as the Reporting Hospital
Quality Data for Annual Payment
(RHQDAPU) Program) was originally
established to implement section 501(b)
of the MMA, Public Law 108–173. This
program expanded our voluntary
Hospital Quality Initiative. The Hospital
IQR Program originally consisted of a
‘‘starter set’’ of 10 quality measures. The
collection of information associated
with the original starter set of quality
measures was previously approved
under OMB control number 0938–0918.
All of the information collection
requirements previously approved
under OMB control number 0938–0918
have been combined with the
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information collection request
previously approved under OMB
control number 0938–1022. We no
longer use OMB control number 0938–
0918.
We added additional quality measures
to the Hospital IQR Program and
submitted the information collection
request to OMB for approval. This
expansion of the Hospital IQR measures
was part of our implementation of
section 5001(a) of the DRA. Section
1886(b)(3)(B)(viii)(III) of the Act, added
by section 5001(a) of the DRA, requires
that the Secretary expand the ‘‘starter
set’’ of 10 quality measures that were
established by the Secretary as of
November 1, 2003, to include measures
‘‘that the Secretary determines to be
appropriate for the measurement of the
quality of care furnished by hospitals in
inpatient settings.’’ The burden
associated with these reporting
requirements was previously approved
under OMB control number 0938–1022.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53666), we stated that, for
the FY 2016 payment determinations
and subsequent years updates, we
sought OMB approval for a revised
information collection request using the
same OMB control number (0938–1022).
The FY 2014 IPPS/LTCH PPS final rule
(78 FR 50955) does not change the
method for information collection
requests. In a revised request for the FY
2017 payment determination, we will
add the four claims-based measures and
one chart-abstracted measure that we
are finalizing in this final rule as
proposed. The claims-based measures
are: (1) Hospital 30-day, all-cause,
unplanned, risk-standardized
readmission rate (RSRR) following
coronary artery bypass graft (CABG)
surgery; (2) Hospital 30-day, all-cause,
risk-standardized mortality rate (RSMR)
following coronary artery bypass graft
(CABG) surgery; (3) Hospital-level, riskstandardized 30-day episode-of-care
payment measure for pneumonia; and
(4) Hospital-level, risk-standardized 30day episode-of-care payment measure
for heart failure. The chart-abstracted
measure we are finalizing in this final
rule is: Severe sepsis and septic shock:
management bundle (NQF #0500).
Because claims-based measures can
be calculated based on data that are
already reported to the Medicare
program for payment purposes, we
believe no additional information
collection will be required from the
hospitals for the four finalized claims
based measures. However, we believe
that the chart-abstracted measure will
cause some additional burden.
In addition, we believe there will be
a reduction in the burden as a result of
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50345
removing 19 total measures in this
rule.245 We note that we are not
removing SCIP-Inf-4 Cardiac Surgery
Patients with Controlled 6 a.m.
Postoperative Blood Glucose as
proposed. The measures we are
removing are: (1) AMI–1 Aspirin at
Arrival; (2) AMI–3 ACEI/ARB for left
ventricular systolic dysfunction; (3)
AMI–5 Beta-blocker prescribed at
discharge; (4) AMI–8a Timing of Receipt
of Primary Percutaneous Coronary
Intervention (PCI); (5) HF–2 Evaluation
of left ventricular systolic function; (6)
SCIP-Inf-1 Prophylactic antibiotic
received within 1 hour prior to surgical
incision; (7) SCIP-Inf-2 Prophylactic
antibiotic selection for surgical patients;
(8) SCIP Inf-3 Prophylactic antibiotics
discontinued within 24 hours after
surgery end time (48 hours for cardiac
surgery); (9) SCIP Inf-6 Appropriate hair
removal; (10) SCIP-Inf-9 Postoperative
urinary catheter removal on postoperative day 1 or 2 with day of surgery
being day zero; (11) SCIP–VTE–2:
Surgery patients who received
appropriate VTE prophylaxis within 24
hours pre/post-surgery; (12) SCIP
Cardiovascular-2: Surgery Patients on a
Beta Blocker prior to arrival who
received a Beta Blocker during the
perioperative period; (13) PN–6
Appropriate initial antibiotic selection;
(14) STK–2 Antithrombotic therapy for
ischemic stroke; (15) STK–3
Anticoagulation therapy for Afib/flutter;
(16) STK–5 Antithrombotic therapy by
the end of hospital day 2; (17) STK–10
Assessed for rehab; and (18) VTE–4
Patients receiving un-fractionated
Heparin with doses/labs monitored by
protocol, and (19) one structural
measure: Participation in a systematic
database for cardiac surgery.
The numbers included in our
finalized policy more accurately reflect
the burden associated with the Hospital
IQR Program than the estimates
provided in our proposal. In the FY
2014 IPPS/LTCH PPS final rule, we
estimated that the burden for the FY
2016 payment determination was 1,775
hours annually per hospital and 5.86
million hours across approximately
3,300 hospitals participating in the
Hospital IQR Program (78 FR 50956).
These estimates (at 78 FR 50956 for
chart-abstracted measures) were based
on the projected numbers of records to
be abstracted for VTE and stroke. Using
actual data from the Hospital IQR
Program’s clinical data warehouse, we
245 We note that some of these measures are being
removed as chart-abstracted measures, but are being
retained as electronic clinical quality measures. We
refer readers to section IX.A.2.b. of the preamble of
this final rule for further discussion.
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have since revised these estimates
downward to 1,309 hours per hospital
and 4.3 million hours across all
hospitals.
We believe that there will be a
reduction in burden for hospitals due to
14 of the 19 chart-abstracted measures
that we are removing: (1) AMI–8a
Timing of Receipt of Primary
Percutaneous Coronary Intervention
(PCI); (2) HF–2 Evaluation of left
ventricular systolic function; (3) SCIPInf-1 Prophylactic antibiotic received
within 1 hour prior to surgical incision;
(4) SCIP-Inf-2 Prophylactic antibiotic
selection for surgical patients; (5) SCIP
Inf-3 Prophylactic antibiotics
discontinued within 24 hours after
surgery end time (48 hours for cardiac
surgery); (6) SCIP-Inf-9 Postoperative
urinary catheter removal on
postoperative day 1 or 2 with day of
surgery being day zero; (7) SCIP–VTE–
2: Surgery patients who received
appropriate VTE prophylaxis within 24
hours pre/postsurgery; (8) SCIP
Cardiovascular-2: Surgery Patients on a
Beta Blocker prior to arrival who
received a Beta Blocker during the
perioperative period; (9) PN–6
Appropriate initial antibiotic selection;
(10) STK–2 Antithrombotic therapy for
ischemic stroke; (11) STK–3
Anticoagulation therapy for Afib/flutter;
(12) STK–5 Antithrombotic therapy by
the end of hospital day 2; (13) STK–10
Assessed for rehab; and (14) VTE–4
Patients receiving un-fractionated
Heparin with doses/labs monitored by
protocol.
The remaining four chart-abstracted
measures that we are removing have
been previously suspended from the
program; therefore, their removal will
not impact the reporting burden. The
structural measure we are removing,
Participation in a Systematic Database
for Cardiac Surgery (NQF #0113), has an
estimated burden of nearly zero hours;
therefore, its removal will not result in
a significant burden reduction.
Therefore, for the FY 2017 payment
determination, we estimate a net
reduction in burden accounting for both
the addition of one chart-abstracted
measure, severe sepsis and septic shock:
Management bundle (NQF #0500), as
well as our removal of 19 measures
(both chart-abstracted and structural) to
be 160 hours annually per hospital. We
estimate the total reduction in burden
for chart abstraction and structural
measures for the approximately 3,300
Hospital IQR Program-participating
hospitals to be 0.5 million hours (please
note the stated number appears to be off
by 0.1 due to rounding).
In addition, we intend to enroll up to
100 hospitals in a voluntary large scale
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test of validation for electronic clinical
quality measures for the Hospital IQR
Program. We estimate a total burden of
16 hours for each participating hospital.
We intend to reimburse hospitals $26
per hour for up to 16 hours for their
participation in this test. Details
regarding this reimbursement rate are as
follows:
• The labor performed can be
accomplished by medical records and
health information technology staff,
with a mean hourly wage in general
medical and surgical hospitals of
$19.24.246
• Applying OMB Circular A–76, we
assumed full fringe benefits of 36.25
percent, for a fully burdened labor rate
of $26.25 per hour, rounding to $26 per
hour, that accounts for the full cost of
labor. The circular is available at
http://www.whitehouse.gov/sites/
default/files/omb/assets/omb/circulars/
a076/a76_incl_tech_correction.pdf.
For the FY 2017 payment
determination, we also are encouraging
hospitals to voluntarily submit up to 16
measures electronically for the Hospital
IQR Program in a manner that would
permit eligible hospitals to partially
align Hospital IQR Program
requirements with some requirements
under the Medicare EHR Incentive
Program. We estimate that the total
burden associated with the electronic
clinical quality measure reporting
option will be similar to the burden
outlined for hospitals in the EHR
Incentive Program Stage 2 final rule (77
FR 53968 through 54162). As described
above for participation in the test of
validation for electronic clinical quality
metrics in the Hospital IQR Program, we
believe an individual with
commensurate skills will submit
electronic clinical quality measures on
behalf of the hospital at a rate of
approximately $26.00 per hour.
Therefore, we believe it will cost a
hospital approximately $277.33 ($26.00
x 10 hours and 40 minutes) to report 16
electronic clinical quality measures.
Additional information about the chart
abstraction burden is detailed in section
II.K. of Appendix A to this final rule.
Previously, we required hospitals to
provide 96 patient charts for validation
per hospital per year, including 36
charts for HAI validation (with an
average page length of 1,500) and 60
246 In May 2012, the hourly wage was $18.68.
Occupational employment and wages, May 2012,
29–2071 Medical records and health information
technicians. Bureau of Labor Statistics, http://
www.bls.gov/oes/2012/may/oes292071.htm, last
accessed 3/31/2014. We increased this wage by 3.0
percent to account for inflation in the past 24
months. U.S. Inflation Calculator. http://
www.usinflationcalculator.com/inflation/currentinflation-rates/, last accessed 3/31/2014.
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charts for clinical process of care
measure validation (with an average
page length of 300) for a total of 72,000
pages per hospital per year. For the FY
2017 payment determination and
subsequent years, we are reducing this
requirement to 72 charts per hospital
per year, including 40 charts for HAI
validation and 36 charts for clinical
process of care validation, for a total of
70,800 pages per hospital per year—a
decrease of 1,200 pages per hospital per
year. We reimburse hospitals at 12 cents
per photocopied page (68 FR 67956 and
70 FR 23667). Therefore, the reduced
burden is $144 per hospital for up to
600 hospitals.
To support validation of four HAI
measures for the FY 2017 payment
determination and subsequent years, we
estimate an annual burden of 43,200
hours. This estimate is based on up to
600 hospitals completing HAI
Templates averaging 18 hours per
quarter over 4 quarters. This burden is
10,800 hours more than that for the FY
2016 payment determination as
finalized in the FY 2014 IPPPS/LTCH
PPS final rule (78 FR 50822 through
50825) of 32,400 hours, because the HAI
measures are to be validated for 4
quarters instead of 3 quarters. However,
this change for the FY 2017 payment
determination was previously finalized
(78 FR 50822 through 50825).
Using the estimates above, we
estimate an overall reduction in burden
from the FY 2016 estimate. We
anticipate the reduction in total burden
for hospitals to be 160 hours per
hospital or 0.5 million hours for the FY
2017 payment determination, as
compared to FY 2016, for reporting
chart-abstracted and structural
measures, completing forms, reviewing
reports, and submitting validation
templates across all hospitals. This
burden estimate includes new,
readopted, and previously finalized
measures. The estimate excludes the
burden associated with the NHSN and
HCAHPS measures, both of which are
submitted under separate information
collection requests and are approved
under separate OMB control numbers.
The table below describes the hospital
burden associated with the previously
finalized Hospital IQR Program
requirements, and shows how they
changed based upon the policies
finalized for the FY 2017 payment
determination. The numbers included
in our finalized policy more accurately
reflect the burden associated with the
Hospital IQR Program over the estimates
provided in our proposal. The burden
estimates in this final rule are the
estimates for which we are requesting
OMB approval.
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50347
BURDEN IMPACT OF HOSPITAL IQR PROGRAM REQUIREMENTS
Hospital IQR program requirement
Number of hospitals
impacted
Burden per hospital
for previously finalized
requirements
Burden per hospital
for all requirements
finalized in this rule
(continuing, removed,
added)
Chart-abstracted and structural measures, forms ....
Review reports for claims-based measures .............
Reporting of voluntary electronic clinical quality
measures in place of chart-abstracted measures.
Validation templates ..................................................
Electronic clinical quality measure validation test ....
Validation charts photocopying .................................
3,300 .........................
3,300 .........................
Unknown * .................
1,291 hours ...............
4 hours ......................
¥385 hours ...............
1,131 hours ...............
4 hours ......................
¥425 hours ...............
¥160 hours
0
¥40 hours
Up to 600 ** ...............
Up to 100 ** ...............
Up to 600 ..................
72 hours ....................
0 ................................
$8,640 .......................
72 hours ....................
16 hours ....................
$8,496 .......................
0
16 hours
¥$144
Net change in
burden per
hospital
* This number is unknown at the time this table was prepared because final submission deadlines have not passed. Because the burden associated with participation is negative, we conservatively assumed the number of participating hospitals to be 0 in summary calculations included in
the narrative.
** Maximum numbers were used in summary calculations included in the narrative.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
7. ICRs for PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
As discussed in section IX.B. of the
preamble of the proposed rule and this
final rule, section 1866(k)(1) of the Act
requires, for purposes of FY 2014 and
each subsequent fiscal year, that a
hospital described in section
1886(d)(1)(B)(v) of the Act (a PPSexempt cancer hospital, or a PCH)
submit data in accordance with section
1866(k)(2) of the Act with respect to
such fiscal year.
In this final rule, we are finalizing our
proposal to adopt one new clinical
effectiveness measure (External Beam
Radiotherapy for Bone Metastases) for
the FY 2017 program and subsequent
years, which will increase the total
number of measures for the FY 2017
PCHQR measure set to 19 measures.
We also are finalizing an update to the
specifications for the five previously
finalized clinical process/oncology care
measures to require PCHs to report allpatient data for each of these measures,
and adopting a new sampling
methodology that PCHs can use to
report these measures, as well as the
External Beam Radiotherapy measure.
We believe that requiring PCHs to
report the new External Beam
Radiotherapy for Bone Metastases
measure, as well as to use the sampling
methodology, will not be burdensome.
At least seven PCHs are currently
reporting quality measure data
(including population and sampling
data for HCAHPS measures) on a
voluntary basis to CMS. PCHs may also
have experience submitting quality and
population/sample size data to other
entities, such as State survey agencies
and The Joint Commission. As a result,
we believe that the new reporting
requirements we are adopting will not
significantly impact PCHs.
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50957 through 50959), we
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included burden estimates for the FY
2015 and FY 2016 programs. We noted
in that final rule that those estimates
represented a worst case scenario of
estimated burden. We are providing a
revised burden estimate for FY 2016 and
a burden estimate for FY 2017 that take
into account our finalized sampling
methodologies for all applicable
measures. The anticipated revised
burden on PCHs for the FY 2016
program and the anticipated new
burden on PCHs for the FY 2017
program consist of the following: New
measure training and measure
maintenance, and the time required for
collection, aggregation, and submission
of data for all measures.
We estimate that 11 PCHs will submit
quality measure data on approximately
37,596 cancer cases annually beginning
with FY 2016 and FY 2017.247 In
addition, we estimate that PCHs will
spend 0.5 hours on chart abstraction
and data submission per case/event, 0.5
hours on training per each new
measure, 0.25 hours on measure
maintenance per each existing measure,
and a maximum of 5 hours summarizing
and reporting population and sample
size counts for the six SCIP measures
and five oncology care measures.
We are reducing the burden estimates
for the HCAHPS Survey, the six SCIP
measures, and the five clinical process/
oncology care measures in this final rule
to take into consideration the sampling
that PCHs may use for these measures.
As a result, we estimate that the
reporting burden on each PCH for the
FY 2016 program will be 18,758 hours.
We estimate that the reporting burden
on each PCH for FY 2017 would
increase by 50 hours because PCHs will
be required to report an additional
quality measure (External Beam
Radiotherapy for Bone Metastases).
247 FY 2011 CMS MedPAR file based on Medicare
data alone.
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Therefore, we estimate the overall
burden for all of the FY 2017 PCHQR
Program requirements to be 18,808
hours per PCH. This FY 2017 estimate,
which includes an additional finalized
measure, represents a decrease of 33,122
hours 248 per PCH from the FY 2016
burden estimate of 51,930 hours that we
published in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50957 through
50959), or an overall decrease of 64
percent in the number of hours for each
PCH. Coupled with our estimated salary
costs,249 this revised estimate results in
a net reduction in estimated cost of
$472,362 per PCH. We believe that this
burden estimate more accurately
captures the hour and cost impact on
PCHs participating in the PCHQR
Program and reflects our efforts to
minimize the burden impact through
the proposed adoption of a new
sampling methodology that PCHs can
use to report the clinical process/
oncology care measures.
However, we note that these estimates
are based on PCH reporting of Medicare
data only. We intend to update the
burden estimate to more accurately
reflect the burden on PCHs for reporting
all-patient data in future years.
Comment: One commenter supported
CMS’ efforts to reduce the reporting
burden of the PCHQR Program but
raised concern about the variation in
estimated burden between the Hospital
IQR Program and PCHQR Program, and
the possibility that the large variation in
PCH patient volume may leave some
PCHs with a greater burden than is
estimated on average. The commenter
248 This figure represents the difference between
previous burden estimate (51,930 hours) in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50958) and
current burden estimate (18,808 hours).
249 We are now estimating an hourly salary of $33
(http://swz.salary.com/salarywizard/Staff-NurseRN-Hourly-Salary-Details.aspxper). After
accounting for employee benefits and overhead, this
results in a total cost of $66 per labor hour.
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also noted that the burden estimates
provided in the FY 2015 IPPS/LTCH
PPPS proposed rule do not consider the
need for PCHs to build a reporting
infrastructure, report non-Medicare
data, or make efforts to ensure
consistent application of measure
specifications across PCHs.
Response: We thank the commenter
for their support and will consider this
feedback for future years. We
incorporated a sampling approach for
non-Medicare patients, abstraction,
training, computer edits, and labor
hours in our burden estimates. We also
note that we will revise our estimates to
account for the burden associated with
reporting patient level data for the six
SCIP measures in future years, once we
have data on which submission option
PCHs select for SCIP data submission.
Finally, in response to the commenter’s
concern that our burden estimates do
not account for ensuring consistent
application of measure specifications
across PCHs, we note that it is our role
to ensure that PCHs report each measure
consistent with the measure
specifications and, therefore, this task
does not affect PCH burden.
We will submit a revision of the
information collection request currently
approved under OMB 0938–1175 to
account for the aforementioned changes
to the PCHQR Program.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
8. ICRs for the Hospital Value-Based
Purchasing (VBP) Program
In section IV.I. of the preamble of the
proposed rule and of this final rule, we
discuss requirements for the Hospital
VBP Program. Specifically, in this final
rule, we are adopting three new
measures for the FY 2017 Hospital VBP
Program: (1) Methicillin-Resistant
Staphylococcus aureus (MRSA)
Bacteremia; (2) Clostridium difficile;
and (3) PC–01: Elective Delivery Prior to
39 Completed Weeks Gestation. The
first two measures are measures of
healthcare-associated infections
reported via the CDC’s National
Healthcare Safety Network, while the
last measure is a chart-abstracted
measure.
We also are adopting Hospital-level
Risk-Standardized Complication Rate
(RSCR) Following Elective Primary
Total Hip Arthroplasty (THA) and Total
Knee Arthroplasty (TKA) for the FY
2019 Hospital VBP Program.
As provided for in section
1886(o)(2)(A) of the Act, all of these
additional measures are required for the
Hospital IQR Program. Therefore, their
inclusion in the Hospital VBP Program
does not result in any additional burden
because the Hospital VBP Program uses
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data that are required for the Hospital
IQR Program.
9. ICRs for the Long-Term Care Hospital
Quality Reporting (LTCHQR) Program
As discussed in sections IX.C.3.
through IX.C.5. of the preamble of the
proposed rule and of this final rule, for
the LTCHQR Program, for the FY 2015
payment determination and subsequent
years, we are retaining the following
three quality measures: (1) National
Healthcare Safety Network (NHSN)
Catheter-Associated Urinary Tract
Infections (CAUTI) Outcome Measure
(NQF #0138); (2) National Healthcare
Safety Network (NHSN) Central Line
Catheter-Associated Blood Stream
Infection Event (CLABSI) Outcome
Measure (NQF #0139); and (3) and
Percent of Residents or Patients with
Pressure Ulcers That Are New or
Worsened (Short-Stay) (NQF #0678). For
the FY 2016 payment determination and
subsequent years, we are retaining the
following two measures in addition to
the measures finalized for previous
years: (1) Percent of Residents or
Patients Who Were Assessed and
Appropriately Given the Seasonal
Influenza Vaccine (Short-Stay) (NQF
#0680); and (2) Influenza Vaccination
Coverage among Healthcare Personnel
(NQF #0431). For the FY 2017 payment
determination and subsequent years, we
are retaining the following three
measures in addition to the measures
finalized for previous years: (1) National
Health Safety Network (NHSN) FacilityWide Inpatient Hospital-Onset
Methicillin-resistant Staphylococcus
aureus (MRSA) Bacteremia Outcome
Measure (NQF #1716); (2) National
Health Safety Network (NHSN) FacilityWide Inpatient Hospital-Onset
Clostridium difficile Infection (CDI)
Outcome Measure (NQF #1717); and (3)
All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge
from Long-Term Care Hospitals. For the
FY 2018 payment determination and
subsequent years, we are retaining the
following measure in addition to the
measures finalized for previous years:
Application of Percent of Residents
Experiencing One or More Falls with
Major Injury (Long Stay) (NQF #0674).
As discussed in section IX.C.7. of the
preamble of the proposed rule and this
final rule, we are finalizing three new
quality measures for inclusion in the
LTCHQR Program for the FY 2018
payment determination and subsequent
years: (1) Percent of Long-Term Care
Hospital Patients with an Admission
and Discharge Functional Assessment
and a Care Plan That Addresses
Function; (2) Functional Outcome
Measure: Change in Mobility among
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Long-Term Care Hospital Patients
Requiring Ventilator Support; and (3)
National Healthcare Safety Network
(NHSN) Ventilator-Associated Event
(VAE) Outcome Measure.
Six of the previously adopted and
newly finalized measures will be
collected via the NHSN. The NHSN is
a secure, Internet-based healthcareassociated infection (HAI) tracking
system maintained and managed by the
CDC. The NHSN enables health care
facilities to collect and use data about
HAIs, adherence to clinical practices
known to prevent HAIs, and other
adverse events within their
organizations. NHSN data collection
occurs via a Web-based tool hosted by
the CDC and provided free of charge to
facilities. We believe that any burden
increase related to complying with the
submission of the proposed NHSN VAE
Outcome measure would be minimal
because LTCHs have already completed
the initial setup of the NHSN
submission process and have become
familiar with reporting data in the
NHSN system due to the requirement to
report CAUTI and CLABSI measures.
While this requirement is subject to the
PRA, we believe that the associated
burden is approved under OMB control
number 0920–0666, for those measures
previously finalized, with an expiration
date of November, 31, 2016.
The All-Cause Unplanned
Readmission Measure for 30 Days PostDischarge from Long-Term Care
Hospitals is a Medicare claims-based
measure. Because claims-based
measures can be calculated based on
data that are already reported to the
Medicare program for payment
purposes, we believe that this measure
will not add any additional reporting
burden for LTCHs.
The remaining five previously
adopted and newly finalized measures
will be collected utilizing the LTCH
CARE Data Set. The LTCH CARE Data
Set, in its current form, has been
approved under OMB control number
0938–1163. Additions will need to be
made to the LTCH CARE Data Set in
order to allow for collection of the two
functional status measures we are
finalizing in section IX.C.7.a. of the
preamble of this final rule: (1) Percent
of Long-Term Care Hospital Patients
with an Admission and Discharge
Functional Assessment and a Care Plan
That Addresses Function; and (2)
Functional Outcome Measure: Change
in Mobility among Long-Term Care
Hospital Patients Requiring Ventilator
Support. The revised data collection
will be resubmitted to OMB for
approval. While this requirement is
subject to the PRA, we believe the
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associated burden is either approved
under OMB control number 0938–1163,
for those measures previously finalized,
with an expiration date of June 30, 2016,
or is contained in this updated
information collection request section.
Assuring data accuracy is vital to
public reporting programs. However, as
discussed in section IX.C.11. of the
preamble of this final rule, we are not
finalizing our proposal, for the FY 2016
payment determination and subsequent
years, to validate data submitted to CMS
on the LTCH CARE Data Set at this time.
We discuss and respond to public
comments we received on these
information collection requirements in
the section IX.C. of the preamble of this
final rule.
10. Electronic Health Record (EHR)
Incentive Program and Meaningful Use
(MU)
In section IX.D. of the preamble of the
proposed rule and of this final rule, we
discuss our proposal to align the
Medicare EHR Incentive Program
reporting and submission timelines for
clinical quality measures for eligible
hospitals and CAHs with the Hospital
IQR Program’s reporting and submission
timelines. In addition, we provide
guidance and clarification of certain
policies for reporting zero denominators
on clinical quality measures and our
policy on case threshold exemptions.
Because these proposals for data
collection would align with the
reporting requirements in place for the
Hospital IQR Program, we do not
believe there is any additional burden
for this collection of information.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
11. ICR Regarding Revision of
Regulations Governing Use and Release
of Medicare Advantage (MA) Risk
Adjustment Data (§ 422.310(f))
Medicare Advantage (MA)
organizations are required to submit risk
adjustment data to CMS organizations
under current authority at § 422.310(b)
through (d). The changes we are
finalizing regarding the use and release
of MA risk adjustment data under
section X. of the preamble of this final
rule do not change the requirements on
MA organizations for submission of
information to CMS, which have been in
place for several years. Therefore, these
finalized changes do not impose new
information collection requirements on
MA organizations. Consequently,
because there are no new information
collection requirements in our proposal,
the proposal does not require a review
by OMB under the authority of the
Paperwork Reduction Act of 1995.
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C. Waiver of 60-Day Delay in the
Effective Date
We ordinarily provide a 60-day delay
in the effective date of the provisions of
a rule in accordance with the
Administrative Procedure Act (APA) (5
U.S.C. 553(d), which requires a 30-day
delayed effective date, and the
Congressional Review Act (5 U.S.C.
801(a)(3), which requires a 60-day
delayed effective date for major rules.
However, we can waive the delay in the
effective date if the Secretary finds, for
good cause, that the delay is
impracticable, unnecessary, or contrary
to the public interest, and incorporates
a statement of the finding and the
reasons in the rule issued. 5 U.S.C.
553(d)(3); 5 U.S.C. 808(2).
The Hospital Inpatient Prospective
Payment Systems for Acute Care
Hospitals and the Long Term Care
Hospital Prospective Payment System
are fiscal year payment systems, and we
typically issue the final rule by August
1 of each year to both comply with the
requirement to annually review and
update these payment systems and
ensure that the payment policies for
these systems are effective, following
the required 60-day delay in the
effective date, on October 1, the first day
of the fiscal year to which the policies
are intended to apply. If the agency
finds, for good cause, that a 60-day
delay is impracticable, unnecessary, or
contrary to the public interest, and the
agency incorporates a statement of the
findings and its reasons in the rule
issued, the agency may specify an
earlier effective date. The timeframes for
developing annual rules are extremely
compressed and processing issues
complicated this year’s rule. We believe
it would be contrary to the public
interest to delay the effective date of the
payment system portions of this rule.
We therefore specify that those portions
of the rule will be effective October 1.
List of Subjects
42 CFR Part 405
Administrative practice and
procedure, Health facilities, Health
professions, Kidney diseases, Medicare,
Reporting and recordkeeping, rural
areas, X-rays.
42 CFR Part 412
Administrative practice and
procedure, Health facilities, Medicare,
Puerto Rico, Reporting and
recordkeeping requirements.
42 CFR Part 413
Health facilities, Kidney diseases,
Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
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50349
42 CFR Part 415
Health facilities, Health professions,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 422
Administrative practice and
procedure, Health facilities, Health
maintenance, organizations (HMO),
Medicare, Penalties, Privacy, Reporting
and recordkeeping requirements.
42 CFR Part 424
Emergency medical services, Health
facilities, Health professions, Medicare.
42 CFR Part 485
Grant programs—health, Health
facilities, Medicaid, Medicare,
Reporting and recordkeeping
requirements.
42 CFR Part 488
Administrative practice and
procedure, Health facilities, Medicare,
Reporting and recordkeeping
requirements.
For the reasons stated in the preamble
of this final rule, the Centers for
Medicare & Medicaid Services is
confirming, as final, interim rules
published on October 3, 2013 (78 FR
61191) and March 18, 2014 (79 FR
15022) and is further amending 42 CFR
Chapter IV as set forth below:
Title 42—Public Health
PART 405—FEDERAL HEALTH
INSURANCE FOR THE AGED AND
DISABLED
Subpart R—Provider Reimbursement
Determinations and Appeals
1. The authority citation for Subpart R
continues to read as follows:
■
Authority: Secs. 205, 1102, 1814(b),
1815(a), 1833, 1861(v), 1871, 1872, 1878, and
1886 of the Social Security Act (42 U.S.C.
405, 1302, 1395f(b), 1395g(a), 1395l, 1395hh,
1395ii, 1395oo, and 1395ww).
2. Section 405.1811 is amended by—
a. Revising paragraphs (a)
introductory text and (a)(3).
■ b. Revising paragraph (b) introductory
text.
■ c. Redesignating paragraph (c) as
paragraph (e).
■ d. Adding new paragraphs (c) and (d).
■ e. Revising newly redesignated
paragraph (e).
The revisions and additions read as
follows:
■
■
§ 405.1811 Right to contractor hearing;
contents of, and adding issues to, hearing
request.
(a) Right to hearing on final contractor
determination. A provider (but no other
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individual, entity, or party) has a right
to a contractor hearing, as a single
provider appeal, for specific items
claimed for a cost reporting period
covered by a final contractor or
Secretary determination if—
*
*
*
*
*
(3) Unless the provider qualifies for a
good cause extension under § 405.1813,
the date of receipt by the contractor of
the provider’s hearing request is no later
than 180 days after the date of receipt
by the provider of the final contractor or
Secretary determination.
(b) Contents of request for a
contractor hearing on final contractor
determination. The provider’s request
for a contractor hearing under paragraph
(a) of this section must be submitted in
writing to the contractor, and the
request must include the elements
described in paragraphs (b)(1) through
(b)(3) of this section. If the provider
submits a hearing request that does not
meet the requirements of paragraph
(b)(1), (b)(2), or (b)(3) of this section, the
contractor hearing officer may dismiss
with prejudice the appeal or take any
other remedial action he or she
considers appropriate.
*
*
*
*
*
(c) Right to hearing based on untimely
contractor determination.
Notwithstanding the provisions of
paragraph (a) of this section, a provider
(but no other individual, entity, or
party) has a right to a contractor hearing,
as a single provider appeal, for a cost
reporting period if—
(1) A final contractor determination
for the provider’s cost reporting period
is not issued (through no fault of the
provider) within 12 months after the
date of receipt by the contractor of the
provider’s perfected cost report or
amended cost report (as specified in
§ 413.24(f) of this chapter). The date of
receipt by the contractor of the
provider’s perfected cost report or
amended cost report is presumed to be
the date the contractor stamped
‘‘Received’’ on such cost report unless it
is shown by a preponderance of the
evidence that the contractor received
the cost report on an earlier date.
(2) Unless the provider qualifies for a
good cause extension under § 405.1813,
the date of receipt by the contractor of
the provider’s hearing request is no later
than 180 days after the expiration of the
12 month period for issuance of the
final contractor determination (as
determined in accordance with
paragraph (c)(1) of this section); and
(3) The amount in controversy (as
determined in accordance with
§ 405.1839) is at least $1,000 but less
than $10,000.
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(d) Contents of request for a
contractor hearing based on untimely
contractor determination. The
provider’s request for a contractor
hearing under paragraph (c) of this
section must be submitted in writing to
the contractor, and the request must
include the elements described in
paragraphs (d)(1) through (d)(3) of this
section. If the provider submits a
hearing request that does not meet the
requirements of paragraph (d)(1), (d)(2),
or (d)(3) of this section, the contractor
hearing officer may dismiss with
prejudice the appeal or take any other
remedial action he or she considers
appropriate.
(1) A demonstration that the provider
satisfies the requirements for a
contractor hearing as specified in
paragraph (c) of this section.
(2) An explanation (for each specific
item at issue) of the following:
(i) Why the provider believes
Medicare payment is incorrect for each
disputed item (or, where applicable,
why the provider is unable to determine
whether Medicare payment is correct
because it does not have access to
underlying information concerning the
calculation of Medicare payment).
(ii) How and why the provider
believes Medicare payment must be
determined differently for each disputed
item.
(iii) If the provider self-disallows a
specific item, a description of the nature
and amount of each self-disallowed item
and the reimbursement or payment
sought for the item.
(3) A copy of any documentary
evidence the provider considers
necessary to satisfy the hearing request
requirements of paragraphs (d)(1) and
(d)(2) of this section.
(e) Adding issues to the hearing
request. After filing a hearing request in
accordance with paragraphs (a) and (b),
or paragraphs (c) and (d), of this section,
a provider may add specific Medicare
payment issues to the original hearing
request by submitting a written request
to the contractor hearing officer, only
if—
(1) The request to add issues complies
with the requirements of paragraphs (a)
and (b), or paragraphs (c) and (d), of this
section as to each new issue.
(2) The specific matters at issue raised
in the initial hearing request and the
matters identified in subsequent
requests to add issues, when combined,
satisfy the amount in controversy
requirements of paragraph (a)(2) or
paragraph (c)(3) of this section.
(3) The contractor hearing officer
receives the provider’s request to add
issues no later than 60 days after the
expiration of the applicable 180-day
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period prescribed in paragraph (a)(3) or
paragraph (c)(2) of this section.
■ 3. Section 405.1835 is amended by—
■ a. Revising paragraphs (a)
introductory text and (a)(3).
■ b. Revising paragraph (b) introductory
text.
■ c. Redesignating paragraph (c) as
paragraph (e).
■ d. Adding new paragraphs (c) and (d).
■ e. Revising newly redesignated
paragraph (e).
The revisions and additions read as
follows:
§ 405.1835 Right to Board hearing;
contents of, and adding issues to, hearing
request.
(a) Right to hearing on final contractor
determination. A provider (but no other
individual, entity, or party) has a right
to a Board hearing, as a single provider
appeal, for specific items claimed for a
cost reporting period covered by a final
contractor or Secretary determination
if—
*
*
*
*
*
(3) Unless the provider qualifies for a
good cause extension under § 405.1836,
the date of receipt by the Board of the
provider’s hearing request is no later
than 180 days after the date of receipt
by the provider of the final contractor or
Secretary determination.
(b) Contents of request for a Board
hearing on final contractor
determination. The provider’s request
for a Board hearing under paragraph (a)
of this section must be submitted in
writing to the Board, and the request
must include the elements described in
paragraphs (b)(1) through (b)(4) of this
section. If the provider submits a
hearing request that does not meet the
requirements of paragraph (b)(1), (b)(2),
or (b)(3) of this section, the Board may
dismiss with prejudice the appeal or
take any other remedial action it
considers appropriate.
*
*
*
*
*
(c) Right to hearing based on untimely
contractor determination.
Notwithstanding the provisions of
paragraph (a) of this section, a provider
(but no other individual, entity, or
party) has a right to a Board hearing, as
a single provider appeal, for specific
items claimed for a cost reporting period
if—
(1) A final contractor determination
for the provider’s cost reporting period
is not issued (through no fault of the
provider) within 12 months after the
date of receipt by the contractor of the
provider’s perfected cost report or
amended cost report (as specified in
§ 413.24(f) of this chapter). The date of
receipt by the contractor of the
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provider’s perfected cost report or
amended cost report is presumed to be
the date the contractor stamped
‘‘Received’’ on such cost report unless it
is shown by a preponderance of the
evidence that the contractor received
the cost report on an earlier date.
(2) Unless the provider qualifies for a
good cause extension under § 405.1836,
the date of receipt by the Board of the
provider’s hearing request is no later
than 180 days after the expiration of the
12 month period for issuance of the
final contractor determination (as
determined in accordance with
paragraph (c)(1) of this section); and
(3) The amount in controversy (as
determined in accordance with
§ 405.1839) is $10,000 or more.
(d) Contents of request for a Board
hearing based on untimely contractor
determination. The provider’s request
for a Board hearing under paragraph (c)
of this section must be submitted in
writing to the Board, and the request
must include the elements described in
paragraphs (d)(1) through (d)(4) of this
section. If the provider submits a
hearing request that does not meet the
requirements of paragraph (d)(1), (d)(2),
or (d)(3) of this section, the Board may
dismiss with prejudice the appeal or
take any other remedial action it
considers appropriate.
(1) A demonstration that the provider
satisfies the requirements for a Board
hearing as specified in paragraph (c) of
this section.
(2) An explanation (for each specific
item at issue) of the following:
(i) Why the provider believes
Medicare payment is incorrect for each
disputed item (or, where applicable,
why the provider is unable to determine
whether Medicare payment is correct
because it does not have access to
underlying information concerning the
calculation of Medicare payment).
(ii) How and why the provider
believes Medicare payment must be
determined differently for each disputed
item.
(iii) If the provider self-disallows a
specific item, a description of the nature
and amount of each self-disallowed item
and the reimbursement or payment
sought for the item.
(3) A copy of any documentary
evidence the provider considers
necessary to satisfy the hearing request
requirements of paragraphs (d)(1) and
(d)(2) of this section.
(4) With respect to a provider under
common ownership or control, the
name and address of its parent
corporation, and a statement that meets
all of the requirements of paragraphs
(b)(4)(i) and (b)(4)(ii) of this section.
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(e) Adding issues to the hearing
request. After filing a hearing request in
accordance with paragraphs (a) and (b),
or paragraphs (c) and (d), of this section,
a provider may add specific Medicare
payment issues to the original hearing
request by submitting a written request
to the Board only if—
(1) The request to add issues complies
with the requirements of paragraphs (a)
and (b), or paragraphs (c) and (d), of this
section as to each new issue.
(2) The specific matters at issue raised
in the initial hearing request and the
matters identified in subsequent
requests to add issues, when combined,
satisfy the amount in controversy
requirements of paragraph (a)(2) or
paragraph (c)(3) of this section.
(3) The Board receives the provider’s
request to add issues no later than 60
days after the expiration of the
applicable 180-day period prescribed in
paragraph (a)(3) or paragraph (c)(2), of
this section.
Nomenclature Changes
Subpart R [Amended]
4. Amend Subpart R by removing the
term or phrase in the first column and
replace it with the term or phrase in the
second column:
■
Remove
Add
an intermediary
intermediary
intermediaries’
intermediary’s
a contractor
contractor
contractors’
contractor’s
Subpart X—Rural Health Clinic and
Federally Qualified Health Center
Services
5. The authority citation for Subpart X
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
6. Section 405.2468 is amended by
revising paragraph (f)(1) to read as
follows:
■
§ 405.2468
Allowable costs.
*
*
*
*
*
(f) * * *
(1) Effective for portions of cost
reporting periods occurring on or after
January 1, 1999, if an RHC or an FQHC
incurs ‘‘all or substantially all’’ of the
costs for the training program in the
nonhospital setting as defined in
§ 413.75(b) of this chapter, the RHC or
FQHC may receive direct graduate
medical education payment for those
residents. However, in connection with
cost reporting periods for which ‘‘all or
substantially all of the costs for the
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50351
training program in the nonhospital
setting’’ is not defined in § 413.75(b) of
this chapter, if an RHC or an FQHC
incurs the salaries and fringe benefits
(including travel and lodging where
applicable) of residents training at the
RHC or FQHC, the RHC or FQHC may
receive direct graduate medical
education payments for those residents.
*
*
*
*
*
PART 412—PROSPECTIVE PAYMENT
SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
7. The authority citation for Part 412
is revised 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.
8. Section 412.23 is amended by—
a. Revising paragraphs (e)(6)(i),
(e)(6)(ii) introductory text, and
(e)(6)(ii)(B)(2).
■ b. Revising paragraphs (e)(7)(i) and
(e)(7)(ii) introductory text.
■ c. Adding new paragraph (e)(7)(iii).
The revisions and additions read as
follows:
■
■
§ 412.23 Excluded hospitals:
Classifications.
*
*
*
*
*
(e) * * *
(6) * * *
(i) General rule. Except as specified in
paragraphs (e)(6)(ii) and (e)(6)(iii) of this
section for the period beginning
December 29, 2007 and ending
December 28, 2012, and the period
beginning April 1, 2014 and ending
September 30, 2017, a moratorium
applies to the establishment and
classification of a long-term care
hospital as described in paragraphs (e)
and (e)(1) through (e)(5) of this section
or a long-term care hospital satellite
facility as described in § 412.22(h).
(ii) Exception. The moratorium
specified in paragraph (e)(6)(i) of this
section is not applicable to the
establishment and classification of a
long-term care hospital that meets the
requirements of paragraphs (e) and (e)(1)
through (e)(5) of this section, or a longterm care hospital satellite facility that
meets the requirements of § 412.22(h), if
the long-term care hospital or long-term
care satellite facility meets the following
criteria on or before December 29, 2007,
or prior to April 1, 2014, as applicable:
*
*
*
*
*
(B) * * *
(2)(i) Has expended prior to December
29, 2007, at least 10 percent (or, if less,
$2.5 million) of the estimated cost of the
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project specified in paragraph
(e)(6)(ii)(B)(1) of his section; or
(ii) Has expended, before April 1,
2014, at least 10 percent (or, if less, $2.5
million) of the estimated cost of the
project specified in paragraph
(e)(6)(ii)(B)(1) of this section.
*
*
*
*
*
(7) * * *
(i) For purposes of this paragraph, an
existing long-term care hospital or longterm care hospital satellite facility
means a long-term care hospital that
meets the requirements of paragraph(e)
of this section or a long-term care
hospital satellite facility that meets the
requirements of § 412.22(h) that
received payment under the provisions
of subpart O of this part prior to the
dates noted in the following moratorium
clauses.
(ii) December 29, 2007, through
December 28, 2007—
*
*
*
*
*
(iii) April 1, 2014 through September
30, 2017—The number of Medicarecertified beds in an existing long-term
care hospital or an existing long-term
care hospital satellite facility must not
be increased beyond the number of
Medicare-certified beds prior to April 1,
2014.
*
*
*
*
*
■ 9. Section 412.64 is amended by—
■ a. Removing paragraph (b)(1)(ii)(D).
■ b. Revising paragraph (b)(3)(i).
■ c. Revising paragraphs (d)(1), (d)(2)(i)
introductory text, (d)(2)(ii), and (d)(3)
introductory text.
■ d. In paragraphs (h)(4) introductory
text and (h)(4)(vi), removing the date
‘‘October 1, 2014’’ and adding in its
place the date ‘‘October 1, 2015’’.
The revisions read as follows:
§ 412.64 Federal rates for inpatient
operating costs for Federal fiscal year 2005
and subsequent fiscal years.
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*
*
*
*
*
(b) * * *
(3)(i) For discharges occurring on or
after October 1, 2004, a hospital that is
located in a rural county adjacent to one
or more urban areas is deemed to be
located in an urban area and receives
the Federal payment amount for the
urban area to which the greater number
of workers in the county commute if the
rural county would otherwise be
considered part of an urban area, under
the standards for designating MSAs if
the commuting rates used in
determining outlying counties were
determined on the basis of the aggregate
number of resident workers who
commute to (and, if applicable under
the standards, from) the central county
or central counties of all adjacent MSAs.
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Qualifying counties are determined
based upon OMB standards, using the
most recent OMB standards for
delineating statistical areas adopted by
CMS.
*
*
*
*
*
(d) * * *
(1) The applicable percentage change
for updating the standardized amount
for all hospitals in all areas is—
(i) For fiscal year 2005 through fiscal
year 2009, the percentage increase in the
market basket index (as defined in
§ 413.40(a)(3) of this chapter) for
prospective payment hospitals, subject
to the provisions of paragraph (d)(2) of
this section.
(ii) For fiscal year 2010, for
discharges—
(A) On or after October 1, 2009 and
before April 1, 2010, the percentage
increase in the market basket index (as
defined in § 413.40(a)(3) of this chapter)
for prospective payment hospitals,
subject to the provisions of paragraph
(d)(2) of this section; and
(B) On or after April 1, 2010 and
before October 1, 2010, the percentage
increase in the market basket index (as
defined in § 413.40(a)(3) of this chapter)
for prospective payment hospitals,
subject to the provisions of paragraph
(d)(2) of this section, less 0.25
percentage point.
(iii) For fiscal year 2011, the
percentage increase in the market basket
index (as defined in § 413.40(a)(3) of
this subchapter) for prospective
payment hospitals, subject to the
provisions of paragraph (d)(2) of this
section, less 0.25 percentage point.
(iv) For fiscal years 2012 and 2013,
the percentage increase in the market
basket index (as defined in
§ 413.40(a)(3) of this chapter) for
prospective payment hospitals, subject
to the provisions of paragraph (d)(2) of
this section, less a multifactor
productivity adjustment (as determined
by CMS) and less 0.1 percentage point.
(v) For fiscal year 2014, the
percentage increase in the market basket
index (as defined in § 413.40(a)(3) of
this chapter) for prospective payment
hospitals, subject to the provisions of
paragraph (d)(2) of this section, less a
multifactor productivity adjustment (as
determined by CMS) and less 0.3
percentage point.
(vi) For fiscal year 2015, the
percentage increase in the market basket
index (as defined in § 413.40(a)(3) of
this chapter) for prospective payment
hospitals, subject to the provisions of
paragraphs (d)(2) and (d)(3) of this
section, less a multifactor productivity
adjustment (as determined by CMS) and
less 0.2 percentage point.
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(2)(i) In the case of a ‘‘subsection (d)
hospital,’’ as defined under section
1886(d)(1)(B) of the Act, that does not
submit quality data on a quarterly basis
to CMS, in the form and manner
specified by CMS, the percentage
increase in the market basket index (as
defined in § 413.40(a)(3) of this chapter)
for prospective payment hospitals is
reduced—
*
*
*
*
*
(ii) Any reduction pursuant to this
paragraph (d)(2) will apply only to the
fiscal year involved and will not be
taken into account in computing the
applicable percentage change for a
subsequent fiscal year.
(3) Beginning fiscal year 2015, in the
case of a ‘‘subsection (d) hospital,’’ as
defined under section 1886(d)(1)(B) of
the Act, that is not a meaningful
electronic health record (EHR) user as
defined in Part 495 of this chapter for
the applicable EHR reporting period and
does not receive an exception, threefourths of the percentage increase in the
market basket index (as defined in
§ 413.40(a)(3) of this chapter) for
prospective payment hospitals is
reduced—
*
*
*
*
*
■ 10. Section 412.101 is amended by
revising paragraphs (b)(2)(i), (b)(2)(ii),
(c)(1), (c)(2) introductory text, and (d) to
read as follows:
§ 412.101 Special treatment: Inpatient
hospital payment adjustment for lowvolume hospitals.
*
*
*
*
*
(b) * * *
(2) * * *
(i) For FY 2005 through FY 2010 and
the portion of FY 2015 beginning on
April 1, 2015, and subsequent fiscal
years, a hospital must have fewer than
200 total discharges, which includes
Medicare and non-Medicare discharges,
during the fiscal year, based on the
hospital’s most recently submitted cost
report, and be located more than 25 road
miles (as defined in paragraph (a) of this
section) from the nearest ‘‘subsection
(d)’’ (section 1886(d) of the Act)
hospital.
(ii) For FY 2011 through FY 2014, and
the portion of FY 2015 before April 1,
2015, a hospital must have fewer than
1,600 Medicare discharges, as defined in
paragraph (a) of this section, during the
fiscal year, based on the hospital’s
Medicare discharges from the most
recently available MedPAR data as
determined by CMS, and be located
more than 15 road miles, as defined in
paragraph (a) of this section, from the
nearest ‘‘subsection (d)’’ (section
1886(d) of the Act) hospital.
*
*
*
*
*
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(c) * * *
(1) For FY 2005 through FY 2010 and
the portion of FY 2015 beginning on
April 1, 2015 and subsequent fiscal
years, the adjustment is an additional 25
percent for each Medicare discharge.
(2) For FY 2011 through FY 2014 and
the portion of FY 2015 before April 1,
2015, the adjustment is as follows:
*
*
*
*
*
(d) Eligibility of new hospitals for the
adjustment. For FYs 2005 through 2010
and the portion of FY 2015 beginning on
April 1, 2015, and subsequent fiscal
years, a new hospital will be eligible for
a low-volume adjustment under this
section once it has submitted a cost
report for a cost reporting period that
indicates that it meets discharge
requirements during the applicable
fiscal year and has provided its fiscal
intermediary or Medicare administrative
contractor with sufficient evidence that
it meets the distance requirement, as
specified under paragraph (b)(2) of this
section.
■ 11. Section 412.102 is revised to read
as follows:
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§ 412.102 Special treatment: Hospitals
located in areas that are changing from
urban to rural as a result of a geographic
redesignation.
An urban hospital that was part of an
MSA, but was redesignated as rural as
a result of the most recent OMB
standards for delineating statistical
areas adopted by CMS, may receive an
adjustment to its rural Federal payment
amount for operating costs for 2
successive fiscal years as provided in
paragraphs (a) and (b) of this section.
(a) First year adjustment. (1) Effective
on or after October 1, 1983 and before
October 1, 2014, the hospital’s rural
average standardized amount and
disproportionate share payments as
described in § 412.106 are adjusted on
the basis of an additional amount that
equals two-thirds of the difference
between the urban standardized amount
and disproportionate share payments
applicable to the hospital before its
geographic redesignation and the rural
standardized amount and
disproportionate share payments
otherwise applicable to the Federal
fiscal year for which the adjustment is
made.
(2) Effective on or after October 1,
2014, the hospital’s rural
disproportionate share payments as
described in § 412.106 are adjusted on
the basis of an additional amount that
equals two-thirds of the difference
between the disproportionate share
payments as an urban hospital
applicable to the hospital before its
geographic redesignation to a rural area
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as a result of implementation of the
most recent OMB standards for
delineating statistical areas adopted by
CMS and the rural disproportionate
share payment otherwise applicable to
the Federal fiscal year for which the
adjustment is made.
(b) Second year adjustment. (1)
Effective on or after October 1, 1983 and
before October 1, 2014, if a hospital’s
status continues to be rural as a result
of geographic redesignation, its rural
average standardized amount and
disproportionate share payments are
adjusted on the basis of an additional
amount that equals one-third of the
difference between the urban
standardized amount and
disproportionate share payments
applicable to the hospital before its
redesignation and the rural standardized
amounts and disproportionate share
payments otherwise applicable to the
Federal fiscal year for which the
adjustment is made.
(2) Effective on or after October 1,
2014, if a hospital’s status continues to
be rural as a result of geographic
redesignation, its disproportionate share
payments are adjusted on the basis of an
additional amount that equals one-third
of the difference between the
disproportionate share payments
applicable to the hospital before its
geographic redesignation to a rural area
as a result of implementation of the
most recent OMB standards for
delineating statistical areas adopted by
CMS and the rural disproportionate
share payments otherwise applicable to
the Federal fiscal year for which the
adjustment is made.
■ 12. Section 412.103 is amended by
adding a new paragraph (a)(6) to read as
follows:
§ 412.103 Special treatment: Hospitals
located in urban areas and that apply for
reclassification as rural.
(a) * * *
(6) For any period on or after October
1, 2014, a CAH in a county that was not
in an urban area as defined by the Office
of Management and Budget (OMB), but
was included in an urban area as a
result of the most recent OMB standards
for delineating statistical areas adopted
by CMS and the most recent Census
Bureau data, may be reclassified as
being located in a rural area for
purposes of meeting the rural location
requirement at § 485.610(b) of this
chapter for a period of 2 years,
beginning with the date of the
implementation of the new labor market
area delineations, if it meets any of the
requirements under paragraph (a)(1),
(a)(2), or (a)(3) of this section.
*
*
*
*
*
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13. Section 412.105 is amended by
revising paragraphs (a)(1)(ii),
(f)(1)(iv)(D), and (f)(1)(v), to read as
follows:
■
§ 412.105 Special treatment: Hospitals that
incur indirect costs for graduate medical
education programs.
*
*
*
*
*
(a) * * *
(1) * * *
(ii)(A) For new programs started prior
to October 1, 2012, the exception for
new programs described in paragraph
(f)(1)(vii) of this section applies to each
new program individually for which the
full-time equivalent cap may be
adjusted based on the period of years
equal to the minimum accredited length
of each new program.
(B) For new programs started on or
after October 1, 2012, the exception for
new programs described in paragraph
(f)(1)(vii) of this section applies to each
new program individually during the
cost reporting periods prior to the
beginning of the applicable hospital’s
cost reporting period that coincides
with or follows the start of the sixth
program year of the first new program
started, for hospitals for which the fulltime equivalent cap may be adjusted in
accordance with § 413.79(e)(1) of this
chapter, and prior to the beginning of
the applicable hospital’s cost reporting
period that coincides with or follows
the start of the sixth program year of the
each individual new program started,
for hospitals for which the full-time
equivalent cap may be adjusted in
accordance with § 413.79(e)(3) of this
chapter.
*
*
*
*
*
(f) * * *
(1) * * *
(iv) * * *
(D) A rural hospital redesignated as
urban after September 30, 2004, as a
result of the most recent census data
and implementation of the new labor
market area definitions announced by
OMB on June 6, 2003, may retain the
increases to its full-time equivalent
resident cap that it received under
paragraphs (f)(1)(iv)(A) and (f)(1)(vii) of
this section while it was located in a
rural area. Effective October 1, 2014, if
a rural hospital is redesignated as urban
due to the most recent OMB standards
for delineating statistical areas adopted
by CMS, the redesignated urban hospital
may retain any existing increases to its
FTE resident cap that it had received
prior to when the redesignation became
effective. Effective October 1, 2014, if a
rural hospital is redesignated as urban
due to the most recent OMB standards
for delineating statistical areas adopted
by CMS, the redesignated urban hospital
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may receive an increase to its FTE
resident cap for a new program, in
accordance with paragraph (e) of this
section, if it received a letter of
accreditation for the new program and/
or started training residents in the new
program prior to the redesignation
becoming effective.
(v)(A) For a hospital’s cost reporting
periods beginning on or after October 1,
1997, and before October 1, 1998, the
total number of full-time equivalent
residents for payment purposes is equal
to the average of the actual full-time
equivalent resident counts (subject to
the requirements listed in paragraphs
(f)(1)(ii)(C) and (f)(1)(iv) of this section)
for that cost reporting period and the
preceding cost reporting period.
(B) For a hospital’s cost reporting
periods beginning on or after October 1,
1998, the total number of full-time
equivalent residents for payment
purposes is equal to the average of the
actual full-time equivalent resident
count (subject to the requirements set
forth in paragraphs (f)(1)(ii)(C) and
(f)(1)(iv) of this section) for that cost
reporting period and the preceding two
cost reporting periods.
(C) For new programs started prior to
October 1, 2012, if a hospital qualified
for an adjustment to the limit
established under paragraph (f)(1)(iv) of
this section for new medical residency
programs created under paragraph
(f)(1)(vii) of this section, the count of
residents participating in new medical
residency training programs above the
number included in the hospital’s fulltime equivalent count for the cost
reporting period ending during calendar
year 1996 is added after applying the
averaging rules in paragraph (f)(1)(v)(B)
of this section for a period of years.
Residents participating in new medical
residency training programs are
included in the hospital’s full-time
equivalent count before applying the
averaging rules after the period of years
has expired. For purposes of this
paragraph, for each new program
started, the period of years equals the
minimum accredited length for each
new program. The period of years for
each new program begins when the first
resident begins training in each new
program.
(D) For new programs started on or
after October 1, 2012, for hospitals for
which the full-time equivalent cap may
be adjusted in accordance with
§ 413.79(e) of this chapter, full-time
equivalent residents participating in
new medical residency training
programs are excluded from the
hospital’s full-time equivalent count
before applying the averaging rules
during the cost reporting periods prior
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to the beginning of the applicable
hospital’s cost reporting period that
coincides with or follows the start of the
sixth program year of the first new
program started, for hospitals for which
the full-time equivalent cap may be
adjusted in accordance with
§ 413.79(e)(1) of this chapter, and prior
to the beginning of the applicable
hospital’s cost reporting period that
coincides with or follows the start of the
sixth program year of the each
individual new program started, for
hospitals for which the full-time
equivalent cap may be adjusted in
accordance with § 413.79(e)(3) of this
chapter. Beginning with the applicable
hospital’s cost reporting period that
coincides with or follows the start of the
sixth program year of the first new
program started for hospitals for which
the full-time equivalent cap may be
adjusted in accordance with
§ 413.79(e)(1) of this chapter, and
beginning with the applicable hospital’s
cost reporting period that coincides
with or follows the start of the sixth
program year of each individual new
program started for hospitals for which
the full-time equivalent cap may be
adjusted in accordance with
§ 413.79(e)(3) of this chapter, full-time
equivalent residents participating in
new medical residency training
programs are included in the hospital’s
full-time equivalent count before
applying the averaging rules in
paragraph (f)(1)(v)(B) of this section.
(E) Subject to the provisions of
paragraph (f)(1)(ix) of this section, fulltime equivalent residents that are
displaced by the closure of either
another hospital or another hospital’s
program are added to the full-time
equivalent count after applying the
averaging rules in paragraph (f)(1)(v)(B)
of this section for the receiving hospital
for the duration of time that the
displaced residents are training at the
receiving hospital.
(F) Subject to the provisions of
paragraph (f)(1)(x) of this section,
effective for cost reporting periods
beginning on or after April 1, 2000, fulltime equivalent residents at an urban
hospital in a rural track program are
included in the urban hospital’s rolling
average calculation described in this
paragraph (f)(1)(v)(B).
*
*
*
*
*
■ 14. Section 412.106 is amended by
revising paragraph (g)(1)(iii)(C) to read
as follows:
§ 412.106 Special treatment: Hospitals that
serve a disproportionate share of lowincome patients.
*
*
*
(g) * * *
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(1) * * *
(iii) * * *
(C) For fiscal year 2014 and for fiscal
year 2015, CMS will base its estimates
of the amount of hospital
uncompensated care on the most recent
available data on utilization for
Medicaid and Medicare SSI patients, as
determined by CMS in accordance with
paragraphs (b)(2)(i) and (b)(4) of this
section.
*
*
*
*
*
§ 412.108
[Amended]
15. In § 412.108, paragraph (a)(1)
introductory text and paragraph
(c)(2)(iii) introductory text, remove the
date ‘‘April 1, 2014’’ and add in its
place the date ‘‘April 1, 2015’’.
■ 16. Section 412.140 is amended by
revising paragraph (c)(2) to read as
follows:
■
§ 412.140 Participation, data submission,
and validation requirements under the
Hospital Inpatient Quality Reporting (IQR)
Program.
*
*
*
*
*
(c) * * *
(2) Exception. Upon request by a
hospital, CMS may grant an extension or
exemption of one or more data
submission deadlines in the event of
extraordinary circumstances beyond the
control of the hospital. Specific
requirements for submission of a request
for an extension or exemption are
available on QualityNet.org.
*
*
*
*
*
■ 17. Section 412.152 is amended by
revising the definition of ‘‘Applicable
hospital’’ to read as follows:
§ 412.152 Definitions for the Hospital
Readmissions Reduction Program.
*
*
*
*
*
Applicable hospital is a hospital
described in section 1886(d)(1)(B) of the
Act.
*
*
*
*
*
§ 412.154
[Amended]
18. Section 412.154 is amended by
removing and reserving paragraph (d).
■ 19. Section 412.160 is amended by
revising the definitions of ‘‘Base
operating DRG payment amount’’ and
‘‘Performance standards’’ to read as
follows:
■
§ 412.160 Definitions for the Hospital
Value-Based Purchasing (VBP) Program.
*
*
*
*
*
Base operating DRG payment amount
means the following:
(1) With respect to a subsection (d)
hospital (as defined in section
1886(d)(1)(B) of the Act), the wageadjusted DRG operating payment plus
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any applicable new technology add-on
payments under subpart F of this part.
This amount is determined without
regard to any payment adjustments
under the Hospital Readmissions
Reduction Program, as specified under
§ 412.154. This amount does not include
any additional payments for indirect
medical education under § 412.105, the
treatment of a disproportionate share of
low-income patients under § 412.106,
outliers under subpart F of this part, or
a low volume of discharges under
§ 412.101.
(2) With respect to a Medicaredependent, small rural hospital that
receives payments under § 412.108(c) or
a sole community hospital that receives
payments under § 412.92(d), the wageadjusted DRG operating payment plus
any applicable new technology add-on
payments under subpart F of this part.
This amount does not include any
additional payments for indirect
medical education under § 412.105, the
treatment of a disproportionate share of
low-income patients under § 412.106,
outliers under subpart F of this part, or
a low volume of discharges under
§ 412.101. With respect to a Medicaredependent, small rural hospital that
receives payments under § 412.108(c)
(for discharges occurring in FY 2013) or
a sole community hospital that receives
payments under § 412.92(d), this
amount also does not include the
difference between the hospital-specific
payment rate and the Federal payment
rate determined under subpart D of this
part.
*
*
*
*
*
Performance standards are the levels
of performance that hospitals must meet
or exceed in order to earn points under
the Hospital VBP Program, and are
calculated with respect to a measure for
a fiscal year no later than 60 days prior
to the start of the performance period for
that measure for that fiscal year. The
performance standards for a measure
may be updated as follows:
(1) To make a single correction to
correct a calculation error, data issue, or
other problem that would significantly
change the performance standards; or
(2) To incorporate nonsubstantive
technical updates made to the measure
between the time that CMS first displays
the performance standards for that
measure for a fiscal year and the time
that CMS calculates hospital
performance on that measure at the
conclusion of the performance period
for that measure for a fiscal year.
*
*
*
*
*
■ 20. Section 412.161 is revised to read
as follows:
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§ 412.161 Applicability of the Hospital
Value-Based Purchasing (VBP) Program
The Hospital VBP Program applies to
hospitals, as that term is defined in
§ 412.160.
§ 412.172
[Amended]
21. Section 412.172 is amended by
removing and reserving paragraph (c).
■ 22. Section 412.232 is amended by
revising paragraph (b)(2) to read as
follows:
■
§ 412.232 Criteria for all hospitals in a rural
county seeking urban redesignation.
*
*
*
*
*
(b) * * *
(2) For fiscal years beginning with FY
2005, the group of hospitals must
demonstrate that the county in which
the hospitals are located meets the
standards for redesignation to an MSA
as an outlying county using the most
recent OMB standards for delineating
statistical areas adopted by CMS and the
most recent Census Bureau data.
*
*
*
*
*
■ 23. Section 412.234 is amended by
revising paragraph (a)(3)(iv) to read as
follows:
§ 412.234 Criteria for all hospitals in an
urban county seeking redesignation to
another urban area.
(a) * * *
(3) * * *
(iv) For Federal fiscal year 2008 and
thereafter, hospitals located in counties
that are in the same Combined
Statistical Area (CSA) or Core-Based
Statistical Area (CBSA) (under the most
recent OMB standards for delineating
statistical areas adopted by CMS and the
most recent Census Bureau data) as the
urban area to which they seek
redesignation qualify as meeting the
proximity requirement for
reclassification to the urban area to
which they seek redesignation.
*
*
*
*
*
■ 24. Section 412.500 is amended by
adding paragraphs (a)(4), (a)(5), and
(a)(6) to read as follows:
§ 412.500
Basis and scope of subpart.
(a) * * *
(4) Section 4302(a) of Public Law
111–5, which amended sections 114(c)
and (d) of Public Law 110–173 relating
to several moratoria on the
establishment of new long-term care
hospitals and satellite facilities and on
the increase in the number of beds in
existing long-term care hospitals and
satellite facilities under the long-term
care hospital prospective payment
system.
(5) Sections 3106(a) and 10312(a) of
Public Law 111–148, which extended
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certain payment rules and moratoria
under the long-term care hospital
prospective payment system by further
amending sections 114(c) and (d) of
Public Law 110–173.
(6) Section 1206 of Public Law 113–
67, which further extended certain
payment rules and moratoria under the
long-term care hospital prospective
payment system by amending sections
114(c) and (d) of Public Law 110–173,
and which:
(i) Added a new section 1886(m)(6) to
the Act to establish a site neutral
payment amount for long-term care
hospital discharges that fail to meet the
applicable criteria in cost reporting
periods beginning on or after October 1,
2015; and
(ii) Requires the Secretary’s review of
the payment rates and regulations
governing long-term care hospitals
established under section
1886(d)(1)(B)(iv)(II) of the Act and
application of payment adjustments
based on that review.
*
*
*
*
*
■ 25. Section 412.521 is amended by
revising paragraph (a)(2) to read as
follows:
§ 412.521
Basis for payment.
(a) * * *
(2) Except as provided for in
§ 412.526, the amount of payment under
the prospective payment system is
based on the Federal payment rate
established in accordance with
§ 412.523, including adjustments
described in § 412.525, and, if
applicable during a transition period, on
a blend of the Federal payment rate and
the cost-based reimbursement rate
described in § 412.533.
*
*
*
*
*
■ 26. Section 412.523 is amended by
adding a new paragraph (c)(3)(xi) to
read as follows:
§ 412.523 Methodology for calculating the
Federal prospective payment rates.
*
*
*
*
*
(c) * * *
(3) * * *
(xi) For long-term care hospital
prospective payment system fiscal year
beginning October 1, 2014, and ending
September 30, 2015. The standard
Federal rate for the long-term care
hospital prospective payment system
beginning October 1, 2014, and ending
September 30, 2015, is the standard
Federal rate for the previous long-term
care hospital prospective payment
system fiscal year updated by 2.2
percent, and further adjusted, as
appropriate, as described in paragraph
(d) of this section.
*
*
*
*
*
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[Amended]
27. Section 412.525 is amended by
removing and reserving paragraph
(d)(3).
■ 28. A new § 412.526 is added to read
as follows:
■
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§ 412.526 Payment provisions for a
‘‘subclause (II)’’ long-term care hospital.
(a) Definition. A ‘‘subclause (II)’’ longterm care hospital is a hospital that
qualifies as an LTCH under section
1886(d)(1)(B)(iv)(II) of the Act.
(b) Method of payment. (1) For cost
reporting periods beginning on or after
October 1, 2003 and before September
30, 2014, payment to a ‘‘subclause (II)’’
long-term care hospital is made under
the prospective payment system
specified in § 412.1(a)(4) and Subpart O
of this part.
(2) For cost reporting periods
beginning on or after October 1, 2014,
payment to a ‘‘subclause (II)’’ long-term
care hospital is made under the
prospective payment system specified
in § 412.1(a)(4) and under Subpart O of
this part, as adjusted. The adjusted
payment amount is determined based
on reasonable cost, as described at
§ 412.526(c).
(c) Determining the adjusted payment
for Medicare inpatient operating and
capital-related costs under the
reasonable cost-based reimbursement
rules. Medicare inpatient operating
costs are paid based on reasonable cost,
subject to a ceiling. The ceiling is the
aggregate upper limit on the amount of
a hospital’s net Medicare inpatient
operating costs that the program will
recognize for payment purposes, as
determined under paragraph (c)(1) of
this section.
(1) Ceiling. For each cost reporting
period, the ceiling is determined by
multiplying the updated target amount,
as defined in paragraph (c)(2) of this
section, for that period by the number
of Medicare discharges paid under this
subpart during that period.
(2) Target amounts. (i) For cost
reporting periods beginning during
Federal fiscal year 2015, the target
amount equals the hospital’s target
amount determined under § 413.40(c)(4)
for its cost reporting period beginning
during Federal fiscal year 2000, updated
by the applicable annual rate-of-increase
percentages specified in § 413.40(c)(3) to
the subject period.
(ii) For subsequent cost reporting
periods, the target amount equals the
hospital’s target amount for the previous
cost reporting period updated by the
applicable annual rate-of-increase
percentage specified in § 413.40(c)(3) for
the subject cost reporting period.
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(3) Payment for inpatient operating
costs. For cost reporting periods subject
to this section, the hospital’s Medicare
allowable net inpatient operating costs
for that period (as defined at
§ 413.40(a)(3)) are paid on a reasonable
cost basis, subject to that hospital’s
ceiling (as determined under paragraph
(c)(1) of this section) for that period.
(4) Payment for inpatient capitalrelated costs. Medicare allowable net
inpatient capital costs are paid on a
reasonable cost basis, in accordance
with the regulations under Part 413 of
this chapter.
(5) Adjustments for extraordinary
circumstances—(i) General rules. (A)
CMS may adjust the ceiling determined
under paragraph (c)(1) of this section for
one or more cost reporting periods when
unusual inpatient operating costs have
resulted in the hospital exceeding its
ceiling imposed under this section due
to extraordinary circumstances beyond
the hospital’s control. These
circumstances include, but are not
limited to, strikes, fire, earthquakes,
floods, or similar unusual occurrences
with substantial cost effects.
(B) When the hospital requests an
adjustment, CMS makes an adjustment
only to the extent that the hospital’s
operating costs are reasonable,
attributable to the circumstances
specified separately, identified by the
hospital, and verified by the Medicare
administrative contractor.
(ii) Process for adjustment requests.
The provisions of §§ 413.40(e)(1)
through (e)(5) of this subchapter are
applicable to extraordinary
circumstances adjustment requests
under this section.
§ 412.532
[Removed]
29. Section 412.532 is removed.
30. Section 412.534 is amended by—
a. Revising paragraphs (c)(1)
introductory text and (c)(1)(i).
■ b. Removing the year ‘‘2013’’ and
adding in its place the year ‘‘2016’’ in
paragraph (c)(1) and (c)(2) paragraph
heading.
■ c. Revising paragraph (c)(3).
■ d. Removing the year ‘‘2013’’ and
adding in its place the year ‘‘2016’’ in
paragraphs (d)(1) paragraph heading,
(d)(1)(i), and (d)(2) paragraph heading.
■ e. Revising paragraph (d)(3).
■ f. Removing the year ‘‘2013’’ and
adding in its place the year ‘‘2016’’ in
paragraphs (e)(1) paragraph heading,
(e)(1)(i), and (e)(2) paragraph heading.
■ g. Revising paragraph (e)(3).
■ h. Revising paragraphs (h)
introductory text, (h)(4), and (h)(5).
■ i. Removing paragraph (h)(6).
The revisions read as follows:
■
■
■
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§ 412.534 Special payment provisions for
long-term care hospitals within hospitals
and satellites of long-term care hospitals.
*
*
*
*
*
(c) * * *
(1) For cost reporting periods
beginning on or after October 1, 2004
and before October 1, 2007 and for cost
reporting periods beginning on or after
October 1, 2016. (i) Except as provided
in paragraphs (c)(3), (g), and (h) of this
section, for any cost reporting period
beginning on or after October 1, 2004
and before October 1, 2007, and for cost
reporting periods beginning on or after
October 1, 2016 in which the long-term
care hospital or its satellite facility has
a discharged Medicare inpatient
population of whom no more than 25
percent were admitted to the hospital or
its satellite facility from the co-located
hospital, payments are made under the
rules at §§ 412.500 through 412.541
with no adjustment under this section.
*
*
*
*
*
(3) For a long-term care hospital
satellite facility described in
§ 412.22(h)(3)(i), for cost reporting
periods beginning on or after July 1,
2007 and before July 1, 2016, payments
will be determined using the
methodology specified in paragraph
(c)(1) of this section, except that the
applicable percentage threshold for
Medicare discharges is 50 percent.
(d) * * *
(3) For cost reporting periods
beginning on or after July 1, 2007 and
before July 1, 2016, payment for a longterm care hospital satellite facility
described in § 412.22(h)(3)(i) will be
determined using the methodology
specified in paragraph (c)(1) of this
section, except that the applicable
percentage threshold for Medicare
discharges is 75 percent.
(e) * * *
(3) For cost reporting periods
beginning on or after July 1, 2007 and
before July 1, 2016, payments for a longterm care hospital satellite facility
described in § 412.22(h)(3)(i) will be
determined using the methodology
specified in paragraph (c)(1) of this
section, except that the applicable
percentage threshold for Medicare
discharges is 75 percent.
*
*
*
*
*
(h) Effective date of policies in this
section for certain co-located long-term
care hospitals and satellite facilities of
long-term care hospitals. Except as
specified in paragraph (h)(4) of this
section, the policies set forth in this
paragraph (h) apply to Medicare patient
discharges that were admitted from a
hospital located in the same building or
on the same campus as a long-term care
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hospital described in § 412.23(e)(2)(i)
that meets the criteria in § 412.22(f) and
a satellite facility of a long-term care
hospital as described under
§ 412.22(h)(3)(i) for discharges occurring
in cost reporting periods beginning on
or after July 1, 2007.
*
*
*
*
*
(4) For a long-term care hospital
described in § 412.23(e)(2)(i) that meets
the criteria in § 412.22(f), the policies
set forth in this paragraph (h) and in
§ 412.536 do not apply for discharges
occurring in cost reporting periods
beginning on or after July 1, 2007.
(5) For a long-term care hospital or a
satellite facility that, as of December 29,
2007, was co-located with an entity that
is a provider-based, off-campus location
of a subsection (d) hospital which did
not provide services payable under
section 1886(d) of the Act at the offcampus location, the policies set forth
in this paragraph (h) and in § 412.536 do
not apply for discharges occurring in
cost reporting periods beginning on or
after July 1, 2007 and before July 1,
2016.
■ 31. Section 412.536 is amended by—
■ a. Removing and reserving paragraph
(a)(1)(iii).
■ b. Revising paragraph (a)(2)
introductory text.
■ c. Removing and reserving paragraph
(a)(2)(ii).
■ d. Removing paragraph (a)(3).
The revisions read as follows:
§ 412.536 Special payment provisions for
long-term care hospitals and satellites of
long-term care hospitals that discharged
Medicare patients admitted from a hospital
not located in the same building or on the
same campus as the long-term care
hospital or satellite of the long-term care
hospital.
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(a) * * *
(1) * * *
(iii) [Reserved].
*
*
*
*
*
(2) For cost reporting periods
beginning on or after July 1, 2007 and
before July 1, 2016, the policies set forth
in this section are not applicable to
discharges from:
*
*
*
*
*
(ii) [Reserved].
*
*
*
*
*
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE
SERVICES; OPTIONAL
PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED
NURSING FACILITIES
32. The authority for Part 413
continues to read as follows:
■
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Authority: Secs. 1102, 1861(v)(1)(A), and
1871 of the Social Security Act (42 U.S.C.
1302, 1395x(v)(1)(A), and 1395hh).
Nomenclature Changes
PART 413—[AMENDED]
33. Amend Part 413 by removing the
term or phrase in the first column and
replace it with the term or phrase in the
second column:
■
Remove
Add
an intermediary’s ...............
fiscal intermediary ..............
fiscal intermediary’s ...........
intermediary .......................
intermediaries ....................
intermediary’s ....................
a contractor’s
contractor
contractor’s
contractor
contractors
contractor’s
34. Section 413.75(b)(5) is amended
by revising the definition of ‘‘Rural track
FTE limitation’’ to read as follows:
■
§ 413.75 Direct GME payments: General
requirements.
*
*
*
*
*
(b) * * *
(5) * * *
Rural track FTE limitation means the
maximum number of residents (as
specified in § 413.79(k)) training in a
rural track residency program that an
urban hospital may include in its FTE
count and that is in addition to the
number of FTE residents already
included in the hospital’s FTE cap.
*
*
*
*
*
■ 35. Section 413.78 is amended by
revising paragraph (g)(6) to read as
follows:
§ 413.78 Direct GME payment:
Determination of the total number of FTE
residents.
*
*
*
*
*
(g) * * *
(6) The provisions of paragraphs
(g)(1)(ii), (g)(2), (g)(3), and (g)(5) of this
section shall not be applied in a manner
that requires reopening of any settled
cost reports as to which there is not a
jurisdictionally proper appeal pending
as of March 23, 2010, on direct GME or
IME payments. Cost reporting periods
beginning before July 1, 2010 are not
governed by paragraph (g) of this
section.
*
*
*
*
*
■ 36. Section 413.79 is amended by
revising paragraphs (c)(6), (d)(5), and
(k)(7), to read as follows:
§ 413.79 Direct GME payments:
Determination of the weighted number of
FTE residents.
*
*
*
*
*
(c) * * *
(6) FTE resident caps for rural
hospitals that are redesignated as
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50357
urban. A rural hospital redesignated as
urban after September 30, 2004, as a
result of the most recent census data
and implementation of the new MSA
definitions announced by OMB on June
6, 2003, may retain the increases to its
FTE resident cap that it received under
paragraphs (c)(2)(i), (e)(1)(iii), and (e)(3)
of this section while it was located in a
rural area. Effective October 1, 2014, if
a rural hospital is redesignated as urban
due to the most recent OMB standards
for delineating statistical areas adopted
by CMS, the redesignated urban hospital
may retain any existing increases to its
FTE resident cap that it had received
prior to when the redesignation became
effective. Effective October 1, 2014, if a
rural hospital is redesignated as urban
due to the most recent OMB standards
for delineating statistical areas adopted
by CMS, the redesignated urban hospital
may receive an increase to its FTE
resident cap for a new program, in
accordance with paragraph (e) of this
section, if it received a letter of
accreditation for the new program and/
or started training residents in the new
program prior to the redesignation
becoming effective.
(d) * * *
(5) (i) For new programs started prior
to October 1, 2012, if a hospital qualifies
for an adjustment to the limit
established under paragraph (c)(2) of
this section for new medical residency
programs created under paragraph (e) of
this section, the count of the residents
participating in new medical residency
training programs above the number
included in the hospital’s FTE count for
the cost reporting period ending during
calendar year 1996 is added after
applying the averaging rules in this
paragraph (d), for a period of years.
Residents participating in new medical
residency training programs are
included in the hospital’s FTE count
before applying the averaging rules after
the period of years has expired. For
purposes of this paragraph (d), for each
new program started, the period of years
equals the minimum accredited length
for each new program. The period of
years begins when the first resident
begins training in each new program.
(ii) For new programs started on or
after October 1, 2012, for hospitals for
which the FTE cap may be adjusted in
accordance with § 413.79(e), FTE
residents participating in new medical
residency training programs are
excluded from the hospital’s FTE count
before applying the averaging rules
during the cost reporting periods prior
to the beginning of the applicable
hospital’s cost reporting period that
coincides with or follows the start of the
sixth program year of the first new
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program started, for hospitals for which
the FTE may be adjusted in accordance
with § 413.79(e)(1), and prior to the
beginning of the applicable hospital’s
cost reporting period that coincides
with or follows the start of the sixth
program year of the each individual new
program started, for hospitals for which
the FTE cap may be adjusted in
accordance with § 413.79(e)(3).
Beginning with the applicable hospital’s
cost reporting period that coincides
with or follows the start of the sixth
program year of the first new program
started for hospitals for which the FTE
cap may be adjusted in accordance with
§ 413.79(e)(1), and beginning with the
applicable hospital’s cost reporting
period that coincides with or follows
the start of the sixth program year of the
each individual new program started for
hospitals for which the FTE cap may be
adjusted in accordance with
§ 413.79(e)(3), FTE residents
participating in new medical residency
training programs are included in the
hospital’s FTE count before applying the
averaging rules.
*
*
*
*
*
(k) * * *
(7)(i) Effective prior to October 1,
2014, if an urban hospital had
established a rural track training
program under the provisions of this
paragraph (k) with a hospital located in
a rural area and that rural area
subsequently becomes an urban area
due to the most recent census data and
implementation of the new labor market
area definitions announced by OMB on
June 6, 2003, the urban hospital may
continue to adjust its FTE resident limit
in accordance with this paragraph (k)
for the rural track programs established
prior to the adoption of such new labor
market area definitions. In order to
receive an adjustment to its FTE
resident cap for a new rural track
residency program, the urban hospital
must establish a rural track program
with hospitals that are designated rural
based on the most recent geographical
location delineations adopted by CMS.
(ii) Effective October 1, 2014, if an
urban hospital started a rural track
training program under the provisions
of this paragraph (k) with a hospital
located in a rural area and, during the
3-year period that is used to calculate
the urban hospital’s rural track FTE
limit, that rural area subsequently
becomes an urban area due to the most
recent OMB standards for delineating
statistical areas adopted by CMS and the
most recent Census Bureau data, the
urban hospital may continue to adjust
its FTE resident limit in accordance
with this paragraph (k) and subject to
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paragraph (k)(7)(iii) of this section for
the rural track programs started prior to
the adoption of such new OMB
standards for delineating statistical
areas.
(iii) Effective October 1, 2014, if an
urban hospital started a rural track
training program under the provisions
of this paragraph (k) with a hospital
located in a rural area and that rural
area subsequently becomes an urban
area due to the most recent OMB
standards for delineating statistical
areas adopted by CMS and the most
recent Census Bureau data, regardless of
whether the redesignation of the rural
hospital occurs during the 3-year period
that is used to calculate the urban
hospital’s rural track FTE limit, or after
the 3-year period used to calculate the
urban hospital’s rural track FTE limit,
the urban hospital may continue to
adjust its FTE resident limit in
accordance with this paragraph (k)
based on the rural track programs
started prior to the change in the
hospital’s geographic designation. In
order for the urban hospital to receive
or use the adjustment to its FTE resident
cap for training FTE residents in the
rural track residency program that was
started prior to the most recent OMB
standards for delineating statistical
areas adopted by CMS, one of the
following two conditions must be met
by the end of a period that begins when
the most recent OMB standards for
delineating statistical areas are adopted
by CMS and continues through the end
of the second residency training year
following the date the most recent OMB
delineations are adopted by CMS: the
hospital that has been redesignated from
rural to urban must reclassify as rural
under § 412.103 of this chapter, for
purposes of IME only; or the urban
hospital must find a new site that is
geographically rural consistent with the
most recent geographical location
delineations adopted by CMS. In order
to receive an adjustment to its FTE
resident cap for an additional new rural
track residency program, the urban
hospital must participate in a rural track
program with sites that are
geographically rural based on the most
recent geographical location
delineations adopted by CMS.
*
*
*
*
*
PART 415—SERVICES FURNISHED BY
PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN
TEACHING SETTINGS, AND
RESIDENTS IN CERTAIN SETTINGS
37. The authority citation for Part 415
continues to read as follows:
■
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Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh), and sec. 124 of Pub. L. 106–113
(113 Stat. 1501A–332).
38. Section 415.70 is amended by
revising paragraph (b) to read as follows:
■
§ 415.70 Limits on compensation for
physician services in providers.
*
*
*
*
*
(b) Methodology for establishing
limits. (1) For cost reporting periods
beginning before January 1, 2015. CMS
establishes a methodology for
determining annual reasonable
compensation equivalency limits and, to
the extent possible, considers average
physician incomes by specialty and type
of location using the best available data.
(2) For cost reporting periods
beginning on or after January 1, 2015.
CMS establishes a methodology for
determining annual reasonable
compensation equivalency limits and, to
the extent possible, considers average
physician incomes by specialty using
the best available data.
*
*
*
*
*
PART 422—MEDICARE ADVANTAGE
PROGRAM
39. 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).
40. Section 422.300 is revised to read
as follows:
■
§ 422.300
Basis and scope.
This subpart is based on sections
1106, 1128J(d), 1853, 1854, and 1858 of
the Act. It sets forth the rules for making
payments to Medicare Advantage (MA)
organizations offering local and regional
MA plans, including calculation of MA
capitation rates and benchmarks,
conditions under which payment is
based on plan bids, adjustments to
capitation rates (including risk
adjustment), collection of risk
adjustment data, conditions for use and
disclosure of risk adjustment data, and
other payment rules. See § 422.458 in
subpart J for rules on risk sharing
payments to MA regional organizations.
■ 41. Section 422.310 is amended by
revising paragraph (f) to read as follows:
§ 422.310
Risk adjustment data.
*
*
*
*
*
(f) Use and release of data.
(1) CMS use of data. CMS may use the
data described in paragraphs (a) through
(d) of this section for the following
purposes:
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(i) To determine the risk adjustment
factors used to adjust payments, as
required under §§ 422.304(a) and (c);
(ii) To update risk adjustment models;
(iii) To calculate Medicare DSH
percentages;
(iv) To conduct quality review and
improvement activities;
(v) For Medicare coverage purposes;
(vi) To conduct evaluations and other
analysis to support the Medicare
program (including demonstrations) and
to support public health initiatives and
other health care-related research;
(vii) For activities to support the
administration of the Medicare program;
(viii) For activities conducted to
support program integrity; and
(ix) For purposes authorized by other
applicable laws.
(2) CMS release of data. Regarding
data described in paragraphs (a) through
(d) of this section, CMS may release the
minimum data it determines is
necessary for one or more of the
purposes listed in paragraph (f)(1) of
this section to other HHS agencies, other
Federal executive branch agencies,
States, and external entities in
accordance with the following:
(i) Applicable Federal laws;
(ii) CMS data sharing procedures;
(iii) Subject to the protection of
beneficiary identifier elements and
beneficiary confidentiality, including—
(A) A prohibition against public
disclosure of beneficiary identifying
information;
(B) Release of beneficiary identifying
information to other HHS agencies,
other Federal executive branch agencies,
and States only when such information
is needed; and
(C) Release of beneficiary identifying
information to external entities only to
the extent needed to link datasets.
(iv) Subject to the aggregation of
dollar amounts reported for the
associated encounter to protect
commercially sensitive data.
(v) Risk adjustment data other than
data described in paragraphs (f)(2)(iii)
and (f)(2)(iv) of this section will be
released without the redaction or
aggregation described in paragraphs
(f)(2)(iii) and (f)(2)(iv) of this section,
respectively.
(3) Risk adjustment data will not
become available for release under this
paragraph (f) unless—
(i) The risk adjustment reconciliation
for the applicable payment year has
been completed;
(ii) CMS determines that data release
is necessary under paragraph (f)(1)(vi) of
this section for emergency preparedness
purposes before reconciliation; or
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(iii) CMS determines that
extraordinary circumstances exist to
release the data before reconciliation.
*
*
*
*
*
PART 424—CONDITIONS FOR
MEDICARE PAYMENT
42. 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
1395(hh)).
43. Section 424.11 is amended by
revising paragraph (d)(5) to read as
follows:
■
§ 424.11
General procedures.
*
*
*
*
*
(d) * * *
(5) For all inpatient hospital services,
including inpatient psychiatric facility
services, a delayed certification may not
extend past discharge.
*
*
*
*
*
■ 44. Section 424.15 is amended by
revising paragraph (b) to read as follows:
§ 424.15 Requirements for inpatient CAH
services.
*
*
*
*
*
(b) Certification begins with the order
for inpatient admission. All certification
requirements must be completed,
signed, and documented in the medical
record no later than 1 day before the
date on which the claim for payment for
the inpatient CAH service is submitted.
*
*
*
*
*
PART 485—CONDITIONS OF
PARTICIPATION: SPECIALIZED
PROVIDERS
45. The authority citation for Part 485
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395(hh)).
46. Section 485.610 is amended by
revising paragraph (b) introductory text
and adding a new paragraph (b)(5) to
read as follows:
■
§ 485.610 Conditions of participation:
Status and location.
*
*
*
*
*
(b) Standard: Location in a rural area
or treatment as rural. The CAH meets
the requirements of either paragraph
(b)(1) or (b)(2) of this section or the
requirements of paragraph (b)(3), (b)(4),
or (b)(5) of this section.
*
*
*
*
*
(5) Effective on or after October 1,
2014, for a period of 2 years beginning
with the effective date of the most
recent Office of Management and
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50359
Budget (OMB) standards for delineating
statistical areas adopted by CMS, the
CAH no longer meets the location
requirements in either paragraph (b)(1)
or (b)(2) of this section and is located in
a county that, prior to the most recent
OMB standards for delineating
statistical areas adopted by CMS and the
most recent Census Bureau data, was
located in a rural area as defined by
OMB, but under the most recent OMB
standards for delineating statistical
areas adopted by CMS and the most
recent Census Bureau data, is located in
an urban area.
*
*
*
*
*
PART 488—SURVEY, CERTIFICATION,
AND ENFORCEMENT PROCEDURES
47. The authority citation for Part 488
continues to read as follows:
■
Authority: Secs. 1102, 1128I, and 1871 of
the Social Security Act (42 U.S.C. 1302,
1320a–7j, and 1395(hh)); Pub. L. 110–149,
121 Stat. 1819.
48. Section 488.61 is amended by—
a. Revising paragraphs (a)(4) and
(c)(3).
■ b. Adding new paragraphs (f), (g), and
(h).
The revisions and additions read as
follows:
■
■
§ 488.61 Special procedures for approval
and re-approval of organ transplant centers.
*
*
*
*
*
(a) * * *
(4) CMS will consider mitigating
factors in accordance with paragraphs
(f), (g), and (h) of this section.
*
*
*
*
*
(c) * * *
(3) CMS will consider mitigating
factors in accordance with paragraphs
(f), (g), and (h) of this section.
*
*
*
*
*
(f) Consideration of mitigating factors
in initial approval and re-approval
survey, certification, and enforcement
actions for transplant centers.
(1) Factors. Except for situations of
immediate jeopardy or deficiencies
other than failure to meet requirements
of § 488.80 or § 488.82, CMS will
consider such mitigating factors as may
be appropriate in light of the nature of
the deficiency and circumstances,
including (but not limited to) the
following, in making a decision of
initial and re-approval of a transplant
center that does not meet the data
submission, clinical experience, or
outcome requirements:
(i) The extent to which outcome
measures are not met or exceeded;
(ii) Availability of Medicare-approved
transplant centers in the area;
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(iii) Extenuating circumstances (for
example, natural disaster) that have a
temporary effect on meeting the
conditions of participation;
(iv) Program improvements that
substantially address root causes of graft
failures or patient deaths, that have been
implemented and institutionalized on a
sustainable basis, and that are supported
by outcomes more recent than the latest
available SRTR report, for which there
is a sufficient post-transplant patient
and graft survival period and a
sufficient number of transplants such
that CMS finds that the program
demonstrates present-day compliance
with the requirements at
§ 482.80(c)(2)(ii)(C) or
§ 482.82(c)(2)(ii)(C) of this chapter;
(v) Whether the program has made
extensive use of innovative
transplantation practices relative to
other transplant programs, such as a
high rate of transplantation of
individuals who are highly sensitized or
children who have undergone a Fontan
procedure compared to most other
transplant programs, where CMS finds
that the innovative practices are
supported by evidence-based published
research literature or nationally
recognized standards or Institution
Review Board (IRB) approvals, and the
SRTR risk-adjustment methodology
does not take the relevant key factors
into consideration; and
(vi) Whether the program’s
performance, based on the OPTN
method of calculating patient and graft
survival, is within the OPTN’s
thresholds for acceptable performance
and does not flag OPTN performance
review under the applicable OPTN
policy.
(2) Content. A request for
consideration of mitigating factors must
include sufficient information to permit
an adequate review and understanding
of the transplant program, the factors
that have contributed to outcomes,
program improvements or innovations
that have been implemented or planned,
and in the case of natural disasters, the
recovery actions planned. Examples of
information to be submitted with each
request include (but are not limited to)
the following:
(i) The name and contact information
for the transplant hospital and the
names and roles of key personnel of the
transplant program;
(ii) The type of organ transplant
program(s) for which approval is
requested;
(iii) The conditions of participation
that the program does not meet for
which the transplant center is
requesting CMS’ review for mitigating
factors;
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(iv) The program’s organizational
chart with full-time equivalent levels,
roles, and structure for reporting to
hospital leadership;
(v) For applications involving
substandard patient or graft survival, the
rationale and supporting evidence for
CMS’ review includes, but is not limited
to—
(A) Root Cause Analysis for patient
deaths and graft failures, including
factors the program has identified as
likely causal or contributing factors for
patient deaths and graft failures;
(B) Program improvements that have
been implemented and improvements
that are planned;
(C) Patient and donor/organ selection
criteria and evaluation protocols,
including methods for pre-transplant
patient evaluation by cardiologists,
hematologists, nephrologists, and
psychiatrists or psychologists to the
extent applicable;
(D) Waitlist management protocols
and practices relevant to outcomes;
(E) Pre-operative management
protocols and practices;
(F) Immunosuppression/infection
prophylaxis protocols;
(G) Post-transplant monitoring and
management protocols and practices;
(H) Quality Assessment and
Performance Improvement (QAPI)
Program meeting minutes from the most
recent four meetings and attendance
rosters from the most recent 12 months;
(I) Quality dashboard and other
performance indicators; and
(J) The most recent data regarding
transplants that have been made and for
outcomes in terms of both patient
survival and graft survival;
(vi) For mitigating factors requests
based on innovative practice:
(A) A description of the innovations
that have been implemented and
identification of the specific cases for
which the innovative practices are
relevant so as to enable the patient and
graft survival data for such cases to be
compared with all other transplants for
at least the period covered by the latest
available SRTR report.
(B) The literature, research, or other
evidentiary basis that supports
consideration of the practice(s) as
innovative.
(vii) For requests based on natural
disasters or public health emergency:
(A) A description of the disaster or
emergency, the specific impact on the
program, the time periods of the event(s)
and of its immediate recovery aftermath;
(B) Identification of the transplants
that occurred during the period for
which the request is being made; and
(C) The approximate date when the
program believes it substantially
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recovered from the event(s), or believes
it will recover if substantial recovery
has not been accomplished at the time
of the request.
(3) Timing. Within 10 days after CMS
has issued formal written notice of a
condition-level deficiency to the
program, CMS must receive notification
of the program’s intent to seek
mitigating factors approval or reapproval, and receive all information for
consideration of mitigating factors
within 120 days of the CMS written
notification for a deficiency due to data
submission, clinical experience or
outcomes at § 482.80 or § 482.82 of this
chapter. Failure to meet these
timeframes may be the basis for denial
of mitigating factors. However, CMS
may permit an extension of the timeline
for good cause, such as a declared
public health emergency.
(g) Results of mitigating factors
review.
(1) Actions. Upon review of the
request to consider mitigating factors,
CMS may take the following actions:
(i) Approve initial approval or reapproval of a program’s Medicare
participation based upon approval of
mitigating factors;
(ii) Deny the program’s request for
Medicare approval or re-approval based
on mitigating factors.
(iii) Offer a time-limited Systems
Improvement Agreement, in accordance
with paragraph (h) of this section, when
a transplant program has waived its
appeal rights, has implemented
substantial program improvements that
address root causes and are
institutionally supported by the
hospital’s governing body on a
sustainable basis, and has requested
more time to design or implement
additional improvements or
demonstrate compliance with CMS
outcome requirements. Upon
completion of the Systems Improvement
Agreement or a CMS finding that the
hospital has failed to meet the terms of
the Agreement, CMS makes a final
determination of whether to approve or
deny a program’s request for Medicare
approval or re-approval based on
mitigating factors. A Systems
Improvement Agreement follows the
process specified in paragraph (h) of
this section.
(2) Limitation. CMS will not approve
any program with a condition-level
deficiency. However, CMS may approve
a program with a standard-level
deficiency upon receipt of an acceptable
plan of correction.
(h) Transplant Systems Improvement
Agreement. A Systems Improvement
Agreement is a binding agreement,
entered into voluntarily by the hospital
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and CMS, through which CMS extends
a prospective Medicare termination date
and offers the program additional time
to achieve compliance with the
conditions of participation, contingent
on the hospital’s agreement to
participate in a structured regimen of
quality improvement activities,
demonstrate improved outcomes, and
waive the right to appeal termination
based on the identified deficiency or
deficiencies (that led to the Agreement)
in consideration for more time to
demonstrate compliance. In some cases,
transplant programs may enter a period
of inactivity—voluntarily, or imposed as
a condition of the Systems Improvement
Agreement.
(1) Content. In exchange for the
additional time to initiate or continue
activities to achieve compliance with
the conditions of participation, the
hospital must agree to a regimen of
specified activities, including (but not
limited to) all of the following:
(i) Patient notification about the
degree and type of noncompliance by
the program, an explanation of what the
program improvement efforts mean for
patients, and financial assistance to
defray the out-of-pocket costs of
copayments and testing expenses for
any wait-listed individual who wishes
to be listed with another program;
(ii) An external independent peer
review team that conducts an onsite
assessment of the program. The peer
review must include—
(A) Review of policies, staffing,
operations, relationship to hospital
services, and factors that contribute to
program outcomes;
(B) Suggestions for quality
improvements the hospital should
consider;
(C) Both verbal and written feedback
provided directly to the hospital;
(D) Verbal debriefing provided
directly to CMS; neither the hospital nor
the peer review team is required to
provide a written report to CMS; and
(E) Onsite review by a
multidisciplinary team that includes a
transplant surgeon with expertise in the
relevant organ type(s), a transplant
administrator, an individual with
expertise in transplant QAPI systems, a
social worker or psychologist or
psychiatrist, and a specialty physician
with expertise in conditions particularly
relevant to the applicable organ types(s)
such as a cardiologist, nephrologist, or
hepatologist. Except for the transplant
surgeon, CMS may permit substitution
of one type of expertise for another
individual who has expertise
particularly needed for the type of
challenges experienced by the program,
such as substitution of an infection
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control specialist in lieu of, or in
addition to, a social worker;
(iii) An action plan that addresses
systemic quality improvements and is
updated after the onsite peer review;
(iv) An onsite consultant whose
qualifications are approved by CMS,
and who provides services for 8 days
per month on average for the duration
of the agreement, except that CMS may
permit a portion of the time to be spent
offsite and may agree to fewer
consultant days each month after the
first 3 months of the Systems
Improvement Agreement;
(v) A comparative effectiveness
analysis that compares policies,
procedures, and protocols of the
transplant program with those of other
programs in areas of endeavor that are
relevant to the center’s current quality
improvement needs;
(vi) Development of increased
proficiency, or demonstration of current
proficiency, with patient-level data from
the Scientific Registry of Transplant
Recipients and the use of registry data
to analyze outcomes and inform quality
improvement efforts;
(vii) A staffing analysis that examines
the level, type, training, and skill of staff
in order to inform transplant center
efforts to ensure the engagement and
appropriate training and credentialing
of staff;
(viii) Activities to strengthen
performance of the Quality Assessment
and Performance Improvement Program
to ensure full compliance with the
requirements of § 482.96 and § 482.21 of
this chapter;
(ix) Monthly (unless otherwise
specified) reporting and conference calls
with CMS regarding the status of
programmatic improvements, results of
the deliverables in the Systems
Improvement Agreement, and the
number of transplants, deaths, and graft
failures that occur within 1 year posttransplant; and
(x) Additional or alternative
requirements specified by CMS, tailored
to the transplant program type and
circumstances. CMS may waive the
content elements at paragraphs (h)(1)(v),
(h)(1)(vi), (h)(1)(vii), or (h)(1)(viii) of this
section if it finds that the program has
already adequately conducted the
activity, the program is already
proficient in the function, or the activity
is clearly inapplicable to the
deficiencies that led to the Agreement.
(2) Timeframe. A Systems
Improvement Agreement will be
established for up to a 12-month period,
subject to CMS’ discretion to determine
if a shorter timeframe may suffice. At
the hospital’s request, CMS may extend
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50361
the agreement for up to an additional 6month period.
Dated: July 24, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: July 29, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
Note: The following Addendum and
Appendixes will not appear in the Code of
Federal Regulations.
Addendum—Schedule of Standardized
Amounts, Update Factors, Rate-ofIncrease Percentages Effective with Cost
Reporting Periods Beginning on or after
October 1, 2014, and Payment Rates for
LTCHs Effective for Discharges
Occurring on or after October 1, 2014
I. Summary and Background
In this Addendum, we are setting
forth a description of the methods and
data we used to determine the
prospective payment rates for Medicare
hospital inpatient operating costs and
Medicare hospital inpatient capitalrelated costs for FY 2015 for acute care
hospitals. We also are setting forth the
rate-of-increase percentages for updating
the target amounts for certain hospitals
excluded from the IPPS for FY 2015. We
note that, because certain hospitals
excluded from the IPPS are paid on a
reasonable cost basis subject to a rate-ofincrease ceiling (and not by the IPPS),
these hospitals are not affected by the
figures for the standardized amounts,
offsets, and budget neutrality factors.
Therefore, in this final rule, we are
establishing the rate-of-increase
percentages for updating the target
amounts for certain hospitals excluded
from the IPPS that are effective for cost
reporting periods beginning on or after
October 1, 2014.
In addition, we are setting forth a
description of the methods and data we
used to determine the standard Federal
rate that will be applicable to Medicare
LTCHs for FY 2015.
In general, except for SCHs, MDHs
and hospitals located in Puerto Rico, for
FY 2015, each hospital’s payment per
discharge under the IPPS is based on
100 percent of the Federal national rate,
also known as the national adjusted
standardized amount. This amount
reflects the national average hospital
cost per case from a base year, updated
for inflation.
SCHs are paid based on whichever of
the following rates yields the greatest
aggregate payment: the Federal national
rate (including, as discussed in section
IV.F. of the preamble of this final rule,
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uncompensated care payments under
section 1886(r)(2) of the Act); the
updated hospital-specific rate based on
FY 1982 costs per discharge; the
updated hospital-specific rate based on
FY 1987 costs per discharge; the
updated hospital-specific rate based on
FY 1996 costs per discharge; or the
updated hospital-specific rate based on
FY 2006 costs per discharge.
We note that, as discussed in section
IV.G. of the preamble of this final rule,
section 1106 of Public Law 113–67,
enacted on December 26, 2013,
extended the MDH program from the
end of FY 2013 (that is, for discharges
occurring after September 30, 2013)
through the first half of FY 2014 (that is,
for discharges occurring before April 1,
2014). Subsequently, section 106 of
Public Law 113–93, enacted on April 1,
2014, further extended the MDH
program through the first half of FY
2015 (that is, for discharges occurring
before April 1, 2015). Prior to the
enactment of Public Law 113–67, the
MDH program was only to be in effect
through the end of FY 2013. Under
current law, the MDH program will
expire for discharges on or after April 1,
2015.
Under section 1886(d)(5)(G) of the
Act, MDHs historically have been paid
based on the Federal national rate or, if
higher, the Federal national rate plus 50
percent of the difference between the
Federal national rate and the updated
hospital-specific rate based on FY 1982,
FY 1987, or FY 2002 costs per
discharge, whichever was higher.
Section 5003(c) of Public Law 109–171
further required that MDHs be paid
based on the Federal national rate or, if
higher, the Federal national rate plus 75
percent of the difference between the
Federal national rate and the updated
hospital-specific rate. Further, based on
the provisions of section 5003(d) of
Public Law 109–171, MDHs are no
longer subject to the 12-percent cap on
their DSH payment adjustment factor.
For hospitals located in Puerto Rico,
the payment per discharge is based on
the sum of 25 percent of an updated
Puerto Rico-specific rate based on
average costs per case of Puerto Rico
hospitals for the base year and 75
percent of the Federal national rate. (We
refer readers to section II.D.2. of this
Addendum for a complete description.)
As discussed below in section II. of
this Addendum, we are making changes
in the determination of the prospective
payment rates for Medicare inpatient
operating costs for acute care hospitals
for FY 2015. In section III. of this
Addendum, we discuss our policy
changes for determining the prospective
payment rates for Medicare inpatient
capital-related costs for FY 2015. In
section IV. of this Addendum, we are
setting forth our changes for
determining the rate-of-increase limits
for certain hospitals excluded from the
IPPS for FY 2015. In section V. of this
Addendum, we discuss policy changes
for determining the standard Federal
rate for LTCHs paid under the LTCH
PPS for FY 2015. The tables to which
we refer in the preamble of this final
rule are listed in section VI. of this
Addendum and are available via the
Internet on the CMS Web site.
II. Changes to Prospective Payment
Rates for Hospital Inpatient Operating
Costs for Acute Care Hospitals for FY
2015
The basic methodology for
determining prospective payment rates
for hospital inpatient operating costs for
acute care hospitals for FY 2005 and
Hospital submitted quality
data and is a
meaningful
EHR User
FY 2015
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Market Basket Rate-of-Increase ................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act ..................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ....................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ....................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act .............
Applicable Percentage Increase Applied to Standardized Amount ...........
• An update of 2.2 percent to the
Puerto Rico-specific standardized
amount (that is, the FY 2015 estimate of
the market basket rate-of-increase of 2.9
percent less an adjustment of 0.5
percentage point for MFP and less 0.2
percentage point), in accordance with
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NOT submit
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is NOT a meaningful EHR User
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Hospital did
NOT submit
quality data and
is a meaningful
EHR User
2.9
section 1886(d)(9)(C)(i) of the Act, as
amended by section 401(c) of Public
Law 108–173, which sets the update to
the Puerto Rico-specific standardized
amount equal to the applicable
percentage increase set forth under
section 1886(b)(3)(B)(i) of the Act.
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subsequent fiscal years is set forth under
§ 412.64. The basic methodology for
determining the prospective payment
rates for hospital inpatient operating
costs for hospitals located in Puerto
Rico for FY 2005 and subsequent fiscal
years is set forth under §§ 412.211 and
412.212. Below we discuss the factors
we are using for determining the
prospective payment rates for FY 2015.
In summary, the standardized
amounts set forth in Tables 1A, 1B, and
1C that are listed and published in
section VI. of this Addendum (and
available via the Internet) reflect—
• Equalization of the standardized
amounts for urban and other areas at the
level computed for large urban hospitals
during FY 2004 and onward, as
provided for under section
1886(d)(3)(A)(iv)(II) of the Act.
• The labor-related share that is
applied to the standardized amounts
and Puerto Rico-specific standardized
amounts to give the hospital the highest
payment, as provided for under sections
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of
the Act. For FY 2015, depending on
whether a hospital submits quality data
under the rules established in
accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter
referred to as a hospital that submits
quality data) and is a meaningful EHR
user under section 1886(b)(3)(B)(ix) of
the Act (hereafter referred to as a
hospital that is a meaningful EHR user),
there are four possible applicable
percentage increases that can be applied
to the national standardized amount.
We refer readers to section IV.B. of the
preamble of this final rule for a
complete discussion on the FY 2015
inpatient hospital update. Below is a
table with these four options:
• An adjustment to the standardized
amount to ensure budget neutrality for
DRG recalibration and reclassification,
as provided for under section
1886(d)(4)(C)(iii) of the Act.
• An adjustment to ensure the wage
index changes are budget neutral, as
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provided for under section
1886(d)(3)(E)(i) of the Act. We note that
section 1886(d)(3)(E)(i) of the Act
requires that when we compute such
budget neutrality, we assume that the
provisions of section 1886(d)(3)(E)(ii) of
the Act (requiring a 62 percent laborrelated share in certain circumstances)
had not been enacted.
• An adjustment to ensure the effects
of geographic reclassification are budget
neutral, as provided for under section
1886(d)(8)(D) of the Act, by removing
the FY 2014 budget neutrality factor and
applying a revised factor.
• As discussed below and in section
III. of the preamble of this final rule, an
adjustment to offset the cost of the
transitional wage index provisions
provided by CMS as a result of the
adoption of the new OMB labor market
area delineations.
• An adjustment to ensure the effects
of the rural community hospital
demonstration program required under
section 410A of Public Law 108–173, as
amended by sections 3123 and 10313 of
Public Law 111–148, which extended
the demonstration program for an
additional 5 years, are budget neutral as
required under section 410A(c)(2) of
Public Law 108–173.
• An adjustment to remove the FY
2014 outlier offset and apply an offset
for FY 2015, as provided for under
section 1886(d)(3)(B) of the Act.
• As discussed below and in section
II.D. of the preamble of this final rule,
a recoupment to meet the requirements
of section 631 of ATRA to adjust the
standardized amount to offset the
estimated amount of the increase in
aggregate payments as a result of not
completing the prospective adjustment
authorized under section 7(b)(1)(A) of
Public Law 110–90 until FY 2013.
Beginning in FY 2008, we applied the
budget neutrality adjustment for the
rural floor to the hospital wage indexes
rather than the standardized amount. As
we did for FY 2014, for FY 2015,
consistent with current law, we are
continuing to apply the rural floor
budget neutrality adjustment to hospital
wage indexes rather than the
standardized amount. Also, consistent
with section 3141 of the Affordable Care
Act, instead of applying a State level
rural floor budget neutrality adjustment
to the wage index, we are applying a
uniform, national budget neutrality
adjustment to the FY 2015 wage index
for the rural floor. We note that, in
section III.G.2.b. of the preamble to this
final rule, we are extending the imputed
floor policy (both the original
methodology and alternative
methodology) for another year, through
September 30, 2015.
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Therefore, for FY 2015, in this final
rule, we are continuing to include the
imputed floor (calculated under the
original and alternative methodologies)
in calculating the uniform, national
rural floor budget neutrality adjustment,
which will be reflected in the FY 2015
wage index.
A. Calculation of the Adjusted
Standardized Amount
1. Standardization of Base-Year Costs or
Target Amounts
In general, the national standardized
amount is based on per discharge
averages of adjusted hospital costs from
a base period (section 1886(d)(2)(A) of
the Act), updated and otherwise
adjusted in accordance with the
provisions of section 1886(d) of the Act.
For Puerto Rico hospitals, the Puerto
Rico-specific standardized amount is
based on per discharge averages of
adjusted target amounts from a base
period (section 1886(d)(9)(B)(i) of the
Act), updated and otherwise adjusted in
accordance with the provisions of
section 1886(d)(9) of the Act. The
September 1, 1983 interim final rule (48
FR 39763) contained a detailed
explanation of how base-year cost data
(from cost reporting periods ending
during FY 1981) were established for
urban and rural hospitals in the initial
development of standardized amounts
for the IPPS. The September 1, 1987
final rule (52 FR 33043 and 33066)
contains a detailed explanation of how
the target amounts were determined and
how they are used in computing the
Puerto Rico rates.
Sections 1886(d)(2)(B) and
1886(d)(2)(C) of the Act require us to
update base-year per discharge costs for
FY 1984 and then standardize the cost
data in order to remove the effects of
certain sources of cost variations among
hospitals. These effects include casemix, differences in area wage levels,
cost-of-living adjustments for Alaska
and Hawaii, IME costs, and costs to
hospitals serving a disproportionate
share of low-income patients.
In accordance with section
1886(d)(3)(E) of the Act, the Secretary
estimates, from time-to-time, the
proportion of hospitals’ costs that are
attributable to wages and wage-related
costs. In general, the standardized
amount is divided into labor-related and
nonlabor-related amounts; only the
proportion considered to be the laborrelated amount is adjusted by the wage
index. Section 1886(d)(3)(E) of the Act
requires that 62 percent of the
standardized amount be adjusted by the
wage index, unless doing so would
result in lower payments to a hospital
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than would otherwise be made. (Section
1886(d)(9)(C)(iv)(II) of the Act extends
this provision to the labor-related share
for hospitals located in Puerto Rico.)
For FY 2015, we are using the
national and Puerto Rico-specific laborrelated and nonlabor-related shares
established for FY 2014, using the FY
2010-based hospital market basket.
Specifically, under section 1886(d)(3)(E)
of the Act, the Secretary estimates, from
time to time, the proportion of payments
that are labor-related: ‘‘[T]he Secretary
shall adjust the proportion, (as
estimated by the Secretary from time to
time) of hospitals’ costs which are
attributable to wages and wage-related
costs, of the DRG prospective payment
rates . . . .’’ We refer to the proportion
of hospitals’ costs that are attributable to
wages and wage-related costs as the
‘‘labor-related share.’’ For FY 2015, as
discussed in section III. of the preamble
of this final rule, we are continuing to
use a labor-related share of 69.6 percent
for the national standardized amounts,
and 63.2 percent for the Puerto Ricospecific standardized amount, if the
hospital has a wage index value that is
greater than 1.0000. Consistent with
section 1886(d)(3)(E) of the Act, we are
applying the wage index to a laborrelated share of 62 percent of the
national standardized amount for all
IPPS hospitals whose wage index values
are less than or equal to 1.0000. For all
IPPS hospitals whose wage indexes are
greater than 1.0000, we are applying the
wage index to a labor-related share of
69.6 percent of the national
standardized amount.
For FY 2015, all Puerto Rico hospitals
have a wage index value that is less than
1.0000 because the average hourly rate
of every hospital in Puerto Rico divided
by the national average hourly rate (the
sum of all salaries and hours for all
hospitals in the 50 United States and
Puerto Rico) results in a wage index that
is below 1.0000. However, when we
divide the average hourly rate of every
hospital located in Puerto Rico by the
Puerto Rico-specific national average
hourly rate (the sum of all salaries and
hours for all hospitals located only in
Puerto Rico), we determine a Puerto
Rico-specific wage index value for some
hospitals that is either above, or below
1.0000, depending on the hospital’s
location within Puerto Rico. Therefore,
for hospitals located in Puerto Rico, we
are applying a labor-related share of
63.2 percent if its Puerto Rico-specific
wage index is greater than 1.0000. For
hospitals located in Puerto Rico whose
Puerto Rico-specific wage index values
are less than or equal to 1.0000, we are
applying a labor share of 62 percent.
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The standardized amounts for
operating costs appear in Tables 1A, 1B,
and 1C that are listed and published in
section VI. of the Addendum to this
final rule and are available via the
Internet on the CMS Web site.
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2. Computing the National Average
Standardized Amount and Puerto RicoSpecific Standardized Amount
Section 1886(d)(3)(A)(iv)(II) of the Act
requires that, beginning with FY 2004
and thereafter, an equal standardized
amount be computed for all hospitals at
the level computed for large urban
hospitals during FY 2003, updated by
the applicable percentage update.
Section 1886(d)(9)(A)(ii)(II) of the Act
equalizes the Puerto Rico-specific urban
and rural area rates. Accordingly, we are
calculating the FY 2015 national average
standardized amount and Puerto Ricospecific standardized amount
irrespective of whether a hospital is
located in an urban or rural location.
3. Updating the National Average
Standardized Amount and Puerto RicoSpecific Standardized Amount
Section 1886(b)(3)(B) of the Act
specifies the applicable percentage
increase used to update the
standardized amount for payment for
inpatient hospital operating costs. We
note that, in compliance with section
404 of the MMA, in this final rule, we
are using the revised and rebased FY
2010-based IPPS operating and capital
market baskets for FY 2015 (which
replaced the FY 2006-based IPPS
operating and capital market baskets in
FY 2014). As discussed in section IV.B.
of the preamble of this final rule, in
accordance with section 1886(b)(3)(B) of
the Act, as amended by section 3401(a)
of the Affordable Care Act, we are
reducing the FY 2015 applicable
percentage increase (which is based on
IHS Global Insight, Inc.’s (IGI’s) second
quarter 2014 forecast of the FY 2010based IPPS market basket) by the MFP
adjustment (the 10-year moving average
of MFP for the period ending FY 2015)
of 0.5 percentage point, which is
calculated based on IGI’s second quarter
2014 forecast.
In addition, in accordance with
section 1886(b)(3)(B)(i) of the Act, as
amended by sections 3401(a) and
10319(a) of the Affordable Care Act, we
are further updating the standardized
amount for FY 2015 by the estimated
market basket percentage increase less
0.2 percentage point for hospitals in all
areas. Sections 1886(b)(3)(B)(xi) and
(xii) of the Act, as added and amended
by sections 3401(a) and 10319(a) of the
Affordable Care Act, further state that
these adjustments may result in the
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applicable percentage increase being
less than zero. The percentage increase
in the market basket reflects the average
change in the price of goods and
services comprising routine, ancillary,
and special care unit hospital inpatient
services.
Based on IGI’s 2014 second quarter
forecast of the hospital market basket
increase (as discussed in Appendix B of
this final rule), the most recent forecast
of the hospital market basket increase
for FY 2015 is 2.9 percent. As discussed
above, for FY 2015, depending on
whether a hospital submits quality data
under the rules established in
accordance with section
1886(b)(3)(B)(viii) of the Act and is a
meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act, there are
four possible applicable percentage
increases that could be applied to the
standardized amount. We refer readers
to section IV. of the preamble of this
final rule for a complete discussion on
the FY 2015 inpatient hospital update to
the standardized amount. We also refer
readers to the table above for the four
possible applicable percentage increases
that would be applied to update the
national standardized amount. The
standardized amounts shown in Tables
1A through 1C that are published in
section VI. of this Addendum and that
are available via the Internet on the
CMS Web site reflect these differential
amounts.
Section 401(c) of Public Law 108–173
amended section 1886(d)(9)(C)(i) of the
Act and states that, for discharges
occurring in a fiscal year (beginning
with FY 2004), the Secretary shall
compute an average standardized
amount for hospitals located in any area
of Puerto Rico that is equal to the
average standardized amount computed
under subclause (I) for FY 2003 for
hospitals in a large urban area (or,
beginning with FY 2005, for all
hospitals in the previous fiscal year)
increased by the applicable percentage
increase under subsection (b)(3)(B) for
the fiscal year involved. Therefore, the
update to the Puerto Rico-specific
operating standardized amount is
subject to the applicable percentage
increase set forth under section
1886(b)(3)(B)(i) of the Act, as amended
by sections 3401(a) and 10319(a) of the
Affordable Care Act (that is, the same
update factor as for all other hospitals
subject to the IPPS). Accordingly, we are
establishing an applicable percentage
increase to the Puerto Rico-specific
standardized amount of 2.2 percent for
FY 2015.
Although the update factors for FY
2015 are set by law, we are required by
section 1886(e)(4) of the Act to
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recommend, taking into account
MedPAC’s recommendations,
appropriate update factors for FY 2015
for both IPPS hospitals and hospitals
and hospital units excluded from the
IPPS. Section 1886(e)(5)(A) of the Act
requires that we publish our proposed
recommendations in the Federal
Register for public comment. Our
recommendation on the update factors
is set forth in Appendix B of this final
rule.
4. Other Adjustments to the Average
Standardized Amount
As in the past, we are adjusting the
FY 2015 standardized amount to remove
the effects of the FY 2014 geographic
reclassifications and outlier payments
before applying the FY 2015 updates.
We then apply budget neutrality offsets
for outliers and geographic
reclassifications to the standardized
amount based on FY 2015 payment
policies.
We do not remove the prior year’s
budget neutrality adjustments for
reclassification and recalibration of the
DRG relative weights and for updated
wage data because, in accordance with
sections 1886(d)(4)(C)(iii) and
1886(d)(3)(E) of the Act, estimated
aggregate payments after updates in the
DRG relative weights and wage index
should equal estimated aggregate
payments prior to the changes. If we
removed the prior year’s adjustment, we
would not satisfy these conditions.
Budget neutrality is determined by
comparing aggregate IPPS payments
before and after making changes that are
required to be budget neutral (for
example, changes to MS–DRG
classifications, recalibration of the MS–
DRG relative weights, updates to the
wage index, and different geographic
reclassifications). We include outlier
payments in the simulations because
they may be affected by changes in these
parameters.
In order to appropriately estimate
aggregate payments in our modeling, we
make several inclusions and exclusions
so that the appropriate universe of
claims and charges are included. We
discuss IME Medicare Advantage
payment amounts, fee-for-service only
claims, and charges for anti-hemophilic
blood factor and organ acquisition
below.
Consistent with our methodology
established in the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50422 through
50433), because IME Medicare
Advantage payments are made to IPPS
hospitals under section 1886(d) of the
Act, we believe these payments must be
part of these budget neutrality
calculations. However, we note that it is
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not necessary to include Medicare
Advantage IME payments in the outlier
threshold calculation or the outlier
offset to the standardized amount
because the statute requires that outlier
payments be not less than 5 percent nor
more than 6 percent of total ‘‘operating
DRG payments,’’ which does not
include IME and DSH payments. We
refer readers to the FY 2011 IPPS/LTCH
PPS final rule for a complete discussion
on our methodology of identifying and
adding the total Medicare Advantage
IME payment amount to the budget
neutrality adjustments.
In addition, consistent with the
methodology in the FY 2012 IPPS/LTCH
PPS final rule, in order to ensure that
we capture only fee-for-service claims,
we are only including claims with a
‘‘Claim Type’’ of 60 (which is a field on
the MedPAR file that indicates a claim
is a fee-for-service claim).
Finally, consistent with our
methodology established in the FY 2011
IPPS/LTCH PPS final rule (75 FR 50422
through 50423), we examined the
MedPAR file and removed pharmacy
charges for anti-hemophilic blood factor
(which are paid separately under the
IPPS) with an indicator of ‘‘3’’ for blood
clotting with a revenue code of ‘‘0636’’
from the covered charge field for the
budget neutrality adjustments. We also
removed organ acquisition charges from
the covered charge field for the budget
neutrality adjustments because organ
acquisition is a pass-through payment
not paid under the IPPS.
The Bundled Payments for Care
Improvement (BPCI) initiative,
developed under the authority of
section 3021 of the Affordable Care Act
(codified at section 1115A of the Act),
is comprised of four broadly defined
models of care, which link payments for
multiple services beneficiaries receive
during an episode of care. Under the
BPCI initiative, organizations enter into
payment arrangements that include
financial and performance
accountability for episodes of care. On
January 31, 2013, CMS announced the
health care organizations selected to
participate in the BPCI initiative. For
additional information on the BPCI
initiative, we refer readers to the CMS
Center for Medicare and Medicaid
Innovation’s Web site at: http://
innovation.cms.gov/initiatives/BundledPayments/index.html.
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53341 through 53343), for
FY 2013 and subsequent fiscal years, we
finalized a methodology to treat
hospitals that participate in the BPCI
initiative the same as prior fiscal years
for the IPPS payment modeling and
ratesetting process (which includes
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recalibration of the MS–DRG relative
weights, ratesetting, calculation of the
budget neutrality factors, and the impact
analysis) without regard to a hospital’s
participation within these bundled
payment models (that is, as if they are
not participating in those models under
the BPCI initiative). Therefore, for FY
2015, as discussed in section II.H.4. of
the preamble to this final rule, as we
proposed, we are continuing to include
all applicable data from subsection (d)
hospitals participating in BPCI Models
1, 2, and 4 in our IPPS payment
modeling and ratesetting calculations.
We refer readers to the FY 2013 IPPS/
LTCH PPS final rule for a complete
discussion on our final policy for the
treatment of hospitals in the BPCI
initiative in our ratesetting process.
The Affordable Care Act established
the Hospital Readmissions Reduction
Program and the Hospital VBP Program
which adjust payments to certain IPPS
hospitals beginning with discharges on
or after October 1, 2012. Because the
adjustments made under these programs
affect the estimation of aggregate IPPS
payments, in this final rule, consistent
with our methodology established in the
FY 2013 IPPS/LTCH PPS final rule (77
FR 53687 through 53688), we believe
that it is appropriate to include
adjustments for these programs within
our budget neutrality calculations. We
discuss the treatment of these two
programs in the context of budget
neutrality adjustments below.
Section 1886(q) of the Act establishes
the ‘‘Hospital Readmissions Reduction
Program’’ effective for discharges from
an ‘‘applicable hospital’’ beginning on
or after October 1, 2012, under which
payments to those hospitals under
section 1886(d) of the Act are reduced
to account for certain excess
readmissions. Under the Hospital
Readmissions Reduction Program, for
discharges beginning on October 1, 2012
discharges from an ‘‘applicable
hospital’’ are paid at an amount equal to
the product of the ‘‘base operating DRG
payment amount’’ and an ‘‘adjustment
factor’’ that accounts for excess
readmissions for the hospital for the
fiscal year plus any applicable add-on
payments. We refer readers to section
IV.H. of the preamble of this final rule
for full details of our implementation of
and FY 2015 policy changes to the
Hospital Readmissions Reduction
Program. We also note that the Hospital
Readmissions Reduction Program
provided for under section 1886(q) of
the Act is not budget neutral.
Section 1886(o) of the Act requires the
Secretary to establish a Hospital VBP
Program under which, for discharges
beginning on October 1, 2012, value-
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based incentive payments are made in a
fiscal year to eligible subsection (d)
hospitals that meet performance
standards established for a performance
period for that fiscal year. As specified
under section 1886(o)(7)(B)(i) of the Act,
these value-based incentive payments
are funded by a reduction applied to
each eligible hospital’s base-operating
DRG payment amount, for each
discharge occurring in the fiscal year.
As required by section 1886(o)(7)(A) of
the Act, the total amount of allocated
funds available for value-based
incentive payments with respect to a
fiscal year is equal to the total amount
of base-operating DRG payment
reductions, as estimated by the
Secretary. In a given fiscal year,
hospitals may earn a value-based
incentive payment amount for a fiscal
year that is greater than, equal to, or less
than the reduction amount, based on
their performance on quality measures
under the Hospital VBP Program. Thus,
the Hospital VBP Program is estimated
to have no net effect on overall
payments. We refer readers to section
IV.I. of the preamble of this final rule for
full details regarding the Hospital VBP
Program.
Both the hospital readmissions
payment adjustment (reduction) and the
hospital VBP payment adjustment
(redistribution) are applied on a claimby-claim basis by adjusting, as
applicable, the base-operating DRG
payment amount for individual
subsection (d) hospitals, which affects
the overall sum of aggregate payments
on each side of the comparison within
the budget neutrality calculations. For
example, when we calculate the budget
neutrality factor for MS–DRG
reclassification and recalibration of the
relative weights, we compare aggregate
payments estimated using the prior
year’s GROUPER and relative weights to
estimated payments using the new
GROUPER and relative weights. (We
refer readers to section II.A.4.a. of this
Addendum for full details.) Other
factors, such as the DSH and IME
payment adjustments, are the same on
both sides of the comparison because
we are only seeking to ensure that
aggregate payments do not increase or
decrease as a result of the changes of
MS–DRG reclassification and
recalibration.
In order to properly determine
aggregate payments on each side of the
comparison, as we did for FY 2014, for
FY 2015 and subsequent years, we are
continuing to apply the hospital
readmissions payment adjustment and
the hospital VBP payment adjustment
on each side of the comparison,
consistent with the methodology that
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we adopted in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53687 through
53688). That is, we are applying the
readmissions payment adjustment factor
and the hospital VBP payment
adjustment factor on both sides of our
comparison of aggregate payments when
determining all budget neutrality factors
described in section II.A.4. of this
Addendum.
For the purpose of calculating the FY
2015 readmissions payment adjustment
factors, we are using excess readmission
ratios and aggregate payments for excess
readmissions based on admissions from
the prior fiscal year’s applicable period
because hospitals have had the
opportunity to review and correct these
data before the data were made public
under the policy we adopted regarding
the reporting of hospital-specific
readmission rates, consistent with
section 1886(q)(6) of the Act. For FY
2015, in this final rule, we are
calculating the readmissions payment
adjustment factors using excess
readmission ratios and aggregate
payments for excess readmissions based
on admissions from the finalized
applicable period for FY 2015 as
hospitals have had the opportunity to
review and correct these data under our
policy regarding the reporting of
hospital-specific readmission rates
consistent with section 1886(q)(6) of the
Act. We discuss our policy regarding the
reporting of hospital-specific
readmission rates for FY 2015 in section
IV.H.3.f. of the preamble of this final
rule. (For additional information on our
general policy for the reporting of
hospital-specific readmission rates,
consistent with section 1886(q)(6) of the
Act, we refer readers to the FY 2013
IPPS/LTCH PPS final rule (77 FR 53399
through 53400).)
In addition, for FY 2015, in this final
rule, for the purpose of modeling
aggregate payments when determining
all budget neutrality factors, we are
using proxy hospital VBP payment
adjustment factors for FY 2015 that are
based on data from a historical period
because hospitals have not yet had an
opportunity to review and submit
corrections for their data from the FY
2015 performance period. (For
additional information on our policy
regarding the review and correction of
hospital-specific measure rates under
the Hospital VBP Program, consistent
with section 1886(o)(10)(A)(ii) of the
Act, we refer readers to the FY 2013
IPPS/LTCH PPS final rule (77 FR 53578
through 53581), the CY 2012 OPPS/ASC
final rule with comment period (76 FR
74544 through 74547), and the Hospital
Inpatient VBP final rule (76 FR 26534
through 26536).)
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The Affordable Care Act also
established section 1886(r) of the Act,
which modifies the methodology for
computing the Medicare DSH payment
adjustment beginning in FY 2014.
Beginning in FY 2014, IPPS hospitals
receiving Medicare DSH payment
adjustments will receive an empirically
justified Medicare DSH payment equal
to 25 percent of the amount that would
previously have been received under the
current statutory formula set forth under
section 1886(d)(5)(F) of the Act
governing the Medicare DSH payment
adjustment. In accordance with section
1886(r)(2) of the Act, the remaining
amount, equal to an estimate of 75
percent of what otherwise would have
been paid as Medicare DSH payments,
reduced to reflect changes in the
percentage of individuals under age 65
who are uninsured, will be available to
make additional payments to Medicare
DSH hospitals based on their share of
the total amount of uncompensated care
reported by Medicare DSH hospitals for
a given time period. In order to properly
determine aggregate payments on each
side of the comparison for budget
neutrality, prior to FY 2014, we
included estimated Medicare DSH
payments on both sides of our
comparison of aggregate payments when
determining all budget neutrality factors
described in section II.A.4. of this
Addendum.
To do this for FY 2015 and
subsequent years (as we did for FY
2014), we are including estimated
empirically justified Medicare DSH
payments that will be paid in
accordance with section 1886(r)(1) of
the Act and estimates of the additional
uncompensated care payments made to
hospitals receiving Medicare DSH
payment adjustments as described by
section 1886(r)(2) of the Act. That is, we
are considering estimated empirically
justified Medicare DSH payments at 25
percent of what would otherwise have
been paid, and also the estimated
additional uncompensated care
payments for hospitals receiving
Medicare DSH payment adjustments on
both sides of our comparison of
aggregate payments when determining
all budget neutrality factors described in
section II.A.4. of this Addendum.
We note that, when calculating total
payments for budget neutrality, to
determine total payments for SCHs we
model total hospital-specific rate
payments and total Federal rate
payments and then include whichever
one of the total payments is greater. As
discussed in section IV.F. of the
preamble to this final rule and below,
we are continuing the FY 2014 finalized
methodology under which we will take
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into consideration uncompensated care
payments in the comparison of
payments under the Federal rate and the
hospital-specific rate for SCHs.
Therefore, we are including estimated
uncompensated care payments in this
comparison.
Similarly, for MDHs, as discussed in
section IV. of the preamble to this final
rule, when computing payments under
the Federal national rate plus 75 percent
of the difference between the payments
under the Federal national rate and the
payments under the updated hospitalspecific rate, we are continuing to take
into consideration uncompensated care
payments in the computation of
payments under the Federal rate and the
hospital-specific rate for MDHs.
Also, for FY 2015, as of the time of
development of this final rule, CMS has
yet to finalize a list of hospitals that are
not meaningful EHR users under section
1886(b)(3)(B)(ix) of the Act. Therefore,
we are not including this adjustment to
the standardized amount (for those
hospitals that are not meaningful EHR
users) in our modeling of aggregate
payments for budget neutrality for FY
2015. CMS intends to release a final list
of hospitals that are not meaningful EHR
users in September 2014. Hospitals
identified on this list will be paid based
on the applicable standardized amount
in Tables 1A and 1B for discharges
occurring in FY 2015.
We finally note that the wage index
value is calculated and assigned to a
hospital based on the hospital’s labor
market area. Under section 1886(d)(3)(E)
of the Act, beginning with FY 2005, we
delineate hospital labor market areas
based on the Core-Based Statistical
Areas (CBSAs) established by the Office
of Management and Budget (OMB). The
current statistical areas used in FY 2014
are based on OMB standards published
on December 27, 2000 (65 FR 82228)
and Census 2000 data and Census
Bureau population estimates for 2007
and 2008 (OMB Bulletin No. 10–02). For
purposes of determining all of the FY
2014 budget neutrality factors, we
determined aggregate payments on each
side of the comparison for our budget
neutrality calculations using wage
indexes based on the current CBSAs.
As stated in the FY 2014 IPPS/LTCH
PPS proposed rule (78 FR 27552) and
final rule (78 FR 50586), on February 28,
2013, OMB issued OMB Bulletin No.
13–01, which established revised
delineations for Metropolitan Statistical
Areas, Micropolitan Statistical Areas,
and Combined Statistical Areas, and
provided guidance on the use of the
delineations of these statistical areas. In
order to implement these changes for
the IPPS, it was necessary to identify the
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new OMB labor market area delineation
for each county and hospital in the
country. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50586), we stated that
we intended to propose changes to the
wage index policy based on the new
OMB delineations in the FY 2015 IPPS/
LTCH PPS proposed rule. As discussed
in section III. of the preamble of this
final rule, as we proposed, we are
adopting the new OMB labor market
area delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, effective for the FY 2015 IPPS
wage index.
Consistent with our policy to adopt
the new OMB delineations, in order to
properly determine aggregate payments
on each side of the comparison for our
budget neutrality calculations, we are
using wage indexes based on the new
OMB delineations in the determination
of all of the budget neutrality factors
discussed below (with the exception of
the transitional budget neutrality factor
and outlier threshold as explained
below). We also note that, consistent
with past practice as finalized in the FY
2005 IPPS final rule (69 FR 49034), we
are not adopting the new OMB
delineations themselves in a budget
neutral manner. We continue to believe
that the revision to the labor market
areas in and of itself does not constitute
an ‘‘adjustment or update’’ to the
adjustment for area wage differences, as
provided under section 1886(d)(3)(E) of
the Act.
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a. Recalibration of MS–DRG Relative
Weights and Updated Wage Index—
Budget Neutrality Adjustment
Section 1886(d)(4)(C)(iii) of the Act
specifies that, beginning in FY 1991, the
annual DRG reclassification and
recalibration of the relative weights
must be made in a manner that ensures
that aggregate payments to hospitals are
not affected. As discussed in section
II.H. of the preamble of this final rule,
we normalized the recalibrated MS–
DRG relative weights by an adjustment
factor so that the average case relative
weight after recalibration is equal to the
average case relative weight prior to
recalibration. However, equating the
average case relative weight after
recalibration to the average case relative
weight before recalibration does not
necessarily achieve budget neutrality
with respect to aggregate payments to
hospitals because payments to hospitals
are affected by factors other than
average case relative weight. Therefore,
as we have done in past years, we are
making a budget neutrality adjustment
to ensure that the requirement of section
1886(d)(4)(C)(iii) of the Act is met.
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Section 1886(d)(3)(E)(i) of the Act
requires us to update the hospital wage
index on an annual basis beginning
October 1, 1993. This provision also
requires us to make any updates or
adjustments to the wage index in a
manner that ensures that aggregate
payments to hospitals are not affected
by the change in the wage index.
Section 1886(d)(3)(E)(i) of the Act
requires that we implement the wage
index adjustment in a budget neutral
manner. However, section
1886(d)(3)(E)(ii) of the Act sets the
labor-related share at 62 percent for
hospitals with a wage index less than or
equal to 1.0000, and section
1886(d)(3)(E)(i) of the Act provides that
the Secretary shall calculate the budget
neutrality adjustment for the
adjustments or updates made under that
provision as if section 1886(d)(3)(E)(ii)
of the Act had not been enacted. In
other words, this section of the statute
requires that we implement the updates
to the wage index in a budget neutral
manner, but that our budget neutrality
adjustment should not take into account
the requirement that we set the laborrelated share for hospitals with wage
indexes less than or equal to 1.0000 at
the more advantageous level of 62
percent. Therefore, for purposes of this
budget neutrality adjustment, section
1886(d)(3)(E)(i) of the Act prohibits us
from taking into account the fact that
hospitals with a wage index less than or
equal to 1.0000 are paid using a laborrelated share of 62 percent. Consistent
with current policy, for FY 2015, we are
adjusting 100 percent of the wage index
factor for occupational mix. We describe
the occupational mix adjustment in
section III.F. of the preamble of this
final rule.
For FY 2015, to comply with the
requirement that MS–DRG
reclassification and recalibration of the
relative weights be budget neutral for
the Puerto Rico standardized amount
and the hospital-specific rates, we used
FY 2013 discharge data to simulate
payments and compared the following:
• Aggregate payments using the FY
2014 labor-related share percentages,
the new OMB labor market area
delineations for FY 2015, the FY 2014
relative weights, and the FY 2014 prereclassified wage data, and applied the
FY 2015 hospital readmissions payment
adjustments and estimated FY 2015
hospital VBP payment adjustments; and
• Aggregate payments using the FY
2014 labor-related share percentages,
the new OMB labor market area
delineations for FY 2015, the FY 2015
relative weights, and the FY 2014 prereclassified wage data, and applied the
same hospital readmissions payment
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adjustments and estimated hospital VBP
payment adjustments applied above.
Based on this comparison, we
computed a budget neutrality
adjustment factor equal to 0.997543. As
discussed in section IV. of this
Addendum, we also are applying the
MS–DRG reclassification and
recalibration budget neutrality factor of
0.997543 to the hospital-specific rates
that are effective for cost reporting
periods beginning on or after October 1,
2014.
Comment: Several commenters stated
that CMS miscalculated the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor presented
in the proposed rule. The commenters
noted that the budget neutrality
adjustment factor of 0.992938 presented
in the proposed rule was much lower
than historical levels. The commenters
also noted that, for the last 5 years, the
budget neutrality adjustment factor has
been between 0.996731 (FY 2011) and
0.998431 (FY 2013). In addition, the
commenters informed CMS that they
attempted to replicate the calculation of
this budget neutrality adjustment factor,
but were unable to do so. The
commenters added that in May of 2014,
CMS posted a revised set of MS–DRG
relative weights on the CMS Web site
via the Internet because a number of
postacute care transfer-adjusted cases
for certain MS–DRGs presented in the
FY 2015 IPPS/LTCH PPS proposed rule
were inadvertently miscalculated.
However, the commenters stated that
they were still not able to verify the
budget neutrality adjustment factor
using the updated MS–DRG relative
weights. The commenters stated that, by
using the revised MS–DRGs, they
calculated a revised budget neutrality
adjustment factor of 1.000301. The
commenters recommended that CMS
examine the calculation of the budget
neutrality adjustment factor and, if
necessary, revise the budget neutrality
adjustment factor for the FY 2015 IPPS/
LTCH PPS final rule.
One commenter recommended that
CMS perform an analysis to confirm
whether the proposed MS–DRG
reclassification and recalibration budget
neutrality adjustment factor is accurate
and correct. The commenter also
recommended that CMS discuss the
results of its analysis in the final rule
and afford interested parties a further
opportunity to review and comment on
the final budget neutrality adjustment
factor before it becomes effective on
October 1, 2014.
Response: We appreciate the
commenters’ input. As the commenters
requested, we examined the calculation
of the budget neutrality adjustment
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factor presented in the proposed rule.
We agree with the commenters that the
MS–DRG reclassification and
recalibration budget neutrality
adjustment factor was calculated
incorrectly during the development of
the proposed rule due to the inadvertent
miscalculation of a number of postacute
care transfer-adjusted cases for certain
MS–DRGs. Using the updated MS–DRG
relative weights, we calculated a revised
proposed budget neutrality adjustment
factor similar to the factor calculated by
the commenters. For FY 2015, in this
final rule, using accurate postacute care
transfer-adjusted cases for these MS–
DRGs, we have calculated a MS–DRG
reclassification and recalibration budget
neutrality factor of 0.997543, which is
consistent with historical levels.
In response to the commenters’
concerns regarding verifying the
accuracy of the budget neutrality
adjustment factor, we announced
through information posted via the
Internet on the CMS Web site at http://
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/
AcuteInpatientPPS/FY2015–IPPSProposed-Rule-Home-Page-Items/
FY2015-IPPS-Proposed-Rule-DataFiles.html that there was an inadvertent
miscalculation of a number of postacute
care transfer-adjusted cases for certain
MS–DRGs. Therefore, after the
publication of the FY 2015 IPPS/LTCH
PPS proposed rule, we also posted via
the Internet on the CMS Web site a
revised table of the proposed MS–DRG
relative weights for FY 2015. It is our
goal to strive for accuracy in regard to
our adjustment factor calculations, and
we appreciate the commenters’
recognition of the mistake and for
pointing out the effects of the
miscalculation during the comment
period. However, we believe that the 60day comment period affords the public
an appropriate opportunity to review
and comment on all of the proposals
presented throughout the entire FY 2015
IPPS/LTCH PPS proposed rule. We are
not changing our proposed policy in
calculating this budget neutrality
adjustment, but rather are using
corrected information. Therefore, we do
not believe that an additional
opportunity for comment necessary.
Comment: The commenter also noted
that CMS did not explicitly state which
labor-related share percentages were
used in the calculation of the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor. In
addition, the commenter did not believe
that it was appropriate to use the new
OMB delineations in the calculation of
the MS–DRG reclassification and
recalibration budget neutrality
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adjustment factor. The commenter
requested that CMS address why it is
appropriate to apply the new OMB
delineations in the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor and how
and whether the new OMB delineations
impact the calculation of the final
budget neutrality adjustment factor. The
commenter also requested that CMS
identify which labor-related share
percentages were in each component of
the payment simulation model used to
calculate the final budget neutrality
adjustment factor.
Response: As discussed in section
III.B.(2)(e)(6) of the preamble of this
final rule and consistent with past
practice (69 FR 49034), we are not
adopting the new OMB delineations, in
and of themselves, in a budget neutral
manner. However, we are adopting the
transitional policies we have effectuated
in a budget neutral manner as we
describe below. We do not believe that
the revision to the labor market areas in
and of itself constitutes an ‘‘adjustment
or update’’ to the adjustment for area
wage differences, as provided under
section 1886(d)(3)(E) of the Act.
Therefore, the new OMB delineations
did not impact the calculation of the
final budget neutrality adjustment
factor. Also, as stated in the FY 2015
IPPS/LTCH PPS proposed rule and
above, consistent with our policy to
adopt the new OMB delineations, in
order to properly determine aggregate
payments on each side of the
comparison for our budget neutrality
adjustment factor calculations, we are
using wage indexes based on the new
OMB delineations in the determination
of all of the budget neutrality
adjustment factors discussed below
(with the exception of the transitional
budget neutrality factor and outlier
fixed-loss threshold as explained
below).
We also did not include the laborrelated share percentages used in the
calculation of the proposed MS–DRG
reclassification and recalibration budget
neutrality adjustment factor presented
in the proposed rule. For FY 2015, in
this final rule, as requested by the
commenters, we present the laborrelated share percentages used in the
calculation of the budget neutrality
adjustment factor in response to public
comments we received in the discussion
above, which are the same labor-related
share percentages used for the proposed
rule.
In order to meet the statutory
requirements that we do not take into
account the labor-related share of 62
percent when computing wage index
budget neutrality adjustment factor, it
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was necessary to use a three-step
process to comply with the
requirements that MS–DRG
reclassification and recalibration of the
relative weights and the updated wage
index and labor-related share have no
effect on aggregate payments for IPPS
hospitals. Under the first step, we
determined an MS- DRG reclassification
and recalibration budget neutrality
adjustment factor of 0.997543 (by using
the same methodology described above
to determine the MS–DRG
reclassification and recalibration budget
neutrality factor for the Puerto Rico
standardized amount and hospitalspecific rates). Under the second step, to
compute a budget neutrality adjustment
factor for wage index and labor-related
share percentage changes we used FY
2013 discharge data to simulate
payments and compared the following:
• Aggregate payments using the new
OMB labor market area delineations for
FY 2015, FY 2015 relative weights and
the FY 2014 pre-reclassified wage
indexes, applied the FY 2014 laborrelated share of 69.6 percent to all
hospitals (regardless of whether the
hospital’s wage index was above or
below 1.0000), and applied the FY 2015
hospital readmissions payment
adjustment and the FY 2015 estimated
hospital VBP payment adjustment; and
• Aggregate payments using the new
OMB labor market area delineations for
FY 2015, FY 2015 relative weights and
the FY 2015 pre-reclassified wage
indexes, applied the labor-related share
for FY 2015 of 69.6 percent to all
hospitals (regardless of whether the
hospital’s wage index was above or
below 1.0000), and applied the same FY
2015 hospital readmissions payment
adjustments and estimated FY 2015
hospital VBP payment adjustments
applied above.
In addition, we applied the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor (derived in
the first step) to the payment rates that
were used to simulate payments for this
comparison of aggregate payments from
FY 2014 to FY 2015. By applying this
methodology, we determined a budget
neutrality adjustment factor of 1.001443
for changes to the wage index. Finally,
we multiplied the MS–DRG
reclassification and recalibration budget
neutrality adjustment factor of 0.997543
(derived in the first step) by the budget
neutrality adjustment factor of 1.001443
for changes to the wage index (derived
in the second step) to determine the
MS–DRG reclassification and
recalibration and updated wage index
budget neutrality adjustment factor of
0.998982.
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b. Reclassified Hospitals—Budget
Neutrality Adjustment
Section 1886(d)(8)(B) of the Act
provides that certain rural hospitals are
deemed urban. In addition, section
1886(d)(10) of the Act provides for the
reclassification of hospitals based on
determinations by the MGCRB. Under
section 1886(d)(10) of the Act, a hospital
may be reclassified for purposes of the
wage index.
Under section 1886(d)(8)(D) of the
Act, the Secretary is required to adjust
the standardized amount to ensure that
aggregate payments under the IPPS after
implementation of the provisions of
sections 1886(d)(8)(B) and (C) and
1886(d)(10) of the Act are equal to the
aggregate prospective payments that
would have been made absent these
provisions. We note that the wage index
adjustments provided for under section
1886(d)(13) of the Act are not budget
neutral. Section 1886(d)(13)(H) of the
Act provides that any increase in a wage
index under section 1886(d)(13) shall
not be taken into account in ‘‘applying
any budget neutrality adjustment with
respect to such index’’ under section
1886(d)(8)(D) of the Act. To calculate
the budget neutrality adjustment factor
for FY 2015, we used FY 2013 discharge
data to simulate payments and
compared the following:
• Aggregate payments using the FY
2014 labor-related share percentages,
the new OMB labor market area
delineations for FY 2015, FY 2015
relative weights, and FY 2015 wage data
prior to any reclassifications under
sections 1886(d)(8)(B) and (C) and
1886(d)(10) of the Act, and applied the
FY 2015 hospital readmissions payment
adjustments and the estimated FY 2015
hospital VBP payment adjustments; and
• Aggregate payments using the FY
2014 labor-related share percentages,
the new OMB labor market area
delineations for FY 2015, FY 2015
relative weights, and FY 2015 wage data
after such reclassifications, and applied
the same hospital readmissions payment
adjustments and the estimated hospital
VBP payment adjustments applied
above.
We note that the reclassifications
applied under the second simulation
and comparison are those listed in
Tables 9A2 and 9C2, which are posted
on the CMS Web site. These tables
reflect reclassification crosswalks based
on the new OMB labor market area
delineations for FY 2015, and apply the
policies explained in section III. of the
preamble to this final rule. Based on
these simulations, we calculated a
budget neutrality adjustment factor of
0.990406 to ensure that the effects of
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these provisions are budget neutral,
consistent with the statute.
The FY 2015 budget neutrality
adjustment factor was applied to the
standardized amount after removing the
effects of the FY 2014 budget neutrality
adjustment factor. We note that the FY
2015 budget neutrality adjustment
reflects FY 2015 wage index
reclassifications approved by the
MGCRB or the Administrator.
c. Rural Floor Budget Neutrality
Adjustment
Under § 412.64(e)(4), we make an
adjustment to the wage index to ensure
that aggregate payments after
implementation of the rural floor under
section 4410 of the BBA (Pub. L. 105–
33) and the imputed floor under
§ 412.64(h)(4) are equal to the aggregate
prospective payments that would have
been made in the absence of such
provisions. Consistent with section 3141
of the Affordable Care Act and as
discussed in section III.G. of the
preamble of this final rule and codified
at § 412.64(e)(4)(ii), the budget
neutrality adjustment for the rural and
imputed floor is a national adjustment
to the wage index.
As noted above and as discussed in
section III.G.2.b. of the preamble of this
final rule, in the FY 2012 IPPS/LTCH
PPS final rule, we extended the imputed
floor calculated under the original
methodology through FY 2013 (76 FR
51594). In the FY 2013 IPPS/LTCH PPS
final rule, we established an alternative
methodology for calculating the
imputed floor and established a policy
that the minimum wage index value for
an all-urban state would be the higher
of the value determined under the
original methodology or the value
computed using the alternative
methodology (77 FR 53368 through
53369). Consistent with the
methodology for treating the imputed
floor, similar to the methodology we
used in the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53368 through 53369),
we included this alternative
methodology for computing the imputed
floor index in the calculation of the
uniform, national rural floor budget
neutrality adjustment for FY 2014. For
FY 2015, as discussed in section
III.G.2.b. of the preamble of this final
rule, we are extending the imputed floor
using the higher of the value determined
under the original methodology or the
alternative methodology for FY 2015.
Therefore, in order to ensure that
aggregate payments to hospitals are not
affected, similar to prior years, we will
follow our policy of including the
imputed floor in the rural floor budget
neutrality adjustment to the wage index.
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As discussed above, for FY 2015, we
are implementing the new OMB
delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, effective for the FY 2015 IPPS
wage index. Therefore, the budget
neutrality adjustment for the rural floor
and imputed floor will be calculated
using the new OMB delineations.
Under the OMB delineations used for
FY 2014, the imputed floor (both the
original methodology and alternative
methodology) was applied to New
Jersey and Rhode Island because these
were the only two all-urban States.
Under OMB’s 2010 revised delineations
based on Census 2010 data, in addition
to New Jersey and Rhode Island,
Delaware will become an all-urban state.
Therefore, for FY 2015, the imputed
floor will be applied to the wage index
for hospitals located in New Jersey,
Rhode Island, and Delaware.
Similar to our calculation in the FY
2012 IPPS/LTCH PPS final rule (76 FR
51593 and 51788), the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53689), and
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50975 through 50976), for FY
2015, we are calculating a national rural
Puerto Rico wage index (used to adjust
the labor-related share of the national
standardized amount for hospitals
located in Puerto Rico which receive 75
percent of the national standardized
amount) and a rural Puerto Rico-specific
wage index (which is used to adjust the
labor-related share of the Puerto Ricospecific standardized amount for
hospitals located in Puerto Rico that
receive 25 percent of the Puerto Ricospecific standardized amount). Because
there are no rural Puerto Rico hospitals
with established wage data, our
calculation of the FY 2015 rural Puerto
Rico wage index is based on the policy
adopted in the FY 2008 IPPS final rule
with comment period (72 FR 47323).
That is, we will use the unweighted
average of the wage indexes from all
CBSAs (urban areas) that are contiguous
(share a border with) to the rural
counties to compute the rural floor (72
FR 47323; 76 FR 51594). Under the new
OMB labor market area delineations,
except for Arecibo, Puerto Rico (CBSA
11640), all other Puerto Rico urban areas
are contiguous to a rural area. Therefore,
based on our existing policy, the FY
2015 rural Puerto Rico wage index is
calculated based on the average of the
FY 2015 wage indexes for the following
urban areas: Aguadilla-Isabela, PR
(CBSA 10380); Guayama, PR (CBSA
25020); Mayaguez, PR (CBSA 32420);
Ponce, PR (CBSA 38660), San German,
PR (CBSA 41900) and San JuanCarolina-Caguas, PR (CBSA 41980).
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To calculate the national rural floor
and imputed floor budget neutrality
adjustment factors and the Puerto Ricospecific rural floor budget neutrality
adjustment factor, we used FY 2013
discharge data to simulate payments,
the FY 2015 new OMB labor market area
delineations, and post-reclassified
national and Puerto Rico-specific wage
indexes and compared the following:
• The national and Puerto Ricospecific simulated payments without
the national rural floor and imputed
floor and Puerto Rico-specific rural floor
applied; and
• The national and Puerto Ricospecific simulated payments with the
national rural floor and imputed floor
and Puerto Rico-specific rural floor
applied.
Based on this comparison, we
determined a national rural budget
neutrality adjustment factor of 0.989507
and the Puerto Rico-specific budget
neutrality adjustment factor of 0.991291.
The national adjustment was applied to
the national wage indexes to produce a
national rural floor budget neutral wage
index and the Puerto Rico-specific
adjustment was applied to the Puerto
Rico-specific wage indexes to produce a
Puerto Rico-specific rural floor budget
neutral wage index.
Comment: Many commenters opposed
the continued application of a
nationwide rural floor budget neutrality
adjustment. Some commenters noted
that under the current rural floor policy,
all hospitals located in Massachusetts
are eligible for the rural floor wage
index as a result of one rural hospital,
which resulted in an approximate 4.9
percent increase in payments for
hospitals located in Massachusetts and
creates a disparity when considering the
wage index of other hospitals around
the country. The commenters also noted
that under the rural floor policy,
hospitals located in California will also
receive an increase in payments of
approximately $196 million as a result
of the application of the rural floor
policy. The commenters stated that the
adverse consequences of applying a
nationwide rural floor budget neutrality
adjustment have been recognized by
CMS, MedPAC, and many others over
the past several years. The commenters
believed that the Medicare wage index
system cannot accomplish its objective
of ensuring that payments for the wage
component of labor accurately reflect
actual wage costs until this policy is
corrected. Other commenters
recommended that CMS consider
applying the rural floor budget
neutrality adjustment through a Statespecific budget neutrality adjustment
factor, as CMS has previously applied.
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Response: We appreciate the
commenters’ input and for informing us
of their concerns. Section 3141 of Public
Law 111–148 requires that a national
budget neutrality adjustment be applied
in implementing the rural floor policy.
Therefore, absent a legislative change
enacted by Congress, we are unable to
change the rural floor budget neutrality
adjustment from a national to a Statespecific adjustment.
Comment: Some commenters
recommended that CMS consider
implementing a policy under the IPPS
and the OPPS that would result in only
hospitals located in rural areas being
included in the statewide rural floor
wage index used for urban hospitals
located in areas with wage indexes that
are lower than the statewide rural wage
index. The commenters believed that
such a policy would prevent urban
hospitals from reclassifying to rural
status simply to improve the rural wage
index, which might be used as a floor
for urban hospitals located in areas of a
State that have lower wage index values.
The commenters added that they
believed that CMS has the regulatory
authority to make such a policy change
without the enactment of Congressional
legislation.
Another commenter recommended
that, for FY 2015, CMS require States to
have at least 5 percent of their PPS
hospitals physically located in rural
areas as a prerequisite for establishing a
rural floor wage index for each State.
The commenter believed that this would
ensure the original intent of the rural
floor policy, which is to serve as an
equalizer, and would protect the policy
from being used as a manipulation tool
that allows a handful of hospitals in one
isolated area of the State to dictate the
wage index for a major Metropolitan
area.
In addition, the same commenter
urged CMS to create a national hospital
wage index floor of 0.91. The
commenter explained that this would
reduce current disparities between
hospitals. The commenter also stated
that the purpose of the hospital area
wage index is to fairly account for labor
costs incurred by providers, and not to
reward ‘‘winners’’ or punish ‘‘losers’’ as
a result of reclassifications and a
proliferation of other modifications. The
commenter further noted that it
recognized that there is growing interest
from MedPAC and others regarding
revising the hospital area wage index
system, but acknowledged that such
revisions take time. Therefore, the
commenter believed that a hospital rural
floor wage index is appropriate until
CMS creates a system that better reflects
the realities of today’s healthcare system
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and levels the playing field for all
Medicare providers.
Response: We appreciate the
commenters’ input. We did not make
any proposals to change the rural floor
wage index policy. Any changes to this
policy would first need to be proposed
through rulemaking. Consequently, we
are not making any changes to address
the commenters’ concerns at this time.
With respect to the commenter who
recommended that CMS establish a
national hospital wage index floor of
0.91, we do not believe that there is any
statistical basis to support this
calculation. In addition, we are unclear
how such a wage index floor policy
could be implemented nor do we
believe that this suggestion meets the
requirement of the statute. With respect
to the other commenters’ suggestions,
we first need to determine if the revised
policy that the commenters suggested
would be inconsistent with any
longstanding policy or statutory
requirement. We will consider the
commenters’ suggestions in future
rulemaking.
Comment: One commenter requested
that CMS provide an updated, detailed,
State-specific analysis of the effect of a
nationwide rural floor budget neutrality
adjustment. The commenter specifically
noted the estimated ‘‘windfall’’
expected to be received by hospitals
located in Massachusetts as a result of
the rural floor policy, and requested that
CMS provide data and additional
analysis of the impacts of a national
rural floor budget neutrality adjustment.
In addition, commenters questioned
whether the addition of one rural
hospital located in Franklin County,
Massachusetts reduced the impact of the
Massachusetts rural floor wage index
from FY 2014 to FY 2015.
Response: We have provided an
updated State-specific analysis of the
effect of the rural floor budget neutrality
adjustment in Appendix A of the
Addendum to this final rule. We also
discuss in Appendix A to this final rule
the increase in payments the hospitals
in Massachusetts are expected to receive
as a result of the rural floor wage index
policy.
We discuss below the reduced impact
of the rural floor wage index policy for
hospitals located in Massachusetts from
FY 2014 to FY 2015. In FY 2014, CMS
calculated that 60 hospitals would
benefit from the Massachusetts rural
floor wage index, resulting in an
estimated $167.6 million being received
by hospitals located in Massachusetts as
a result of the national rural floor budget
neutrality adjustment. In FY 2015, fewer
hospitals located in Massachusetts (51)
have been identified as benefitting from
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the rural floor wage index, and the fiscal
impact of rural floor budget neutrality
adjustment has been reduced. Below we
explain why nine providers (60 minus
51) received the Massachusetts rural
floor wage index in FY 2014, but not in
FY 2015.
The commenters are correct that the
addition of one rural hospital located in
Franklin County, Massachusetts
reduced the impact of the rural floor
wage index in FY 2015, as compared to
the impact of the rural floor wage index
in FY 2014. To further clarify, in FY
2014, there was only one geographically
located rural hospital in Massachusetts
(located in Nantucket County).
Therefore, the Massachusetts pre- and
post- reclassified rural wage index in
the calculation of the reclassification
budget neutrality adjustment, and the
application of the rural floor budget
neutrality adjustment, was established
based on wage data from that one
hospital located in Nantucket County,
Massachusetts. For FY 2015, another
hospital, which is defined as ‘‘urban’’
under the current delineations, is now
considered to be ‘‘rural’’ under the new
OMB delineations. Specifically, this
hospital is located in Franklin County,
Massachusetts, which is no longer
considered to be part of CBSA 44140
(Springfield, MA) under the new OMB
delineations, and is now considered to
be geographically located in a rural area.
However, under the new OMB
delineations, Franklin County meets the
requirements under section
1886(d)(8)(B) of the Act for
reclassification. Therefore, in FY 2015,
any hospital located within Franklin
County is deemed an ‘‘urban’’ labor
market (that is, the hospitals are
considered ‘‘Lugar’’ hospitals). The
calculation of the FY 2015
Massachusetts pre-reclassified rural
wage index, which is used in the
calculation of reclassification budget
neutrality adjustment, is calculated
based on the two geographically located
rural hospitals (one from Franklin
County and one from Nantucket
County). The average hourly wage of the
Franklin County hospital is lower than
the average hourly wage of the
Nantucket County hospital, lowering the
pre-reclassified rural wage index for FY
2015 relative to FY 2014.
With respect to budget neutrality, as
described earlier in this Addendum, we
first calculate and apply the MS–DRG
and wage index budget neutrality
adjustment, then the reclassification
budget neutrality adjustment, and then
the rural floor budget neutrality
adjustment. This analysis focuses on the
reclassification and rural floor budget
neutrality adjustments and applies the
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requirement of section 1886(d)(8)(C)(iii)
of the Act, which specifies that an area’s
post-reclassified wage index (without
application of the rural floor budget
neutrality adjustment) may not be
reduced below the State’s postreclassified rural wage index value
(without application of the rural floor
budget neutrality adjustment), as a
result of reclassification. As stated in
the FY 1992 IPPS final rule (56 FR
43220 through 43221), if reclassification
(either to or from an area) would lower
an area’s post-reclassified wage index
(without application of the rural floor
budget neutrality adjustment) below the
State’s post-reclassified rural wage
index (without application of the rural
floor budget neutrality adjustment),
CMS assigns those areas the postreclassified rural wage index value for
that State (without application of the
rural floor budget neutrality
adjustment). For this to occur, the area’s
pre-reclassified wage index value must
be greater than or equal to the State’s
pre-reclassified rural wage index value
prior to calculating the effects of the
reclassification budget neutrality
adjustment.
As discussed above in section II.A.4.b.
of this Addendum regarding the
reclassification budget neutrality
adjustment, to ensure that the effects of
applying sections 1886(d)(8)(B) and (C)
and 1886(d)(10) of the Act are budget
neutral, we compare FY 2015 wage data
prior to any reclassifications under
sections 1886(d)(8)(B) and (C) and
1886(d)(10) of the Act (that is, prereclassified wage data) to FY 2015 wage
data after such reclassifications (that is,
the post-reclassified wage data).
Specifically, we compared the
Massachusetts pre-reclassified rural
wage index (Column C in the table
below) to the pre-reclassified area wage
index (Column B in the table below).
(We note that the Massachusetts prereclassified rural wage index is
comprised from the wage data of two
rural hospitals, one located in Franklin
County, Massachusetts and one located
in Nantucket County, Massachusetts.) If
a hospital’s pre-reclassified area wage
index (Column B in the table below) is
greater than or equal to the
Massachusetts pre-reclassified rural
wage index (Column C in the table
below), then we compare the
Massachusetts post-reclassified rural
wage index (Column F in the table
below, which is based only on the wage
data from one rural hospital in
Nantucket County, and does not include
the hospital located in Franklin County
because it has been reclassified as an
urban Lugar hospital) to the post-
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50371
reclassified area wage index (Column E
in the table below). For hospitals that
receive reclassification in FY 2015, if
the hospital’s post-reclassified area
wage index (Column E in the table
below) is less than the Massachusetts
post-reclassified rural wage index
(Column F in the table below, which is
based on the wage data from one rural
hospital located in Nantucket County),
then we assign the hospital the
Massachusetts post-reclassified rural
wage index (Column F in the table
below) prior to application of the rural
floor budget neutrality adjustment. The
nine hospitals were reclassified for FY
2015, and their post-reclassified area
wage index (Column E in the table
below) is less than the Massachusetts
post-reclassified rural wage index
(Column F in the table below).
Therefore, although there are other
hospitals located in Massachusetts that
also have been reclassified, only the
nine hospitals meet both conditions and
are being assigned the Massachusetts
post-reclassified rural wage index
(without application of the rural floor
budget neutrality adjustment).
Specifically, when we compared the
Massachusetts pre-reclassified wage
index to Massachusetts post-reclassified
wage index in the calculation of the
reclassification budget neutrality
adjustment, the area’s pre-reclassified
wage index value for the nine hospitals
is greater than or equal to the
Massachusetts pre-reclassified rural
wage index value of 1.1447 (which is
calculated based on the wage data from
the two rural hospitals). After
application of the reclassifications, the
area’s post-reclassified wage index value
for these nine hospitals is lower than
the Massachusetts post-reclassified rural
wage index value of 1.3477 (which only
includes wage data from one rural
hospital located in Nantucket County,
Massachusetts). Therefore, in
accordance with our reclassification
hold-harmless methodology, these nine
hospitals are assigned the Massachusetts
post-reclassified rural wage index value
of 1.3477 within the calculation of the
reclassification budget neutrality
adjustment, prior to the calculation and
application of the rural floor budget
neutrality adjustment. The impact of
this increase in payments (Column B
compared to Column F for the nine
hospitals) is factored into the
reclassification budget neutrality
adjustment factor, which is applied to
standardized amount. The table below
illustrates the various wage indexes in
each step of the process described above
and why these nine hospitals were
assigned the Massachusetts post-
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reclassified rural wage index prior to the
Provider
220001
220016
220019
220058
220062
220090
220095
220163
220176
(A)
Pre-reclassified
CBSA
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
application of the rural floor budget
neutrality adjustment.
(B)
Area
pre-reclassified
wage index
49340
22
49340
49340
49340
49340
49340
49340
49340
(C)
Massachusetts
pre-reclassified
rural wage index
(D)
Post-reclassified
CBSA
1.1447
1.1447
1.1447
1.1447
1.1447
1.1447
1.1447
1.1447
1.1447
14454
44140
14454
14454
14454
14454
14454
14454
14454
1.1728
1.1447
1.1728
1.1728
1.1728
1.1728
1.1728
1.1728
1.1728
(E)
Area
post-reclassified
wage index
1.2318
1.0379
1.2318
1.2318
1.2318
1.2318
1.2318
1.2318
1.2318
(F)
Massachusetts
post-reclassified
rural wage index
1.3477
1.3477
1.3477
1.3477
1.3477
1.3477
1.3477
1.3477
1.3477
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Note: All wage indexes in this table do not include application of the rural floor budget neutrality adjustment.
The next step in the sequence of our
calculation of the budget neutrality
adjustment factor is to calculate the
rural floor budget neutrality adjustment,
which is applied to the wage index. For
the 51 hospitals located in
Massachusetts, their post-reclassified
area wage index is compared to the
Massachusetts rural floor wage index
(consisting of the one rural hospital
located in Nantucket County). Because
their post-reclassified area wage index
value is lower than the Massachusetts
rural floor wage index value, the
hospitals are assigned the Massachusetts
rural floor wage index value of 1.3477.
Therefore, a rural floor budget neutrality
adjustment factor is applied to the wage
indexes of the 51 hospitals to account
for the increase in payments as a result
of the application of the rural floor wage
index policy. However, with regard to
the nine reclassified hospitals, they
have already been assigned a postreclassified wage index value of 1.3477,
which is equal to the Massachusetts
rural wage index. Accordingly, there is
no need to make any further
adjustments to ensure budget neutrality.
As a result, the nine hospitals are
excluded from and have no effect on the
rural floor budget neutrality adjustment
for FY 2015, and the impact of the FY
2015 rural floor budget neutrality
adjustment for Massachusetts is lower
than that of the FY 2014 rural floor
budget neutrality adjustment. While the
overall impact of the rural floor budget
neutrality adjustment has decreased for
hospitals located in Massachusetts in
FY 2015, this explains why the same
number of hospitals (60) will still
receive the Massachusetts rural wage
index in FY 2015 (determined by using
the wage data from one rural hospital
located in Nantucket County,
Massachusetts) based on two different
policies.
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d. Wage Index Transition Budget
Neutrality
As discussed in section III. of the
preamble of this final rule, in the past,
we have provided for transition periods
when adopting changes that have
significant payment implications,
particularly large negative impacts.
Similar to FY 2005, for FY 2015, we
have determined that the transition to
using the new OMB delineations will
have the largest impact on hospitals that
are currently located in an urban county
that became rural under the new OMB
delineations. To alleviate the decreased
payments associated with having a rural
wage index, in calculating the area wage
index, similar to the transition provided
in the FY 2005 IPPS final rule, we are
finalizing, as we proposed, a policy to
generally assign these counties the
urban wage index value of the CBSA to
which they are physically located in for
FY 2014 for FYs 2015, 2016, and 2017.
In addition to the 3-year transition
period for hospitals being transitioned
from urban to rural status as discussed
above, we are finalizing, as we
proposed, a 1-year blended wage index
transitional policy for all hospitals that
will experience any decrease in their
wage index value (that is, a hospital’s
actual wage index value used for
payment, which accounts for all
applicable effects of reclassification and
redesignation) exclusively as a result of
the implementation of the new OMB
delineations. Similar to the policy
adopted in the FY 2005 IPPS final rule
(69 FR 49033), a post-reclassified wage
index with the rural and imputed floor
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 floor
applied will be computed based on the
hospital’s new FY 2015 CBSA (that is,
the FY 2015 constituent county/ies). We
compared these two wage indexes. If the
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FY 2015 wage index using the FY 2015
CBSAs is lower than the FY 2015 wage
index using the FY 2014 CBSAs, we are
computing a blended wage index
consisting of 50 percent of each of the
two wage indexes added together. This
blended wage index is the hospital’s
wage index for FY 2015. Hospitals that
benefit from the adoption of the new
OMB delineations are assigned their
new wage index based on the new OMB
delineations. We refer readers to section
III. of the preamble of this final rule for
a complete discussion on the
transitional wage index policy.
In the past, CMS has budget
neutralized transitional wage indexes.
Because we are establishing a policy
that allows for the application of a
transitional wage index only when it
benefits the hospital, we believe that it
would be appropriate to ensure that
such a transitional policy does not
increase aggregate Medicare payments
beyond the payments that would be
made had we simply adopted the new
OMB delineations without any
transitional provisions. Therefore, for
FY 2015, we proposed to use our
exceptions and adjustments authority
under section 1886(d)(5)(I)(i) of the Act
to make an adjustment to the national
and Puerto Rico-specific standardized
amounts to ensure that total payments,
including the effect of the transitional
wage index provisions, will equal what
payments would have been if we had
fully adopted the new OMB
delineations without any transitional
provisions. We did not receive any
public comments on this proposal and
are finalizing our proposal to make this
adjustment under section 1886(d)(5)(I)(i)
of the Act.
Also, because we did not receive any
public comments on this proposal we
are finalizing our proposal to use the
same methodology presented in the
proposed rule in this final rule to
calculate the transitional wage index
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budget neutrality adjustment factor. We
discuss the calculation of this
adjustment factor below.
As stated above, the 50/50 blended
wage indexes use post-reclassified wage
index data with the rural and imputed
floor applied computed based on FY
2014 CBSAs. Because the 50/50 blended
methodology uses data based on FY
2014 CBSAs, in order to properly
calculate the transitional budget
neutrality factor, it was first necessary to
calculate the following budget neutrality
factors based on the FY 2014 CBSAs: An
MS–DRG and wage index budget
neutrality, a reclassification budget
neutrality, and a rural floor budget
neutrality. It was necessary to compute
the first three budget neutrality factors
of MS–DRG, wage index, and
reclassification budget neutrality (which
are applied to the standardized amount)
to ensure that the calculation of the
rural and imputed floor budget
neutrality factor applied to the wage
index based on FY 2014 CBSAs is
accurate. We calculated these four
budget neutrality factors using the same
methodology stated above, but used the
FY 2014 CBSAs instead of the FY 2015
CBSAs on both sides of the comparison.
After calculating all of the budget
neutrality factors using FY 2014 and FY
2015 CBSAs, to calculate the
transitional wage index budget
neutrality factor for FY 2015, we used
FY 2013 discharge data to simulate
payments and compared the following:
• Aggregate payments using new
OMB delineations for FY 2015, the FY
2015 relative weights, FY 2015 wage
data after such reclassifications under
sections 1886(d)(8)(B) and (C) and
1886(d)(10) of the Act (using the new
OMB delineations), applied the rural
floor budget neutrality adjustment factor
to the wage index (using the new OMB
delineations), and applied the FY 2015
hospital readmissions payment
adjustments and the estimated FY 2015
hospital VBP payment adjustments; and
• Aggregate payments using FY 2015
relative weights, FY 2015 wage data
after applying the transitional wage
indexes, and applied the same hospital
readmissions payment adjustments and
the estimated hospital VBP payment
adjustments applied above. We note that
hospitals that did not receive the
transitional 50/50 blended wage index
were assigned the post-reclassified wage
index values with the rural floor budget
neutrality adjustment based on the FY
2015 new OMB delineations.
Based on these simulations, we
calculated a budget neutrality
adjustment factor of 0.998859.
Therefore, for FY 2015, we are applying
a transitional wage index budget
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neutrality adjustment factor of 0.998859
to the national average and Puerto Ricospecific standardized amounts to ensure
that the effects of these transitional
wage indexes are budget neutral.
We note that the budget neutrality
adjustment factor calculated above is
based on the increase in payments in FY
2015 that would result from the
transitional wage indexes. Therefore, we
are applying this budget neutrality
adjustment factor as a one-time
adjustment to the FY 2015 national and
Puerto Rico-specific standardized
amounts in order to offset the increase
in payments in FY 2015 as a result of
these transitional wage indexes. For
subsequent fiscal years, we will not take
into consideration the adjustment factor
applied to the national and Puerto Ricospecific standardized amounts in the
previous fiscal year’s update when
calculating the current fiscal year
transitional wage index budget
neutrality adjustment factor (that is, this
adjustment will not be applied
cumulatively). Because we are
establishing a 3-year transitional wage
index policy for urban hospitals that
became rural as a result of the adoption
of the new OMB delineations, we intend
to establish transitional wage index
budget neutrality adjustment factors to
apply to the FY 2016 and FY 2017
national and Puerto Rico-specific
standardized amounts during those
respective rulemaking cycles. Similar to
the policy for FY 2015, we intend to
propose that the FYs 2016 and 2017
adjustments would be applied as ‘‘onetime’’ adjustments and not cumulative
adjustments applied each fiscal year.
e. Case-Mix Budget Neutrality
Adjustment
(1) Background
Below we summarize the recoupment
adjustment to the FY 2015 payment
rates, as required by section 631 of
ATRA, to account for the increase in
aggregate payments as a result of not
completing the prospective adjustment
authorized under section 7(b)(1)(A) of
Public Law 110–90 until FY 2013. We
refer readers to section II.D. of the
preamble of this final rule for a
complete discussion regarding our
policies for FY 2015 in this final rule
and previously finalized policies
(including our historical adjustments to
the payment rates) relating to the effect
of changes in documentation and coding
that do not reflect real changes in casemix.
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(2) Recoupment or Repayment
Adjustment Authorized by Section 631
of the American Taxpayer Relief Act of
2012 (ATRA) to the National
Standardized Amount
Section 631 of the ATRA amended
section 7(b)(1)(B) of Public Law 110–90
to require the Secretary to make a
recoupment adjustment totaling $11
billion by FY 2017. Our actuaries
estimated that if CMS were to fully
account for the $11 billion recoupment
required by section 631 of ATRA in FY
2014, a one-time ¥9.3 percent
adjustment to the standardized amount
would be necessary. It is often our
practice to delay or phase-in payment
rate adjustments over more than 1 year,
in order to moderate the effect on
payment rates in any 1 year. Therefore,
consistent with the policies that we
have adopted in many similar cases, for
FY 2014, we applied a ¥0.8 percent
adjustment to the standardized amount.
In this final rule, as we proposed, we are
applying an additional ¥0.8 percent
adjustment to the standardized amount
for FY 2015. We note that, as section
631 of the ATRA instructs the Secretary
to make a recoupment adjustment only
to the standardized amount, this
adjustment would not apply to the
Puerto Rico-specific standardized
amount and hospital-specific payment
rates.
f. Rural Community Hospital
Demonstration Program Adjustment
As discussed in section IV.L. of the
preamble of this final rule, section 410A
of Public Law 108–173 originally
required the Secretary to establish a
demonstration program that modifies
reimbursement for inpatient services for
up to 15 small rural hospitals. Section
410A(c)(2) of Public Law 108–173
requires that ‘‘[i]n conducting the
demonstration program under this
section, the Secretary shall ensure that
the aggregate payments made by the
Secretary do not exceed the amount
which the Secretary would have paid if
the demonstration program under this
section was not implemented.’’
Sections 3123 and 10313 of the
Affordable Care Act extended the
demonstration program for an
additional 5-year period, and allowed
up to 30 hospitals to participate in 20
States with low population densities
determined by the Secretary. (In
determining which States to include in
the expansion, the Secretary is required
to use the same criteria and data that the
Secretary used to determine the States
for purposes of the initial 5-year period.)
In the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53449 through 53453), in
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order to achieve budget neutrality, we
adjusted the national IPPS payment
rates by an amount sufficient to account
for the added costs of this
demonstration program as described in
section IV.K. of that final rule. In other
words, we applied budget neutrality
across the payment system as a whole
rather than merely across the
participants of this demonstration
program, consistent with past practice.
We stated that we believe the language
of the statutory budget neutrality
requirement permits the agency to
implement the budget neutrality
provision in this manner. The statutory
language requires that ‘‘aggregate
payments made by the Secretary do not
exceed the amount which the Secretary
would have paid if the demonstration
. . . was not implemented,’’ but does
not identify the range across which
aggregate payments must be held equal.
As we did for FY 2014, for FY 2015,
we are adjusting the national IPPS
payment rates according to the same
methodology that we used for FY 2013,
as set forth in section IV.L. of the
preamble of this final rule, to account
for the estimated additional costs of the
demonstration program for FY 2015. For
FY 2015, in this final rule, the estimated
amount of this budget neutrality
adjustment factor applied to the
national IPPS payment rates for FY 2015
is $54,177,144. In addition, similar to
previous years, we are including in the
budget neutrality offset amount the
amount by which the actual
demonstration costs corresponding to an
earlier given year (which would be
determined once we have finalized cost
reports for that year) exceeded the
budget neutrality offset amount
finalized in the corresponding year’s
IPPS final rule. For this FY 2015 IPPS/
LTCH PPS final rule, we have calculated
the amount by which the actual costs of
the demonstration in FY 2008 (that is,
the costs of the demonstration for the 10
hospitals that participated in FY 2008,
as shown in these hospitals’ finalized
cost reports for the cost report period
beginning in that calendar year),
exceeded the amount that was finalized
in the FY 2008 IPPS final rule. For FY
2015, in this final rule, we are
establishing a budget neutrality offset
amount of $10,389,771 for FY 2008.
We also are currently working with
the MACs that service the hospitals
participating in the demonstration to
obtain finalized cost reports for FYs
2009, 2010, 2011, and 2012). These data
were unavailable for this final rule.
However, depending on our progress in
obtaining these cost reports, we may
include in the FY 2016 IPPS final rule
the difference between the
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demonstration costs for one or more of
these years and the amounts that were
finalized in the respective fiscal years’
final rules.
Therefore, the final total budget
neutrality offset amount that we are
applying to the FY 2015 IPPS payment
rates is $64,566,915. This amount is the
sum of two separate components: (1) the
difference between the total estimated
FY 2014 reasonable cost amount to be
paid under the demonstration to the 22
participating hospitals participating in
the demonstration program for covered
inpatient services, and the total
estimated amount that would otherwise
be paid to the participating hospitals in
FY 2014 without the demonstration
($54,177,144); and (2) the amount by
which the actual costs of the
demonstration for FY 2008, which are
calculated in accordance with the
finalized cost reports for the hospitals
that participated in the demonstration
during FY 2008, exceed the budget
neutrality offset amount that was
finalized in the FY 2008 IPPS final rule
($10,389,771).
Accordingly, using the most recent
data available to account for the
estimated costs of the demonstration
program, for FY 2015, we computed a
factor of 0.99931 for the rural
community hospital demonstration
program budget neutrality adjustment
that will be applied to the IPPS standard
Federal payment rate.
g. Outlier Payments
Section 1886(d)(5)(A) of the Act
provides for payments in addition to the
basic prospective payments for ‘‘outlier’’
cases involving extraordinarily high
costs. To qualify for outlier payments, a
case must have costs greater than the
sum of the prospective payment rate for
the DRG, any IME and DSH payments,
any new technology add-on payments,
and the ‘‘outlier threshold’’ or ‘‘fixedloss’’ amount (a dollar amount by which
the costs of a case must exceed
payments in order to qualify for an
outlier payment). We refer to the sum of
the prospective payment rate for the
DRG, any IME and DSH payments, any
new technology add-on payments, and
the outlier threshold as the outlier
‘‘fixed-loss cost threshold.’’ To
determine whether the costs of a case
exceed the fixed-loss cost threshold, a
hospital’s CCR is applied to the total
covered charges for the case to convert
the charges to estimated costs. Payments
for eligible cases are then made based
on a marginal cost factor, which is a
percentage of the estimated costs above
the fixed-loss cost threshold. The
marginal cost factor for FY 2015 is 80
percent, the same marginal cost factor
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we have used since FY 1995 (59 FR
45367).
In accordance with section
1886(d)(5)(A)(iv) of the Act, outlier
payments for any year are projected to
be not less than 5 percent nor more than
6 percent of total operating DRG
payments (which does not include IME
and DSH payments) plus outlier
payments. When setting the outlier
threshold, we compute the 5.1 percent
target by dividing the total operating
outlier payments by the total operating
DRG payments plus outlier payments.
We do not include any other payments
such as IME and DSH within the outlier
target amount. Therefore, it is not
necessary to include Medicare
Advantage IME payments in the outlier
threshold calculation. Section
1886(d)(3)(B) of the Act requires the
Secretary to reduce the average
standardized amount by a factor to
account for the estimated proportion of
total DRG payments made to outlier
cases. Similarly, section
1886(d)(9)(B)(iv) of the Act requires the
Secretary to reduce the average
standardized amount applicable to
hospitals located in Puerto Rico to
account for the estimated proportion of
total DRG payments made to outlier
cases. More information on outlier
payments may be found on the CMS
Web site at: http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/
outlier.htm.
(1) FY 2015 Outlier Fixed-Loss Cost
Threshold
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50977–50983), in response
to public comments on the FY 2013
IPPS/LTCH PPS proposed rule, we
made changes to our methodology for
projecting the outlier fixed-loss cost
threshold for FY 2014. We refer readers
to the FY 2014 IPPS/LTCH PPS final
rule for detailed discussion of the
changes.
For FY 2015, we proposed to continue
to use the same methodology that we
used in FY 2014. As we have done in
the past, to calculate the proposed FY
2015 outlier threshold, we simulated
payments by applying proposed FY
2015 payment rates and policies using
cases from the FY 2013 MedPAR file.
Therefore, in order to determine the
proposed FY 2015 outlier threshold, we
inflated the charges on the MedPAR
claims by 2 years, from FY 2013 to FY
2015. As discussed in the FY 2014 IPPS/
LTCH PPS final rule, we believe a
methodology that is based on 1-year of
charge data will provide a more stable
measure to project the average charge
per case because our prior methodology
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used a 6-month measure, which
inherently uses fewer claims than a 1year measure and makes it more
susceptible to fluctuations in the
average charge per case as a result of
any significant charge increases or
decreases by hospitals. Under this new
methodology, to compute the 1-year
average annualized rate-of-change in
charges per case for FY 2015, we
proposed to compare the second quarter
of FY 2012 through the first quarter of
FY 2013 (January 1, 2012, through
December 31, 2012) to the second
quarter of FY 2013 through the first
quarter of FY 2014 (January 1, 2013,
through December 31, 2013). This rateof-change is 5.6 percent (1.055736) or
11.5 percent (1.114579) over 2 years.
Comment: Commenters were
concerned that they were unable to
replicate the calculation of the charge
inflation factor that CMS used in the
proposed rule. The commenters stated
that the first quarter of the FY 2014
MedPAR claims were not released to the
public. The commenters requested that
CMS release the claims data used to
calculate the charge inflation factor used
in the proposed rule. One commenter, a
provider, requested that CMS reevaluate
the calculation of the inflation factor
because it far exceeds the inflation
factors used in labor markets that the
provider operates within.
Response: In the FY 2014 IPPS/LTCH
PPS proposed rule, we proposed to
adopt a new methodology to compare
periods of 1-year of the most recent
charge data in order to inflate charges.
Commenters supported this proposal
and it was adopted for FY 2014 and
future years in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50978). We note
that we did not provide additional data
for the first quarter of FY 2013, which
was used to inflate charges in the FY
2014 IPPS/LTCH PPS proposed rule, nor
was it requested during the comment
period for the FY 2014 IPPS/LTCH PPS
proposed rule. We further note that our
charge inflation policy from FY 2005
through FY 2013 also compared the
most recent period of charge data using
a 6-month comparison instead of a 1
year comparison. Similar to above, we
did no provide additional data for the
first quarter of the applicable fiscal year,
nor was it requested during the
comment period for those years.
Consistent with this policy, for FY
2015, we proposed to compare the most
recent charge data from the second
quarter of FY 2012 through the first
quarter of FY 2013 (January 1, 2012,
through December 31, 2012) to the
second quarter of FY 2013 through the
first quarter of FY 2014 (January 1, 2013,
through December 31, 2013).
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In response to the commenters who
requested a restructuring of the limited
data set files for the FY 2015 IPPS/LTCH
PPS proposed and final rule to provide
an additional quarter of MedPAR claims
data, we did not have sufficient time to
restructure the files as the commenters
requested prior to the publication of the
proposed and this final rule. Consistent
with our longstanding policy since FY
2005, we continue to believe that it is
optimal to use the most recent period of
charge data available to measure charge
inflation. We will consider how best to
provide additional information on the
charge inflation factor for future years.
With respect to the commenter
requesting that CMS reevaluate the
calculation of the inflation factor, we
believe that our measure of charge
inflation accurately reflects the national
charge inflation. Our charge inflation
factor represents the average percentage
increase in charge inflation for all
hospitals. We recognize that charge
inflation may vary geographically, and
we do not believe that it is appropriate
to base the charge inflation factor on
selective labor markets because we
apply this charge inflation factor to all
claims for all hospitals.
As we have done in the past, in the
FY 2015 IPPS/LTCH PPS proposed rule
we proposed to establish the FY 2015
outlier threshold using hospital CCRs
from the December 2013 update to the
Provider-Specific File (PSF)—the most
recent available data at the time of the
proposed rule. We also proposed that if
more recent data became available
would we use that data to calculate the
final FY 2015 outlier threshold. For FY
2015, we also proposed to continue to
apply an adjustment factor to the CCRs
to account for cost and charge inflation
(as explained below).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50979), we adopted a new
methodology to adjust the CCRs.
Specifically, we finalized a policy to
compare the national average caseweighted operating and capital CCR
from the most recent update of the PSF
to the national average case-weighted
operating and capital CCR from the
same period of the prior year.
Therefore, as we did for FY 2014, for
FY 2015, we proposed to adjust the
CCRs from the December 2013 update of
the PSF by comparing the percentage
change in the national average caseweighted operating CCR and capital
CCR from the December 2012 update of
the PSF to the national average caseweighted operating CCR and capital
CCR from the December 2013 update of
the PSF. We note that in the proposed
rule we used total transfer-adjusted
cases from FY 2013 to determine the
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national average case-weighted CCRs for
both sides of the comparison. As stated
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50979), we believe that it is
appropriate to use the same case count
on both sides of the comparison because
this will produce the true percentage
change in the average case-weighted
operating and capital CCR from one year
to the next without any effect from a
change in case count on different sides
of the comparison.
Using the proposed methodology
above, for the proposed rule we
calculated a December 2012 operating
national average case-weighted CCR of
0.295101 and a December 2013
operating national average caseweighted CCR of 0.289587. We then
calculated the percentage change
between the two national operating
case-weighted CCRs by subtracting the
December 2012 operating national
average case-weighted CCR from the
December 2013 operating national
average case-weighted CCR and then
dividing the result by the December
2012 national operating average caseweighted CCR. This resulted in a
proposed national operating CCR
adjustment factor of 0.981315.
We used the same methodology
proposed above to adjust the capital
CCRs. Specifically, for the proposed rule
we calculated a December 2012 capital
national average case-weighted CCR of
0.025079 and a December 2013 capital
national average case-weighted CCR of
0.024868. We then calculated the
percentage change between the two
national capital case-weighted CCRs by
subtracting the December 2012 capital
national average case-weighted CCR
from the December 2013 capital national
average case-weighted CCR and then
dividing the result by the December
2012 capital national average caseweighted CCR. This resulted in a
proposed national capital CCR
adjustment factor of 0.991587.
Consistent with our methodology
used in the past and as stated in the FY
2009 IPPS final rule (73 FR 48763), we
continue to believe that it is appropriate
to apply only a 1-year adjustment factor
to the CCRs. On average, it takes
approximately 9 months for a fiscal
intermediary or MAC to tentatively
settle a cost report from the fiscal year
end of a hospital’s cost reporting period.
The average ‘‘age’’ of hospitals’ CCRs
from the time the fiscal intermediary or
the MAC inserts the CCR in the PSF
until the beginning of FY 2015 is
approximately 1 year. Therefore, as
stated above, we believe a 1-year
adjustment factor to the CCRs is
appropriate.
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Comment: One commenter matched
the CCRs used for the proposed rule
impact file to the December 2013 PSF
and found that 126 providers’ CCRs did
not match. The commenter noted that
although an extremely high percentage
of providers’ CCRs matched the data in
the December 2013 update, the average
percent difference for those CCRs that
did not match is much higher than any
other comparison from prior years. The
commenter stated that this difference
could lead to differences in the
calculated fixed-loss threshold. The
commenter further stated that the data
demonstrated that CMS used
significantly outdated CCRs to make
projections for the FY 2015 fixed-loss
threshold. The commenter
recommended that this error be rectified
in the final rule, which would result in
a substantially reduced threshold. In
addition, the commenter recommended
that CMS use the most recently updated
PSF file for the final rule.
Response: With regard to the
commenter’s finding of 126 providers
with CCRs from the proposed rule
impact file that did not match the data
in the December 2013 PSF, as stated in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50979), we apply the following
edits to providers’ CCRs in the PSF. We
believe these edits are appropriate in
order to accurately model the outlier
threshold. We first search for Indian
Health Service providers and those
providers assigned the statewide
average CCR from the current fiscal
year. We then replace these CCRs with
the statewide average CCR for the
upcoming fiscal year. We also assign the
statewide average CCR (for the
upcoming fiscal year) to those providers
that have no value in the CCR field in
the PSF. We believe that the edits above
are the reason why the commenter
found that 126 providers had CCRs in
the impact file that did not match the
CCRs in the December 2013 PSF, and
contributed to the average percentage
difference for those CCRs that did not
match. We also believe that we have
accurately calculated and applied these
statewide average CCRs and will
continue to monitor any large variances
in the future. With regard to using the
most recently updated PSF file for the
final rule, we responded to a similar
comment below.
As stated above, for FY 2015, we
applied the proposed FY 2015 payment
rates and policies using cases from the
FY 2013 MedPAR files in calculating
the outlier threshold.
As discussed above, for FY 2015, we
are applying transitional wage indexes
because of the adoption of the new OMB
labor market area delineations. Also, as
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discussed in section III.B.3. of the
preamble to the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50160 and 50161)
and in section III.G.3. of the preamble of
this final rule, in accordance with
section 10324(a) of the Affordable Care
Act, beginning in FY 2011, we created
a wage index floor of 1.0000 for all
hospitals located in States determined
to be frontier States. We noted that the
frontier State floor adjustments will be
calculated and applied after rural and
imputed floor budget neutrality
adjustments are calculated for all labor
market areas, in order to ensure that no
hospital in a frontier State will receive
a wage index less than 1.0000 due to the
rural and imputed floor adjustment. In
accordance with section 10324(a) of the
Affordable Care Act, the frontier State
adjustment will not be subject to budget
neutrality, and will only be extended to
hospitals geographically located within
a frontier State. However, for purposes
of estimating the proposed outlier
threshold for FY 2015, it was necessary
to apply the transitional wage indexes
and adjust the wage index of those
eligible hospitals in a frontier State
when calculating the outlier threshold
that results in outlier payments being
5.1 percent of total payments for FY
2015. If we did not take the above into
account, our estimate of total FY 2015
payments would be too low, and, as a
result, our proposed outlier threshold
would be too high, such that estimated
outlier payments would be less than our
projected 5.1 percent of total payments.
As we did in establishing the FY 2009
outlier threshold (73 FR 57891), in our
projection of FY 2015 outlier payments,
we proposed not to make any
adjustments for the possibility that
hospitals’ CCRs and outlier payments
may be reconciled upon cost report
settlement. We stated that we continue
to believe that, due to the policy
implemented in the June 9, 2003 Outlier
final rule (68 FR 34494), CCRs will no
longer fluctuate significantly and,
therefore, few hospitals will actually
have these ratios reconciled upon cost
report settlement. In addition, it is
difficult to predict the specific hospitals
that will have CCRs and outlier
payments reconciled in any given year.
We also note that, in accordance with
our reconciliation criteria,
reconciliation occurs in instances where
a hospital’s actual CCR for the cost
reporting period fluctuates plus or
minus 10 percentage points compared to
the interim CCR used to calculate
outlier payments when a bill is
processed. Our simulations assume that
CCRs accurately measure hospital costs
based on information available to us at
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the time we set the outlier threshold.
For these reasons, we proposed not to
make any assumptions regarding the
effects of reconciliation on the outlier
threshold calculation.
Comment: One commenter expressed
concern that CMS did not consider
outlier reconciliation in the
development of the outlier threshold.
The commenter stated that CMS did not
provide any objective data concerning
the number of hospitals that have been
subject to outlier reconciliation and the
amounts recovered. The commenter
further stated that, in February 2003, the
Secretary signed what the commenter
described as an emergency interim final
rule that would have corrected the
outlier threshold and included outlier
reconciliation payments (in the
calculation of the outlier threshold), but
that rule was not issued because of
objections from the Office of
Management and Budget. The
commenter asserted that if it was
possible to account for outlier
reconciliation payments at the initial
implementation of the outlier
reconciliation policy in the calculation
of the threshold, it should be possible to
do so 10 years later. The commenter
also searched cost reports from the
HCRIS database for the years 2003
through 2010 (Form CMS–2552–96 and
CMS–2552–10) and, based on these
data, provided its estimate that the
annual amounts recovered by CMS
through reconciliation totaled
$108,934,425. The commenter believed
that these data can be used to provide
a baseline and trend information to
assess whether outlier reconciliation is
a significant factor to be considered in
the development of the outlier
threshold. The commenter noted that it
was unable to extract outlier
reconciliation payment information
from cost reports filed under Form
CMS–2552–10. The commenter was
unsure why this data was not being
captured. Therefore, the commenter
requested that CMS disclose in the final
rule and future rulemaking the amount
CMS has recovered through
reconciliation by year.
Another commenter cited a report
issued by the Office of Inspector General
(OIG) on June 28, 2012, entitled ‘‘The
Centers for Medicare & Medicaid
Services Did Not Reconcile Medicare
Outlier Payments in Accordance With
Federal Regulations and Guidance’’ (A–
07–10–02764), which reviewed the
reconciliation process for outlier
payments under the IPPS. The
commenter stated that the 2012 OIG
Report identified approximately $664
million in unreconciled outlier
payments, which is a material amount
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in relation to total outlier payments.
Moreover, the commenter further stated
that CMS now has approximately 10 full
fiscal years of experience with
reconciliation from which to project the
impact of its reconciliation in the
upcoming fiscal year. As such, the
commenter asserted that CMS’ policy of
refusing to account for the impact of
reconciliation in setting the FY 2015
outlier fixed-loss cost threshold is
neither reasonable nor consistent with
the outlier provisions of the statute.
The same commenter cited the OIG
report issued on November 13, 2013,
entitled ‘‘Medicare Hospital Outlier
Payments Warrant Increased Scrutiny’’
(OEI–06–10–00520). The commenter
stated that the proposed outlier fixedloss cost threshold appears improperly
inflated and, therefore, overstated
because CMS does not report, and has
not taken any actions to report, any
steps to account for ‘‘high-outlier’’
payments identified in the report. The
commenter further stated that it is
neither consistent with the outlier
provisions of the statute nor reasonable
for CMS, in modeling outlier payments
for the upcoming fiscal year, to include
outlier payments that were based on
excessively high charges for particular
MS–DRGs and not based on truly
unusually high costs. The commenter
concluded that such payments will
presumably be recouped by CMS
following audit and reconciliation.
However, CMS has not disclosed or
discussed what, if anything, it has done
to address this issue in setting the
outlier fixed-loss cost threshold for FY
2015.
Response: A similar comment was
received in response to the policies
presented in last year’s rule. We
appreciate the commenter’s input and
for informing us of its concern regarding
our policy of not including outlier
reconciliation within the development
of the outlier fixed-loss cost threshold.
The commenter provided data from
HCRIS that demonstrated total outlier
reconciliation payments from 2003
through 2010 were $108,934,425, which
equates to approximately $13,616,803
annually. Assuming that the totals
provided by the commenter are correct,
we do not believe that this relatively
small annual amount would have an
impact on the outlier threshold because
total outlier payments are
approximately $4.3 billion. Further,
with regard to the draft final rule
referenced by the commenter, that draft
document was never finalized or
published in the Federal Register
(neither on a proposed or interim basis),
or implemented in any way. We also
disagree with the commenter’s
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characterization of the draft interim
final rule. That draft rule would not
have adjusted the outlier threshold by
accounting for payment changes as a
result of outlier reconciliation, as the
commenter suggested. Rather, the draft
interim final rule merely would have
calculated a new fixed-loss threshold to
be applied for the remainder of Federal
fiscal year 2003 using the same data that
originally had been used for that
purpose, but excluding data from 123
hospitals whose percentage of outlier
payments relative to total DRG
payments increased by at least 5
percentage points between FY 1999 and
FY 2001, and whose case-mix (the
average DRG relative weight value for
all of a hospital’s Medicare cases)
adjusted charges increased at a rate at or
above the 95th percentile rate of charge
increase for all hospitals (46.63 percent)
over the same period. As previously
stated, this draft rule was never
finalized or published in the Federal
Register. Therefore, that document has
little, if any, relevance to the current
discussion. With respect to the
commenter citing the 2012 OIG Report
which identified approximately $664
million in unreconciled outlier
payments, we cannot substantiate this
amount until all of the outlier
reconciliations are performed. As the
MACs continue to perform these outlier
reconciliations, they record these
amounts on the cost report, which are
then publicly available through the
HCRIS database. Also, CMS has
requested that the MACs submit to CMS
the reconciled outlier amounts. We will
continue to track these outlier
reconciliations as stated in our response
to the OIG report.
As stated in prior final rules, we
continue to believe that, as a result of
the policy implemented in the June 9,
2003 outlier final rule (68 FR 34494),
CCRs will no longer fluctuate
significantly and, therefore, few
hospitals will actually have these ratios
reconciled upon cost report settlement
as demonstrated by the total outlier
payments provided by the commenter.
In addition, it is difficult to predict the
specific hospitals that will have CCRs
and outlier payments reconciled in any
given year. We also note that, in
accordance with our outlier
reconciliation criteria, reconciliation
occurs in instances where a hospital’s
actual CCR for the cost reporting period
fluctuates plus or minus 10 percentage
points compared to the interim CCR
used to calculate outlier payments when
a bill is processed. Our simulations
assume that CCRs accurately measure
hospital costs based on information
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available to us at the time we set the
outlier threshold. For these reasons, as
we proposed, we are finalizing our
proposal not to make any assumptions
regarding the effects of reconciliation on
the outlier threshold calculation.
Also, outlier reconciliation is a
function of the cost report and MACs
record the outlier reconciliation amount
on each provider’s cost report (and are
not required to report these data to CMS
outside of the cost report settlement
process). Therefore, the outlier
reconciliation data that the commenter
requested should be publicly available
through the cost report. With regard to
the commenter not being able to retrieve
the data for outlier reconciliation
payments from cost reports filed under
Form CMS–2552–10, we received a
similar comment in response to last
year’s proposed rule, as summarized in
the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50980). We will continue to
follow up with our information systems
team to ensure this information is
readily available to the public. Since the
effective date of Change Request 7192
on April 1, 2011, we have approved the
reconciliation of outlier payments for
some hospitals. Other hospitals that
were flagged for outlier reconciliation
are still under review for approval. In
addition, some hospitals flagged for
outlier reconciliation may experience a
delay in reconciling their outlier
payments due to circumstances that
prevent the MACs from finalizing the
hospital’s cost report (such as other
payments that may need to be
reconciled aside from outlier payments).
We disagree with the commenter that
stated that we should not include
outlier payments that were based on
excessively high charges for particular
MS–DRGs and not based on truly
unusually high costs because such
payments will presumably be recouped
by CMS following audit and
reconciliation. The purpose of the CCR
is to measure a hospital’s costs and
charges. We believe that the CCRs will
reflect these low costs and high charges
that the commenter referred to, and
when applied to the charges on the
claim will result in less outlier
payments for such cases because the
costs of the case will be lower when
compared to the total MS–DRG
payments excluding outlier payments.
Also, the commenter appears to assume
that providers with high charges will be
eligible for outlier reconciliation and
CMS will recoup these funds at a later
time. We disagree with the commenter.
If a hospital’s interim CCR is consistent
with its charges on the claim then no
matter how high or low a hospital’s
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charges, the hospital probably will not
meet the outlier reconciliation criteria.
As described in sections IV.H. and
IV.I., respectively, of the preamble of
this final rule, sections 1886(q) and
1886(o) of the Act establish the Hospital
Readmissions Reduction Program and
the Hospital VBP Program, respectively.
We do not believe that it is appropriate
to include the hospital VBP payment
adjustments and the hospital
readmissions payment adjustments in
the outlier threshold calculation or the
outlier offset to the standardized
amount. Specifically, consistent with
our definition of the base operating DRG
payment amount for the Hospital
Readmissions Reduction Program under
§ 412.152 and the Hospital VBP Program
under § 412.160, outlier payments under
section 1886(d)(5)(A) of the Act are not
affected by these payment adjustments.
Therefore, outlier payments will
continue to be calculated based on the
unadjusted base DRG payment amount
(as opposed to using the base-operating
DRG payment amount adjusted by the
hospital readmissions payment
adjustment and the hospital VBP
payment adjustment). Consequently, we
proposed to exclude the hospital VBP
payment adjustments and the hospital
readmissions payment adjustments from
the calculation of the outlier fixed-loss
cost threshold.
We noted that, to the extent section
1886(r) of the Act modifies the existing
DSH payment methodology under
section 1886(d)(5)(F), the new
uncompensated care payment under
section 1886(r)(2), like the empirically
justified Medicare DSH payment under
section 1886(r)(1), may be considered an
amount payable under section
1886(d)(5)(F) of the Act such that it
would be reasonable to include the
payment in the outlier determination
under section 1886(d)(5)(A). As we did
for FY 2014, for FY 2015, we stated that
we also are proposing to allocate an
estimated per-discharge uncompensated
care payment amount to all cases for the
hospitals eligible to receive the
uncompensated care payment amount
in the calculation of the outlier fixedloss cost threshold methodology. We
stated that we continue to believe that
allocating an eligible hospital’s
estimated uncompensated care payment
to all cases equally in the calculation of
the outlier fixed-loss cost threshold
would best approximate the amount we
would pay in uncompensated care
payments during the year because,
when we make claim payments to a
hospital eligible for such payments, we
would be making estimated perdischarge uncompensated care
payments to all cases equally.
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Furthermore, we stated that we continue
to believe that using the estimated perclaim uncompensated care payment
amount to determine outlier estimates
provides predictability as to the amount
of uncompensated care payments
included in the calculation of outlier
payments. Therefore, consistent with
the methodology used in FY 2014 to
calculate the outlier fixed-loss cost
threshold, for FY 2015, we stated that
we are proposing to include estimated
FY 2015 uncompensated care payments
in the computation of the proposed
outlier fixed-loss cost threshold.
Specifically, we stated we are proposing
to use the estimated per-discharge
uncompensated care payments to
hospitals eligible for the uncompensated
care payment for all cases in the
calculation of the outlier fixed-loss cost
threshold methodology.
Using this methodology, we proposed
an outlier fixed-loss cost threshold for
FY 2015 equal to the prospective
payment rate for the MS–DRG, plus any
IME, empirically justified Medicare
DSH payments, estimated
uncompensated care payment, and any
add-on payments for new technology,
plus $25,799.
In the proposed rule we noted that the
proposed FY 2015 fixed-loss cost
threshold is higher than the FY 2014
final outlier fixed-loss cost threshold of
$21,748. We stated that we believe that
the increase in the charge inflation
factor (compared to the FY 2014 charge
inflation factor) contributed to a higher
proposed outlier fixed-loss threshold for
FY 2015. As charges increase, so do
outlier payments. As a result, it was
necessary for us to raise the proposed
outlier fixed-loss cost threshold to
decrease the amount of outlier payments
expended in order to reach the 5.1
percent target.
Comment: Some commenters were
surprised by the magnitude of the
increase of the outlier threshold in the
proposed rule compared to the
threshold of $21,748 for FY 2014. The
commenters explained that, for FY
2013, CMS currently estimates that
outliers are 4.81 percent of total MS–
DRG payments. The commenters
asserted that, given that the threshold
for FY 2013 of $21,821 was similar to
the outlier threshold for FY 2014, they
find little justification for a dramatic
increase in the threshold for FY 2015.
The commenters also stated that it is
important that CMS is aware of the
magnitude of inaccuracies when
estimating the actual outlier payout for
prior years or calculating the current
outlier threshold. The commenters
noted that, in prior years, CMS has
estimated outlier payments for a FY in
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one year and then the next year revises
the estimate at a much lower number
than the initial estimate. The
commenters cited the FY 2013 outlier
estimate as an example where CMS
estimated total outlier payments for FY
2013 in the FY 2014 IPPS/LTCH PPS
proposed rule as 5.17 percent and then
revised this number in the FY 2015
IPPS/LTCH PPS proposed rule to 4.81
percent.
The commenters also noted that with
each rulemaking the final outlier
threshold established by CMS is always
lower than the threshold set forth in the
proposed rule. One commenter
speculated that this is most likely as
result of the use of updated CCRs or
other data in calculating the final outlier
threshold. As a result, the commenter
emphasized the need for CMS to use the
most recent data available when
calculating the outlier threshold. The
commenter stated that, with regard to
the current rulemaking, CMS used data
from the December 2013 PSF in the
proposed rule, when the March 2014
PSF was available at the time the
proposed rule was issued. Using the
March 2014 PSF, the commenter
calculated an outlier threshold of
$25,375 (compared to the threshold
presented in the proposed rule of
$25,799, which used the December 2013
PSF).
Response: When we conduct our
modeling to determine the outlier
threshold, we factor in all payments and
policies that would affect actual
payments for the current year in order
to estimate that outlier payments are 5.1
percent of total MS–DRG payments.
While we recognize that outlier
payments have been below the 5.1
percent target in prior fiscal years, we
do not believe that these lower payouts
are relevant to the current fiscal year
because they do not lend greater
accuracy to the estimate of payments
that are 5.1 percent of total MS–DRG
payments for FY 2015. We also note that
in response to commenters’ concerns,
last year we modified our outlier
threshold calculation by changing the
way we adjust the CCRs. We also
changed the measure of inflation from
using 6 months of claims data to 1 year
of claims data. CMS shares the
commenters’ belief that outlier
payments in every fiscal year meet the
5.1 percent target, and we made these
changes to improve our methodology for
calculating the outlier threshold. As in
prior years, CMS will continue to
consider any suggestions made by the
commenters to improve the accuracy of
the calculation of the outlier threshold.
CMS’ historical policy is to use the
best available data when setting the
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
payment rates and factors in both the
proposed and final rules. Sometimes
there are variables that change between
the proposed and final rule as result of
the availability of more recent data,
such as the charge inflation factor and
the CCR adjustment factors that can
cause fluctuations in the threshold
amount. Other factors such as changes
to the wage indexes and market basket
increase can also cause the outlier fixedloss cost threshold to fluctuate between
the proposed rule and the final rule
each year. We use the latest data that is
available at the time of the development
of the proposed and final rules, such as
the most recent update of MedPAR
claims data and CCRs from the most
recent update of the PSF. With regard to
the commenter noting the availability of
the March 2014 PSF at the time the
proposed rule was issued, this file was
not available when we calculated the
proposed outlier fixed-loss cost
threshold as part of the development of
the proposed rule. Therefore, for the
proposed rule, we used the latest update
available, which was the December 2013
PSF. If we were to wait for the March
2014 PSF to become available, this
would cause further delay of
publication of the proposed rule,
leading to a possible further delay of
issuance of the final rule in a timely
fashion.
Comment: One commenter stated that
as a result of the large increase in the
proposed outlier threshold it suspected
that CMS is duplicating its charge
increases through the use of the charge
inflation factor. The commenter
believed that this duplication is
compounded by the fact that the CCRs
would also reflect high charges. The
commenter believed that these two
issues are artificially inflating the
threshold while hospitals have lower
costs. The commenter offered an
alternative threshold of $24,340, by
measuring the change in outlier
percentage payments of 5.1 percent for
FY 2015 compared to the FY 2014
outlier estimate of 5.79 percent (5.1
percent minus 5.79 percent = ¥0.69
percent divided by 5.79 percent = 11.92
percent). The commenter recommended
using a forecast correction of 100 plus
11.92 percent based on their calculation
above.
Response: We disagree with the
commenter. We believe that our
measure and application of the charge
inflation factor is accurate and
appropriate as explained in the
proposed rule. As discussed, we apply
a 2-year charge inflation factor because
we use claims from FY 2013 for FY
2015. Also, the CCRs we use come
directly from the PSF, which comes
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directly from hospitals’ cost reports. We
believe that these CCRs are accurate. We
also are unsure what ‘‘high charges’’ to
which the commenter referred. Further,
as noted above, section 1886(d)(5)(A)(iv)
of the Act requires outlier payments to
be not less than 5 percent nor more than
6 percent of total estimated or projected
payments in that year. Therefore, we
cannot adopt the commenter’s
suggestion to use a forecast correction to
compute the outlier threshold. When we
calculate the threshold, we use the latest
data that are available at the time of the
proposed and final rules in order to
estimate that outlier payments are 5.1
percent of total payments.
Comment: One commenter noted that
CMS did not indicate if it has made any
additional changes to its methodology to
exclude the charges for hemophilia
clotting factors from the calculation of
the fixed-loss outlier threshold. The
commenter noted that CMS provides a
methodology for excluding such charges
from MedPAR data for the budget
neutrality calculation. The commenter
wanted to ensure that such efforts also
resulted in the exclusion of such
charges from MedPAR data used for the
calculation of the fixed-loss threshold as
well.
Response: We appreciate the
commenter’s input and for seeking
clarification on the calculation of the
fixed-loss outlier threshold. Similar to
what is done in the budget neutrality
calculation, CMS excludes the charges
for hemophilia clotting factors from the
calculation of the fixed-loss outlier
threshold.
Comment: One commenter stated that
in its public comment submitted in
response to the FY 2014 IPPS/LTCH
PPS proposed rule regarding outliers, it
explained why uncompensated care
payments should be included as part of
the fixed-loss threshold calculation. The
commenter noted that it is clear why
CMS considered this in the FY 2015
IPPS/LTCH PPS proposed rule. The
commenter wanted to ensure that
updates to the uncompensated care
payment calculation are also considered
in the final rule.
Response: As discussed above, we
included updates to the uncompensated
care payment calculation as part of the
fixed-loss outlier threshold calculation
in this final rule.
After consideration of the public
comments we received, we are not
making any changes to our methodology
in this final rule for FY 2015. Therefore,
we are using the same methodology we
proposed to calculate the final outlier
threshold.
As we have done in the past, to
calculate the final FY 2015 outlier
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50379
threshold, we simulated payments by
applying FY 2015 payment rates and
policies using cases from the FY 2013
MedPAR file. Therefore, in order to
determine the final FY 2015 outlier
threshold, we inflated the charges on
the MedPAR claims by 2 years, from FY
2013 to FY 2015. As discussed in the FY
2014 IPPS/LTCH PPS final rule, we
believe that a methodology that is based
on 1-year of charge data will provide a
more stable measure to project the
average charge per case. To compute the
1-year average annualized rate-ofchange in charges per case for FY 2015,
we compared the third quarter of FY
2012 through the second quarter of FY
2013 (April 1, 2012, through March 31,
2013) to the third quarter of FY 2013
through the second quarter of FY 2014
(April 1, 2013, through March 31, 2014).
This rate-of-change is 5.1 percent
(1.050917) or 10.4 percent (1.104427)
over 2 years.
As we have done in the past, we are
establishing the FY 2015 outlier
threshold using hospital CCRs from the
March 2014 update to the ProviderSpecific File (PSF)—the most recent
available data at the time of
development of this final rule. For FY
2015, we also are continuing to apply an
adjustment factor to the CCRs to account
for cost and charge inflation (as
explained below). In the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50979), we
adopted a new methodology to adjust
the CCRs. Specifically, we finalized a
policy to compare the national average
case-weighted operating and capital
CCR from the most recent update of the
PSF to the national average caseweighted operating and capital CCR
from the same period of the prior year.
Therefore, as we did for FY 2014, for
FY 2015, we are adjusting the CCRs
from the March 2014 update of the PSF
by comparing the percentage change in
the national average case-weighted
operating CCR and capital CCR from the
March 2013 update of the PSF to the
national average case-weighted
operating CCR and capital CCR from the
March 2014 update of the PSF. We note
that we used total transfer-adjusted
cases from FY 2013 to determine the
national average case-weighted CCRs for
both sides of the comparison. As stated
in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50979), we believe that it is
appropriate to use the same case count
on both sides of the comparison as this
will produce the true percentage change
in the average case-weighted operating
and capital CCR from one year to the
next without any effect from a change in
case count on different sides of the
comparison.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
Using the methodology above, we
calculated a March 2013 operating
national average case-weighted CCR of
0.292377 and a March 2014 operating
national average case-weighted CCR of
0.28714. We then calculated the
percentage change between the two
national operating case-weighted CCRs
by subtracting the March 2013 operating
national average case-weighted CCR
from the March 2014 operating national
average case-weighted CCR and then
dividing the result by the March 2013
national operating average caseweighted CCR. This resulted in a
national operating CCR adjustment
factor of 0.982088.
We also used the same methodology
above to adjust the capital CCRs.
Specifically, we calculated a March
2013 capital national average caseweighted CCR of 0.025143 and a March
2014 capital national average caseweighted CCR of 0.024849. We then
calculated the percentage change
between the two national capital caseweighted CCRs by subtracting the March
2013 capital national average caseweighted CCR from the March 2014
capital national average case-weighted
CCR and then dividing the result by the
March 2013 capital national average
case-weighted CCR. This resulted in a
national capital CCR adjustment factor
of 0.988307.
Consistent with our methodology in
the past and as stated in the FY 2009
IPPS final rule (73 FR 48763), we
continue to believe that it is appropriate
to apply only a 1-year adjustment factor
to the CCRs. On average, it takes
approximately 9 months for a fiscal
intermediary or MAC to tentatively
settle a cost report from the fiscal year
end of a hospital’s cost reporting period.
The average ‘‘age’’ of hospitals’ CCRs
from the time the fiscal intermediary or
the MAC inserts the CCR in the PSF
until the beginning of FY 2015 is
approximately 1 year. Therefore, as
stated above, we believe a 1-year
adjustment factor to the CCRs is
appropriate.
As stated above, for FY 2015, we
applied the FY 2015 payment rates and
policies using cases from the FY 2013
MedPAR files in calculating the outlier
threshold.
As discussed above, for FY 2015, we
are applying transitional wage indexes
because of the adoption of the new OMB
labor market area delineations. Also, as
discussed in section III.B.3. of the
preamble to the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50160 and 50161)
and in section III.G.3. of the preamble of
this final rule, in accordance with
section 10324(a) of the Affordable Care
Act, beginning in FY 2011, we created
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a wage index floor of 1.0000 for all
hospitals located in States determined
to be frontier States. We note that the
frontier State floor adjustments are
calculated and applied after rural and
imputed floor budget neutrality
adjustments are calculated for all labor
market areas, in order to ensure that no
hospital in a frontier State receives a
wage index less than 1.0000 due to the
rural and imputed floor adjustment. In
accordance with section 10324(a) of the
Affordable Care Act, the frontier State
adjustment is not subject to budget
neutrality, and is only extended to
hospitals geographically located within
a frontier State. However, for purposes
of estimating the outlier threshold for
FY 2015, it was necessary to apply the
transitional wage indexes and adjust the
wage index of those eligible hospitals in
a frontier State when calculating the
outlier threshold that results in outlier
payments being 5.1 percent of total
payments for FY 2015. If we did not
take the above into account, our
estimate of total FY 2015 payments
would be too low, and, as a result, our
outlier threshold would be too high,
such that estimated outlier payments
would be less than our projected 5.1
percent of total payments.
As we did in establishing the FY 2009
outlier threshold (73 FR 57891), as we
proposed and for the reasons discussed
above, in our projection of FY 2015
outlier payments, we are not making
any adjustments for the possibility that
hospitals’ CCRs and outlier payments
may be reconciled upon cost report
settlement.
As described in sections IV.H. and
IV.I., respectively, of the preamble of
this final rule, sections 1886(q) and
1886(o) of the Act establish the Hospital
Readmissions Reduction Program and
the Hospital VBP Program, respectively.
We do not believe that it is appropriate
to include the hospital VBP payment
adjustments and the hospital
readmissions payment adjustments in
the outlier threshold calculation or the
outlier offset to the standardized
amount. Specifically, consistent with
our definition of the base operating DRG
payment amount for the Hospital
Readmissions Reduction Program under
§ 412.152 and the Hospital VBP Program
under § 412.160, outlier payments under
section 1886(d)(5)(A) of the Act are not
affected by these payment adjustments.
Therefore, outlier payments will
continue to be calculated based on the
unadjusted base DRG payment amount
(as opposed to using the base-operating
DRG payment amount adjusted by the
hospital readmissions payment
adjustment and the hospital VBP
payment adjustment). Consequently, we
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Sfmt 4700
are excluding the hospital VBP payment
adjustments and the hospital
readmissions payment adjustments from
the calculation of the outlier fixed-loss
cost threshold.
We note that, to the extent section
1886(r) of the Act modifies the existing
DSH payment methodology under
section 1886(d)(5)(F), the new
uncompensated care payment under
section 1886(r)(2), like the empirically
justified Medicare DSH payment under
section 1886(r)(1), may be considered an
amount payable under section
1886(d)(5)(F) of the Act such that it
would be reasonable to include the
payment in the outlier determination
under section 1886(d)(5)(A). As we did
for FY 2014, for FY 2015, for the reasons
discussed above, we also are allocating
an estimated per-discharge
uncompensated care payment amount to
all cases for the hospitals eligible to
receive the uncompensated care
payment amount in the calculation of
the outlier fixed-loss cost threshold
methodology. Specifically, we are using
the estimated per-discharge
uncompensated care payments to
hospitals eligible for the uncompensated
care payment for all cases in the
calculation of the outlier fixed-loss cost
threshold methodology.
Using this methodology, we
calculated a final outlier fixed-loss cost
threshold for FY 2015 equal to the
prospective payment rate for the MS–
DRG, plus any IME, empirically justified
Medicare DSH payments, estimated
uncompensated care payment, and any
add-on payments for new technology,
plus $24,758.
We note that the final FY 2015 fixedloss cost threshold is higher than the FY
2014 final outlier fixed-loss cost
threshold of $21,748. We believe that
the increase in the charge inflation
factor (compared to the FY 2014 charge
inflation factor) contributed to a higher
outlier fixed-loss threshold for FY 2015.
As charges increase, so do outlier
payments. As a result, it was necessary
for us to raise the outlier fixed-loss cost
threshold to decrease the amount of
outlier payments expended in order to
reach the 5.1 percent target.
Also, the final FY 2015 fixed-loss cost
threshold is lower than the FY 2015
proposed outlier fixed-loss cost
threshold of $25,799. As discussed
above, the proposed MS–DRG
reclassification and recalibration budget
neutrality factor was calculated
incorrectly in the proposed rule as a
result of the inadvertent miscalculation
of a number of postacute care transferadjusted cases for certain MS–DRGs. We
believe that the corrected factor, which
offsets less money from the
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
calculate a CCR (as described under
§ 412.84(i)(3) of our regulations),
statewide average CCRs are used to
determine whether a hospital qualifies
for outlier payments. Table 8A listed in
section VI. of this Addendum (and
(2) Other Changes Concerning Outliers
available only via the Internet on the
As stated in the FY 1994 IPPS final
CMS Web site) contains the statewide
rule (58 FR 46348), we establish an
average operating CCRs for urban
outlier threshold that is applicable to
hospitals and for rural hospitals for
both hospital inpatient operating costs
which the fiscal intermediary or MAC is
and hospital inpatient capital-related
unable to compute a hospital-specific
costs. When we modeled the combined
CCR within the above range. Effective
operating and capital outlier payments,
for discharges occurring on or after
we found that using a common
October 1, 2014, these statewide average
threshold resulted in a lower percentage ratios will replace the ratios posted on
of outlier payments for capital-related
our Web site at http://www.cms.gov/
costs than for operating costs. We
Medicare/Medicare-Fee-for-Serviceproject that the thresholds for FY 2015
Payment/AcuteInpatientPPS/FY-2014will result in outlier payments that will
IPPS-Final-Rule-Home-Page-Items/FYequal 5.1 percent of operating DRG
2014-IPPS-Final-Rule-CMS-1599-Fpayments and 6.27 percent of capital
Tables.html. Table 8B listed in section
payments based on the Federal rate.
VI. of this Addendum (and available via
In accordance with section
the Internet on the CMS Web site)
1886(d)(3)(B) of the Act, we are
contains the comparable statewide
reducing the FY 2015 standardized
average capital CCRs. As previously
amount by the same percentage to
stated, the CCRs in Tables 8A and 8B
account for the projected proportion of
will be used during FY 2015 when
payments paid as outliers.
hospital-specific CCRs based on the
The outlier adjustment factors that
latest settled cost report are either not
will be applied to the standardized
available, or are outside the range noted
amount based on the FY 2015 outlier
above. Table 8C listed in section VI. of
threshold are as follows:
this Addendum (and available via the
Internet on the CMS Web site) contains
Operating
standardCapital fed- the statewide average total CCRs used
under the LTCH PPS as discussed in
ized
eral rate
amounts
section V. of this Addendum.
We finally note that we published a
National .............
0.948998
0.937327
Puerto Rico .......
0.926575
0.915412 manual update (Change Request 3966)
to our outlier policy on October 12,
2005, which updated Chapter 3, Section
We are applying the outlier
20.1.2 of the Medicare Claims
adjustment factors to the FY 2015
payment rates after removing the effects Processing Manual. The manual update
covered an array of topics, including
of the FY 2014 outlier adjustment
CCRs, reconciliation, and the time value
factors on the standardized amount.
To determine whether a case qualifies of money. We encourage hospitals that
for outlier payments, we apply hospital- are assigned the statewide average
operating and/or capital CCRs to work
specific CCRs to the total covered
charges for the case. Estimated operating with their fiscal intermediary or MAC
on a possible alternative operating and/
and capital costs for the case are
or capital CCR as explained in Change
calculated separately by applying
Request 3966. Use of an alternative CCR
separate operating and capital CCRs.
developed by the hospital in
These costs are then combined and
conjunction with the fiscal intermediary
compared with the outlier fixed-loss
or MAC can avoid possible
cost threshold.
Under our current policy at § 412.84,
overpayments or underpayments at cost
we calculate operating and capital CCR
report settlement, thereby ensuring
ceilings and assign a statewide average
better accuracy when making outlier
CCR for hospitals whose CCRs exceed
payments and negating the need for
3.0 standard deviations from the mean
outlier reconciliation. We also note that
of the log distribution of CCRs for all
a hospital may request an alternative
hospitals. Based on this calculation, for
operating or capital CCR ratio at any
hospitals for which the fiscal
time as long as the guidelines of Change
intermediary or MAC computes
Request 3966 are followed. In addition,
operating CCRs greater than 1.23 or
as mentioned above, we published an
capital CCRs greater than 0.172, or
additional manual update (Change
hospitals for which the fiscal
Request 7192) to our outlier policy on
intermediary or MAC is unable to
December 3, 2010, which also updated
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standardized amount, results in less
outlier payments. Therefore, it was
necessary to lower the outlier threshold
from the proposed rule in the final rule
in order to reach the 5.1 percent target.
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50381
Chapter 3, Section 20.1.2 of the
Medicare Claims Processing Manual.
The manual update outlines the outlier
reconciliation process for hospitals and
Medicare contractors. To download and
view the manual instructions on outlier
reconciliation, we refer readers to the
CMS Web site: http://www.cms.hhs.gov/
manuals/downloads/clm104c03.pdf.
(3) FY 2013 and FY 2014 Outlier
Payments
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50983 through 50984), we
stated that, based on available data, we
estimated that actual FY 2013 outlier
payments would be approximately 4.77
percent of actual total MS–DRG
payments. This estimate was computed
based on simulations using the FY 2012
MedPAR file (discharge data for FY
2012 claims). That is, the estimate of
actual outlier payments did not reflect
actual FY 2013 claims, but instead
reflected the application of FY 2013
payment rates and policies to available
FY 2012 claims.
Our current estimate, using available
FY 2013 claims data, is that actual
outlier payments for FY 2013 were
approximately 4.86 percent of actual
total MS–DRG payments. Therefore, the
data indicate that, for FY 2013, the
percentage of actual outlier payments
relative to actual total payments is lower
than we projected for FY 2013.
Consistent with the policy and statutory
interpretation we have maintained since
the inception of the IPPS, we do not
make retroactive adjustments to outlier
payments to ensure that total outlier
payments for FY 2013 are equal to 5.1
percent of total MS–DRG payments.
We currently estimate that, using the
latest CCRs from the March 2014 update
of the PSF, actual outlier payments for
FY 2014 will be approximately 5.71
percent of actual total MS–DRG
payments, approximately 0.61
percentage point higher than the 5.1
percent we projected when setting the
outlier policies for FY 2014. This
estimate of 5.71 percent is based on
simulations using the FY 2013 MedPAR
file (discharge data for FY 2013 claims).
5. FY 2015 Standardized Amount
The adjusted standardized amount is
divided into labor-related and nonlaborrelated portions. Tables 1A and 1B
listed and published in section VI. of
this Addendum (and available via the
Internet) contain the national
standardized amounts that we are
applying to all hospitals, except
hospitals located in Puerto Rico, for FY
2015. The Puerto Rico-specific amounts
are shown in Table 1C listed and
published in section VI. of this
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Addendum (and available via the
Internet on the CMS Web site). The
amounts shown in Tables 1A and 1B
differ only in that the labor-related share
applied to the standardized amounts in
Table 1A is 69.6 percent, and the laborrelated share applied to the
standardized amounts in Table 1B is 62
percent. In accordance with sections
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of
the Act, we are applying a labor-related
share of 62 percent, unless application
of that percentage would result in lower
payments to a hospital than would
otherwise be made. In effect, the
statutory provision means that we will
apply a labor-related share of 62 percent
for all hospitals whose wage indexes are
less than or equal to 1.0000.
In addition, Tables 1A and 1B include
the standardized amounts reflecting the
applicable percentage increases for FY
2015.
Under section 1886(d)(9)(A)(ii) of the
Act, the Federal portion of the Puerto
Rico payment rate is based on the
discharge-weighted average of the
national large urban standardized
amount (this amount is set forth in
Table 1A). The labor-related and
nonlabor-related portions of the national
average standardized amounts for
Puerto Rico hospitals for FY 2015 are set
forth in Table 1C listed and published
in section VI. of this Addendum (and
available via the Internet on the CMS
Web site). This table also includes the
Puerto Rico-specific standardized
amounts. The labor-related share
applied to the Puerto Rico-specific
standardized amount is the labor-related
share of 63.2 percent, or 62 percent,
depending on which provides higher
payments to the hospital. (Section
1886(d)(9)(C)(iv) of the Act, as amended
by section 403(b) of Public Law 108–
173, provides that the labor-related
share for hospitals located in Puerto
Rico be 62 percent, unless the
application of that percentage would
result in lower payments to the
hospital.)
The following table illustrates the
changes from the FY 2014 national
standardized amount. The second
through fifth columns display the
changes from the FY 2014 standardized
amounts for each applicable FY 2015
standardized amount. The first row of
the table shows the updated (through
FY 2014) average standardized amount
after restoring the FY 2014 offsets for
outlier payments, demonstration budget
neutrality, the geographic
reclassification budget neutrality, and
the retrospective documentation and
coding adjustment under section
7(b)(1)(B) of Public Law 110–90. The
MS–DRG reclassification and
recalibration and wage index budget
neutrality adjustment factors are
cumulative. Therefore, those FY 2014
adjustment factors are not removed from
this table.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
COMPARISON OF FY 2014 STANDARDIZED AMOUNTS TO THE FY 2015 STANDARDIZED AMOUNTS
FY 2014 Base Rate after removing:
1. FY 2014 Geographic Reclassification
Budget Neutrality (0.990718)
2. FY 2014 Rural Community Hospital
Demonstration Program Budget Neutrality (0.999415)
3. Cumulative Factor: FY 2008, FY
2009, FY 2012, FY 2013, and FY
2014 Documentation and Coding Adjustment as Required under Sections
7(b)(1)(A) and 7(b)(1)(B) of Pub. L.
110–90 and Documentation and Coding Recoupment Adjustment as required under Section 631 of the American Taxpayer Relief Act of 2012
(0.9403).
4. FY 2014 Operating Outlier Offset
(0.948995)
FY 2015 Update Factor .................................
FY 2015 MS-DRG Recalibration and Wage
Index Budget Neutrality Factor.
FY 2015 Reclassification Budget Neutrality
Factor.
FY 2015 Rural Community Demonstration
Program Budget Neutrality Factor.
FY 2015 Operating Outlier Factor .................
Cumulative Factor: FY 2008, FY 2009, FY
2012, FY 2013, FY 2014 and FY 2015
Documentation and Coding Adjustment as
Required under Sections 7(b)(1)(A) and
7(b)(1)(B) of Pub. L. 110–90 and Documentation and Coding Recoupment Adjustment as required under Section 631 of
the American Taxpayer Relief Act of 2012.
FY 2015 New Labor Market Delineation
Wage Index Transition Budget Neutrality
Factor.
VerDate Mar<15>2010
18:25 Aug 21, 2014
Jkt 232001
Hospital submitted
quality data and is a
meaningful EHR user
Hospital submitted
quality data and is
NOT a meaningful
EHR user
Hospital did NOT
submit quality sata
and is a meaningful
EHR user
Hospital did NOT
submit quality data
and is NOT a
meaningful
EHR user
If Wage Index is
Greater Than
1.0000: Labor
(69.6%): $4,230.38.
Nonlabor (30.4%):
$1,847.75.
If Wage Index is less
Than or Equal to
1.0000: Labor
(62%): $3,768.45.
Nonlabor (38%):
$2,309.70.
If Wage Index is
Greater Than
1.0000: Labor
(69.6%): $4,230.38.
Nonlabor (30.4%):
$1,847.75.
If Wage Index is less
Than or Equal to
1.0000: Labor
(62%): $3,768.45.
Nonlabor (38%):
$2,309.70.
If Wage Index is
Greater Than
1.0000: Labor
(69.6%): $4,230.38.
Nonlabor (30.4%):
$1,847.75.
If Wage Index is less
Than or Equal to
1.0000: Labor
(62%): $3,768.45.
Nonlabor (38%):
$2,309.70.
If Wage Index is
Greater Than
1.0000: Labor
(69.6%): $4,230.38.
Nonlabor (30.4%):
$1,847.75.
If Wage Index is less
Than or Equal to
1.0000: Labor
(62%): $3,768.45.
Nonlabor (38%):
$2,309.70.
1.022 ..........................
0.998982 ....................
1.01475 ......................
0.998982 ....................
1.01475 ......................
0.998982 ....................
1.0075.
0.998982.
0.990406 ....................
0.990406 ....................
0.990406 ....................
0.990406.
0.99931 ......................
0.99931 ......................
0.99931 ......................
0.99931.
0.948998 ....................
0.9329 ........................
0.948998 ....................
0.9329 ........................
0.948998 ....................
0.9329 ........................
0.948998.
0.9329.
0.998859 ....................
0.998859 ....................
0.998859 ....................
0.998859.
PO 00000
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Fmt 4701
Sfmt 4700
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
50383
COMPARISON OF FY 2014 STANDARDIZED AMOUNTS TO THE FY 2015 STANDARDIZED AMOUNTS—Continued
Hospital submitted
quality data and is
NOT a meaningful
EHR user
Hospital submitted
quality data and is a
meaningful EHR user
National Standardized Amount for FY 2015 if
Wage Index is Greater Than 1.0000;
Labor/Non-Labor Share Percentage (69.6/
30.4).
National Standardized Amount for FY 2015 if
Wage Index is less Than or Equal to
1.0000; Labor/Non-Labor Share Percentage (62/38).
The following table illustrates the
changes from the FY 2014 Puerto Ricospecific payment rate for hospitals
located in Puerto Rico. The second
column shows the changes from the FY
2014 Puerto Rico specific payment rate
for hospitals with a Puerto Rico-specific
wage index greater than 1.0000. The
Hospital did NOT
submit quality sata
and is a meaningful
EHR user
Hospital did NOT
submit quality data
and is NOT a
meaningful
EHR user
Labor: $3,780.13.
Labor: $3,753.31.
Labor: $3,753.31.
Labor: $3,726.50.
Nonlabor: $1,651.09.
Nonlabor: $1,639.38.
Nonlabor: $1,639.38.
Nonlabor:
$1,627.66.
Labor: $3,367.36.
Labor: $3,343.47.
Labor: $3,343.47.
Labor: $3,319.58.
Nonlabor: $2,063.86.
Nonlabor: $2,049.22.
Nonlabor: $2,049.22.
Nonlabor:
$2,034.58.
third column shows the changes from
the FY 2014 Puerto Rico specific
payment rate for hospitals with a Puerto
Rico-specific wage index less than or
equal to 1.0000. The first row of the
table shows the updated (through FY
2014) Puerto Rico-specific payment rate
after restoring the FY 2014 offsets for
Puerto Rico-specific outlier payments,
rural community hospital
demonstration program budget
neutrality, and the geographic
reclassification budget neutrality. The
MS–DRG recalibration budget neutrality
adjustment factor is cumulative and is
not removed from this table.
COMPARISON OF FY 2014 PUERTO RICO-SPECIFIC PAYMENT RATE TO THE FY 2015 PUERTO RICO–SPECIFIC PAYMENT
RATE
FY 2014 Puerto Rico Base Rate, after removing: ..............................
1. FY 2014 Geographic Reclassification Budget Neutrality
(0.990718).
2. FY 2014 Rural Community Hospital Demonstration Program
Budget Neutrality (0.999415).
3. FY 2014 Puerto Rico Operating Outlier Offset (0.943455) ............
FY 2015 Update Factor ......................................................................
FY 2015 MS-DRG Recalibration Budget Neutrality Factor ................
FY 2015 Reclassification Budget Neutrality Factor ............................
FY 2015 Rural Community Hospital Demonstration Program Budget
Neutrality Factor.
FY 2015 New Labor Market Delineation Wage Index Transition
Budget Neutrality Factor.
FY 2015 Puerto Rico Operating Outlier Factor ..................................
Puerto Rico-Specific Payment Rate for FY 2015 ...............................
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
B. Adjustments for Area Wage Levels
and Cost-of-Living
18:25 Aug 21, 2014
Jkt 232001
Update
(2.2 percent);
wage index is less than or equal to
1.0000; labor/Non-labor share percentage (62/38)
Labor: $1,722.31 .............................
Nonlabor: $1,002.86 ........................
1.022 ................................................
0.997543 ..........................................
0.990406 ..........................................
0.99931 ............................................
Labor: $1,689.61
Nonlabor: $1,035.56
1.022
0.997543
0.990406
0.99931
0.998859 ..........................................
0.998859
0.926575 ..........................................
Labor: $1,608.39 .............................
Nonlabor: $936.54 ...........................
0.926575
Labor: $1,577.86
Nonlabor: $967.07
1. Adjustment for Area Wage Levels
Tables 1A through 1C, as published in
section VI. of this Addendum (and
available via the Internet), contain the
labor-related and nonlabor-related
shares that we used to calculate the
prospective payment rates for hospitals
located in the 50 States, the District of
Columbia, and Puerto Rico for FY 2015.
This section addresses two types of
adjustments to the standardized
amounts that are made in determining
the prospective payment rates as
described in this Addendum.
VerDate Mar<15>2010
Update
(2.2 percent); wage index is greater
than 1.0000; labor/Non-labor share
percentage (63.2/36.8)
Sections 1886(d)(3)(E) and
1886(d)(9)(C)(iv) of the Act require that
we make an adjustment to the laborrelated portion of the national and
Puerto Rico prospective payment rates,
respectively, to account for area
differences in hospital wage levels. This
adjustment is made by multiplying the
labor-related portion of the adjusted
standardized amounts by the
appropriate wage index for the area in
which the hospital is located. In section
III. of the preamble of this final rule, we
discuss the data and methodology for
the FY 2015 wage index.
PO 00000
Frm 00531
Fmt 4701
Sfmt 4700
2. Adjustment for Cost-of-Living in
Alaska and Hawaii
Section 1886(d)(5)(H) of the Act
provides discretionary authority to the
Secretary to make ‘‘such adjustments
. . . as the Secretary deems appropriate
to take into account the unique
circumstances of hospitals located in
Alaska and Hawaii.’’ Higher laborrelated costs for these two States are
taken into account in the adjustment for
area wages described above. To account
for higher nonlabor-related costs for
these two States, we multiply the
nonlabor-related portion of the
standardized amount for hospitals
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located in Alaska and Hawaii by an
adjustment factor.
In the FY 2013 IPPS/LTCH PPS final
rule, we established a methodology to
update the COLA factors for Alaska and
Hawaii that were published by the U.S.
Office of Personnel Management (OPM)
every 4 years (at the same time as the
update to the labor-related share of the
IPPS market basket), beginning in FY
2014. We refer readers to the FY 2013
IPPS/LTCH PPS proposed and final
rules for additional background and a
detailed description of this methodology
(77 FR 28145 through 28146 and 77 FR
53700 through 53701, respectively).
For FY 2014, in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50985
through 50987), we updated the COLA
factors published by OPM for 2009 (as
these are the last COLA factors OPM
published prior to transitioning from
COLAs to locality pay) using the
methodology that we finalized in the FY
2013 IPPS/LTCH PPS final rule.
Based on the policy finalized in the
FY 2013 IPPS/LTCH PPS final rule, we
are using the same COLA factors
established in FY 2014 for FY 2015 to
adjust the nonlabor-related portion of
the standardized amount for hospitals
located in Alaska and Hawaii. Below is
a table listing the COLA factors for FY
2015.
FINAL FY 2015 COST-OF-LIVING ADJUSTMENT FACTORS: ALASKA AND
HAWAII HOSPITALS
Cost of
living adjustment
factor
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Area
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by
road .......................................
City of Fairbanks and 80-kilometer (50-mile) radius by
road .......................................
City of Juneau and 80-kilometer
(50-mile) radius by road ........
Rest of Alaska ...........................
Hawaii:
City and County of Honolulu .....
County of Hawaii .......................
County of Kauai ........................
County of Maui and County of
Kalawao .................................
1.23
1.23
1.23
1.25
1.25
1.19
1.25
1.25
Based on the policy finalized in the
FY 2013 IPPS/LTCH PPS final rule, the
next update to the COLA factors for
Alaska and Hawaii would occur in FY
2018.
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18:25 Aug 21, 2014
Jkt 232001
C. Calculation of the Prospective
Payment Rates
General Formula for Calculation of the
Prospective Payment Rates for FY 2015
In general, the operating prospective
payment rate for all hospitals paid
under the IPPS located outside of Puerto
Rico, except SCHs and MDHs, for FY
2015 equals the Federal rate (which
includes uncompensated care
payments).
We note that, as discussed in section
IV.G. of the preamble of this final rule,
section 1106 of Public Law 113–67,
enacted on December 26, 2013,
extended the MDH program from the
end of FY 2013 through the first half of
FY 2014 (that is, for discharges
occurring before April 1, 2014).
Subsequently, section 106 of Public Law
113–93, enacted on April 1, 2014,
further extended the MDH program
through the first half of FY 2015 (that is,
for discharges occurring before April 1,
2015). Prior to the enactment of Public
Law 113–67, the MDH program was
only to be in effect through the end of
FY 2013. Under current law, the MDH
program will expire for discharges
beginning on April 1, 2015.
SCHs are paid based on whichever of
the following rates yields the greatest
aggregate payment: The Federal national
rate (which, as discussed in section
IV.F. of the preamble of this final rule,
includes uncompensated care
payments); the updated hospitalspecific rate based on FY 1982 costs per
discharge; the updated hospital-specific
rate based on FY 1987 costs per
discharge; the updated hospital-specific
rate based on FY 1996 costs per
discharge; or the updated hospitalspecific rate based on FY 2006 costs per
discharge to determine the rate that
yields the greatest aggregate payment.
The prospective payment rate for
SCHs for FY 2015 equals the higher of
the applicable Federal rate, or the
hospital-specific rate as described
below.
The prospective payment rate for
MDHs for FY 2015 discharges occurring
before April 1, 2015 equals the higher of
the Federal rate or the Federal rate plus
75 percent of the difference between the
Federal rate and the hospital-specific
rate as described below. For MDHs, the
updated hospital-specific rate is based
on FY 1982, FY 1987 or FY 2002 costs
per discharge, whichever yields the
greatest aggregate payment.
The prospective payment rate for
hospitals located in Puerto Rico for FY
2015 equals 25 percent of the Puerto
Rico-specific payment rate plus 75
percent of the applicable national rate.
PO 00000
Frm 00532
Fmt 4701
Sfmt 4700
1. Federal Rate
The Federal rate is determined as
follows:
Step 1—Select the applicable average
standardized amount depending on
whether the hospital submitted
qualifying quality data and is a
meaningful EHR user, as described
above.
Step 2—Multiply the labor-related
portion of the standardized amount by
the applicable wage index for the
geographic area in which the hospital is
located or the area to which the hospital
is reclassified.
Step 3—For hospitals located in
Alaska and Hawaii, multiply the
nonlabor-related portion of the
standardized amount by the applicable
cost-of-living adjustment factor.
Step 4—Add the amount from Step 2
and the nonlabor-related portion of the
standardized amount (adjusted, if
applicable, under Step 3).
Step 5—Multiply the final amount
from Step 4 by the relative weight
corresponding to the applicable MS–
DRG (Table 5 listed in section VI. of this
Addendum and available via the
Internet).
The Federal payment rate as
determined in Step 5 may then be
further adjusted if the hospital qualifies
for either the IME or DSH adjustment.
In addition, for hospitals that qualify for
a low-volume payment adjustment
under section 1886(d)(12) of the Act and
42 CFR 412.101(b), the payment in Step
5 would be increased by the formula
described in section IV.D. of the
preamble of this final rule. The baseoperating DRG payment amount may be
further adjusted by the hospital
readmissions payment adjustment and
the hospital VBP payment adjustment as
described under sections 1886(q) and
1886(o) of the Act, respectively. Finally,
we add the uncompensated care
payment to the total claim payment
amount. We note that, as discussed
above, we take uncompensated care
payments into consideration when
calculating outlier payments.
2. Hospital-Specific Rate (Applicable
Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
Section 1886(b)(3)(C) of the Act
provides that SCHs are paid based on
whichever of the following rates yields
the greatest aggregate payment: The
Federal rate (which, as discussed in
section IV.F. of the preamble of this
final rule, includes uncompensated care
payments); the updated hospitalspecific rate based on FY 1982 costs per
discharge; the updated hospital-specific
rate based on FY 1987 costs per
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discharge; the updated hospital-specific
rate based on FY 1996 costs per
discharge; or the updated hospitalspecific rate based on FY 2006 costs per
discharge to determine the rate that
yields the greatest aggregate payment.
As discussed previously, currently
MDHs are paid based on the Federal
national rate or, if higher, the Federal
national rate plus 75 percent of the
difference between the Federal national
rate and the greater of the updated
hospital-specific rates based on either
FY 1982, FY 1987, or FY 2002 costs per
discharge.
For a more detailed discussion of the
calculation of the hospital-specific rates,
we refer readers to the FY 1984 IPPS
interim final rule (48 FR 39772); the
April 20, 1990 final rule with comment
period (55 FR 15150); the FY 1991 IPPS
final rule (55 FR 35994); and the FY
2001 IPPS final rule (65 FR 47082). We
also refer readers to section IV.F. of the
preamble of this final rule for a
complete discussion on empirically
justified Medicare DSH and
uncompensated care payments.
FY 2015
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Market Basket Rate-of-Increase ................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act ..................................................
Adjustment for Failure to be a Meaningful EHR User under
Section 1886(b)(3)(B)(ix) of the Act .......................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ....
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the
Act ..........................................................................................
Applicable Percentage Increase Applied to Hospital-Specific
Rate ........................................................................................
For a complete discussion of the
applicable percentage increase applied
to the hospital-specific rates for SCHs
and MDHs, we refer readers to section
IV.B. of the preamble of this final rule.
In addition, because SCHs and MDHs
use the same MS–DRGs as other
hospitals when they are paid based in
whole or in part on the hospital-specific
rate, the hospital-specific rate is
adjusted by a budget neutrality factor to
ensure that changes to the MS–DRG
classifications and the recalibration of
the MS–DRG relative weights are made
in a manner so that aggregate IPPS
payments are unaffected. Therefore, a
SCH’s and MDH’s hospital-specific rate
is adjusted by the MS–DRG
reclassification and recalibration budget
neutrality factor of 0.997543, as
discussed in section III. of this
Addendum. The resulting rate is used in
determining the payment rate that an
SCH will receive for its discharges
beginning on or after October 1, 2014,
and the payment rate that an MDH will
receive for its discharges beginning on
or after October 1, 2014, and before
April 1, 2015. We note that, in this final
rule, for FY 2015, we are not making a
documentation and coding adjustment
to the hospital-specific rate. We refer
readers to section II.D. of the preamble
VerDate Mar<15>2010
18:25 Aug 21, 2014
Jkt 232001
specific rates for SCHs and MDHs
equals the applicable percentage
increase set forth in section
1886(b)(3)(B)(i) of the Act (that is, the
same update factor as for all other
hospitals subject to the IPPS). Because
the Act sets the update factor for SCHs
and MDHs equal to the update factor for
all other IPPS hospitals, the update to
the hospital-specific rates for SCHs and
MDHs is subject to the amendments to
section 1886(b)(3)(B) of the Act made by
sections 3401(a) and 10319(a) of the
Affordable Care Act. Accordingly, the
applicable percentage increases to the
hospital-specific rates applicable to
SCHs and MDHs are the following:
b. Updating the FY 1982, FY 1987, FY
1996 and FY 2006 Hospital-Specific
Rate for FY 2015
Section 1886(b)(3)(B)(iv) of the Act
provides that the applicable percentage
increase applicable to the hospitalHospital
submitted quality
data and is a
meaningful EHR
user
Hospital
submitted quality
data and is not a
meaningful EHR
user
2.9
2.9
0.0
0.0
¥0.725
¥0.725
0.0
¥0.5
¥0.725
¥0.5
0.0
¥0.5
¥0.725
¥0.5
¥0.2
¥0.2
¥0.2
¥0.2
2.2
1.475
a. Puerto Rico-Specific Rate
The Puerto Rico-specific prospective
payment rate is determined as follows:
Step 1—Select the applicable average
standardized amount considering the
applicable wage index (obtained from
Table 1C published in section VI. of this
Addendum and available via the
Internet).
Step 2—Multiply the labor-related
portion of the standardized amount by
Fmt 4701
Hospital did not
submit quality
data and is not a
meaningful EHR
user
2.9
3. General Formula for Calculation of
Prospective Payment Rates for Hospitals
Located in Puerto Rico Beginning on or
After October 1, 2014, and Before
October 1, 2015
Section 1886(d)(9)(E)(iv) of the Act
provides that, effective for discharges
occurring on or after October 1, 2004,
hospitals located in Puerto Rico are paid
based on a blend of 75 percent of the
national prospective payment rate and
25 percent of the Puerto Rico-specific
rate.
Frm 00533
Hospital did not
submit quality
data and is a
meaningful EHR
user
2.9
of this final rule for a complete
discussion regarding our policies and
previously finalized policies (including
our historical adjustments to the
payment rates) relating to the effect of
changes in documentation and coding
that do not reflect real changes in casemix.
PO 00000
50385
Sfmt 4700
1.475
0.75
the applicable Puerto Rico-specific wage
index.
Step 3—Add the amount from Step 2
and the nonlabor-related portion of the
standardized amount.
Step 4—Multiply the amount from
Step 3 by the applicable MS–DRG
relative weight (obtained from Table 5
listed in section VI. of this Addendum
and available via the Internet).
Step 5—Multiply the result in Step 4
by 25 percent.
b. National Prospective Payment Rate
The national prospective payment
rate is determined as follows:
Step 1—Select the applicable national
average standardized amount.
Step 2—Multiply the labor-related
portion of the national average
standardized amount by the applicable
wage index for the geographic area in
which the hospital is located or the area
to which the hospital is reclassified.
Step 3—Add the amount from Step 2
and the nonlabor-related portion of the
national average standardized amount.
Step 4—Multiply the amount from
Step 3 by the applicable MS–DRG
relative weight (obtained from Table 5
listed in section VI. of this Addendum
and available via the Internet on the
CMS Web site).
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tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Step 5—Multiply the result in Step 4
by 75 percent.
The sum of the Puerto Rico-specific
rate and the national prospective
payment rate computed above equals
the prospective payment rate for a given
discharge for a hospital located in
Puerto Rico. This payment rate is then
further adjusted if the hospital qualifies
for either the IME or DSH adjustment.
Finally, we add the uncompensated
care payment to the total claim payment
amount. We note that, as discussed
above, we take uncompensated care
payments into consideration when
calculating outlier payments.
III. Changes to Payment Rates for Acute
Care Hospital Inpatient Capital-Related
Costs for FY 2015
The PPS for acute care hospital
inpatient capital-related costs was
implemented for cost reporting periods
beginning on or after October 1, 1991.
Effective with that cost reporting period,
over a 10-year transition period (which
extended through FY 2001) the payment
methodology for Medicare acute care
hospital inpatient capital-related costs
changed from a reasonable cost-based
methodology to a prospective
methodology (based fully on the Federal
rate).
The basic methodology for
determining Federal capital prospective
rates is set forth in the regulations at 42
CFR 412.308 through 412.352. Below we
discuss the factors that we used to
determine the capital Federal rate for FY
2015, which is effective for discharges
occurring on or after October 1, 2014.
The 10-year transition period ended
with hospital cost reporting periods
beginning on or after October 1, 2001
(FY 2002). Therefore, for cost reporting
periods beginning in FY 2002, all
hospitals (except ‘‘new’’ hospitals under
§ 412.304(c)(2)) are paid based on the
capital Federal rate. For FY 1992, we
computed the standard Federal payment
rate for capital-related costs under the
IPPS by updating the FY 1989 Medicare
inpatient capital cost per case by an
actuarial estimate of the increase in
Medicare inpatient capital costs per
case. Each year after FY 1992, we
update the capital standard Federal rate,
as provided at § 412.308(c)(1), to
account for capital input price increases
and other factors. The regulations at
§ 412.308(c)(2) also provide that the
capital Federal rate be adjusted annually
by a factor equal to the estimated
proportion of outlier payments under
the capital Federal rate to total capital
payments under the capital Federal rate.
In addition, § 412.308(c)(3) requires that
the capital Federal rate be reduced by an
adjustment factor equal to the estimated
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proportion of payments for exceptions
under § 412.348. (We note that, as
discussed in the FY 2013 IPPS/LTCH
PPS final rule (77 FR 53705), there is
generally no longer a need for an
exceptions payment adjustment factor.)
However, in limited circumstances, an
additional payment exception for
extraordinary circumstances is provided
for under § 412.348(f) for qualifying
hospitals. Therefore, in accordance with
§ 412.308(c)(3), an exceptions payment
adjustment factor may need to be
applied if such payments are made.
Section 412.308(c)(4)(ii) requires that
the capital standard Federal rate be
adjusted so that the effects of the annual
DRG reclassification and the
recalibration of DRG weights and
changes in the geographic adjustment
factor (GAF) are budget neutral.
Section 412.374 provides for blended
payments to hospitals located in Puerto
Rico under the IPPS for acute care
hospital inpatient capital-related costs.
Accordingly, under the capital PPS, we
compute a separate payment rate
specific to hospitals located in Puerto
Rico using the same methodology used
to compute the national Federal rate for
capital-related costs. In accordance with
section 1886(d)(9)(A) of the Act, under
the IPPS for acute care hospital
operating costs, hospitals located in
Puerto Rico are paid for operating costs
under a special payment formula.
Effective October 1, 2004, in accordance
with section 504 of Public Law 108–173,
the methodology for operating payments
made to hospitals located in Puerto Rico
under the IPPS was revised to make
payments based on a blend of 25
percent of the applicable standardized
amount specific to Puerto Rico hospitals
and 75 percent of the applicable
national average standardized amount.
In conjunction with this change to the
operating blend percentage, effective
with discharges occurring on or after
October 1, 2004, we also revised the
methodology for computing capital
payments made to hospitals located in
Puerto Rico to be based on a blend of
25 percent of the Puerto Rico capital
rate and 75 percent of the national
capital Federal rate (69 FR 49185).
A. Determination of the Federal
Hospital Inpatient Capital-Related
Prospective Payment Rate Update
In the discussion that follows, we
explain the factors that we used to
determine the capital Federal rate for FY
2015. In particular, we explain why the
FY 2015 capital Federal rate increases
approximately 1.2 percent, compared to
the FY 2014 capital Federal rate. As
discussed in the impact analysis in
Appendix A to this final rule, we
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estimate that capital payments per
discharge will increase approximately
1.5 percent during that same period.
Because capital payments constitute
about 10 percent of hospital payments,
a percent change in the capital Federal
rate yields only about a 0.1 percent
change in actual payments to hospitals.
1. Projected Capital Standard Federal
Rate Update
a. Description of the Update Framework
Under § 412.308(c)(1), the capital
standard Federal rate is updated on the
basis of an analytical framework that
takes into account changes in a capital
input price index (CIPI) and several
other policy adjustment factors.
Specifically, we adjust the projected
CIPI rate-of-increase as appropriate each
year for case-mix index-related changes,
for intensity, and for errors in previous
CIPI forecasts. The update factor for FY
2015 under that framework is 1.5
percent based on the best data available
at this time. The update factor under
that framework is based on a projected
1.5 percent increase in the FY 2010based CIPI, a 0.0 percentage point
adjustment for intensity, a 0.0
percentage point adjustment for casemix, a 0.0 percentage point adjustment
for the FY 2013 DRG reclassification
and recalibration, and a forecast error
correction of 0.0 percentage point. As
discussed below in section III.C. of this
Addendum, we continue to believe that
the CIPI is the most appropriate input
price index for capital costs to measure
capital price changes in a given year.
We also explain the basis for the FY
2015 CIPI projection in that same
section of this Addendum. Below we
describe the policy adjustments that we
are applying in the update framework
for FY 2015.
The case-mix index is the measure of
the average DRG weight for cases paid
under the IPPS. Because the DRG weight
determines the prospective payment for
each case, any percentage increase in
the case-mix index corresponds to an
equal percentage increase in hospital
payments.
The case-mix index can change for
any of several reasons:
• The average resource use of
Medicare patients changes (‘‘real’’ casemix change);
• Changes in hospital documentation
and coding of patient records result in
higher-weighted DRG assignments
(‘‘coding effects’’); and
• The annual DRG reclassification
and recalibration changes may not be
budget neutral (‘‘reclassification
effect’’).
We define real case-mix change as
actual changes in the mix (and resource
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requirements) of Medicare patients as
opposed to changes in documentation
and coding behavior that result in
assignment of cases to higher-weighted
DRGs, but do not reflect higher resource
requirements. The capital update
framework includes the same case-mix
index adjustment used in the former
operating IPPS update framework (as
discussed in the May 18, 2004 IPPS
proposed rule for FY 2005 (69 FR
28816)). (We no longer use an update
framework to make a recommendation
for updating the operating IPPS
standardized amounts as discussed in
section II. of Appendix B to the FY 2006
IPPS final rule (70 FR 47707).)
For FY 2015, we are projecting a 0.5
percent total increase in the case-mix
index. We estimated that the real casemix increase will also equal 0.5 percent
for FY 2015. The net adjustment for
change in case-mix is the difference
between the projected real increase in
case-mix and the projected total
increase in case-mix. Therefore, as we
proposed, the net adjustment for casemix change in FY 2015 is 0.0 percentage
point.
The capital update framework also
contains an adjustment for the effects of
DRG reclassification and recalibration.
This adjustment is intended to remove
the effect on total payments of prior
year’s changes to the DRG classifications
and relative weights, in order to retain
budget neutrality for all case-mix indexrelated changes other than those due to
patient severity of illness. Due to the lag
time in the availability of data, there is
a 2-year lag in data used to determine
the adjustment for the effects of DRG
reclassification and recalibration. For
example, we have data available to
evaluate the effects of the FY 2013 DRG
reclassification and recalibration as part
of our update for FY 2015. We estimate
that FY 2013 DRG reclassification and
recalibration resulted in no change in
the case-mix when compared with the
case-mix index that would have resulted
if we had not made the reclassification
and recalibration changes to the DRGs.
Therefore, as we proposed, we are
making a 0.0 percentage point
adjustment for reclassification and
recalibration in the update framework
for FY 2015.
The capital update framework also
contains an adjustment for forecast
error. The input price index forecast is
based on historical trends and
relationships ascertainable at the time
the update factor is established for the
upcoming year. In any given year, there
may be unanticipated price fluctuations
that may result in differences between
the actual increase in prices and the
forecast used in calculating the update
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factors. In setting a prospective payment
rate under the framework, we make an
adjustment for forecast error only if our
estimate of the change in the capital
input price index for any year is off by
0.25 percentage point or more. There is
a 2-year lag between the forecast and the
availability of data to develop a
measurement of the forecast error. A
forecast error of 0.0 percentage point
was calculated for the FY 2015 update.
Historically, when forecast error of the
CIPI is greater than 0.25 percentage
point in absolute terms, it is reflected in
the update recommended under this
framework. Current historical data
indicate that the forecasted FY 2013
rate-of-increase of the FY 2006-based
CIPI (1.2 percent) used in calculating
the FY 2013 update factor slightly
understated the actual realized FY 2013
price increases of the FY 2006-based
CIPI (1.3 percent) by 0.1 percentage
point because the prices associated with
both the depreciation and other capitalrelated cost categories grew more
quickly than anticipated. Because this
forecast error does not exceed the 0.25
percentage point threshold, as we
proposed, we are making a 0.0
percentage point adjustment for forecast
error in the update for FY 2015.
Under the capital IPPS update
framework, we also make an adjustment
for changes in intensity. Historically, we
calculated this adjustment using the
same methodology and data that were
used in the past under the framework
for operating IPPS. The intensity factor
for the operating update framework
reflected how hospital services are
utilized to produce the final product,
that is, the discharge. This component
accounts for changes in the use of
quality-enhancing services, for changes
within DRG severity, and for expected
modification of practice patterns to
remove noncost-effective services. Our
intensity measure is based on a 5-year
average.
We calculate case-mix constant
intensity as the change in total cost per
discharge, adjusted for price level
changes (the CIPI for hospital and
related services) and changes in real
case-mix. Without reliable estimates of
the proportions of the overall annual
intensity increases that are due,
respectively, to ineffective practice
patterns and the combination of qualityenhancing new technologies and
complexity within the DRG system, we
assume that one-half of the annual
increase is due to each of these factors.
The capital update framework thus
provides an add-on to the input price
index rate of increase of one-half of the
estimated annual increase in intensity,
to allow for increases within DRG
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50387
severity and the adoption of qualityenhancing technology.
In this final rule, we are continuing to
use a Medicare-specific intensity
measure that is based on a 5-year
adjusted average of cost per discharge
for FY 2015 (we refer readers to the FY
2011 IPPS/LTCH PPS final rule (75 FR
50436) for a full description of our
Medicare-specific intensity measure).
Specifically, for FY 2015, we are using
an intensity measure that is based on an
average of cost per discharge data from
the 5-year period beginning with FY
2007 and extending through FY 2012.
Based on these data, we estimated that
case-mix constant intensity declined
during FYs 2007 through 2012. In the
past, when we found intensity to be
declining, we believed a zero (rather
than a negative) intensity adjustment
was appropriate. Consistent with this
approach, because we estimate that
intensity declined during that 5-year
period, we believe it is appropriate to
continue to apply a zero intensity
adjustment for FY 2015. Therefore, as
we proposed, we are making a 0.0
percentage point adjustment for
intensity in the update for FY 2015.
Above, we described the basis of the
components used to develop the 1.5
percent capital update factor under the
capital update framework for FY 2015 as
shown in the table below.
CMS FY 2015 UPDATE FACTOR TO
THE CAPITAL FEDERAL RATE
Capital Input Price Index*
Intensity:
Case-Mix Adjustment Factors:
Real Across DRG
Change ..................
Projected Case-Mix
Change ..................
1.5
0.0
¥0.5
0.5
Subtotal ..............
Effect of FY 2013 Reclassification and Recalibration ................................
Forecast Error Correction
1.5
0.0
0.0
Total Update .......
1.5
*The capital input price index is based on
the FY 2010-based CIPI.
b. Comparison of CMS and MedPAC
Update Recommendation
In its March 2014 Report to Congress,
MedPAC did not make a specific update
recommendation for capital IPPS
payments for FY 2015. (We refer readers
to MedPAC’s Report to the Congress:
Medicare Payment Policy, March 2014,
Chapter 3.)
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2. Outlier Payment Adjustment Factor
Section 412.312(c) establishes a
unified outlier payment methodology
for inpatient operating and inpatient
capital-related costs. A single set of
thresholds is used to identify outlier
cases for both inpatient operating and
inpatient capital-related payments.
Section 412.308(c)(2) provides that the
standard Federal rate for inpatient
capital-related costs be reduced by an
adjustment factor equal to the estimated
proportion of capital-related outlier
payments to total inpatient capitalrelated PPS payments. The outlier
thresholds are set so that operating
outlier payments are projected to be 5.1
percent of total operating IPPS DRG
payments.
For FY 2014, we estimated that outlier
payments for capital will equal 6.07
percent of inpatient capital-related
payments based on the capital Federal
rate in FY 2014. Based on the thresholds
as set forth in section II.A. of this
Addendum, we estimate that outlier
payments for capital-related costs will
equal 6.27 percent for inpatient capitalrelated payments based on the capital
Federal rate in FY 2015. Therefore, we
are applying an outlier adjustment
factor of 0.9373 in determining the
capital Federal rate for FY 2015. Thus,
we estimate that the percentage of
capital outlier payments to total capital
Federal rate payments for FY 2015 will
be slightly higher than the percentage
for FY 2014.
The outlier reduction factors are not
built permanently into the capital rates;
that is, they are not applied
cumulatively in determining the capital
Federal rate. The FY 2015 outlier
adjustment of 0.9373 is a ¥0.21 percent
change from the FY 2014 outlier
adjustment of 0.9393. Therefore, the net
change in the outlier adjustment to the
capital Federal rate for FY 2015 is
0.9979 (0.9373/0.9393). Thus, the
outlier adjustment will decrease the FY
2015 capital Federal rate by 0.21 percent
compared to the FY 2014 outlier
adjustment.
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3. Budget Neutrality Adjustment Factor
for Changes in DRG Classifications and
Weights and the GAF
Section 412.308(c)(4)(ii) requires that
the capital Federal rate be adjusted so
that aggregate payments for the fiscal
year based on the capital Federal rate
after any changes resulting from the
annual DRG reclassification and
recalibration and changes in the GAF
are projected to equal aggregate
payments that would have been made
on the basis of the capital Federal rate
without such changes. Because we
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implemented a separate GAF for Puerto
Rico, we apply separate budget
neutrality adjustments for the national
GAF and the Puerto Rico GAF. We
apply the same budget neutrality factor
for DRG reclassifications and
recalibration nationally and for Puerto
Rico. Separate adjustments were
unnecessary for FY 1998 and earlier
because the GAF for Puerto Rico was
implemented in FY 1998.
To determine the factors for FY 2015,
we compared (separately for the
national capital rate and the Puerto Rico
capital rate) estimated aggregate capital
Federal rate payments based on the FY
2014 MS–DRG classifications and
relative weights and the FY 2014 GAF
to estimated aggregate capital Federal
rate payments based on the FY 2014
MS–DRG classifications and relative
weights and the FY 2015 GAFs. To
achieve budget neutrality for the
changes in the national GAFs, based on
calculations using updated data, we are
applying an incremental budget
neutrality adjustment factor of 0.9999
for FY 2015 to the previous cumulative
FY 2014 adjustment factor of 0.9891,
yielding an adjustment factor of 0.9890
through FY 2015. For the Puerto Rico
GAFs, we are applying an incremental
budget neutrality adjustment factor of
1.0012 for FY 2015 to the previous
cumulative FY 2014 adjustment factor
of 1.0076, yielding a cumulative
adjustment factor of 1.0088 through FY
2015.
We then compared estimated
aggregate capital Federal rate payments
based on the FY 2014 MS–DRG relative
weights and the FY 2015 GAFs to
estimated aggregate capital Federal rate
payments based on the cumulative
effects of the FY 2015 MS–DRG
classifications and relative weights and
the FY 2015 GAFs. The incremental
adjustment factor for DRG
classifications and changes in relative
weights is 0.9987 both nationally and
for Puerto Rico. The cumulative
adjustment factors for MS–DRG
classifications and changes in relative
weights and for changes in the GAFs
through FY 2015 are 0.9877 nationally
and 1.0075 for Puerto Rico. (We note
that all the values are calculated with
unrounded numbers.) The GAF/DRG
budget neutrality adjustment factors are
built permanently into the capital rates;
that is, they are applied cumulatively in
determining the capital Federal rate.
This follows the requirement under
§ 412.308(c)(4)(ii) that estimated
aggregate payments each year be no
more or less than they would have been
in the absence of the annual DRG
reclassification and recalibration and
changes in the GAFs.
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The methodology used to determine
the recalibration and geographic
adjustment factor (GAF/DRG) budget
neutrality adjustment is similar to the
methodology used in establishing
budget neutrality adjustments under the
IPPS for operating costs. One difference
is that, under the operating IPPS, the
budget neutrality adjustments for the
effect of geographic reclassifications are
determined separately from the effects
of other changes in the hospital wage
index and the MS–DRG relative weights.
Under the capital IPPS, there is a single
GAF/DRG budget neutrality adjustment
factor (the national capital rate and the
Puerto Rico capital rate are determined
separately) for changes in the GAF
(including geographic reclassification)
and the MS–DRG relative weights. In
addition, there is no adjustment for the
effects that geographic reclassification
has on the other payment parameters,
such as the payments for DSH or IME.
The cumulative adjustment factor
accounts for the MS–DRG
reclassifications and recalibration and
for changes in the GAFs. It also
incorporates the effects on the GAFs of
FY 2015 geographic reclassification
decisions made by the MGCRB
compared to FY 2014 decisions.
However, it does not account for
changes in payments due to changes in
the DSH and IME adjustment factors.
4. Capital Federal Rate for FY 2015
For FY 2014, we established a capital
Federal rate of $429.31 (78 FR 50990).
We are establishing an update of 1.5
percent in determining the FY 2015
capital Federal rate for all hospitals. As
a result of this update and the budget
neutrality factors discussed above, we
are establishing a national capital
Federal rate of $434.26 for FY 2015. The
national capital Federal rate for FY 2015
was calculated as follows:
• The FY 2015 update factor is 1.015,
that is, the update is 1.5 percent.
• The FY 2015 budget neutrality
adjustment factor that is applied to the
capital Federal rate for changes in the
MS–DRG classifications and relative
weights and changes in the GAFs is
0.9986.
• The FY 2015 outlier adjustment
factor is 0.9373.
(We note that, as discussed in section
VI.C. of the preamble of this final rule,
we are not making an additional MS–
DRG documentation and coding
adjustment to the capital IPPS Federal
rates for FY 2015.)
Because the FY 2015 capital Federal
rate has already been adjusted for
differences in case-mix, wages, cost-ofliving, indirect medical education costs,
and payments to hospitals serving a
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disproportionate share of low-income
patients, we are not making additional
adjustments in the capital Federal rate
for these factors, other than the budget
neutrality factor for changes in the MS–
DRG classifications and relative weights
and for changes in the GAFs.
We are providing the following chart
that shows how each of the factors and
adjustments for FY 2015 affects the
computation of the FY 2015 national
capital Federal rate in comparison to the
FY 2014 national capital Federal rate.
The FY 2015 update factor has the effect
of increasing the capital Federal rate by
1.5 percent compared to the FY 2014
capital Federal rate. The GAF/DRG
budget neutrality adjustment factor has
the effect of decreasing the capital
50389
Federal rate by 0.14 percent. The FY
2015 outlier adjustment factor has the
effect of decreasing the capital Federal
rate by 0.21 percent compared to the FY
2014 capital Federal rate. The combined
effect of all the changes will increase the
national capital Federal rate by 1.15
percent compared to the FY 2014
national capital Federal rate.
COMPARISON OF FACTORS AND ADJUSTMENTS: FY 2014 CAPITAL FEDERAL RATE AND FY 2015 CAPITAL FEDERAL RATE
FY 2014
Update Factor 1 ................................................................................
GAF/DRG Adjustment Factor 1 ........................................................
Outlier Adjustment Factor 2 ..............................................................
Capital Federal Rate ........................................................................
FY 2015
1.0090
0.9987
0.9393
429.31
Change
1.0150
0.9986
0.9373
434.26
1.0150
0.9986
0.9979
1.0115
Percent change
1.50
¥0.14
¥0.21
1.15
1 The update factor and the GAF/DRG budget neutrality adjustment factors are built permanently into the capital Federal rates. Thus, for example, the incremental change from FY 2014 to FY 2015 resulting from the application of the 0.9986 GAF/DRG budget neutrality adjustment factor
for FY 2015 is a net change of 0.9986 (or –0.14 percent).
2 The outlier reduction factor is not built permanently into the capital Federal rate; that is, the factor is not applied cumulatively in determining
the capital Federal rate. Thus, for example, the net change resulting from the application of the FY 2015 outlier adjustment factor is 0.9373/
0.9393, or 0.9979 (or ¥0.21 percent).
In this final rule, we also are
providing the following chart that
shows how the final FY 2015 capital
Federal rate differs from the proposed
FY 2015 capital Federal rate as
presented in the FY 2015 IPPS/LTCH
PPS proposed rule.
COMPARISON OF FACTORS AND ADJUSTMENTS: PROPOSED FY 2015 CAPITAL FEDERAL RATE AND FINAL FY 2015
CAPITAL FEDERAL RATE
Proposed
Update Factor ..................................................................................
GAF/DRG Adjustment Factor ..........................................................
Outlier Adjustment Factor ................................................................
Capital Federal Rate ........................................................................
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5. Special Capital Rate for Puerto Rico
Hospitals
Section 412.374 provides for the use
of a blended payment system for
payments made to hospitals located in
Puerto Rico under the PPS for acute care
hospital inpatient capital-related costs.
Accordingly, under the capital PPS, we
compute a separate payment rate
specific to hospitals located in Puerto
Rico using the same methodology used
to compute the national Federal rate for
capital-related costs. Under the broad
authority of section 1886(g) of the Act,
beginning with discharges occurring on
or after October 1, 2004, capital
payments made to hospitals located in
Puerto Rico are based on a blend of 25
percent of the Puerto Rico capital rate
and 75 percent of the capital Federal
rate. The Puerto Rico capital rate is
derived from the costs of Puerto Rico
hospitals only, while the capital Federal
rate is derived from the costs of all acute
care hospitals participating in the IPPS
(including Puerto Rico).
To adjust hospitals’ capital payments
for geographic variations in capital
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Final
1.0150
0.9957
0.9374
433.01
costs, we apply a GAF to both portions
of the blended capital rate. The GAF is
calculated using the operating IPPS
wage index, and varies depending on
the labor market area or rural area in
which the hospital is located. We use
the Puerto Rico wage index to determine
the GAF for the Puerto Rico part of the
capital-blended rate and the national
wage index to determine the GAF for
the national part of the blended capital
rate.
Because we implemented a separate
GAF for Puerto Rico in FY 1998, we also
apply separate budget neutrality
adjustment factors for the national GAF
and for the Puerto Rico GAF. However,
we apply the same budget neutrality
adjustment factor for MS–DRG
reclassifications and recalibration
nationally and for Puerto Rico. The
budget neutrality adjustment factors for
the national GAF and for the Puerto
Rico GAF and the budget neutrality
factor for MS–DRG reclassifications and
recalibration (which is the same
nationally and for Puerto Rico) are
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Change
1.0150
0.9986
0.9373
434.26
1.0000
1.0030
0.9999
1.0029
Percent change
0.00
0.30
¥0.01
1.29
discussed in section III.A.3. of this
Addendum.
In computing the payment for a
particular Puerto Rico hospital, the
Puerto Rico portion of the capital rate
(25 percent) is multiplied by the Puerto
Rico-specific GAF for the labor market
area in which the hospital is located,
and the national portion of the capital
rate (75 percent) is multiplied by the
national GAF for the labor market area
in which the hospital is located (which
is computed from national data for all
hospitals in the United States and
Puerto Rico).
For FY 2014, the special capital rate
for hospitals located in Puerto Rico was
$209.82 (78 FR 50991). With the
changes we are making to the factors
used to determine the capital Federal
rate, the FY 2015 special capital rate for
hospitals in Puerto Rico is $209.10.
Comment: One commenter noted that
the proposed capital standard Federal
rate for Puerto Rico is approximately
less than half of the proposed national
capital standard Federal rate. The
commenter asserted that this
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‘‘disparity’’ is ‘‘not consistent with the
basic reality of Puerto Rico’’ because
average capital costs in Puerto Rico are
not that dissimilar from those in the
United States.
Response: We appreciate the
commenter’s attention to the proposed
capital Federal rates for Puerto Rico
hospitals. While it is not clear what the
commenter was specifically requesting,
we believe the commenter may have
been suggesting that CMS increase the
Puerto Rico specific capital Federal rate
to reduce the difference between it and
the national capital Federal rate. The
commenter is correct that the proposed
Puerto Rico capital standard Federal
rate is approximately half of the
proposed national capital standard
Federal rate, which has consistently
been the difference since those rates
were established. The Puerto Rico
capital rate is derived from the costs of
Puerto Rico hospitals only, while the
national capital Federal rate is derived
from the costs of all acute care hospitals
participating in the IPPS, including
Puerto Rico. The commenter did not
provide any empirical data to
demonstrate that the capital-related
costs in Puerto Rico are similar to those
in the United States, nor that the
blended payment methodology for
capital-related costs to hospitals located
in Puerto Rico at § 412.374 (that is, 25
percent of the Puerto Rico capital rate
and 75 percent of the national capital
Federal rate) does not result in
appropriate capital IPPS payments for
Puerto Rico hospitals. Consequently, we
are unable to assess and directly
respond to the statements included in
the comment. Therefore, in this final
rule, we have determined that the
Puerto Rico capital Federal rate for FY
2015 is consistent with our current
policy.
B. Calculation of the Inpatient CapitalRelated Prospective Payments for FY
2015
For purposes of calculating payments
for each discharge during FY 2015, the
capital Federal rate is adjusted as
follows: (Standard Federal Rate) × (DRG
weight) × (GAF) × (COLA for hospitals
located in Alaska and Hawaii) × (1 +
DSH Adjustment Factor + IME
Adjustment Factor, if applicable). The
result is the adjusted capital Federal
rate.
Hospitals also may receive outlier
payments for those cases that qualify
under the thresholds established for
each fiscal year. Section 412.312(c)
provides for a single set of thresholds to
identify outlier cases for both inpatient
operating and inpatient capital-related
payments. The outlier thresholds for FY
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2015 are in section II.A. of this
Addendum. For FY 2015, a case would
qualify as a cost outlier if the cost for
the case plus the (operating) IME and
DSH payments (including both the
empirically justified Medicare DSH
payment and the estimated
uncompensated care payment, as
discussed in section II.A.4.g.(1) of this
Addendum) is greater than the
prospective payment rate for the MS–
DRG plus the fixed-loss amount of
$24,758.
Currently, as provided under
§ 412.304(c)(2), we pay a new hospital
85 percent of its reasonable costs during
the first 2 years of operation unless it
elects to receive payment based on 100
percent of the capital Federal rate.
Effective with the third year of
operation, we pay the hospital based on
100 percent of the capital Federal rate
(that is, the same methodology used to
pay all other hospitals subject to the
capital PPS).
C. Capital Input Price Index
1. Background
Like the operating input price index,
the capital input price index (CIPI) is a
fixed-weight price index that measures
the price changes associated with
capital costs during a given year. The
CIPI differs from the operating input
price index in one important aspect—
the CIPI reflects the vintage nature of
capital, which is the acquisition and use
of capital over time. Capital expenses in
any given year are determined by the
stock of capital in that year (that is,
capital that remains on hand from all
current and prior capital acquisitions).
An index measuring capital price
changes needs to reflect this vintage
nature of capital. Therefore, the CIPI
was developed to capture the vintage
nature of capital by using a weightedaverage of past capital purchase prices
up to and including the current year.
We periodically update the base year
for the operating and capital input price
indexes to reflect the changing
composition of inputs for operating and
capital expenses. In the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50603
through 50607), we rebased and revised
the CIPI to a FY 2010 base year to reflect
the more current structure of capital
costs in hospitals. For a complete
discussion of this rebasing, we refer
readers to the FY 2014 IPPS/LTCH PPS
final rule.
2. Forecast of the CIPI for FY 2015
Based on the latest forecast by IHS
Global Insight, Inc. (second quarter of
2014), we are forecasting the FY 2010based CIPI to increase 1.5 percent in FY
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2015. This reflects a projected 2.0
percent increase in vintage-weighted
depreciation prices (building and fixed
equipment, and movable equipment),
and a projected 2.7 percent increase in
other capital expense prices in FY 2015,
partially offset by a projected 1.1
percent decline in vintage-weighted
interest expenses in FY 2015. The
weighted average of these three factors
produces the forecasted 1.5 percent
increase for the FY 2010-based CIPI as
a whole in FY 2015.
IV. Changes to Payment Rates for
Excluded Hospitals: Rate-of-Increase
Percentages for FY 2015
Payments for services furnished in
children’s hospitals, 11 cancer
hospitals, and hospitals located outside
the 50 States, the District of Columbia
and Puerto Rico (that is, short-term
acute care hospitals located in the U.S.
Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa)
that are excluded from the IPPS are
made on the basis of reasonable costs
based on the hospital’s own historical
cost experience, subject to a rate-ofincrease ceiling. A per discharge limit
(the target amount as defined in
§ 413.40(a) of the regulations) is set for
each hospital based on the hospital’s
own cost experience in its base year,
and updated annually by a rate-ofincrease percentage. (We note that, in
accordance with § 403.752(a), RNHCIs
are also subject to the rate-of-increase
limits established under § 413.40 of the
regulations.)
In the FY 2015 IPPS/LTCH PPS
proposed rule, we proposed that the FY
2015 rate-of-increase percentage for
updating the target amounts for the 11
cancer hospitals, children’s hospitals,
and the short-term acute care hospitals
located in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands,
and American Samoa, as well as
RNHCIs would be the estimated
percentage increase in the FY 2015 IPPS
operating market basket, in accordance
with applicable regulations at § 413.40.
As we did in FY 2014, we proposed to
use the percentage increase in the FY
2010-based IPPS operating market
basket to update these target amounts.
Based on IHS Global Insight, Inc.’s 2014
first quarter forecast, we estimated that
the FY 2010-based IPPS operating
market basket update for FY 2015 was
2.7 percent (that is, the estimate of the
market basket rate-of-increase).
However, we proposed that if more
recent data become available for the
final rule, we would use them to
calculate the IPPS operating market
basket update for FY 2015.
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We did not receive any public
comments on our proposals.
Based on updated data from IHS
Global Insight, Inc.’s 2014 second
quarter forecast, we estimate that the
final FY 2010-based IPPS operating
market basket update for FY 2015 is 2.9
percent (that is, the estimate of the
market basket rate-of-increase).
The IRF PPS, the IPF PPS, and the
LTCH PPS are updated annually. We
refer readers to section VII. of the
preamble of this final rule and section
V. of the Addendum to this final rule for
the update changes to the Federal
payment rates for LTCHs under the
LTCH PPS for FY 2015. The annual
updates for the IRF PPS and the IPF PPS
are issued by the agency in separate
Federal Register documents.
V. Updates to the Payment Rates for the
LTCH PPS for FY 2015
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A. LTCH PPS Standard Federal Rate for
FY 2015
1. Background
In section VII. of the preamble of this
final rule, we discuss our updates to the
payment rates, factors, and specific
policies under the LTCH PPS for FY
2015.
Under § 412.523(c)(3)(ii) of the
regulations, for LTCH PPS rate years
beginning RY 2004 through RY 2006, we
updated the standard Federal rate
annually by a factor to adjust for the
most recent estimate of the increases in
prices of an appropriate market basket
of goods and services for LTCHs. We
established this policy of annually
updating the standard Federal rate
because, at that time, we believed that
was the most appropriate method for
updating the LTCH PPS standard
Federal rate for years after the initial
implementation of the LTCH PPS in FY
2003. Therefore, under
§ 412.523(c)(3)(ii), for RYs 2004 through
2006, the annual update to the LTCH
PPS standard Federal rate was equal to
the previous rate year’s Federal rate
updated by the most recent estimate of
increases in the appropriate market
basket of goods and services included in
covered inpatient LTCH services.
In determining the annual update to
the standard Federal rate for RY 2007,
based on our ongoing monitoring
activity, we believed that, rather than
solely using the most recent estimate of
the LTCH PPS market basket update as
the basis of the annual update factor, it
was appropriate to adjust the standard
Federal rate to account for the effect of
documentation and coding in a prior
period that was unrelated to patients’
severity of illness (71 FR 27818).
Accordingly, we established under
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§ 412.523(c)(3)(iii) that the annual
update to the standard Federal rate for
RY 2007 was zero percent based on the
most recent estimate of the LTCH PPS
market basket at that time, offset by an
adjustment to account for changes in
case-mix in prior periods due to the
effect of documentation and coding that
were unrelated to patients’ severity of
illness. For RY 2008 through FY 2011,
we also made an adjustment for the
effect of documentation and coding that
was unrelated to patients’ severity of
illness in establishing the annual update
to the standard Federal rate as set forth
in the regulations at §§ 412.523(c)(3)(iv)
through (c)(3)(vii). For FYs 2012, 2013,
and 2014, we updated the standard
Federal rate by the most recent estimate
of the LTCH PPS market basket at that
time, including additional statutory
adjustments required by section
1886(m)(3)(A) of the Act as set forth in
the regulations at §§ 412.523(c)(3)(viii)
through (c)(3)(ix).
Section 1886(m)(3)(A) of the Act, as
added by section 3401(c) of the
Affordable Care Act, specifies that, for
rate year 2010 and each subsequent rate
year, any annual update to the standard
Federal rate shall be reduced:
• For rate year 2010 through 2019, by
the other adjustment specified in
section 1886(m)(3)(A)(ii) and (m)(4) of
the Act; and
• For rate year 2012 and each
subsequent year, by the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (which
we refer to as ‘‘the multifactor
productivity (MFP) adjustment’’) as
discussed in section VII.C.2. of the
preamble of this final rule.
Section 1886(m)(3)(B) of the Act
provides that the application of
paragraph (3) of section 1886(m) of the
Act may result in the annual update
being less than zero for a rate year, and
may result in payment rates for a rate
year being less than such payment rates
for the preceding rate year. (As noted in
section VII.C.2.a. of the preamble of this
final rule, the annual update to the
LTCH PPS occurs on October 1 and we
have adopted the term ‘‘fiscal year’’ (FY)
rather than ‘‘rate year’’ (RY) under the
LTCH PPS beginning October 1, 2010.
Therefore, for purposes of clarity, when
discussing the annual update for the
LTCH PPS, including the provisions of
the Affordable Care Act, we use the term
‘‘fiscal year’’ rather than ‘‘rate year’’ for
2011 and subsequent years.)
For FY 2014, consistent with our
historical practice, we established an
update to the LTCH PPS standard
Federal rate based on the full estimated
LTCH PPS market basket increase of 2.5
percent and the 0.8 percentage point
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50391
reductions required by sections
1886(m)(3)(A)(i) and 1886(m)(3)(A)(ii)
with 1886(m)(4)(C) of the Act.
Accordingly, at § 412.523(c)(3)(x) of the
regulations, we established an annual
update of 1.7 percent to the standard
Federal rate for FY 2014 (78 FR 50761
through 50763).
For FY 2015, as discussed in greater
detail in section VII.C.2. of the preamble
of this final rule, consistent with our
proposal, we are establishing an annual
update to the LTCH PPS standard
Federal rate based on the full estimated
increase in the LTCH PPS market
basket, less the MFP adjustment
consistent with section 1886(m)(3)(A)(i)
of the Act, and less the 0.2 percentage
point required by sections
1886(m)(3)(A)(ii) and (m)(4)(E) of the
Act. In addition, as discussed in greater
detail in section VII.C.2. of the preamble
of this final rule, beginning in FY 2014,
the annual update will be further
reduced by 2.0 percentage points for
LTCHs that fail to submit quality
reporting data in accordance with the
requirements of the LTCHQR Program
under section 1886(m)(5) of the Act.
Specifically, in this final rule, based
on the best available data, we are
establishing an annual update to the
standard Federal rate of 2.2 percent,
which is based on the full estimated
increase in the LTCH PPS market basket
of 2.9 percent, less the MFP adjustment
of 0.5 percentage point consistent with
section 1886(m)(3)(A)(i) of the Act, and
less the 0.2 percentage point required by
sections 1886(m)(3)(A)(ii) and (m)(4)(E)
of the Act. As discussed in greater detail
in section VII.C.2.c. of the preamble of
this final rule, for LTCHs that fail to
submit the required quality reporting
data for FY 2015 in accordance with the
LTCHQR Program, the annual update is
further reduced by 2.0 percentage points
as required by section 1886(m)(5) of the
Act. Accordingly, we are establishing an
annual update to the LTCH PPS
standard Federal rate of 0.2 percent for
LTCHs that fail to submit the required
quality reporting data for FY 2015. This
0.2 percent update is calculated based
on the full estimated increase in the
LTCH PPS market basket of 2.9 percent,
less a MFP adjustment of 0.5 percentage
point, less an additional adjustment of
0.2 percentage point required by the
statute, and less 2.0 percentage points
for failure to submit quality reporting
data as required by section 1886(m)(5)
of the Act.
2. Development of the FY 2015 LTCH
PPS Standard Federal Rate
We continue to believe that the
annual update to the LTCH PPS
standard Federal rate should be based
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on the most recent estimate of the
increase in the LTCH PPS market
basket, including any statutory
adjustments. Consistent with our
historical practice and as we proposed,
for FY 2015, we are applying the annual
update to the LTCH PPS standard
Federal rate from the previous year.
Furthermore, in determining the
standard Federal rate for FY 2015,
consistent with our proposal, we also
are making certain regulatory
adjustments. Specifically, we are
applying an adjustment factor for the
final year of the 3-year phase-in of the
one-time prospective adjustment to the
standard Federal rate under
§ 412.523(d)(3), as discussed in greater
detail in section VII.C.3. of the preamble
of this final rule. In addition, in
determining the FY 2015 standard
Federal rate, we are applying a budget
neutrality adjustment factor for the
changes related to the area wage
adjustment (that is, changes to the wage
data, including the policy to adopt the
new OMB delineations, and laborrelated share) in accordance with
§ 412.523(d)(4).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50993and 50993), we
established an annual update to the
LTCH PPS standard Federal rate of 1.7
percent for FY 2014 based on the full
estimated LTCH PPS market basket
increase of 2.5 percent, less the MFP
adjustment of 0.5 percentage point
consistent with section 1886(m)(3)(A)(i)
of the Act and less the 0.3 percentage
point required by sections
1886(m)(3)(A)(ii) and (m)(4)(C) of the
Act. Accordingly, at § 412.523(c)(3)(x),
we established an annual update to the
standard Federal rate for FY 2014 of 1.7
percent. That is, we applied an update
factor of 1.017 to the FY 2013 Federal
rate of $40,607.31 to determine the FY
2014 standard Federal rate. We also
adjusted the standard Federal rate for
FY 2014 by the one-time prospective
adjustment factor for FY 2014 of
0.98734 under § 412.523(d)(3)(ii).
Furthermore, for FY 2014, we applied
an area wage level budget neutrality
factor of 1.0010531 to the standard
Federal rate to ensure that any changes
to the area wage level adjustment (that
is, the annual update of the wage index
values and labor-related share) would
not result in any change (increase or
decrease) in estimated aggregate LTCH
PPS payments. Consequently, we
established a standard Federal rate for
FY 2014 of $40,607.31 (calculated as
$40,397.96 × 1.017 × 0.98734 ×
1.0010531).
In this final rule, we are establishing
an annual update to the LTCH PPS
standard Federal rate of 2.2 percent (that
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is, an update factor of 1.022) for FY
2015, based on the full estimated
increase in the LTCH PPS market basket
of 2.9 percent, less the MFP adjustment
of 0.5 percentage point, consistent with
section 1886(m)(3)(A)(i) of the Act, and
less the 0.2 percentage point required by
sections 1886(m)(3)(A)(ii) and (m)(4)(E)
of the Act. Therefore, consistent with
our proposal, under § 412.523(c)(3)(xi),
we are applying a factor of 1.022 to the
FY 2014 standard Federal rate of
$40,607.31 to determine the FY 2015
standard Federal rate. These factors are
based on IGI’s second quarter 2014
forecast, which are the best available
data at this time. For LTCHs that fail to
submit quality reporting data for FY
2015 under the LTCHQR Program,
consistent with our proposal, under
§ 412.523(c)(3)(xi) in conjunction with
§ 412.523(c)(4), we are reducing the
annual update to the LTCH PPS
standard Federal rate by an additional
2.0 percentage points consistent with
section 1886(m)(5) of the Act. Therefore,
we are establishing an annual update to
the LTCH PPS standard Federal rate of
0.2 percent (that is, 2.2 percent minus
2.0 percentage points, or an update
factor of 1.002) for FY 2015 for LTCHs
that fail to submit the required quality
reporting data for FY 2015 under the
LTCHQR Program. We also are
establishing that the standard Federal
rate for FY 2015 will be further adjusted
by an adjustment factor of 0.98734 for
FY 2015 under the final year of the 3year phase-in of the one-time
prospective adjustment at
§ 412.523(d)(3)(ii). In addition, for FY
2015, we are applying an area wage
level budget neutrality factor of
1.0016703 to the standard Federal rate
to ensure that any changes to the area
wage level adjustment (that is, the
annual update of the wage index values
and labor-related share) will not result
in any change (increase or decrease) in
estimated aggregate LTCH PPS
payments. Accordingly, we are
establishing a standard Federal rate of
$41,043.71 (calculated as $40,607.31 ×
1.022 × 0.98734 × 1.0016703) for FY
2015. The standard Federal rate of
$41,043.71 will apply in determining
the payments for FY 2015 discharges
from LTCHs that submit quality
reporting data for FY 2015 in
accordance with the requirements of the
LTCHQR Program under section
1886(m)(5) of the Act. For LTCHs that
fail to submit quality reporting data for
FY 2015 in accordance with the
requirements of the LTCHQR Program
under section 1886(m)(5) of the Act, we
are establishing a standard Federal of
$40,240.51 (calculated as $40,607.31 ×
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1.002 × 0.98734 × 1.0016703) for FY
2015.
B. Adjustment for Area Wage Levels
under the LTCH PPS for FY 2015
1. Background
Under the authority of section 123 of
the BBRA, as amended by section 307(b)
of the BIPA, we established an
adjustment to the LTCH PPS standard
Federal rate to account for differences in
LTCH area wage levels under
§ 412.525(c). The labor-related share of
the LTCH PPS standard Federal rate is
adjusted to account for geographic
differences in area wage levels by
applying the applicable LTCH PPS wage
index. The applicable LTCH PPS wage
index is computed using wage data from
inpatient acute care hospitals without
regard to reclassification under section
1886(d)(8) or section 1886(d)(10) of the
Act.
When we implemented the LTCH
PPS, we established a 5-year transition
to the full area wage level adjustment.
The area wage level adjustment was
completely phased-in for cost reporting
periods beginning in FY 2007.
Therefore, for cost reporting periods
beginning on or after October 1, 2006,
the applicable LTCH area wage index
values are the full LTCH PPS area wage
index values calculated based on acute
care hospital inpatient wage index data
without taking into account geographic
reclassification under section 1886(d)(8)
and section 1886(d)(10) of the Act. For
additional information on the phase-in
of the area wage level adjustment under
the LTCH PPS, we refer readers to the
August 30, 2002 LTCH PPS final rule
(67 FR 56015 through 56019) and the
RY 2008 LTCH PPS final rule (72 FR
26891).
2. Geographic Classifications (Labor
Market Areas) Based on the New OMB
Delineations
In adjusting for the differences in area
wage levels under the LTCH PPS, the
labor-related portion of an LTCH’s
Federal prospective payment is adjusted
by using an appropriate area wage index
based on the geographic classification
(labor market area) in which the LTCH
is located. Specifically, the application
of the LTCH PPS area wage level
adjustment under existing § 412.525(c)
is made based on the location of the
LTCH—either in an ‘‘urban area,’’ or a
‘‘rural area,’’ as defined in § 412.503.
Under § 412.503, an ‘‘urban area’’ is
defined as a Metropolitan Statistical
Area (MSAs) (which includes a
Metropolitan division, where
applicable), as defined by the Executive
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OMB and a ‘‘rural area’’ is defined as
any area outside of an urban area.
The CBSA-based geographic
classification (labor market area)
definitions currently used under the
LTCH PPS, effective for discharges
occurring on or after July 1, 2005, are
based on the OMB’s CBSA definitions
that were developed based on 2000 U.S.
Census data. As discussed in greater
detail in section VII.D. of the preamble
of this final rule, OMB announced
revisions to the statistical boundaries of
its labor market areas for MSAs,
Micropolitan Statistical Areas, and
Combined Statistical Areas, and
provided guidance on the uses of the
delineations of these areas in OMB
Bulletin No. 13–01, issued on February
28, 2013 (referred hereinafter as the
‘‘new OMB delineations’’). As
previously stated, at that time, the FY
2014 IPPS/LTCH PPS proposed rule was
in the advanced stages of development,
and the proposed FY 2014 LTCH PPS
area wage indexes had already been
developed based on the previous OMB
CBSA-based labor market area
definitions that are currently used to
define CBSA-based labor market areas
(referred hereinafter as ‘‘CBSA
designations’’) under the LTCH PPS.
Therefore, we did not implement
changes to the CBSA designations under
the LTCH PPS for FY 2014 based on the
new OMB labor market areas
delineations that were developed based
on 2010 Decennial Census data. Rather,
to allow for sufficient time to assess the
new changes and their ramifications, we
stated that we intended to propose to
adopt the new OMB delineations, and
the corresponding changes to the area
wage index values based on those
delineations, under the LTCH PPS for
FY 2015 through notice and comment
rulemaking. This approach was
consistent with the approach used
under the IPPS. (We refer readers to the
FY 2014 IPPS/LTCH PPS final rule (78
FR 50994 through 50995).)
As discussed in section VII.D. of the
preamble of this final rule, under the
authority of section 123 of the BBRA, as
amended by section 307(b) of the BIPA,
we are adopting the new OMB
delineations beginning in FY 2015. We
believe that these new OMB
delineations are based on the best
available data that reflect the local
economies and area wage levels of the
hospitals that are currently located in
these geographic areas. We also believe
that the new OMB delineations will
ensure that the LTCH PPS area wage
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level adjustment most appropriately
accounts for and reflects the relative
hospital wage levels in the geographic
area of the hospital as compared to the
national average hospital wage level. We
note that this policy is consistent with
the IPPS policy discussed in section
III.B. of the preamble of this final rule.
For additional details on our policy to
adopt the new OMB delineations, we
refer readers to section VII.D. of the
preamble of this final rule.
3. LTCH PPS Labor-Related Share
Under the payment adjustment for the
differences in area wage levels under
§ 412.525(c), the labor-related share of
an LTCH’s PPS Federal prospective
payment is adjusted by the applicable
wage index for the labor market area in
which the LTCH is located. The LTCH
PPS labor-related share currently
represents the sum of the labor-related
portion of operating costs (Wages and
Salaries; Employee Benefits;
Professional Fees Labor-Related,
Administrative and Business Support
Services; and All-Other: Labor-Related
Services) and a labor-related portion of
capital costs using the applicable LTCH
PPS market basket. Additional
background information on the
historical development of the laborrelated share under the LTCH PPS and
the development of the RPL market
basket can be found in the RY 2007
LTCH PPS final rule (71 FR 27810
through 27817 and 27829 through
27830) and the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51766 through 51769
and 51808).
For FY 2013, we revised and rebased
the market basket used under the LTCH
PPS by adopting the newly created FY
2009-based LTCH-specific market
basket. In addition, we determined the
labor-related share for FY 2013 as the
sum of the FY 2013 relative importance
of each labor-related cost category of the
FY 2009-based LTCH-specific market
basket. For more details, we refer
readers to the FY 2013 IPPS/LTCH PPS
final rule (77 FR 53477 through 53479).
Consistent with our historical
practice, in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50995 through 50996),
we determined the LTCH PPS laborrelated share for FY 2014 based on the
FY 2014 relative importance of each
labor-related cost category, which
reflected the different rates of price
change for these cost categories between
the base year (FY 2009) and FY 2014.
Specifically, based on IGI’s second
quarter 2013 forecast of the FY 2009-
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50393
based LTCH-specific market basket, we
established a labor-related share under
the LTCH PPS for FY 2014 of 62.537
percent.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28335), we
proposed to establish a labor-related
share under the LTCH PPS for FY 2015
of 62.571 percent based on IGI’s first
quarter 2014 forecast of the FY 2009based LTCH-specific market basket.
Consistent with our historical practice,
we also proposed that if more recent
data became available, we would use
that data to determine the final FY 2015
labor-related share under the LTCH PPS.
We did not receive any public
comments on this proposal. Therefore,
we are adopting the policy as final
without modification.
For FY 2015, in this final rule, we are
establishing a labor-related share under
the LTCH PPS of 62.306 percent based
on IGI’s second quarter 2014 forecast of
the FY 2009-based LTCH-specific
market basket. The table below shows
the FY 2015 labor-related share relative
importance using IGI’s second quarter
2014 forecast of the FY 2009-based
LTCH-specific market basket. The sum
of the relative importance for FY 2015
for operating costs (Wages and Salaries;
Employee Benefits; Professional Fees
Labor-Related, Administrative and
Business Support Services; and All
Other: Labor-Related Services) is 58.116
percent. We are establishing that the
portion of capital-related costs that is
influenced by the local labor market
will continue to be estimated to be 46
percent. Because the relative importance
for capital-related costs will be 9.109
percent of the FY 2009-based LTCHspecific market basket in FY 2015, we
are taking 46 percent of 9.109 percent to
determine the labor-related share of
capital-related costs for FY 2015, which
will result in 4.190 percent (0.46 x
9.109). We then added that 4.190
percent for the capital-related cost
amount to the 58.116 percent for the
operating cost amount to determine the
total labor-related share for FY 2015.
Therefore, under the broad authority of
section 123 of the BBRA, as amended by
section 307(b) of BIPA, to determine
appropriate payment adjustments under
the LTCH PPS, we are establishing a
labor-related share under the LTCH PPS
for FY 2015 of 62.306 percent. This
labor-related share is determined using
the same methodology as used in
calculating all previous fiscal years
LTCH labor-related shares.
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FY 2015 LABOR-RELATED SHARE RELATIVE IMPORTANCE BASED ON THE FY 2009-BASED LTCH–SPECIFIC MARKET
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FY 2015 laborrelated share
relative
importance
Wages and Salaries ........................................................................................................................................................................
Employee Benefits ...........................................................................................................................................................................
Professional Fees: Labor-Related ...................................................................................................................................................
Administrative and Business Support Services ...............................................................................................................................
All Other: Labor-Related Services ...................................................................................................................................................
44.865
8.072
2.198
0.500
2.481
Subtotal .....................................................................................................................................................................................
Proposed Labor-Related Portion of Capital Costs (46%) ...............................................................................................................
58.116
4.190
Total Labor-Related Share ................................................................................................................................................
62.306
4. LTCH PPS Wage Index for FY 2015
Historically, we have established
LTCH PPS area wage index values
calculated from acute care IPPS hospital
wage data without taking into account
geographic reclassification under
sections 1886(d)(8) and 1886(d)(10) of
the Act (67 FR 56019). The area wage
level adjustment established under the
LTCH PPS is based on an LTCH’s actual
location without regard to the ‘‘urban’’
or ‘‘rural’’ designation of any related or
affiliated provider.
In the FY 2014 LTCH PPS final rule
(78 FR 50996 through 50997), we
calculated the FY 2014 LTCH PPS area
wage index values using the same data
used for the FY 2014 acute care hospital
IPPS (that is, data from cost reporting
periods beginning during FY 2010),
without taking into account geographic
reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act, as
these were the most recent complete
data available at that time. In that same
final rule, we indicated that we
computed the FY 2014 LTCH PPS area
wage index values consistent with the
urban and rural geographic
classifications (labor market areas) that
were in place at that time, and
consistent with the pre-reclassified IPPS
wage index policy (that is, our historical
policy of not taking into account IPPS
geographic reclassifications in
determining payments under the LTCH
PPS). As with the IPPS wage index,
wage data for multicampus hospitals
with campuses located in different labor
market areas (CBSAs) are apportioned to
each CBSA where the campus (or
campuses) are located. We also
continued to use our existing policy for
determining area wage index values for
areas where there are no IPPS wage
data.
Consistent with our historical
methodology, in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28336
through 28337), to determine the
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applicable area wage index values under
the LTCH PPS for FY 2015, under the
broad authority of section 123 of the
BBRA, as amended by section 307(b) of
the BIPA, to determine appropriate
payment adjustments under the LTCH
PPS, we proposed to use wage data
collected from cost reports submitted by
IPPS hospitals for cost reporting periods
beginning during FY 2011, without
taking into account geographic
reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act.
We proposed to use FY 2011 wage data
because these data are the most recent
complete data available. We also noted
that these are the same data used to
compute the proposed FY 2015 acute
care hospital inpatient wage index, as
discussed in section III. of the preamble
of that proposed rule. We proposed to
compute the FY 2015 LTCH PPS area
wage index values consistent with the
proposed ‘‘urban’’ and ‘‘rural’’
geographic classifications (that is, using
the proposed new OMB labor market
area delineations), and consistent with
our historical policy of not taking into
account IPPS geographic
reclassifications under sections
1886(d)(8) and 1886(d)(10) of the Act in
determining payments under the LTCH
PPS. We also proposed to continue to
apportion wage data for multicampus
hospitals with campuses located in
different labor market areas to each
CBSA where the campus or campuses
are located, consistent with the IPPS
policy. Lastly, under our proposed
methodology for determining the FY
2015 LTCH PPS area wage index values,
we proposed to continue to use our
existing policy for determining area
wage index values for areas where there
are no IPPS wage data. (We refer readers
to section V.B.4. of the Addendum to
the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28336 through 28337) for
additional details regarding our
proposals pertaining to the development
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of the LTCH PPS wage index values for
FY 2015, which we are adopting as final
without modification in this final rule,
as discussed below.)
Comment: One commenter provided
information received from a procured
contractor that attempted to replicate
the proposed FY 2015 LTCH wage index
values using the IPPS wage index data
from the FY 2011 cost report data that
CMS made available on its Web site. As
part of that analysis, the contractor also
explored the variance between the FY
2014 LTCH PPS wage index values and
the proposed FY 2015 LTCH PPS wage
index values for certain LTCHs that
were projected to experience a relatively
significant change in their wage index.
In particular, the analysis prepared by
the commenter’s contractor focused on
specific CBSAs (particularly CBSA
23540 and CBSA 34740) that were
projected to experience ‘‘a significant
decline’’ in their wage index values for
FY 2015 when compared to FY 2014,
although there has been no change in
the constituent of hospitals used to
compute the wage index values for these
areas. The commenter requested that
CMS reexamine the wage data used to
calculate the FY 2015 LTCH PPS wage
index values for CBSAs that would
experience a decrease in their wage
index values for FY 2015 when
compared to the FY 2014 LTCH PPS
wage index values for these CBSAs, and
to explain the cause for those decreases.
Response: As requested by the
commenter, we reexamined the IPPS
wage data used to calculate the FY 2015
LTCH PPS wage index values for CBSAs
that were projected to experience a
decrease in their wage index values for
FY 2015 when compared to the FY 2014
LTCH PPS wage index values for these
CBSAs, focusing our attention on the
CBSAs referenced by the commenter.
We found no issues with the IPPS
hospital wage data from the FY 2011
cost reports, or with the calculation of
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the FY 2015 LTCH PPS wage index
values. In exploring the cause for the
decrease in the wage index values for
CBSAs projected to experience ‘‘a
significant decline’’ in their FY 2015
wage index values when compared to
the FY 2014 LTCH PPS wage index
values for these CBSAs, we found that
many of these CBSAs were comprised of
three or less hospitals. A labor market
area’s wage index value is calculated as
the ratio of the labor market area’s
average hourly wage to the national
average hourly wage. Labor market areas
(CBSAs) with fewer providers are
generally subject to less stability in yearto-year wage index values because there
is less of an averaging effect, wherein
even relatively minor changes in one
provider’s wage data can produce a
relatively ‘‘significant’’ effect on the
wage index value for that area. This is
because such a change in one provider’s
wage data has a relatively greater effect
on the CBSA’s average hourly wage
(based solely on the limited number of
hospitals in that area) when compared
to the effect that such a change has on
the national average hourly wage (which
is based on wage data from all
hospitals). We note that there also are
CBSAs that were projected to
experience a ‘‘significant increase’’ in
their wage index values for the same
reason. We believe that these wage
index changes are appropriate because
these values are based on the most
recent data available that reflect the
relative hospital wage level in a
geographic area (CBSA) in comparison
to the national average hospital wage
level.
After consideration of the public
comments we received, in this final
rule, we are finalizing our proposals
pertaining to the development of the
LTCH PPS wage index values for FY
2015, without modification. Therefore,
consistent with our historical
methodology, to determine the
applicable area wage index values under
the LTCH PPS for FY 2015, under the
broad authority of section 123 of the
BBRA, as amended by section 307(b) of
the BIPA, to determine appropriate
payment adjustments under the LTCH
PPS, we are using wage data collected
from cost reports submitted by IPPS
hospitals for cost reporting periods
beginning during FY 2011, without
taking into account geographic
reclassification under sections
1886(d)(8) and 1886(d)(10) of the Act.
We are using FY 2011 wage data
because these data are the most recent
complete data available. These are the
same data used to compute the FY 2015
acute care hospital inpatient wage index
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values, as discussed in section III. of the
preamble of this final rule. (For our
rationale for using IPPS hospital wage
data as a proxy for determining the area
wage index values used under the LTCH
PPS, we refer readers to the FY 2010
IPPS/RY 2010 LTCH PPS final rule (74
FR 44024 through 44025).) The FY 2015
LTCH PPS area wage index values were
computed consistent with the ‘‘urban’’
and ‘‘rural’’ geographic classifications
(that is, using the new OMB labor
market area delineations), as discussed
in section VII.D. of the preamble of this
final rule, and consistent with the prereclassified IPPS wage index policy
(that is, our historical policy of not
taking into account IPPS geographic
reclassifications under sections
1886(d)(8) and 1886(d)(10) of the Act in
determining payments under the LTCH
PPS). As with the IPPS wage index, we
are continuing to apportion wage data
for multicampus hospitals with
campuses located in different labor
market areas to each CBSA where the
campus or campuses are located, as
discussed in section III.G. of the
preamble of this final rule. Furthermore,
in determining the FY 2015 LTCH PPS
area wage index values, we are
continuing to use our existing policy for
determining area wage index values for
areas where there are no IPPS wage data
using the methodology we established
in the RY 2009 LTCH PPS final rule. For
more information about this
methodology, including an explanation
of and rationale for our policy for
determining LTCH PPS wage index
values for areas that have no IPPS wage
data, we refer readers to the RY 2009
LTCH PPS final rule (73 FR 26817
through 26818).
There are currently no LTCHs located
in labor market areas without IPPS
hospital wage data (or IPPS hospitals).
However, as discussed in the proposed
rule, if an LTCH were to open in one of
these labor market areas, LTCH PPS
wage index values for such an area
would be calculated using our
established methodology. Under our
existing methodology, the LTCH PPS
wage index value for urban CBSAs with
no IPPS wage data is determined by
using an average of all of the urban areas
within the State, and the LTCH PPS
wage index value for rural areas with no
IPPS wage data is determined by using
the unweighted average of the wage
indices from all of the CBSAs that are
contiguous to the rural counties of the
State.
Based on the FY 2011 IPPS wage data
that we are using to determine the FY
2015 LTCH PPS area wage index values
in this final rule, there are no IPPS wage
data for the urban area Hinesville, GA
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50395
(CBSA 25980). Consistent with the
methodology discussed above, we
calculated the FY 2015 wage index
value for CBSA 25980 as the average of
the wage index values for all of the
other urban areas within the State of
Georgia (that is, CBSAs 10500, 12020,
12060, 12260, 15260, 16860, 17980,
19140, 23580, 31420, 40660, 42340,
46660 and 47580), as shown in Table
12A, which is listed in section VI. of the
Addendum to this final rule and
available via the Internet on the CMS
Web site). We note that, as IPPS wage
data are dynamic, it is possible that
urban areas without IPPS wage data will
vary in the future.
Based on FY 2011 IPPS wage data that
we are using to determine the FY 2015
LTCH PPS area wage index values in
this final rule, there are no rural areas
without IPPS hospital wage data.
Therefore, as discussed in the proposed
rule, it is not necessary to use our
established methodology to calculate an
LTCH PPS wage index value for
proposed rural areas with no IPPS wage
data for FY 2015. We note that, as IPPS
wage data are dynamic, it is possible
that rural areas without IPPS wage data
will vary in the future.
For FY 2015, we are adopting the new
OMB delineations under the LTCH PPS,
as discussed in greater detail in section
VII.D. of the preamble of this final rule.
Under this policy, there will be some
changes to the current CBSA
compositions as a result of the new
OMB delineations, which will result in
the creation of new CBSAs, ‘‘urban’’
counties that are now ‘‘rural,’’ ‘‘rural’’
counties that are now ‘‘urban,’’ and
existing CBSAs that are divided into
separate boundaries. Under existing
§ 412.503, an ‘‘urban area’’ is defined as
a Metropolitan Statistical Area as
defined by the Executive OMB, and a
‘‘rural area’’ is defined as any area
outside of an urban area. We are not
making any changes to the current
definitions of ‘‘urban area’’ and ‘‘rural
area’’ because our policy to use the new
OMB delineations under the LTCH PPS
is consistent with the definitions in
existing § 412.503.
As discussed in section VII.D.2.e. of
the preamble of this final rule, overall
we believe that using the new OMB
delineations will result in LTCH PPS
area wage index values being more
representative of the actual costs of
labor in a given area. However, we also
recognize that, as a result of our policy
to adopt the new OMB delineations,
some LTCHs will experience decreases
in area wage index values, while other
LTCHs will experience increases in area
wage index values. Therefore, to
mitigate any short-term instability in
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LTCH PPS payments that could result
from our policy to adopt the new OMB
delineations, in section VII.D.2.e. of the
preamble of this final rule, we are
finalizing our proposed transitional
wage index policy. Under our
transitional wage index policy, any
LTCH that will experience a decrease in
its area wage index solely as a result of
the policy to adopt the new OMB
delineations under the LTCH PPS will
receive a blended area wage index for
FY 2015. That is, for purposes of
determining an LTCH’s area wage index
for FY 2015, we are computing LTCH
PPS area wage index values using the
area wage data discussed above under
both the current (FY 2014) CBSA
designations and the new OMB
delineations. If the area wage index
value under the new OMB delineations
is lower than the area wage index value
under the FY 2014 CBSA designations,
the LTCH will be paid based on a
blended area wage index for FY 2015,
which will be computed as the sum of
50 percent of each wage index value
(referred to as the 50/50 blended wage
index), as described below.
Specifically, under the transitional
wage index policy that we are
establishing in this final rule, to
determine the applicable area wage
index value for each LTCH that will be
effective for discharges occurring on or
after October 1, 2014, through
September 30, 2015, we computed the
following two area wage index values:
(1) the wage index values calculated
using the new OMB delineations; and
(2) the wage index values calculated
using the current (FY 2014) CBSA
designations. The FY 2015 LTCH area
wage index values calculated using the
new OMB delineations are presented in
Table 12A (for urban areas) and Table
12B (for rural areas) associated with this
final rule, which are available via the
Internet on the CMS Web site. The FY
2015 LTCH area wage index values
calculated using the current (FY 2014)
CBSA designations are presented in
Table 12C (for urban areas) and Table
12D (for rural areas) associated with this
final rule, which are available via the
Internet on the CMS Web site. Where
applicable, the wage index values in
Tables 12C and 12D will be used to
calculate a LTCH’s 50/50 blended wage
index value under the transitional wage
index policy. Under our transitional
wage index policy, an LTCH will only
receive the 50/50 blended area wage
index value for FY 2015 if the LTCH’s
area wage index value under the new
OMB delineations (shown in Table 12A
or 12B) is lower than the area wage
index value under the FY 2014 CBSA
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designations (shown in Tables 12C or
12D). If an LTCH’s area wage index
under the new OMB delineations
(shown in Tables 12A or 12B) is higher
than the wage index under the FY 2014
CBSA designations (shown in Tables
12C or 12D), we will pay the LTCH
based on 100 percent of the area wage
index under the new OMB delineations
shown in Tables 12A or 12B (as such
the LTCH will not receive the 50/50
blended area wage index). Furthermore,
as discussed below and in section
VII.D.2.e. of the preamble of this final
rule, we are applying this transitional
wage index policy in a budget neutral
manner. Each LTCH’s labor market area
under the new OMB delineations and
the current (FY 2014) CBSA-based labor
market area designation can be found in
the LTCH PPS impact file for this final
rule, which is available via the Internet
on the CMS Web site.
5. Budget Neutrality Adjustment for
Changes to the Area Wage Level
Adjustment
Historically, the LTCH PPS wage
index and labor-related share are
updated annually based on the latest
available data. Under § 412.525(c)(2),
any changes to the area wage index
values or labor-related share are to be
made in a budget neutral manner such
that estimated aggregate LTCH PPS
payments are unaffected; that is, will be
neither greater than nor less than
estimated aggregate LTCH PPS
payments without such changes to the
area wage level adjustment. Under this
policy, we determine an area wage-level
adjustment budget neutrality factor that
will be applied to the standard Federal
rate to ensure that any changes to the
area wage level adjustments are budget
neutral such that any changes to the
area wage index values or labor-related
share would not result in any change
(increase or decrease) in estimated
aggregate LTCH PPS payments.
Accordingly, under § 412.523(d)(4), we
apply an area wage level adjustment
budget neutrality factor in determining
the standard Federal rate, and we also
established a methodology for
calculating an area wage level
adjustment budget neutrality factor. (For
additional information on the
establishment of our budget neutrality
policy for changes to the area wage level
adjustment, we refer readers to the FY
2012 IPPS/LTCH PPS final rule (76 FR
51771 through 51773 and 51809).)
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28337 through
28338), in accordance with
§ 412.523(d)(4), we proposed to apply
an area wage level adjustment budget
neutrality factor to adjust the standard
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Federal rate to account for the estimated
effect of the adjustments or updates to
the area wage level adjustment under
§ 412.525(c)(1) on estimated aggregate
LTCH PPS payments using our existing
methodology. In determining the area
wage level adjustment budget neutrality
factor for FY 2015 under § 412.523(d)(4),
we also proposed to include the
proposed transitional wage index policy
under the proposed adoption of the new
OMB delineations (that is, the proposed
50/50 blended area wage index values
for LTCHs that would experience a
decrease in the their wage index solely
as a result of the proposed adoption of
the new OMB delineations under the
LTCH PPS) to ensure that the proposed
changes to the area wage level
adjustments would be budget neutral.
We did not receive any public
comments on our proposals pertaining
to the FY 2015 budget neutrality
adjustment for changes to the area wage
level adjustment. Therefore, in this final
rule, we are adopting our proposal as
final without modification.
In this final rule, for FY 2015, in
accordance with § 412.523(d)(4), we are
applying an area wage level adjustment
budget neutrality factor to adjust the
standard Federal rate to account for the
estimated effect of the adjustments or
updates to the area wage level
adjustment under § 412.525(c)(1) on
estimated aggregate LTCH PPS
payments using a methodology that is
consistent with the methodology we
established in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51773). In addition
to the updates for FY 2015 to the area
wage index data and labor-related share
discussed above, as discussed above and
in section VII.D.2.e. of the preamble of
this final rule, we are establishing a
transitional wage index policy to
mitigate the impacts of adopting
changes to the LTCH PPS labor market
areas (CBSAs) based on the new OMB
delineations. Because our transitional
wage index policy for LTCHs that will
experience a decrease in their area wage
index solely as a result of the adoption
of the new OMB delineations under the
LTCH PPS will result in an increase in
estimated aggregate LTCH PPS
payments without such changes, we are
including the 50/50 blended area wage
index when determining the area wage
level adjustment budget neutrality factor
that we are applying to the standard
Federal rate under § 412.523(d)(4) to
ensure that any changes to the area
wage-level adjustments are budget
neutral.
For this final rule, using the steps in
the methodology described in section
VII.D.2.e. of this preamble, we
determined a FY 2015 area wage level
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adjustment budget neutrality factor of
1.0016703. Accordingly, in section
V.A.2. of the Addendum to this final
rule, to determine the FY 2015 LTCH
PPS standard Federal rate, we are
applying an area wage level adjustment
budget neutrality factor of 1.0016703, in
accordance with § 412.523(d)(4). The FY
2015 LTCH PPS standard Federal rate
shown in Table 1E of the Addendum to
this final rule reflects this adjustment
factor.
C. LTCH PPS Cost-of-Living Adjustment
(COLA) for LTCHs Located in Alaska
and Hawaii
Under § 412.525(b), a cost-of-living
adjustment (COLA) is provided for
LTCHs located in Alaska and Hawaii to
account for the higher costs incurred in
those States. Specifically, we apply a
COLA to payments to LTCHs located in
Alaska and Hawaii by multiplying the
nonlabor-related portion of the standard
Federal payment rate by the applicable
COLA factors established annually by
CMS. Higher labor-related costs for
LTCHs located in Alaska and Hawaii are
taken into account in the adjustment for
area wage levels described above.
Prior to FY 2014, we used the most
recent updated COLA factors obtained
from the U.S. Office of Personnel
Management (OPM) Web site at http://
www.opm.gov/oca/cola/rates.asp to
adjust the LTCH PPS payments for
LTCHs located in Alaska and Hawaii.
Statutory changes have transitioned the
Alaska and Hawaii COLAs to locality
pay (phased in over a 3-year period
beginning in January 2010, with COLA
rates being frozen as of October 28,
2009, and then proportionately reduced
to reflect the phase-in of locality pay).
For FY 2013, we believed that it was
appropriate to use ‘‘frozen’’ COLA
factors to adjust payments, while we
explored alternatives for updating the
COLA factors in the future, and we
continued to use the same ‘‘frozen’’
COLA factors used in FY 2012 to adjust
the nonlabor-related portion of the
standard Federal rate for LTCHs located
in Alaska and Hawaii in FY 2013 under
§ 412.525(b). We also established a
methodology to update the COLA
factors for Alaska and Hawaii every 4
years (at the same time as the update to
the labor-related share of the IPPS
market basket), beginning in FY 2014
(77 FR 53712 through 53713). The
methodology we established to update
the COLA factors is based on a
comparison of the growth in the CPIs for
Anchorage, Alaska, and Honolulu,
Hawaii, relative to the growth in the CPI
for the average U.S. city as published by
the Bureau of Labor Statistics (BLS). It
also incorporates a 25-percent cap on
the CPI-updated COLA factors, which is
consistent with a statutorily mandated
25-percent cap that was applied to
OPM’s published COLA factors. We
believe that determining updated COLA
factors using this methodology would
appropriately adjust the nonlaborrelated portion of the standard Federal
rate for LTCHs located in Alaska and
Hawaii. (For additional details on the
methodology we established in the FY
2013 IPPS/LTCH PPS final rule to
update the COLA factors for Alaska and
Hawaii beginning in FY 2014, we refer
readers to section VII.D.3. of the
preamble of that final rule (77 FR 53481
through 53482).)
For FY 2014, we updated the COLA
factors published for Alaska and Hawaii
by OPM for 2009 (as these are the last
COLA factors OPM published prior to
transitioning from COLAs to locality
pay) using the methodology that we
finalized in the FY 2013 IPPS/LTCH
PPS final rule. Under our finalized
methodology, we used COLA factors for
FY 2014 for the three specified urban
areas of Alaska (Anchorage, Fairbanks
and Juneau) of 1.23; for the City and
County of Honolulu, the County of
Kauai, the County of Maui, the County
of Kalawao, and ‘‘All other’’ areas of
Alaska of 1.25; and for the County of
Hawaii of 1.19. For additional details on
our policy, we refer readers to the FY
50397
2014 IPPS/LTCH PPS final rule (78 FR
50997 through 50998).
Under our finalized policy, we update
the COLA factors using the methodology
described above every 4 years; the first
year began in FY 2014 (77 FR 53482).
Therefore, in the FY 2015 IPPS/LTCH
PPS proposed rule (79 FR 28338), for FY
2015, under the broad authority
conferred upon the Secretary by section
123 of the BBRA, as amended by section
307(b) of the BIPA, to determine
appropriate payment adjustments under
the LTCH PPS, we proposed to continue
to use the COLA factors based on the
2009 OPM COLA factors updated
through 2012 by the comparison of the
growth in the CPIs for Anchorage,
Alaska, and Honolulu, Hawaii, relative
to the growth in the CPI for the average
U.S. city as established in the FY 2014
IPPS/LTCH PPS final rule. We did not
receive any public comments on this
proposal. Therefore, in this final rule,
we are adopting the policy as final
without modification.
Accordingly, in this final rule, for FY
2015, under the broad authority
conferred upon the Secretary by section
123 of the BBRA, as amended by section
307(b) of the BIPA, to determine
appropriate payment adjustments under
the LTCH PPS, we are continuing to use
the COLA factors established in the FY
2014 IPPS/LTCH PPS final rule, which
were based on the 2009 OPM COLA
factors updated through 2012 by the
comparison of the growth in the CPIs for
Anchorage, Alaska, and Honolulu,
Hawaii, relative to the growth in the CPI
for the average U.S. city. (We refer
readers to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50998) for a discussion
of the FY 2014 COLA factors.)
Consistent with our historical practice,
we are establishing that the COLA
factors shown in the table below will be
used to adjust the nonlabor-related
portion of the standard Federal rate for
LTCHs located in Alaska and Hawaii
under § 412.525(b).
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COST-OF-LIVING ADJUSTMENT FACTORS FOR ALASKA AND HAWAII HOSPITALS UNDER THE LTCH PPS FOR FY 2015
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by road .....................................................................................................
City of Fairbanks and 80-kilometer (50-mile) radius by road ......................................................................................................
City of Juneau and 80-kilometer (50-mile) radius by road ..........................................................................................................
All other areas of Alaska ..............................................................................................................................................................
Hawaii:
City and County of Honolulu .................................................................................................................................................
County of Hawaii ...................................................................................................................................................................
County of Kauai .....................................................................................................................................................................
County of Maui and County of Kalawao ...............................................................................................................................
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D. Adjustment for LTCH PPS High-Cost
Outlier (HCO) Cases
1. Background
Under the broad authority conferred
upon the Secretary by section 123 of the
BBRA as amended by section 307(b) of
the BIPA, in the regulations at
§ 412.525(a), we established an
adjustment for additional payments for
outlier cases that have extraordinarily
high costs relative to the costs of most
discharges. We refer to these cases as
high cost outliers (HCOs). Providing
additional payments for outliers
strongly improves the accuracy of the
LTCH PPS in determining resource costs
at the patient and hospital level. These
additional payments reduce the
financial losses that would otherwise be
incurred when treating patients who
require more costly care and, therefore,
reduce the incentives to underserve
these patients. We set the outlier
threshold before the beginning of the
applicable rate year so that total
estimated outlier payments are
projected to equal 8 percent of total
estimated payments under the LTCH
PPS.
Under § 412.525(a) in the regulations
(in conjunction with § 412.503), we
make outlier payments for any
discharges if the estimated cost of a case
exceeds the adjusted LTCH PPS
payment for the MS–LTC–DRG plus a
fixed-loss amount. Specifically, in
accordance with § 412.525(a)(3) (in
conjunction with § 412.503), we make
an additional payment for an HCO case
that is equal to 80 percent of the
difference between the estimated cost of
the patient case and the outlier
threshold, which is the sum of the
adjusted Federal prospective payment
for the MS–LTC–DRG and the fixed-loss
amount. The fixed-loss amount is the
amount used to limit the loss that a
hospital will incur under the outlier
policy for a case with unusually high
costs. This results in Medicare and the
LTCH sharing financial risk in the
treatment of extraordinarily costly cases.
Under the LTCH PPS HCO policy, the
LTCH’s loss is limited to the fixed-loss
amount and a fixed percentage of costs
above the outlier threshold (adjusted
MS–LTC–DRG payment plus the fixedloss amount). The fixed percentage of
costs is called the marginal cost factor.
We calculate the estimated cost of a case
by multiplying the Medicare allowable
covered charge by the hospital’s overall
hospital cost-to-charge ratio (CCR).
Under the LTCH PPS HCO policy at
§ 412.525(a), we determine a fixed-loss
amount, that is, the maximum loss that
an LTCH can incur under the LTCH PPS
for a case with unusually high costs
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before the LTCH will receive any
additional payments. We calculate the
fixed-loss amount by estimating
aggregate payments with and without an
outlier policy. The fixed-loss amount
results in estimated total outlier
payments being projected to be equal to
8 percent of projected total LTCH PPS
payments. Currently, MedPAR claims
data and CCRs based on data from the
most recent Provider-Specific File (PSF)
(or from the applicable statewide
average CCR if an LTCH’s CCR data are
faulty or unavailable) are used to
establish a fixed-loss threshold amount
under the LTCH PPS.
2. Determining LTCH CCRs Under the
LTCH PPS
a. Background
The following is a discussion of CCRs
that are used in determining payments
for HCO and SSO cases under the LTCH
PPS, at § 412.525(a) and § 412.529,
respectively. Although this section is
specific to HCO cases, because CCRs
and the policies and methodologies
pertaining to them are used in
determining payments for both HCO
and SSO cases (to determine the
estimated cost of the case at
§ 412.529(d)(2)), we are discussing the
determination of CCRs under the LTCH
PPS for both of these types of cases
simultaneously.
In determining both HCO payments
(at § 412.525(a)) and SSO payments (at
§ 412.529), we calculate the estimated
cost of the case by multiplying the
LTCH’s overall CCR by the Medicare
allowable charges for the case. In
general, we use the LTCH’s overall CCR,
which is computed based on either the
most recently settled cost report or the
most recent tentatively settled cost
report, whichever is from the latest cost
reporting period, in accordance with
§ 412.525(a)(4)(iv)(B) and
§ 412.529(f)(4)(ii) for HCOs and SSOs,
respectively. (We note that, in some
instances, we use an alternative CCR,
such as the statewide average CCR in
accordance with the regulations at
§ 412.525(a)(4)(iv)(C) and
§ 412.529(f)(4)(iii), or a CCR that is
specified by CMS or that is requested by
the hospital under the provisions of the
regulations at § 412.525(a)(4)(iv)(A) and
§ 412.529(f)(4)(i).) Under the LTCH PPS,
a single prospective payment per
discharge is made for both inpatient
operating and capital-related costs.
Therefore, we compute a single
‘‘overall’’ or ‘‘total’’ LTCH-specific CCR
based on the sum of LTCH operating
and capital costs (as described in
Section 150.24, Chapter 3, of the
Medicare Claims Processing Manual
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(Pub. 100–4)) as compared to total
charges. Specifically, an LTCH’s CCR is
calculated by dividing an LTCH’s total
Medicare costs (that is, the sum of its
operating and capital inpatient routine
and ancillary costs) by its total Medicare
charges (that is, the sum of its operating
and capital inpatient routine and
ancillary charges).
b. LTCH Total CCR Ceiling
Generally, an LTCH is assigned the
applicable statewide average CCR if,
among other things, an LTCH’s CCR is
found to be in excess of the applicable
maximum CCR threshold (that is, the
LTCH CCR ceiling). This is because
CCRs above this threshold are most
likely due to faulty data reporting or
entry, and CCRs based on erroneous
data should not be used to identify and
make payments for outlier cases.
Therefore, under our established policy,
generally, if an LTCH’s calculated CCR
is above the applicable ceiling, the
applicable LTCH PPS statewide average
CCR is assigned to the LTCH instead of
the CCR computed from its most recent
(settled or tentatively settled) cost report
data.
In this final rule, using our
established methodology for
determining the LTCH total CCR ceiling
(described above), based on IPPS total
CCR data from the March 2014 update
of the PSF, consistent with our
proposal, we are establishing a total
CCR ceiling of 1.346 under the LTCH
PPS for FY 2015 in accordance with
§ 412.525(a)(4)(iv)(C)(2) for HCOs and
§ 412.529(f)(4)(iii)(B) for SSOs.
c. LTCH Statewide Average CCRs
Our general methodology established
for determining the statewide average
CCRs used under the LTCH PPS is
similar to our established methodology
for determining the LTCH total CCR
ceiling (described above) because it is
based on ‘‘total’’ IPPS CCR data. Under
the LTCH PPS HCO policy at
§ 412.525(a)(4)(iv)(C) and the SSO
policy at § 412.529(f)(4)(iii), the MAC
may use a statewide average CCR, which
is established annually by CMS, if it is
unable to determine an accurate CCR for
an LTCH in one of the following
circumstances: (1) new LTCHs that have
not yet submitted their first Medicare
cost report (for this purpose, consistent
with current policy, a new LTCH is
defined as an entity that has not
accepted assignment of an existing
hospital’s provider agreement in
accordance with § 489.18); (2) LTCHs
whose CCR is in excess of the LTCH
CCR ceiling; and (3) other LTCHs for
whom data with which to calculate a
CCR are not available (for example,
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missing or faulty data). (Other sources of
data that the MAC may consider in
determining an LTCH’s CCR include
data from a different cost reporting
period for the LTCH, data from the cost
reporting period preceding the period in
which the hospital began to be paid as
an LTCH (that is, the period of at least
6 months that it was paid as a shortterm, acute care hospital), or data from
other comparable LTCHs, such as
LTCHs in the same chain or in the same
region.)
Consistent with our historical practice
of using the best available data, in this
final rule, using our established
methodology for determining the LTCH
statewide average CCRs, based on the
most recent complete IPPS ‘‘total CCR’’
data from the March 2014 update of the
PSF, consistent with our proposal, we
are establishing LTCH PPS statewide
average total CCRs for urban and rural
hospitals that would be effective for
discharges occurring on or after October
1, 2014 through September 20, 2015, in
Table 8C listed in section VI. of the
Addendum to this final rule (and
available via the Internet).
Under the changes to the LTCH PPS
labor market areas based on the new
OMB delineations, all areas in
Delaware, the District of Columbia, New
Jersey, and Rhode Island would be
classified as urban. Therefore, there are
no rural statewide average total CCRs
listed for those jurisdictions in Table
8C. This policy is consistent with the
policy that we established when we
revised our methodology for
determining the applicable LTCH
statewide average CCRs in the FY 2007
IPPS final rule (71 FR 48119 through
48121) and is the same as the policy
applied under the IPPS. In addition,
although Connecticut and
Massachusetts have areas that are
designated as rural, there are no shortterm, acute care IPPS hospitals or
LTCHs located in those areas as of
March 2014. Therefore, consistent with
our existing methodology, we are using
the national average total CCR for rural
IPPS hospitals for rural Connecticut and
Massachusetts in Table 8C listed in
section VI. of the Addendum to this
final rule (and available via the
Internet).
In addition, consistent with our
existing methodology, in determining
the urban and rural statewide average
total CCRs for Maryland LTCHs paid
under the LTCH PPS, consistent with
our proposal, we are continuing to use,
as a proxy, the national average total
CCR for urban IPPS hospitals and the
national average total CCR for rural IPPS
hospitals, respectively. We are using
this proxy because we believe that the
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CCR data in the PSF for Maryland
hospitals may not be entirely accurate
(as discussed in greater detail in the FY
2007 IPPS final rule (71 FR 48120)).
d. Reconciliation of LTCH HCO and
SSO Payments
We note that under the LTCH PPS
HCO policy at § 412.525(a)(4)(iv)(D) and
the LTCH PPS SSO policy at
§ 412.529(f)(4)(iv), the payments for
HCO and SSO cases, respectively, are
subject to reconciliation. Specifically,
any reconciliation of outlier payments is
based on the CCR that is calculated
based on a ratio of cost-to-charge data
computed from the relevant cost report
determined at the time the cost report
coinciding with the discharge is settled.
For additional information, we refer
readers to sections 150.26 through
150.28 of the Medicare Claims
Processing Manual (Pub. 100–4) as
added by Change Request 7192
(Transmittal 2111; December 3, 2010)
and the RY 2009 LTCH PPS final rule
(73 FR 26820 through 26821).
3. Establishment of the LTCH PPS
Fixed-Loss Amount for FY 2015
When we implemented the LTCH
PPS, as discussed in the August 30,
2002 LTCH PPS final rule (67 FR 56022
through 56026), under the broad
authority of section 123 of the BBRA as
amended by section 307(b) of BIPA, we
established a fixed-loss amount so that
total estimated outlier payments are
projected to equal 8 percent of total
estimated payments under the LTCH
PPS. To determine the fixed-loss
amount, we estimate outlier payments
and total LTCH PPS payments for each
case using claims data from the
MedPAR files. Specifically, to
determine the outlier payment for each
case, we estimate the cost of the case by
multiplying the Medicare covered
charges from the claim by the LTCH’s
CCR. Under § 412.525(a)(3) (in
conjunction with § 412.503), if the
estimated cost of the case exceeds the
outlier threshold, we make an outlier
payment equal to 80 percent of the
difference between the estimated cost of
the case and the outlier threshold (that
is, the sum of the adjusted Federal
prospective payment for the MS–LTC–
DRG and the fixed-loss amount).
In the FY 2014 IPPS/LTCH PPS final
rule (78 FR 53715), we presented our
policies regarding the methodology and
data we used to establish the fixed-loss
amount of $13,314 for FY 2014, which
was calculated using our existing
methodology to calculate the fixed-loss
amount for FY 2014 (based on the data
and the rates and policies presented in
that final rule) in order to maintain
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estimated HCO payments at the
projected 8 percent of total estimated
LTCH PPS payments. Consistent with
our historical practice of using the best
data available, in determining the fixedloss amount for FY 2014, we used the
most recent available LTCH claims data
and CCR data, that is, LTCH claims data
from the March 2013 update of the FY
2012 MedPAR file and CCRs from the
March 2013 update of the PSF, as these
data were the most recent complete
LTCH data available at that time.
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28321), we
proposed to continue to use our existing
methodology to calculate a fixed-loss
amount for FY 2015 using the best
available data that would maintain
estimated HCO payments at the
projected 8 percent of total estimated
LTCH PPS payments (based on the rates
and policies presented in this proposed
rule). Specifically, based on the most
recent complete LTCH data available at
that time (that is, LTCH claims data
from the March 2014 update of the FY
2013 MedPAR file and CCRs from the
March 2014 update of the PSF), we
proposed to determine a fixed-loss
amount for FY 2015 that would result in
estimated outlier payments projected to
be equal to 8 percent of total estimated
payments in FY 2015. Under the broad
authority of section 123(a)(1) of the
BBRA and section 307(b)(1) of the BIPA,
we proposed a fixed-loss amount of
$15,730 for FY 2015, and also proposed
to make an additional payment for an
HCO case that is equal to 80 percent of
the difference between the estimated
cost of the case and the outlier threshold
(the sum of the adjusted Federal LTCH
payment for the MS–LTC–DRG and the
proposed fixed-loss amount of $15,730).
Comment: One commenter expressed
support for the proposed fixed-loss
amount, and stated that the proposed
increase for FY 2015 is justified. That
same commenter also requested that
CMS provide its most recent estimate of
the percentage payout of high-cost
outlier payments for the current fiscal
year. Another commenter expressed
concern that the proposed increase in
the fixed-loss amount would result in
significant financial losses for hospitals
that treat a comparatively high volume
of outlier cases, and recommended that
the increase be transitioned in over 2
years to reduce the impact of this
increase in the fixed-loss amount.
Response: We appreciate the
commenter’s support for the proposed
fixed-loss amount, and agree that the
increase is necessary to maintain
estimated HCO payments at the
projected 8 percent of total estimated
LTCH PPS payments (as explained in
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the proposed rule). In section I.K. of the
regulatory impact analysis in the
Appendix to this final rule, we state that
we currently estimate that HCO
payments will be approximately 7.9
percent of the estimated total LTCH PPS
payments in FY 2014 based on the most
recent data available.
While we understand the
commenter’s concern regarding the
financial impact an increase in the
fixed-loss amount may have on the
outlier payments to some LTCH’s, we do
not believe that the increase should be
phased-in over 2 years. The intent of the
HCO policy is to provide an additional
payment to LTCH cases that have
unusually high costs while at the same
time balancing an incentive for LTCHs
to treat expensive patients and provide
cost efficient care. (We refer readers to
the FY 2003 LTCH PPS final rule (67 FR
56025) for further details regarding the
intent of this policy.) Under our
historical HCO policy, this balance is
achieved by making outlier payments
that are intended to approximate the
marginal cost of providing care above
the fixed-loss threshold. We believe that
phasing-in the increase to the fixed-loss
amount would be inconsistent with the
intent of the LTCH PPS HCO policy
because such a policy would reduce the
incentive to provide cost efficient care
by resulting in estimated outlier
payments that are in excess of 8 percent
of total estimated payments in FY 2015.
(For additional detail on the rationale
for setting the HCO payment ‘‘target’’ at
8 percent of total estimated LTCH PPS
payments, we refer readers to the FY
2003 LTCH PPS final rule (67 FR 56022
through 56024).) Furthermore, any
auxiliary adjustment to the fixed-loss
amount, such as a transition, would
result in making outlier payments that
would not be directly related to the cost
of providing care to unusually costly
cases in FY 2015. When we determine
the annual fixed-loss amount, we
include all payments and policies that
would affect actual payments for the
current fiscal year in order to ensure the
most accurate determination of a fixedloss amount that would result in
estimated outlier payments equaling 8
percent of total estimated for the fiscal
year. Including an auxiliary adjustment,
such as a transition, that is not relative
to the current fiscal year does not lend
greater accuracy to the determination of
a fixed-loss amount that would result in
estimated outlier payments equaling 8
percent of total estimated payments in
FY 2015. For these reasons, we continue
to believe that our policies are
consistent with the original intent of the
HCO policy under the LTCH PPS and,
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therefore, we are not adopting the
commenter’s suggestion to phase-in the
increase to the fixed-loss amount for FY
2015.
In this final rule, after consideration
of the public comments we received, we
are adopting our proposals related to the
calculation of the fixed-loss amount for
FY 2015 as final without modification.
For FY 2015, consistent with our
proposal, we are continuing to use our
existing methodology to calculate a
fixed-loss amount for FY 2015 using the
best available data that would maintain
estimated HCO payments at the
projected 8 percent of total estimated
LTCH PPS payments (based on the rates
and policies presented in this final
rule). Specifically, for this final rule, we
used LTCH claims data from the March
2014 update of the FY 2013 MedPAR
file and CCRs from the March 2014
update of the PSF to determine a fixedloss amount that will result in estimated
outlier payments projected to be equal
to 8 percent of total estimated payments
in FY 2015 because these data are the
most recent complete LTCH data
available at this time. Under the broad
authority of section 123(a)(1) of the
BBRA and section 307(b)(1) of BIPA, we
are establishing a fixed-loss amount of
$14,972 for FY 2015. Therefore, we are
making an additional payment for an
HCO case that is equal to 80 percent of
the difference between the estimated
cost of the case and the outlier threshold
(the sum of the adjusted Federal LTCH
payment for the MS–LTC–DRG and the
fixed-loss amount of $14,972).
We note that the fixed-loss amount of
$14,792 for FY 2015 is lower than the
proposed FY 2015 fixed-loss amount of
$15,730. This decrease is primarily a
result of updated data used to calculate
the fixed-loss amount in this final rule,
such as the most recent available LTCH
claims data in the MedPAR file, CCRs in
the PSF, and the estimate of the LTCH
PPS market basket update factors. We
also note that the fixed-loss amount of
$14,972 for FY 2015 is slightly higher
than the FY 2014 fixed-loss amount of
$13,314. Based on our payment
simulations using the most recent
available data at this time, the final
increase in the fixed-loss amount for FY
2015 is necessary to maintain the
existing requirement that estimated
outlier payments equal 8 percent of
estimated total LTCH PPS payments.
Maintaining the fixed-loss amount at the
current level would result in HCO
payments that are more than the current
regulatory 8-percent requirement
because a lower fixed-loss amount
would result in more cases qualifying as
outlier cases, as well as higher outlier
payments for qualifying HCO cases
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because the maximum loss that an
LTCH must incur before receiving an
HCO payment (that is, the fixed-loss
amount) would be smaller. For these
reasons, we believe that raising the
fixed-loss amount is appropriate and
necessary to maintain that estimated
outlier payments would equal 8 percent
of estimated total LTCH PPS payments
as required under § 412.525(a). (As
noted above, for further information on
the existing 8 percent HCO ‘‘target’’
requirement, we refer readers to the
August 30, 2002 LTCH PPS final rule
(67 FR 56022 through 56024).)
4. Application of the Outlier Policy to
SSO Cases
As we discussed in the August 30,
2002 final rule (67 FR 56026), under
some rare circumstances, an LTCH
discharge could qualify as an SSO case
(as defined in the regulations at
§ 412.529 in conjunction with § 412.503)
and also as an HCO case. In this
scenario, a patient could be hospitalized
for less than five-sixths of the geometric
average length of stay for the specific
MS–LTC–DRG, and yet incur
extraordinarily high treatment costs. If
the estimated costs exceeded the HCO
threshold (that is, the SSO payment plus
the fixed-loss amount), the discharge is
eligible for payment as an HCO.
Therefore, for an SSO case in FY 2015,
the HCO payment would be 80 percent
of the difference between the estimated
cost of the case and the outlier threshold
(the sum of the fixed-loss amount of
$14,972 and the amount paid under the
SSO policy as specified in § 412.529).
E. Update to the IPPS Comparable/
Equivalent Amounts To Reflect the
Statutory Changes to the IPPS DSH
Payment Adjustment Methodology
In the FY 2014 IPPS/LTCH PPS final
rule, we established a policy for
reflecting the changes to the Medicare
IPPS DSH payment adjustment
methodology provided for by section
3133 of the Affordable Care Act in the
calculation of the ‘‘IPPS comparable
amount’’ under the SSO policy at
§ 412.529 and the ‘‘IPPS equivalent
amount’’ under the 25-percent threshold
payment adjustment policy at § 412.534
and § 412.536. Historically, the
determination of both the ‘‘IPPS
comparable amount’’ and the ‘‘IPPS
equivalent amount’’ includes an amount
for inpatient operating costs ‘‘for the
costs of serving a disproportionate share
of low-income patients.’’ Under the
statutory changes to the Medicare DSH
payment adjustment methodology that
began in FY 2014, in general, eligible
IPPS hospitals receive an empirically
justified Medicare DSH payment equal
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to 25 percent of the amount they
otherwise would have received under
the statutory formula for Medicare DSH
payments prior to the amendments
made by the Affordable Care Act. The
remaining amount, equal to an estimate
of 75 percent of the amount that
otherwise would have been paid as
Medicare DSH payments, reduced to
reflect changes in the percentage of
individuals under the age of 65 who are
uninsured, is made available to make
additional payments to each hospital
that qualifies for Medicare DSH
payments and that has uncompensated
care. The additional uncompensated
care payments are based on the
hospital’s amount of uncompensated
care for a given time period relative to
the total amount of uncompensated care
for that same time period reported by all
IPPS hospitals that receive Medicare
DSH payments.
To reflect the statutory changes to the
Medicare DSH payment adjustment
methodology in the calculation of the
‘‘IPPS comparable amount’’ and the
‘‘IPPS equivalent amount’’ under the
LTCH PPS, we stated that we will
include a reduced Medicare DSH
payment amount that reflects the
projected percentage of the payment
amount calculated based on the
statutory Medicare DSH payment
formula prior to the amendments made
by the Affordable Care Act that will be
paid to eligible IPPS hospitals as
empirically justified Medicare DSH
payments and uncompensated care
payments in that year (that is, a
percentage of the operating DSH
payment amount that has historically
been reflected in the LTCH PPS
payments that is based on IPPS rates).
We also stated that the projected
percentage will be updated annually,
consistent with the annual
determination of the amount of
uncompensated care payments that will
be made to eligible IPPS hospitals. As
explained in the FY 2014 IPPS/LTCH
PPS final rule (79 FR 50766 through
50767), we believe that this approach
results in appropriate payments under
the LTCH PPS and is consistent with
our intention that the ‘‘IPPS comparable
amount’’ and the ‘‘IPPS equivalent
amount’’ under the LTCH PPS closely
resemble what an IPPS payment would
have been for the same episode of care,
while recognizing that some features of
the IPPS cannot be translated directly
into the LTCH PPS.
For FY 2014, aggregate Medicare IPPS
operating DSH payments are projected
to be reduced to 95.7 percent of the
amount that would otherwise have been
paid under the statutory Medicare DSH
payment formula prior to the
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amendments made by the Affordable
Care Act. Accordingly, for FY 2014, the
calculation of the ‘‘IPPS comparable
amount’’ under § 412.529 and the ‘‘IPPS
equivalent amount’’ under § 412.534
and § 412.536 includes an applicable
operating Medicare DSH payment
amount that is equal to 95.7 percent of
the operating Medicare DSH payment
amount based the current statutory
Medicare DSH payment formula (that is,
the operating Medicare DSH payment
amount historically included in those
calculations). (We refer readers the FY
2012 IPPS/LTCH PPS final rule (76 FR
50766).)
In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28341 through
28342), we discussed that, for FY 2015,
based on the latest data available, we
project that the reduction in the amount
of Medicare DSH payments pursuant to
section 1886(r)(1) of the Act, along with
the proposed payments for
uncompensated care under section
1886(r)(2) of the Act, would result in
overall Medicare DSH payments
equaling 85.26 percent of the amount of
Medicare DSH payments that would
otherwise have been made in the
absence of amendments made by the
Affordable Care Act. Therefore, we
proposed that the calculation of the
‘‘IPPS comparable amount’’ under
§ 412.529 and the ‘‘IPPS equivalent
amount’’ under § 412.534 and § 412.536
for FY 2015 includes an applicable
operating Medicare DSH payment
amount that would be equal to 85.26
percent of the operating Medicare DSH
payment amount based on the statutory
Medicare DSH payment formula prior to
the amendments made by the Affordable
Care Act. We also proposed that,
consistent with our historical practice of
using the most recent data available, if
more recent data became available for
the final rule, we would use that data to
determine the percentage of the
operating Medicare DSH payment
amount based on the statutory Medicare
DSH payment formula prior to the
amendments made by the Affordable
Care Act used in the calculation of the
‘‘IPPS comparable amount’’ under
§ 412.529 and the ‘‘IPPS equivalent
amount’’ under § 412.534 and § 412.536
for FY 2015.
As discussed in greater detail in
section IV.F.3.d.(2) of the preamble of
this final rule, based on the most recent
data available, our estimate of 75
percent of the amount that would
otherwise have been paid as Medicare
DSH payments (under the methodology
outlined in section 1886(r)(2) of the Act)
will be adjusted to 76.19 percent of that
amount to reflect the change in the
percentage of individuals that are
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uninsured. The resulting amount will
then be used to determine the amount
of uncompensated care payments that
will be made to eligible IPPS hospitals
in FY 2015. In other words, Medicare
DSH payments prior to the amendments
made by the Affordable Care Act are
adjusted to 57.14 percent (the product of
75 percent and 76.19 percent) and the
resulting amount will be used to
calculate the uncompensated care
payments to eligible hospitals. As a
result, for FY 2015, we project that the
reduction in the amount of Medicare
DSH payments pursuant to section
1886(r)(1) of the Act, along with the
payments for uncompensated care
under section 1886(r)(2) of the Act, will
result in overall Medicare DSH
payments of 82.14 percent of the
amount of Medicare DSH payments that
would otherwise have been made in the
absence of amendments made by the
Affordable Care Act (that is, 25 percent
+ 57.14 percent = 82.14 percent).
We did not receive any public
comments on this proposal and
therefore we are adopting the policy as
final without modification. In this final
rule, for FY 2015, we are establishing
that the calculation of the ‘‘IPPS
comparable amount’’ under § 412.529
and the ‘‘IPPS equivalent amount’’
under § 412.534 and § 412.536 will
include an applicable operating
Medicare DSH payment amount that
will be equal to 82.14 percent of the
operating Medicare DSH payment
amount based on the statutory Medicare
DSH payment formula prior to the
amendments made by the Affordable
Care Act.
F. Computing the Adjusted LTCH PPS
Federal Prospective Payments for FY
2015
Section 412.525 sets forth the
adjustments to the LTCH PPS standard
Federal rate. Under § 412.525(c), the
standard Federal rate is adjusted to
account for differences in area wages by
multiplying the labor-related share of
the standard Federal rate by the
applicable LTCH PPS wage index (FY
2015 values are shown in Tables 12A
through 12D listed in section VI. of the
Addendum of this final rule and are
available via the Internet). The standard
Federal rate is also adjusted to account
for the higher costs of LTCHs located in
Alaska and Hawaii by the applicable
COLA factors (the FY 2015 factors are
shown in the chart in section V.C. of
this Addendum) in accordance with
§ 412.525(b). In this final rule, we are
establishing a standard Federal rate for
FY 2015 of $41,043.71 (applicable to
discharges from LTCHs that submit the
required quality reporting data for FY
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2015 in accordance with the LTCHQR
Program under section 1886(m)(5) of the
Act), as discussed above in section
V.A.2. of the Addendum to this final
rule. We illustrate the methodology to
adjust the LTCH PPS Federal standard
rate for FY 2015 in the following
example:
Example:
During FY 2015, a Medicare patient is
in an LTCH located in Chicago, Illinois
(CBSA 16974). The FY 2015 LTCH PPS
wage index value for CBSA 16974 is
1.0419 (obtained from Table 12A listed
in section VI. of the Addendum of this
final rule and available via the Internet
on the CMS Web site). The Medicare
patient is classified into MS–LTC–DRG
189 (Pulmonary Edema & Respiratory
Failure), which has a relative weight for
FY 2015 of 0.9098 (obtained from Table
11 listed in section VI. of the
Addendum of this final rule and
available via the Internet on the CMS
Web site). The LTCH submitted quality
reporting data for FY 2015 in
accordance with the LTCHQR Program
under section 1886(m)(5) of the Act.
To calculate the LTCH’s total adjusted
Federal prospective payment for this
Medicare patient in FY 2015, we
computed the wage-adjusted Federal
prospective payment amount by
multiplying the unadjusted FY 2015
standard Federal rate ($41,043.71) by
the labor-related share (62.306 percent)
and the wage index value (1.0419). This
wage-adjusted amount was then added
to the nonlabor-related portion of the
unadjusted standard Federal rate
(37.694 percent; adjusted for cost of
living, if applicable) to determine the
adjusted Federal rate, which is then
multiplied by the MS–LTC–DRG
relative weight (0.9098) to calculate the
total adjusted Federal LTCH PPS
prospective payment for FY 2015 ($38,
316.42). The table below illustrates the
components of the calculations in this
example.
Standard Federal Prospective Payment Rate * ...............................................................................................................................
Labor-Related Share .......................................................................................................................................................................
Labor-Related Portion of the Federal Rate .....................................................................................................................................
Wage Index (CBSA 16974) .............................................................................................................................................................
Wage-Adjusted Labor Share of Federal Rate .................................................................................................................................
Nonlabor-Related Portion of the Federal Rate ($41,043.71 × 0.37694) .........................................................................................
Adjusted Federal Rate Amount .......................................................................................................................................................
MS–LTC–DRG 189 Relative Weight ...............................................................................................................................................
Total Adjusted Federal Prospective Payment .................................................................................................................................
$41,043.71
× 0.62306
= $ 25,572.69
× 1.0419
= $ 26,644.19
+ $ 15,471.02
= $ 42,115.21
× 0.9098
= $ 38, 316.42
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* LTCH PPS standard Federal rate applicable to discharges from LTCHs that submit the required quality data in accordance with the LTCHQR
Program under section 1886(m)(5) of the Act).
VI. Tables Referenced in This Final Rule
and Available Only Through the
Internet on the CMS Web site
This section lists the tables referred to
throughout the preamble of this final
rule and in this Addendum. In the past,
a majority of these tables were
published in the Federal Register as
part of the annual proposed and final
rules. However, similar to FYs 2012
through 2014, for the FY 2015
rulemaking cycle, the IPPS and LTCH
tables will not be published in the
Federal Register in the annual IPPS/
LTCH PPS proposed and final rules and
will be available only through the
Internet. Specifically, all IPPS Tables
listed below with the exception of IPPS
Tables 1A, 1B, 1C, and 1D, and LTCH
PPS Table 1E will be available only
through the Internet. IPPS Tables 1A,
1B, 1C, and 1D, and LTCH PPS Table 1E
are displayed at the end of this section
and will continue to be published in the
Federal Register as part of the annual
proposed and final rules.
As discussed in sections II.G.11. and
13. of the preamble of this final rule,
Tables 6A through 6F will not be issued
with this FY 2015 final rule because
there are no new, revised, or deleted
diagnosis or procedure codes for FY
2015. As discussed in section IV.D. of
this final rule, section 106 of the
Protecting Access to Medicare Act of
2014 (Pub. L. 113–93), enacted on April
1, 2014, extended, through the first half
of FY 2015 (that is, for discharges
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occurring before April 1, 2015), the
temporary changes in the low-volume
hospital definition and methodology for
determining the payment adjustment
originally made by the Affordable Care
Act (and extended by subsequent
legislation). We refer the reader to
section IV.D. of the preamble of this
final rule for complete details on the
low-volume hospital payment
adjustment. Therefore, Table 14
associated with this final rule lists the
FY 2015 low-volume payment
adjustments for potentially eligible
hospitals that also meet the distance
criterion for low-volume hospital status.
As discussed in section IV.H.11. of the
preamble of this final rule, we are
providing proxy FY 2015 readmission
payment adjustment factors in Table
15A issued with this final rule. After the
completion of the review and
corrections process, we will publish the
final FY 2015 readmissions payment
adjustment factors in Table 15B on the
CMS IPPS Web site. In addition, under
the HAC Reduction Program established
by section 3008 of the Affordable Care
Act, a hospital’s total payment may be
reduced by 1 percent if it is in the
lowest HAC performance quartile.
However, as discussed in section IV.J. of
the preamble of this final rule, we are
not providing the hospital-level data
(such as a proxy list of providers subject
to the HAC Reduction Program in FY
2015 in Table 17) in conjunction with
this final rule. Finally, a hospital’s
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Factor 3 is the proportion of the
uncompensated care amount that a DSH
will receive under section 3133 of the
Affordable Care Act. Factor 3 is the
hospital’s estimated number of
Medicaid days and Medicare SSI days
relative to the estimate of all DSHs’
Medicaid days and Medicare SSI days.
Therefore, Table 18 contains the FY
2015 Medicare DSH uncompensated
care payment Factor 3 for all hospitals
and identifies whether or not a hospital
is projected to receive DSH and,
therefore, eligible to receive the
additional payment for uncompensated
care for FY 2015.
Readers who experience any problems
accessing any of the tables that are
posted on the CMS Web sites identified
below should contact Michael Treitel at
(410) 786–4552.
The following IPPS tables for this FY
2015 final rule are available only
through the Internet on the CMS Web
site at: http://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html. Click on
the link on the left side of the screen
titled, ‘‘FY 2015 IPPS Final Rule Home
Page’’ or ‘‘Acute Inpatient—Files for
Download’’.
Table 2–1.—Hospital Average Hourly
Wages for Federal Fiscal Years 2013
(2009 Wage Data), 2014 (2010 Wage
Data), and 2015 (2011 Wage Data); and
3-Year Average of Hospital Average
Hourly Wages; Based on CBSA
Delineations used in FY 2014
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Table 2–2.—Acute Care Hospitals
Case-Mix Indexes for Discharges
Occurring in Federal Fiscal Year 2012;
Hospital Wage Indexes for Federal
Fiscal Year 2015; Hospital Average
Hourly Wages for Federal Fiscal Years
2013 (2009 Wage Data), 2014 (2010
Wage Data), and 2015 (2011 Wage Data;
Based on FY 2015 CBSA Delineations);
and 3-Year Average of Hospital Average
Hourly Wages
Table 3A–1.—FY 2015 and 3-Year*
Average Hourly Wage for Acute Care
Hospitals in Urban Areas by CBSA;
Based on CBSA Delineations Used in FY
2014
Table 3A–2.—FY 2015 and 3-Year*
Average Hourly Wage for Acute Care
Hospitals in Urban Areas by CBSA;
Based on CBSA Delineations Used in FY
2015
Table 3B–1.—FY 2015 and 3-Year*
Average Hourly Wage for Acute Care
Hospitals in Rural Areas by CBSA;
Based on CBSA Delineations Used in FY
2014
Table 3B–2.—FY 2015 and 3-Year*
Average Hourly Wage for Acute Care
Hospitals in Rural Areas by CBSA;
Based on CBSA Delineations Used in FY
2015
Table 4A–1.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals in Urban Areas by
CBSA and by State—FY 2015; Based on
CBSA Delineations Used in FY 2014.
Table 4A–2.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals in Urban Areas by
CBSA and by State—FY 2015; Based on
CBSA Delineations Used in FY 2015.
Table 4B–1.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals in Rural Areas by
CBSA and by State—FY 2015; Based on
CBSA Delineations Used in FY 2014.
Table 4B–2.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals in Rural Areas by
CBSA and by State—FY 2015; Based on
CBSA Delineations Used in FY 2015.
Table 4C–1.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals That Are
Reclassified by CBSA and by State—FY
2015; Based on CBSA Delineations Used
in FY 2014.
Table 4C–2.—Wage Index and Capital
Geographic Adjustment Factor (GAF) for
Acute Care Hospitals That Are
Reclassified by CBSA and by State—FY
2015; Based on CBSA Delineations Used
in FY 2015.
Table 4D–1.—States Designated as
Frontier, with Acute Care Hospitals
Receiving at a Minimum the Frontier
State Floor Wage Index; Urban Areas
with Acute Care Hospitals Receiving the
Statewide Rural Floor or Imputed Floor
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Wage Index—FY 2015; Based on CBSA
Delineations Used in FY 2014.
Table 4D–2.—States Designated as
Frontier, with Acute Care Hospitals
Receiving at a Minimum the Frontier
State Floor Wage Index; Urban Areas
with Acute Care Hospitals Receiving the
Statewide Rural Floor or Imputed Floor
Wage Index—FY 2015; Based on CBSA
Delineations Used in FY 2015.
Table 4E–1.—Urban CBSAs and
Constituent Counties for Acute Care
Hospitals—FY 2015; Based on CBSA
Delineations Used in FY 2014.
Table 4E—2.—Urban CBSAs and
Constituent Counties for Acute Care
Hospitals—FY 2015; Based on CBSA
Delineations Used in FY 2015.
Table 4F–1.—Puerto Rico Wage Index
and Capital Geographic Adjustment
Factor (GAF) for Acute Care Hospitals
by CBSA—FY 2015; Based on CBSA
Delineations Used in FY 2014.
Table 4F–2.—Puerto Rico Wage Index
and Capital Geographic Adjustment
Factor (GAF) for Acute Care Hospitals
by CBSA—FY 2015; Based on CBSA
Delineations Used in FY 2015.
Table 4J.—Out-Migration Adjustment
for Acute Care Hospitals—FY 2015
Table 5.—List of Medicare Severity
Diagnosis-Related Groups (MS–DRGs),
Relative Weighting Factors, and
Geometric and Arithmetic Mean Length
of Stay—FY 2015
Table 6I.—Major CC List—FY 2015
Table 6J.—Complete CC List—FY
2015
Table 6K.—Complete List of CC
Exclusions—FY 2015
Table 7A.—Medicare Prospective
Payment System Selected Percentile
Lengths of Stay: FY 2013 MedPAR
Update—March 2014 GROUPER V31.0
MS–DRGs
Table 7B.—Medicare Prospective
Payment System Selected Percentile
Lengths of Stay: FY 2013 MedPAR
Update—March 2014 GROUPER V32.0
MS–DRGs
Table 8A.—FY 2015 Statewide
Average Operating Cost-to-Charge Ratios
(CCRs) for Acute Care Hospitals (Urban
and Rural)
Table 8B.—FY 2015 Statewide
Average Capital Cost-to-Charge Ratios
(CCRs) for Acute Care Hospitals
Table 9A–1.—Hospital
Reclassifications and Redesignations—
FY 2015; Based on CBSA Delineations
Used in FY 2014.
Table 9A–2.—Hospital
Reclassifications and Redesignations—
FY 2015; Based on CBSA Delineations
Used in FY 2015.
Table 9C–1.—Hospitals Redesignated
as Rural under Section 1886(d)(8)(E) of
the Act—FY 2015; Based on CBSA
Delineations Used in FY 2014.
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Table 9C–2.—Hospitals Redesignated
as Rural under Section 1886(d)(8)(E) of
the Act—FY 2015; Based on CBSA
Delineations Used in FY 2015.
Table 10.—New Technology Add-On
Payment Thresholds 1,2 for Applications
for FY 2016
Table 14.—List of Hospitals with
Fewer than 1,600 Medicare Discharges
Based on the March 2014 Update of the
FY 2013 MedPAR File and Potentially
Eligible Hospitals’ FY 2015 LowVolume Payment Adjustment for
Discharges Occurring Before April 1,
2015 (Eligibility for the low-volume
payment adjustment is also dependent
upon meeting the mileage criteria
specified at § 412.101(b)(2)(ii) of the
regulations.)
Table 15A.—FY 2015 Proxy
Readmissions Adjustment Factors
Table 16.—Updated Proxy Hospital
Inpatient Value-Based Purchasing (VBP)
Program Adjustment Factors for FY
2015
Table 18.—FY 2015 Medicare DSH
Uncompensated Care Payment Factor 3
The following LTCH PPS tables for
this FY 2015 final rule are available
only through the Internet on the CMS
Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/LongTermCareHospitalPPS/
index.html under the list item for
Regulation Number CMS–1607–F.
Table 8C.—FY 2015 Statewide
Average Total Cost-to-Charge Ratios
(CCRs) for LTCHs (Urban and Rural)
Table 11.—MS–LTC–DRGs, Relative
Weights, Geometric Average Length of
Stay, Short-Stay Outlier (SSO)
Threshold, and ‘‘IPPS Comparable
Threshold’’ for Discharges Occurring
from October 1, 2014 through
September 30, 2015 under the LTCH
PPS
Table 12A.—LTCH PPS Wage Index
for Urban Areas under the New OMB
CBSA Delineations for Discharges
Occurring From October 1, 2014
through September 30, 2015
Table 12B.—LTCH PPS Wage Index
for Rural Areas under the New OMB
CBSA Delineations for Discharges
Occurring from October 1, 2014 through
September 30, 2015
Table 12C.—LTCH PPS Wage Index
for Urban Areas under the Current
CBSA Designations for Discharges
Occurring from October 1, 2014 through
September 30, 2015
Table 12D.—LTCH PPS Wage Index
for Rural Areas under the Current CBSA
Designations for Discharges Occurring
from October 1, 2014 through
September 30, 2015
Table 13A.—Composition of LowVolume Quintiles for MS–LTC–DRGs—
FY 2015
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Table 13B.—No-Volume MS–LTC–
DRG Crosswalk for FY 2015
TABLE 1A—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR (69.6 PERCENT LABOR
SHARE/30.4 PERCENT NONLABOR SHARE IF WAGE INDEX IS GREATER THAN 1)—FY 2015
Hospital submitted quality data
and is a meaningful EHR user
(Update = 2.2 percent)
Hospital did NOT submit quality
data and is a meaningful EHR
user (update = 1.475 percent)
Hospital submitted quality data
and is NOT a meaningful EHR
user (update = 1.475 percent)
Hospital did NOT submit quality
data and is NOT a meaningful
EHR user (update = 0.75
percent)
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
$3,780.13
$1,651.09
$3,753.31
$1,639.38
$3,753.31
$1,639.38
$3,726.50
$1,627.66
TABLE 1B—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR (62 PERCENT LABOR SHARE/
38 PERCENT NONLABOR SHARE IF WAGE INDEX IS LESS THAN OR EQUAL TO 1)—FY 2015
Hospital submitted quality data
and is a meaningful EHR user
(Update = 2.2 percent)
Hospital did NOT submit quality
data and is a meaningful EHR
user (Update = 1.475 percent)
Hospital submitted quality data
and is NOT a meaningful EHR
user (Update = 1.475 percent)
Hospital did NOT submit quality
data and is NOT a meaningful
EHR user (Update = 0.75
percent)
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
Labor
Nonlabor
$3,367.36
$2,063.86
$3,343.47
$2,049.22
$3,343.47
$2,049.22
$3,319.58
$2,034.58
TABLE 1C—ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR PUERTO RICO, LABOR/NONLABOR (NATIONAL: 62 PERCENT LABOR SHARE/38 PERCENT NONLABOR SHARE BECAUSE WAGE INDEX IS LESS THAN OR EQUAL TO 1; PUERTO
RICO: 63.2 PERCENT LABOR SHARE/36.8 PERCENT NONLABOR SHARE IF WAGE INDEX IS GREATER THAN 1 OR 62
PERCENT LABOR SHARE/38 PERCENT NONLABOR SHARE IF WAGE INDEX IS LESS THAN OR EQUAL TO 1—FY 2015
Rates if wage index is greater than 1
Standardized
Amount
Labor
Nonlabor
Rates if wage
index is less
than or equal
to 1
Labor
National 1
..........................................................................................................
Puerto Rico ......................................................................................................
1 For
Not Applicable
$1,608.39
Not Applicable
$936.54
$3,367.36
$1,577.86
$2,063.86
$967.07
FY 2015, there are no CBSAs in Puerto Rico with a national wage index greater than 1.
TABLE 1D—CAPITAL STANDARD FEDERAL PAYMENT RATE—FY 2015
Rate
National ................................................................................................................................................................................................
Puerto Rico ..........................................................................................................................................................................................
$434.26
$209.10
TABLE 1E—LTCH STANDARD FEDERAL PROSPECTIVE PAYMENT RATE—FY 2015
Full Update
(2.2 Percent)
Standard Federal Rate ............................................................................................................................................
$41,043.71
Reduced
Update*
(0.2 Percent)
$40,240.51
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* For LTCHs that fail to submit quality reporting data for FY 2015 in accordance with the LTCH Quality Reporting (LTCHQR) Program, the annual update is reduced by 2.0 percentage points as required by section 1886(m)(5) of the Act.
Appendix A: Economic Analyses
I. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this final
rule as required by Executive Order 12866 on
Regulatory Planning and Review (September
30, 1993), Executive Order 13563 on
Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility
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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 (March 22, 1995, Pub. L.
104–4), Executive Order 13132 on Federalism
(August 4, 1999), and the Congressional
Review Act (5 U.S.C. 804(2)).
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
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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. A
regulatory impact analysis (RIA) must be
prepared for major rules with economically
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significant effects ($100 million or more in
any 1 year).
We have determined that this final rule is
a major rule as defined in 5 U.S.C. 804(2). We
estimate that the changes for FY 2015 acute
care hospital operating and capital payments
will redistribute amounts in excess of $100
million to acute care hospitals. The
applicable percentage increase to the IPPS
rates required by the statute, in conjunction
with other payment changes in this final rule,
will result in an estimated $654 million
decrease in FY 2015 operating payments (or
¥0.6 percent change) and an estimated $132
million increase in FY 2015 capital payments
(or 1.6 percent change). These changes are
relative to payments made in FY 2014. The
impact analysis of the capital payments can
be found in section I.J. of this Appendix. In
addition, as described in section I.K. of this
Appendix, LTCHs are expected to experience
an increase in payments by $62 million in FY
2015 relative to FY 2014.
Our operating impact estimate includes the
¥0.8 percent documentation and coding
adjustment applied to the IPPS standardized
amount, which represents part of the
recoupment required under section 631 of
the ATRA. In addition, our operating
payment impact estimate includes the 2.2
percent hospital update to the standardized
amount (which includes the estimated 2.9
percent market basket update less 0.5
percentage point for the multifactor
productivity adjustment and less 0.2
percentage point required under the
Affordable Care Act). The estimates of IPPS
operating payments to acute care hospitals do
not reflect any changes in hospital
admissions or real case-mix intensity, which
will also affect overall payment changes.
The analysis in this Appendix, in
conjunction with the remainder of this
document, demonstrates that this final rule is
consistent with the regulatory philosophy
and principles identified in Executive Orders
12866 and 13563, the RFA, and section
1102(b) of the Act. This final rule will affect
payments to a substantial number of small
rural hospitals, as well as other classes of
hospitals, and the effects on some hospitals
may be significant. Finally, in accordance
with the provisions of Executive Order
12866, the Executive Office of Management
and Budget has reviewed this final rule.
B. Statement of Need
This final rule is necessary in order to
make payment and policy changes under the
Medicare IPPS for Medicare acute care
hospital inpatient services for operating and
capital-related costs as well as for certain
hospitals and hospital units excluded from
the IPPS. This final rule also is necessary to
make payment and policy changes for
Medicare hospitals under the LTCH PPS
payment system.
C. Objectives of the IPPS
The primary objective of the IPPS is to
create incentives for hospitals to operate
efficiently and minimize unnecessary costs
while at the same time ensuring that
payments are sufficient to adequately
compensate hospitals for their legitimate
costs in delivering necessary care to
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Medicare beneficiaries. In addition, we share
national goals of preserving the Medicare
Hospital Insurance Trust Fund.
We believe that the changes in this final
rule will further each of these goals while
maintaining the financial viability of the
hospital industry and ensuring access to high
quality health care for Medicare
beneficiaries. We expect that these changes
will ensure that the outcomes of the
prospective payment systems are reasonable
and equitable while avoiding or minimizing
unintended adverse consequences.
D. Limitations of Our Analysis
The following quantitative analysis
presents the projected effects of our policy
changes, as well as statutory changes
effective for FY 2015, on various hospital
groups. We estimate the effects of individual
policy changes by estimating payments per
case while holding all other payment policies
constant. We use the best data available, but,
generally, we do not attempt to make
adjustments for future changes in such
variables as admissions, lengths of stay, or
case-mix.
E. Hospitals Included in and Excluded From
the IPPS
The prospective payment systems for
hospital inpatient operating and capitalrelated costs of acute care hospitals
encompass most general short-term, acute
care hospitals that participate in the
Medicare program. There were 32 Indian
Health Service hospitals in our database,
which we excluded from the analysis due to
the special characteristics of the prospective
payment methodology for these hospitals.
Among other short-term, acute care hospitals,
hospitals in Maryland are paid in accordance
with the Maryland All-Payer Model, and
hospitals located outside the 50 States, the
District of Columbia, and Puerto Rico (that is,
5 short-term acute care hospitals located in
the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa)
receive payment for inpatient hospital
services they furnish on the basis of
reasonable costs, subject to a rate-of-increase
ceiling.
As of March 2014, there were 3,396 IPPS
acute care hospitals included in our analysis.
This represents approximately 56 percent of
all Medicare-participating hospitals. The
majority of this impact analysis focuses on
this set of hospitals. There also are
approximately 1,326 CAHs. These small,
limited service hospitals are paid on the basis
of reasonable costs rather than under the
IPPS. IPPS-excluded hospitals and units
include IPFs, IRFs, LTCHs, RNHCIs,
children’s hospitals, 11 cancer hospitals, and
5 short-term acute care hospitals located in
the Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa,
which are paid under separate payment
systems. Changes in the prospective payment
systems for IPFs and IRFs are made through
separate rulemaking. Payment impacts for
these IPPS-excluded hospitals and units are
not included in this final rule. The impact of
the update and policy changes to the LTCH
PPS for FY 2015 is discussed in section I.L.
of this Appendix.
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F. Effects on Hospitals and Hospital Units
Excluded From the IPPS
As of March 2014, there were 98 children’s
hospitals, 11 cancer hospitals, 5 short-term
acute care hospitals located in the Virgin
Islands, Guam, the Northern Mariana Islands
and American Samoa, and 18 RNHCIs being
paid on a reasonable cost basis subject to the
rate-of-increase ceiling under § 413.40. (In
accordance with § 403.752(a) of the
regulation, RNHCIs are paid under § 413.40.)
Among the remaining providers, 245
rehabilitation hospitals and 897
rehabilitation units, and 431 LTCHs, are paid
the Federal prospective per discharge rate
under the IRF PPS and the LTCH PPS,
respectively, and 490 psychiatric hospitals
and 1,136 psychiatric units are paid the
Federal per diem amount under the IPF PPS.
As stated above, IRFs and IPFs are not
affected by the rate updates discussed in this
final rule. The impacts of the changes on
LTCHs are discussed in section I.K. of this
Appendix.
For children’s hospitals, the 11 cancer
hospitals, the 5 short-term acute care
hospitals located in the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, and RNHCIs, the update of the rateof-increase limit (or target amount) is the
estimated FY 2015 percentage increase in the
IPPS operating market basket, consistent with
section 1886(b)(3)(B)(ii) of the Act, and
§§ 403.752(a) and 413.40 of the regulations.
As discussed in section IV. of the preamble
of the FY 2014 IPPS/LTCH PPS final rule, we
rebased the IPPS operating market basket to
a FY 2010 base year. Therefore, we are using
the percentage increase in the FY 2010-based
IPPS operating market basket to update the
target amounts for FY 2015 and subsequent
fiscal years for children’s hospitals, the 11
cancer hospitals, the 5 short-term acute care
hospitals located in the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, and RNHCIs that are paid based on
reasonable costs subject to the rate-ofincrease limits. Consistent with current law,
based on IHS Global Insight, Inc.’s second
quarter 2014 forecast of the FY 2010-based
market basket increase, we are estimating
that the FY 2015 update based on the IPPS
operating market basket is 2.9 percent (that
is, the current estimate of the market basket
rate-of-increase). However, the Affordable
Care Act requires an adjustment for
multifactor productivity (currently estimated
to be 0.5 percentage point for FY 2015) and
a 0.2 percentage point reduction to the
market basket update resulting in a 2.2
percent applicable percentage increase for
IPPS hospitals that submit quality data and
are meaningful EHR users, as discussed in
section IV.B. of the preamble of this final
rule. Children’s hospitals, the 11 cancer
hospitals, the 5 short-term acute care
hospitals located in the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, and RNCHIs that continue to be paid
based on reasonable costs subject to rate-ofincrease limits under § 413.40 of the
regulations are not subject to the reductions
in the applicable percentage increase
required under the Affordable Care Act.
Therefore, for those hospitals paid under
§ 413.40 of the regulations, the update is the
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percentage increase in the FY 2015 IPPS
operating market basket, estimated at 2.9
percent, without the reductions required
under the Affordable Care Act.
The impact of the update in the rate-ofincrease limit on those excluded hospitals
depends on the cumulative cost increases
experienced by each excluded hospital since
its applicable base period. For excluded
hospitals that have maintained their cost
increases at a level below the rate-of-increase
limits since their base period, the major effect
is on the level of incentive payments these
excluded hospitals receive. Conversely, for
excluded hospitals with cost increases above
the cumulative update in their rate-ofincrease limits, the major effect is the amount
of excess costs that will not be paid.
We note that, under § 413.40(d)(3), an
excluded hospital that continues to be paid
under the TEFRA system and whose costs
exceed 110 percent of its rate-of-increase
limit receives its rate-of-increase limit plus
the lesser of: (1) 50 percent of its reasonable
costs in excess of 110 percent of the limit, or
(2) 10 percent of its limit. In addition, under
the various provisions set forth in § 413.40,
hospitals can obtain payment adjustments for
justifiable increases in operating costs that
exceed the limit.
G. Quantitative Effects of the Policy Changes
Under the IPPS for Operating Costs
1. Basis and Methodology of Estimates
In this final rule, we are announcing policy
changes and payment rate updates for the
IPPS for FY 2015 for operating costs of acute
care hospitals. The FY 2015 updates to the
capital payments to acute care hospitals are
discussed in section I.J. of this Appendix.
Based on the overall percentage change in
payments per case estimated using our
payment simulation model, we estimate that
total FY 2015 operating payments will
decrease by 0.6 percent compared to FY
2014. In addition to the applicable
percentage increase, this amount reflects the
FY 2015 recoupment adjustment for
documentation and coding described in
section II.D. of the preamble of this final rule
of ¥0.8 percent to the IPPS national
standardized amounts. The impacts do not
reflect changes in the number of hospital
admissions or real case-mix intensity, which
will also affect overall payment changes.
We have prepared separate impact analyses
of the changes to each system. This section
deals with the changes to the operating
inpatient prospective payment system for
acute care hospitals. Our payment simulation
model relies on the most recent available
data to enable us to estimate the impacts on
payments per case of certain changes in this
final rule. However, there are other changes
for which we do not have data available that
will allow us to estimate the payment
impacts using this model. For those changes,
we have attempted to predict the payment
impacts based upon our experience and other
more limited data.
The data used in developing the
quantitative analyses of changes in payments
per case presented below are taken from the
FY 2013 MedPAR file and the most current
Provider-Specific File (PSF) that is used for
payment purposes. Although the analyses of
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the changes to the operating PPS do not
incorporate cost data, data from the most
recently available hospital cost reports were
used to categorize hospitals. Our analysis has
several qualifications. First, in this analysis,
we do not make adjustments for future
changes in such variables as admissions,
lengths of stay, or underlying growth in real
case-mix. Second, due to the interdependent
nature of the IPPS payment components, it is
very difficult to precisely quantify the impact
associated with each change. Third, we use
various data sources to categorize hospitals
in the tables. In some cases, particularly the
number of beds, there is a fair degree of
variation in the data from the different
sources. We have attempted to construct
these variables with the best available source
overall. However, for individual hospitals,
some miscategorizations are possible.
Using cases from the FY 2013 MedPAR
file, we simulated payments under the
operating IPPS given various combinations of
payment parameters. As described above,
Indian Health Service hospitals and hospitals
in Maryland were excluded from the
simulations. The impact of payments under
the capital IPPS, or the impact of payments
for costs other than inpatient operating costs,
are not analyzed in this section. Estimated
payment impacts of the capital IPPS for FY
2015 are discussed in section I.J. of this
Appendix.
We discuss the following changes below:
• The effects of the application of the
documentation and coding adjustment and
the applicable percentage increase (including
the market basket update, the multifactor
productivity adjustment and the applicable
percentage reduction in accordance with the
Affordable Care Act) to the standardized
amount and hospital-specific rates.
• The effects of the changes to the relative
weights and MS–DRG grouper.
• The effects of the changes in hospitals’
wage index values reflecting updated wage
data from hospitals’ cost reporting periods
beginning during FY 2011, compared to the
FY 2010 wage data, and the adoption of the
new OMB delineations to calculate the FY
2015 wage index.
• The combined effects of the recalibration
of the MS–DRG relative weights as required
by section 1886(d)(4)(C) of the Act and the
wage index (including the updated wage data
and the adoption of new OMB labor market
area delineations), including the wage and
recalibration budget neutrality factors.
• The effects of the geographic
reclassifications by the MGCRB (as of
publication of this final rule) and the effects
of the adoption of new OMB labor market
area delineations on these reclassifications,
that will be effective for FY 2015.
• The effects of the rural floor and imputed
floor with the application of the national
budget neutrality factor applied to the wage
index where the rural floor and imputed floor
wage index are calculated based on the
adoption of the new OMB labor market area
delineations.
• The effects of the adoption of the new
labor market area delineations announced by
OMB in February 2013 on hospital
redesignations.
• The effects of the 3-year transition for
urban hospitals becoming rural under the
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new OMB delineations and the 1-year
transitional blended wage index for hospitals
whose FY 2015 wage indexes decrease solely
as a result of adopting the new OMB
delineations.
• The effects of the frontier State wage
index adjustment under the statutory
provision that requires that hospitals located
in States that qualify as frontier States to not
have a wage index less than 1.0. This
provision is not budget neutral.
• The effects of the implementation of
section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108–173, which
provides for an increase in a hospital’s wage
index if a threshold percentage of residents
of the county where the hospital is located
commute to work at hospitals in counties
with higher wage indexes.
• The effects of the policies for
implementation of the Hospital Readmissions
Reduction Program under section 1886(q) of
the Act, as added by section 3025 of the
Affordable Care Act, that adjusts a hospital’s
base operating DRG amount by an adjustment
factor to account for a hospital’s excess
readmissions.
• The effects of the policies for continued
implementation of section 3133 of the
Affordable Care Act that reduces Medicare
DSH payments to 25 percent of what
hospitals had been previously paid under
section 1886(d)(5)(F) of the Act and
establishes an additional payment to be made
to hospitals that receive DSH payments for
their relative share of the total amount of
uncompensated care.
• The total estimated change in payments
based on the FY 2015 policies relative to
payments based on FY 2014 policies that
include the applicable percentage increase of
2.2 percent (or 2.9 percent market basket
update with a reduction of 0.5 percentage
point for the multifactor productivity
adjustment, and a 0.2 percentage point
reduction, as required under the Affordable
Care Act). The total estimated change in
payments for FY 2015 reflects the extension
of MDH payment status for the first 6 months
of FY 2015, in accordance with the Protecting
Access to Medicare Act of 2014 (Pub. L. 113–
93) enacted on April 1, 2014.
We note that in the FY 2015 IPPS/LTCH
PPS proposed rule we provided the effects of
section 1886(o) of the Act, as added by
section 3008 of the Affordable Care Act,
which establishes payment reductions under
the HAC Reduction Program. Hospitals
ranked in the lowest 25 percent of
performance on HACs are subject to a 1percent reduction in total IPPS payments. We
are finalizing policies related to the HAC
Reduction Program in this final rule, but as
described earlier in this final rule, because
the HAC scores are currently undergoing 30day review and correction by the hospitals,
we are not providing hospital-level data or a
hospital-level payment impact in conjunction
with the FY 2015 IPPS Final Rule. We do
provide an estimate of the overall payment
impact in section I.H.8. of this Appendix A
along with a discussion of the impact of these
changes.
To illustrate the impact of the FY 2015
changes, our analysis begins with a FY 2014
baseline simulation model using: the FY
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2015 applicable percentage increase of 2.2
percent and the documentation and coding
recoupment adjustment of 0.8 percent to the
Federal standardized amount; the FY 2014
MS–DRG GROUPER (Version 31.0); the
current FY 2014 CBSA designations for
hospitals based on the OMB definitions; the
FY 2014 wage index; and no MGCRB
reclassifications. Outlier payments are set at
5.1 percent of total operating MS–DRG and
outlier payments for modeling purposes.
Section 1886(b)(3)(B)(viii) of the Act, as
added by section 5001(a) of Public Law 109–
171, as amended by section 4102(b)(1)(A) of
the ARRA (Pub. L. 111–5) and by section
3401(a)(2) of the Affordable Care Act (Pub. L.
111–148), provides that, for FY 2007 and
each subsequent year through FY 2014, the
update factor will include a reduction of 2.0
percentage points for any subsection (d)
hospital that does not submit data on
measures in a form and manner and at a time
specified by the Secretary. Beginning in FY
2015, the reduction is one-quarter of such
applicable percentage increase determined
without regard to section 1886(b)(3)(B)(ix),
(xi), or (xii) of the Act, or one-quarter of the
market basket update. Therefore, for FY 2015,
we are establishing that hospitals that do not
submit quality information under rules
established by the Secretary and that are
meaningful EHR users under section
1886(b)(3)(B)(ix) of the Act will receive an
applicable percentage increase of 1.475
percent. At the time that this impact was
prepared, 56 hospitals did not receive the full
market basket rate-of-increase for FY 2014
because they failed the quality data
submission process or did not choose to
participate. For purposes of the simulations
shown below, we modeled the payment
changes for FY 2015 using a reduced update
for these 56 hospitals. However, we do not
have enough information at this time to
determine which hospitals will not receive
the full update factor for FY 2015.
Beginning in FY 2015, in accordance with
section 1886(b)(3)(B)(ix) of the Act, a hospital
that has been identified as not an meaningful
EHR user will be subject to a reduction of
one-quarter of such applicable percentage
increase determined without regard to
section 1886(b)(3)(B)(ix), (xi), or (xii) of the
Act, or one-quarter of the market basket
update. Therefore, for FY 2015, we are
establishing that hospitals that are identified
as not meaningful EHR users and do submit
quality information under section
1886(b)(3)(B)(viii) of the Act will receive an
applicable percentage increase of 1.475
percent. Hospitals that are identified as not
meaningful EHR users under section
1886(b)(3)(B)(ix) of the Act and also do not
submit quality data under section
1886(b)(3)(B)(viii) of the Act will receive an
applicable percentage increase of 0.75
percent, which reflects a one-quarter
reduction of the market basket update for
failure to submit quality data and a onequarter reduction of the market basket update
for being identified as not a meaningful EHR
user. For FY 2015, we have yet to finalize a
list of hospitals that are not meaningful EHR
users under section 1886(b)(3)(B)(ix) of the
Act. Therefore, we are not including this
adjustment to the standardized amount (for
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those hospitals that are not meaningful EHR
users) in our modeling of aggregate payments
for FY 2015. We intend to release a final list
of hospitals that are not meaningful EHR
users in September 2014. Hospitals identified
on this list will be paid based on the
applicable standardized amount in Table 1A
and Table 1B for discharges occurring in FY
2015.
Each policy change, statutory or otherwise,
is then added incrementally to this baseline,
finally arriving at an FY 2015 model
incorporating all of the changes. This
simulation allows us to isolate the effects of
each change.
Our final comparison illustrates the
percent change in payments per case from FY
2014 to FY 2015. Three factors not discussed
separately have significant impacts here. The
first factor is the update to the standardized
amount. In accordance with section
1886(b)(3)(B)(i) of the Act, we are updating
the standardized amounts for FY 2015 using
an applicable percentage increase of 2.2
percent. This includes our forecasted IPPS
operating hospital market basket increase of
2.9 percent with a reduction of 0.5
percentage point for the multifactor
productivity adjustment and a 0.2 percentage
point reduction as required under the
Affordable Care Act. (Hospitals that fail to
comply with the quality data submission
requirements and are meaningful EHR users
would receive an update of 1.475 percent.
This update includes a reduction of onequarter of the market basket update for
failure to submit these data). We note that
hospitals that do comply with the quality
data submission requirements but are not
meaningful EHR users would receive an
update of 1.475 percent, which includes a
reduction of one-quarter of the market basket
update. Furthermore, hospitals that do not
comply with the quality data submission
requirements and also are not meaningful
EHR users would receive an update of 0.75
percent. However, as discussed earlier, we do
not have a list of hospitals that are not
meaningful EHR users and have not included
this adjustment to the standardized amount
(for those hospitals that are not meaningful
EHR users) in our modeling of aggregate
payments for FY 2015. Under section
1886(b)(3)(B)(iv) of the Act, the updates to
the hospital-specific amounts for SCHs and
MDHs also are equal to the applicable
percentage increase, or 2.2 percent if the
hospital submits quality data and is a
meaningful EHR user. In addition, we are
updating the Puerto Rico-specific amount by
an applicable percentage increase of 2.2
percent.
A second significant factor that affects the
changes in hospitals’ payments per case from
FY 2014 to FY 2015 is the change in
hospitals’ geographic reclassification status
from one year to the next. That is, payments
may be reduced for hospitals reclassified in
FY 2014 that are no longer reclassified in FY
2015. Conversely, payments may increase for
hospitals not reclassified in FY 2014 that are
reclassified in FY 2015.
A third significant factor is that we
currently estimate that actual outlier
payments during FY 2014 will be 5.71
percent of total MS–DRG payments. When
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the FY 2014 IPPS/LTCH PPS final rule was
published, we projected FY 2014 outlier
payments would be 5.1 percent of total MS–
DRG plus outlier payments; the average
standardized amounts were offset
correspondingly. The effects of the higher
than expected outlier payments during FY
2014 (as discussed in the Addendum to this
final rule) are reflected in the analyses below
comparing our current estimates of FY 2014
payments per case to estimated FY 2015
payments per case (with outlier payments
projected to equal 5.1 percent of total MS–
DRG payments).
2. Analysis of Table I
Table I displays the results of our analysis
of the changes for FY 2015. The table
categorizes hospitals by various geographic
and special payment consideration groups to
illustrate the varying impacts on different
types of hospitals. The top row of the table
shows the overall impact on the 3,396 acute
care hospitals included in the analysis.
The next four rows of Table I contain
hospitals categorized according to their
geographic location: all urban, which is
further divided into large urban and other
urban; and rural. There are 2,549 hospitals
located in urban areas included in our
analysis. Among these, there are 1,401
hospitals located in large urban areas
(populations over 1 million), and 1,148
hospitals in other urban areas (populations of
1 million or fewer). In addition, there are 847
hospitals in rural areas. The next two
groupings are by bed-size categories, shown
separately for urban and rural hospitals. The
final groupings by geographic location are by
census divisions, also shown separately for
urban and rural hospitals.
The second part of Table I shows hospital
groups based on hospitals’ FY 2015 payment
classifications, including any
reclassifications under section 1886(d)(10) of
the Act. For example, the rows labeled urban,
large urban, other urban, and rural show that
the numbers of hospitals paid based on these
categorizations after consideration of
geographic reclassifications (including
reclassifications under sections 1886(d)(8)(B)
and 1886(d)(8)(E) of the Act that have
implications for capital payments) are 2,563;
1,413; 1,150; and 833, respectively.
The next three groupings examine the
impacts of the changes on hospitals grouped
by whether or not they have GME residency
programs (teaching hospitals that receive an
IME adjustment) or receive Medicare DSH
payments, or some combination of these two
adjustments. There are 2,357 nonteaching
hospitals in our analysis, 795 teaching
hospitals with fewer than 100 residents, and
244 teaching hospitals with 100 or more
residents.
In the DSH categories, hospitals are
grouped according to their DSH payment
status, and whether they are considered
urban or rural for DSH purposes. The next
category groups together hospitals considered
urban or rural, in terms of whether they
receive the IME adjustment, the DSH
adjustment, both, or neither.
The next five rows examine the impacts of
the changes on rural hospitals by special
payment groups (SCHs, RRCs, and MDHs).
There were 193 RRCs, 325 SCHs, and 162
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MDHs (MDH status is extended through
March 31, 2015 only under Pub. L. 113–93),
124 hospitals that are both SCHs and RRCs,
and 15 hospitals that are MDHs and RRCs
(MDH status is extended through March 31,
2015 only under Pub. L. 113–93).
The next series of groupings are based on
the type of ownership and the hospital’s
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Medicare utilization expressed as a percent
of total patient days. These data were taken
from the FY 2012 or FY 2011 Medicare cost
reports.
The next two groupings concern the
geographic reclassification status of
hospitals. The first grouping displays all
urban hospitals that were reclassified by the
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MGCRB for FY 2015. The second grouping
shows the MGCRB rural reclassifications.
The final category shows the impact of the
policy changes on the 15 cardiac hospitals.
BILLING CODE 4120–01–P
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3,396
1.5
Frm 00557
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
Fmt 4701
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutrality3
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
(3)
(4)
Sfmt 4725
0
0
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality'
(5)
0
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
0
0
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
(9)
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
Hospital
Readmissions
Reduction Proeram11
(11)
0
0
0.1
-0.2
Changes
to
Medicare
DSH12
(12)
-1.3
All
F¥2015
Chanees13
(13)
-0.6 I
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All Hospitals
I
By Geographic
Location:
I
I
2,549
1.4
0
0
0.1
-0.1
0
0
0
0.1
-0.2
-1.4
-0.6
Urban hospitals
1,401
1.4
0.1
0.1
0.2
-0.3
0
0
0
0.1
-0.2
-1.4
-0.6
Large urban areas
1
I
1,148
1.5
0
-0.2
-0.2
0.1
0
0
0
0.2
-0.2
-1.3
-0.6
Other urban areas
1
I
847
1.8
-0.3
0.1
-0.2
1.5
-0.3
0
0
0.1
0
-0.9
-0.7 I
22AUR2
I
Rural hospitals
Bed Size (Urban):
I
666
1.5
-0.2
0.1
-0.1
-0.4
0.1
0.1
0
0.4
-0.2
-0.7
-o.3
0-99 beds
I
I
787
I 00-199 beds
i
I
1.4
-0.1
-0.1
-0.2
0
0.3
0
0
0.2
-0.3
-1.4
-o.1
1
I
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TABLE I.-IMPACT ANALYSIS OF CHANGES TO THE IPPS FOR OPERATING COSTS FOR FY 2015
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500 or more beds
(6)
(7)
(8)
No. of
Hospitals 1
(1)
455
1.5
-0.1
0
0
0.1
0
0.1
0
0.1
429
1.4
0
0
0.1
-0.3
0.1
0.1
0
212
1.4
0.2
0
0.2
-0.2
-0.2
-0.1
328
1.8
-0.3
-0.1
-0.4
0.4
-0.3
305
1.9
-0.4
0
-0.4
0.9
125
1.8
-0.3
0.1
-0.2
50
1.7
-0.2
0.1
39
1.7
-0.1
0.1
PO 00000
200-299 beds
FY2015
MGCRB
Reclassifications 6
Impact of
the New
OMB
CBSA
Designations 8
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
(4)
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
(3)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
Hospital
Readmissions
Reduction Pro2ram11
22AUR2
Changes
to
Medicare
DSH12
(12)
All
F¥2015
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(13)
-0.2
-1.1
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i
300-499 beds
Bed Size (Rural):
I
0-49 beds
i
50-99 beds
I
100-149 beds
I
150-199 beds
200 or more beds
ER22AU14.010
I
I
I
I
I
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
I
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
VerDate Mar<15>2010
Jkt 232001
Fmt 4701
(3)
(4)
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustmentl 0
(10)
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
120
1.4
0.1
0.8
0.8
1.3
2.8
-0.5
0.2
0.1
324
1.4
0.1
0.1
0.2
0.1
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0
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407
1.4
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397
1.4
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-0.6
153
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Sfmt 4725
E:\FR\FM\22AUR2.SGM
22AUR2
Changes
to
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DSH12
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All
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1
I
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
50411
ER22AU14.011
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
50412
VerDate Mar<15>2010
Jkt 232001
1.6
PO 00000
52
Frm 00560
Fmt 4701
(3)
(4)
0.1
0.1
0.2
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
-0.8
0
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
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Application of
the
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Wage
Index
and OutMigration
Adjustmentl 0
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Hospital
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0
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Changes
to
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I
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0.6
0.4
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1
E:\FR\FM\22AUR2.SGM
i
57
1.9
-0.4
0.7
0.2
1.1
-0.2
-0.2
0.2
0.2
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132
1.8
-0.3
-0.1
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0.1
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1
I
22AUR2
116
1.9
-0.3
0
-0.2
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-0.2
0.1
0
0
-0.1
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I
165
1.6
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I
102
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0
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168
1.7
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1.7
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61
2
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0
0
0
0.6
0
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East North Central
East South Central
West North Central
West South
Central
Mountain
ER22AU14.012
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
I
!
I
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
VerDate Mar<15>2010
Jkt 232001
2.3
PO 00000
24
Frm 00561
Fmt 4701
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
(3)
(4)
-0.7
0.8
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
-0.5
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
0.9
-0.2
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
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Application of
the
Frontier
Wage
Index
and OutMigration
Adjustmentl 0
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Hospital
Readmissions
Reduction Pro2ram11
(11)
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0
0.2
Changes
to
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(12)
-0.3
Pacific
All
F¥2015
Chan2es13
(13)
1.1
Sfmt 4725
By Payment
Classification:
I
I
I
E:\FR\FM\22AUR2.SGM
2,563
1.4
0
0
0.1
-0.1
0
0
0
0.1
-0.2
-1.4
-0.6
1,413
1.4
0.1
0.1
0.2
-0.3
0
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0
0.1
-0.2
-1.4
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1,150
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0
-0.2
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833
1.8
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I
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Other urban areas
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1.5
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1
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Fewer than 100
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795
100 or more
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-0.2
-1.4
-o.6
1
i
1.4
0.2
0.1
0.4
-0.1
-0.2
-0.1
0.1
0
-0.1
-1.6
-o.8
1
I
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
50413
ER22AU14.013
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
50414
VerDate Mar<15>2010
Jkt 232001
Fmt 4701
(6)
(7)
(8)
No. of
Hospitals 1
(1)
679
1.5
-0.1
-0.1
-0.1
0
0
0.2
0
0.2
-0.2
-0.3
1,588
1.4
0.1
0
0.1
-0.1
0
0
0
0.1
-0.2
-1.5
PO 00000
Frm 00562
FY2015
MGCRB
Reclassifications 6
Impact of
the New
OMB
CBSA
Designations 8
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
(4)
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
(3)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
(9)
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
Hospital
Readmissions
Reduction Pro2ram11
(11)
Changes
to
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(12)
All
F¥2015
Chan2es13
(13)
Sfmt 4725
UrbanDSH:
I
0.6 I
Non-DSH
I
-0.8
E:\FR\FM\22AUR2.SGM
100 or more beds
22AUR2
383
1.5
-0.3
0.2
-0.1
0
0
0.1
0
0.3
-0.2
-1
-o.8
373
2.1
-0.4
0
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0.2
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212
1.8
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1.8
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0
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24
1.4
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-0.2
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2.4
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0
0.2
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-1.3
137
1.4
-0.2
-0.1
-0.2
1
-0.6
-0.3
0.2
0.5
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-1.3
RuraiDSH:
SCH
RRC
100 or more beds
ER22AU14.014
i
I
I
Less than 100 beds
Less than 100 beds
I
1
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
I
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
VerDate Mar<15>2010
Jkt 232001
(3)
(4)
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustmentl 0
(10)
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
Both teaching and
DSH
842
1.4
0.1
0
0.2
-0.2
-0.1
0
0
0.1
Teaching and no
DSH
133
1.4
0
0
0
0.3
0.1
0.1
0
No teaching and
DSH
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1.5
-0.1
-0.1
-0.1
0
0.3
0.1
459
1.4
-0.1
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-0.2
-0.2
0
193
1.4
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0
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325
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0
PO 00000
Frm 00563
Fmt 4701
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
Hospital
Readmissions
Reduction Pro2ram11
Sfmt 4725
E:\FR\FM\22AUR2.SGM
22AUR2
Changes
to
Medicare
DSH12
(12)
All
F¥2015
Chan2es13
-0.1
-1.6
-0.9
0.2
-0.3
-0.3
0.9
0
0.1
-0.2
-1.4
-0.7
0.2
0
0.2
-0.2
-0.3
0.7
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0
0
0.6
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0
0
0
0
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I
Urban teaching
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Special Hospital
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i
SCH
162
2
-0.4
0
-0.4
0.3
-0.2
0
0
0.1
-0.1
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-5.3
124
2.1
-0.4
0
-0.3
0.3
0
0
0
0.1
0.1
-0.3
1
MDH
SCHandRRC
1
I
I
I
I
I
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
50415
ER22AU14.015
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
50416
VerDate Mar<15>2010
Jkt 232001
Fmt 4701
(3)
(4)
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
15
2
-0.4
-0.1
-0.4
0.5
-0.1
-0.1
0
0
1,935
1.5
0
0.1
0.1
0
0
0
0
0.1
PO 00000
Frm 00564
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
FY2015
DRG,Rel.
Wts.,
Wage
Index
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with Wage
and
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Budget
Neutrality5
(5)
(9)
Hospital
Readmissions
Reduction Program11
Sfmt 4725
Changes
to
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DSH12
(12)
All
F¥2015
Changes13
0
-0.3
-8.1
-0.2
-1.2
-o.4
(11)
(13)
MDHandRRC
Type of
Ownership:
E:\FR\FM\22AUR2.SGM
Voluntary
892
1.4
0
-0.2
-0.2
0.2
0.1
0.1
-0.1
0.1
-0.2
-1.5
542
1.5
0
-0.1
-0.1
-0.1
0
0
0
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Proprietary
I
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Government
Medicare
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I
501
1.4
0
0.1
0.2
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0
0
0
0
-0.1
-3
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2,081
1.4
0
0
0
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0
0
0
0.1
-0.2
-1.2
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601
1.6
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0.8
0.1
0.2
0
0.1
-0.2
-0.6
-0.1
0-25
50-65
I
I
25-50
ER22AU14.016
!
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutrality'
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
VerDate Mar<15>2010
Jkt 232001
Fmt 4701
(3)
(4)
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
93
1.6
-0.2
-0.2
-0.3
0.2
0.5
-0.1
0
0.2
719
1.5
-0.1
0
0
2.4
0.1
0
-0.1
2,677
1.4
0
0
0
-0.7
0
0
450
1.4
0
0
0.1
2.4
0.2
2,054
1.4
0
0
0.1
-0.8
269
1.8
-0.3
0
-0.2
2.5
PO 00000
Frm 00565
F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
Hospital
Readmissions
Reduction Proeram11
Sfmt 4725
E:\FR\FM\22AUR2.SGM
22AUR2
Changes
to
Medicare
DSH 12
(12)
All
F¥2015
Chanees13
-0.2
-0.6
-0.7
0
-0.2
-1.1
-0.2
i
0
0.1
-0.2
-1.4
-0.7
I
0
-0.1
0
-0.2
-1.2
-0.1
0
0
0
0.1
-0.2
-1.4
-0.7
-0.3
0
0
0
-0.1
-0.9
-oA
(9)
(11)
(13)
!
Over65
FY 2015
Reclassifications
by the Medicare
Geographic
Classification
Review Board:
All Reclassified
Hospitals
Non-Reclassified
Hospitals
Urban Hospitals
Reclassified
Urban
Nonreclassified
Hospitals, FY 2015
All Rural Hospitals
Reclassified FY
2015
Rural
N onreclassified
Hospitals FY 2015
i
I
I
514
1.9
-0.4
0
-0.3
-0.1
-0.2
-0.1
0
0.3
0.1
-0.9
-0.91
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
18:25 Aug 21, 2014
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutralitr
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F¥2015
Wage Data
with
Application of
Wage
Budget
Neutrality4
(4)
FY2015
DRG,Rel.
Wts.,
Wage
Index
Changes
with Wage
and
Recalibration
Budget
Neutrality5
(5)
FY2015
MGCRB
Reclassifications 6
Rural
Floor and
Imputed
Floor
with
Application of
National
Rural
Floor
Budget
Neutrality7
Impact of
the New
OMB
CBSA
Designations 8
(6)
(7)
(8)
Application of
theCBSA
Transition
Wage
Index
with
Budget
Neutrality 9
Application of
the
Frontier
Wage
Index
and OutMigration
Adjustment10
(10)
No. of
Hospitals 1
(1)
Hospital
Rate
Update
and
Documentation and
Coding
Adjustment 2
(2)
50
1.9
-0.3
-0.1
-0.4
-0.3
-0.1
-0.4
0.2
2
64
1.6
-0.3
0.3
0
3.1
-0.5
0.2
0.1
15
1.4
1.1
0.1
1.3
-0.9
-0.1
0.1
-0.1
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22AUR2
ER22AU14.018
All Section 401
Reclassified
Hospitals
Other Reclassified
Hospitals (Section
1886(d)(8)(B))
FY2015
Weights
andDRG
Changes
with
Application of
Recalibration
Budget
Neutrality'
(3)
(9)
Hospital
Readmissions
Reduction Program11
Changes
to
Medicare
DSH12
(12)
All
F¥2015
Changes13
0
-0.6
-1.2
0.1
-0.1
-1.2
-2
0.7
0
-0.1
2.1
(11)
(13)
!
Specialty
Hospitals
Cardiac specialty
Hospitals
I
I
1 Because data necessary to classifY some hospitals by category were missing, the total number of hospitals in each category may not equal the national
total. Discharge data are from FY 2013, and hospital cost report data are from reporting periods beginning in FY 2012 and FY 2011.
2 This column displays the payment impact of the hospital rate update and the documentation and coding adjustment including the 2.2 percent adjustment to the
national standardized amount and hospital-specific rate (the estimated 2.9 percent market basket update reduced by the 0.5 percentage point for the multifactor
productivity adjustment and the 0.2 percentage point reduction under the Affordable Care Act) and the 0.8 percent documentation and coding adjustment to the
national standardized amount.
3 This column displays the payment impact of the changes to the Version 32.0 GROUPER, the changes to the relative weights and the recalibration of the
MS-DRG weights based on FY 2013 MedPAR data in accordance with section 1886(d)(4)(C)(iii) of the Act. This column displays the application of the
recalibration budget neutrality factor of0.997543 in accordance with section 1886(d)(4)(C)(iii) of the Act.
I
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This column displays the payment impact of the update to wage index data using FY 2011 cost report data and the new OMB labor market area delineations.
This column displays the payment impact of the application of the wage budget neutrality factor, which is calculated separately from the recalibration budget
neutrality factor, and is calculated in accordance with section 1886(d)(3)(E)(i) ofthe Act. The wage budget neutrality factor is 1.001443.
5 This column displays the combined payment impact of the changes in Columns 3 through 4 and the cumulative budget neutrality factor for MS-DRG and wage
changes in accordance with section 1886(d)(4)(C)(iii) of the Act and section 1886(d)(3)(E) of the Act. The cumulative wage and recalibration budget neutrality
factor of0.998982 is the product of the wage budget neutrality factor and the recalibration budget neutrality factor.
6 Shown here are the effects of geographic reclassifications by the Medicare Geographic Classification Review Board (MGCRB) along with the effects of the
adoption of the new OMB labor market area delineations on these reclassifications. The effects demonstrate the FY 2015 payment impact of going from no
reclassifications to the reclassifications scheduled to be in effect for FY 2015. Reclassification for prior years has no bearing on the payment impacts shown
here. This column reflects the geographic budget neutrality factor of0.990406.
7 This column displays the effects of the rural floor and imputed floor based on the adoption of new OMB labor market area delineations. The Affordable Care
Act requires the rural floor budget neutrality adjustment to be 100 percent national level adjustment. The rural floor budget neutrality factor (which includes the
imputed floor) applied to the wage index is 0.989507.
8 This column displays the effects of the adoption of the new OMB labor market area delineations. It does not reflect the 3-year transition for hospitals that are
currently located in urban counties that would become rural under the new OMB delineations and the one-year transition to the new OMB delineations where the
wage indexes are blended such that hospitals receive 50 percent of their wage index based on the new OMB delineations, and 50 percent of their wage index
based on their current labor market area. Rather, it shows the impact of the new OMB delineations fully implemented in FY 2015.
9This column shows the effects of both the 3-year transition for hospitals that are currently located in urban counties that become rural under the new OMB
delineations, and the 50/50 blended wage index adjustments in a budget neutral manner. For FY 2015, we are applying both the 3-year transition and 50/50
blended wage index adjustments in a budget neutral manner, with a budget neutrality factor of0.998859 applied to the standardized amount.
10 This column shows the combined impact of the policy required under section 10324 of the Affordable Care Act that hospitals located in frontier States have a
wage index no less than 1.0 and of section 1886(d)(13) of the Act, as added by section 505 of Pub. L. 108-173, which provides for an increase in a hospital's
wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes.
These are nonbudget neutral policies.
11 This column displays the impact of the implementation of the Hospital Readmissions Reduction Program, section 3025 of the Affordable Care Act, a
nonbudget neutral provision that adjusts a hospital's payment for excess readmissions.
12 This column displays the impact of the implementation of section 3133 of the Affordable Care Act that reduces Medicare DSH payments by 7 5 percent and
establishes an additional uncompensated care payment.
13 This column shows the changes in payments from FY 2014 to FY 2015. It reflects the impact of the FY 2015 hospital update and the adjustment for
documentation and coding. It also reflects changes in hospitals' reclassification status in FY 2015 compared to FY 2014, and the extension ofMDH payment
status for the first half ofFY 2015, under Pub. L. 113-93 enacted on Apri11, 2014. It incorporates all of the changes displayed in Columns 2, 5, 6, 7, 8, 9, 10, 11,
and 12 (the changes displayed in Columns 3 and 4 are included in Column 5). The sum of these impacts may be different from the percentage changes shown
here due to rounding and interactive effects.
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a. Effects of the Hospital Update and
Documentation and Coding Adjustment
(Column 2)
As discussed in section II.D. of the
preamble of this final rule, this column
includes the hospital update, including the
2.9 percent market basket update, the
reduction of 0.5 percentage point for the
multifactor productivity adjustment, and the
0.2 percentage point reduction in accordance
with the Affordable Care Act. In addition,
this column includes the FY 2015
documentation and coding recoupment
adjustment of ¥0.8 percent on the national
standardized amount as part of the
recoupment required by section 631 of the
ATRA. As a result, we are making a 1.4
percent update to the national standardized
amount. This column also includes the 2.2
percent update to the hospital-specific rates
which also includes the 2.9 percent market
basket update, the reduction of 0.5
percentage point for the multifactor
productivity adjustment, and the 0.2
percentage point reduction in accordance
with the Affordable Care Act.
Overall, hospitals will experience a 1.5
percent increase in payments primarily due
to the combined effects of the hospital update
and documentation and coding adjustment
on the national standardized amount and the
hospital update to the hospital-specific rate.
Hospitals that are paid under the hospitalspecific rate, namely SCHs, will experience
a 2.2 percent increase in payments; therefore,
hospital categories with SCHs paid under the
hospital-specific rate will experience
increases in payments of more than 1.4
percent.
b. Effects of the Changes to the MS–DRG
Reclassifications and Relative Cost-Based
Weights With Recalibration Budget
Neutrality (Column 3)
Column 3 shows the effects of the changes
to the MS–DRGs and relative weights with
the application of the recalibration budget
neutrality factor to the standardized amounts.
Section 1886(d)(4)(C)(i) of the Act requires us
annually to make appropriate classification
changes in order to reflect changes in
treatment patterns, technology, and any other
factors that may change the relative use of
hospital resources. Consistent with section
1886(d)(4)(C)(iii) of the Act, we calculated a
recalibration budget neutrality factor to
account for the changes in MS–DRGs and
relative weights to ensure that the overall
payment impact is budget neutral.
As discussed in section II.E. of the
preamble of this final rule, the FY 2015 MS–
DRG relative weights will be 100 percent
cost-based and 100 percent MS–DRGs. For
FY 2015, the MS–DRGs are calculated using
the FY 2013 MedPAR data grouped to the
Version 32.0 (FY 2015) MS–DRGs. The
methodology to calculate the relative weights
and the reclassification changes to the
GROUPER are described in more detail in
section II.H. of the preamble of this final rule.
The ‘‘All Hospitals’’ line in Column 3
indicates that changes due to the MS–DRGs
and relative weights will result in a 0.0
percent change in payments with the
application of the recalibration budget
neutrality factor of 0.997543 on to the
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standardized amount. Hospital categories
that generally treat more surgical cases than
medical cases will experience increases in
their payments due to the changes to the
relative weight methodology. Rural hospitals
will experience a 0.3 percent decrease in
payments because rural hospitals tend to
treat fewer surgical cases than medical cases,
while teaching hospitals with more than 100
residents will experience an increase in
payments by 0.2 percent as those hospitals
treat more surgical cases than medical cases.
c. Effects of the Wage Index Changes
(Column 4)
Column 4 shows the impact of updated
wage data using FY 2011 cost report data and
the new OMB labor market area delineations,
with the application of the wage budget
neutrality factor. The wage index is
calculated and assigned to hospitals on the
basis of the labor market area in which the
hospital is located. Under section
1886(d)(3)(E) of the Act, beginning with FY
2005, we delineate hospital labor market
areas based on the Core Based Statistical
Areas (CBSAs) established by OMB. The
current statistical areas used in FY 2014 were
based on OMB standards published on
December 27, 2000 (65 FR 82228) and Census
2000 data and Census Bureau population
estimates for 2007 and 2008 (OMB Bulletin
No. 10–02).
As stated in the FY 2014 IPPS/LTCH PPS
proposed rule (78 FR 27552) and final rule
(78 FR 50586), on February 28, 2013, OMB
issued OMB Bulletin No. 13–01, which
established revised delineations for
Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical
Areas, and provided guidance on the use of
the delineations of these statistical areas. In
order to implement these changes for the
IPPS, it is necessary to identify the new labor
market area delineation for each county and
hospital in the country. However, because
the bulletin was not issued until February 28,
2013, with supporting data not available
until later, and because the changes made by
the bulletin and their ramifications needed to
be extensively reviewed and verified, we
were unable to undertake such a lengthy
process before publication of the FY 2014
IPPS/LTCH PPS proposed rule and, thus, did
not implement changes to the wage index for
FY 2014 based on these new OMB
delineations. In the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50586), we stated that we
intended to propose changes to the wage
index based on the new OMB delineations in
this FY 2015 proposed rule. As discussed
below, in this final rule, we are
implementing the new OMB delineations as
described in the February 28, 2013 OMB
Bulletin No. 13–01, effective beginning with
the FY 2015 IPPS wage index.
Section 1886(d)(3)(E) of the Act requires
that, beginning October 1, 1993, we annually
update the wage data used to calculate the
wage index. In accordance with this
requirement, the wage index for acute care
hospitals for FY 2015 is based on data
submitted for hospital cost reporting periods
beginning on or after October 1, 2010 and
before October 1, 2011. The estimated impact
of the updated wage data using the FY 2011
cost report data and the new OMB labor
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market area delineations on hospital
payments is isolated in Column 4 by holding
the other payment parameters constant in
this simulation. That is, Column 4 shows the
percentage change in payments when going
from a model using the FY 2014 wage index,
based on FY 2010 wage data, the laborrelated share of 69.6 percent, under the new
OMB delineations and having a 100-percent
occupational mix adjustment applied, to a
model using the FY 2015 pre-reclassification
wage index based on FY 2011 wage data with
the labor-related share of 69.6 percent, under
the new OMB delineations, also having a
100-percent occupational mix adjustment
applied, while holding other payment
parameters such as use of the Version 32.0
MS–DRG GROUPER constant). The FY 2015
occupational mix adjustment is based on the
CY 2010 occupational mix survey.
In addition, the column shows the impact
of the application of the wage budget
neutrality to the national standardized
amount. In FY 2010, we began calculating
separate wage budget neutrality and
recalibration budget neutrality factors, in
accordance with section 1886(d)(3)(E) of the
Act, which specifies that budget neutrality to
account for wage index changes or updates
made under that subparagraph must be made
without regard to the 62 percent labor-related
share guaranteed under section
1886(d)(3)(E)(ii) of the Act. Therefore, for FY
2015, we calculated the wage budget
neutrality factor to ensure that payments
under updated wage data and the laborrelated share of 69.6 percent are budget
neutral without regard to the lower laborrelated share of 62 percent applied to
hospitals with a wage index less than or
equal to 1.0. In other words, the wage budget
neutrality is calculated under the assumption
that all hospitals receive the higher laborrelated share of the standardized amount.
The wage budget neutrality factor is
1.001443, and the overall payment change is
zero percent.
Column 4 shows the impacts of updating
the wage data using FY 2011 cost reports.
Overall, the new wage data and the laborrelated share, combined with the wage
budget neutrality adjustment, will lead to a
0.0 percent change for all hospitals as shown
in Column 4.
In looking at the wage data itself, the
national average hourly wage increased 1.02
percent compared to FY 2014. Therefore, the
only manner in which to maintain or exceed
the previous year’s wage index was to match
or exceed the national 1.02 percent increase
in average hourly wage. Of the 3,387
hospitals with wage data for both FYs 2014
and 2015, 1,572 or 46.4 percent will
experience an average hourly wage increase
of 1.02 percent or more.
The following chart compares the shifts in
wage index values for hospitals due to
changes in the average hourly wage data for
FY 2015 relative to FY 2014. Among urban
hospitals, 4 will experience a decrease of
more than 10 percent, with 2 urban hospital
experiencing an increase of more than 10
percent. Seventy-six urban hospitals will
experience an increase or decrease of at least
5 percent or more but less than or equal to
10 percent. Among rural hospitals, none will
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experience a decrease of more than 5 percent,
but 5 rural hospitals will experience an
increase of greater than 5 percent but less
than or equal to 10 percent. However, 841
rural hospitals will experience increases or
decreases of less than or equal to 5 percent,
while 2,220 urban hospitals will experience
increases or decreases of less than or equal
to 5 percent. Two hundred thirty-nine urban
and no rural hospitals will not experience a
change in their wage index. These figures
reflect changes in the ‘‘pre-reclassified,
occupational mix-adjusted wage index,’’ that
is, the wage index before the application of
geographic reclassification, the rural and
imputed floors, the out-migration adjustment,
and other wage index exceptions and
adjustments. We note that this analysis was
performed by applying the new OMB labor
market area delineations to the FY 2015 wage
data and also by recomputing the FY 2014
final wage data to reflect the new OMB
delineations. (We refer readers to sections
III.G.2. through III.I. of the preamble of this
final rule for a complete discussion of the
exceptions and adjustments to the wage
index.) We note that the ‘‘post-reclassified
wage index’’ or ‘‘payment wage index,’’ the
wage index that includes all such exceptions
and adjustments (as reflected in Tables 2, 4A,
50421
4B, 4C, and 4F of the Addendum to this final
rule, which are available via the Internet on
the CMS Web site) is used to adjust the laborrelated share of a hospital’s standardized
amount, either 69.6 percent or 62 percent,
depending upon whether a hospital’s wage
index is greater than 1.0 or less than or equal
to 1.0. Therefore, the pre-reclassified wage
index figures in the chart below may
illustrate a somewhat larger or smaller
change than will occur in a hospital’s
payment wage index and total payment.
The following chart shows the projected
impact of changes in the area wage index
values for urban and rural hospitals.
Number of hospitals
Percentage change in area wage index values
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Increase more than 10 percent ...............................................................................................................................
Increase more than 5 percent and less than or equal to 10 percent .....................................................................
Increase or decrease less than or equal to 5 percent ............................................................................................
Decrease more than 5 percent and less than or equal to 10 percent ....................................................................
Decrease more than 10 percent ..............................................................................................................................
Unchanged ...............................................................................................................................................................
d. Combined Effects of the MS–DRG and
Wage Index Changes (Column 5)
Section 1886(d)(4)(C)(iii) of the Act
requires that changes to MS–DRG
reclassifications and the relative weights
cannot increase or decrease aggregate
payments. In addition, section 1886(d)(3)(E)
of the Act specifies that any updates or
adjustments to the wage index are to be
budget neutral. We computed a wage budget
neutrality factor of 1.001443 and a
recalibration budget neutrality factor of
0.997543 (which is applied to the Puerto
Rico-specific standardized amount and the
hospital-specific rates). The product of the
two budget neutrality factors is the
cumulative wage and recalibration budget
neutrality factor. The cumulative wage and
recalibration budget neutrality adjustment is
0.998982, or approximately 0.10 percent,
which is applied to the national standardized
amounts. Because the wage budget neutrality
and the recalibration budget neutrality are
calculated under different methodologies
according to the statute, when the two budget
neutralities are combined and applied to the
standardized amount, the overall payment
impact is not necessarily budget neutral.
However, in this final rule, we are estimating
that the changes in the MS–DRG relative
weights and updated wage data with wage
and budget neutrality applied will result in
a 0.0 percent change in payments.
e. Effects of MGCRB Reclassifications
(Column 6)
Our impact analysis to this point has
assumed acute care hospitals are paid on the
basis of their actual geographic location (with
the exception of ongoing policies that
provide that certain hospitals receive
payments on other bases than where they are
geographically located). The changes in
Column 6 reflect the per case payment
impact of moving from this baseline to a
simulation incorporating the MGCRB
decisions for FY 2015 and the effects of the
adoption of the new OMB labor market area
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delineations on these reclassifications which
affect hospitals’ wage index area
assignments.
By spring of each year, the MGCRB makes
reclassification determinations that will be
effective for the next fiscal year, which
begins on October 1. The MGCRB may
approve a hospital’s reclassification request
for the purpose of using another area’s wage
index value. Hospitals may appeal denials of
MGCRB decisions to the CMS Administrator.
Further, hospitals had 45 days from
publication of the IPPS proposed rule in the
Federal Register to decide whether to
withdraw or terminate an approved
geographic reclassification for the following
year.
The overall effect of geographic
reclassification is required by section
1886(d)(8)(D) of the Act to be budget neutral.
Therefore, for purposes of this impact
analysis, we are applying an adjustment of
0.990406 to ensure that the effects of the
reclassifications under section 1886(d)(10) of
the Act are budget neutral (section II.A. of the
Addendum to this final rule). Geographic
reclassification generally benefits hospitals in
rural areas. We estimate that the geographic
reclassification will increase payments to
rural hospitals by an average of 1.5 percent.
By region, all the rural hospital categories
will experience increases in payments due to
MGCRB reclassifications.
Table 9A listed in section VI. of the
Addendum to this final rule and available via
the Internet on the CMS Web site reflects the
reclassifications for FY 2015.
f. Effects of the Rural and Imputed Floor,
Including Application of National Budget
Neutrality (Column 7)
As discussed in section III.B. of the
preamble of the FY 2009 IPPS final rule, the
FY 2010 IPPS/RY 2010 LTCH PPS final rule,
the FYs 2011, 2012, 2013 and 2014 IPPS/
LTCH PPS final rules, and this final rule,
section 4410 of Public Law 105–33
established the rural floor by requiring that
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2
18
2,220
58
4
239
Rural
0
5
841
0
0
0
the wage index for a hospital in any urban
area cannot be less than the wage index
received by rural hospitals in the same State.
We apply a uniform budget neutrality
adjustment to the wage index. The imputed
floor, which is also included in the
calculation of the budget neutrality
adjustment to the wage index, was extended
in FY 2012 for 2 additional years. In the past,
only urban hospitals in New Jersey received
the imputed floor. As discussed in the FY
2013 IPPS/LTCH PPS final rule (77 FR
53369), we established an alternative
temporary methodology for the imputed
floor, which resulted in an imputed floor for
Rhode Island for FY 2013. For FY 2014, we
extended the imputed rural floor, as
calculated under the original methodology
and the alternative methodology. For FY
2015, we are extending the imputed rural
floor for one year, as calculated under the
original methodology and the alternative
methodology. As a result, New Jersey, Rhode
Island, and Delaware are able to receive an
imputed floor. In New Jersey, 15 out of 64
hospitals will receive the imputed floor, and
4 out of 11 hospitals in Rhode Island will
receive the imputed floor for FY 2015. In the
FY 2015 IPPS/LTCH PPS proposed rule (78
FR 28356), we stated that one out of six
hospitals in Delaware would benefit from the
imputed floor. However, in this final rule, no
hospitals are benefitting from the imputed
floor in Delaware because the CBSA wage
index for each CBSA in Delaware under the
new OMB delineations is equal to or higher
than the imputed rural floor.
The Affordable Care Act requires that we
apply one rural floor budget neutrality factor
to the wage index nationally, and the
imputed floor is part of the rural floor budget
neutrality factor applied to the wage index
nationally. We have calculated an FY 2015
rural floor budget neutrality factor to be
applied to the wage index of 0.989507, which
reduces wage indexes by 1.0 percent.
Column 7 shows the projected impact of
the rural floor and imputed floor with the
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national rural floor budget neutrality factor
applied to the wage index based on the new
OMB labor market area delineations. The
column compares the post-reclassification FY
2015 wage index of providers before the rural
floor and imputed floor adjustment and the
post-reclassification FY 2015 wage index of
providers with the rural floor and imputed
floor adjustment based on the new OMB
labor market area delineations. Only urban
hospitals can benefit from the rural and
imputed floors. Because the provision is
budget neutral, all other hospitals (that is, all
rural hospitals and those urban hospitals to
which the adjustment is not made) will
experience a decrease in payments due to the
budget neutrality adjustment that is applied
nationally to their wage index.
We estimate that 422 hospitals will benefit
from the rural and imputed floors in FY
2015, while the remaining 2,974 IPPS
hospitals in our model have their wage index
reduced by the rural floor budget neutrality
adjustment of 0.989507 (or 1.0 percent). We
project that, in aggregate, rural hospitals will
experience a 0.3 percent decrease in
payments as a result of the application of the
rural floor budget neutrality because the rural
hospitals do not benefit from the rural floor,
but have their wage indexes downwardly
adjusted to ensure that the application of the
rural floor is budget neutral overall. We
project hospitals located in urban areas will
experience no change in payments because
increases in payments by hospitals
benefitting from the rural floor offset
decreases in payments by nonrural floor
urban hospitals whose wage index is
downwardly adjusted by the rural floor
budget neutrality factor. Urban hospitals in
the New England region can expect a 2.8
percent increase in payments primarily due
to the application of the rural floor in
Massachusetts. Fifty-one urban providers in
Massachusetts are expected to receive the
rural floor wage index value, including the
rural floor budget neutrality of 1.3336,
increasing payments overall to Massachusetts
by an estimated $156 million. During most
past years, there have been no IPPS hospitals
located in rural areas in Massachusetts. There
was one urban IPPS hospital that was
reclassified to rural Massachusetts (under
section 1886(d)(8)(E) of the Act) which
established the Massachusetts rural floor, but
the wage index resulting from that hospital’s
data was not high enough for any urban
hospital to benefit from the rural floor policy.
However, for the FY 2012 wage index, the
rural floor for Massachusetts was established
by a hospital that converted from a CAH to
an IPPS hospital that is geographically
located in rural Massachusetts. The rural
floor in Massachusetts continues to be set by
the wage index of the hospital in rural
Massachusetts that converted from CAH to
IPPS status. We estimate that Massachusetts
hospitals will receive approximately a 4.9
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percent increase in IPPS payments due to the
application of the rural floor in FY 2015.
We wish to make note of a situation that
occurred in the rural floor impact calculation
for Massachusetts. In FY 2014, CMS
calculated that 60 hospitals would benefit
from the Massachusetts rural floor, resulting
in an estimated $167.6 million being received
by Massachusetts hospitals via the national
rural floor budget neutrality adjustment. In
FY 2015, fewer Massachusetts hospitals, 51
hospitals, have been identified as benefitting
from the rural floor, and the fiscal impact of
national budget neutrality has been reduced.
We have received inquiries from commenters
regarding this reduction, speculating whether
the addition of one rural hospital in Franklin
County, MA reduced the impact of the
Massachusetts rural floor. The commenters
are correct that the addition of one rural
hospital in Massachusetts reduced the impact
of the rural floor in FY 2015 as compared to
the impact of the rural floor in FY 2014. We
refer readers to section II.A.4.(c) of the
Addendum to this final rule for a complere
discussion on this issue.
Urban Puerto Rico hospitals are expected
to experience a 0.0 percent change in
payments as a result of the application of a
Puerto Rico rural floor with the application
of the Puerto Rico rural floor budget
neutrality adjustment. We are applying a
rural floor budget neutrality factor to the
Puerto Rico-specific wage index of 0.991291
or ¥0.87 percent. The Puerto Rico-specific
wage index adjusts the Puerto Rico-specific
standardized amount, which represents 25
percent of payments to Puerto Rico hospitals.
The increases in payments experienced by
the urban Puerto Rico hospitals that benefit
from a rural floor are offset by the decreases
in payments by the urban Puerto Rico
hospitals that do not benefit from the rural
floor that have their wage indexes
downwardly adjusted by the rural floor
budget neutrality adjustment. As a result,
overall, urban Puerto Rico hospitals will
experience a 0.0 percent change in payments
due to the application of the rural floor with
rural floor budget neutrality.
There are 15 hospitals out of the 64
hospitals in New Jersey that benefit from the
extension of the imputed floor and will
receive the imputed floor wage index value
under the new OMB labor market area
delineations, including the rural floor budget
neutrality of 1.121 which we estimate will
increase payments to those imputed floor
hospitals by $24 million (overall, the State
will see an increase in payments of
approximately $2.7 million due to the other
hospitals in the State experiencing decreases
in payments due to the rural floor budget
neutrality adjustment). Four Rhode Island
hospitals will benefit from the imputed rural
floor calculated under the alternative
methodology and receive an additional $3.7
million (overall, the State will receive an
additional $1.9 million). As mentioned
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earlier, in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28356), we stated that
one hospital in Delaware would benefit from
the imputed floor. However, in this final rule,
no hospitals are benefitting from the imputed
floor in Delaware because the CBSA wage
index for each CBSA in Delaware under the
new OMB delineations is equal to or higher
than the imputed rural floor.
In response to a public comment addressed
in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51593), we are providing the payment
impact of the rural floor and imputed floor
with budget neutrality at the State level.
Column 1 of the table below displays the
number of IPPS hospitals located in each
State. Column 2 displays the number of
hospitals in each State that will receive the
rural floor or imputed floor wage index for
FY 2015 based on the new OMB labor market
area delineations. Column 3 displays the
percentage of total payments each State will
receive or contribute to fund the rural floor
and imputed floor with national budget
neutrality based on the new OMB labor
market area delineations. The column
compares the post-reclassification FY 2015
wage index of providers before the rural floor
and imputed floor adjustment and the postreclassification FY 2015 wage index of
providers with the rural floor and imputed
floor adjustment with the wage indexes
calculated based on the new OMB labor
market area delineations. Column 4 displays
the estimated payment amount that each
State will gain or lose due to the application
of the rural floor and imputed floor with
national budget neutrality.
Comment: Some commenters requested
that CMS include in the FY 2015 IPPS/LTCH
PPS final rule an updated detailed Statespecific analysis of the effects of nationwide
rural floor budget neutrality. In addition, the
commenters requested that CMS publish a
table showing the cumulative State-specific
and aggregate inpatient and outpatient
payment impact of the nationwide rural floor
with budget neutrality and project the
estimated 10-year State-specific effects of
continuing the current policy.
Response: We appreciate the commenters’
request for additional analysis on the impact
of the rural floor on inpatient and outpatient
payments. Commenters may request to view
the OPPS impacts of the rural floor policy
through the public comment period for the
CY 2015 OPPS/ASC proposed rule that closes
on September 2, 2014. In addition, we are
unable to provide a State-by-State impact
with a 10-year projection of the rural floor
because the rural floor is based on wage data
that are updated annually. Therefore, we
believe it would be difficult to accurately
portray the rural floor in 10-year projections.
We have updated our State-by-State rural
floor budget neutrality impact analysis for
this FY 2015 IPPS/LTCH PPS final rule.
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50423
FY 2015 IPPS ESTIMATED PAYMENTS DUE TO RURAL FLOOR AND IMPUTED FLOOR WITH NATIONAL BUDGET NEUTRALITY
State
Number of hospitals
Number of
hospitals that will
receive the rural
floor or imputed
floor
Percent change
in payments
due to application of rural
floor and imputed floor with
budget
neutrality
Difference
(in millions)
(1)
(2)
(3)
(4)
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Alabama .............................................................................................
Alaska ................................................................................................
Arizona ...............................................................................................
Arkansas ............................................................................................
California ............................................................................................
Colorado ............................................................................................
Connecticut ........................................................................................
Delaware ............................................................................................
Washington, D.C. ...............................................................................
Florida ................................................................................................
Georgia ..............................................................................................
Hawaii ................................................................................................
Idaho ..................................................................................................
Illinois .................................................................................................
Indiana ...............................................................................................
Iowa ...................................................................................................
Kansas ...............................................................................................
Kentucky ............................................................................................
Louisiana ............................................................................................
Maine .................................................................................................
Massachusetts ...................................................................................
Michigan .............................................................................................
Minnesota ..........................................................................................
Mississippi ..........................................................................................
Missouri ..............................................................................................
Montana .............................................................................................
Nebraska ............................................................................................
Nevada ...............................................................................................
New Hampshire .................................................................................
New Jersey ........................................................................................
New Mexico .......................................................................................
New York ...........................................................................................
North Carolina ....................................................................................
North Dakota ......................................................................................
Ohio ...................................................................................................
Oklahoma ...........................................................................................
Oregon ...............................................................................................
Pennsylvania ......................................................................................
Puerto Rico ........................................................................................
Rhode Island ......................................................................................
South Carolina ...................................................................................
South Dakota .....................................................................................
Tennessee .........................................................................................
Texas .................................................................................................
Utah ...................................................................................................
Vermont .............................................................................................
Virginia ...............................................................................................
Washington ........................................................................................
West Virginia ......................................................................................
Wisconsin ...........................................................................................
Wyoming ............................................................................................
g. Impact of the New OMB Delineations
(Column 8)
Column 8 shows the effects of the adoption
of the new OMB labor market area
delineations. This column compares the
payments under the rural and imputed floor
wage index with rural floor budget neutrality
calculated under the new OMB delineations
and the payments under the rural and
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91
6
57
45
309
47
31
6
7
169
106
12
14
127
91
34
53
65
100
20
61
95
51
64
78
12
23
24
13
64
25
163
87
6
135
86
33
154
52
11
55
19
98
324
33
6
79
49
30
65
11
imputed floor wage index with budget
neutrality calculated under the current OMB
delineations. It does not reflect the 3-year
transition for hospitals that are currently
located in urban counties that become rural
under the new OMB delineations and the 1year transition to the new OMB delineations
where the wage indexes are blended such
that hospitals receive 50 percent of their
wage index based on the new OMB
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2
4
9
0
200
6
8
0
0
25
0
0
0
0
0
0
0
1
0
0
51
0
0
0
0
4
0
6
9
15
2
0
0
1
10
2
0
10
11
4
7
0
16
6
2
0
1
8
2
0
0
¥0.5
1.5
¥0.1
¥0.5
1.9
0.2
¥0.4
¥0.6
¥0.6
¥0.3
¥0.5
¥0.4
¥0.4
¥0.6
¥0.6
¥0.5
¥0.4
¥0.5
¥0.5
¥0.5
4.9
¥0.5
¥0.5
¥0.5
¥0.5
¥0.3
¥0.4
0.7
2.2
0.1
¥0.2
¥0.6
¥0.5
¥0.3
¥0.4
¥0.5
¥0.5
¥0.5
0
0.5
¥0.3
¥0.3
¥0.2
¥0.5
¥0.4
¥0.3
¥0.5
¥0.2
¥0.4
¥0.5
¥0.2
¥$8.4
2.2
¥1.9
¥5.3
188.8
2.3
¥6.5
¥2.4
¥2.6
¥18.6
¥13.3
¥1.3
¥1.2
¥28.1
¥13.2
¥4.5
¥3.8
¥7.9
¥7.0
¥2.5
155.6
¥22.9
¥10.0
¥5.3
¥11.2
¥0.8
¥2.6
4.6
10.5
2.7
¥0.7
¥47.4
¥15.8
¥0.9
¥16.9
¥5.7
¥4.7
¥23.3
¥0.1
1.9
¥5.0
¥1.1
¥5.6
¥30.3
¥2.2
¥0.7
¥12.0
¥3.0
¥3.1
¥8.6
¥0.3
delineations, and 50 percent of their wage
index based on their current labor market
area. Rather, it shows the impact of the new
OMB delineations fully implemented for FY
2015. Approximately 609 hospitals have their
wage index impacted due to the new OMB
delineations. Urban New England and rural
Middle Atlantic hospitals will experience the
largest decreases in payments due to the new
OMB delineations being fully implemented
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
for FY 2015, with payment decreases of 0.5
and 0.2 percent, respectively. Urban nonDSH hospitals, nonteaching and non-DSH
hospitals, and Lugar hospitals will
experience the largest increases in payments
due to the new OMB delineations being fully
implemented for FY 2015, each with
payment increases of 0.2 percent.
h. Application of the CBSA Transition Wage
Index With Budget Neutrality (Column 9)
As discussed earlier in this final rule, for
FY 2015, we are using the most recent labor
market area delineations issued by OMB but
we established a transition period in certain
circumstances. Specifically, we established a
3-year transition for hospitals that are
currently located in an urban county that
becomes rural under the new OMB labor
market area delineations under which such
hospitals will be assigned the urban wage
index value of the CBSA in which they are
physically located for FY 2014 for a period
of 3 fiscal years (that is, for FYs 2015, 2016,
and 2017). We also are establishing a 1-year
blended wage index for all hospitals that
experience any decrease in their actual
payment wage index (that is, a hospital’s
actual wage index used for payment, which
accounts for all applicable effects of
reclassification and redesignation)
exclusively due to the implementation of the
new OMB labor market area delineations. We
are providing that a post-reclassified wage
index with the rural and imputed floor
applied be 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 floor applied be computed
based on the hospital’s new FY 2015 CBSA
(that is, the FY 2015 constituent county/ies).
We compared these two wage indexes. If the
FY 2015 wage index with FY 2015 CBSAs
was lower than the FY 2015 wage index with
FY 2014 CBSAs, we computed a blended
wage index, consisting of 50 percent of each
of the two wage indexes added together. This
blended wage index is the hospital’s wage
index for FY 2015. This adjustment only
applies to hospitals that will experience a
decrease in their actual payment wage index
exclusively due to the implementation of the
new OMB labor market area delineations.
Hospitals that benefit from the new OMB
labor market area delineations receive their
new wage index based on the new OMB labor
market area delineations. We refer readers to
section III.B. of the preamble to this final rule
for a complete discussion on the transition
wage indexes. Lastly, we are applying both
the 3-year transition and 50/50 blended wage
index adjustments in a budget neutral
manner. We are making an adjustment to the
standardized amount to ensure that the total
payments, including the effect of the
transition provisions, equal what payments
would have been if we had not provided for
these transitional wage indexes.
Column 9 shows the effects of the adoption
of the new OMB labor market area
delineations, including the 3-year hold
harmless provision for hospitals that are
currently located in an urban county that
becomes rural under the new OMB
delineations and the 1-year transition to the
new OMB delineations where the wage
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indexes are blended such that hospitals
receive 50 percent of their wage index based
on the new OMB delineations and 50 percent
of their wage index based on their current
labor market area. For FY 2015, we are
applying both the 3-year transition and 50/
50 blended wage index adjustments in a
budget neutral manner, with a budget
neutrality factor of 0.998859 (or ¥0.1
percent) applied to the standardized amount
to ensure that the total payments, including
the effect of the transition provisions, equal
what payments would have been if we had
not provided for these transitional wage
indexes. This column shows the payment
impact of the transitional wage index. For
columns 1 through 8, the payment impacts
and budget neutrality factors have been
calculated under the new OMB delineations.
Under the 1-year transition to the new OMB
delineations, hospitals that would have
experienced a decrease in payments due to
the new OMB delineations being fully
implemented this year now have those
decreases alleviated due to the transition.
Urban New England hospitals and Middle
Atlantic hospitals will experience a 0.2
percent and 0.3 percent increase respectively
in payments due to the application of the
transitional wage index with budget
neutrality, while urban South Atlantic, East
North Central, East South Central, West
North Central, West South Central, Mountain
and Pacific hospitals will experience a ¥0.1
percent change in payments due to the
transitional budget neutrality adjustment of
¥0.1 percent applied to the standard Federal
rate.
i. Effects of the Application of the Frontier
State Wage Index and Out-Migration
Adjustment (Column 10)
This column shows the combined effects of
the application of section 10324(a) of the
Affordable Care Act, which requires that we
establish a minimum post-reclassified wageindex of 1.00 for all hospitals located in
‘‘frontier States,’’ and the effects of section
1886(d)(13) of the Act, as added by section
505 of Public Law 108–173, which provides
for an increase in the wage index for
hospitals located in certain counties that
have a relatively high percentage of hospital
employees who reside in the county, but
work in a different area with a higher wage
index. These two wage index provisions are
not budget neutral and increase payments
overall by 0.1 percent compared to the
provisions not being in effect.
The term ‘‘frontier States’’ is defined in the
statute as States in which at least 50 percent
of counties have a population density less
than 6 persons per square mile. Based on
these criteria, four States (Montana, North
Dakota, South Dakota, and Wyoming) are
considered frontier States and 46 hospitals
located in those States will receive a frontier
wage index of 1.0000. Nevada is also, by
definition, a frontier State and was assigned
a frontier floor value of 1.0000 for FY 2012,
but since then and including in this final
rule, its rural floor value has been greater
than 1.0000 so it has not been subject to the
frontier wage index. Overall, this provision is
not budget neutral and is estimated to
increase IPPS operating payments by
approximately $67 million or approximately
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0.1 percent. Rural hospitals located in the
Mountain region and urban hospitals located
in the West North Central region will
experience an increase in payments by 0.6
and 0.8 percent, respectively, because many
of the hospitals located in this region are
frontier State hospitals.
In addition, section 1886(d)(13) of the Act,
as added by section 505 of Public Law 108–
173, provides for an increase in the wage
index for hospitals located in certain
counties that have a relatively high
percentage of hospital employees who reside
in the county, but work in a different area
with a higher wage index. Hospitals located
in counties that qualify for the payment
adjustment are to receive an increase in the
wage index that is equal to a weighted
average of the difference between the wage
index of the resident county, postreclassification and the higher wage index
work area(s), weighted by the overall
percentage of workers who are employed in
an area with a higher wage index. There are
an estimated 273 providers that will receive
the out-migration wage adjustment in FY
2015. Rural hospitals generally qualify for the
adjustment, resulting in a 0.1 percent
increase in payments. This provision appears
to benefit Section 401 hospitals and RRCs in
that they will experience a 2.0 percent and
0.6 percent increase in payments,
respectively. This out-migration wage
adjustment also is not budget neutral, and we
estimate the impact of these providers
receiving the out-migration increase to be
approximately $53 million.
j. Effects of the Reductions Under the
Hospital Readmissions Reduction Program
(Column 11)
Column 11 shows our estimates of the
effects of the policies for reductions in
payments under the Hospital Readmissions
Reduction Program, which was established
under section 3025 of the Affordable Care
Act. The Hospital Readmissions Reduction
Program requires a reduction to a hospital’s
base operating DRG payments to account for
excess readmissions, which for FY 2015, is
based on a hospital’s risk-adjusted
readmission rate during a 3-year period for
five applicable conditions: acute myocardial
infarction, heart failure, pneumonia, total hip
and total knee arthroplasty and chronic
obstructive pulmonary disease. This
provision is not budget neutral. A hospital’s
readmission adjustment is the higher of a
ratio of the hospital’s aggregate payments for
excess readmissions to their aggregate
payments for all discharges, or a floor, which
has been defined in the statute as 0.97 (or a
3.0 percent reduction) for FY 2015. A
hospital’s base operating DRG payment (that
is, wage-adjusted DRG payment amount, as
discussed in section IV.G. of the preamble of
this final rule) is the portion of the IPPS
payment subject to the readmissions payment
adjustment (DSH, IME, outliers and lowvolume add-on payments are not subject to
the readmissions adjustment). For FY 2015,
we have revised the definition of base
operating DRG payment for MDHs to include
the hospital-specific add-on amount, as
discussed earlier in this final rule such that
the this hospital-specific add-on amount is
also subject to the readmissions payment
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
adjustment. In this final rule, we estimate
that 2,638 hospitals will have their base
operating DRG payments reduced by their
hospital-specific readmissions adjustment, an
increase from FY 2014, due to the addition
of new readmissions measures in the
program. As a result, we estimate that the
Hospital Readmissions Reduction Program
will result in a 0.2 percent decrease in
payments relative to FY 2014. We estimate
that the Hospital Readmissions Reduction
Program will result in a 0.4 percent decrease
in payments relative to no provision (or a
decrease of $424 million).
Teaching non-DSH hospitals experience a
decrease in payments of 0.3 percent relative
to last year, while teaching DSH hospitals
experience a 0–1 percent decrease in
payments relative to last year. Puerto Rico
hospitals will show a 0.0 percent change in
payments because they are exempt from the
provision.
k. Effects of the Changes to Medicare DSH
Payments (Column 12)
Column 12 shows the effects of the
adjustments to Medicare DSH payments
made under section 3133 of the Affordable
Care Act. Under section 3133, hospitals that
are eligible to receive Medicare DSH
payments will receive 25 percent of the
amount they previously would have received
under the former statutory formula for
Medicare DSH payments. The remainder,
equal to an estimate of 75 percent of what
otherwise formerly would have been paid as
Medicare DSH payments, reduced to reflect
changes in the percentage of individuals
under age 65 who are uninsured and
additional statutory adjustments, is available
to make additional payments to each hospital
that qualifies for Medicare DSH payments.
Each Medicare DSH hospital will receive an
additional payment based on its estimated
share of the total amount of uncompensated
care for all Medicare DSH hospitals. The
reduction to Medicare DSH payments is not
budget neutral.
For FY 2015, we are establishing that the
amount to be distributed on the basis of
uncompensated care, which is 75 percent of
our estimate of what otherwise would have
been paid in Medicare DSH payments (that
is, Factor 1), be adjusted to 76.19 percent of
that amount to reflect changes in the
percentage of individuals under age 65 who
are uninsured and additional statutory
adjustments (that is, Factor 1 multiplied by
Factor 2). In the FY 2015 IPPS/LTCH PPS
proposed rule the uncompensated care
payment was 75 percent of what otherwise
would have been paid for Medicare DSH
payment adjustments adjusted by a Factor 2
of 80.36 percent and for FY 2014, the
uncompensated care payment was 75 percent
of what otherwise would have been paid for
Medicare DSH payment adjustments adjusted
by a Factor 2 of 94.3 percent. Assuming DSH
payments are constant, the FY 2015
uncompensated care amount is
approximately 14 percentage points less than
the uncompensated care amount that we
distributed for FY 2014. As a result, we
project that, compared to the empirically
justified DSH payments and the
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uncompensated care payments made last
year, payments for FY 2015 will be reduced
overall by 1.3 percent as compared to
Medicare DSH payments made last year
under the first year of the implementation of
section 3133 of the Affordable Care Act. The
uncompensated care payment methodology
has redistributive effects based on a Medicare
DSH hospital’s low income insured patient
days (sum of Medicaid patient days and
Medicare SSI patient days) relative to the
Medicaid patient days and Medicare SSI
patient days for Medicare DSH hospitals, and
the final payment amount is not tied to a
hospital’s discharges.
Rural West South Central and Rural Pacific
will experience a 0.3 percent change in DSH
and uncompensated care payments.
Hospitals with low Medicare utilization
(Medicare days are less than 25 percent of
total inpatient days) will experience the
largest decreases in payments of 3.0 percent.
l. Effects of All FY 2015 Changes (Column
13)
Column 13 shows our estimate of the
changes in payments per discharge from FY
2014 and FY 2015, resulting from all changes
reflected in this final rule for FY 2015. It
includes combined effects of the previous
columns in the table.
The average decrease in payments under
the IPPS for all hospitals is approximately 0.6
percent for FY 2015 relative to FY 2014. As
discussed in section II.D. of the preamble of
this final rule, this column includes the FY
2015 documentation and coding recoupment
adjustment of -0.8 percent on the national
standardized amount as part of the
recoupment required under section 631 of
the ATRA. In addition, this column includes
the annual hospital update of 2.2 percent to
the national standardized amount. This
annual hospital update includes the 2.9
percent market basket update, the reduction
of 0.5 percentage point for the multifactor
productivity adjustment, and the 0.2
percentage point reduction under section
3401 of the Affordable Care Act. Hospitals
paid under the hospital-specific rate will
receive a 2.2 percent hospital update
described above. As described in Column 2,
the annual hospital update with the
documentation and coding recoupment
adjustment for hospitals paid under the
national standardized amount combined with
the annual hospital update for hospitals paid
under the hospital-specific rate will result in
a 1.5 percent increase in payments in FY
2015 relative to FY 2014. Column 11 shows
the estimated 0.2 percent decrease in
payments due to the reductions in payments
under the Hospital Readmissions Reduction
Program relative to FY 2014. Column 12
shows the estimated 1.3 percent decrease in
Medicare DSH payments due to the changes
made under section 3133 of the Affordable
Care Act, which reduces Medicare DSH
payments by 75 percent and redistributes the
remainder, equal to an estimate of 75 percent
of what otherwise would have been paid as
Medicare DSH payments, reduced to reflect
changes in the percentage of individuals
under age 65 who are uninsured and an
additional statutory adjustment, to each
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50425
hospital that qualifies for Medicare DSH
payments as an uncompensated care
payment based on the hospital’s relative
share of the total amount of uncompensated
care. The impact of moving from our estimate
of FY 2014 outlier payments, 5.71 percent, to
the estimate of FY 2015 outlier payments, 5.1
percent, will result in a decrease of 0.6
percent in FY 2015 payments relative to FY
2014. Lastly, this column reflects the
extension of MDH payment status for the first
half of FY 2015, under Public Law 113–93,
enacted on April 1, 2014. There also might
be interactive effects among the various
factors comprising the payment system that
we are not able to isolate. For these reasons,
the values in Column 13 may not equal the
sum of the estimated percentage changes
described above. (We note that in the FY
2015 IPPS/LTCH PPS proposed rule we
provided the effects of section 1886(o) of the
Act, as added by section 3008 of the
Affordable Care Act, which establishes
payment reductions under the HAC
Reduction Program. Hospitals ranked in the
lowest 25 percent of performance on HACs
are subject to a 1-percent reduction in total
IPPS payments. We are finalizing policies
related to the HAC Reduction Program in this
final rule, but as described earlier in this
final rule, because the HAC scores are
currently undergoing 30-day review and
correction by the hospitals, we are not
providing hospital-level data or a hospitallevel payment impact in conjunction with
the FY 2015 IPPS Final Rule. We do provide
an estimate of the overall payment impact in
section I.H.8. of this Appendix A along with
a discussion of the impact of these changes.)
Overall payments to hospitals paid under
the IPPS are estimated to decrease by 0.6
percent for FY 2015. Much of the payment
changes among the hospital categories is
attributed to the reduction in Medicare DSH
payments and the redistribution of a portion
of the Medicare DSH payments as an
additional payment for hospitals’ relative
uncompensated care amounts. Hospitals in
urban areas will experience a 0.6 percent
decrease in payments per discharge in FY
2015 compared to FY 2014. Hospital
payments per discharge in rural areas are
estimated to decrease by 0.7 percent in FY
2015.
3. Impact Analysis of Table II
Table II presents the projected impact of
the changes for FY 2015 for urban and rural
hospitals and for the different categories of
hospitals shown in Table I. It compares the
estimated average payments per discharge for
FY 2014 with the estimated average
payments per discharge for FY 2015, as
calculated under our models. Therefore, this
table presents, in terms of the average dollar
amounts paid per discharge, the combined
effects of the changes presented in Table I.
The estimated percentage changes shown in
the last column of Table II equal the
estimated percentage changes in average
payments per discharge from Column 13 of
Table I.
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TABLE II—IMPACT ANALYSIS OF CHANGES FOR FY 2015 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT
SYSTEM
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
[Payments per discharge]
Number of
hospitals
Estimated
average
FY 2014
payment per
discharge
Estimated
average
FY 2015
payment per
discharge
All
FY 2015 changes
(1)
(2)
(3)
(4)
All Hospitals ...................................................................................
By Geographic Location:
Urban hospitals .......................................................................
Large urban areas ..................................................................
Other urban areas ..................................................................
Rural hospitals ........................................................................
Bed Size (Urban):
0–99 beds ...............................................................................
100–199 beds .........................................................................
200–299 beds .........................................................................
300–499 beds .........................................................................
500 or more beds ...................................................................
Bed Size (Rural):
0–49 beds ...............................................................................
50–99 beds .............................................................................
100–149 beds .........................................................................
150–199 beds .........................................................................
200 or more beds ...................................................................
Urban by Region:
New England ..........................................................................
Middle Atlantic ........................................................................
South Atlantic .........................................................................
East North Central ..................................................................
East South Central .................................................................
West North Central .................................................................
West South Central ................................................................
Mountain .................................................................................
Pacific .....................................................................................
Puerto Rico .............................................................................
Rural by Region:
New England ..........................................................................
Middle Atlantic ........................................................................
South Atlantic .........................................................................
East North Central ..................................................................
East South Central .................................................................
West North Central .................................................................
West South Central ................................................................
Mountain .................................................................................
Pacific .....................................................................................
By Payment Classification:
Urban hospitals .......................................................................
Large urban areas ..................................................................
Other urban areas ..................................................................
Rural areas .............................................................................
Teaching Status:
Nonteaching ............................................................................
Fewer than 100 residents .......................................................
100 or more residents ............................................................
Urban DSH:
Non-DSH ................................................................................
100 or more beds ...................................................................
Less than 100 beds ................................................................
Rural DSH:
SCH ........................................................................................
RRC ........................................................................................
100 or more beds ...................................................................
Less than 100 beds ................................................................
Urban teaching and DSH:
Both teaching and DSH ..........................................................
Teaching and no DSH ............................................................
No teaching and DSH ............................................................
No teaching and no DSH .......................................................
Special Hospital Types:
RRC ........................................................................................
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3,396
11,197
11,129
¥0.6
2,549
1,401
1,148
847
11,566
12,296
10,677
8,238
11,496
12,226
10,608
8,184
¥0.6
¥0.6
¥0.6
¥0.7
666
787
455
429
212
9,085
9,730
10,470
11,892
14,185
9,054
9,661
10,448
11,814
14,075
¥0.3
¥0.7
¥0.2
¥0.7
¥0.8
328
305
125
50
39
6,778
7,803
8,112
8,856
9,979
6,695
7,686
8,099
8,808
10,008
¥1.2
¥1.5
¥0.2
¥0.5
0.3
120
324
407
397
153
162
387
162
385
52
12,688
12,762
10,423
10,795
10,044
11,316
10,674
11,895
14,626
8,149
12,684
12,752
10,327
10,733
9,911
11,275
10,492
11,793
14,638
7,543
0
¥0.1
¥0.9
¥0.6
¥1.3
¥0.4
¥1.7
¥0.9
0.1
¥7.4
22
57
132
116
165
102
168
61
24
11,180
8,289
7,834
8,474
7,513
8,914
7,108
9,454
11,083
11,080
8,216
7,764
8,484
7,404
8,925
6,974
9,503
11,207
¥0.9
¥0.9
¥0.9
0.1
¥1.4
0.1
¥1.9
0.5
1.1
2,563
1,413
1,150
833
11,551
12,286
10,645
8,454
11,480
12,214
10,576
8,401
¥0.6
¥0.6
¥0.6
¥0.6
2,357
795
244
9,343
10,941
16,321
9,296
10,879
16,187
¥0.5
¥0.6
¥0.8
679
1,588
383
9,801
11,990
8,431
9,863
11,893
8,366
0.6
¥0.8
¥0.8
373
212
24
137
7,907
9,190
7,390
6,328
7,858
9,162
7,297
6,247
¥0.6
¥0.3
¥1.3
¥1.3
842
133
1,129
459
13,175
11,027
9,781
9,223
13,063
11,125
9,709
9,288
¥0.9
0.9
¥0.7
0.7
193
9,372
9,316
¥0.6
Sfmt 4700
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50427
TABLE II—IMPACT ANALYSIS OF CHANGES FOR FY 2015 ACUTE CARE HOSPITAL OPERATING PROSPECTIVE PAYMENT
SYSTEM—Continued
[Payments per discharge]
Number of
hospitals
Estimated
average
FY 2014
payment per
discharge
Estimated
average
FY 2015
payment per
discharge
All
FY 2015 changes
(1)
(2)
(3)
(4)
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
SCH ........................................................................................
MDH ........................................................................................
SCH and RRC ........................................................................
MDH and RRC .......................................................................
Type of Ownership:
Voluntary .................................................................................
Proprietary ..............................................................................
Government ............................................................................
Medicare Utilization as a Percent of Inpatient Days:
0–25 ........................................................................................
25–50 ......................................................................................
50–65 ......................................................................................
Over 65 ...................................................................................
FY 2015 Reclassifications by the Medicare Geographic Classification Review Board:
All Reclassified Hospitals .......................................................
Non-Reclassified Hospitals .....................................................
Urban Hospitals Reclassified .................................................
Urban Nonreclassified Hospitals, FY 2015 ............................
All Rural Hospitals Reclassified FY 2015 ...............................
Rural Nonreclassified Hospitals FY 2015 ...............................
All Section 401 Reclassified Hospitals ...................................
Other Reclassified Hospitals (Section 1886(d)(8)(B)) ............
Specialty Hospitals:
Cardiac Specialty Hospitals ....................................................
H. Effects of Other Policy Changes
In addition to those policy changes
discussed above that we are able to model
using our IPPS payment simulation model,
we are making various other changes in this
final rule. Generally, we have limited or no
specific data available with which to estimate
the impacts of these changes. Our estimates
of the likely impacts associated with these
other changes are discussed below.
1. Effects of Policy on MS–DRGs for
Preventable HACs, Including Infections
In section II.F. of the preamble of this final
rule, we discuss our implementation of
section 1886(d)(4)(D) of the Act, which
requires the Secretary to identify conditions
that are: (1) high cost, high volume, or both;
(2) result in the assignment of a case to an
MS–DRG that has a higher payment when
present as a secondary diagnosis; and (3)
could reasonably have been prevented
through application of evidence-based
guidelines. For discharges occurring on or
after October 1, 2008, hospitals will not
receive additional payment for cases in
which one of the selected conditions was not
present on admission, unless, based on data
and clinical judgment, it cannot be
determined at the time of admission whether
a condition is present. That is, the case will
be paid as though the secondary diagnosis
were not present. However, the statute also
requires the Secretary to continue counting
the condition as a secondary diagnosis that
results in a higher IPPS payment when doing
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325
162
124
15
9,570
7,073
10,289
9,195
9,636
6,700
10,394
8,450
0.7
¥5.3
1
¥8.1
1,935
892
542
11,319
9,986
12,214
11,274
9,900
12,038
¥0.4
¥0.9
¥1.4
501
2,081
601
93
14,705
11,311
9,137
8,406
14,357
11,261
9,131
8,349
¥2.4
¥0.4
¥0.1
¥0.7
719
2,677
450
2,054
269
514
50
64
10,791
11,327
11,446
11,618
8,732
7,665
10,130
7,812
10,771
11,243
11,429
11,535
8,702
7,597
10,012
7,658
¥0.2
¥0.7
¥0.1
¥0.7
¥0.4
¥0.9
¥1.2
¥2
15
12,303
12,567
2.1
the budget neutrality calculations for MS–
DRG reclassifications and recalibration.
Therefore, we will perform our budget
neutrality calculations as though the
payment provision did not apply, but
Medicare will make a lower payment to the
hospital for the specific case that includes
the secondary diagnosis. Thus, the provision
results in cost savings to the Medicare
program.
We note that the provision will only apply
when one or more of the selected conditions
are the only secondary diagnosis or diagnoses
present on the claim that will lead to higher
payment. Medicare beneficiaries will
generally have multiple secondary diagnoses
during a hospital stay, such that beneficiaries
having one MCC or CC will frequently have
additional conditions that also will generate
higher payment. Only a small percentage of
the cases will have only one secondary
diagnosis that would lead to a higher
payment. Therefore, if at least one
nonselected secondary diagnosis that leads to
higher payment is on the claim, the case will
continue to be assigned to the higher paying
MS–DRG and there will be no Medicare
savings from that case. In addition, as
discussed in section II.F.3. of the preamble of
this final rule, it is possible to have two
severity levels where the HAC does not affect
the MS–DRG assignment or for an MS–DRG
not to have severity levels. In either of these
circumstances, the case will continue to be
assigned to the higher paying MS–DRG and
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there will be no Medicare savings from that
case.
The HAC payment provision went into
effect on October 1, 2008. Our savings
estimates for the next 5 fiscal years are
shown below:
Year
FY
FY
FY
FY
FY
2015
2016
2017
2018
2019
................................
................................
................................
................................
................................
Savings
(in millions)
$27
29
31
34
36
In section IV.J. of the preamble of this final
rule, we are making changes to the HAC
Reduction Program for FY 2015. We refer
readers to section I.H.6. of this Appendix A
for a discussion of the impact of these
changes.
2. Effects of Policy Relating to New Medical
Service and Technology Add-On Payments
In section II.I. of the preamble to this final
rule, we discuss five applications
(Dalbavancin, Heli-FXTM EndoAnchor
System, CardioMEMSTM HF (Heart Failure)
Monitoring System, MitraClip® System, and
Responsive Neurostimulator (RNS®) System)
for add-on payments for new medical
services and technologies for FY 2015, as
well as the status of the new technologies
that were approved to receive new
technology add-on payments in FY 2014. We
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note that one of the applications (for the
Watchman® System) discussed in the
proposed rule withdrew its application prior
to the publication of this final rule.
As explained in the preamble to this final
rule, add-on payments for new medical
services and technologies under section
1886(d)(5)(K) of the Act are not required to
be budget neutral. As discussed in section
II.I.4. of the preamble of this final rule, we
are approving three of the five applications
(CardioMEMSTM HF Monitoring System,
MitraClip® System, and RNS® System) for
new technology add-on payments for FY
2015. As we proposed, in this final rule, we
also are continuing to make new technology
add-on payments in FY 2015 for KcentraTM,
Argus® II Retinal Prosthesis System, the
Zilver® PTX® Drug Eluting Peripheral Stent,
Voraxaze®, and the Zenith® F. Graft (because
all of these technologies are still within the
3-year anniversary of the product’s entry onto
the market). We note that new technology
add-on payments per case are limited to the
lesser of: (1) 50 percent of the costs of the
new technology; or (2) 50 percent of the
amount by which the costs of the case exceed
the standard MS–DRG payment for the case.
Because it is difficult to predict the actual
new technology add-on payment for each
case, our estimates below are based on the
increase in add-on payments for FY 2015 as
if every claim that would qualify for a new
technology add-on payment would receive
the maximum add-on payment. Based on the
applicant’s estimate from FY 2013, we
currently estimate that new technology addon payments for Voraxaze® will increase
overall FY 2015 payments by $6,300,000.
Based on the applicant’s estimate from FY
2013, we currently estimate that new
technology add-on payments for the Zenith®
F. Graft will increase overall FY 2015
payments by $4,085,750. Based on the
applicant’s estimate for FY 2014, we
currently estimate that new technology addon payments for KcentraTM will increase
overall FY 2015 payments by $5,449,888.
Based on the applicant’s estimate for FY
2014, we currently estimate that new
technology add-on payments for the Argus®
II Retinal Prosthesis System will increase
overall FY 2015 payments by $3,601,437.
Based on the applicant’s estimate for FY
2014, we currently estimate that new
technology add-on payments for the Zilver®
PTX® Drug Eluting Peripheral Stent will
increase overall FY 2015 payments by
$20,463,000. Based on the applicant’s
estimate for FY 2015, we currently estimate
that new technology add-on payments for the
CardioMEMSTM HF Monitoring System will
increase overall FY 2015 payments by
$11,315,625 (maximum add-on payment of
$8,875 * 1,275 patients). Based on the
applicant’s estimate for FY 2015, we
currently estimate that new technology addon payments for the MitraClip® System will
increase overall FY 2015 payments by
$27,000,000 (maximum add-on payment of
$15,000 * 1,800 patients). Based on the
applicant’s estimate for FY 2015, we
currently estimate that new technology addon payments for the RNS® System will
increase overall FY 2015 payments by
$12,932,500 (maximum add-on payment of
$18,475 * 700 patients).
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3. Effects of Changes to List of MS–DRGs
Subject to Postacute Care Transfer and DRG
Special Pay Policy
In section IV.A. of the preamble of this
final rule, we discuss changes to the list of
MS–DRGs subject to the postacute care
transfer and DRG special payment policies.
As reflected in Table 5 listed in section VI.
of the Addendum to this final rule and
available via the Internet on the CMS Web
site, using criteria set forth in regulation at
§ 412.4, we evaluated MS–DRG charge,
discharge, and transfer data to determine
which MS–DRGs qualify for the postacute
care transfer and DRG special pay policies.
We note that we are making no change to
these payment policies in this FY 2015 final
rule. We are changing the status of certain
MS–DRGs as a result of revisions to the MS–
DRGs for FY 2015. We are changing the
status of five MS–DRGs to qualify for the
postacute care transfer policy in FY 2015.
One additional MS–DRG that qualified under
the policy in FY 2014 does not qualify in FY
2015, and we are changing the status
accordingly. Finally, five MS–DRGs now
qualify for the MS–DRG special pay policy in
FY 2015 after not qualifying in FY 2014, and
we are adding them to the list of qualifying
MS–DRGs. Column 4 of Table I in this
Appendix A shows the effects of the changes
to the MS–DRGs and relative payment
weights with the application of the
recalibration budget neutrality factor to the
standardized amounts. Section
1886(d)(4)(C)(i) of the Act requires us
annually to make appropriate classification
changes in order to reflect changes in
treatment patterns, technology, and any other
factors that may change the relative use of
hospital resources. The analysis and methods
determining the changes due to the MS–
DRGs and relative payment weights accounts
for and includes changes in MS–DRG
postacute care transfer and special pay policy
statuses. We refer readers to section I.G. of
this Appendix for a more detailed discussion
of payment impacts due to MS–DRG
reclassification policies.
4. Effects of the Payment Adjustment for
Low-Volume Hospitals for FY 2015
In section V.D. of the preamble of this final
rule, we discuss the provisions of the
Protecting Access to Medicare Act of 2014
(Pub. L.113–93) that extend for an additional
year, through March 31, 2015, the temporary
changes to the low-volume hospital
definition and the methodology for
determining the payment adjustment made
by the Affordable Care Act for FYs 2011 and
2012, and extended through FY 2013 by the
ATRA, and the first half of FY 2014 by the
Pathway for SGR Reform Act (Pub. L. 113–
67). Therefore, to qualify for the low-volume
hospital payment adjustment for FY 2015
discharges occurring before April 1, 2015,
under section 1886(d)(12) of the Act, a
hospital must have less than 1,600 Medicare
discharges and be located more than 15 miles
from other IPPS hospitals The payment
adjustment for eligible low-volume hospital
FY 2015 discharges occurring before April 1,
2015, is a continuous, linear sliding scale
adjustment ranging from an additional 25
percent payment adjustment to qualifying
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hospitals with 200 or fewer Medicare
discharges to no additional payment to
hospitals with 1,600 or more Medicare
discharges.
Beginning with FY 2015 discharges
occurring on or after April 1, 2015, in
accordance with section 1886(d)(12) of the
Act, the low-volume hospital definition and
payment adjustment methodology revert back
to the statutory requirements that were in
effect prior to the amendments made by the
Affordable Care Act as amended by
subsequent legislation. Therefore, effective
for FY 2015 discharges occurring on or after
April 1, 2015 and subsequent years, in order
to qualify as a low-volume hospital, a
subsection (d) hospital must be more than 25
road miles from another subsection (d)
hospital and have less than 200 discharges
(that is, less than 200 discharges total,
including both Medicare and non-Medicare
discharges) during the fiscal year.
Based on the latest available data, we
estimate that approximately 593 hospitals
will qualify as a low-volume hospital in FY
2014 and in FY 2015 for discharges occurring
before April 1, 2015. With the statutory
changes to the low-volume hospital payment
adjustment, we estimate only approximately
five hospitals will continue to qualify as a
low-volume hospital for FY 2015 discharges
occurring on or after April 1, 2015. We
project that the expiration of the temporary
changes to the low-volume hospital
definition and the payment adjustment
methodology originally made by the
Affordable Care Act and extended by
subsequent legislation will result in a
decrease in payments of approximately $152
million in FY 2015 as compared to the lowvolume hospital payments in FY 2014. This
estimate accounts for our projection of the
five IPPS low-volume hospitals in FY 2014
that are expected to continue to receive a
low-volume hospital payment adjustment of
an additional 25 percent for FY 2015
discharges occurring on or after April 1,
2015.
5. Effects of Policies Related to IME Medicare
Part C Add-On Payments to SCHs Paid
According to Their Hospital-Specific Rates
In section IV.E.2. of the preamble of this
final rule, we discuss our finalized policy
related to IME add-on payments for Medicare
Part C patients to SCHs that are paid
according to their hospital-specific rates.
Payments based on the Federal rate are based
on the IPPS standardized amount and
include all applicable IPPS add-on payments,
such as outliers, DSH, and IME, while
payments based on the hospital-specific rate
include no add-on payments. The hospitalspecific rate generally reflects the additional
costs incurred by a teaching hospital for its
Medicare Part A patients. However, the
hospital-specific rate does not reflect the
costs associated with Medicare Part C
patients and there is currently no payment
mechanism for SCHs paid based on their
hospital-specific rate to receive the IME addon payment for Medicare Part C patients.
Accordingly, we are providing all SCHs that
are subsection (d) teaching hospitals, IME
add-on payments for applicable discharges of
Medicare Part C patients in accordance with
section 1886(d)(11) of the Act, regardless of
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whether the SCH is paid based on the Federal
rate or its hospital-specific rate. In addition,
we also are establishing that for purposes of
the comparison of payments based on the
Federal rate and payments based on the
hospital-specific rate, IME payments under
section 1886(d)(11) of the Act for Medicare
Part C patients will no longer be included as
part of the Federal rate payment. Because the
IPPS Federal rate used in the MDH payment
methodology is the same IPPS Federal rate
that is used in the SCH payment
methodology, this change to the comparison
of payments based on the Federal rate and
payments based on the hospital-specific rate
also applies to the Federal rate payment
amount used to determine payment to MDHs
that are teaching hospitals (that is, in the
determination of the payment amount in
addition to the Federal rate payment that is
equal to 75 percent of the amount by which
the hospital-specific rate payment exceeds
the Federal rate payment), as discussed in
section IV.E.2. of the preamble of this final
rule.
We estimate that the policy at section
IV.E.2. of the preamble of this final rule will
result in an increase in payments to
approximately 45 hospitals that are both
SCHs or MDHs and teaching hospitals of
approximately $5.3 million in FY 2015.
6. Effects of the Extension of the MDH
Program for the First Half of FY 2015
In section V.G. of the preamble of this final
rule, we briefly discuss the statutory
extension of the MDH program through
March 31, 2015, that is, through the first half
of FY 2015, by section 106 of the Protecting
Access to Medicare Act of 2014 (Pub. L. 113–
93). Hospitals that qualify as MDHs receive
the higher of operating IPPS payments made
under the Federal standardized amount or
the payments made under the Federal
standardized amount plus 75 percent of the
amount by which the hospital-specific rate (a
hospital-specific cost-based rate) exceeds the
Federal standardized amount. Based on the
latest available data we have for 177 MDHs,
we project that 166 MDHs will receive the
blended payment (that is, the Federal
standardized amount plus 75 percent of the
amount by which the hospital-specific rate
exceeds the Federal standardized amount) for
the first half of FY 2015 (that is, for
discharges occurring through March 31,
2015). We estimate that those hospitals will
experience an overall increase in payments of
approximately $70.7 million as compared to
our previous estimates of payments to these
hospitals for FY 2015 prior to the extension
of the MDH program through March 31, 2015,
by section 106 of Public Law 113–93.
7. Effects of Changes Under the FY 2015
Hospital Value-Based Purchasing (VBP)
Program
Section 1886(o)(1)(B) of the Act directs the
Secretary to make value-based incentive
payments under the Hospital VBP Program to
hospitals that meet performance standards
during the performance period for discharges
occurring on or after October 1, 2012. These
incentive payments will be funded for FY
2015 through a reduction to the FY 2015 base
operating DRG payment for each discharge of
1.50 percent, as required by section
1886(o)(7)(B) of the Act. The applicable
percentage for FY 2016 is 1.75 percent and
for FY 2017 and subsequent years, it is 2
percent. We are required to ensure that the
total amount available for value-based
incentive payments is equal to the total
amount of reduced payments for all hospitals
for the fiscal year, as estimated by the
Secretary.
We refer readers to the Hospital Inpatient
VBP Program final rule (76 FR 26490 through
26547), the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74527 through
74547), the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53567 through 53614), the FY
2014 IPPS/LTCH PPS final rule (78 FR 50677
through 50707), and the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75120
through 75121) for further explanation of the
details of the Hospital VBP Program.
We specifically refer readers to the FY
2013 IPPS/LTCH PPS final rule (77 FR 53582
through 53592) and the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50678 through 50679),
for discussions of the measures and other
policies that we adopted for the FY 2015 and
FY 2016 Hospital VBP Programs.
In section IV.I. of the preamble of this final
rule, we estimate the available pool of funds
for value-based incentive payments in the FY
2015 Hospital VBP Program, which, in
accordance with section 1886(o)(7)(C)(iii) of
the Act, will be 1.50 percent of base
50429
operating DRG payments, or a total of
approximately $1.4 billion. This estimated
available pool for FY 2015 is based on the
historical pool of hospitals that were eligible
to participate in the FY 2014 Hospital VBP
Program and the payment information from
the March 2014 update to the FY 2013
MedPAR file.
The estimated impacts of the FY 2015
Hospital VBP Program by hospital
characteristic, found in the table below, are
based on historical TPSs. We used the FY
2014 Hospital VBP Program TPSs to calculate
the proxy adjustment factors used for this
impact analysis. These are the most recently
available scores that hospitals were given an
opportunity to review and correct. The proxy
adjustment factors use estimated annual base
operating DRG payment amounts derived
from the March 2014 update to the FY 2013
MedPAR file. The proxy adjustment factors
can be found in Table 16 associated with this
final rule (available via the Internet on the
CMS Web site).
The impact analysis shows that, for the FY
2015 Hospital VBP Program, the number of
hospitals that will receive an increase in base
operating DRG payment amount is slightly
lower than the number of hospitals that will
receive a decrease. Among urban hospitals,
those in the New England, South Atlantic,
East North Central, West North Central, and
West South Central regions will have an
increase, on average, in base operating DRG
payment amount, and among rural hospitals,
those in the New England and East North
Central regions will have an increase, on
average, in base operating DRG payment
amounts.
Both urban and rural hospitals in the
Middle Atlantic, East South Central,
Mountain, and Pacific regions and rural
hospitals in the South Atlantic, West North
Central, and West South Central regions will
receive an average decrease in base operating
DRG payment amount. As the percent of DSH
payments increases, we see a decrease in
base operating DRG payment amount, while
as the Medicare utilization (MCR) percent
increases, we see an increase in base
operating DRG payment amount.
Nonteaching and teaching hospitals will
have an average decrease in base operating
DRG payment amount.
IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNT CHANGES RESULTING FROM THE FY 2015 HOSPITAL
VBP PROGRAM
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Number of
hospitals
By Geographic Location:
All Hospitals ......................................................................................................................................................
Large Urban ..............................................................................................................................................
Other Urban ...............................................................................................................................................
Rural Area .................................................................................................................................................
Urban hospitals .................................................................................................................................................
0–99 beds ..................................................................................................................................................
100–199 beds ............................................................................................................................................
200–299 beds ............................................................................................................................................
300–499 beds ............................................................................................................................................
500 or more beds ......................................................................................................................................
Rural hospitals ..................................................................................................................................................
0–49 beds ..................................................................................................................................................
50–99 beds ................................................................................................................................................
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2,728
1,113
910
705
2,023
307
677
431
401
207
705
161
296
Average
(percent)
¥0.038
¥0.021
¥0.030
¥0.074
¥0.025
0.025
¥0.043
¥0.032
¥0.033
¥0.010
¥0.074
¥0.042
¥0.088
50430
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
IMPACT ANALYSIS OF BASE OPERATING DRG PAYMENT AMOUNT CHANGES RESULTING FROM THE FY 2015 HOSPITAL
VBP PROGRAM—Continued
Number of
hospitals
By
By
By
By
100–149 beds ............................................................................................................................................
150–199 beds ............................................................................................................................................
200 or more beds ......................................................................................................................................
Region:
Urban By Region ..............................................................................................................................................
New England .............................................................................................................................................
Middle Atlantic ...........................................................................................................................................
South Atlantic ............................................................................................................................................
East North Central .....................................................................................................................................
East South Central ....................................................................................................................................
West North Central ....................................................................................................................................
West South Central ...................................................................................................................................
Mountain ....................................................................................................................................................
Pacific ........................................................................................................................................................
Rural By Region ...............................................................................................................................................
New England .............................................................................................................................................
Middle Atlantic ...........................................................................................................................................
South Atlantic ............................................................................................................................................
East North Central .....................................................................................................................................
East South Central ....................................................................................................................................
West North Central ....................................................................................................................................
West South Central ...................................................................................................................................
Mountain ....................................................................................................................................................
Pacific ........................................................................................................................................................
MCR Percent:
0–25 ..................................................................................................................................................................
25–50 ................................................................................................................................................................
50–65 ................................................................................................................................................................
Over 65 .............................................................................................................................................................
DSH Percent:
0–25 ..................................................................................................................................................................
25–50 ................................................................................................................................................................
50–65 ................................................................................................................................................................
Over 65 .............................................................................................................................................................
Teaching Status:
Teaching ...........................................................................................................................................................
Non-Teaching ...................................................................................................................................................
Actual FY 2015 Hospital VBP Program
TPSs will not be reviewed and corrected by
hospitals until after this FY 2015 IPPS/LTCH
PPS final rule has been published. Therefore,
the same historical universe of eligible
hospitals and corresponding TPSs from the
FY 2014 Hospital VBP Program are used for
this updated impact analysis.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
8. Effects of Changes to the HAC Reduction
Program for FY 2015
In section IV.J. of the preamble of this final
rule, we are establishing measures, scoring,
and a risk adjustment methodology to
implement the FY 2015 payment reduction
under the HAC Reduction Program. Section
1886(p) of the Act, as added under section
3008(a) of the Affordable Care Act,
establishes an adjustment to hospital
payments for HACs, or a HAC Reduction
program, under which payments to
applicable hospitals are adjusted to provide
an incentive to reduce HACs, effective for
discharges occurring on October 1, 2014 and
for subsequent program years.
We note that hospitals will have a payment
impact for the first time in FY 2015. For FY
2015, we are presenting the overall impact of
the HAC Reduction Program provision along
with other IPPS payment provision impacts
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in section I.G. of this Appendix A. The table
and analyses that we are presenting below
show the distributional effect of the measures
and scoring system for the HAC Reduction
Program included in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50707 through 50729).
For FY 2015, we note that we finalized a
Total HAC Score methodology in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50707
through 50729) that assigns weights for
Domain 1 and Domain 2 at 35 percent and
65 percent, respectively. Based on this
methodology, the table below presents data
on the proportion of hospitals, by structural
characteristic, in the worst performing
quartile based on the 35/65 weighting
scheme.
The data for this simulation are derived
from the AHRQ PSI results based on
Medicare FFS discharges from July 2011
through June 2013, using version 4.5a of the
AHRQ software, and CDC measure results
were used based on Standard Infection Ratios
(SIRs) calculated with data reported to the
National Healthcare Safety Network for
infections occurring between January 2012
and December 2013. To analyze the results
by hospital characteristic, the FY 2015
proposed rule impact file were used. Of the
3,352 hospitals included in this analysis,
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Average
(percent)
148
55
45
¥0.074
¥0.106
¥0.067
2,023
112
279
346
350
121
134
248
130
303
705
21
64
136
114
114
82
101
45
28
¥0.025
0.058
¥0.076
0.002
0.052
¥0.043
0.054
0.003
¥0.086
¥0.155
¥0.074
0.044
¥0.150
¥0.024
0.036
¥0.019
¥0.052
¥0.178
¥0.299
¥0.247
260
1,788
605
46
¥0.119
¥0.034
¥0.016
0.003
1,253
1,220
141
114
0.013
¥0.064
¥0.121
¥0.222
933
1,795
¥0.041
¥0.036
3,310 hospitals were included for geographic
location, bed size, region, DSH percent, and
teaching status; 3,270 for ownership; and
3,196 for MCR percent. These differences in
denominator are due to the source of the
hospital characteristic data. This analysis
does not include Maryland hospitals as
Maryland hospitals are exempt by waiver
from the HAC Reduction Program in FY
2015.
The percentage of hospitals for each
characteristic (column 3) indicates the
percent of hospitals in each level of
characteristic. For example, with regard to
geographic region, 40.4 percent of hospitals
(or 1,338 hospitals) are characterized as large
urban; 33.8 percent of hospitals (or 1,119
hospitals) are characterized as other urban;
and 25.8 percent of hospitals (or 853
hospitals) are characterized as rural. The
percentage of hospitals in the worst
performing quartile (column 5) indicates the
proportion of hospitals for each characteristic
that would be penalized. For example, in
regards to geographic location, 26.6 percent
of hospitals (or 356 hospitals) characterized
as large urban will be subject to a payment
adjustment; 23.0 percent of hospitals (or 257
hospitals) characterized as other urban will
be subject to a payment adjustment; and 13.2
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
percent of hospitals (or 113 hospitals)
characterized as rural will be subject to a
payment adjustment.
With regard to geographic location of urban
hospitals by bed size, 15.7 percent of
hospitals (or 98 hospitals) characterized as
urban hospitals with bed size of 0–99 beds
will be subject to a payment adjustment; 20.7
percent of hospitals (or 155 hospitals)
characterized as urban hospitals with bed
size of 100–199 beds will be subject to a
payment adjustment; 29.7 percent of
hospitals (or 136 hospitals) characterized as
urban hospitals with bed size of 200–299
beds will be subject to a payment adjustment;
27.7 percent of hospitals (or 72 hospitals)
characterized as urban hospitals with bed
size of 300–399 beds will be subject to a
payment adjustment; 41.2 percent of
hospitals (or 63 hospitals) characterized as
urban hospitals with bed size of 400–499
beds will be subject to a payment adjustment;
and 42.0 percent of hospitals (or 89 hospitals)
characterized as urban hospitals with bed
size of 500 or more beds will be subject to
a payment adjustment.
With regard to geographical location of
rural hospitals by bed size, 11.7 percent of
hospitals (or 39 hospitals) characterized as
rural hospitals with bed size of 0–49 beds
will be subject to a payment adjustment; 12.5
percent of hospitals (or 37 hospitals)
characterized as rural hospitals with bed size
of 50–99 beds will be subject to a payment
adjustment; 12.6 percent of hospitals (or 17
hospitals) characterized as rural hospitals
with bed size of 100–149 beds will be subject
to a payment adjustment; 18.0 percent of
hospitals (or 9 hospitals) characterized as
rural hospitals with bed size of 150–199 beds
will be subject to a payment adjustment; and
29.7 percent of hospitals (or 11 hospitals)
characterized as rural hospitals with bed size
of 200 or more beds will be subject to a
payment adjustment.
With regard to region of urban hospitals,
30.3 percent of hospitals (or 36 hospitals)
characterized as urban in the New England
region will be subject to a payment
adjustment; 30.2 percent of hospitals (or 96
hospitals) characterized as urban in the MidAtlantic region will be subject to a payment
adjustment; 24.3 percent of hospitals (or 98
hospitals) characterized as urban in the
South Atlantic region will be subject to a
payment adjustment; 22.5 percent of
hospitals (or 88 hospitals) characterized as
urban in the East North Central region will
be subject to a payment adjustment; 22.1
percent of hospitals (or 33 hospitals)
characterized as urban in the West South
Central region will be subject to a payment
adjustment; 26.1 percent of hospitals (or 42
hospitals) characterized as urban in the East
North Central region will be subject to a
payment adjustment; 15.9 percent of
hospitals (or 60 hospitals) characterized as
urban in the West South Central region will
be subject to a payment adjustment; 33.3
percent of hospitals (or 54 hospitals)
characterized as urban in the Mountain
region will be subject to a payment
adjustment; and 28.2 percent of hospitals (or
106 hospitals) characterized as urban in the
Pacific region will be subject to a payment
adjustment.
With regard to region of rural hospitals,
18.2 percent of hospitals (or 4 hospitals)
characterized as rural in the New England
region will be subject to a payment
adjustment; 12.5 percent of hospitals (or 7
hospitals) characterized as rural in the MidAtlantic region will be subject to a payment
adjustment; 16.9 percent of hospitals (or 22
hospitals) characterized as rural in the South
Atlantic region will be subject to a payment
adjustment; 12.2 percent of hospitals (or 14
hospitals) characterized as rural in the East
North Central region will be subject to a
payment adjustment; 8.8 percent of hospitals
(or 14 hospitals) characterized as rural in the
West South Central region will be subject to
a payment adjustment; 15.0 percent of
hospitals (or 16 hospitals) in the East North
Central region will be subject to a payment
adjustment; 9.6 percent of hospitals (or 16
hospitals) in the West South Central region
will be subject to a payment adjustment; 26.8
percent of hospitals (or 19 hospitals) in the
Mountain region will be subject to a payment
adjustment; and 3.8 percent of hospitals (or
1 hospitals) in the Pacific region will be
subject to a payment adjustment.
With regard to the DSH percent
characteristic, 19.4 percent of hospitals (or
309 hospitals) characterized in the 0–24 DSH
percent will be subject to a payment
adjustment; 22.0 percent of hospitals (or 304
hospitals) characterized in the 25–49 DSH
percent will be subject to a payment
adjustment; 38.1 percent of hospitals (or 67
hospitals) characterized in the 50–64 DSH
50431
percent will be subject to a payment
adjustment; and 28.9 percent of hospitals (or
46 hospitals) characterized in the 65 and over
DSH percent will be subject to a payment
adjustment.
With regard to the teaching status
characteristic, 17.0 percent of hospitals (or
391 hospitals) characterized as nonteaching
will be subject to a payment adjustment; 25.7
percent of hospitals (or 198 hospitals)
characterized as fewer than 100 residents
will be subject to a payment adjustment; and
56.4 percent of hospitals (or 137 hospitals)
characterized as 100 or more residents will
be subject to a payment adjustment.
With regard to the urban teaching and DSH
characteristic, 35.6 percent of hospitals (or
294 hospitals) characterized as teaching and
DSH will be subject to a payment adjustment;
25.0 percent of hospitals (or 32 hospitals)
characterized as teaching and no DSH will be
subject to a payment adjustment; 19.5
percent of hospitals (or 207 hospitals)
characterized as no teaching and DSH will be
subject to a payment adjustment; 18.2
percent of hospitals (or 80 hospitals)
characterized as no teaching and no DSH will
be subject to a payment adjustment; and 13.2
percent of hospitals (or 113 hospitals)
characterized as nonurban will be subject to
a payment adjustment.
With regard to the type of ownership
characteristic, 22.7 percent of hospitals (or
429 hospitals) characterized as voluntary will
be subject to a payment adjustment; 18.7
percent of hospitals (or 160 hospitals)
characterized as proprietary will be subject to
a payment adjustment; and 25.0 percent of
hospitals (or 131 hospitals) characterized as
government will be subject to a payment
adjustment.
With regard to the MCR percent
characteristic, 37.4 percent of hospitals (or
145 hospitals) characterized in the 0–24 MCR
percent will be subject to a payment
adjustment; 22.6 percent of hospitals (or 447
hospitals) characterized in the 25–49 MCR
percent will be subject to a payment
adjustment; 14.4 percent of hospitals (or 101
hospitals) characterized in the 50–64 MCR
percent will be subject to a payment
adjustment; and 9.4 percent of hospitals (or
12 hospitals) characterized in the 65 and over
MCR percent will be subject to a payment
adjustment.
PROPORTION OF HOSPITALS IN THE WORST PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC SCORE BY
HOSPITAL CHARACTERISTIC FOR THE FY 2015 HAC REDUCTION PROGRAM
Hospital characteristics
Hospitals in the worst
performing quartile
Number of
hospitals a
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Characteristic
Total d ...............................................................................................................
By geographic location:
All hospitals:
Large urban e .....................................................................................
Other urban .......................................................................................
Rural ..................................................................................................
Urban hospitals:
0–99 beds ..........................................................................................
100–199 beds ....................................................................................
200–299 beds ....................................................................................
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Percent b
Number of
hospitals
Percent within
characteristic c
3,352
100.0
726
21.7
1,338
1,119
853
40.4
33.8
25.8
356
257
113
26.6
23.0
13.2
626
748
458
25.5
30.4
18.6
98
155
136
15.7
20.7
29.7
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
PROPORTION OF HOSPITALS IN THE WORST PERFORMING QUARTILE (>75TH PERCENTILE) OF THE TOTAL HAC SCORE BY
HOSPITAL CHARACTERISTIC FOR THE FY 2015 HAC REDUCTION PROGRAM—Continued
Hospital characteristics
Hospitals in the worst
performing quartile
Number of
hospitals a
Characteristic
By
By
By
By
By
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
By
300–399 beds ....................................................................................
400–499 .............................................................................................
500 or more beds ..............................................................................
Rural hospitals:
0–49 beds ..........................................................................................
50–99 beds ........................................................................................
100–149 beds ....................................................................................
150–199 beds ....................................................................................
200 or more beds ..............................................................................
region:
Urban by region:
New England .....................................................................................
Mid-Atlantic ........................................................................................
South Atlantic ....................................................................................
East North Central .............................................................................
West South Central ...........................................................................
East North Central .............................................................................
West South Central ...........................................................................
Mountain ............................................................................................
Pacific ................................................................................................
Rural by region:
New England .....................................................................................
Mid-Atlantic ........................................................................................
South Atlantic ....................................................................................
East North Central .............................................................................
West South Central ...........................................................................
East North Central .............................................................................
West South Central ...........................................................................
Mountain ............................................................................................
Pacific ................................................................................................
DSH percent:
0–24 ..........................................................................................................
25–49 ........................................................................................................
50–64 ........................................................................................................
65 and over ..............................................................................................
teaching status:
Non-teaching ............................................................................................
Fewer than 100 residents .........................................................................
100 or more residents ..............................................................................
urban teaching and DSH: f
Teaching and DSH ...................................................................................
Teaching and no DSH ..............................................................................
No teaching and DSH ..............................................................................
No teaching and no DSH .........................................................................
Non-urban .................................................................................................
type of ownership:
Voluntary ...................................................................................................
Proprietary ................................................................................................
Government ..............................................................................................
MCR percent:
0–24 ..........................................................................................................
25–49 ........................................................................................................
50–64 ........................................................................................................
65 and over ..............................................................................................
Percent b
Number of
hospitals
Percent within
characteristic c
260
153
212
10.6
6.2
8.6
72
63
89
27.7
41.2
42.0
334
297
135
50
37
39.2
34.8
15.8
5.9
4.3
39
37
17
9
11
11.7
12.5
12.6
18.0
29.7
119
318
404
391
149
161
377
162
376
4.8
12.9
16.4
15.9
6.1
6.6
15.3
6.6
15.3
36
96
98
88
33
42
60
54
106
30.3
30.2
24.3
22.5
22.1
26.1
15.9
33.3
28.2
22
56
130
115
159
107
167
71
26
2.6
6.6
15.2
13.5
18.6
12.5
19.6
8.3
3.0
4
7
22
14
14
16
16
19
1
18.2
12.5
16.9
12.2
8.8
15.0
9.6
26.8
3.8
1,592
1,383
176
159
48.1
41.8
5.3
4.8
309
304
67
46
19.4
22.0
38.1
28.9
2,297
770
243
69.4
23.3
7.3
391
198
137
17.0
25.7
56.4
827
128
1,062
440
853
25.0
3.9
32.1
13.3
25.8
294
32
207
80
113
35.6
25.0
19.5
18.2
13.2
1,890
857
523
57.8
26.2
16.0
429
160
131
22.7
18.7
25.0
388
1,977
703
128
12.1
61.9
22.0
4.0
145
447
101
12
37.4
22.6
14.4
9.4
Source: FY 2015 HAC Reduction Program Final Rule Results provided by R&A contract. Scores are based on AHRQ PSI 90 data from July
2011 through June 2013 and CLABSI and CAUTI results from January 2012 to December 2013. Hospital Characteristics are based on FY 2015
Proposed Rule Impact File released May 20, 2014.
a The total number of hospitals with hospital characteristic data (3,310 for geographic location, bed size, region, DSH percent and teaching status; 3,270 for type of ownership; and 3,196 for MCR) do not add up to the total number of hospitals eligible for the HAC Reduction program
(3,352) because 42 hospitals are not included in the FY 2015 impact file and not all hospitals have data for all characteristics.
b This column is the percent of all hospitals with each characteristic that were eligible for the program and included in the FY 15 impact file.
Percents may not sum to 100 due to rounding.
c This column is the percent of hospitals within each characteristic that are in the worse performing quartile.
d Total excludes the 46 Maryland hospitals.
e Large Urban hospitals are hospitals located in large urban areas (populations over 1 million).
f A hospital is considered a teaching hospital if it has an IME adjustment factor for Operation PPS (TCHOP) greater than zero and is considered a DSH hospital if it has a DSH patient percentage greater than zero.
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
9. Effects of Policy Changes Relating to
Payments for Direct GME and IME
Under section IV.K.2. of the preamble of
this final rule, we discuss our revisions to
simplify and streamline the timing of CMS’s
policies related to when the FTE resident
caps, the 3-year rolling average, and the IRB
ratio cap would become effective for new
teaching hospitals, by stating that the FTE
resident caps, rolling average, and IRB ratio
cap will be effective simultaneously,
beginning with the applicable hospital’s cost
reporting period that coincides with or
follows the start of the sixth program year of
the first new program started. We are
specifying that this policy regarding the
effective dates of the FTE residency caps,
rolling average, and IRB ratio cap for FTE
residents in new programs is consistent with
the methodology for calculation of the FTE
resident caps as described in the FY 2013
IPPS/LTCH PPS final rule, and implemented
at 42 CFR 413.79(e)(1) and (3). That is, this
policy is effective for urban hospitals that
have not yet had FTE resident caps
established under § 413.79(e)(1), and for rural
hospitals, on or after October 1, 2012. This
policy will increase the amount of time that
the new programs will be exempt from the
FTE resident caps by several months,
depending on the cost reporting period of the
new teaching hospital. The estimate of
possible cost of this policy is less than $5
million a year and, therefore, is negligible.
In section IV.K.3.a. of the preamble of this
final rule, we discuss our policies related to
the effect of new OMB labor market area
delineations on certain teaching hospitals
training residents in rural areas. Under
existing regulations a new teaching hospital
has 5 years from when it first begins training
residents in its first new program to grow its
cap. If the teaching hospital is a rural
teaching hospital, it can continue to receive
permanent cap adjustments even after the
initial 5-year cap-building period ends if it
trains residents in a new program. As a result
of the implementation of the new OMB
delineations, some teaching hospitals may be
redesignated from being located in a rural
area to an urban area, thereby losing their
ability to increase their caps again after their
initial 5-year cap-building period. Effective
October 1, 2014, if a rural hospital has
received a letter of accreditation for a new
program and/or started training residents in
the new program prior to being redesignated
as urban, it can continue growing that
program for the remainder of the capbuilding period and receive a permanent cap
adjustment for that new program. Once the
cap-building period for the new program that
was started while the hospital was still rural
expires, the teaching hospital that has been
redesignated as urban will no longer be able
to receive any additional permanent cap
adjustments.
In section IV.K.3.b. of the preamble of this
final rule, we discuss our policy change
related to a redesignated hospital’s
participation in a rural track program. Under
existing regulations, if an urban hospital
rotates residents to a separately accredited
rural track program at a rural site(s) for more
than one-half of the duration of the program,
the urban hospital may receive an adjustment
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to its cap for training those FTE residents,
referred to as the rural track FTE limitation.
We are providing that, effective October 1,
2014, if a rural hospital participating in a
rural track is in an area redesignated by OMB
as urban after residents started training in the
rural track and during the period that is used
to calculate the urban hospital’s rural track
FTE limitation, the urban hospital may still
receive a cap adjustment for that rural track.
We also are providing that, effective October
1, 2014, if the rural hospital participating in
the rural track is in an area redesignated as
urban, the redesignated urban hospital can
continue to be considered a rural hospital for
purposes of the rural track for a transition
period that would begin effective with the
implementation date of the new OMB
delineations and last through the end of the
second residency training year following
implementation of the new OMB
delineations. However, during that transition
period, either the rural hospital that has been
redesignated as urban must reclassify as rural
under § 412.103 for purposes of IME payment
only, or the urban hospital must find a new
geographically rural site to participate as the
rural site for purposes of the rural track, in
order for the urban hospital to receive
payment under § 413.79(k)(1) or (k)(2) for the
rural track program after the transition period
ends.
We estimate that these policies discussed
under IV.K.3.a. and b. of the preamble of this
final rule will have a very minimal, if any,
impact on Medicare expenditures. These
policies will only be applied to, at the most,
very few hospitals (if any at all) and will only
apply once every 10 years as a result of OMB
changes in labor market area delineations
due to a recent Census.
In sections IV.K.5.a. and b. of the preamble
of this final rule, we are making some
changes to the current application process for
and awarding of cap slots from closed
hospitals under section 5506 of the
Affordable Care Act that will be effective for
hospital closures announced on or after
October 1, 2014. We are providing an
alternative interpretation of the statutory
provision at section 5506(d) of the Affordable
Care Act, which provides that the Secretary
give consideration to the effect of the
permanent awarding of slots under section
5506 of the Affordable Care Act to any
temporary cap adjustments to a hospital
received under § 413.79(h) of the regulations
to ensure that there be no duplication of FTE
cap slots. In this final rule, we are
interpreting the statutory language at section
5506(d) in a manner that will permit us to
apply the concept of ensuring no duplication
of FTE resident slots on a hospital-byhospital basis, such that if a hospital is both
receiving a temporary cap adjustment under
§ 413.79(h) and is applying under section
5506 for permanent cap slots, it will not be
able to receive a permanent cap adjustment
until an equivalent amount of displaced
residents graduate. However, if a hospital is
applying under section 5506 for permanent
cap slots and did not receive a temporary cap
adjustment under § 413.79(h), that hospital
will not have to wait until displaced
residents that are training at another hospital
graduate to be awarded any permanent cap
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50433
slots under section 5506. We estimate that
this revised policy could result in a slight
increase in Medicare expenditures in a rare
event a section 5506 cap adjustment may be
provided to one hospital before a temporary
cap adjustment expires at another hospital.
However, we are unable to estimate whether
this will occur with any future hospital
closures where section 5506 is applied
because we do not know how many, if any,
residents will be displaced. Furthermore, we
believe that any temporary duplicate
payment will be a rare occurrence as most
hospitals that are receiving a temporary cap
adjustment under § 413.79(h) will also
receive a permanent cap adjustment under
section 5506. In this instance the hospital
will only be able to receive the permanent
cap adjustment once the temporary cap
adjustment for an equivalent number of FTE
residents expires, in which case there would
be no duplication of FTE resident slots.
In addition, under section IV.K.5.c. of the
preamble of this final rule, we are revising
the ranking criteria used to award slots under
section 5506. First, we are no longer allowing
hospitals to apply for cap relief, which is
included under current Ranking Criterion
Eight. This change means that hospitals will
be awarded slots under section 5506 for
taking over a closed hospital’s residency
training program, having participated with a
closed hospital in a Medicare GME affiliated
group, taking over part of a closed hospital’s
program, expanding or starting a new
geriatrics program, expanding or starting a
new primary care or general surgery program,
and expanding or starting a new nonprimary
care or nongeneral surgery program. Second,
Ranking Criterion One currently applies to
hospitals that are assuming (or have
assumed) an entire program from the hospital
that closed. We are revising this Ranking
Criterion to provide priority to a hospital
whose FTE resident caps were erroneously
reduced by CMS under section 5503 of the
Affordable Care Act, contrary to the specific
statutory exception at section
1886(h)(8)(A)(ii)(I) of the Act, and the CMS
Central Office was made aware of the error
prior to the posting of the FY 2015 proposed
rule. We do not believe there is any cost
associated with these policies. We will
continue assigning all of the closed hospital’s
slots; only the specific hospitals awarded the
slots may change.
10. Effects of Implementation of Rural
Community Hospital Demonstration Program
In section IV.L. of the preamble of this final
rule, we discuss our implementation of
section 410A of Public Law 108–173, as
amended, which requires the Secretary to
conduct a demonstration that would modify
reimbursement for inpatient services for up
to 30 rural community hospitals. Section
410A(c)(2) requires that ‘‘[i]n conducting the
demonstration program under this section,
the Secretary shall ensure that the aggregate
payments made by the Secretary do not
exceed the amount which the Secretary
would have paid if the demonstration
program under this section was not
implemented.’’ As discussed in section IV.L.
of the preamble of this final rule, in the IPPS
final rules for each of the previous 10 fiscal
years, we have estimated the additional
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payments made by the program for each of
the participating hospitals as a result of the
demonstration. In order to achieve budget
neutrality, we are adjusting the national IPPS
rates by an amount sufficient to account for
the added costs of this demonstration. In
other words, we are applying budget
neutrality across the payment system as a
whole rather than across the participants of
this demonstration. The language of the
statutory budget neutrality requirement
permits the agency to implement the budget
neutrality provision in this manner. The
statutory language requires that ‘‘aggregate
payments made by the Secretary do not
exceed the amount which the Secretary
would have paid if the demonstration . . .
was not implemented’’ but does not identify
the range across which aggregate payments
must be held equal.
We are adjusting the national IPPS rates
according to the methodology set forth
elsewhere in this final rule. The adjustment
to the national IPPS rates to account for
estimated demonstration cost for FY 2014 for
the 7 ‘‘pre-expansion’’ participating hospitals
that are currently participating in the
demonstration and the 15 additional
hospitals participating as a result of the
expansion of the demonstration under the
Affordable Care Act is $54,177,144. In
addition, in this final rule, we are adding to
the adjustment of the national IPPS rates the
amount by which the actual costs of the
demonstration for FY 2008 (as shown in the
finalized cost reports for cost reporting
periods beginning in FY 2008 for the
hospitals that participated in the
demonstration during FY 2008) exceed the
budget neutrality offset amount that was
finalized in the FY 2008 IPPS final rule
($10,389,771). Thus, the resulting total
($64,566,915) is the amount for which an
adjustment to inpatient rates for FY 2015 is
calculated.
11. Effects of Changes Related to
Reclassification as Rural for CAHs
In section VI.D.2. of the preamble of this
final rule, we discuss our policies relating to
reclassifications of CAHs as a result of the
adoption of the new OMB labor market area
delineations. A facility is eligible for
designation as a CAH only if it is either
physically located in a rural area or has been
reclassified as rural under 42 CFR 412.103.
CAHs can be affected by the recent OMB
labor market area delineations because
facilities that are currently participating as
CAHs that were previously located in rural
areas may now be located in urban areas as
a result of the new delineations. Previously,
in both in the FY 2005 IPPS final rule and
the FY 2010 IPPS/LTCH PPS final rule, we
revised the regulations to give currently
participating CAHs 2 years, from the effective
date of the earlier OMB designations, to
reclassify as rural facilities. However, these
regulation changes were specific to a
particular timeframe. As we are
implementing the latest OMB labor market
area delineations in this final rule, we are
providing that, effective October 1, 2014,
currently participating CAHs that are located
in an area that has been redesignated from
rural to urban under the new delineations
will again be treated as rural for 2 years from
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the date the new OMB delineations are
implemented. An affected CAH will have 2
years from the date the redesignation
becomes effective to reclassify as rural and
thereby retain its CAH status. If a CAH fails
to reclassify within those 2 years, it can no
longer participate in Medicare as a CAH.
However, unlike in previous years when the
regulation changes were specific to a
particular timeframe, the change that we are
making to the regulations is not specific to
a particular timeframe but will also apply to
future OMB labor market area delineations.
We estimate that this policy will have little
or no impact on Medicare expenditures
because we expect that virtually all of the
affected CAHs will be granted rural status by
the State in which they are located and,
therefore, will be able to apply for
reclassification as rural under § 412.103 in
order to retain their CAH status.
12. Effects of Revision of the Requirements
for Physician Certification of CAH Inpatient
Services
In section VI.D.3. of the preamble of this
final rule, we discuss the statutory
requirement for physician certification of
CAH inpatient services. For inpatient CAH
services to be payable under Medicare Part A,
section 1814(a)(8) of the Act requires that a
physician certify that the individual may
reasonably be expected to be discharged or
transferred to a hospital within 96 hours after
admission to the CAH. These statutory
requirements are addressed in the regulations
at 42 CFR 424.15. In order to provide CAHs
with additional flexibility in meeting
certification requirements, we are amending
the regulation text at § 424.11(d)(5) to remove
the phrase ‘‘or critical access hospital
inpatient’’. In addition, we are revising the
regulations at § 424.15(b) to read as follows:
‘‘Certification begins with the order for
inpatient admission. All certification
requirements must be completed, signed, and
documented in the medical record no later
than 1 day before the date on which the
claim for the inpatient CAH service is
submitted.’’ We do not believe there is any
significant impact on Medicare expenditures
associated with these changes because we are
simply providing CAHs with additional
flexibility in meeting the statutory
requirement for physician certification of
CAH inpatient services. The underlying
statutory requirement itself is unchanged.
13. Effects of Changes Relating to Technical
Correction to Administrative Appeals by
Providers and Judicial Review
In section VIII. of the preamble to this final
rule, we discuss the technical correction to
the regulations to eliminate provider
dissatisfaction as a requirement for PRRB
jurisdiction over appeals based on untimely
contractor determinations as well as the
change in terminology in Part 405 and Part
413 from ‘‘intermediary’’ or ‘‘fiscal
intermediary’’ to ‘‘contractor’’. There is no
impact to the provider resulting from these
provisions.
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I. Effects of Update to the Reasonable
Compensation Equivalent (RCE) Limits for
Compensation for Physician Services
Provided in Providers
In section VI.B. of the preamble of this
final rule, we discuss our finalized policy to
update and revise the methodology used to
calculate the reasonable compensation
equivalent (RCE) limits for compensation for
physician services provided in providers, in
accordance with our regulations at 42 CFR
415.70(f)(2). For CY 2015, we estimate that 59
cancer and children’s hospitals and 46 IPPS
teaching hospitals will be subject to the RCE
limits. We estimate the costs associated with
the updated RCE limits for CY 2015 to be
approximately $40 million. We do not expect
this RCE limit update to impact a significant
number of small, rural entities; therefore, a
full impact analysis is not required.
J. Effects of Changes in the Capital IPPS
1. General Considerations
For the impact analysis presented below,
we used data from the March 2014 update of
the FY 2013 MedPAR file and the March
2014 update of the Provider-Specific File
(PSF) that is used for payment purposes.
Although the analyses of the changes to the
capital prospective payment system do not
incorporate cost data, we used the March
2014 update of the most recently available
hospital cost report data (FYs 2011 and 2012)
to categorize hospitals. Our analysis has
several qualifications. We use the best data
available and make assumptions about casemix and beneficiary enrollment as described
below.
Due to the interdependent nature of the
IPPS, it is very difficult to precisely quantify
the impact associated with each change. In
addition, we draw upon various sources for
the data used to categorize hospitals in the
tables. In some cases (for instance, the
number of beds), there is a fair degree of
variation in the data from different sources.
We have attempted to construct these
variables with the best available sources
overall. However, it is possible that some
individual hospitals are placed in the wrong
category.
Using cases from the March 2014 update of
the FY 2013 MedPAR file, we simulated
payments under the capital IPPS for FY 2014
and FY 2015 for a comparison of total
payments per case. Any short-term, acute
care hospitals not paid under the general
IPPS (for example, Indian Health Service
hospitals and hospitals in Maryland) are
excluded from the simulations.
The methodology for determining a capital
IPPS payment is set forth at § 412.312. The
basic methodology for calculating capital
IPPS payments in FY 2015 is as follows:
(Standard Federal Rate) × (DRG weight) ×
(GAF) × (COLA for hospitals located in
Alaska and Hawaii) × (1 + DSH Adjustment
Factor + IME adjustment factor, if
applicable).
In addition to the other adjustments,
hospitals may also receive outlier payments
for those cases that qualify under the
threshold established for each fiscal year. We
modeled payments for each hospital by
multiplying the capital Federal rate by the
GAF and the hospital’s case-mix. We then
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added estimated payments for indirect
medical education, disproportionate share,
and outliers, if applicable. For purposes of
this impact analysis, the model includes the
following assumptions:
• We estimate that the Medicare case-mix
index will increase by 0.5 percent in both
FYs 2014 and 2015.
• We estimate that Medicare discharges
will be approximately 11.6 million in FY
2014 and 11.7 million in FY 2015.
• The capital Federal rate was updated
beginning in FY 1996 by an analytical
framework that considers changes in the
prices associated with capital-related costs
and adjustments to account for forecast error,
changes in the case-mix index, allowable
changes in intensity, and other factors. As
discussed in section III.A.1.a. of the
Addendum to this final rule, the update is
1.5 percent for FY 2015.
• In addition to the FY 2015 update factor,
the FY 2015 capital Federal rate was
calculated based on a GAF/DRG budget
neutrality adjustment factor of 0.9986 and an
outlier adjustment factor of 0.9373. As
discussed in section VI.C. of the preamble of
this final rule, we are not making an
additional MS–DRG documentation and
coding adjustment to the capital IPPS Federal
rates for FY 2015.
2. Results
We used the actuarial model described
above to estimate the potential impact of our
changes for FY 2015 on total capital
payments per case, using a universe of 3,396
hospitals. As described above, the individual
hospital payment parameters are taken from
the best available data, including the March
2014 update of the FY 2013 MedPAR file, the
March 2014 update to the PSF, and the most
recent cost report data from the March 2014
update of HCRIS. In Table III, we present a
comparison of estimated total payments per
case for FY 2014 and estimated total
payments per case for FY 2015 based on the
FY 2015 payment policies. Column 2 shows
estimates of payments per case under our
model for FY 2014. Column 3 shows
estimates of payments per case under our
model for FY 2015. Column 4 shows the total
percentage change in payments from FY 2014
to FY 2015. The change represented in
Column 4 includes the 1.5 percent update to
the capital Federal rate and other changes in
the adjustments to the capital Federal rate.
The comparisons are provided by: (1)
Geographic location; (2) region; and (3)
payment classification.
The simulation results show that, on
average, capital payments per case in FY
2015 are expected to increase as compared to
capital payments per case in FY 2014. This
expected increase is due primarily to the
approximately 1.2 percent increase in the
capital Federal rate for FY 2015 as compared
to the FY 2014 capital Federal rate. (For a
discussion of the determination of the capital
Federal rate, we refer readers to section III.A.
of the Addendum to this final rule.) Overall,
across all hospitals, the changes to the GAFs
are expected to have no net effect on capital
payments. However, regionally, the effects of
the changes to the GAFs on capital payments
are consistent with the projected changes in
payments due to changes in the wage index
(and policies affecting the wage index) as
shown in Table I in section I.G. of this
Appendix.
Overall, there is an increase in capital
payments per case due to the effects of
changes to the MS–DRG reclassifications and
recalibrations, with more of this increase
expected for urban hospitals. However, this
increase is offset by projected changes in
outlier payments for both urban and rural
hospitals. Rural areas are expected to
experience an offset to the projected increase
in capital payments per case due to the
effects of changes to the GAFs.
The net impact of these changes is an
estimated 1.5 percent change in capital
payments per case from FY 2014 to FY 2015
for all hospitals (as shown below in Table
III).
The geographic comparison shows that, on
average, all hospitals are expected to
experience an increase in capital IPPS
payments per case in FY 2015 as compared
to FY 2014. As we stated above, these
expected increases are primarily due to the
increase in the capital Federal rate. Capital
IPPS payments per case for hospitals in
‘‘large urban areas’’ are expected to have an
estimated increase of 1.7 percent, while
hospitals in rural areas, on average, are
expected to experience a 1.0 percent increase
in capital payments per case from FY 2014
to FY 2015. Capital IPPS payments per case
for ‘‘other urban hospitals’’ are estimated to
increase 1.4 percent. The primary factor
contributing to the difference in the projected
increase in capital IPPS payments per case
for urban hospitals as compared to rural
hospitals is the increase in capital payments
to urban hospitals due to changes to the MS–
DRG relative weights and the effect of
changes in the GAFs. The increase in capital
payments due to changes to the MS–DRG
relative weights is slightly lower for rural
hospitals than it is for urban hospitals. In
addition, rural hospitals are expected to
experience a slight decrease in capital
payments due to the effect of changes in the
GAFs, while urban hospitals are expected to
experience a slight increase in capital
50435
payments due to the effect of changes in the
GAFs.
The comparisons by region show that the
estimated increases in capital payments per
case from FY 2014 to FY 2015 in urban areas
range from a 2.4 percent increase for the
Pacific urban region to a 0.9 percent increase
for the West South Central urban region. For
rural regions, the Pacific rural region is
expected to experience the largest increase in
capital IPPS payments per case of 2.4
percent, while the Mountain rural region is
projected to have the smallest increase in
capital payments per case of 0.5 percent,
compared to FY 2014 payments per case.
Unlike most other urban and rural regions
where changes in the GAFs either contribute
to a projected decrease in capital payments
or only a small increase in capital payments,
the changes in the GAFs are a primary
contributor to the expected increase in
capital IPPS payments per case for the Pacific
urban and rural regions. A larger than
average decrease in capital payments per case
for the Mountain rural area due to the change
in outliers offsets the projected increases to
that area’s capital payments per case in FY
2015 compared to FY 2014.
Hospitals of all types of ownership (that is,
voluntary hospitals, government hospitals,
and proprietary hospitals) are estimated to
experience an increase in capital payments
per case from FY 2014 to FY 2015. The
increase in capital payments for voluntary
hospitals is estimated at 1.6 percent, and for
proprietary and government hospitals the
increase is estimated to be 1.4 percent.
Section 1886(d)(10) of the Act established
the MGCRB. Hospitals may apply for
reclassification for purposes of the wage
index for FY 2015. Reclassification for wage
index purposes also affects the GAFs because
that factor is constructed from the hospital
wage index. To present the effects of the
hospitals being reclassified as of the
publication of this final rule for FY 2015, we
show the average capital payments per case
for reclassified hospitals for FY 2015. Urban
reclassified hospitals are expected to
experience an increase in capital payments of
2.1 percent, whereas for urban
nonreclassified hospitals, the expected
increase is 1.4 percent. The estimated
percentage increase for rural reclassified
hospitals is 1.0 percent, and for rural
nonreclassified hospitals, the estimated
percentage increase is 0.7 percent. Other
reclassified hospitals (that is, hospitals
reclassified under section 1886(d)(8)(B) of the
Act) are expected to experience the largest
increase (2.2 percent) in capital payments
from FY 2014 to FY 2015.
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE
[FY 2014 payments compared to FY 2015 payments]
Number of
hospitals
By Geographic Location:
All hospitals ......................................................................
Large urban areas (populations over 1 million) ........
Other urban areas (populations of 1 million of
fewer) .....................................................................
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Average FY 2014
payments/case
Average FY 2015
payments/case
3,396
1,401
856
944
869
960
1.5
1.7
1,148
824
835
1.4
Sfmt 4700
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50436
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TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued
[FY 2014 payments compared to FY 2015 payments]
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
Number of
hospitals
Rural areas ................................................................
Urban hospitals .................................................................
0–99 beds ..................................................................
100–199 beds ............................................................
200–299 beds ............................................................
300–499 beds ............................................................
500 or more beds ......................................................
Rural hospitals ..................................................................
0–49 beds ..................................................................
50–99 beds ................................................................
100–149 beds ............................................................
150–199 beds ............................................................
200 or more beds ......................................................
By Region:
Urban by Region ..............................................................
New England .............................................................
Middle Atlantic ...........................................................
South Atlantic ............................................................
East North Central .....................................................
East South Central ....................................................
West North Central ....................................................
West South Central ...................................................
Mountain ....................................................................
Pacific ........................................................................
Puerto Rico ................................................................
Rural by Region ................................................................
New England .............................................................
Middle Atlantic ...........................................................
South Atlantic ............................................................
East North Central .....................................................
East South Central ....................................................
West North Central ....................................................
West South Central ...................................................
Mountain ....................................................................
Pacific ........................................................................
[There are no rural hospitals in Puerto Rico]
By Payment Classification:
All hospitals ......................................................................
Large urban areas (populations over 1 million) ...............
Other urban areas (populations of 1 million of fewer) .....
Rural areas .......................................................................
Teaching Status:
Non-teaching .............................................................
Fewer than 100 Residents ........................................
100 or more Residents ..............................................
Urban DSH:
100 or more beds ...............................................
Less than 100 beds ...........................................
Rural DSH:
Sole Community (SCH/EACH) ...........................
Referral Center (RRC/EACH) ............................
Other Rural:
100 or more beds .......................................
Less than 100 beds ....................................
Urban teaching and DSH:
Both teaching and DSH ............................................
Teaching and no DSH ...............................................
No teaching and DSH ...............................................
No teaching and no DSH ..........................................
Rural Hospital Types:
Non special status hospitals .....................................
RRC/EACH ................................................................
SCH/EACH ................................................................
SCH, RRC and EACH ...............................................
Hospitals Reclassified by the Medicare Geographic Classification Review Board:
FY2015 Reclassifications:
All Urban Reclassified ...............................................
All Urban Non-Reclassified .......................................
All Rural Reclassified ................................................
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Frm 00584
Average FY 2014
payments/case
Average FY 2015
payments/case
847
2,549
666
787
455
429
212
847
328
305
125
50
39
583
890
733
772
812
908
1,066
583
474
542
582
636
709
588
903
739
783
826
922
1,082
588
479
546
588
643
717
1.0
1.6
0.9
1.4
1.7
1.6
1.6
1.0
1.1
0.7
1.0
1.0
1.1
2,549
120
324
407
397
153
162
387
162
385
52
847
22
57
132
116
165
102
168
61
24
..............................
890
984
958
802
856
764
880
823
907
1,120
408
583
812
566
555
607
534
619
515
653
749
..............................
903
1,001
978
812
868
772
892
830
918
1,148
412
588
823
575
559
613
538
624
518
657
767
..............................
1.6
1.7
2.0
1.3
1.4
1.0
1.3
0.9
1.2
2.4
1.1
1.0
1.4
1.6
0.7
1.0
0.9
0.8
0.7
0.5
2.4
..............................
3,396
1,413
1,150
833
856
943
823
594
869
959
835
599
1.5
1.7
1.4
0.8
2,357
795
244
728
837
1,210
738
850
1,231
1.4
1.5
1.7
1,588
383
911
649
925
656
1.6
1.0
373
212
530
656
535
661
1.0
0.8
24
137
552
465
552
469
0.0
0.8
842
133
1,129
459
990
891
762
788
1,005
907
774
799
1.6
1.8
1.6
1.4
2,575
193
325
124
890
717
652
711
904
730
659
720
1.5
1.8
1.1
1.3
450
2,054
269
886
893
621
904
906
628
2.1
1.4
1.0
Fmt 4701
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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations
50437
TABLE III—COMPARISON OF TOTAL PAYMENTS PER CASE—Continued
[FY 2014 payments compared to FY 2015 payments]
Number of
hospitals
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All Rural Non-Reclassified ........................................
Other Reclassified Hospitals (Section 1886(d)(8)(B))
Type of Ownership:
Voluntary ...................................................................
Proprietary .................................................................
Government ...............................................................
Medicare Utilization as a Percent of Inpatient Days:
0–25 ...........................................................................
25–50 .........................................................................
50–65 .........................................................................
Over 65 ......................................................................
K. Effects of Payment Rate Changes and
Policy Changes Under the LTCH PPS
1. Introduction and General Considerations
In section VII. of the preamble of this final
rule and section V. of the Addendum to this
final rule, we set forth the annual update to
the payment rates for the LTCH PPS for FY
2015. In the preamble of this final rule, we
specify the statutory authority for the
provisions that are presented, identify those
policies, and present rationales for our
decisions as well as alternatives that were
considered. In this section of Appendix A to
this final rule, we discuss the impact of the
changes to the payment rate, factors, and
other payment rate policies related to the
LTCH PPS that are presented in the preamble
of this final rule in terms of their estimated
fiscal impact on the Medicare budget and on
LTCHs.
Currently, there are 422 LTCHs included in
this impacts analysis, which includes data
for 80 nonprofit (voluntary ownership
control) LTCHs, 330 proprietary LTCHs, and
12 LTCHs that are government-owned and
operated. (We note that, although there are
currently approximately 430 LTCHs, for
purposes of this impact analysis, we
excluded the data of all inclusive rate
providers and the LTCHs that are paid in
accordance with demonstration projects,
consistent with the development of the FY
2015 MS–LTC–DRG relative weights
(discussed in section VII.B.3.c. of the
preamble of this final rule)). In the impact
analysis, we used the payment rate, factors,
and policies presented in this final rule,
including the 2.2 percent annual update for
LTCHs that submit quality data in
accordance with section 1886(m)(5)(C) of the
Act, which is based on the full estimated
increase of the LTCH PPS market basket and
the reductions required by sections
1886(m)(3) and (m)(4) of the Act, the final
year of the phase-in of a one-time prospective
adjustment factor of 0.98734 (approximately
–1.3 percent), the update to the MS–LTC–
DRG classifications and relative weights, the
update to the wage index values, including
the implementation of the new OMB
delineations, and labor-related share, and the
best available claims and CCR data to
estimate the change in payments for FY 2015.
(As discussed in section VII.C. of the
preamble of this final rule, in accordance
with section 1886(m)(5)(C) of the Act, for
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Average FY 2014
payments/case
Average FY 2015
payments/case
514
59
533
581
536
594
0.7
2.2
1,935
892
542
868
776
895
882
787
908
1.6
1.4
1.4
501
2,081
601
93
1,023
871
717
648
1,038
884
728
654
1.5
1.5
1.5
1.0
LTCHs that fail to submit quality data, the
annual update to the LTCH PPS standard
Federal rate is reduced by 2.0 percentage
points in FY 2015.)
The standard Federal rate for FY 2014 is
$40,607.31 for LTCHs that submit quality
data in accordance with the requirements of
section 1886(m)(5)(C) of the Act. For FY
2015, we are establishing a standard Federal
rate of $41,043.71 (for LTCHs that submit
quality data in accordance with the
requirements of section 1886(m)(5)(C) of the
Act, which reflects the 2.2 percent annual
update to the standard Federal rate, and the
area wage budget neutrality factor of
1.0016703 to ensure that the changes in the
wage index, including the implementation of
the new OMB delineations, and labor-related
share do not influence aggregate payments,
and the final year of the phase-in of a onetime prospective adjustment factor of
0.98734. For LTCHs that fail to submit data
for the LTCHQR Program, in accordance with
section 1886(m)(5)(C) of the Act, we are
establishing a standard Federal rate of
$40,240.51. This reduced standard Federal
rate reflects the updates described above as
well as the required 2.0 percentage point
reduction to the annual update for failure to
submit data to the LTCHQR Program. We
note that the factors described above to
determine the FY 2015 standard Federal rate
are applied to the FY 2014 Federal standard
rate set forth under § 412.523(c)(3)(ix)(A)
(that is, $40,607.31).
Based on the best available data for the 422
LTCHs in our database, we estimate that the
annual update to the standard Federal rate
for FY 2015, the update to the MS–LTC–DRG
classifications relative weights for FY 2015
(discussed in section VII.B. of the preamble
to this final rule), and the changes to the area
wage adjustment for FY 2015 (discussed in
section V.B. of the Addendum to this final
rule), in addition to an estimated increase in
HCO payments will result in an increase in
estimated payments from FY 2014 of
approximately $62 million. Based on the 422
LTCHs in our database, we estimate that the
FY 2015 LTCH PPS payments would be
approximately $5.614 billion, as compared to
estimated FY 2014 LTCH PPS payments of
approximately $5.552 billion. Because the
combined distributional effects and
estimated changes to the Medicare program
payments are over approximately $100
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Change
million, this final rule is considered a major
economic rule, as defined in this section. We
note that the approximate $62 million for the
projected increase in estimated aggregate
LTCH PPS payments from FY 2014 to FY
2015 does not reflect changes in LTCH
admissions or case-mix intensity in estimated
LTCH PPS payments, which also will affect
overall payment changes. In addition, it does
not reflect the estimated change in aggregate
LTCH PPS payments due the projected
impact of certain other LTCH PPS policy
changes, which are discussed below in
section I.K.3.b. of this Appendix.
The projected 1.1 percent increase in
estimated payments per discharge from FY
2014 to FY 2015 is attributable to several
factors, including the 2.2 percent annual
update to the standard Federal rate (or 0.2
percent annual update for LTCHs that failed
to submit data under the requirements of the
LTCHQR Program), a one-time prospective
adjustment factor for FY 2015 of 0.98734
(approximately ¥1.3 percent), and projected
increases in estimated HCO payments.
Although the net effect of the 2.2 percent
annual update and the approximate ¥1.3
percent one-time prospective adjustment
factor is approximately 0.9 percent (that is,
2.2 percent¥1.3 percent = 0.9 percent), Table
IV (column 6) shows the estimated change
attributable solely to the annual update to the
standard Federal rate (2.2 percent for LTCHs
that submit quality data under the
requirements of the LTCHQR Program and
0.2 percent for LTCHs that failed submit
quality data under the requirements of the
LTCHQR Program), including a one-time
prospective adjustment factor for FY 2015
under the final year of the phase-in
(approximately¥1.3 percent), is projected to
result in an increase of 0.8 percent in
payments per discharge from FY 2014 to FY
2015, on average, for all LTCHs. In addition
to the 2.2 percent annual update for FY 2015,
and a ¥1.3 percent one-time prospective
adjustment factor for FY 2015, this estimated
increase in aggregate LTCH PPS payments of
0.8 percent shown in column 6 of Table IV
also includes estimated payments for SSO
cases that are paid using special
methodologies that are not affected by the
annual update to the standard Federal rate.
Therefore, for all hospital categories, the
projected increase in payments based on the
standard Federal rate is slightly less than the
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net effect of the 2.2 percent annual update
and the approximate ¥1.3 percent one-time
prospective adjustment factor (or 0.9 percent)
for FY 2015. Because we are applying an area
wage level budget neutrality factor to the
standard Federal rate, the annual update to
the wage data, including the implementation
of the new OMB delineations, and laborrelated share does not impact the increase in
aggregate payments.
As discussed in section V.B. of the
Addendum to this final rule, we are updating
the wage index values for FY 2015 based on
the most recent available data and the
adoption of the new OMB labor market area
delineations. Under our adoption of the new
OMB delineations, we are establishing and
applying a transitional blended wage index
for FY 2015 for LTCHs that will have a lower
wage index value under those delineations,
as discussed in section VII.D.2. of the
preamble of this final rule. Therefore, this
column reflects the blended wage index that
is calculated as a 50/50 blend of the wage
index under the current CBSA designations
and the wage index under the new OMB
delineations under our transitional wage
index policy. In addition, we are slightly
lowering the labor-related share from 62.537
percent to 62.306 percent under the LTCH
PPS for FY 2015, based on the most recent
available data on the relative importance of
the labor-related share of operating and
capital costs based on the FY 2009-based
LTCH-specific market basket. We also are
applying an area wage level budget neutrality
factor of 1.0016703, which increases the
standard Federal rate by approximately 0.17
percent. Therefore, the changes to the wage
data, including the adoption of the new OMB
delineations, and labor-related share do not
result in a change in estimated aggregate
LTCH PPS payments.
Table IV below shows the impact of the
payment rate and the policy changes on
LTCH PPS payments for FY 2015 presented
in this final rule by comparing estimated FY
2014 payments to estimated FY 2015
payments. The projected increase in
payments from FY 2014 to FY 2015 of 1.1
percent is attributable to the impacts of the
change to the standard Federal rate (0.9
percent in Column 6) and the effect of the
estimated slight increase in payments for
HCO cases (0.1 percent) and an estimated
increase in payments for SSO cases (0.2
percent). We currently estimate total HCO
payments are projected to increase slightly
from FY 2014 to FY 2015 in order to ensure
that the estimated HCO payments will be 8
percent of the total estimated LTCH PPS
payments in FY 2015. An analysis of the
most recent available LTCH PPS claims data
(that is, FY 2013 claims data from the March
2014 update of the MedPAR file) indicates
that the FY 2014 HCO threshold of $13,314
(as established in the FY 2014 IPPS/LTCH
PPS final rule) may-result in HCO payments
in FY 2015 that are slightly below the
estimated 8 percent. Specifically, we
currently estimate that HCO payments will
be approximately 7.9 percent of the estimated
total LTCH PPS payments in FY 2014. We
estimate that the impact of the slight increase
in HCO payments will result in
approximately a 0.1 percent increase in
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estimated payments from FY 2014 to FY
2015, on average, for all LTCHs. Furthermore,
in calculating the estimated HCO payments
for FYs 2014 and 2015, we increased
estimated costs by the applicable market
basket percentage increase as projected by
our actuaries. This increase in estimated
costs also results in a projected increase in
SSO payments of approximately 0.2 percent
relative to last year. The net result of these
projected changes in HCO and SSO payments
in FY 2015 is an estimated change in
aggregate payments of 0.3 percent. We note
that estimated payments for all SSO cases
comprise approximately 12 percent of the
estimated total LTCH PPS payments, and
estimated payments for HCO cases comprise
approximately 8 percent of the estimated
total FY 2015 LTCH PPS payments. Payments
for HCO cases are based on 80 percent of the
estimated cost of the case above the HCO
threshold, while the majority of the payments
for SSO cases (approximately 60 percent) are
based on the estimated cost of the case.
In addition to the projected increase in
LTCH PPS payments per discharge of
approximately $62 million (1.1 percent) from
FY 2014 to FY 2015, as shown in Table IV
below, we also estimate that the net effect of
the projected impact of certain other LTCH
PPS policy changes (that is, the reinstatement
of the moratorium on the full implementation
of the ‘‘25-percent policy’’ payment
adjustment; the reinstatement of the
moratorium on the development of new
LTCHs and LTCH satellite facilities and
additional LTCH beds; the revocation of
onsite discharges and readmissions policy;
and the payment adjustment for ‘‘subclause
(II)’’ LTCHs) will result in a $116 million
increase in aggregate LTCH PPS payments in
FY 2015. The individual impact of these
policy changes are discussed in greater detail
below in section I.K.3.b. of this Appendix.
As we discuss in detail throughout this
final rule, based on the most recent available
data, we believe that the provisions of this
final rule relating to the LTCH PPS will result
in an increase in estimated aggregate LTCH
PPS payments and that the resulting LTCH
PPS payment amounts will result in
appropriate Medicare payments.
2. Impact on Rural Hospitals
For purposes of section 1102(b) of the Act,
we define a small rural hospital as a hospital
that is located outside of an urban area and
has fewer than 100 beds. As shown in Table
IV, we are projecting a 1.2 percent increase
in estimated payments per discharge for FY
2015 as compared to FY 2014 for rural
LTCHs that will result from the changes
presented in this final rule, as well as the
effect of estimated changes to HCO and SSO
payments. This estimated impact is based on
the data for the 22 rural LTCHs in our
database (out of 422 LTCHs) for which
complete data were available.
The estimated increase in LTCH PPS
payments from FY 2014 to FY 2015 for rural
LTCHs (1.2 percent) is slightly greater than
the national average increase (1.1 percent).
The estimated increase in LTCH PPS
payments from FY 2014 to FY 2015 for rural
LTCHs is primarily due to the increase to the
standard Federal rate.
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3. Anticipated Effects of LTCH PPS Payment
Rate Changes and Policy Changes
a. Budgetary Impact
Section 123(a)(1) of the BBRA requires that
the PPS developed for LTCHs ‘‘maintain
budget neutrality.’’ We believe that the
statute’s mandate for budget neutrality
applies only to the first year of the
implementation of the LTCH PPS (that is, FY
2003). Therefore, in calculating the FY 2003
standard Federal rate under § 412.523(d)(2),
we set total estimated payments for FY 2003
under the LTCH PPS so that estimated
aggregate payments under the LTCH PPS
were estimated to equal the amount that
would have been paid if the LTCH PPS had
not been implemented.
As discussed above in section I.K.1. of this
Appendix, we project an increase in
aggregate LTCH PPS payments per discharge
in FY 2015 relative to FY 2014 of
approximately $62 million based on the 422
LTCHs in our database. In addition, as
discussed below in section I.K.3.b. of this
Appendix, we also estimate that the net effect
of the projected impact of certain other LTCH
PPS policy changes will result in a $116
million increase in aggregate LTCH PPS
payments in FY 2015.
b. Impact of Certain LTCH PPS Policy
Changes
(1) Reinstatement of the Moratorium on the
Full Implementation of the ‘‘25-Percent
Policy’’ Payment Adjustment (§ 412.534 and
§ 412.536) and Reinstatement of the
Moratorium on the Development of New
LTCHs and LTCH Satellites and Additional
LTCH beds (§ 412.23(e) and §§ 412.23(e)(6)
and (7))
Section 1206(b) of Public Law 113–67
provides for the retroactive reinstatement and
extension, for an additional 4 years, of the
moratorium on the full implementation of the
25-percent threshold payment adjustment
(referred to as the ‘‘25-percent policy’’
payment adjustment) established under
section 114(c) of the MMSEA, as amended by
section 4302(a) of the ARRA and sections
3106(c) and 10312(a) of the Affordable Care
Act. As discussed in section VII.E. of the
preamble of this final rule, we are reinstating
this payment adjustment retroactively for
LTCH cost reporting periods beginning on or
after July 1, 2013 or October 1, 2013, as
applicable under the regulations at § 412.534
and § 412.536.
Section 1206(b)(2) of Public Law 113–67,
as amended by section 112(b) of the
Protecting Access to Medicare Act of 2–14
(Pub. L. 113–93), provides for moratoria on
the establishment of new LTCHs and LTCH
satellite facilities and on bed increases in
LTCHs effective for the period beginning
April 1, 2014, and ending September 30,
2017. This statutory provision also provides
specific exceptions to the moratorium on the
establishment of new LTCHs and LTCH
satellites. We are implementing this policy
under the regulations at § 412.23(e) and
§§ 412.23(e)(6) and (7), respectively. For
additional details, refer to section VII.G. of
the preamble of this final rule.
Our Office of the Actuary projects that the
reinstatement of ‘‘25-percent policy’’
adjustment policy will result in
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approximately a $120 million increase in
aggregate LTCH PPS payments in FY 2015. In
addition, our Office of the Actuary projects
that the portion of the moratoria on the
establishment of new LTCHs and LTCH
satellite facilities and additional LTCH beds
that will occur during FY 2015 is estimated
to result in approximately a $30 million
reduction in aggregate LTCH PPS payments
in FY 2015. Therefore, we project our
implementation of both of these statutory
provisions will result in approximately a $90
million increase in aggregate LTCH PPS
payments in FY 2015.
(2) Revocation of On-Site Discharges and
Readmissions Policy (§ 412.532)
As discussed in section VII.F. of the
preamble of this final rule, we are removing
the discharge and readmission requirement
specified in the regulations under § 412.532
(referred to as the ‘‘5-percent payment
threshold’’). Under the ‘‘5-percent payment
threshold’’ policy, if an LTCH (or a LTCH
satellite facility) directly readmits more than
5 percent of its total Medicare inpatients
discharged from an ‘‘on-site facility’’ (for
example, a co-located acute care hospital, an
IRF, or a SNF, or in the case of a LTCH
satellite facility, that is co-located with an
LTCH), all such discharges to the co-located
‘‘on-site facility’’ and the readmissions to the
LTCH are treated as one discharge for that
cost reporting period, and, as such, one
LTCH PPS payment is made on the basis of
each patient’s initial principal diagnosis. We
estimate that the discontinuation of the ‘‘5percent payment threshold’’ policy will
result in an increase of approximately $20
million in aggregate LTCH PPS payments in
FY 2015. (We note, as also discussed in
section VII.F. of the preamble of this final
rule, after consideration of public comments,
we are not finalizing the proposed revision
the fixed-day thresholds under the greater
than 3-day interruption of stay policy under
§ 412.531.)
(3) Payment Adjustment for ‘‘Subclause (II)’’
LTCHs (§ 412.526)
Section 1206(d) of Public Law 113–67
requires the Secretary to evaluate payments
and regulations governing ‘‘hospitals which
are classified under subclause (II) of
subsection (d)(1)(B)(iv)’’. In addition, based
on the result of such evaluations, the statute
authorizes the Secretary to adjust the
payment rates for this type of hospital and to
adjust regulations governing a subclause (II)
LTCH that otherwise apply to subclause (I)
LTCHs. As discussed in section VII.H. of the
preamble of this final rule, under new
§ 412.526, we are applying a payment
adjustment under the LTCH PPS to a
subclause (II) LTCH beginning in FY 2015
that will result in payments to this type of
LTCH resembling those under the reasonable
cost TEFRA payment system model. Our
Office of the Actuary projects that the
payment adjustment for ‘‘subclause (II)’’
LTCHs will increase aggregate LTCH PPS
payments in FY 2015 by approximately $6
million.
c. Impact on Providers
The basic methodology for determining a
per discharge LTCH PPS payment is set forth
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under § 412.515 through § 412.536. In
addition to the basic MS–LTC–DRG payment
(the standard Federal rate multiplied by the
MS–LTC–DRG relative weight), we make
adjustments for differences in area wage
levels, a COLA for LTCHs located in Alaska
and Hawaii, and SSOs. Furthermore, LTCHs
may also receive HCO payments for those
cases that qualify based on the threshold
established each year.
To understand the impact of the changes
to the LTCH PPS payments presented in this
final rule on different categories of LTCHs for
FY 2015, it is necessary to estimate payments
per discharge for FY 2014 using the rates,
factors (including the FY 2014 GROUPER
(Version 31.0), and relative weights and the
policies established in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50753 through
50760 and 51002). It is also necessary to
estimate the payments per discharge that will
be made under the LTCH PPS rates and
factors, and GROUPER (Version 32.0) for FY
2015 (as discussed in section VII. of the
preamble of this final rule and section V. of
the Addendum to this final rule). These
estimates of FY 2014 and FY 2015 LTCH PPS
payments are based on the best available
LTCH claims data and other factors, such as
the application of inflation factors to estimate
costs for SSO and HCO cases in each year.
We also evaluated the change in estimated
FY 2014 payments to estimated FY 2015
payments (on a per discharge basis) for each
category of LTCHs. We are establishing a
standard Federal rate for FY 2015 of
$41,043.71 (for LTCHs that submit quality
data under the requirements of the LTCHQR
Program), which includes the 2.2 percent
annual update, the area wage budget
neutrality factor of 1.0016703, and a one-time
prospective adjustment to the standard
Federal rate for FY 2015 of 0.98734
(approximately ¥1.3 percent). For LTCHs
that fail to submit data to the LTCH Quality
Reporting Program, we are establishing a
standard Federal rate for FY 2015 of
$40,240.51 that includes a 2.0 percentage
point reduction applied to the annual update
under the requirements of section
1886(m)(5)(C) of the Act in addition to the
other adjustments noted above.
Hospital groups were based on
characteristics provided in the OSCAR data,
FY 2010 through FY 2012 cost report data in
HCRIS, and PSF data. Hospital groups
included the following:
• Location: large urban/other urban/rural.
• Participation date.
• Ownership control.
• Census region.
• Bed size.
To estimate the impacts of the payment
rates and policy changes among the various
categories of existing providers, we used
LTCH cases from the FY 2013 MedPAR file
to estimate payments for FY 2014 and to
estimate payments for FY 2015 for 422
LTCHs. We believe that the discharges based
on the FY 2013 MedPAR data for the 422
LTCHs in our database, which includes 330
proprietary LTCHs, provide sufficient
representation in the MS–LTC–DRGs
containing discharges for patients who
received LTCH care for the most commonly
treated LTCH patients’ diagnoses.
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50439
d. Calculation of Prospective Payments
For purposes of this impact analysis, to
estimate per discharge payments under the
LTCH PPS, we simulated payments on a
case-by-case basis using LTCH claims from
the FY 2013 MedPAR files. For modeling
estimated LTCH PPS payments for FY 2014,
we used the FY 2014 standard Federal rate
(that is, $40,607.31 for LTCHs that submit
quality data under the requirements of the
LTCHQR Program and $39,808.74 for LTCHs
that failed to submit quality data under the
requirements of the LTCHQR Program) used
to make payments for LTCH discharges
occurring on or after October 1, 2013 through
September 30, 2014).
For modeling estimated LTCH PPS
payments for FY 2015, we used the FY 2015
standard Federal rate of $41,043.71 (for
LTCHs that submit quality data under the
requirements of the LTCHQR Program),
which includes a one-time prospective
adjustment of 0.98734 for FY 2015 for the
final year of the 3-year phase-in. For LTCHs
that we project to have failed to submit the
requisite quality data for FY 2015 under the
LTCH Quality Reporting Program, we used
the FY 2015 standard Federal rate of
$40,240.51, which reflects the 2.0 percentage
points reduction required by section
1886(m)(5)(C) of the Act. The FY 2015
standard Federal rates also include the
application of an area wage level budget
neutrality factor of 1.0016703 (as discussed
in section V.B.5. of the Addendum to this
final rule). Furthermore, in modeling
estimated LTCH PPS payments for both FY
2014 and FY 2015 in this impact analysis, we
applied the FY 2014 and the FY 2015
adjustments for area wage levels and the
COLA for LTCHs located in Alaska and
Hawaii. Specifically, we adjusted for
differences in area wage levels in
determining estimated FY 2014 payments
using the current LTCH PPS labor-related
share of 62.537 percent (78 FR 50995 through
50996) and the wage index values established
in the Tables 12A and 12B listed in the
Addendum to the FY 2014 IPPS/LTCH PPS
final rule (which are available via the
Internet on the CMS Web site. We also
applied the FY 2014 COLA factors shown in
the table in section V.C. of the Addendum to
that final rule (78 FR 50997 through 50998)
to adjust the FY 2014 nonlabor-related share
(37.463 percent) for LTCHs located in Alaska
and Hawaii. Similarly, we adjusted for
differences in area wage levels in
determining the estimated FY 2015 payments
using the FY 2015 LTCH PPS labor-related
share of 62.306 percent and the FY 2015
wage index values, including the 50/50
blended wage index, determined from the
wage index values presented in Tables 12A
through 12D listed in section VI. of the
Addendum to this final rule (and available
via the Internet). We also applied the FY
2015 COLA factors shown in the table in
section V.C. of the Addendum to this final
rule to the FY 2015 nonlabor-related share
(37.694 percent) for LTCHs located in Alaska
and Hawaii.
As discussed above, our impact analysis
reflects an estimated change in payments for
SSO cases, as well as an estimated increase
in payments for HCO cases (as described in
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section V.D. of the Addendum to this final
rule). In modeling payments for SSO and
HCO cases in FY 2015, we applied an
inflation factor of 5.0 percent (determined by
OACT) to estimate the costs of each case
using the charges reported on the claims in
the FY 2013 MedPAR files and the best
available CCRs from the March 2014 update
of the PSF. Furthermore, in modeling
estimated LTCH PPS payments for FY 2015
in this impact analysis, we used the FY 2015
fixed-loss amount of $14,972 (as discussed in
section V.D. of the Addendum to this final
rule).
These impacts reflect the estimated
‘‘losses’’ or ‘‘gains’’ among the various
classifications of LTCHs from FY 2014 to FY
2015 based on the payment rates and policy
changes presented in this final rule. Table IV
illustrates the estimated aggregate impact of
the LTCH PPS among various classifications
of LTCHs.
• The first column, LTCH Classification,
identifies the type of LTCH.
• The second column lists the number of
LTCHs of each classification type.
• The third column identifies the number
of LTCH cases.
• The fourth column shows the estimated
payment per discharge for FY 2014 (as
described above).
• The fifth column shows the estimated
payment per discharge for FY 2015 (as
described above).
• The sixth column shows the percentage
change in estimated payments per discharge
from FY 2014 to FY 2015 due to the annual
update to the standard Federal rate (as
discussed in section V.A.2. of the Addendum
to this final rule, including the 2.0 percentage
point reduction to the update to the standard
Federal rate for LTCHs that fail to submit
data to the LTCHQR Program) and the final
year of the phase-in of a one-time prospective
adjustment factor for FY 2015.
• The seventh column shows the
percentage change in estimated payments per
discharge from FY 2014 to FY 2015 for
changes to the area wage level adjustment
(that is, the wage indexes, including the
implementation of the new OMB
delineations, and the labor-related share),
including the application of an area wage
level budget neutrality factor (as discussed in
section V.B. of the Addendum to this final
rule. This column includes the wage index
calculated as a 50/50 blend of the wage index
under the current CBSA designations and the
wage index under the new OMB delineations
under our transitional wage index policy for
the implementation of the new OMB
delineations.
• The eighth column shows the percentage
change in estimated payments per discharge
from FY 2014 (Column 4) to FY 2015
(Column 5) for all changes (and includes the
effect of estimated changes to HCO and SSO
payments).
TABLE IV—IMPACT OF PAYMENT RATE AND POLICY CHANGES TO LTCH PPS PAYMENTS FOR FY 2015
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[Estimated FY 2014 payments compared to estimated FY 2015 payments]
LTCH Classification
Number of
LTCHs
Number of
LTCH PPS
cases
Average FY
2014 LTCH
PPS payment
per case
(1)
(2)
(3)
(4)
ALL PROVIDERS ........
BY LOCATION:
RURAL ..................
URBAN .................
LARGE ...........
OTHER ..........
BY PARTICIPATION
DATE:
BEFORE OCT.
1983 ..................
OCT. 1983–SEPT.
1993 ..................
OCT. 1993–SEPT.
2002 ..................
OCTOBER 2002
and AFTER .......
BY OWNERSHIP
TYPE:
VOLUNTARY ........
PROPRIETARY ....
GOVERNMENT ....
BY REGION:
NEW ENGLAND ...
MIDDLE ATLANTIC .....................
SOUTH ATLANTIC
EAST NORTH
CENTRAL ..........
EAST SOUTH
CENTRAL ..........
WEST NORTH
CENTRAL ..........
WEST SOUTH
CENTRAL ..........
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Average FY
2015 LTCH
PPS payment
per case 1
Percent
change in
estimated
payments per
discharge from
FY 2014 to FY
2015 for the
annual update
to the federal
rate 2
(5)
(6)
Percent
change in
estimated
payments per
discharge from
FY 2014 to FY
2015 for
changes to the
area wage
level adjustment with
budget
neutrality 3
Percent
change in
payments per
discharge from
FY 2014 to FY
2015 for all
changes 4
(7)
(8)
422
138,281
40,149
40,600
0.8
0.0
1.1
22
400
200
200
5,695
132,586
76,559
56,027
35,361
40,355
42,561
37,341
35,770
40,808
43,060
37,730
0.8
0.8
0.8
0.8
¥0.1
0.0
0.1
¥0.1
1.2
1.1
1.2
1.0
16
5,209
37,151
38,039
0.8
0.9
2.4
44
16,841
43,306
43,778
0.8
¥0.1
1.1
181
62,870
39,354
39,754
0.8
¥0.1
1.0
181
53,361
40,383
40,845
0.8
0.0
1.1
80
330
12
18,696
117,767
1,818
41,099
39,916
45,491
41,674
40,350
45,750
0.8
0.8
0.8
0.2
0.0
¥0.4
1.4
1.1
0.6
14
6,959
36,468
37,339
0.8
1.0
2.4
29
61
8,545
18,609
42,861
42,491
43,626
42,848
0.8
0.8
0.9
¥0.2
1.8
0.8
70
20,160
41,699
42,165
0.8
0.2
1.1
31
8,962
39,380
39,745
0.8
¥0.4
0.9
26
6,473
39,500
39,986
0.8
0.1
1.2
134
48,290
35,668
35,968
0.8
¥0.4
0.8
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50441
TABLE IV—IMPACT OF PAYMENT RATE AND POLICY CHANGES TO LTCH PPS PAYMENTS FOR FY 2015—Continued
[Estimated FY 2014 payments compared to estimated FY 2015 payments]
LTCH Classification
Number of
LTCHs
Number of
LTCH PPS
cases
Average FY
2014 LTCH
PPS payment
per case
(1)
(2)
(3)
(4)
MOUNTAIN ...........
PACIFIC ................
BY BED SIZE:
BEDS: 0–24 ..........
BEDS: 25–49 ........
BEDS: 50–74 ........
BEDS: 75–124 ......
BEDS: 125–199 ....
BEDS: 200 + .........
Average FY
2015 LTCH
PPS payment
per case 1
Percent
change in
estimated
payments per
discharge from
FY 2014 to FY
2015 for the
annual update
to the federal
rate 2
(5)
(6)
Percent
change in
estimated
payments per
discharge from
FY 2014 to FY
2015 for
changes to the
area wage
level adjustment with
budget
neutrality 3
Percent
change in
payments per
discharge from
FY 2014 to FY
2015 for all
changes 4
(7)
(8)
32
25
6,809
13,474
43,154
50,143
43,692
50,825
0.8
0.8
0.1
0.2
1.2
1.4
24
200
117
45
22
14
2,591
47,301
37,621
22,107
15,387
13,274
35,097
39,156
40,747
41,907
39,065
41,312
35,370
39,565
41,258
42,416
39,492
41,708
0.9
0.8
0.8
0.8
0.8
0.8
¥0.3
¥0.1
0.1
0.2
¥0.1
¥0.2
0.8
1.0
1.3
1.2
1.1
1.0
tkelley on DSK3SPTVN1PROD with REGISTER-BK 2 CV
1 Estimated FY 2015 LTCH PPS payments based on the payment rate and factor changes presented in the preamble of and the Addendum to
this final rule.
2 Percent change in estimated payments per discharge from FY 2014 to FY 2015 for the annual update to the standard Federal rate and the
one-time prospective adjustment factor for FY 2015 as discussed in section V.A.2. of the Addendum to this final rule.
3 Percent change in estimated payments per discharge from FY 2014 to FY 2015 for changes to the area wage level adjustment under
§ 412.525(c) (as discussed in section V.B. of the Addendum to this final rule).
4 Percent change in estimated payments per discharge from FY 2014 LTCH PPS (shown in Column 4) to FY 2015 LTCH PPS (shown in Column 5), including all of the changes to the rates and factors presented in the preamble of and the Addendum to this final rule. Note, this column,
which shows the percent change in estimated payments per discharge for all changes, does not equal the sum of the percent changes in estimated payments per discharge for the annual update to the standard Federal rate (column 6) and the changes to the area wage level adjustment
with budget neutrality (Column 7) due to the effect of estimated changes in both estimated payments to SSO cases that are paid based on estimated costs and aggregate HCO payments (as discussed in this impact analysis), as well as other interactive effects that cannot be isolated.
e. Results
Based on the most recent available data for
422 LTCHs, we have prepared the following
summary of the impact (as shown above in
Table IV) of the LTCH PPS payment rate and
policy changes presented in this final rule.
The impact analysis in Table IV shows that
estimated payments per discharge are
expected to increase 1.1 percent, on average,
for all LTCHs from FY 2014 to FY 2015 as
a result of the payment rate and policy
changes presented in this final rule,
including an estimated slight increase in
HCO payments. This estimated 1.1 percent
increase in LTCH PPS payments per
discharge from the FY 2014 to FY 2015 for
all LTCHs (as shown in Table IV) was
determined by comparing estimated FY 2015
LTCH PPS payments (using the payment
rates and factors discussed in this final rule)
to estimated FY 2014 LTCH PPS payments
(as described in section I.K.3.d. of this
Appendix).
We are establishing a standard Federal rate
of $41,043.71 (or a standard Federal rate of
$40,240.51 for LTCHs that failed to submit
data under the requirements of the LTCHQR
Program) for FY 2015. Specifically, we are
updating the standard Federal rate for FY
2015 by 2.2 percent, which is based on the
latest estimate of the LTCH PPS market
basket increase (2.9 percent), the reduction of
0.5 percentage point for the MFP adjustment,
and the 0.2 percentage point reduction
consistent with sections 1886(m)(3) and
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(m)(4) of the Act. For LTCHs that fail to
submit quality data under the requirements
of the LTCHQR Program, as required by
section 1886(m)(5)(C) of the Act, a 2.0
percentage point reduction is applied to the
annual update to the standard Federal rate.
In addition, we are applying a one-time
prospective adjustment factor for FY 2015 of
0.98734 (approximately –1.3 percent) to the
standard Federal rate for the final year of the
3-year phase-in.
We noted earlier in this section that, for
most categories of LTCHs, as shown in Table
IV (Column 6), the payment increase due to
the 2.2 percent annual update to the standard
Federal rate and the application of a one-time
prospective adjustment for FY 2015 of
approximately ¥1.3 percent for the final year
of the 3-year phase-in is projected to result
in approximately a 0.8 percent increase in
estimated payments per discharge for all
LTCHs from FY 2014 to FY 2015.
In addition, our estimate of the changes in
payments due to the update to the standard
Federal rate also reflects estimated payments
for SSO cases that are paid using special
methodologies that are not affected by the
update to the standard Federal rate. For these
reasons, we estimate that payments may
increase by less than 0.9 percent for certain
hospital categories due to the annual update
to the standard Federal rate and the
application of the final phase of the one-time
prospective adjustment for FY 2015.
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(1) Location
Based on the most recent available data,
the vast majority of LTCHs are located in
urban areas. Only approximately 5 percent of
the LTCHs are identified as being located in
a rural area, and approximately 4 percent of
all LTCH cases are treated in these rural
hospitals. The impact analysis presented in
Table IV shows that the average percent
increase in estimated payments per discharge
from FY 2014 to FY 2015 for all hospitals is
1.1 percent for all changes. For rural LTCHs,
the percent change for all changes is
estimated to be a 1.2 percent increase, while
for urban LTCHs, we estimate the increase
will be 1.1 percent. Large urban LTCHs are
projected to experience an increase of 1.2
percent in estimated payments per discharge
from FY 2014 to FY 2015, while other urban
LTCHs are projected to experience an
increase of 1.0 percent in estimated payments
per discharge from FY 2014 to FY 2015, as
shown in Table IV.
(2) Participation Date
LTCHs are grouped by participation date
into four categories: (1) Before October 1983;
(2) between October 1983 and September
1993; (3) between October 1993 and
September 2002; and (4) October 2002 and
after. Based on the most recent available data,
the categories of LTCHs with the largest
percentage of LTCH cases (approximately 45
percent) are in hospitals that began
participating in the Medicare program
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between October 1993 and September 2002,
and they are projected to experience a 1.0
percent increase in estimated payments per
discharge from FY 2014 to FY 2015, as
shown in Table IV.
Approximately 4 percent of LTCHs began
participating in the Medicare program before
October 1983, and these LTCHs are projected
to experience a higher than average percent
increase (2.4 percent) in estimated payments
per discharge from FY 2014 to FY 2015, as
shown in Table IV. Approximately 10
percent of LTCHs began participating in the
Medicare program between October 1983 and
September 1993. These LTCHs are projected
to experience a 1.1 percent increase in
estimated payments from FY 2014 to FY
2015. LTCHs that began participating in the
Medicare program after October 1, 2002,
which treat approximately 39 percent of all
LTCH cases, are projected to experience a 1.1
percent increase in estimated payments from
FY 2014 to FY 2015.
(3) Ownership Control
LTCHs are grouped into three categories
based on ownership control type: voluntary,
proprietary, and government. Based on the
most recent available data, approximately 19
percent of LTCHs are identified as voluntary
(Table IV). The majority (nearly 78 percent)
of LTCHs are identified as proprietary while
government-owned and operated LTCHs
represent about 3 percent of LTCHs. Based on
ownership type, voluntary LTCHs are
expected to experience an above average
increase in payments of 1.4 percent;
proprietary LTCHs are expected to
experience an increase of 1.1 percent in
payments, while government-owned and
operating LTCHs are expected to experience
an increase in payments that is less than the
national average of 0.6 percent from FY 2014
to FY 2015.
(4) Census Region
Estimated payments per discharge for FY
2015 are projected to increase for LTCHs
located in all regions in comparison to FY
2014. Of the 9 census regions, we project that
the increase in estimated payments per
discharge will have the largest positive
impact on LTCHs in the New England and
Middle Atlantic regions (2.4 percent and 1.8
percent, respectively as shown in Table IV).
The estimated percent increase in payments
per discharge from FY 2014 to FY 2015 for
those regions is largely attributable to the
changes in the area wage level adjustment.
In contrast, LTCHs located in the South
Atlantic and West South Central regions are
projected to experience the smallest increase
in estimated payments per discharge from FY
2014 to FY 2015. The lower than national
average estimated increase in payments of 0.8
percent is primarily due to estimated
decreases in payments associated with the
changes to the area wage level adjustment.
(5) Bed Size
LTCHs are grouped into six categories
based on bed size: 0–24 beds; 25–49 beds;
50–74 beds; 75–124 beds; 125–199 beds; and
greater than 200 beds. Most bed size
categories are projected to receive either a
slightly higher or slightly lower than average
increase in estimated payments per discharge
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from FY 2014 to FY 2015. We project that
small LTCHs (0–24 beds) will experience a
0.8 percent increase in payments, which is
less than the nation average mostly due to
decreases in the area wage level adjustment,
while large LTCHs (200+ beds) will
experience a 1.0 percent increase in
payments. LTCHs with between 75 and 124
beds are expected to experience an above
average increase in payments per discharge
from FY 2014 to FY 2015 (1.2 percent).
4. Effect on the Medicare Program
As noted previously, we project that the
provisions of this final rule will result in an
increase in estimated aggregate LTCH PPS
payments in FY 2015 relative to FY 2014 of
approximately $62 million (or approximately
1.1 percent) for the 422 LTCHs in our
database.
5. Effect on Medicare Beneficiaries
Under the LTCH PPS, hospitals receive
payment based on the average resources
consumed by patients for each diagnosis. We
do not expect any changes in the quality of
care or access to services for Medicare
beneficiaries under the LTCH PPS, but we
continue to expect that paying prospectively
for LTCH services will enhance the efficiency
of the Medicare program.
L. Effects of Requirements for the Hospital
Inpatient Quality Reporting (IQR) Program
In section IX.A. of the preamble of this
final rule, we discuss our requirements for
hospitals to report quality data under the
Hospital IQR Program in order to receive the
full annual percentage increase for the FY
2017 payment determination. We are
removing a total of 19 measures from the
Hospital IQR Program for the FY 2017
payment determination and subsequent
years, which begins in the CY 2015 reporting
period. The first five measures are: (1) AMI–
1 Aspirin at arrival (NQF #0132); (2) AMI–
3 ACEI/ARB for left ventricular systolic
dysfunction (NQF #0137); (3) AMI–5 Betablocker prescribed at discharge (NQF #0160);
(4) SCIP INF–6 Appropriate Hair Removal;
and (5) Participation in a systematic database
for cardiac surgery (NQF #0113). Of these
five measures, the first four are currently
suspended. The fifth measure was
recommended by the MAP for removal
because it is ‘‘topped-out.’’ We believe that
an additional 14 chart-abstracted measures
are ‘‘topped out,’’ based on the previously
adopted criteria, and we are removing them
from the FY 2017 payment determination
and subsequent years measure set. However,
we are retaining the electronic clinical
quality measure version of 10 of these chartabstracted measures for Hospital IQR
Program reporting as discussed in section
IX.A.7.f. of the preamble of this final rule.
We also are adding one chart-abstracted
measure for the FY 2017 payment
determination and subsequent years in this
final rule: Severe sepsis and septic shock:
management bundle (NQF #0500).
We are incorporating refinements for
several measures for the FY 2017 payment
determination and subsequent years that
were previously adopted in the Hospital IQR
Program. These refinements have either
arisen out of the NQF endorsement
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maintenance process, or during our internal
efforts to harmonize measure approaches.
The measure refinements include the
following: (1) Refining the planned
readmission algorithm for all seven
readmission measures included in the
Hospital IQR Program; (2) modifying the hip/
knee readmission and complication measure
cohorts to exclude index admissions with a
secondary fracture diagnosis; and (3)
modifying the hip/knee complication
measure to not count as complications coded
as ‘‘present on admission’’ (POA) during the
index admission. We do not anticipate any
hospital burden associated with these
revisions, as each is based on claims
submitted by hospitals for payment purposes.
Information is not available to determine
the precise number of hospitals that would
not meet the requirements to receive the full
annual percentage increase for the FY 2017
payment determination. Historically, an
average of 100 hospitals that participate in
the Hospital IQR Program do not receive the
full annual percentage increase in any fiscal
year. We anticipate that because of the new
requirements we are finalizing for reporting
for the FY 2017 payment determination, the
number of hospitals not receiving the full
annual percentage increase may be higher
than average. The highest number of
hospitals failing to meet program
requirements was approximately 200 after
the introduction of new NHSN reporting
requirements. If the number of hospitals
failing does increase because of new
requirements, we anticipate that over the
long run, this number will decline as
hospitals gain more experience with these
requirements.
In the FY 2014 IPPS/LTCH PPS final rule,
we estimated that the burden for the FY 2016
payment determination was 1,775 hours
annually per hospital and 5.86 million hours
across all 3,300 hospitals participating in the
Hospital IQR Program (78 FR 50956).
However, we have re-estimated the total
number of hours associated with the
requirements finalized for the FY 2016
payment determination to be 1,309 hours per
hospital or a total of 4.3 million hours for all
hospitals using more recent information from
the clinical data warehouse than was
available in August 2013.
As discussed in section XIII.B.6. of the
preamble of this final rule, we estimate that
our proposals for the adoption and removal
of measures will result in an overall
reduction in the total burden for hospitals for
the FY 2017 payment determination for
reporting chart-abstracted and structural
measures, completing forms, reviewing
reports, and submitting validation templates
of 160 hours per hospital or 0.5 million hours
across all hospitals compared to the total
burden for participating hospitals in the
Hospital IQR Program for the FY 2016
payment determination. The numbers
included in our finalized policy more
accurately reflect the burden associated with
our program than the estimates provided in
our proposal. As a result, the total burden for
approximately 3,300 hospitals for the FY
2017 payment determination will be 1,149
hours per hospital or 3.8 million hours across
all hospitals. This burden estimate includes
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both the newly finalized measures and the
measures we are continuing. The burden
estimates in this final rule are the estimates
for which we are requesting OMB approval.
50443
The table below describes the hospital
burden associated with the Hospital IQR
Program requirements.
BURDEN IMPACT OF HOSPITAL IQR PROGRAM REQUIREMENTS FOR FY 2017
Hospital IQR Program Requirement
Number of hospitals
impacted
Burden per hospital
for previously finalized
requirements
Burden per hospital
for all requirements as
finalized (continuing,
removed, added)
Chart-abstracted and structural measures, forms ....
Review reports for claims-based measures .............
Reporting of voluntary electronic clinical quality
measures in place of chart-abstracted measures.
Validation templates ..................................................
Electronic clinical quality measure validation test ....
Validation charts photocopying .................................
3,300 .........................
3,300 .........................
Unknown* ..................
1,291 hours ...............
4 hours ......................
¥385 hours ...............
1,131 hours ...............
4 hours ......................
¥425 hours ...............
¥160 hours.
0.
¥40 hours.
Up to 600** ................
Up to 100** ................
Up to 600 ..................
72 hours ....................
0 ................................
$8,640 .......................
72 hours ....................
16 hours ....................
$8,496 .......................
0.
16 hours.
$¥144.
Net change in
burden per
hospital
* This number is unknown at the time this table was prepared because final submission deadlines have not passed. Because the burden associated with participation is negative, we assumed this number to be 0 in summary calculations included in the narrative.
** Maximum numbers were used in summary calculations included in the narrative.
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We estimate that the total burden
associated with the voluntary electronic
clinical quality measure reporting option will
be similar to the burden outlined for
hospitals in the Medicare EHR Incentive
Program Stage 2 final rule (77 FR 53968
through 54162). In this rule, we finalize a
policy allowing hospitals to submit data for
a maximum of 16 measures that can be used
to satisfy partial requirements for both
programs. We estimate that each hospital that
participates in the voluntary electronic
quality measure reporting option could
realize a maximum reduction in burden of up
to approximately 425 hours by submitting
data for all 12 required chart-abstracted
measures that are also electronically
specified.
M. Effects of Requirements for the PPSExempt Cancer Hospital Quality Reporting
(PCHQR) Program for FY 2017
In section IX.B. of the preamble of this
final rule, we discuss our policies for the
quality data reporting program for PPSexempt cancer hospitals (PCHs), which we
refer to as the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program. The
PCHQR Program is authorized under section
1866(k) of the Act, which was added by
section 3005 of the Affordable Care Act. In
this final rule, we are requiring that PCHs
submit data on one additional measure
beginning with the FY 2017 program which
will increase the total number of measures in
the FY 2017 PCHQR measure set to 19
measures. We also are updating the
specifications for the five previously
finalized clinical process/oncology care
measures to require PCHs to report all-patient
data for each of these measures, and to adopt
a new sampling methodology that PCHs can
use to report these measures, as well as the
newly finalized EBRT for bone metastases
measure. We also are providing PCHs with
two reporting options to report the clinical
process/oncology care, SCIP, and clinical
process/cancer specific treatment measures.
The impact of the new requirements for the
PCHQR Program is expected to be minimal
overall because some PCHs are already
submitting previously adopted quality
measure data to CMS. As a result, these PCHs
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are familiar with our IT infrastructure and
programmatic operations. In addition to
fostering transparency and facilitating public
reporting, we believe our requirements
uphold our goals in improving quality of care
and achieving better health outcomes, which
outweighs burden.
One expected effect of the PCHQR Program
is to keep the public informed of the quality
of care provided by PCHs. We will publicly
display quality measure data collected under
the PCHQR Program as required under the
Act. These data will be displayed on the
Hospital Compare Web site. The goals of
making these data available to the public in
a user-friendly and relevant format, include,
but are not limited to: (1) Allowing the public
to compare PCHs in order to make informed
health care decisions regarding care setting;
and (2) providing information about current
trends in health care. Furthermore, PCHs can
use their own health care quality data for
many purposes such as in risk management
programs, healthcare associated infection
prevention programs, and research and
development activities, among others.
N. Effects of Requirements for the Long-Term
Care Hospital Quality Reporting (LTCHQR)
Program for FY 2015 Through FY 2018
In section IX.C. of the preamble of this
final rule, we discuss the implementation of
section 1886(m)(5) of the Act, which was
added by section 3004(a) of the Affordable
Care Act. Section 1886(m)(5) of the Act
provides that, for rate year 2014 and each
subsequent year, any LTCH that does not
submit data to the Secretary in accordance
with section 1886(m)(5)(C) of the Act shall
receive a 2-percentage point reduction to the
annual update to the standard Federal rate
for discharges for the hospital during the
applicable fiscal year. In the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51839 through
51840), we estimated that only a few LTCHs
would not receive the full annual percentage
increase in any fiscal year as a result of
failure to submit data under the LTCHQR
Program. Information is not available to
determine the precise number of LTCHs that
would not meet the requirements to receive
the full annual percentage increase for the FY
2016 payment determination. At the time
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that this analysis was prepared, 8 of the 442
active Medicare-certified LTCHs did not
receive the full annual percentage increase
for the FY 2014 payment determination. We
believe that a majority of LTCHs will
continue to collect and submit data for the
FY 2015 payment determination and
subsequent years because they will continue
to view the LTCHQR Program as an
important step in improving the quality of
care patients receive in the LTCHs. We
believe that the burden associated with the
LTCHQR Program is the time and effort
associated with data collection. There are
approximately 442 LTCHs currently
reporting quality data to CMS.
In this final rule, we are retaining seven
previously finalized measures, revising two
previously finalized measures, and are
finalizing three additional quality measures
for inclusion in the LTCHQR Program. In
section IX.C.7. of the preamble of this final
rule, we are finalizing three new quality
measures for inclusion in the LTCHQR
Program affecting the FY 2018 payment
determination and subsequent years: (1)
Percent of Long-Term Care Hospital Patients
with an Admission and Discharge Functional
Assessment and a Care Plan That Addresses
Function; (2) Functional Outcome Measure:
Change in Mobility among Long-Term Care
Hospital Patients Requiring Ventilator
Support; and (3) National Healthcare Safety
Network (NHSN) Ventilator-Associated Event
(VAE) Outcome Measure.
Six of the previously adopted and newly
finalized measures will be collected via the
NHSN. In section IX.C.7.b. of the preamble of
this final rule, we are finalizing our proposal
to collect the NHSN VAE Outcome Measure.
Normally, we would only discuss the burden
associated with those measures that were
proposed or finalized in any given rule.
Because we have access to information that
now indicates our previous calculations for
the CAUTI, CLABSI, MRSA, and CDI were
incorrect (we estimated in the FY 2014 IPPS/
LTCH PPS final rule (78 FR 50959 through
50964) that LTCHs would submit six
infection events per month for each of these
measures), we offer below the recalculation
of the associated burden. Based on
submissions to the NHSN, we now estimate
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that each LTCH will make approximately 7
NHSN submissions per month: 1 MRSA
event; 1 CDI event; 2 CLABSI events; 3
CAUTI events (84 events per LTCH
annually). This equates to a total of
approximately 37,128 submissions of events
to the NHSN from all LTCHs per year
(includes CAUTI, CLABSI, MRSA, and CDI).
The CDC estimated the public reporting
burden of the collection of information for
each measure to include the time for
reviewing instructions, searching existing
data sources, gathering and maintaining the
data needed, and completing and reviewing
the collection of information. MRSA and CDI
events are estimated to require an average of
15 minutes per response (10 minutes of
clinical (RN) time, and 5 minutes of clerical
(Medical Record or Healthcare Information
Technician)). CAUTI is estimated to require
an average of 29 minutes per response, and
CLABSI events are estimated to require an
average of 32 minutes per response. In
addition, each LTCH must also complete a
Patient Safety Monthly Reporting Plan
estimated at 35 minutes per Plan and a
Denominator for Specialty Care Area, which
is estimated at 5 hours per month. Based on
this estimate, we expect each LTCH will
expend 8.6 hours per month for each LTCH,
103.2 hours annually for each LTCH or
45,614.4 hours annually for all LTCHs
reporting to the NHSN.
In addition, each LTCH must submit the
Influenza Vaccination Coverage among
Healthcare Personnel (NQF #0431), which
the CDC estimates will take 10 minutes
annually per LTCH, or an additional 73.66
hours for all LTCHs annually. In total, the
burden we have recalculated for all
previously finalized measures (including
CAUTI, CLABSI, MRSA, CDI, HCP, Patient
Safety Monthly Reporting plan, and
Denominator for Specialty Care Area) will
equal 103.4 hours annually per LTCH or
45,072.8 hours for all LTCHs annually.
For the newly finalized VAE measure,
which will also be reported by LTCHs
through the CDC’s NHSN, the CDC estimates
that each LTCH will submit 1 VAE per
month, which will require approximately 22
minutes of clinical time per response. This
equates to 22 minutes per LTCH monthly, 4.4
hours per LTCH annually, and 1,944.8 hours
for all LTCHs annually. According to the US
Bureau of Labor and Statistics, the mean
hourly wage for a registered nurse (RN) is
$33.13 250; the mean hourly wage for a
medical records and health information
technician is $16.81. However, in order to
account for overhead and fringe benefits, we
have doubled the mean hourly wage, making
it $66.26 for an RN and $33.62 for a Medical
Record or Health Information Technician. We
estimate that the annual cost per each LTCH
for the previously finalized measures, for
which we have recalculated burden
(including CAUTI, CLABSI, MRSA, CDI,
HCP, Patient Safety Monthly Reporting plan,
and Denominator for Specialty Care Area) to
be $6,770.10 and that the total yearly cost to
all LTCHs for the submission of data to
NHSN will be $2,992,384.20. We estimate
that the total cost for the newly finalized
VAE measure will be $291.54 per LTCH
annually, or $128,860.68 for all LTCHs
annually.
The All-Cause Unplanned Readmission
Measure for 30 Days Post-Discharge from
Long-Term Care Hospitals is a Medicare
claims-based measure; because claims-based
measures can be calculated based on data
that are already reported to the Medicare
program for payment purposes, we believe
there will be no additional impact.
The remaining five measures will be
collected utilizing the LTCH CARE Data Set.
The burden estimates associated with OMB
control number 0938–1163 estimate that each
LTCH has an impact data collection burden
of 243.24 hours or $6,755.84 associated with
collection of the LTCH CARE Data Set, which
includes the following three measures:
Percent of Residents or Patients with
Pressure Ulcers That Are New or Worsened
(NQF #0678); Percent of Residents or Patients
Who Were Assessed and Appropriately
Given the Seasonal Influenza Vaccine (NQF
#0680); and the Application of Percent of
Residents Experiencing One or More Falls
with Major Injury (Long Stay) (NQF #0674).
We are also finalizing our proposal to use
the LTCH CARE Data Set to report the two
additional newly finalized measures—
Functional Outcome Measure: Change in
Mobility among Long-Term Care Hospital
Patients Requiring Ventilator Support; and
Percent of Long-Term Care Hospital Patients
with an Admission and Discharge Functional
Assessment and a Care Plan That Addresses
Function—for the FY 2018 payment
determination and subsequent years. In
addition, the LTCH CARE Data Set will be
used to report the previously finalized
measure. We estimate the additional
elements for two newly finalized measures
will take 13.5 minutes of nursing/clinical
staff time to report data for Admission
assessment and 13 minutes of nursing/
clinical staff time to report data for Discharge
assessment, for a total of 26.5 minutes. In
accordance with OMB control number 0920–
0666, we estimate 202,050 discharges from
all LTCHs annually, with an additional
burden of 26.5 minutes. This would equate
to 89,238.75 total hours or 201.9 hours per
LTCH. We believe this work will be
completed by RN staff. As previously noted,
per the US Bureau of Labor and Statistics, the
mean hourly wage for a registered nurse (RN)
is $33.13.251 However, in order to account for
overhead and fringe benefits, we have
doubled the mean hourly wage, making it
$66.26 for an RN. The total cost related to the
two newly finalized functional status
measures referenced above is estimated at
250 According to the U.S. Bureau of Labor
Statistics, the mean hourly wage for a Registered
Nurse is $31.48. See: http://www.bls.gov/ooh/
healthcare/registered-nurses.htm. Fringe benefits
are calculated at a rate of 36.25 percent in
accordance with OMB Circular A–76, Attachment
C, Table C.1. After adding the fringe benefits, the
total hourly cost for an RN is $42.89.
251 According to the U.S. Bureau of Labor
Statistics, the mean hourly wage for a Registered
Nurse is $31.48. See: http://www.bls.gov/ooh/
healthcare/registered-nurses.htm. Fringe benefits
are calculated at a rate of 36.25 percent in
accordance with OMB Circular A–76, Attachment
C, Table C.1. After adding the fringe benefits, the
total hourly cost for an RN is $42.89.
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$13,377.89 per LTCH annually, or
$5,913,027.38 for all LTCHs annually.
As discussed in section IX.C.7.a.1 of the
preamble of this final rule, in response to
several public comments concerned that the
proposed functional status measures are
excessively burdensome and that some of the
included data items used to collect the data
for the measures had ‘‘low response rates’’
during demonstration testing, we have
decided to reduce the number of LTCH CARE
Data Set data items required for the measure
Percent of Long-Term Care Hospital Patients
with an Admission and Discharge Functional
Assessment and a Care Plan That Addresses
Function. We have reduced the number of
data items for this quality measure from the
originally proposed 45 to 35. We estimate
that this reduction effectively reduces the
annual cost per LTCH from the originally
estimated $13,377.89 to $10,348.82 annually,
and reduces the annual cost for all LTCHs
from the originally estimated $5,913,027.38
to $4,574,178.44. This equates to a reduction
of $3,029.07 per LTCH annually, and
$1,338,851.38 for all LTCHs annually.
Lastly, as discussed in section IX.C.11. of
the preamble of this final rule, in response
to public comments, we are not finalizing our
proposal to validate the accuracy of LTCH
data at this time.
In summary, the total cost for all
previously finalized HAI and vaccination
measures (CAUTI, CLABSI, MRSA, CDI,
HCP, Patient Safety Monthly Reporting plan,
and Denominator for Specialty Care Area)
reported through the CDC’s NHSN, that we
have recalculated based on new information
regarding the number of infection events
reported by LTCHs per month, is $6,770.10
per LTCH annually, or $2,992,384.20 for all
LTCHs annually. The total cost per LTCH for
the three newly finalized measures in this
final rule (Functional Outcome Measure:
Change in Mobility among Inpatients
requiring Ventilator Support, Percent of
LTCH Inpatients with an Admission and
Discharge Functional Assessment and a Care
Plan That Addresses Function, and
Ventilator-Associated Events) is $10,640.36
per LTCH annually, or $4,703,039.12 for all
LTCHs annually.
Comment: Several commenters expressed
concern over the burden associated with
collection the two functional status measures
we proposed.
Response: For a full discussion of the
public comments, our responses, and our
associated analysis of the reduction in
required data items for the measure Patients
with an Admission and Discharge Functional
Assessment and a Care Plan That Addresses
Function, we refer readers to the comment
and response portion of section IX.C.7.a.1 of
the preamble of this final rule. As we discuss
above, as a result of our response, we have
reduced our estimate of the burden for these
measures, as we are finalizing them, by
$1,338,851.38.
Comment: One commenter expressed
concern over the burden with which the
LTCH program is growing year to year, noting
that there has been a 300 percent increase in
burden each year, and that hospitals cannot
endure such increases. This commenter
further noted that the total cost for the
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LTCHQR Program to all LTCHs, with the
inclusion of the three additional finalized
measures in this rule is close to $12 million,
while the initially estimated cost for the
LTCHQR Program in the FY 2012 IPPS/LTCH
PPS final rule was $750,000.
Response: We believe that the commenter’s
reference to $750,000 is a reference to our
estimate in section IX.b.6 the FY 2012 IPPS/
LTCH PPS final rule of the costs of
submitting the CAUTI and CLABSI data to
NHSN (76 FR 51780 through 51781). Our
estimate of the effects of the LTCHQR
Program in that final rule (76 FR 51839) was
$1,128,440. Our original estimate in the FY
2012 IPPS/LTCH PPS final rule was based on
projected costs for the program, as we had no
data related to the rate of submission of our
proposed measures.
While the commenter is correct that the
estimates in the proposed FY 2015 IPPS/
LTCH PPS proposed rule, as well as this final
rule, equal approximately $12 million, we
would like to take this opportunity to explain
the increase. Our original estimate in the FY
2012 IPPS/LTCH PPS final rule was based on
projected costs for the program, as we had no
data related to the rate of submission of our
proposed measures.
In subsequent years, as we added measures
to the LTCHQR Program and as we have
obtained a better understanding of the rate at
which LTCHs would submit HAI data to the
NHSN, we calculated and recalculated these
costs in order to provide a more accurate
representation of the program costs. As we
have done in past rules, based on new
information from the CDC, we have again
recalculated the program costs related to
previously finalized quality measures and
required data submission. The estimates
contained within this final rule resulted from
actual CDC data regarding the rate of
submission of all quality measures submitted
via the CDC’s NHSN, as well as from OMBapproved burden estimates for each of these
measures. In addition, we accounted for
actual burden, such as the Patient Safety
Reporting Plan and Denominator for
Specialty Care Area, which together, added
an additional 64.2 hours per year per
provider or 28,248 hours for all LTCHs.
Finally, in the FY 2015 IPPS/LTCH PPS
proposed rule, as well as this final rule, we
accounted for overhead and fringe benefits,
which effectively doubled many of our
earlier cost estimates. Our inclusion of these
costs (overhead and fringe), which we have
not included in the past, is a substantial
factor associated with the increase in burden.
We believe that this cost estimate cannot
be compared to the cost estimate in the FY
2014 and previous IPPS/LTCH PPS final
rules, without recognition of the factors
discussed above. However, we are mindful of
the burden of LTCHQR Program
requirements and we have attempted to
balance the need for a robust LTCHQR
Program with this burden. For example, we
have authorized sampling for certain measure
reporting. In addition, as discussed in section
IX.C.7.a.(1) of the preamble of this final rule,
in response to commenters’ specific concerns
regarding burden, we are not adopting the
reporting of several proposed new items in
the LTCH CARE Tool, which overlap other
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items we are retaining, had high ‘‘Activity
Did Not Occur’’ rates, and can be removed
from the quality measure without affecting
the measure substantively. As noted above,
these modifications reduce our burden
estimate by $1,333,851.38.
O. Effects of Regarding Electronic Health
Record (EHR) Incentive Program and
Hospital IQR Program
In sections IX.D. of the preamble of this
final rule, we discuss requirements for the
EHR Incentive Program. We are aligning the
Medicare EHR Incentive Program reporting
and submission timelines for clinical quality
measures for eligible hospitals and CAHs
with the Hospital IQR Program’s reporting
and submission timelines. However we are
not finalizing our proposal to require
quarterly submission of electronic clinical
quality measure data.
We have determined that the electronic
submission of aggregate-level data using
QRDA–III will not be feasible in 2015 for
eligible hospitals and CAHs under the
Medicare EHR Incentive Program. We are
finalizing our proposal to continue, for FY
2015, the policy we adopted for FY 2014 for
eligible hospitals and CAHs submitting
electronic clinical quality measures under
the Medicare EHR Incentive Program. For FY
2015, eligible hospitals and CAHs will be
able to electronically submit using a method
similar to the 2012 and 2013 EHR Incentive
Program electronic reporting pilot for eligible
hospitals and CAHs, which used QRDA–I
(patient-level data). Eligible hospitals and
CAHs that are beyond their first year of
meaningful use may continue to report
aggregate electronic clinical quality measure
results through attestation. We also are
clarifying our policy on zero denominators
and the case threshold exemption for clinical
quality measures.
We do not believe that our newly finalized
proposals to align the Medicare EHR
Incentive program reporting and submission
timelines for clinical quality measures with
the Hospital IQR Program’s reporting and
submission timelines and to allow the
electronic submission of QRDA–I (patientlevel data) for eligible hospitals and CAHs to
electronic submit electronic clinical quality
measures under the Medicare EHR Incentive
Program will have a significant impact.
P. Effects of Revision of Regulations
Governing Use and Release of Medicare
Advantage Risk Adjustment Data
Under section X. of the preamble of this
final rule, we are revising the existing
regulations at § 422.310(f) to broaden the
specified uses of Medicare Advantage (MA)
risk adjustment data in order to strengthen
program management and increase
transparency in the MA program and to
specify the conditions for release of risk
adjustment data to entities outside of CMS.
We are revising the regulations to specify
four additional purposes for which CMS may
use or release risk adjustment data submitted
by MA organizations: (1) To conduct
evaluations and other analysis to support the
Medicare program (including
demonstrations) and to support public health
initiatives and other health care-related
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50445
research; (2) for activities to support the
administration of the Medicare program; (3)
for activities conducted to support program
integrity; and (4) for purposes authorized by
other applicable laws. In addition, the
existing regulations do not specify conditions
for release by CMS of risk adjustment data
submitted by MA organizations. Therefore,
we are adding regulatory language to address
CMS’ release of such data to non-CMS
entities.
We have determined that the regulatory
amendments do not impose any mandatory
costs on entities that may choose, under this
newly finalized policy, to request data files
from CMS for their research analyses or other
purposes listed in the proposal. Requesting
data from CMS is at the discretion of the
requester. Therefore, we have determined
that there are not any economically
significant effects of the provisions. We also
have determined that the regulatory
amendments will not impose a burden on the
entity requesting data files.
Q. Effects of Changes to Enforcement
Provisions for Organ Transplant Centers
Under section XI. of the preamble of this
final rule, we are finalizing our proposals to
expand and clarify the current organ
transplant regulation as it relates to a
transplant program’s ability to request
approval for participation in Medicare based
on mitigating factors, the timelines for such
review, and potential System Improvement
Agreements that may allow a transplant
program to improve outcomes and avert
Medicare termination when outcomes have
not met CMS requirements. Our finalized
policies also will allow for consideration of
factors such as innovative practice in the
field of organ transplantation, and for
potential mitigating factors consideration of a
transplant program’s outcomes using
Bayesian methodology for calculating
outcomes for patient death and graft failure.
These finalized policies will not have a
significant effect on Medicare and Medicaid
programs as it will allow organ transplant
programs to continue to participate in
Medicare if approved based on mitigating
factors or during the time established in the
Systems Improvement Agreement. There is
an added benefit to patients who receive
transplants, and to the Medicare program,
when a transplant program improves patient
and graft survival through completion of a
system Improvement Agreement. However,
sufficient data are not currently available to
quantify the added benefit of System
Improvement Agreements or innovative
practices. Therefore, we project only that the
cost impact of the policies to the Medicare
and Medicaid programs will be negligible.
Historical data reflect that between the date
the transplant regulation was codified in
2007 and August 2013, CMS rendered a final
determination for 129 organ transplant
programs that applied for Medicare approval
based on mitigating factors. Of the 129
transplant programs, 20 terminated Medicare
participation. An additional 33 transplant
programs averted Medicare termination by
successful completion of a Systems
Improvement Agreement and resulting
substantial improvement in patient and graft
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survival. The remaining programs were
approved for mitigating factors based on
improved outcomes (without needing a
System Improvement Agreement), special
circumstances, or came into compliance with
CMS requirements during the mitigating
factors review period. We estimate the cost
associated with the application for mitigating
factors at $10,000. This is based on the salary
for the transplant administrator to prepare
the documents for the application during the
30-day timeframe allotted. The cost does not
represent any increase from what is
anticipated in the existing transplant
regulation related to mitigating factors. For
transplant programs that enter into a Systems
Improvement Agreement, the estimated cost
to the transplant program is $200,000 to
$250,000 based on reports from programs
that have completed such Agreements in the
past. Both a mitigating factors review and
completion of a System Improvement
Agreement are voluntary acts on the part of
a hospital that maintains a transplant
program. Since the 2007 effective date of the
CMS regulation, only one hospital has
elected not to file a mitigating factors review
after being cited by CMS for a condition-level
deficiency for patient outcomes or clinical
experience, and few hospitals have declined
a CMS offer to complete a System
Improvement Agreement. Therefore, we
conclude that the costs involved in these
activities are much lower for the hospital
compared with other alternatives, such as
filing an appeal and incurring the legal costs
of that appeal.
Our finalized policies will not have a
significant impact on a substantial number of
small businesses or other small entities. Nor
will they have a significant impact on small
rural hospitals.
II. Alternatives Considered
This final rule contains a range of policies.
It also provides descriptions of the statutory
provisions that are addressed, identifies the
finalized policies, and presents rationales for
our decisions and, where relevant,
alternatives that were considered.
III. Overall Conclusion
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1. Acute Care Hospitals
Table I of section I.G. of this Appendix
demonstrates the estimated distributional
impact of the IPPS budget neutrality
requirements for the MS–DRG and wage
index changes, and for the wage index
reclassifications under the MGCRB. Table I
also shows an overall decrease of 0.6 percent
in operating payments. As discussed in
section I.G. of this Appendix, we estimate
that operating payments will decrease by
approximately $654 million in FY 2015
relative to FY 2014. However, when we
account for the impact of the changes in
Medicare DSH payments and the impact of
the new additional payments based on
uncompensated care in accordance with
section 3133 of the Affordable Care Act,
based on estimates provided by the CMS
Office of the Actuary, consistent with our
policy discussed in section IV.F. of the
preamble of this final rule, we estimate that
operating payments will decrease by
approximately $457 million relative to FY
2014. In addition, we estimate a savings of
$27 million associated with the HACs
policies in FY 2015, which is an additional
$1 million in savings as compared to FY
2014. We estimate the implementation of the
HAC Reduction Program, under section 3008
of the Affordable Care Act, will reduce
payments by $369 million in FY 2015. We
estimate that the expiration of the expansion
of low-volume hospital payments for
discharges beginning on April 1, 2015, under
the Protecting Access to Medicare Act of
2014 (Pub. L. 113–93) will result in a
decrease in payments of approximately $152
million relative to FY 2014. We estimate that
the new technology add-on payments for FY
2015 will increase spending by
approximately $91 million. Finally, we
estimate that the policies related to
validation, including submission of and
payment for secure electronic versions of
medical information for validation for the FY
2017 payment determination and subsequent
years, as described in the ICRs for the
Hospital IQR Program in section XII.B.6. of
the preamble of this final rule, will result in
no change in payments for CMS for FY 2015.
These estimates, combined with our
estimated decrease in FY 2015 operating
payment of ¥$457 million, result in an
estimated decrease of approximately $888
million for FY 2015. We estimate that
hospitals will experience a 1.5 percent
increase in capital payments per case, as
shown in Table III of section I.I. of this
Appendix. We project that there will be a
$132 million increase in capital payments in
FY 2015 compared to FY 2014. The
cumulative operating and capital payments
would result in a net decrease of
approximately $756 million to IPPS
providers. The discussions presented in the
previous pages, in combination with the rest
of this final rule, constitute a regulatory
impact analysis.
2. LTCHs
Overall, LTCHs are projected to experience
an increase in estimated payments per
discharge in FY 2015. In the impact analysis,
we are using the rates, factors, and policies
presented in this final rule, including
updated wage index values and relative
weights, and the best available claims and
CCR data to estimate the change in payments
under the LTCH PPS for FY 2015.
Accordingly, based on the best available data
for the 422 LTCHs in our database, we
estimate that FY 2015 LTCH PPS payments
will increase approximately $62 million
relative to FY 2014 as a result of the payment
rates and factors presented in this final rule.
In addition, we estimate that net effect of the
projected impact of certain other LTCH PPS
policy changes (that is, the reinstatement of
the moratorium on the full implementation of
the ‘‘25 percent threshold’’ payment
adjustment as discussed in section VII.E. of
the preamble of this final rule; the
reinstatement of the moratorium on the
development of new LTCHs and LTCH
satellite facilities and additional LTCH beds
as discussed in section VII.G. of the preamble
of this final rule; the revocation of onsite
discharges and readmissions policy as
discussed in section VII.F. of the preamble of
this final rule; and the payment adjustment
for ‘‘subclause (II)’’ LTCHs as discussed in
section VII.H. of the preamble of this final
rule) is estimated to result in an increase in
LTCH PPS payments of approximately $116
million. The impact analysis of the payment
rates and factors presented in this final rule
under the LTCH PPS, in conjunction with the
estimated payment impacts of certain other
LTCH PPS policy changes, will result in a net
increase of $178 million to LTCH providers.
Additionally, costs to LTCHs associated with
the completion of the data for the LTCHQR
Program are increasing by $4.7 million for FY
2015.
IV. Accounting Statements and Tables
A. Acute Care Hospitals
As required by OMB Circular A–4
(available at http://www.whitehouse.gov/
omb/circulars/a004/a-4.pdf), in Table V
below, we have prepared an accounting
statement showing the classification of the
expenditures associated with the provisions
of this final rule as they relate to acute care
hospitals. This table provides our best
estimate of the change in Medicare payments
to providers as a result of the changes to the
IPPS presented in this final rule. All
expenditures are classified as transfers to
Medicare providers.
The savings to the Federal Government
associated with the policies in this final rule
are estimated at $756 million.
TABLE V—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES UNDER THE IPPS FROM FY 2014
TO FY 2015
Category
Transfers
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
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¥$756 million.
Federal Government to IPPS Medicare Providers.
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B. LTCHs
As discussed in section I.L. of this
Appendix, the impact analysis of the
payment rates and factors presented in this
final rule under the LTCH PPS, As discussed
in section I.L. of this Appendix, the impact
analysis of the payment rates and factors
presented in this final rule under the LTCH
PPS, in conjunction with the estimated
payment impacts of certain other LTCH PPS
policy changes (that is, the reinstatement of
the moratorium on the full implementation of
the ‘‘25-percent threshold’’ payment
adjustment; the reinstatement of the
moratorium on the development of new
LTCHs and LTCH satellite facilities and
increase in the number of LTCH beds; the
revocation of onsite discharges and
readmissions policy; and the payment
adjustment for ‘‘subclause (II)’’ LTCHs), is
projected to result in an increase in estimated
aggregate LTCH PPS payments in FY 2015
relative to FY 2014 of approximately $178
million based on the data for 422 LTCHs in
our database that are subject to payment
under the LTCH PPS. Therefore, as required
by OMB Circular A–4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a4.pdf), in Table VI below, we have prepared
an accounting statement showing the
classification of the expenditures associated
with the provisions of this final rule as they
50447
relate to the changes to the LTCH PPS. Table
VI provides our best estimate of the estimated
increase in Medicare payments under the
LTCH PPS as a result of the payment rates
and factors and other provisions presented in
this final rule based on the data for the 422
LTCHs in our database. All expenditures are
classified as transfers to Medicare providers
(that is, LTCHs). Lastly, we present the costs
to LTCHs associated with the completion of
the data for the LTCHQR Program at $4.7
million than in FY 2014.
The cost to the Federal Government
associated with the policies for LTCHs in this
final rule is estimated at $178 million.
TABLE VI—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FROM THE FY 2014 LTCH PPS TO
THE FY 2015 LTCH PPS
Category
Transfers
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
$178 million.
Federal Government to LTCH Medicare Providers.
Category
Costs
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Annualized Monetized Costs for LTCHs to Submit Quality Data ............
V. Regulatory Flexibility Act (RFA) Analysis
The RFA requires agencies to analyze
options for regulatory relief of small entities.
For purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small government
jurisdictions. We estimate that most hospitals
and most other providers and suppliers are
small entities as that term is used in the RFA.
The great majority of hospitals and most
other health care providers and suppliers are
small entities, either by being nonprofit
organizations or by meeting the SBA
definition of a small business (having
revenues of less than $7.0 million to $35.5
million in any 1 year). (For details on the
latest standards for health care providers, we
refer readers to page 36 of the Table of Small
Business Size Standards for NAIC 622 found
on the SBA Web site at: http://www.sba.gov/
sites/default/files/files/Size_Standards_
Table.pdf.)
For purposes of the RFA, all hospitals and
other providers and suppliers are considered
to be small entities. Individuals and States
are not included in the definition of a small
entity. We believe that the provisions of this
final rule relating to acute care hospitals
would have a significant impact on small
entities as explained in this Appendix.
Because we lack data on individual hospital
receipts, we cannot determine the number of
small proprietary LTCHs. Therefore, we are
assuming that all LTCHs are considered
small entities for the purpose of the analysis
in section I.L. of this Appendix. MACs are
not considered to be small entities. Because
we acknowledge that many of the affected
entities are small entities, the analysis
discussed throughout the preamble of this
final rule constitutes our regulatory
flexibility analysis. In FY 2015 IPPS/LTCH
PPS proposed rule, we solicited public
comments on our estimates and analysis of
the impact of our proposals on those small
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$4.7 million.
entities. Any public comments that we
received and our responses are presented
throughout this final rule.
VI. Impact on Small Rural Hospitals
Section 1102(b) of the Social Security Act
requires us to prepare a regulatory impact
analysis for any proposed or final rule that
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.
With the exception of hospitals located in
certain New England counties, for purposes
of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is
located outside of an urban area and has
fewer than 100 beds. Section 601(g) of the
Social Security Amendments of 1983 (Pub. L.
98–21) designated hospitals in certain New
England counties as belonging to the adjacent
urban area. Thus, for purposes of the IPPS
and the LTCH PPS, we continue to classify
these hospitals as urban hospitals. (We refer
readers to Table I in section I.G. of this
Appendix for the quantitative effects of the
policy changes under the IPPS for operating
costs.)
VII. Unfunded Mandates Reform Act
Analysis
Section 202 of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4) 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. In 2014, that threshold
level is approximately $141 million. This
final rule will not mandate any requirements
for State, local, or tribal governments, nor
will it affect private sector costs.
VIII. Executive Order 12866
In accordance with the provisions of
Executive Order 12866, the Executive Office
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of Management and Budget reviewed this
final rule.
Appendix B: Recommendation of
Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital
Services
I. Background
Section 1886(e)(4)(A) of the Act requires
that the Secretary, taking into consideration
the recommendations of MedPAC,
recommend update factors for inpatient
hospital services for each fiscal year that take
into account the amounts necessary for the
efficient and effective delivery of medically
appropriate and necessary care of high
quality. Under section 1886(e)(5) of the Act,
we are required to publish update factors
recommended by the Secretary in the
proposed and final IPPS rules, respectively.
Accordingly, this Appendix provides the
recommendations for the update factors for
the IPPS national standardized amount, the
Puerto Rico-specific standardized amount,
the hospital-specific rate for SCHs and
MDHs, and the rate-of-increase limits for
certain hospitals excluded from the IPPS, as
well as LTCHs. In prior years, we have made
a recommendation in the IPPS proposed rule
and final rule for the update factors for the
payment rates for IRFs and IPFs. However,
for FY 2015, we plan to include the
Secretary’s recommendation for the update
factors for IRFs and IPFs in separate Federal
Register documents at the time that we
announce the annual updates for IRFs and
IPFs. We also discuss our response to
MedPAC’s recommended update factors for
inpatient hospital services.
II. Inpatient Hospital Update for FY 2015
A. FY 2015 Inpatient Hospital Update
As discussed in section IV.B. of the
preamble to this final rule, for FY 2015,
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consistent with section 1886(b)(3)(B) of the
Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act, we are
setting the applicable percentage increase by
applying the following adjustments in the
following sequence. Specifically, the
applicable percentage increase under the
IPPS is equal to the rate-of-increase in the
hospital market basket for IPPS hospitals in
all areas, subject to a reduction of one-quarter
of the applicable percentage increase (prior to
the application of other statutory
adjustments; also referred to as the market
basket update or rate-of-increase (with no
adjustments)) for hospitals that fail to submit
quality information under rules established
by the Secretary in accordance with section
1886(b)(3)(B)(viii) of the Act and a 33 1/3
percent reduction to three-fourths of the
applicable percentage increase (prior to the
application of other statutory adjustments;
also referred to as the market basket update
or rate-of-increase (with no adjustments)) for
hospitals not considered to be meaningful
electronic health record (EHR) users in
accordance with section 1886(b)(3)(B)(ix) of
the Act, and then subject to an adjustment
based on changes in economy-wide
productivity (the multifactor productivity
(MFP) adjustment), and an additional
reduction of 0.2 percentage point as required
by section 1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of
the Act, as added by section 3401(a) of the
Affordable Care Act, state that application of
the MFP adjustment and the additional FY
2015 adjustment of 0.2 percentage point may
result in the applicable percentage increase
being less than zero.
In the FY 2015 IPPS/LTCH PPS proposed
rule, based on the most recent data available
at that time, in accordance with section
1886(b)(3)(B) of the Act, we proposed to
establish the FY 2015 market basket update
used to determine the applicable percentage
increase for the IPPS based on IHS Global
Insight, Inc.’s (IGI’s) first quarter 2014
forecast of the FY 2010-based IPPS market
basket rate-of-increase with historical data
through fourth quarter 2013, which was
estimated to be 2.7 percent. Based on the
most recent data available for this FY 2015
final rule, in accordance with section
1886(b)(3)(B) of the Act, we are establishing
the FY 2015 market basket update used to
determine the applicable percentage increase
for the IPPS based on IHS Global Insight,
Inc.’s (IGI’s) second quarter 2014 forecast of
the FY 2010-based IPPS market basket rateof-increase, which is estimated to be 2.9
percent.
In accordance with section 1886(b)(3)(B) of
the Act, as amended by section 3401(a) of the
Affordable Care Act, in section IV.B.1. of the
preamble of the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28087), we proposed a
multifactor productivity (MFP) adjustment
(the 10-year moving average of MFP for the
period ending FY 2015) of 0.4 percent.
Therefore, based on IGI’s first quarter 2014
Hospital
submitted
quality data
and is a
meaningful
EHR user
FY 2015
Market Basket Rate-of-Increase ......................................................................
Adjustment for Failure to Submit Quality Data under Section
1886(b)(3)(B)(viii) of the Act .........................................................................
Adjustment for Failure to be a Meaningful EHR User under Section
1886(b)(3)(B)(ix) of the Act ..........................................................................
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act ..........................
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act ...................
Applicable Percentage Increase Applied to Standardized Amount .................
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B. Update for SCHs and MDHs for FY 2015
Section 1886(b)(3)(B)(iv) of the Act
provides that the FY 2015 applicable
percentage increase in the hospital-specific
rate for SCHs and MDHs equals the
applicable percentage increase set forth in
section 1886(b)(3)(B)(i) of the Act (that is, the
same update factor as for all other hospitals
subject to the IPPS).
As discussed in section IV.G. of the
preamble of this final rule, section 1106 of
the Pathway for SGR Reform Act of 2013
(Pub. L. 113–67), enacted on December 26,
2013, extended the MDH program from the
end of FY 2013 through the first half of FY
2014 (that is, for discharges occurring before
April 1, 2014). Subsequently, section 106 of
the Protecting Access to Medicare Act of
2014 (Pub. L. 113–93), enacted on April 1,
2014, further extended the MDH program
through the first half of FY 2015 (that is, for
discharges occurring before April 1, 2015).
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Hospital
submitted
quality data
and is NOT a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is a
meaningful
EHR user
Hospital did
NOT submit
quality data
and is NOT a
meaningful
EHR user
2.9
2.9
2.9
2.9
0.0
0.0
¥0.725
¥0.725
0.0
¥0.5
¥0.2
2.2
¥0.725
¥0.5
¥0.2
1.475
0.0
¥0.5
¥0.2
1.475
¥0.725
¥0.5
¥0.2
0.75
Prior to the enactment of Public Law 113–67,
the MDH program was to be in effect through
the end of FY 2013 only. The MDH program
expires for discharges beginning on April 1,
2015, under current law. Accordingly, the
update of the hospital-specific rates for FY
2015 for MDHs will apply in determining
payments for FY 2015 discharges occurring
before April 1, 2015.
As mentioned above, the update to the
hospital specific rate for SCHs and MDHs is
subject to section 1886(b)(3)(B)(i) of the Act,
as amended by sections 3401(a) and 10319(a)
of the Affordable Care Act. Accordingly,
depending on whether a hospital submits
quality data and is a meaningful EHR user,
we are establishing the same four applicable
percentage increases in the table above for
the hospital-specific rate applicable to SCHs
and MDHs.
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forecast of the FY 2010-based IPPS market
basket, depending on whether a hospital
submits quality data under the rules
established in accordance with section
1886(b)(3)(B)(viii) of the Act (hereafter
referred to as a hospital that submits quality
data) and is a meaningful EHR user under
section 1886(b)(3)(B)(ix) of the Act (hereafter
referred to as a hospital that is a meaningful
EHR user), we presented in the proposed rule
four possible applicable percentage increases
that could be applied to the standardized
amount. Based on the most recent data
available for this FY 2015 IPPS/LTCH PPS
final rule, in accordance with section
1886(b)(3)(B) of the Act, as amended by
section 3401(a) of the Affordable Care Act, in
section IV.B.1. of the preamble of this final
rule, we are establishing a MFP adjustment
(the 10-year moving average of MFP for the
period ending FY 2015) of 0.5 percent.
In accordance with section 1886(b)(3)(B) of
the Act, as amended by section 3401(a) of the
Affordable Care Act, as discussed in section
IV.B.1. of the preamble of this final rule, we
are establishing the applicable percentages
increases for the FY 2015 updates based on
IGI’s second quarter 2014 forecast of the FY
2010-based IPPS market basket, depending
on whether a hospital submits quality data
under the rules established in accordance
with section 1886(b)(3)(B)(viii) of the Act and
is a meaningful EHR user under section
1886(b)(3)(B)(ix) of the Act, as outlined in the
table below.
C. FY 2015 Puerto Rico Hospital Update
Section 401(c) of Public Law 108–173
amended section 1886(d)(9)(C)(i) of the Act
and states that, for discharges occurring in a
fiscal year (beginning with FY 2004), the
Secretary shall compute an average
standardized amount for hospitals located in
any area of Puerto Rico that is equal to the
average standardized amount computed
under subclause (I) for FY 2003 for hospitals
in a large urban area (or, beginning with FY
2005, for all hospitals in the previous fiscal
year) increased by the applicable percentage
increase under subsection (b)(3)(B) for the
fiscal year involved. Therefore, the update to
the Puerto Rico-specific operating
standardized amount is subject to the
applicable percentage increase set forth in
section 1886(b)(3)(B)(i) of the Act as
amended by sections 3401(a) and 10319(a) of
the Affordable Care Act (that is, the same
update factor as for all other hospitals subject
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to the IPPS). Accordingly, we are making an
applicable percentage increase to the Puerto
Rico-specific standardized amount of 2.2
percent.
D. Update for Hospitals Excluded From the
IPPS for FY 2015
Section 1886(b)(3)(B)(ii) of the Act is used
for purposes of determining the percentage
increase in the rate-of-increase limits for
children’s hospitals, cancer hospitals, and
hospitals located outside the 50 States, the
District of Columbia, and Puerto Rico (that is,
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and America Samoa).
Section 1886(b)(3)(B)(ii) of the Act sets the
percentage increase in the rate-of-increase
limits equal to the market basket percentage
increase. In accordance with § 403.752(a) of
the regulations, RNHCIs are paid under the
provisions of § 413.40, which also use section
1886(b)(3)(B)(ii) of the Act to update the
percentage increase in the rate-of-increase
limits.
Currently, children’s hospitals, PPSexcluded cancer hospitals, RNHCIs, and
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa are
among the remaining types of hospitals still
paid under the reasonable cost methodology,
subject to the rate-of-increase limits. We are
applying the FY 2015 percentage increase in
the IPPS operating market basket to the target
amount for children’s hospitals, PPSexcluded cancer hospitals, RNHCIs, and
short-term acute care hospitals located in the
U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa. For
this final rule, the current estimate of the FY
2015 IPPS operating market basket
percentage increase is 2.9 percent.
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E. Update for LTCHs for FY 2015
Section 123 of Public Law 106–113, as
amended by section 307(b) of Public Law
106–554 (and codified at section 1886(m)(1)
of the Act), provides the statutory authority
for updating payment rates under the LTCH
PPS.
As discussed in section V.A. of the
Addendum to this final rule, we are
establishing an update to the LTCH PPS
standard Federal rate for FY 2015 based on
the full LTCH PPS market basket increase
estimate (for this final rule, estimated to be
2.9 percent), subject to an adjustment based
on changes in economy-wide productivity
and an additional reduction required by
sections 1886(m)(3)(A)(ii) and (m)(4)(E) of the
Act. In accordance with the LTCHQR
Program under section 1886(m)(5) of the Act,
we are reducing the annual update to the
LTCH PPS standard Federal rate by 2.0
percentage points for failure of a LTCH to
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submit the required quality data. The MFP
adjustment described in section
1886(b)(3)(B)(xi)(ii) of the Act is currently
estimated to be 0.5 percent for FY 2015. In
addition, section 1886(m)(3)(A)(ii) of the Act
requires that any annual update for FY 2015
be reduced by the ‘‘other adjustment’’ at
section 1886(m)(4)(E) of the Act, which is 0.2
percentage point. Therefore, based on IGI’s
second quarter 2014 forecast of the FY 2015
LTCH PPS market basket increase, we are
establishing an annual update to the LTCH
PPS standard Federal rate of 2.2 percent (that
is, the current FY 2015 estimate of the market
basket rate-of-increase of 2.9 percent less an
adjustment of 0.5 percentage point for MFP
and less 0.2 percentage point). Accordingly,
we are applying an update factor of 1.022 in
determining the LTCH PPS standard Federal
rate for FY 2015. For LTCHs that fail to
submit quality data for FY 2015, we are
applying an annual update to the LTCH PPS
standard Federal rate of 0.2 percent (that is,
the final annual update for FY 2015 of 2.2
percent less 2.0 percentage points for failure
to submit the required quality data in
accordance with section 1886(m)(5)(C) of the
Act and our rules) by applying an update
factor of 1.002 in determining the LTCH PPS
standard Federal rate for FY 2015.
Furthermore, we are making an adjustment
for the final year of the 3-year phase-in of the
one-time prospective adjustment to the
standard Federal rate under § 412.523(d)(3)
by applying a factor of 0.97834 (or
approximately ¥1.3 percent) in FY 2015,
consistent with current law.
III. Secretary’s Recommendations
MedPAC is recommending an inpatient
hospital update equal to 3.25 percent for FY
2015. MedPAC’s rationale for this update
recommendation is described in more detail
below. As mentioned above, section
1886(e)(4)(A) of the Act requires that the
Secretary, taking into consideration the
recommendations of MedPAC, recommend
update factors for inpatient hospital services
for each fiscal year that take into account the
amounts necessary for the efficient and
effective delivery of medically appropriate
and necessary care of high quality. Consistent
with current law, depending on whether a
hospital submits quality data and is a
meaningful EHR user, we are recommending
the four applicable percentage increases to
the standardized amount listed in the table
under section II. of this Appendix B. We are
recommending that the same applicable
percentage increases apply to SCHs and
MDHs. For the Puerto Rico-specific
standardized amount, we are recommending
an update of 2.2 percent.
In addition to making a recommendation
for IPPS hospitals, in accordance with
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50449
section 1886(e)(4)(A) of the Act, we are
recommending update factors for certain
other types of hospitals excluded from the
IPPS. Consistent with our policies for these
facilities, we are recommending an update to
the target amounts for children’s hospitals,
cancer hospitals, RNHCIs, and short-term
acute care hospitals located in the U.S. Virgin
Islands, Guam, the Northern Mariana Islands,
and American Samoa of 2.9 percent.
For FY 2015, consistent with policy set
forth in section VII. of the preamble of this
final rule, we are recommending an update
of 2.2 percent (that is, the current FY 2015
estimate of the LTCH PPS market basket rateof-increase of 2.9 percent less an adjustment
of 0.5 percentage point for MFP and less 0.2
percentage point) to the LTCH PPS standard
Federal rate.
IV. MedPAC Recommendation for Assessing
Payment Adequacy and Updating Payments
in Traditional Medicare
In its March 2014 Report to Congress,
MedPAC assessed the adequacy of current
payments and costs, and the relationship
between payments and an appropriate cost
base. MedPAC recommended an update to
the hospital inpatient rates equal to 3.25
percent concurrent with changes to the
outpatient prospective payment system and
with initiating change to the LTCH PPS. We
refer the reader to the March 2014 MedPAC
report, which is available for download at
www.medpac.gov for a complete discussion
on this recommendation. MedPAC expects
Medicare margins to remain low in 2014. At
the same time, MedPAC’s analysis finds that
efficient hospitals have been able to maintain
positive Medicare margins while maintaining
a relatively high quality of care.
Response: With regard to MedPAC’s
recommendation of an update to the hospital
inpatient rates equal to 3.25 percent, for FY
2015, as discussed above, sections 3401(a)
and 10319(a) of the Affordable Care Act
amended section 1886(b)(3)(B) of the Act.
Section 1886(b)(3)(B) of the Act, as amended
by these sections, sets the requirements for
the FY 2015 applicable percentage increase.
Therefore, we are establishing an applicable
percentage increase for FY 2015 of 2.2
percent, provided the hospital submits
quality data and is a meaningful EHR user,
consistent with these statutory requirements.
We note that, because the operating and
capital prospective payment systems remain
separate, we are continuing to use separate
updates for operating and capital payments.
The update to the capital rate is discussed in
section III. of the Addendum to this final
rule.
[FR Doc. 2014–18545 Filed 8–4–14; 4:15 pm]
BILLING CODE 4120–01–P
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| File Type | application/pdf |
| File Modified | 2014-10-07 |
| File Created | 2014-10-07 |